manus: good morning manus: from the city of london. this is "bloomberg daybreak: europe." anna: cashing out. its $38 billion tax bill stateside. manus: and the vanguard chairman warns investors as he sees a quiet period ahead. in asia.le less it's still overall lower than long-term historical averages. and china's growth spurts.

investors await gdp from the world second-biggest economy. will it accelerate for the first time since 2010? ♪ anna: welcome to the program. this is "bloomberg daybreak: europe." this thursday morning here in london and let's start with the overnight session over in asia. we've been going through the day , we were in positive territory just a couple of hours ago and now were down about .4% it would waiting for a did lose your data out of china. the growth story for the fourth quarter. industrial production and retail sales due out as well. a strong session in the united states yesterday, the dow closing at 26,000 for the first time. visit smoke and mirrors or earnings and growth?

one of the key questions the market will deal with as we head into tomorrow. the couple of things keeping the markets on edge at this age. -- this stage. we have a story that says some at the bank of japan think that at some point, talk of normalization will be needed. that's about as close as we can get to any change in policy at the boj at the moment that it had that kind of expectation. we put in bitcoin as well. we dipped below 10,000 in yesterday's session and the overng range expands $2600 18 hours. manus: vanguard has a warning sign. we will hear from vanguard shortly. gdp, thingsut the are potentially getting stronger and china. where are they going to part their money?

is where the discussion is. s share of then' treasury market hitting the lowest level since 2000, the lowest in 18 years. together they are about 36% of the u.s. treasury market. china still is the beast. it owns one third of the market. we talked about what they might do. will they continue to invest as heavily in the u.s. bond market? of course they are giving up defending the currency. to a certain extent the drop in terms of holding the treasuries is correlated slightly to the movement in the yuan. you can see a slight turn to the upside. japan has the lowest hoping in four years but there is another story about japan investors into u.s. treasuries as hedging costs are hitting the highest level since 2008.

here is the first word news with juliette saly. juliette: in the u.s., white sarahpress secretary sanders has had president will support the house leadership plan for temporary government funding ahead of tomorrow's shutdown deadline. that gives all lien some did -- paul ryan some additional clout. pressing ahead with a plan to avoid the shutdown by temporarily funding the government for four more weeks but shutting out a deal on immigration. restoringy's hopes of frosty relations with donald trump in davos next week look to be fading. according to people familiar with the matter, with anglo-american relations coming under strain, her team wanted to schedule a conversation between the two leaders during the world economic form. you said there is still a chance they will manage to meet for

brief conversation, though coordinating their diuresis proving extremely difficult. the bitcoin roller coaster start to 2018 has seymour moves, -- moves, there gyrations took the world's biggest digital currency across the trading range of more than $2600. its low point pushed past 50% but bitcoin is still up 1000% from a year ago. in japan, the small shift is taking place in internal discussions among policymakers the neednority raising to discuss policy normalization. they're set to agree the current stimulus program must continue in change for some time. some think the changes natural, given improvement in the economy. vanguard group chairman has raised concerns that the u.s.

equity market is becoming quite irrational and warned of the risk of wrath but cryptocurrency speak elation. one fun has $5 trillion in assets -- one find. bit of good news seems to be incorporated into the market price is right now. there is not a lot of room for bad news. 2007,e first time since we are looking at a situation where a balanced portfolio might outperform an overall equity portfolio over 10 years. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . we started to see weakness coming through in japan. look at the hang seng, also turning south after that fresh

record high yesterday. it's a volatile market, so are watching closely in the next two hours trade. we saw the australian sharemarket close-out fairly lacked. in techen a downturn stocks but indian banks on a tear, sending the insects to a nsex to asending the se record high. sales growth was downgraded to hold at china galaxy. but paying on insurance helping to lead the rally you're seeing in the chinese financial shares n has been powering the hang seng. today's record highs have been holding out a little bit of a dip in late trade today. anna: thank you, juliette saly in singapore.

this weekend marks president donald trump year in office. we look at his effect on the u.s. economy and job creation, marked by his -- most recently by the passage of the tax overhaul. delivering him his first major legislative win. manus: apple is the first major u.s. takes -- tech company -- it millionsg hundreds of back to the u.s.. spendple maker plans to rateser is senior fx strategist, welcome to the show. apple,st manifestation, jobs brought home, dollars brought home. it cannot get any better. are we still correct to rate

that lowly in the drive for the dollar? are,: i think we relatively speaking. when you look at the balance sheet of these big tech in terms ofost overseas cash holdings are already dominated in dollars. you think of your big tech companies, they've effectively had the same problem the pboc have had for the last five or six years. they've been cash rich and the only liquid assets they been able to buy have been u.s. treasuries. a lot of the assets are already denominated in dollars. it's probably positive for the dollar but i wouldn't give more credence than that. anna: look into that now, but that's the impact you see ahead on the dollar. terms of how many of the dollars there are, i've got a chart here underlining how the cash file a writ apple has grown and the overseas cash pile is a

substantial part of the cash holdings apple had. --t's interesting is the way president trump is pleased with what apple has decided to do. the pantry asian means there are no longer able to do further tax obligations -- repatriation .eans there no longer able to peter: no question that all. that was one of the big issues and that's why many these companies have been deferring their tax liabilities and building up huge cache files. anna: they did not know how much they would be taxed so they had to build up for reserve massive numbers will be less than a provision for. peter: if you look at the apple announcement about how much they're going to invest in the united states over the coming years, tim cook basically said we were going to do a lot of this anyway but the capitalists

are getting it done now. it gives the company certainty, and that's what they need. apple it's not just potentially building jobs, it's the manufacturers and the supply chain. that takes us back to bonuses. , whicheard from walmart takes us nicely to this chart that i have for you. u.s. consumers expectation for wage wrote rose in december to three-year high. this is not drawn a for the fed, isn't it? nirvana forhis is the fed. it's quite a syncopated move for the fed and the market protecting itself. peter: it is and it isn't. consumers are bad about forecasting inflation. you with works out for

a decent pay rise, but historically, consumers are not that good casting inflation. treasury yields have been increasing so i would not read too much into it at this stage. anna: where do you stand on how many hikes were going to get from the fed? this -- and evans, some want to wait for signs of inflation before committing to three or four hikes and the other peers the fed to be getting behind inflation. it's more of an art than a science. you find that this year and over the coming years, cpi may get to levels around 2% for the year. get there until 2019.

it would suggest we get probably to rate hikes this year with a risk of a third in september. i think talk of for rate hikes is just absurd, frankly. this is the political headwind that seems to fade in 2018. personally i'm struggling with this, but historical political ,olatility versus forecasted the u.s. looks more stable than china and other emerging markets, but it is riskier than developed nations including australia, canada, france, germany, italy, japan, and the u.k. with politics in the u.s. drive the dollar, or would it be the trade risk from trump that drives the dollar? peter: i think it would probably be the politics. last year when trump basically took power, little by little, we

found the legislative process and so on did not really do an awful lot manus:. 8.5% last year, the most since 2005. peter: it didn't do much for the dollar. apart from tax, he didn't get much done. at this stage, it's hard for me to see the dollar really performing all that well. many other central banks are normalizing policy. you have the bank of england raising rates and a few other banks doing so. anna: is a relative global growth that explains the dollar weakness? that is the solution. manus: we'll talk more about the bank of japan next. peter stays with us.

we are on digital radio in london area. up, a small but potentially important shift is said to be taking place among bank of japan policy makers. we'll discuss the latest thinking at the boj. that's next. brexit said to be off the agenda. the leaders are expected to discuss a raft of bilateral issues. we're live in paris for preview. this is bloomberg. ♪

london.t's 6:18 and stocks have taken a little bit of a breather. could have something to do with some at the bank of japan said to flank the need for further normalization? they seem to have taken a little

bit of pause for thought. anna: fourth-quarter gdp out of and retail shelves up -- retail sales out of china at the same time. french president emmanuel macron bringing asa may, noteworthy and controversial tapestry. manus: what does that say about how france and england got on a couple of centuries ago? morgan stanley will round off those earnings with goldman sachs on fixed income commodities and currency. that story in the banking area this morning. what is going to happen in terms of the tax position for that institution? let's get the business flash with juliette saly. apple has said it will return hundreds of billions of

overseas dollars to america. the iphone maker plans to pay about $38 billion in taxes on the money and spend tens of billions on domestic jobs manufacturing and data centers in the coming years. according to people familiar, apple told him issuing stock ace bonuses worth it when he $500 each following the new tax law. stock units will be included. barclays is cutting up to 100 senior staff in its investment bank as part of the division overhaul. the cuts will be evenly split .etween the u.s. and europe a bank official declined to comment. shell and bp have agreed to buy libyan crude, underscoring how the north african countries covering production and improving security are enticing some of the world's largest companies. shell will load its first cargo in days while bp has also reached an agreement for this

year. the shell spokesman was not immediately able to comment and a bp spokesman declined to do so. a standoff will last indefinitely, speaking sayingvely to bloomberg, the largest lender is moving on with expansion strategy. >> were operating our business as if the crisis will continue forever. first one or two months of the shock has already gone. our growth out of this crisis will continue forever. juliette: that is your bloomberg business flash. anna: a shift is said to be taking place among bank of japan

policy makers with the minority raising the need to eventually start discussing policy normalization. they agree the currency program must continue unchanged for some time according to people familiar with the talks at the central bank. peter kinsella is still with us. story made me smile, and i don't know why. some people at some point in time think that normalization will be needed? normalizationse is so far up that we cannot begin to think about it? peter: i think it's more of the latter than the former. normalization is still incredibly low. about start talking normalization in the current context, what you're saying is you will see some significant yen strength. , there is anmoment

enormous yen short in the market. additionally you have low volatility. if the boj were to come out of talk about policy normalization -- see the every time we yen pop up on speculation, is the market prime to jump on the language around the bond buying? you say that should not detract from the short position. outgoing boj member who raised the prospect a number of months ago, it's just too early. because inflation is so low in japan, at this stage, if they talk about normalization will or sleet, you will see appreciation and that will track inflation even lower. i'll give to much credence to the story at this stage. it's too early to talk about it. bank of japan officials

caution that the markets expectation for policy normalization has moved well ahead of their own. this brings me to bigger thought. you have the government cautioning the markets, pboc perhaps less defensive of the yuan and that ecb, a host of voices. wars,ct for currency 2018. i've asked for, i think we are stepping up the rhetoric and entering a paradigm of whether it will be currency. peter: you are not wrong. to a broad extent reflects a broader weak dollar. it's a reflection of the tax cycle. when he these asian exporting countries -- manus: it's about the speed of end that irkshe investors. peter: without question, you are

correct. question is whether they are prepared to back up the talk with action. most of them have signed up to the g20 communiqué to not intervene in the currency markets. so don't give it to much credence at this point. anna: and what reception the united states gets in the context of that. expectations, there are numbers out there and then we hear from the premiere in china talks about her number. do we just take his number and go with that one? peter: in that case i would go with his. abouticates a plan of 6.9%. the question is what we get over the remainder of this year. it is largely policy induced.

central bank and authorities are trying to get it to do leverage a bit. we did find this for our viewers, the holdings of japan and china in terms of their bonds in the u.s., the lowest in 18 years. china still owns one third of the bond market. they are stepping back from intervention. what is the risk here? peter: the risk is it falls even further. they are not passive managers, they will take of you. declinepart of the explained by china reducing its holdings. they taken the view that the next several months will be

difficult for the treasury market. manus: let's see if they do best a little bit more. .eter kinsella stays with us we will talk brexit, that is next. ♪

anna: this is "bloomberg daybreak: europe." it's 3:30 in the afternoon in tokyo. here in london, 6:30 in the morning. we see a little bit of movement in the yen, but not much. normalization on the cards there. let's check in on the markets. gains in the u.s. not translating to what's happening over in asia. overall a little

bit lower. it's a bit of a mix of red and when it comes to the equities. we look at what's happening in other parts of the market, let's start with the coin. stocks up 50% from the december high. it's been a concern as to whether the bubble is popping or if it's just a healthy correction. past 10,000 in the past 24 hours so. it has held its 100 day moving average since october 2015. one technical analyst saying and we drop below that, that's where you need to sell. the caveat with the coin is it is a new asset that doesn't -- something to watch in terms of technicals. i've been looking at the aussie dollar and how it is the most overbought in 10 years. even know we've seen a little bit of weakness with that data

coming through. and looking at oil, looking at another technical, the relative strength in dekes. above $64 a barrel but it has been above 17 for little while now, looking a little over balked according to this measure. brexit is in everything, that's a message of british prime minister theresa may. the leaders are expected to discuss a raft of lateral issues that have little to do with brexit, including the issue of migrant cap surround the port -- migrant camps around the port of calais. mrs. about four macron? -- what is this about macron? all about brexit, but because of brexit, accra knows he will have some leverage --

macron knows he will have some leverage around theresa may. what he wants to achieve during this visit is a new treaty, a new border treaty with the u.k., in order to solve the migrant situation in calais. a couple of days ago, as you see in these pictures, macron met with some migrants in calais. remember a year ago this massive, makeshift camp, home to more than 7000 migrants, was dismantled by the government. however, you still have several hundred migrants trying to cross the channel every night. a crime wants to -- emmanuel redo thents to agreement. it is unpopular for the french people. he promised to renegotiate it if he was elected president. i could mean british immigration

services will have to deal with some asylum application on british soil and set of french store oil -- french soil. cron once to increase spending and take on were spending too ease pressure on the french side. anna: so that's what emmanuel macron wants in terms of the refugee issues in calais. what does theresa may want to achieve from this, apart from -- whather hands on else does she want to achieve here? may theurse for theresa goal is very different. even though brexit is not on the official agenda, there will be some informal discussions about it. she knows she needs all the help she can get. she needs some support from

angela especially while merkel is busy putting the final touches on her coalition. wants toow -- macron show the good ties with britain. valuablean this tapestry that shows the norman conquest of england by william the conqueror, and at the moment it has been in france for nearly a millennium. that would be a very symbolic move ahead of brexit. manus: thank you very much, caroline. amazing,sella, it's that tapestry coming here. let's talk about something closer to home. the euro keeps rising in the voice is trying to cap that keep coming up.

closed andds to be everybody out there says the current policy is not sustainable. view from an interview yesterday. are we topping out on the euro? peter: no, i think it will continue rallying ready aggressively. couple of reasons. what it basically is, they do this now and again and they start the aggressive moves. the question is, are the ecb prepared to back up their words with actions? are they prepared to do anything in strengthening currency? the answer is no.

iny have intervened once, 2002. they did not intervene in the .uro-dollar when it was at 160 i cannot see why they would talk down the currency now. in relation toth what the ecb think it's going to do, they won't worry too much about the external. anna: i have some research saying recent euro strength think she help mario draghi paint his hawkish fantasies at next week's ecb meeting. the hawks would like to see a change in policy. they have never been a fan of quantitative easing. will they still push in that direction and say they don't mind if the euro goes higher? if you read the december minutes from the ecb, basically

pipeline wereis using is inconsistent with the data we're getting. have to change our forward guidance to prepare for a normalization of policy. the key to sequencing is not change. that means once we finished qe, rates will be on hold where they are or a considerable time. hike inook at a rate december of 2018, it's a little premature. to bring theying cable ison the leash, the strongest we've seen it since brexit. michael saunders is saying you'll need more rate hikes. you've come up with a wonderful every come if we have political risks in the labor government,

then what happens? peter: if we were to get a labor government, you will see a chunky selloff. if you look at what they are proposing in terms of labor policy, they're proposing lose monetary policy but a big expansion and fiscal spending. there talking about increasing fiscal spending on non-tradable's. it tends to lead to an aggressive appreciation of the real effective exchange rate. after the initial run on sterling, sterling could rally. anna: that's what happens if we get a labor government. if we stick with the one we have at the moment, it's like a phoenix, in keeping with what you were describing yesterday. what are your expectations for

the pound? catalyst?e next conversations that start later on this month around transition? peter: i've been on this program before and other strategists are saying you are crazy. sterling remains incredibly cheap in trade weighted terms. in that sense it's very cheap. it would take a lot for starting to become cheaper. the fair value in cable is probably around 1.55. is the worst-case scenarios on brexit have not re-manifested. phase two.toward it will be a negotiation, no question about that. the optics initially will be very difficult. the european side will be

hard-core terms of what their demands are. unicornll be some slaughtering at the beginning of the negotiation's. anna: very graphic. meer: basically it says to it will be for optics but they will eventually get great deal. anna: it's like a lot of these trade conversations around nafta were across the english channel. there's the opposite deal and where you start is not always where you end up. thank you very much, peter kinsella. if your bloomberg customer, you can watch the program using the tv function on the bloomberg. you canlong and influence a conversation. click on the button at the bottom of the screen.

sees assetsard under management approaching $5 billion in 2017. the chairman, bill mcnab, expects further growth this year driven by infiltration of emerging markets. he is concerned the u.s. equity market is becoming, in his words, irrational. he made the comments in a bloomberg exclusive interview in beijing. >> it's not coke and pepsi. we are 20% of the u.s. mutual fund market. our global basis, only a couple of percentage points of the overall arc it. i think there's quite a bit of opportunity for us to take that message. size is something we pay a lot of attention to and word-of-mouth and the loyalty of our clients is what has driven growth. we have many investors who just keep putting more with us over time.

just building relationships deeper and deeper. >> at what point does it become irrational? close in getting very the u.s.. the evaluation is very high. every bit of good news seems to be incorporated into the market prices right now. there's is not a lot of room for bad news. 2007,e first time since we are actually looking at the situation where a balanced portfolio might outperform an overall equity portfolio over 10 years. what we do know is, no one can predict what will happen in the next 12 months. i'm sure the equity market will continue to skyrocket for the next few months. --would expect the next deck decade to be modest on the u.s. side. a little less so in europe and

asia. but overall lower than long-term historical averages. >> how do you think the markets will digest the expected fed rate hikes? >> very carefully. i think they are built-in at this point. you have to worry about the exogenous factor that drives a pullback from the rate hikes or and acceleration of rate hikes. wages.ng to watch our you would see a pullback in the market and the stock market is assuming it will be very gradual. >> in terms of the tax cuts in the u.s., how are they starting to play out, how will they be spending that cash? >> there is a lot of debate going on right now. we've seen companies doing some hiring.

talking about putting more money back, some factory openings in the u.s. and so forth. i think corporations will be pretty thoughtful. this is the first time in many u.s. where i think domiciled firms feel like they are on equal footing globally from attacks standpoint. i think you will see more investment back in the states. i guess is you will see some potential investment that could drive productivity up, which will be great. >> what are your views on what were seeing in terms of cryptocurrencies? chainhink the block technology is one of the most exciting elements in technology. there is all kinds of potential uses of it and applications that we are just beginning to talk about. the cryptocurrency trading worries me a little bit. there is a lot of leverage and and an old investor

told the early in my career, if something seems too good to be true, it probably is. i don't think it is systemic but it is a strong idiosyncratic risk. bea: if something seems to too good to be true, it probably is, according to bill mcnab. u.s. conversation continues on bloomberg radio next. book,discuss the beige trump and his first year in office, and the looming government shutdown. up, apple says it will bring hundreds of billions of dollars back to the u.s. and pay $38 billion in taxes. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." ae dollar continues to make comeback after the selloff on martin luther king down monday. u.s. futures flat at the start of the u.s. trading day. the dow went over 26,000 for the first time. interesting to see where this particular company goes today, apple in the wake of the u.s. tax overhaul says it will bring hundreds of billions of dollars overseas back to the united states to pay $38 billion in taxes. it plans capital expenditures of around $30 billion over the next five years. , andll create 20,000 jobs in terms of apple, it has the largest cash reserves of any company in the u.s. $252 billion as of the end of september. president trump praised the announcement, saying great to

see apple getting through as result of that tax cuts. huge win for the american workers and for the usa. tim, good to see you this morning. to what extent is this a win? how massive a spending plan is this? $6 billion a year. compare that to what they are $10ently doing, around billion. campuse building the new and in today's announcement, they are going to go to another campus that will be a few million dollars there. they are saying $30 billion in the u.s.. i don't have the numbers of what they're spending outside, but inside the u.s., remember apple doesn't have its own factory. when the building a campus are retail, a lot of it is just

equipment they are buying on their own dime and putting it into the factory suppliers. most of the supply chain is outside of u.s. in asia. if the going to be putting more money into the u.s. and building into the u.s. come that could be a big win for some of the suppliers who don't have to pay that money themselves. is, they'rerick talking about making bonus payments to employees. islly what we got here expectation of a flood of companies bringing money back to the united states. made a great point, this is paying taxes on overseas money, but at the same time, the repatriation story bills. >> i would be cautious on how much money will be used to your companies to the u.s.

i anticipate about $20 billion max. $5 billion going toward u.s. manufacturers, companies like dow, corning, u.s. companies will benefit and that's good for u.s. companies, without a doubt. i don't think we will see this money sprouting an iphone s&p factory in the u.s. or anything like that there will be some companies interested in at least having a conversation with various governments on tax breaks in various subsidies. on the flipside, they don't necessarily want to be in the u.s.. nice,cturing for apple is but there's no one else really doing that in the u.s.. china and chain is in indonesia for a reason. there could be a downside to or companies in the u.s. set up, even denser getting subsidies. bank the qatari national

says it has absorb the shock of isolation and is moving on with its expansion strategy. the biggest bank by assets said it is on track to achieve its 2020 target. exclusiveoke in interview with yousef gamal el-din. >> there is no change in our strategy. we continue to look to become a leading bank by 2020. hong kong is looking to establish an operation there. we already open india. singapore becoming are asian of, offering all the products and services and expanding into islamic banking.

in 2020. focused no variation from the strategy. diversification is one of the issues is very important for us. what has compelled us to grow throughout the years and we will continue with diversification. >> would you say that the longer the strikes on, the more difficult it is for lenders like you to deal with? >> we are adjusting to the new norms. asare operating our business if this crisis will continue forever. us. business as usual for gone.ock is already we are operating our risk growth,nt, our funding, as of this crisis we will

continue forever. the qatar national bank ceo. manus: peter can sell it is with us this morning -- peter kinsella is with us is morning. what happens next in emerging markets? talked about inflation risk in emerging markets. it's grown a little bit higher. are starting to see cost push inflation in the end. is thek you have combination of this increase in inflation pressure but also much higher u.s. 10 year yields. for thoseious, nation currencies. anna: thank you very much,

peter. china'sp, fourth-quarter gdp, industrial and retail sales numbers. that's in just a few minutes. this is bloomberg. ♪

manus: good morning from bloomberg's new headquarters in the center of london. anna: these are today's top stories. manus: cashing out. apple says it will spend hundreds of billions overseas dollars back to the u.s. and pay a $38 billion bill stateside. stock slowdown. vanguard's investor -- chairman warns investors as he sees a quiet time ahead. we -- less so in europe and us so in asia. than still overall lower

current historical averages. china's growth spurt. investors await gdp from the world's second-biggest economy. will the full-year reading accelerate for the first time since 2010? welcome to daybreak. it is a beat for china. the market has penciled in 6.7%. foril sales, a mess december sales. the market penciled in 10 point 2%. you are seeing a little bit of a waiver in terms of sales data for the year on year. in terms of the growth at 6.8%, that comes in ahead of estimates on the quarter. to 1.6% for the fourth quarter. 6.8 would give us an annual --

annualized first fully year growth since 2010. the retail sales will be something that irks the market slightly. 57 cities have delivered price rises in this morning, the first in six months. the rest of the data industrial output rises by .52% month on month versus november of .4%. thecomposition rises -- shanghai composite rises. we will see how markets are responding. you have a growth number that beats on the quarter -- on the year. in terms of the retail sales industrial reduction 6.2% year on year ahead of the annual estimates of 6.1 percent. next asset investment, this is important in the rebalancing story for xi. 7.2% for fixed investment. the market penciled in 7.1%. that is the state of play on

those and you have a little bit of breaking news corporate side. anna: some breaking news coming through, a breakdown of the different is this is, sales in the first quarter up by 7%. the estimate was an increase of 10%. first quarter primark sales -- that was primark's sales. this is not a constant currencies level of by 9%. estimate was 11%. they are light but not changing their outlook. maybe that overrides things. the outlook for the group is unchanged. profit down rater than previously. they -- profit is down greater than previously. we will see how that sits along with the outlook for the group changed. that is where we are in the corporate side breaking down the china data and breaking down corporate data. let's talk about where we are on the markets. those look at all

products. let's talk about futures. we have a nice tailwind. the fastest growth since 2010. that will add to the equity market story. you look at some of the performances in the u.s. and vanguard's mr. mcnabb, he is saying the markets will skyrocket. europe and asia will do a little .it better we have equity markets are rising. apple is repacked rating dollars. -- repatriating dollars. you saw the numbers come across the bloomberg. we have equity markets are rising. apple is repacked rating dollars. you will see semiconductors and tech a little bit more in focus today. apple and the bank of japan story is going to add into this. there could be a shift. otherwise -- there may be a shift in the discussion. question of whether it is one or some. important as we

acknowledged in the conversation last hour. nerve as we go through the session. we are unchanged compared to where we were. more positive a few hours ago in the asian session. will we see a shutdown by -- averted by congress? when think the markets are focused on. the u.s. was strong so the dow closed above the 26,000 level for the first time. dollar-yen pretty unchanged. talked us through the boj story. that is no kind of move for decline. dropping below 10,000. that is gargantuan. anna: there is faulty will -- volatility somewhere. manus: if you want to follow the

analytics of the china data you can go to your bloomberg. there is a t live at the moment. spiking on the stronger data. the whole team are there. chinese stocks are not reacting. you have a full breakdown. tliv . o.a.t.'s are down, treasuries a shade lower. equity markets are trying to find the be. one thing to know is that china and japan, their holdings of u.s. treasuries are declining. this is where we started the conversation today. it is not a rocking story. just the fact that they are reducing their holdings or their holdings are hitting the low -- they were reduced in december and that is continuing. bonds are lower and equity markets are higher. what does it mean for the inflationary impulse around the world and the quote, what does that mean for inflation in

europe and in the u.s.? let's get your first word news. juliette saly is standing by. juliette: in the u.s., white house press it very sarah sanders said president trump will support the plan for temporary government funding ahead of the deadline. that gives paul ryan some political clout as he tries to bring reluctant conservatives on board. house republicans leaders are pressing ahead with a plan to avoid a shutdown by temporarily funding the government for four more weeks but shutting out democrats in their -- and their demands for a deal on immigration. bitcoins roller coaster start to 2018 has seen more wild moves over the last 24 hours. plunging below $10,000 for the first time in six weeks before bouncing and resuming its side. the gyrations took the world's biggest digital currency across a trading range of $2600. it's low point pushed a route past 50% but bit come -- bitcoin is up 1000% from a year ago.

in japan a small shift is taking place in internal discussions among boj policymakers with a minority raising the need to start discussing policy normalization. current stimulus program must continue unchanged for some time. according to people familiar with talks of the central bank, some of them think the change is natural given the improvements in the economy. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . china is closing out the session . closing on the release of the data. .51can see we saw a gain of percent. have a look at the turnaround in the hong kong hang seng up i .45% read when we spoke an hour ago it was in the red but also ae aussie dollar is getting boost. japan closed lower on the back of what we had from those boj

channels. the market close fairly flat. a little bit more of a mixed picture on the regional index retreating from the record highs. you had seen taiwan semiconductor up a 2.7%. the fourth quarter number was a base. indian banks lifting the same sex to a record high on the prospect of more investment in run private and government banks and we saw the luxury retailers and hong kong come under pressure. both under pressure down by 3%. it is trying to diversify to get some younger customers as well. thanks very much, juliette saly in singapore. breaking news for a u.k. corporate that has ux exposure -- u.s. exposure. telling us that their u.s. earnings tax rate will be 26% down from 40%. they are going to see their 2017

earnings benefit from a one-off credit. watch out for that. of thethe context collapse we will see how that performs. manus: we broke gdp numbers and the six investors. the banner headline is this is a good full year number. what should we be focused on on the investment side of the headline gdp? >> it is notable that this is a higher number. many economists had estimated at the beginning of 2017 a 6.9% number. graduallyd moves even around the margins to decrease the amount of credit expansion into the system. you have had a conservative effort from regulators, a crackdown on financial risk. we still have the strong growth picture.

diving below the numbers we get the likes of retail sales come in softer. a little bit above industrial production a little bit stronger. a couple of notable on the negatives we should bear in mind. we had a couple of weeks were we in newumber of data stories coming out from the provinces in china. that raises questions about the validity of some of this data. you have the questions around the continuing pace of this credit crackdown in china. and what that will mean for 2018 growth. most think it will start down the estimates for growth in 2018 around 6.4%. you have questions about the monetary policy scenario and how the pboc reacts. the base case is not that we get a benchmark rate rise in 2018, that is done to be questioned. the focus seems to be on moving the rates up in the money market. anna: thank you.

will be 6.9% according to the premier. thanks for giving us the latest on the chinese data. our guest is with us in the studio. start with china. it is good when we see growth coming in better than was estimated out of china. this does open up more opportunities to deliver the economy. is that the subtext on growth? right when you said about the predictability of figures. no one will be surprised by that number. and certainly i think it is becoming the consensus that growth has stabilized in china. and certainly that is the stock -- the view the stock market is taking. last year was a banner year for chinese equities. that is what concerns me. now. built into the price

what concerns me is 2018 might be a more difficult year, a more volatile year. concerns have not gone away. there is a squeeze on pollution that is slowing down growth and we have not talked about the potential for trade wars with the u.s. 2018 looks like a slightly more difficult year than 2017 was. trade you ended with wars, something that we have touched on with a number of guests. how real of risk is that and does that cause you to reduce any kind of exposure? guest: it was the dog that did not work in 2017. if you look at the campaign trump, herom donald was going to declare china currency manipulator. it did not happen. not heare story we did about in 2017. xi saying the phone to he was disappointed by the trade figures. aluminum and

imbalances are beginning to worry the u.s.. maybe that is a story that comes back in 2018. in terms of reducing exposure, you cannot generalize too much about the chinese market. there are huge differentials between the fast growth, technology stocks, the alibabas, the stockscents, listed in hong kong and america had a fantastic year. up 70% since trump's inauguration. is how you in china but in the a-shares. anna: one of your colleagues said the rally will sustain until 2018 but mid-caps may be volatile until the 2017 run. where are with -- where are we with the opening of china. how happy are they with access to the chinese market or

financial services, their ability to own businesses. how do you see that developing and 2018? thet: it is heading in right direction. overseas investors have the ability to invest directly in the chinese market. we have the a-shares being introduced into the msc industries. that is heading in the right direction. manus: one of the things coming through on the tliv discussion is focusing in on consumption. 2017.58.8% to china in if we look at the breakdown of vacationt his autos, appliances, the consumption side is where we want to see and build growth. is that where we focus more on the success because we know he is trying to rebalance the economy and you see a squeeze on that side. guest: this rebalancing is taking place over time.

it is not going to happen overnight. that is why we saw the fixed asset investment figures were still pretty high. that is not going to disappear. it will be worrying if it did disappear overnight. but clearly, the transition to a more consumption-led economy is where the future is and as an investor, that is where we are finding the most interesting opportunities in that transition. manus: property investments rising by 7%. a little bit more to get through. for our question director. he stays with us. bank'se on the central rate hikes. ♪

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minutes to go until the start of trading day. anna: let's get a check on the markets. the asian session lost its nerve as we were going through but where does that leave us on the european equity market? it looks to be a little bit higher. factoring in a strengthen u.s. stocks by .4 of 1%. 26,000 on the dow. data, 6.8% innese the fourth quarter. the estimate was 6.7%. the strongest growth in a number of years. that is a good story. a lovely line from the daily profit. highs.ns setting new the pundits are raising estimates on earnings. anna: let's get a bloomberg

business flash. here's juliette saly. juliette: apple has said it will return hundreds of billions of overseas dollars to america. the iphone maker plans to pay $38 billion in taxes on the money and spend tens of billions on domestic jobs. the manufacturing and data centers in the coming years. according to people familiar, apple told employees it is issuing start -- stock-based bonuses with $2000 each. ad cutting senior staff as division overhaul. according to people familiar, the cuts will be evenly spaced. a bank official declined to comment. the world's largest asset manager blackrock's offering staff unlimited time off. the company wants to provide a benefit that is considered appealing to younger workers used more casual and flexible environments. the ceo is trying to transform it into a more technology

focused firm. the head of hr said the latest move should help it compete against silicon valley rivals. that is your bloomberg business flash. any ideas about the holiday. let's talk about the federal reserve survey that showed a most all of the districts reported a modest to moderate gains in economic activity in the beginning of 2018. it is the beige book. it appears to be supportive of the feds outlook which forecast 2.5% and three interest rate site -- hikes. rather beige. was in oneomebody write that of our reports. a little bit beige bit -- but here we are. apple repatriating dollars. on his is to come. walmart giving out money. am having a warm feeling.

these kind of growth numbers, could they rise more aggressively on the back of this tax story? how much does tax shifting the growth down? it is touching down. guest: it does shift the growth and that is the concern. fear is it throws fuel on a smoldering fire. you add in the tax cuts and that is the trigger for excessive growth and inflation. that leads to more interest-rate rises then we are expecting. we were expecting three but maybe we get more if the tax cuts trigger high growth. anna: i concerned about the levels we are seeing inequities in the u.s.? 26,000 on the dow for the first time. the bloomberg profit talks about is it smoke and mirrors or earnings and for once it is about earnings and growth. you look at the

earnings expectations it is a 10% rise. that is a 30 healthy rate of growth. in needs to be a healthy rate when markets are valued as they are at the moment. our base case is that this [inaudible] are killed byts interest rates. if the fed only raises interest rates three times this year, that is expected, that if it goes more than that, it is a bit more worrying. we have not had a correction in the market for over a year. not even a 5% correction. we should expect more volatility this year. bull: you used the line markets, rallies do not die of old age, they die of interest rates. looking at the dots projection, this is where the debate comes in about what is the new

terminal rate for interest rates in the u.s. 2.5% give or take, maybe three. the u.s.oing to knock growth rate if we get to 2.5%? tom: i do not think it will and that is the point. rates stayinterest on their currently expected trajectories, i do not see a problem for equity markets at the moment. we may have a bit of a correction. i do not think that leads to a bear market. to expect a bear market, you doe to expect a session, i not know if that will happen in the near future. you have to expect interest rates to rise significantly more than we currently expect. our base case is that the equity market grind higher. suggested last night that he had fears the fed is getting a bit behind the curve on the inflation story. you're not concerned about all

the tax cutting and stimulus, what that will do for inflation in the u.s. if you're sticking with the base case. tom cole and it remains to be seen if the fed is behind the curve until it is too late. that is the problem. cutsombination of the tax with an economy which is already in pretty good shape is potentially dangerous. manus: headwinds will fade in 2018. what is the biggest risk to the american dream in 2018 and 20 seconds? politicalnot sure the risks will fade. in america. in europe, they are fading but with the midterms coming up, political risk will return to be an issue in markets this year. anna: thank you so much for your time this morning. tom stephenson, investment director at fidelity. we will continue this on bloomberg radio. you can join the radio team on

dav digital radio or on your digital device. the story.a is retail sales missed and the headline growth will please the market. there is london, beautiful. ♪

guy: welcome to bloomberg markets. this is the bloomberg open. i am guy johnson alongside matt miller in berlin. cash trade 30 minutes away. ♪ guy: apple's cash back. it will pay a $38 billion tax bill as it repatriate hundreds of aliens of dollars. with the bulk of offshore money held by u.s. companies held in treasuries, it is the bond market -- is the bond market going