match in trying to acquire nuclear weapons. putin called kim and educated in mature politician and says the north korean ruler has succeeded in developing a nuclear warhead capable of hitting any target. a key state department of matt -- a key state department diplomat told a senate committee that u.s. military activity in the middle east has liberated 90% of territory previously controlled by the of islamic state but the fight isn't over. >> we remain focused on the enduring defeat of isis and other terror organizations, countering iranian influence, preventing the use of chemical weapons and ensuring the safety of syria's neighbors, and ultimately solving the syrian military crisis through peaceful resolution. secretary center field

says the syrian leader will cling to power at almost any cost possible. theegyptian president has support of most of his country's lawmakers. more than 500 of egypt's 596 legislators have signed recommendations supporting a reelection bid by president lcc. alsisi is expected to run in the march elections and when a second four-year term. in southern california risky crews are searching for survivors from devastating mudslides this week. at least 70 people have been killed and another reader still missing in an exclusive area near santa barbara. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪

scarlet: live from bloomberg world headquarters in new york. i'm scarlet fu. joe: i'm joe weisenthal. julie chatterley's operative. scarlet: we are 30 minutes from the close of trading. scott -- stocks resume rallies. joe: the question is, "what'd you miss?" scarlet: the white house -- the white house pushes taxes back into the headlines. treasury secretary steven mnuchin, appearing at the white house to talk about the tax overhaul. the nation's biggest private employer, walmart, has raised its minimum wage to $11 an hour and given its employees a one-time bonus. equity rallies and records of 2018 dress on after a respite yesterday. but our by you asians looking peaky? economic and market

risks of 2018, with that hyman, the ever core chairman. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. -- "bloomberg markets." treasury secretary steve mnuchin visited the white house press briefing today. for more, let's bring in bloomberg national political reporter sahil kapur were on capitol hill. his message was really one of implementation, how the administration working with the irs is going to make sure people and employers prepare for the tax cuts coming their way. what was your sense of timing and how smoothly things will go, despite his best assurances? hil: things seem to be going as fast as the administration can push them along on this front. the irs had to redo their withholding tables to decide how much money is going to be taken americans' paychecks starting in february, when the

new changes go into effect. so i think they are trying to move forward with implementation and mnuchin is trying to paint a happy face on this to top positive economic news that has come after the bill was signed into law. that was my take away from it. there was no great revelations i think, that he put out there, that we hadn't already heard and already know. joe: you wrote a great piece bring the tax-reform debate, pointing out that when the were cut taxes people's other taxes go down and didn't even notice. how cases of the white house to really make sure this goes smoothly and people start seeing those paychecks increase right away? il: extremely anxious, joe. this is going to be the be all and and all of their compass mitts before the 2018 election. there are things in this tax law including the repeal of the obamacare individual mandate penalty, and opening up well

drilling. that is the heart of it. that's the heart of president trump's economic agenda in his two years before the midterms. so the extent to which americans see the difference in their paychecks and feel like they're gaining from the slot or not, is going to have a big impact on how americans view the first two years of donald trump's presidency. scarlet: the discussion on the tax cut took center stage but there were westerns from reporters, especially about davos, because president trump will be attending the world economic forum annual event in switzerland later this month. and i believe one question from reporters was, why's is he going to a globalist hangout? what can you tell us about the treasury secretary's response? he said the goal was in america-first agenda, is what he is going to be pigeon. and what is good for america is good for the rest of the world. its kind of hard to square that when you have a president threatening trade worth all the time. il: it was an awkward position for the secretary of the treasury to be in, that

davos is not some globalist hangout when it is literally, exactly that. the on that i don't know if there's a whole lot to be said about it. its not his decision, what the president does, but he was kind of put on the spot about it. scarlet: but he is going with him, right? sahil: that seems to be the case but he's not the one that's been going after globalist single -- after globalist single is a. daca, is there any progress on a deal or is it too early to be optimistic? just minutes ago we had at statement come out from center to date durban who set a bipartisan group of six senators working on immigration have what he called an agreement in principle. that agreement in principle includes a daca solution for the roughly hundred dozen people who

could be thrown off the program if congress doesn't act by the time it ends. it also includes changes to family-based immigration, what the president calls chain migration. the diversity visa lottery, which gives green cards to people in countries that are underrepresented in terms of migration into the united states, we are long long way, from home on this. the house of representatives, where the hold up as traditionally been on immigration over the last many attempts over several years, have not signed off on this. so what we have now is the beginning of what could he is significant agreement. scarlet: yes, but there is still a long road ahead. sahil kapur, thank you very much, bloomberg's national political reporter joining us from capitol hill. speaking of steve mnuchin coming to give a big set up to walmart at that press breathing because the big bucks died boosted its starting hourly wage to $11 an hour and delivered bonuses to employees.

this, to stay competitive in a tightening labor market. , sara, you wrote about this in your column today. pr, walmart scored big points with republican politicians and certainly customers as well. but you are arguing walmart needed to do this with or without tax cuts. sarah: it simply because the labor market is getting tighter. we are at 4.1% in employment -- rivalsemployment and its are making plans to do this as well. a lot of walmart's turnaround in last couple of years has been built on the fact that it already invested in wages and saw the benefit of doing that. i think it is thinking, as it swings the bat again on this front. joe: explain that a little further. you wrote about this in your column because it got a lot of attention when walmart raised an hour.um wage to $10

you say there's a directly between higher pay and the improved performance. can you explain how one thing led to the other? sarah: when walmart was in a really tough spot, what they were dealing with was shelves that were not well stocked, dirty stores, lousy customer service. i their own customer service scores and metrics, only 15% of their stores were meeting the standard on those measures. so you can see how that leads to comparable sales growth that is lagging. when they started investing in workers, doing things to retain incoming train them come and make it more worthwhile to work solvemart, we really the dynamic change. we saw negative comparable sales change to positive comparable sales. and investing in workers was a factor. scarlet: we need to put this in perspective yes, they are bumping pay by 10% to $11 an hour. to that represent five hours

walmart because walmart generates almost $500 billion a year in global sales. joe: it really is an incredible number. does going back to the performance at the stores, same-store sales aside, people who came into walmart stores today, or come in in 2018, versus people who are going in 2014, you are saying they would see a pretty significant difference in terms of how stock the shelves are and stuff like that? sara: i really do. the stores are cleaner committee can find what you're looking for, they brought back the greeter person to get that more personal touch. yes, they need to continue that but their firepower key differentiator is their stores. and if they are not delivering good customer service in that arena, that's trouble. and a have been

building that e-commerce portion of the business. one thing that significant is that, after walmart is a big raise increase in 2015 investors acted negatively. ats time around if you look the stock price reaction it barely moved. it seems like investors had made their peace, even with the higher cost involved, even as we said this would just represent five hours of sales. sarah: yes come investors --lize walmart in his walmart is in a much better place overall than they were whenmitt -- than they were they made this investment. we are seeing this grocery pickup service, a hybrid of online and fiscal retailing. its connecting really well and growing choppers. really investors are willing to tolerate a $700 million investment in this time when they think the business is moving into a healthier direction overall. scarlet: sara, thank you so much for joining us from washington. uber's secret tool to

keep law enforcement at mail. that's -- law enforcement at bay. that's next. this is bloomberg. ♪

♪ scarlet: "what'd you miss?" ast companies don't expect raid other offices but uber isn't most companies. the company developed the secret tool called ripley that allow them to lock down equipment and foreign offices before a police raid. joining us is bloomberg technology's eric newcomer who helped break this story. joe: eric, thank you for joining us. talk us through the mechanism. how quickly could bloomberg shut down its electronics and a foreign office when it got wind of a raid? eric: very quickly.

uber employees with sort of call-in or otherwise alert headquarters that a raid was happening, and then someone from headquarters could trigger the software to lock the computers, meaning even some of the employees there, if police were asking them to log on, wouldn't be able to get on their computers. so this was a rapid response to an ongoing police raid. joe: is this illegal? : that's a question for governments all over the world. it is certainly within uber's rights to secure some of the information. really, the question is how it responded to specific warrants, what different sort of police forces were authorized to receive these warrants, and whether in any way uber sort of obstructed investigations with its software. its hard to say. scarlet: your reporting show -- reporting shows this

tool, ripley, dates back to march 15 when holies stormed uber's brussels office. the legal department, the head of the department has since left the company. is that what we don't see uber using this as much anymore? eric: i think uber has changed its tactics somewhat, locking down particular encrypted files, and having a functional desktop. i think to a large degree, the company seems to believe this is sort of a reasonable response. are probably they alone here. i think is particularly interesting in light of the fact that there are some legal questions at over. if polices to wonder had been able to more readily obtain information when they were rating uber's offices, with eight have been able to get any information about any of the sort of ongoing investigations?

locked down that a their computers, we talked to experts who say there are definitely other companies taking similar moves, to secure their computers from police with warrants that my just allowed that -- that might just allow them to raid offices but not any particular files. joe: was there any particular raid that people were supposed to let headquarters know about this, or with the call on the ground were employees made the decision whether or not they should lock the system, and what is the protocol today? standard procedure for any of these raids in any of these companies is to alert your headquarters, get a spokesperson for the company to do with it. so definitely the policy was to sort of escalate the decision to round the raid, and then it would be directed at the time to headquarters so that they could through apley

technical system. but it was a decision often made , to stop police locally from getting information at the local uber offices. scarlet: bloomberg technology reporter eric newcomer, from san francisco joining us for more on this story about ripley. its fascinating. just when you think you know everything, another secret tool. time for a stock of the hour and climbing higher today are shares of delta airlines. this comes after delta reported for letting quarter results. abigail doolittle has details and i assume its positive given the stock is up 5%? they beat both bottom and top line expectations. revenues, solid growth. they say prayers are going to continue to climb. they say there are some questions whether or not whether fares can climb because there's is so much capacity out there. but overall, better than

expected. capshire hathaway is pretty -- is pretty happy. there are major holder of delta stock. last year was a little bit rough , kind of sideways, but its starting to take off again. and just to be clear, its the confidence the company has about the strength of fares. because in the airline industry, everyone is living in fear of another fare war. abigail: that's interesting and i think that fear of a fair war, a tongue twister there, it should not abate completely. because we still have the likes of spirit and some of the others, frontier and alaska airlines, and they could still .ry to cut prices and cut in so is basically too many seats -- too many seats.

but right now they are expressing confidence of repairs and that they will be able to push those prices higher. speaking to george ferguson, he was saying they had about a one dollar benefit your but the interesting point on these major payings, they are not cash taxes until 2019. but one of benefit is the idea that if it does stimulate the economy, there could be more business travelers. business travelers tend to be .ore sensitive to price if you buy ticketed last minute, you're going to do it. scarlet: abigail, thank you. time now for the bloomberg business flash. steve mnuchin's asset management has lost second traitor.

steve: -- has lost the top traitor before his hedge fund launch. topteve colin has lost a traitor before his hedge fund launch. the u.s. marshals service will option more than 3800 bitcoins valued at $52 million. the coins were seized in connection with high-profile federal, state, and local cases including drug busts and-laundering schemes. the option to anywhere 22nd could raise or recommend for the government. nbc expect $1.4 billion in ad revenue from the super bowl and winter olympics. $900 million of that will be from the olympics and south korea which begin february 9. olympicsgher than the in sochi, russia. super bowl advertisers are in line with cash. and that is your bloomberg business flash. coming up, the trump administration's u.s. tax levy on slaps a 1.4%

the wealthiest private-university endowments. at where, hints, the northeast. this is bloomberg. ♪

scarlet: i'm scarlet fu. "what'd you miss?" critics call the tax reform package penalty. tax on the wealthiest university endowments. bloomberg crunched the numbers. the blue dots represent schools in blue districts, and here we

are talking mainly new england, new york, connecticut, massachusetts, that's part of new england, and california, as walter in the red dots are schools in red districts, and if you look at the names of the universities they will sound familiar. these are the wealthiest private university endowments, cooper union, juilliard in new york, much of the ivy league, harvard in massachusetts, princeton new all familiar names. all very rich schools. flip over to the schools in the red districts, much fewer. notre dame indiana, rice in texas. that 22 ofews found the 28 colleges likely to be subject to the tax are and democratic congressional districts and his blue-districts schools, make up 90% of the $200 million per year that the government expects. i was a fiscal policies the

art of getting stuff for your people and taking stuff from other people. it looks like a good example of that. jobless claims, we got them today and they bounced a little bit from a multi--month high. i don't worry about it because of you look at it, my favorite way of looking at jobless claims is, they are still super low. this is a target of non--seasonally adjusted claims so it ignores the holiday adjustments and quirks. if you look at the very end, we at post-crisis lows, right there at the bottom. no sign of any bounce or anything on this measure, so a pretty good sign there. it really is remarkably consistent. scarlet: and now we wait for the second part. joe: we will see what happens when we get past the holidays, and if the seasonally-adjusted numbers are still high, or higher in january and february, maybe we will pay more. scarlet: and the tax cut, as well. we market closes next and

have u.s. stocks resuming the rally to record highs. the dow is up by 180 three points, the s&p 500 gaining two thirds of 1% joe:. joe: another record high. scarlet: from new york, this is bloomberg. ♪

[ ♪ ]

major indexes are back after retreat - slight more like a pop. reasury with a sell off after yesterday's jitters. scarlett. joe: i'm joe. julie is off. if you are tuning in live. we want to welcome you to the closing bell coverage every four to 5:00 eastern. scarlet: we begin with the minutes. we have to call yesterday a pause. to k is back to climbing mys. s&p climbing. 204 points. the last minute of trading level.g us over the joe: it was scary fulling a cent. of a per bandwagon.e us on the scarlet: let's look at a couple f names in us equities,

attracting interest from biout firms. this is according to people with of the matter. penny bows holding talks about a sale. is good for a 15% jump. airlines, abigail was speaking about the results. revenue momentum five years. that softens the blow from rising oil prices. home posting earnings that had fourth quarter revenues that analyst estimates and the margins.der increasing community health up by 24%. asset management boosting its stake to 24%, a sign of support. the government bond market. 2-10. the big story, the reversal of that we have seen, a modest reversal.

crazy. want to get too 1.89%. 10 year yields. back down to 2.54%. thing here is that the last couple of days we have been talking about the bond bear market. yes, there has been selling. it's modest. historical norms. so it's nothing too major. nonetheless, you are pulling back. are pulling back on the day. currency.let's look at we had e.c.b. minutes showing a awkish knowns, and knowledge that communication on monetary policy may need to change. as a result the euro was higher currencies.g 10 ppi data in the us, that stuff, the tations is lower for cpi report tomorrow. looking at the canadian dollar as well. day pressure for a second after the canadian government

canadian unidentified government officials said odds of us withdrawing from n.a.f.t.a. is higher. know if that means the us will pull out or it's a egotiating tactic or what the canadian officials are doing is a tactic. looney is at the weakest level of the year. to travel. ct them against talks. a sixth round in montreal on january 23rdrd. on the commodities front. oil and goal. texas intermediate, flat on the day. gold futures are up modestly. take a look at a five year chart. they s the stuff that trade in london, europe and at hitting $70ink crew a barrel for the first time in three years. there, and a start to the year. those are today's minutes. scarlet: what did you miss,

amidst the green that we saw highs.nd in record what are the risks that be wary of. uld great to see you. stanley says signs of euphoria in equities, do you see signs? >> no. i'm not sure what they are looking at. first, we survey 40 hedge funds every week, and their offensive. and... >> define offensive. 50 is neutral. 47. hey are we ask them how are you invested benchmark. the in the past three weeks investors have taken 44 billion equities, according to flow of funds and put 13 billion bombs. that is in answer to your question. >> that doesn't sound euphoric you. >> no, it doesn't. they arek people are - concerned about things. you started out to own the risk,

is sky high. pes are high. tightening. there must be half-a-dozen risks out there. risks or 's political nuclear war. a lot of people said this is not me. the markets are climbing the wall. don't see clear, you a sense of euphoria, but you see expensive.as being >> expensive is a tricky word. a bid bably were putting in on the da vinci sale. wouldn't go over 400 million. crazy.lion, it's >> it's a funny concept. have on people that you the show have a particular view about the stock market and $40 million apartment on fifth avenue, what do you do that for? to live somewhere. hen you have bitcoin is going

crazy. but what is driving the market here, earnings are going up, as and that is rt, more or less the whole thing. accommodativehave monetary policies. that's changing. >> it's changing. bonds,they'll stop buying you know, a little quicker, and 50 german bond yield is basis points. the greek pond yield is 350. like, 34 bases points last week. - in my view of things, monetary policies are you have itibly, if back in a decade, we'll take a look and see if it's right or not. everything is great. onetary policy is still accommodative. market are not all that expensive. no signs of euphoria. is it the sort of - the funny

feels like t it people are still worried about something is out there. whether it's geopolitics, china or they are scarred from the crisis. it does feel like there's - even with this sort of lack of risks, like a general sense of dread. so like i mentioned the things the people worried about is value of levelling the stock market. tightening. and all the risks. why take a chance on it. of s at a lunch a couple weeks ago. wasanother guy who you know there. who is caution on the market. gave my case, he gave his case. he won hands down. were saying ople why take a swing here. stop, or , we should you need to explore the possibility that this is a super bowl market. had a bull market of historic proportions.

three superbull markets, the last five years, tripled.et scarlet: let's be bes mists for moment. what can make it stop. people say i'm right to be not fully invested. derail hings that can this takes a while to develop. the market knows that much the derail it is inflation takes off. happen. could maybe the fed panics and happens, ens if that and that gets the markets to go down. interest rates are high, the heavy, heavy on debt. and we go down. goodbye. but at the moment, it seems like that - maybe that may be around get to the until i corner, people are serving press to move into the market. what i can tell.

the you mentioned having debate with someone more skeptical of the market. and everyone was convinced by sceptic. is that the case, that the bear sounds like the savvy one, the start one, and no one believes the optimist. i wish that we could leave the and we could sit and watch it. i believe that at the end of cycle. the smart people will be bullish. 1929, over in fisher. it was economist of his day. the most yale economists, the day before the crash, he says we era of ered a new prosperity. that was it. tax cuts that the trump administration passed. does that push us into an era of prosperity, they make the case that it does. from where you sit, do you see it. hard to know. you guys have a real excellent confidence measure. a weekly measure.

in 17 years. >> 1.7 points. it's s a fairly - even-handed. whether you are rich or poor, or small city. you tend to - and it's up. of all the political mess, drama, better put. must be a testimony to low inflation, , low rising stock rices and house tax cuts.d maybe the >> and small business is optimistic as well. i won't even go to the tax cuts. to use, you know, according polls, most people will think i'm good. trump is something that administration is trying to fight. their conviction is once the umbers show up in people's paychecks in february it may be a different story. when we come l back and take a deep die into

the key economic scenes for the year. including china. that is bloombergs.

i'm mark crumpton with first word news. president donald trump announced that he will spend according inst iran, to the secretary of state rex tillerson who spoke at the state deft. he had until tomorrow to announce whether he'd continue 2012 sanctions that cut off iran's central bank system. entral bank

waving the restrictions was required under the agreement world powers ith in exchange for kerbing its nuclear programme. officials displayed what they say is drones following an attack on a russian base in syria. us but id not blame the noted the strange coincidence of us military plane flying over the mediterranean during the attack. a pentagon official noted with the russians about what goes on in syria is of tained at a variety levels. >> the most effective level is the level in theatre. talk about deconfliction details, they strike asked us not to targets and we did the same with them. i think that process is alive effective. >> general mckenzie added i can ell you that the united states was not involved in any way with the drone attack on a russian

time.at any >> in tunisia authorities arrested more than 300 people gas as d tear ro-testers hurled rocks and hurled tyres during nation-wide demonstrations over rising on many its including food, gas and medications. accused ian government opponents of stoking the unrest rises ending the price saying they are essential to improving the economy. there were more head eights for -- headaches for new jersey, residents committing. a 118-year-old bridge carrying 450 trains a day between new and new york became stuck in the open position, causing a of ur suspension in and out the station. plans to replace it with a fixed higher clearance are part of the gateway tunnel project lacking federal funding. global news 24 hours a day hunt d by 27

journalists -- 2700 journalists analysts in 127 countries. joe: what did you miss? monetary policies, a key of string elections, what economic wrists, we are with ed-harman. here. to have you still we talk about the risks, and we can rattle them off. one thing that seems rock solid is earnings. stuff, pite all of this if earnings are going up, it's hard to take down this market. so, first you had the tax cuts. you are given a pass, it will ift the earnings, like a cheater things, and then you have the global economies picking up. us.uding the and then the dollar is down. so you get a free ride from the dollar. then if that is not enough. oil is up. so when oil is up. it's up 20%.

of oil earnings companies. on the dollar it impacts foreign earnings that is repatriated. earnings will be up something 20%. a number that is so big it's hard to imagine. on track for s that. take that down. people talk that there's olatility - actually, there's not been volatility, that's not the point i want to make. down?could take it we are looking for risks and reasons to be skeptical. t feels like when everyone is all in, and everyone knows that earnings will be up 20%, you protect e prepared to what you have out there. >> i'm 24/7 on this. i don't think people are all in. like i mentioned a little earlier, our hedge fund is if. se people taking -- defensive and eople taking money out of equities, for good reason. people realize that the risk you

looking for are not in this room. across the street. biggest one is if inflation was to pick up. to start to as react aggressively. that doesn't seem to be the case at the moment. is a bit of a wildcard, way, far, and it's not very transparent. to be going okay. said the ill dudley risk of an overseeing economy reinforces the case for gradual increases. he talk about the fed having to of fast hat prospect inflation. >> yes, and we'll have a new fed regime in addition to a fed chair, a vice chair. we don't know who that will be. on the fomc. departuremic with the of jennic yellen.

any concerns there. the fed is sort of basically - tightened financial conditions. >> when we got powell reduced a d out we big uncertainty about who would be the fed's chair. done. was it was more or less business as usual. it, i y i like to put think the odds of the fed making fairly low. odds of the fed making a mistake. very careful. looking at the data. you mentioned the ppi. surprisingly weak. they'll take that into account. consumer loomberg comfort measure strong. those, but iuncing think whether they tighten twice year. e times this it will be dependent completely on how the economy is unfolding. started with how investors are not all in. what about companies.

will l get tax savings, they put that money back into share buy backs. or spend it on capital signatures and increasing productivity. question, isn't it. act in 2018. will so far they've been fairly capital spending, getting less so. and they've been adding workers time. which i assume they'll continue to do. front. a limit on that there's not as many workers out there. they'll get pay increases. today you had waste management and wal-mart. - wal-mart is a huge company. and so i assume almost every is getting a tax break, that the workers at that looking at their bosses and saying are we going in this. so far wages have not

except you mentioned the small business survey came out. they have a compensation part of it. it went up 6 points from, like, to 23. that's the biggest come on i have seen in that front. have a favourite theory for why we have so many easons to think that wages and inflation go up. surveys. measure of labour mark and tighten it. unemployment. wages other things say should be going up. do you have a theory for why it not kicked in? > first, i'm like a yoda in this. i can - i don't have to - there to your answers question. but they still end up with a question. some recent ones. ould be this article, artificial intelligence and robots are pulling people down. nd then you have mergers all

the time. and any time there's a merger. companies. there tends to be crosscutting and the workers at the two are insecure for a while. inflationary.'s >> at the outset it's deflationary. to explain why wages have not picked up so far. me, joe, ifsurprise average earnings went up 2%. but i have given up waiting for that month. >> i think the fed is with you of forecasting when that will happen. chairman of ever court. enting an apartment in manhattan is getting cheaper. bloombergs.

scarlet what'd you miss?" enting in manhattan is getting less expensive, the city flooded with new apartments. estate praisal and consulting firm joined bloomberg today. >> i think it's a little early factor in the new tax law, i think it will ultimately favour developers. the tenants probably will not benefit. he problem is we have had an incredible volume of new development in the form of exceeds what we have seen in luxury condo. and so the problem is supply. and that is why we are seeing record concessions set in at

of the burrows - and queens.urkeland >> how is it changing, landlords have been given sweeteners? now they have to drop the side rent. and we are talking about a rent much $2,295. >> exactly. to think of this is rents are coming down from a to a high level. in other words, you shouldn't massive, as a a tenant, massive discount coming up. a slow grind. the supply is still - that is coming into the market in terms new development rental product is mostly skewed to the uxury or the upper half of the market. what we have is a bifurcated market. softer as you move up in rents. and it's - essentially the is static in the lower half of the market, to be

simplistic. in both markets. it's very polarized. and you are seeing behaviour differences. the - when you talk to someone renting a studio. they are not going to tell you are softening. you know, it really is, sort of, he middle of the market, and higher, where you are seeing the numbers come off. headed for a perfect storm, where people start ealizing that it's not only about supply, but the fact that there is a new tax bill. would be capped. property tax deductions in high state. >> so the - what you might see, temporarily - the way i see this whole tax law laying the - for example the adrian mannarino housing -- the housing market. it will take two years for the a ers and sellers to have price discovery, find what the

impact is. i think it's... miller. as jonathan this was bloomberg.

mark: i'm mark crunch tonne with the news. the justice department is of prosecutors to investigate drug trafficking and money laundering linked to the militant movement. the mood by attorney-general reports ions follows that obama administration officials prevented drug rosecutions related to hezbollah for fear of jeopardizing a nuclear deal with iran house of representatives passed a bill to re-organise a ey foreign intelligence collection programme with a change. it requires the federal bureau of investigation to get a do the if it wants to content of american communications, swept up in the

process. renew the tion to pfizer collection programme, to conducty agencies surveillance on foreign targets 256-164, and se heads to the senate. >> this strikes the balance that we must have. between honouring and protecting rivacy rights of us citizens, honouring civil liberties, and making sure we have the tools we age of 21st day and our ry terrorism to keep people safe. >> trump said he will sign the for extending the programme six years. the senate banking committee on vote on january 17th, the nomination of jay powell for a chairman, according to panel spokesperson. trump nominated powell. confirmed powell would be sworn in on february 5th. boy, the last victim hospitalized following a

massacre went home riding in a fire truck. was shot five an times when his father says he's doing well. child's two siblings were among 26 people killed when a stormed a rural baptist church. global news 24 hours a day. powered by 2700 journalists and analysts in 120 countries. crumpton. this is bloomberg. crossing reaking news bloomberg. president donald trump signalling openness to north setting a omacy positive relationship with kim jong un. "the wall ording to street journal". he also made comments regarding n.a.f.t.a., he would terminate a fair deal less was agreed to. aid, mark short says the white house wants changes in any deal, and that would be an immigration deal on dhaka.

stunned by the comment regarding kim jong un and trump, they had a good relationship or probably have a relationship. joe: i saw sa tweet saying trump called north korean leader a bad dude, short and fat and kim jong un said of trump he mentally the deranged, dotted with fire. is a good tionship way. scarlet: the underpinnings of a solid relationship. a recap of the market action. stock. highs in us they resumed the rally after a pause yesterday, up 206 points. s&p gaining 0.7 of 1%. market continues at pace. what did you miss, a bond market selldown. yesterday officials discussed reducing the purchase of trashies, news that kept them

criming. saying fused set report we think the report may have fake wrong sources or news. to discus what is going on, let's bring in brad. for joining us. you are the first person i wanted to talk to when i saw the news. i appreciate you coming on. let's stipulate and say china reduce its exposure to treasury, they didn't want to more, do they have the mechanism or flexibility to portfolio.r own >> yes. hina doesn't just hold treasuries as part of the us portfolio. if it wanted to, it could shift agencies, it has done that in the past. would it have an impact on the not. robably could china hold more bank eposits and fewer treasuries, yes. could china sell treasuries and buy equities, yes. china sell us assets and

move into another currency, yes, is hard. the chinese purchases would tend o push up whatever currency china is buying. there aren't that many bond absorb a ch could meaningful amount of flow. > just to be clear, they could diversify outside of treasury, to ould be harder for china diversify away from dollar denominated assets. you think of the comparative size of the agency market. to the size of the available stock of booms. now that the e.c.b. is reducing the sign. aremechanics, and the flows easier. as long as you are shifting within the us there's no currency effect. what would be the reasons china would want to reduce mentioned ld i, you china sold a lot of treasuries, a modest in 2017 on scale. if they were to start pairing some of the holdings, what would

to that. what would push them in that direction. > the reason why china is selling in 2015/16. reserves were following. needed liquidity. it needed to come up with cash, and sold treasuries. my view, in rough proportion holdings. what could drive china it resume the obvious reason would be that reserves started to fall. picked up. alls what we have seen is reserves are basically stable. china was t's why buying last year. perhaps they reduced the liquid little lower than they wanted to during the peak the essure, and with stabilization of the euan with increase in china's reserves, they brought a few treasuries, it seems like capital flows are roughly

balanced. why that would drive treasury sales going forward. are, okay, e left perhaps china might want to send a message to the us, reminding us that it's the united states biggest single creditor. talk about china being a big mover for the us treasury market. says china doesn't really drive the action. it's buyers like europe. margin china is not really where it's at. they k to the point that want to send a message. china would like to remind the what a big treasury holder it is. you ts to questions, yes, can remind the us all you want. if your options are limited else where. to what extent is it a tool that wield? ntry could >> it's a difficult geopolitical tool to wield, in my view. at the limit. if china really was determined

market. he i think that said, it would ultimately be forced to respond back the pace le of its balance sheet roll-off. day the us f the always has more options in its china here.han it's not the easiest tool of geopolitical leverage. on the other hand, i'm not sure that china is unhappy that people in the markets are about how china may respond to a tougher us trade policy. in general do we overpoliticize the discussion. in the end, is this sort of much standard economics than people make it out to be? >> i think so. i think frankly, china's treasury holdings are almost followed china's reserves over time. particularly when you adjust for holdings that are hold in custodial accounts in

belgium. or less historically - it's been a function of china's about how it manages its currency, which is political own. onomic issue of its it has rarely spilled over from geopolitics. scarlet: bottom line, if you are intrigue or read the tea leaves, looks elsewhere. council forw at the relations joining us from washington d.c. joe: i'll speak to rod arnet of about his filiates cape ratio debates, if you want to get me involved. a twitter. what do you want to know, let me know. this is bloomberg.

joe: "what'd you miss?." believers in the cape ratio seeing e value is in long-term market returns. the directors claim it's elevated. rob arnet chairman and c.e.o. of weighed in iliates on the debate and joins us from thank beach california, you for joining us. the cyclicly adjusted pe ratio s a guide to look at whether the market is under valued over valued - at the moment expensive. say it's a useful system to returns. what does the data say now? > firstly, it's important to neat that any valuation measure nd the schiller or cape ratio is no exception to this rule. aluation ratios are terrible

for picking market tops and bottoms. hey are terrible for market timing. however, they are wonderful for redicting long-term rates of return. and what we find today is that pe ratio, price relative to 10 year smooth to 32-33 earnings, is at times earnings. every at means is that $100 you invest buys you about earnings over the last 10 years. that is a huge valuation multiple. and what that tells us we should y is that expect roughly zero to 2% real above inflation. over the next 10 years. that is all. so just to be clear, the market is not going to crash expensive market is by the measure. over the long term you wouldn't

to go phenomenally well. the critics of the approach have flaws.f they point out a lot of theoretical flaws. if you g they say is take the last 10 years of arnings, that includes the financial crisis when earnings were in the toilet. hy would you want to go back that far when that is a twice or once in a kent sewery event that the whole tort ght thing, what do you say about that? amusing. , i find it critics come out of the woodwork ratio r the schiller pe suggests caution. they are never there when easement ratio says to buy. secondly. they raise are always a two-edge sword. earnings of the 2008/09 because it was a deep recession. pardon me the schiller pe ratio

average for a ar reason. it's to include recessionary cyclical peaks, so that you smooth out ups and downs. they will say, yes, but that was an unusually deep recession. true. only one in the 10 year history. most 10 year spans include a recessions. and, this 10 year span includes - include 7-8 years with the profit margins as a share of g.d.p. in the history of the us economy. have streams in both directions. you will not find critics saying no attention to the schiller pe ratio because high.ngs are too >> let's think about some of the other objections. say is marginsey and earnings are structurally than they wereys in the past for various reasons. aybe technology and the

interalisation of us companies. what should that, therefore, stocks are less expensive. >> you know, as with all of the arguments. there's an achilles hill to each and every one of these arguments. hill on the structurally higher profits is fine. structurally y be higher. but if those structurally higher profits persist into the future. the schiller pe ratio comes down modestly in the next few years. it's high. 32. ead of being it may be 28 or 29. high.rry, 28 or 29 is or that would point to two 3% returns. still very low real returns. little better than bonds. not the kind of returns that people want to expect on the market. >> that leads into another comment point that people make.

at how low interest rates are. argument. the >> valuations will be lower. we are not overpaying. that.is the problem with >> i love that argument. and it's - there's a very simple retort to that. people invest all over the world blinders on. they pay very little attention of he global spectrum opportunity that they have at their disposal. concentrate on stocks and bonds. low interest rates mean a schiller pe ratio of 32 is okay. ly why, in europe, do siro interest -- do zero interest rates justify a ratio of only 16. multiple of the us. houldn't is justify a much higher multiple than the us. my response to those critics of ratio is to say

fine, embrace your argument. your argument. sell the us and buy europe. fascinating paper, a deep read. check it d everyone out. rod arnet chairman and c.e.o. of affiliate. scarlet: highlights with the president of goop, mike george, first interview since his company took over the home shopping network. bloomberg.

scarlet: breaking news crossing bloomberg. amd ced micro devices acknowledges chip vulnerabilities, they do apply chips, it previously said

the chips were unaffected. ou can see the impact on the share price off by almost 4% in after hours trading. today, or earlier in the week intel confirmed reports thatthey contain a feature makes them vulnerable to hacking. it's watered down by saying company's chips are susceptible. they said there was a near zero it's otherwise. we'll keep you posted on further developments there moving on to retail. on 2017s last day of trading a home giant shopping giant was created. a $2.1 billion take over was completed. leader in video commerce, in the first interview ince the deal closed the president and c.e.o. of q.b. e roup mike george spoke exclusively about his vision for the company. > what we have done with the acquisition is to put under one company some. plants consumer director

in the world. from q.b. c. hsn. frank gate. rose, garnett hill and others. what we have is enormous scale consumer space, 14 billion in revenue, 5 million highly loyal customers, and 27,000 extraordinary team members, importantly. this business forward, and we think we can lead in retail. see ourselves offering a third way to shop. traditional brick and mortar. ifferent from transaal e-commerce, built on inspiring our customers with great stories and relationships. and with the resources of combined company. e can lead that much more effectively in the turbulent world of retailing that we find in.elves >> q.b. c sits at the e-commerce, of media, some say it's a difficult to be given the head wings

placing it. a primary distribution channel. a number of americans cutting the board. broadband only homes is 80 million, how will that position itself in environment. > we love the position in this space. there's adverse head winds, winds. positive tail our customers are watching cable tv. cord. not cutting the one of the few broadcasters that is seeing increases in over the last year. we have an engaged customer that tv, engaging with q.b. c. hen, what has changed in the last couple of years is they can find this in all the other ways. can find it on road crew. on o 100 hours on simulcast facebook live. all sorts of over the top

that we are presenting in unique ways. >> are these over the top reach a new customer base as well. >> it's a little bit of both. we see some customers move to the platforms. f we take an example like facebook live. we are the only one with a 24/7 beating. we simulcast on facebook live. e are seeing new customers seeing a cool beauty experience on facebook live. q.b. ay not connect with c, but they connect with a beauty i.q. network that they engage with in an interactive way on facebook live. platform to rful bring in new customers to the company. we can'tg to ekormers, have the discussion -- e-commerce, we can't have that speaking of thout amazon. wal-mart is the next biggest c. yer, then q.b. you are a bit further behind. how do you, indeed, can you,

the the gap with competitors? >> you know, someone that traditional tv shopping, the fact that we are the third-largest mobile comers after amazon and wal-mart is something that we are proud of. good company. how do we complete against them. them do what we do really well. we play our own game. products that are generally exclusive to q.b. c. the are not available on other platforms, we are bringing together not just a product, but personality and video experience. as long as we are committed to compelling, curated experience. noknow, there's a nice place for us. they go to q.b. c for a unique experience, that's what we want to continue to invest in. amber speckingas to q.b. e's mike george.

coming up, what you need to know for tomorrow's trading day. this is bloomberg.

>> u.s. stocks resuming to rally highs. the dow climbing more than 200.3 tomorrow, jason morgan and most

theirowth will reveal fourth-quarter earnings. >> and economic data. retail sales in cpi southwest 8:30 a.m. eastern -- >> that does it for what you miss. -- what you missed. >> good evening. this is bloomberg. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> you're watching boomer technology. let's start with a check on her sword news rick the house voted to extend the government authority to spy on foreigners digital communications.

the law gives the government authority to review americans communications with suspected terrorists. today, president trump called fisa controversial. >> north korean leader kim jong-un has won the match to acquire nuclear weapons. in a meeting today, clinton called kim and educated in mature politician. in puerto rico, officials said 32 people have been killed so far this year. beenis more than double this time last year. over 40% of puerto rico still without power after last year storm. and little boy who was shot last november's returning home today after more than two months in the hospital. the central was shot five times. the child's two siblings were