new deal is not reached. president knows the knows that the u.s. can benefit from the north american free trade agreement, particularly in farming. purdue believes sect can i will come around to making changes to the fact, and officials there are learning not to underestimate the president. nafta talks will resume this month. haiti has been removed from the list of countries eligible to participate into temporary visa programs. command security announced a move is that a week after president trump barley used a vulgarity towards the nation, and sever plural -- and several african nations. shown high levels of fraud and abuse, and a tendency stay.rstay their african of different nationalities today, and

operation managed to save everyone on board of two boards distressed in libya. the recent humanitarian and medical assistance. the coast guard has saved more than a thousand migrants in the past week. european commission chief says that the offer is still on the table for the united kingdom to remain in the eu, even after both sides have entered the second phase of their divorce talks. addressing the eu legislature, he said that we are not throwing the british out, would like them to stay. the exit of great britain is a catastrophe. that we all have to deal with the consequences of. says that even if article 50 is set up for the

u.k. to leave, there's an article that would allow them to a seat again, and i would be happy to facilitate that. proposedr says that he new puzzles to settle a 25 year dispute involving greece and macedonia were progress can be made. with the core shares of both countries today, he is very hopeful that this process is moving in a positive direction. leadershipe we have in both athens -- that generally want a solution. it is a national interests of both countries to solve this problem. greece maintains its northern neighbor's name implies a territorial kind to an adjoining province of macedonia.

global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. julia: live from bloomberg headquarters, i am julia chatterley. scarlet: i am scarlet fu. julia: the close of trading. stocks rallied, about 26,000. scarlet: but the question is, what you miss? on over $30nning billion in expenditures here in the u.s.. househington, the white shows support for the house gop plan for stopgap funding, but

some lawmakers within the party are already raising questions. our prices rising at a time where the global economy is propping up? some goes global economic advisor warns, maybe. p.m. is concerns at 4 julia: let's get to the news now that apple will pay over $38 billion in taxes and overseas cash and invest tens of billions in manufacturing and data centers in the upcoming years. has been pouring through the data and he is here to tell us what apple is really saying. >> it is a little confusing. it was written to impress one man, who has a twitter account. michael: it sounds bigger than it is, but it is quite -- not quite what is being sent. the new tax bill requires

companies to pay taxes on all of their overseas held earnings. apple has over 20 50 billion on it, because there is a lower tax rate for tangible assets. factories and things like that. basically to have to pay $50.5 billion out of the 252 billion, which means a $38 billion tax bill. whether or not they bring the money back, here's the thing about the new the money back. the money is already here. apple has to hundred 52 billion -- only about 3.1% is non-u.s. securities. the rest is in dollar denominated assets. so bringing the money back aspect of it is really misunderstood. misunderstoodg about the apple press release is the greater $50 billion that we're going to spend over five years aspect. what they spent in a year -- what all their supplier spend in the year, and multiplied it by five.

this is new money. the new money is the 30 billion that scarlet talked about. we don't know if incremental or total. haven't told us, because it doesn't make any sense of it is total. we're assuming it is an extra 30 billion. and the new headquarters in cupertino. that space ship looking structure, you wonder if the money they plan to spend is going to be on new facilities, new manufacturing facilities, or .erhaps technical jobs people to answer the phones and answer technical questions. they have been spending $11 million a year on capital expenditures, and a good expenditure of that is on headquarters. they keep that money in the budget, and spend it on something else? they're saying they're going to build a new technical campus, some some of that money will go to that. adding, aboutbly

$6 billion a year in additional spending, which doesn't sound like much when you think about all -- they have been talking but 30he big numbers, billion over five years to 7 -- top more than the cap capital spender. only 23 companies spend that much currently. ofthis is a big amount money. the job creation is real. 20,000 jobs. overcreated six 800 jobs the last five years. so they're going to at 4000 to that of the next five years. it is a back, it just isn't the kind of numbers that the white house is embracing right now. julia: we need clarification on the 20,000 additional on top of what they have already achieved. scarlet: i think the president will embrace that rate of $50 billion number that apple is contributing.

michael mckee, thank you for going through those numbers. others start bringing back that money -- from offshore, how will the bond market be impacted? this mccormick is with us, and your call on this is one of those widely read stories on bloomberg today. talk about the money that is held supposedly overseas, but really and treasuries. >> overseas is kind of a misnomer. that money through foreign subsidiaries as the agencies and corporate bonds. isn't really aon lot of exchange rate movements as far as dumping foreign currency assets and buying dollars. is not going to be impactful for the u.s. dollar. you are saying, we look at the big players, apple, microsoft, google. altogether they have about 500

billion. most people think they either are going to sell some of them, or if they don't sell when they mature, they won't roll them over and use that money to you even though mike detailed some to boostt and jobs -- shareholder value. stock buybacks, booster dividends, things like that. julia: we look at that $30 billion spread over five years, say $6 billion a year compared to the 250 plus billion dollars that is being considered overseas cash -- that's a significant proportion of the domestic bond market. if you want to engage in by back, you still have to sell out those spots, get the cash, and then invest that money in shares. impact have a material on treasury investments or sales going forward. >> absolutely. backdrop,now in the the sales by these big corporate stash we have the feds exiting the markets.

we have the surge in supply coming from the deficits from the tax bill. people are saying that you add these apples and googles, and are either buying or selling -- that is another headwinds to the market. julia: they see a trillion dollars worth of cash held overseas. top eight,at the which goldman sachs says the biggest chunk of the foreign earnings have a lot overseas. a have about 500 billion just and government and corporate. that is nothing, that could definitely be a factor in the markets. this could add a demand shock. this is a pretty long time when we're talking about here. >> the tax payment has been paid in eight years, but as far as the tax structure change, it is now, immediate. to ave transferred territorial system, so they could get to this money at any time they want and do this at any moment.

while the tax bill has been paid in increments over eight years, this demand shock supply coming -- we don't know when. it could be now, it could let the debt rolloff. julia: we should make that clear that apple tax bill is concerned -- scarlet: liz mccormick, thanks so much. the great story available on bloomberg. want to bring you some breaking news crossing to bloomberg right now. rupert murdoch is hospitalized according to vanity fair magazine area there was an accident that happened on his son's yacht and it comes at a delicate time for the 86-year-old empire after 20th century fox sold a lot of its key assets to disney. people are wondering whether --ert murdoch see something there's questions how he would positions hundred century fox and news corp. going forward. certainly, this raises questions

about succession act 20th century fox. longer-term story there, but will bring you further headlines as far as his health is concerned. scarlet: this is bloomberg. ♪

scarlet: lawmakers planned the short game. paul ryanker introduced another short-term spending deal. it was met with opposition on capitol hill. our the card should not odds? jirga's now from capitol hill, -- joining us now from capitol hill. the likely is now likely to side with the temporary government spending measure that will talk about here. is said theyhouse

support the current stopgap measure that is proposed that would the government-funded through february 16, essentially buying a few more weeks for the negotiators in the house and senate come to a deal on spending levels for domestic spending and for military spending. hassame problem that hampered them all this time remains -- the democrats are demanding a solution for the undocumented people, also known as dreamers. as part of any government spending bill, democrats and publicans are not there in terms of negotiating that solution, so a lot of democrats, are planning to vote no. that may be the case again this time, but we don't know. the pressure is ratcheting up on them from their base, unless there is a solution for daca. julia: even if we manage to keep it can for four weeks, what solution comes in that for

weeks? what has to give ground, and what is the solution look like? time is running out. >> it is not going away, and we are short on time. the interesting thing is that i spoke to senator john cornyn and he doesn't believe that the issue of backup and government spending are connected -- daca and government spending. delta combined into things and do them together, versus how the republicans feel where they want to do it separately. the only thing i can change between now and february 16 is if they passed the temporary bill -- it is some sort of breakthrough in negotiations to ,eal through the legal status or lack thereof, of these young, and documented people. there no clear and gain insight. the president has been volatile on this in the last few weeks, not being in the same place from one-day to the next, the has thrown negotiations through a loop. scarlet: people have said the

deadline for resolving cap -- daca is in march. assume no deal is reached, and rep the come up with another temporary plan, how many times can they do this? stepped that measures to keep pushing things off. >> they can do this is made times as they want. as snow law -- there is no law against it. everyone takes it is a terrible way and doesn't give certainty and makes it difficult for the institution every in the federal government to operate without knowing what their budget is going to be like in a few weeks or a few months from now. thedy likes it, but in absence of a deal to get the government funded a longer. of time, they don't have another solution. will be the fourth stopgap measure in the last four months, the fifth of the trump that congress has not

passed an actual budget since trump took the oval office. julia: there are those to look andhis from both sides there is no bipartisan deal on the table. and the president, with his own actions and the whether you agree with them or not, they're so politically insensitive area he scorched the deal here. ultimately gets blamed for the ongoing shenanigans as far as the two different parties are concerned? >> that is certainly an important aspect of this whole political conversation. the president said that he will support whatever deal you come up with and not draw a redline, the following day, he drew up a red line. has been unpredictable on this issue. the politics of shutdowns is all about the blame game, as you pointed out. if the government were to shut down on friday at midnight, it would be the first time in the

modern era of budgeting, dating back to the 1970's, that a party that controls the house, the senate, and the white house, were to shutdown its own government. it has never happened. the plane shutdown usually goes to the party that is in control, and democrats are in the minority right now. been a filibuster power, and i could be the reason that could complicate the blame game, but democrats are facing pressure from their base to stand this time after caving on the last -- many times in pursuit of a deal down the road. julia: that makes sense. thank you for that. rising as they beat estimates. julie hyman has the details. a lot to is spreading the chipmakers themselves. asml was the tender here that sparked the gates that we are seeing. the equipment maker be

projections in the first quarter. i love this quote from an analyst in europe, saying it was a ridiculously strong fourth-quarter for asml. he said the semi conductor is still in rude health. take away from this is that we are still in the midst of this cycle. julia: super cycle. julie: if you look at the semi conductor index, it is a new intraday record. not quite getting there until today. to bloomberg intelligence and covers the check -- and they are a driver in this. 50% of asml machines -- the demand was coming from memory area that is a shift, of new orders of 50%. the new cycles started in mid-2016. they never thought it would come

to an end, or wayne. judging from the latest report, that doesn't appear to be happening. asml --o what extent is they're all rallying. julie: it seems to be applied to all of the chip industry. they have an extensive machine called the extreme violet photography systems, or euv. even if other companies have the same type of machine, because it is memory fueling that the mac, they also make memory machines, then one can extrapolate there were be a demand for all of it here. that is why we are saying -- seeing a lift. julia: all the buzzwords as well. next quarter. scarlet: julie hyman, thank you so much.

a silicon valley startup to keep their employees happy. will it work? will have that story next. this is bloomberg. ♪

scarlet: what you mess is the did you miss? " with us now, this not the first time we have heard of financial wall street type firms offering vacations -- unlimited vacations their employees. start companies do that in silicon valley. how likely is it that people are going to follow through on this? >> very unlikely. i think it is one of those great things on paper that sound

great, but i think. -- here pressure makes employees not do it. your bosses legation time, and see how much occasion time they take. so there is a lot of here sure.ure -- peer pres here, we're talking about it from trying to appeal to younger, potential employees. exactly. blackrock sees itself as a technology firm, and are going to and trying to make a case people in silicon valley, scientists, engineers, trying to make this case that you should come to us. we are a forward-looking company. of one of the benefits you have to have in your array of things. this is not ay substitute for performance.

then you can justify taking some time off in bali. [laughter] otherwise, get down, and get your work. scarlet: what have you heard about firms that offer this perk? have young people come on and joined the firm? >> the evidence now is that it helps retain folks. at some level, it might make you think less about leaving. but it is the type of thing that makes you potentially go into a company. has freear the company lunch, a gym on-site, a possible court, ping-pong, and a limited time off -- that is an advantage. because pay these days, it is very competitive, but the benefits are the things that can get you in the door. it is also a way to avoid the wage increases as well. becky so much.

-- thank you so much. points -- than 300 record highs for all three indexes. this is bloomberg. ♪

♪ [applause] ♪

julia: stocks at a record high, the dow closing above 26,000 for the first time. scarlet: i am scarlet fu. joe weisenthal is on assignment. julia: we welcome you to closing bell coverage. scarlet: let's begin with market minutes. u.s. stocks rising the most in four months. companies continue to celebrate the corporate tax cut. you can see the results. , 323 point gain from the dow record highs. strong bounce back from the softness in the session yesterday. scarlet: that was just a pause. let's look at individual news.

reason stocks continue to power through. billion inpay $30 repatriation tax and is planning $30 billion of capex. it will create jobs in the united states and is planning $10 billion of investment in data centers. good news for companies looking to use the cash they have held in treasuries and corporate bonds thatthe -- in they could not bring back without a huge tax bill. 7%, shrinking lineup, shifting to higher-margin models. the ceo warned adjusted profit , and aall this year

general electric extending its decline from yesterday. some disappointing results and the fact it will take another after-tax charge of $6.2 billion and setting aside more money to deal with legacy insurance assets. they are still obligated to pay. julia: plenty of challenges ahead. market, china treasury holdings falling to the lowest level since july. this is the november reading. $1.18 trillion in november. japan's treasury holdings falling $9.9 billion to just under $1 trillion, so some softness there. flattening to fresh multiyear lows under 44 was theints. where

steepening everyone was talking about? we continue to see the flattening of the curve. let's take a deep dive into the bloomberg. this is chart 7826. a look at emerging markets. this is the premium of turkeys on dollar yields, now at the highest since march. when jacob zuma fired his minister and sparked a downgrade , the move to replace zuma has improved. i thought that was an interesting chart to take a look at. right, let's take a look at currency land, the canadian the bankmbling up to of canada hiked rates 25 basis points. the bank of canada expressing

caution over the rate of future hikes while delivering that rate increase. needagain, reiterating the there. -dollar lower income is around that three-year high. two ecb board members adding to the course about the strength of the euro. sterling, hire .y .4% investors have not been this optimistic on the pound since voters voted to leave the eu. on a softer brexit is probably spurring sterling as well.

julia: scarlet: oil back to a three-year high. wti falling for the first time in six sessions. the trend. to opec showing determination to curb production. compliance by non-opec members is encouraging. producers will be meeting this weekend. there is no plan to discuss an exit strategy. gold and silver higher, but then turned south. gold was rising because bitcoin was down. bitcoin was seen as an alternative to gold. they move in opposition. both are down. , higherm pushing ahead

by almost 2%. that is a record high. those are today's market minutes. "what'd you miss?" the global economy is in above trend global growth and gently but our nextion, guest has three key reasons 2018 could be the year that the economy tops out. thank you so much for joining us today. startsee key reasons, it with the fiscal stimulus in the united states. it comes at an in opportune time when the u.s. economy has been doing well and the last thing it needs now is a shot in the arm. >> that's right. usually tax cuts are a good thing. the timing is important. we are in the ninth year of an economic expansion. late cycle and now

we get this fiscal stimulus, so it raises the risk of an overheating. that has not been a problem so far this expansion. if anything, inflation has been unemploymentwith near 4% and fiscal stimulus a 3%g, growth on trajectory in the second half of last year, there is the risk of an inflation overshoot this the riskch increases of monetary overkill that could undo the economic expansion. think when do we apple says we will be using the cash we have been holding overseas for capital investment and will hire more people. that should be a good thing not a concerning thing am a we risk overheating. capital investment in the united states is a great thing. >> that is absolutely right.

much ise how incremental capital investment over and above what apple was already planning. i don't know that and have not seen details that give us more clarity. companies like apple and other large technology companies are big savers. they make huge profits and don't invest in traditional capex. they invest in people, ideas, and their brand, but they are still hoarding cash. not ack of cash was reason why these companies have not invested in the past. in the new economy, you don't need that much capex anymore, so they have become net providers of saving to the capital market and one of the reasons why interest rates are still so low. scarlet: it brings to mind whether the repatriated cash than inmuch other

flight asset prices further. the risk that inflation could move higher past that 2% threshold is a nether risk that you cite. >> that is correct. we are at a stage where the unemployment rate is very low. wentast time unemployment below 4% was in the late 1960's. that is when inflation ofelerated a lot and a time fiscal stimulus for different reasons back then in the 1960's. wages could pick up and the flat phillips curve could actually bend upwards. another reason is that commodity prices are rising and the dollar has been weakening and we are seeing globally synchronized growth with slack in other labor markets eroding, so this could be the year where inflation surprises on the upside for the first time in this expansion. the risk is the fed is

behind the curve and has to tighten more quickly. they have already tightened and financial conditions are still incredibly loose. is there risk that you suddenly get a pickup and financial conditions or significant tightening in financial conditions match with the fed behind the curve and does that have an effect on asset prices? is that the risk? >> that is clearly the risk. the fed has been tightening and removing some of the stimulus, but still expansionary. rates are below the neutral level. if the fed keeps hiking rates, say by three times this year -- he is gone. we have lost him. julia: we will come back because i want to understand what this means for asset prices. back.l try to get him

we will now take a quick break. from new york, this is bloomberg. ♪ bloomberg. ♪

jimepublican congressman jordan says a short-term spending bill to avoid a federal government shutdown should enclose an increase in defense funding. congressman jordan said bad deal onant a immigration included in the spending deal, but that national defense should be the priority." let's hold the line on everything else. if the democrats want to shut

down government take a state don't want to pay our troops, i think that is what the election was about and what we were elected to do and what i support. hecongressman jordan says does not think there are enough votes to pass the current proposal, though the white house has released support for the stopgap plan. steve bannon has agreed to meet with robert mueller's team this month. prosecutors will interview abandoned instead of having him testify before a grand jury. assert does not plan to executive privilege in that meeting. note -- steve bannon does land to assert executive privilege in that meeting. in an interview with reuters, president trump says russia is filling in the capsule of by the chinese in restricting oil and coal supplies to pyongyang. he says north korea is getting closer every day to being able

to deliver a long-range missile to the nine it states. have agreed to form a unified olympic team and have their appellees parade together for the first time in 11 years at the opening ceremony at the next month -- at next month's winter olympics. thatistry told reporters north korea will send a cheerleading squad to the games and that south and north korean athletes in the squad will cheer together. he added that north korea will send an advance team to the south before the games to check the olympic facilities. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am mark crumpton. julia: "what'd you miss?" the economyyear could top out according to pimco.

if so, how should investors start preparing and what are the key risks. from with us is our guest newport beach, california. great to have you back. we were talking about the risks to the goldilocks environment we are seeing for the united states , but actually more broadly with solid growth and relatively low inflation. should investors position themselves as we pushed into 2018? rally and seen a big markets are going higher and the but this is now a time for caution and prudence. we think first of all you need some exposure to rising inflation, so we think ring inflation-linked in bonds makes sense. we also have reduced our exposure to corporate credit, comparedrly high beta

to the equity market because we worry about a coming correction. we would rather be overweight housing-related assets like mortgage backed securities, they look a good to us and relatively defensive. if you want to take risk, it might be better to do this in selective emerging markets, so we like a basket of high-yielding emerging-market currencies. in the near term, there is the wek of rate increases, so would be defensively positioned on duration looking for further increases in bond yields. 2018 is the year we see inflation pick up in a meaningful way. i feel like investors have heard that many times in recent years. are they ready for that and are they convince 2018 could mark that turning point? is probably a time when

investors are at least concerned about inflation. expectations are adaptive in the sense that if inflation stays low for a long time, people expect it to stay low, so i don't hear a lot of concern meut inflation, which makes concerned. it tells me investors are not prepared for an inflation surprise, and that is when you should prepare for it. scarlet: what is the level of equitiesissing out in rallies and other risky assets? >> there is not much fear. for many years, we were climbing this wall of worry. people were always worried and there is some shock that came along.

now the fear is gone and i think that is the time when you have to start to worry because most investors are now pretty fully invested and that means they will want to get out if the market starts to correct, and that will exacerbate the downdraft. the fact that the fear is gone is the main reason why we should be worried. everyone heading for the exits at the same time. what currencies are in that basket where you see opportunity? mexico, brazil, there are a lot of risks in 2018, so what are you recommending specifically? a basket offocus on high-yielding currencies, not low yielding asian currencies. secondly, there are a lot of idiosyncratic risks in emerging markets, politics first and foremost, but that is the reason

why we prefer a very broad basket that includes 5-7 currencies. we would include the brazilian riel, the mexican peso. you could throw in the turkish lira. there is a lot of political risk in turkey, but by you wishing for the currency is compelling. throw in the indonesian rupiah and the south african rand, so it has to be a broad basket because there are idiosyncratic risks in some of those countries, but these may often cancel each other out. that is the argument for the basket rather than 1-2 currencies. julia: diversification simple. great to chat to you. thank you for joining us. scarlet: some breaking news, alcoa reporting results. this used to mark the beginning of earnings season. is no longer in the dow

industrials and banks have moved their reports earlier. the share price, the stock down the fourths and quarter sales, adjusted eps, and adjusted ebitda. versus $1.20. a lot of questions, not just alcoa, but any company reporting, on what the tax law means or the bottom line. alcoa is taking a charge of $22 .illion in tax provisions it does not see any reform provisions impact on 2018. we are waiting to hear what kind of chance it -- plans it may make with regard to capital buybacks, dividends, maybe even spending on equipment, but no word yet. likinginvestors not

those results, down more than 5%. coming up, bitcoin has been sliding since december. is the end of the ride in sight? we had three charts you cannot miss. this is bloomberg. ♪

scarlet: it is time for our where segment charts we look at top charts and functions. >> with me is the chief market technician at himkm. another day of more record highs. what do your studies around the internals tell you? >> medium and long-term trends are great.

market internals are robust. of stocks percentage that hit a 52-week high on any given day. get such anu extreme reading that it is almost too good. >> is that where we are? >> that is what happened last friday. we had 33% on friday, the highest since may 2013. we have only seen 10 days since 1990 with 30% or more of stocks hitting 52-week highs. is downs later, the s&p nine of 10 instances. that tells you you have been in is aong uptrend and this last gasp exhaustion move that sets up for retracement. >> let's put that together with the 200 day moving average. does that support your first chart? >> yes.

it is about 12% above right now. the highest reading since may 2013. there are a lot of analogies to that. 2013 was a strong year that finish well, but when you hit this extreme exhaustion point in make, you saw a retracement, and that is the setup we could have here now. nothing too bad, just a little consolidation. has not had too much of an influence on stocks. 7824, to show this chart an uptrend. to that uptrend, and do you think that support holds or that area of congestion that has roque into the downside moves down to 1000? >> the moves in the last week or so feel pretty dramatic if you watch intraday charts, but you

can see it is a pull back to its uptrend. we are the most oversold we have been. the benefit still goes to the buyers. it is down 50% off their highs. that triggersea correction, so it could mark an entry point. >> when do you think it could go to the sellers if it were to drop back down? >> the difference that would make this different issue don't see that quick snap back. withoutme we call back much progress on the upside, that would be a change in character. >> you heard it here. julia: thank you. coming up, bank of canada's governor talks about the decision to raise interest rates and the impact of nafta negotiations. from new york, 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.

the is senator jeff flake says president trump is in bolding authoritarian leaders around the world by dismissing media coverage of his administration as fake news. in a speech today, flake urged his colleagues to stop supporting what he calls "these attacks on the truth." "enemy of the people" is how the united states called the free press in 2017. mr. president, it is a testament to the condition of our democracy that our own president uses words infamously smoke and

-- as spoken by joseph stalin to describe his enemies. rona mcdaniel responded to senator flake on social media, tweeting the president has every right to push back against the press and that "comparing the leader of the free world to murderous dictators is absurd. you have gone too far." syria's kurdish party called on to actsecurity council quickly to ensure the safety of the territories in the north after turkey's president ertl juan threaten to attack kurdish militias in the region which are allies -- president ertl juan threatened to attack kurdish militias in the region. the windows to use of opportunity in the coming months to strengthen the continents common currency. the portuguese finance minister travel to germany on his first official trip since taking over as head of the euro group.

>> the recent election cycle and the waves of new european government and major countries with a clear mandate to the monetary union. at the same time, the economic cycle is extremely favorable. mark: germany has given a mixed response so far to the idea of a eurozone finance minister. at a separate event, chancellor angela merkel says "the question is what the job actually is be a is." actually global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am mark crumpton. a recap oft's get today's market action, u.s. stocks soaring to record highs. helping, and of course signs that the tax overhaul will

lead to company spending more on something or buying back stocks. will: i'm hoping they avoid the shutdown. scarlet: "what'd you miss?" china's economy is poised for his first full year celebration since 2010. data out tomorrow at 3:00 will 3:00 a.m.conomy -- will show the economy expanded by 6.8% in 2017. out next to guest is betting big on the country. great to see you. i feel like when we talk about china's economic report, there is optimism already built into the gdp. can it surprise price investors to the downside

or upside? gdp, i'm not so sure, but the reality of china is spectacular. it is the gross story on the planet outside of technology. scarlet: qualified that for us. >> there is a shift going on. since the party congress, the direction is about quality rather than quantity, and the issue is about sustainability. i think many promising things will happen. will see is china will continue to grow at 5% or 6% for another decade. should investors be looking at this approaching getting involved at this stage? >> i am a long-term investor in china. it is 30% of my fund. wille next five years i have 50% of my fund in china. welli think is not

understood in places like new york is the anonymous amount of innovation happening in china. it is about a huge amount of creativity. insee that in the schools the united states, so human capital is an issue. large investment, a third of the unicorns are in china from ai to drones. julia: to what extent is your money invested in large textile -- tech a stock names versus smaller names? they look at the rally and alibaba and tencent. that is where the money flows. >> i think there are many opportunities. percent, about $4 billion in alibaba and tencent. there is a lot of smaller companies. the hotel industry is a

franchise model that has spectacular opportunities. there are many of those types of companies. scarlet: these are all publicly traded companies? >> private companies. scarlet: when you look at companies that have not listed, what opportunities are there for a foreign investor going in? >> it is largely foreign. china is a strange place in the sense that the greatest companies are not really chinese from an ownership perspective. tencent, most chinese companies are not available for investors. these private companies like , those companies are largely funded by foreign capital. julia: i want to talk to you about some risk factors for emerging markets. turkey, concerns about what is going on there.

i guess mexico would be the one for me and light of the headlines over nafta. so from mexico, what is more important, nafta, politics? >> the most pivotal thing, there are two issues here it one is our president and nafta, the sustainability of that. more approximately and more importantly is the presidential election. mexico is emblematic of many countries. china is one exception. you have a political circumstance that is no longer tenable. democracy and great inequality don't fit well together. america haslatin always had volatility and this election is pivotal. the candidate is a communist at heart. scarlet: do you avoid mexico completely or do you see pockets of opportunity? >> i invest in great companies.

i don't worry so much about domicile. andexico, i am concerned don't have a lot of capital relative to what i have had in the last decade. a shift left see in politics in mexico? it will have repercussions for the nine it states. there are some concerns about the mexican border wall in particular. is that enough to prevent the brinksmanship we are seeing right now and nafta negotiations? >> part of the issue in terms of the presidential contest is provocation by the united states. there is an anti-yankee feeling again. think it isould slightly merited, so it is a complicated circumstance. i think nafta is something that will play out over many years and there will be a lot of noise. so mexico and turkey is the other one. julia: two spots of caution.

we will talk more. the oppenheimer fund director of emerging markets. threats could see cloudy relations between the u.s. and our neighbors to the north. scarlet: the bank of canada governor talks about what else? nafta. this is bloomberg. ♪

julia: "what'd you miss?" the bank of canada announced it was raising the overnight lending rate to 1.25%. the bobbin are spoke with themberg canada partner -- bank governor spoke with bloomberg canada partner bnn. >> we began to scope out the

channels that might affect the economy, but as we got into the fall it became evident we needed .o take seriously the breakdown that registered with the people we are talking to in the field. then we read did our survey in december, which was published a week or so ago, and was very strong concern of theirs, so in effect we are trying to gauge the level of concern in companies. we are trying to calibrate that to how much judgment we insert to our outlook. it is not that they are putting off an investment or reconsidering whether it should be in canada or not, so we have to acknowledge that as a negative potential in our outlook. >> are you developing a plan to respond if talks suddenly fall apart and the deal is off? well, miss wilkins was pretty

clear about that in the opening statement. considered, we don't think we can pre-calculate how a change in nafta, whether a simple aggregation, what does it go to? wtobeauty of tariffs -- tariffs? it does not have a lot of they from a monetary standpoint. we believe it would be a net negative for the economy, but how large is not possible to say. i liken it to the oil price shock, where you knew exactly how much oil prices had fallen. you could talk to 25 companies and get a good fix on how they would respond. this would not be like that. for us it is understanding the chamness -- channels to monitor how things are evolving in those

channels, and then you will have a reading. what happens then issue can say in real time that policy needs to respond in this way or that way, so risk management is not something you can do in advance. >> would we be better off if we had something to in the uncertainty one way or the other -- end the uncertainty one way or the other? >> if it is a better result, i can't judge that, but there is no question the uncertainty is already playing a role. that i havedecide to expand today because my customers are clamoring and i am slow to deliver, so a lot of companies are overcapacity -- well, i have to expand today and i will invest in the united states to be on the safe side. that is not a decision you take

every year. it is a 5-10 year decision. there is a very permanent field to those kinds of effects. basically it would be nice if we knew now, but i don't know about the dynamics of the process. maybe we get a better deal if it it takes more time. >> we do know the economy has been doing well. is based on hike data we already happen things we know. rosyre making also very outlook and assumptions about the canadian and u.s. economies. when we add that up, explain why we are not more certain of future rate hikes today given how close to capacity we are? >> we are operating about at our potential. inflation is about at target.

snapshot, give you a it should be higher and any model should say that. the expense we have been through has actually depressed potential output. investment gets put on the back burner until the economy gets really going. investment has been a lagging feature of this outlook for quite some time. past 3-4 quarters have we seen good, healthy signs of investment. so that means our estimates are potentially influenced by the slow growth. get toy expansion we this stage of the cycle and now time to invest, so capacity goes up faster than what we have in our models. this time we think it could be a bigger affect. so we have to at least entertain

the possibility. to the extent that it occurs, that is a higher level of gdp forever, but if you are worried about inflation risks, you have it tendency to nick that process in the bud, and we are being careful not to do that. julia: that was that bank of canada governor with bnn. some breaking news crossing the bloomberg. thesalient information is enactment of the tax reform is believed to result in a one time deduction in net income tax liabilities. this is a reevaluation of those liabilities. they owed tax at $16.8 billion. it creates a bump in fourth-quarter earnings. there is no impact on the 2017 cash flows. eps is $4.10, a boost

to the full year 2017 eps, because of the change in the tax law. julia: in which case they get a positive bump in the fourth quarter. scarlet: still ahead, bitcoins plunged below $10,000. thisis weighing down on cryptocurrency? we will discuss. this is bloomberg. ♪

julia: "what'd you miss?" bitcoin tumbles below $10,000 today, bringing its loss to 50%. just scanning the price there.

the latest plunge brings trauma to the digital coin market that has lost a $300 billion in value since january 13. joining us to discuss now is our guest. talk us through the selloff and the bounce back. what is driving this? this particular selloff might have something to do with regulatory concerns throughout the world. big question about where exactly global regulators will come down on decentralized currencies. regulatorsuth korean have given some indication they would crack on cryptocurrency exchanges. the largests one of markets for bitcoin, that would be a big deal. oft is just one example these regulatory tremors we are starting to see with bitcoin and other cryptocurrencies. futures after bitcoin

were launched, people thought that was the sign to go all in on bitcoin. instead we have seen this wobbliness. we know bitcoin is popular in asia and greater china, south korea will also be closed for the new year. that giving people positive there will be less trading and activity as a result? >> that's right. and some of our bloomberg colleagues wrote a great story on how the lunar new year may affect the selloff. in china and other asian countries, you have the celebration of the lunar new year and some investors might want to cash out on their digital currency and use the actual cash to buy some gifts, for example. julia: we have been talking about the increase in demand for some of these up skewer other -- obscure other cryptocurrencies.

they are 10% to 23% in the last month. cboe looking at exploring contracts and other cryptocurrencies. are making, they this more mainstream. >> that's right. is exploring futures contracts in other cryptocurrencies, the idea being the demand won't stop. you might have futures launching on other cryptocurrencies as well. there are some really big ones that are widely known in traded like ripple and a theory him -- so you might see more contracts coming to mainstream financial markets in the future. has been taking cmelead on this with the

following up later. there is no indication they are following suit? >> we will have to see that later. wanted to show you a chart of the price performance of these other cryptocurrencies. these are the names we throw around a lot. these aren't the obscure ones we take almost a quarter of market share in the last month. >> you probably have investors wild ride bitcoin's and saying what else is out there in the digital currency world. julia: you have those within the industry raising questions about the rally we have seen and the value being suggested by prices. i think they may have to take a step back. scarlet: we should mention today saw the launch of two blockchain

, which uses the underlying technology, not necessarily investing in blockchain on its own, but companies involved with blockchain in some way, shape, or form. the manager of one expects to see the bitcoin etf's coming to market by the second quarter. don't have an etf based on bitcoin yet, but now that you have futures you have some example of a derivative based on the coin out there, so we are now waiting to see if the fcc will approve this product here it -- the sec will approve this product. perhaps this is all the more reason to be talking about the underlying technology and not the froth. scarlet: thank you for joining

us with that story. looking into other cryptocurrencies and futures contract. coming up, what you need to know to gear up for tomorrow's trading. this is bloomberg. ♪ this is bloomberg. ♪

scarlet: "what'd you miss?" the u.s. stocks resuming the

rally. all indices at record highs. 300 points higher for the dow. julia: apple putting money to work, potentially. scarlet: don't forget earnings. may be a government shutdown. maybe a government shutdown. morgan stanley reports fourth-quarter results. julia: china releases numbers for fourth-quarter gdp. scarlet: 3:00 p.m. beijing time. that does it. have a great evening. julia: this is bloomberg. ♪

-- >> are are watching bloomberg technology. general powell is close to becoming chairman of the federal bank.

powell'sapproved nomination. on the elizabeth warren voted against him. powell's nomination now goes to the senate. puerto rico is at risk of not getting loans because it's cash balances are too high. not provide will additional recovery until the territories funds below -- fall below a certain level. the because the government would run out of money in late october due to hurricane mary s economic toll. haiti has written removed -- has been removed from a list -- saying that haitians applying highhese as have shown levels of fraud and abuse, and a tendency to overstate their visa. and rupert murdoch is said to be hospitalized after having a serious back injury. the