releasing a memo that could cut the probe. it reportedly happened as the president was traveling to davos. mr. trump was said to have erected in anger after learning stephen boyd warned it would be extraordinarily reckless to about the justice department related to the investigation. any potential u.k. trade deals negotiating during the 21-month brexit transition period would be subject to eu approval. michelle barnier made that clear in a conference with eu ministers today. she also defended the plan to have a brexit deal finalized by october. this is a major historic treaty, and it may take time for member state parliaments. it might take time for the bishop parliament -- ernest .

i want to make sure we have that time, because we have to have that time period available. we cannot go to close to the end of the year. it does not matter if we are passed by a week or so but we wanted by the end of october. mark: david davis pushed back against the october deadline. he wants the deal finalized over the last three months of the year. the you will have no say during the transition period. four months after hurricane maria struck puerto rico officials say thousands more are still living in hotels. reimbursements from feeema have begun to run out, and many say they cannot afford temporary housing without assistance. maria completely destroyed more than 70,000 homes and damaged 300,000 more. the agency says the program will end march 20. in galveston, texas, officials say nearly 800 families remain in hotels five months

after hurricane harvey destroyed or damaged their homes. floodwaters that have reached a peak in paris are threatening towns downstream along the seine river. heavy rain has swollen the river and its tributaries, forcing road closures and causing damage in more than 200 pounds. water levels are expect -- twowns. water levels are expected to stay high for days or even weeks. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. crumpton, this is bloomberg. ♪ julia: live from bloomberg's world headquarters in new york, i am julia chatterly. scarlet: i am scarlet fu. joe: and i am joe weisenthal. julia: equities are lower, bond yields are higher. joe: the question is, what'd you

miss? scarlet: the 10 year treasury getting out so quickly because i am so excited. how did the market hit the tipping point? investors drink it up. pepper-snapple, creating a beverage giant. extend the plunge after allegations that steve when sexually harassed women. posting the worst session since 2009. . julia: what'd you miss? u.s. treasuries extending their selloffs taking yields to a three-year high all coming ahead of the major week of data and policy announcements this week. we are here with the chief u.s. rate strategist for bloomberg intelligence. he joins us from princeton air. great to have you with us. point at a tipping number of big bond investors -- and a number of big bond investors have been saying yes. what do you think of it? >> technically speaking, there

is not a lot of lines on charts that show there is anywhere to stop. i think what is more interesting about this than just the 270 on the 10-year yield is the fact that the curves continue to steepen. we have not really done anything today. this is not because we have expectations of the fed continuing to hike, it is more technical than that of people getting out of risk and using the 10-year treasury and related products to do that. julia: makes sense. joe: you have been mentioning the fact there are no lines on chartier that would necessarily support treasuries. when you look forward -- charts that would necessarily support treasuries. when you look forward, what is more important? that we are breaking trends are the fundamental catalyst that may be causing people to sell expectations about the economy, the fed, inflation, and so on? ira: ultimately, the fundamentals won the ruling and part of the reason is a little

bit of optimism on the economy itself in the idea that the fed will not necessarily destroy the economy. lessre pricing out a little odds of the policy mistake by the fed, which is a reason why you see the curve steepening. i think some of this is technical. the consensus has been we will flatten the two cents curve and get to zero at some point, and that is not happening. scarlet: good things to keep in mind. speaking of the fed, the meeting this wednesday is supposed to be a nonevent. that is what most people have been anticipating. yet, goldman sachs and others have mentioned it could be slightly hawkish or there could be slightly hawkish rewording of language when regards -- with regards to the inflation assessment. had you see this playing out on the treasury market? -- how do you see this playing out on the treasury market? ira: i think if it is hawkish, you will likely see the curve flattening. there are a lot of reasons to

think the fed will be a little more hawkish. the data has been good, inflation expectations -- you look at market breakevens, so the amount of inflation the markets are expecting over the next 10 years -- and i will win a lot to the last meeting. a lot of optimism the fed 10.2. . julia: we're talking about the optimism in the fed. julia: over what time horizon are read talking about seeing a 3% rate? over what time horizon are we seeing a 3% rate? 25: we just rose in yields or 30 basis points in the last two months. i think a repeat of is not completely out of the question. julia: yeah. joe: in terms of the economic data, we got pretty solid data this morning on personal income and spending. what do you make of it in terms

of what you are watching next and particularly the jobs report and what about that will you be paying attention to? joe: it is not even the -- ira: it is not even the headline numbers unless it comes out super weak. if you get a 200 number, that is fine. it is really the wage numbers. do we see the wage growth and income growth that we need to get the service sector inflation continuing to move higher? that has been what is missing from the recovery. service sector prices. wages being the largest component of the service sector are very important for that. you have seen those starting to climb, but it has been incremental and slow. scarlet: bloomberg intelligence's chief strategist i richardra jersey. some news from bloomberg crossing the terminal. we have michael dell ready to bring all the pieces of his tech empire under one publicly-traded roof.

. alex and san francisco. news that you had michael dell and another group were considering an ipo for the company. now, you have more information about the strategic options dell has been considering. alex: that is right. they were considering taking the company -- the company public. according to people familiar with the matter, dell is also considering a reverse merger wear.he anm it would get it under one roof. it would cause dell -- it was taken private back in 2013 and they bought emc. emc also owns a majority stake in the publicly-traded company. thatdell acquired emc, was made into a tracking stock

that trades under the ticker ddmt. that is another piece that became very important. he wants to get under oneroof as a publicly- traded company -- one roof as a publicly-traded company. also, he wants to take the tracking stock in-house. member, that is a $15 billion market cap. i am saying those shares moving right now as our headlines across the terminal. joe: from a financial engineering standpoint, what would be the advantage for dell to go public via the reverse merger? alex: it would combine all of these pieces. if you think about it, if you did a classic ipo, that stake as a corporate, they are still out there trading. it seems there is potentially some operational synergy in terms of bringing all of these different parts under one roof. when you think about the other counterparties involved, silver in more than $2

billion in equity total. right now, my sources are telling me the sponsor is not looking for an exit, but if it were to get public, they would get a past exit. silver lake does not have many options in terms of privatizing its stake. dell is coming in saying let us round all of this up and see if it moves forward and a more strategic fashion that makes sense. julia: do we assume it will be ware stock?th vm will there be changes to management? or will it be with joe just called it, financial engineering? alex: there is some benefits to the current structure in terms of how this deal would get financed. the stock will probably be what much of this acquisition, is financed with.

dell through the acquisition controls 90% of the voting rights of that stock. thingof a convenient there for michael dell. in terms of management structure, even though this would be an offense a takeover -- of dellmware, it would be an operating business under the umbrella. very well,ormed eve and i am told even better than dell has been performing. scarlet: thank you so much for joining us. re shares plunging today on these reports, off by almost 60%. coming up, whether equity rally -- 16%. coming up, why the equity rally is not getting the appreciation

it deserves. this is bloomberg. ♪

joe: what'd you miss? learning to love the rally. u.s. stocks continuing tissue higher, although not today. is the market being fully appreciated for what it is doing? according to my next guest, it is not being fully appreciated. we know the stock market has been on an incredible rally. you always hear people say a few things. one is, yeah, but the stock market is not the economy. you argue it is more the economy than people realize. >> yeah, i think that is a red herring.

would you prefer an environment where the stock market is not going up? would you think a stoc falling stock market says about the economy? it is ridiculous. i think there are certain sectors in the data that matter more for socks. things like exports and durable goods spending, houses. i think this is an important boo important input. joe: one thing you wrote about is there is a clearly between stock market prices and investment in key areas. what is the area and also what explains the link? neil: i think it is across a wide range of things like industrial equipment, the energy sector you are seeing it as well. a lot of the weakness in business investment in the united states and win financial condition started tightening -- started when financial conditions started tightening

. and we had a very weak period. prices rise, the equity cost goes down. companies can look at the equity market as a macro risk aggregator. when the markets are going up, macro risk is lower. they may feel better about investments. directly, it means i have more collateral against which to borrow. if you're a loan officer, you are looking at that and saying they have better credit to standards and they invest more. are so rising stock prices a reason to be optimistic and something mechanical allowing you to have greater flex ability to make decisions. neil: this is the theory behind the token q. investment. that works. -- token q theory of investment. that works. rising since the market turned early 2016. i think it is more of a signal

than it is for firms, in terms of macro uncertainty. look at what is going on with households too. they have more savings. a lot of that is attributed to the rise in wealth. joe: let us talk about the household side. the other thing people are saying is, yeah, stock markets rallying, but stock ownership is narrow. it perpetuates a new quality because some people have access to stocks and others aren't invested. is there a downside there? neil: i think it is overblown. would you prefer an environment where the stock market is declining? what does that say about the economy? probably that it is not doing well. joe: in theory could say stop focusing so much on the stock market. neil: look, if i am someone that does not own stocks, but i know the stock market is going up, there's a reason why the nightly news runs with that information, right? you do not hear what is going on in fixed income markets at 6:30 on the nightly news. joe: them he would have to

explain how when one -- neil: right. to me, you can think of the stock market as a growth momentum barometer. to me, the stock market going up, that is going to help everyone. maybe some more so than others but i still believe in this idea that a rising tide looks good. joe: when president trump tweets about the markets breaking records all the time and people criticize him, he may not be completely off base? neil: i think his comments on the dollar he probably should take a cue from them and not talk about it so much. generally speaking, i think it is a good thing, not a bad thing. joe: head of u.s. economics at renaissance macro research. thank you very much. scarlet: it is time for the stock of the hour. mcdonald's standout considering the chain reports earnings tomorrow before the bell. littleooking at shares, changes on the day. abigail doolittle has a preview. abigail: investors will probably be looking less about the

december quarter and more ahead. can they keep the sales growth growing? if we look at the bloomberg intelligence function, we will see over the last three years the company has turned things around. they are in turnaround mode. we see step back in the first quarter of 2015. negative. climbing, climbing, climbing -- climbing, climbing, climbing. the upcoming quarter is expected to be 5% down but the focus will be on 2018. investors will want to go back to the 6% or even higher. franchisees are talking about the dollar menu doing very well, better than they expected. all signs are that mcdonald's is likely to you very well. julia: this is all about the ceo's efforts to turn the company around and diversify the company in terms of what you kenny when you go in there. aboutl: you are right that. 2015.k over as ceo in

and has a lot to do with competitive pricing plus technology. not only do they have a more diverse menu but they have the self-order kiosks, mobile apps, delivery. i'm dating myself, but it is not had when i waswe a kid. it is an elaborate system at this point. scarlet: thank you so much. coming up, while american consumption continues to power the economy, there is a cautionary signal. the savings rate is declining. the charts that you cannot miss, next. this is bloomberg. ♪

scarlet: what'd you miss? americans are saving the least in 12 years. the bottom line from this morning's data is americans are spending but they are not saving.

the savings rate in december taking down to 2.4%. it was 2.5% of prior month. we're at the lowest going back to september 2005. the drop matters because consumers make up 70% of the economy and they can only push savings down so far before they cannot spend as much. that will slow down u.s. growth. christian from oppenheimer funds was with us last week and he said people will have to take on a lot more debt. what it shows is wages are not going up as much as spending and risinge savings rate was in the aftermath of the financial crisis in 2008 and 2009, there was a cushion. he says we are eating through the question pretty quickly. tom lee takes it a step further and says part of the push higher is the rotation of negative interest rate bonds. massive savings low

of $700 million a year that was not going into equities before but is starting to make its way over. julia: very important points there. why does that translate to the polls? trump?ident donald we will continue to affect question. save my charts and something just popped up. this is my chart. just looking at what we're the pullback onon bond deals. what extent and if we get to the 3% level. we're looking at the movement of 10-year yields. on the right, you can see it tracking up in 2018 quite significantly higher toward the 3% level. of course you have analysts out there looking at the fundamental reasons behind why we should and could see higher bond yields. there was always a risk here. the reversal you seen, the bond fares buckle because that is what happened in the past. if we go back to 2013 to the

areas i am showing you here, we saw yields about point hitting 3% after we saw the federal reserve move. 10-year yields the nextg over few months. we suburb reverberation over other areas. what we're looking at here is the s&p 500 dividend yield spread to 10-year treasuries. if you look down below, the yellow line here, i'm looking at the spread between 10-year treasury yields and u.s. junk-bond. that also shifted by some 200 basis points. think you for that, -- thank you for that, joe. i still need to learn more about the options. what was oncey one a compelling argument to buy equities. there saying look at the spreads becoming less compelling all the time. let us talk about the data. here's something really

compelling. when you look at the real world, things look pretty good from an economic data standpoint. i put two lines on this chart. it is can a messy. the teal one is the manufacturing index. soaring to its highest level in a long time. and we have an update to the atlanta fed's gdt tracking index as one of the regional ideas that tracks every data point to try to get a sense of where the economy is headed. that is that ever 4.1% right now. as you see, it is noisy. in the last quarter, i want when it fell. the bottom line is things are looking pretty good. we will see what the last quarter revises to ultimately. julia: you were warning with your chart. joe: why bother to say -- in th is market? scarlet: you wonder how the fed will put this together on wednesday when they come up with their inflation and their outlook for the economy.

the market close is next. we have the major indexes pulling back just a hair. the dow off by 100 basis points. good for 0.5% decline. this is bloomberg. ♪

♪ julia: what'd you miss?

stocks under a bit of pressure at the beginning of a busy week for corporate earnings and economic data. the 10-year yields just below 2.7%. i'm julia chatterly. scarlet: i am scarlet fu. joe: i am joe weisenthal. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage every day from 4:00 to 5:00 p.m. eastern. scarlet: we begin with market minutes. i think we can call this a genuine selloff. it has declined at least 0.7% for the dow and s&p. for the dow and s&p, the biggest decline since september 2017. it has been a while. joe: it counts. scarlet: a big mover here was treasuries. the treasury yield on the 10-year moves up. we saw stocks decline. we will get into the rates market on and a little bit. there were individual names moving around a bit.

let's start with the big m&a news of the day. dr. pepper-snapple. the biggest shareholder of the company, which is private. terry green mountain is private. it is a complicated deal here but we are talking about an $18.7 billion deal, in which dr pepper snapple shareholders will be paid. it is a cash deal, as well. speaking at some of the companies and the food space, we're looking at dunkin' donuts down about 2.4%. as you know, jb holdings has investors in dunkin' donuts feeling a little left out there. this is the worst drop in more than a year. resorts. we have been talking about this all day long. the sexual-harassment allegations against founder, chairman, and ceo steve wynn causing headaches for wynn resorts overall as the

government is now looking into this allegations -- these allegations, questioning the management because there is a license up for renewal in the coming years. we talked about wvvmware earlie. they're thinking about a reverse merger to bring the two companies under one roof mining businesses and shifting dell's debt onto vmware's balance sheet. this just broke moments ago. maxim integrated, also moving a bit because electronics are in talks to buy the company. this would be a deal in the chipmaker could approach $20 billion. we will give you more information as we get it. with the decline in selloff in equities, we saw a spike in the vix. vix is about 13, approaching 14. can you believe it? joe: it has been creeping up

this year. long way away a from 14. should we just went out? scarlet: nonetheless, it is moving and it has gained 23% this year. i'd know we do not -- i know we do not look at its movement in terms of percent gain. joe:i'd know we do let us look y action in rates. nothing of the shore and, aend e were talking about with ira jersey earlier in the show. a little steepening. a 10 year yields back on over 2.7% earlier in the day. there weree days, not many places to hide. equity markets having their worst days since early september. 10 year yield up to 2.69%. there we see the multi-your perspective on rates. now we are at a multi-year high. we're still not where we were back in late 2013, 2014 but we are getting there. this is the selloff at the long end cutting more attention.

take a look at german rates. check that out. we are no longer negative. it is unbelievable for the first time basically since early 2016, it looks like we are back to zero for the german five-year yield. the euro negative rates finishing. -- the year of negative rates vanishing. julia: we will get excited about that. the greenbank strengthening again, most of the majors here. ok. we're starting off with dollar and canada. talks again today after at nafta. we been talking back and forth about what was actually achieved here, seemingly optimism from the u.s. side. not quite sure about what. the discussions will continue in mexico and the latest round of talks. let us talk about the u.s. dollar overall. the dollar strengthening just about all members. do we not have it?

so mean. i wanted to talk about the dollar and the fact that it is strengthening. being pared back ahead of what we have been talking about, it has been a busy week this week. scarlet: you ask and you shall receive. julia: there we go. friday's payroll day, you have to expect that little bit. there under pressure despite hawkish comments from davos over the weekend. saying the economy may be near a tipping point. good luck with that. ted toe inflation expec disappoint. perhaps that will be tied for that. sterling, i wanted to point that out. look at that. we're above 140. it is more about the u.s. dollar than anything the u.k. has been doing. they just had head in hands. the brexiteers are laying into comments about a soft brexit. a potential confidence vote on theresa may. the brexit not push

position, more of the same. let us talk about commodities. joe: not as active in the commodities. nowhere to hide today. everything down, including commodities. crude oil down 1%. gold down 0.6%. those are today's market minutes. scarlet: what'd you miss? stocks reacting to a bit of nerves at the start of a busy week. here's michael block. michael, we're also dealing with rising bond yields, which bush pressure on the financials, utilities, and interest rate- sensitive sectors. what you make of this selloff? should we call it a selloff? michael: i want to thank everyone for this honor. i thought it would start off with a dramatic reading of jerry . scarlet: please don't do that. michael: you guys are like bright, young rock stars. i thought it was on the grammys. scarlet: a bit of commentary on

last night. michael: do not worry, bruno mars. i got you. let us talk about the rise yields. we're at key levels here. at the top of the show, you outlined how the 10-years had the key levels. the five-year german yield is back to zero as opposed to negative. there are technical levels being broken here. when that happens, there are pain details. -- pain being felt. how bad is it really? here?s going on in the s&p 500, we did not even get back to the lows we may friday morning. it was a powerful day. remember, they started out kind of weak and the momentum started. that is the key word, momentum. the momentum is not broken. ing herehappen potentially is rotation and it ties back into the dollar and in terms ofg on growth stocks with the earnings coming and value stocks with what rates are doing.

for me, the key thing to watch is the dollar and what it is a lot ofmean for the different sectors of styles and sizes. right now, momentum is with large-cap growth. the question is, could it turned to smaller cap and/or valley? that is low -- value? that is what we're watching. julia: what is leading? michael: it is a combination. momentum in the dollar, and they go hand-in-hand. i have the debates all day, why are stocks not rallying? financials got through earnings season. the story is it was all about -- it was not about the rates etting better interest marginetting better interest margin feelings. [no audio] for me, it comes down to saying there something that is a pure, net interest margin play.

howtal market strength, deregulation affects these stocks. the jury is still out. joe: we have a fed meeting this week. because it is not a press conference meeting, i think it is not getting that much of your attention. goldman was out with a note earlier saying pay attention. maybe it is not want to sleep on, maybe they could deliver some sort of hawkish surprise in language. any chance janet yellen will give us drama? michael: well, janet and her swan song will not be the ones giving us drama. there will be guys like me too, let us basic. why.is certainly in the statement, were member in the first paragraph or so and throughout the statement they talked about the economic situation.the economic situation by the data is stronger .we can poke cold at it, i can say wall.g the it has not yet. it is still red. everyone is excited about wages

in the confidence will come back. given that mindset, people will read the statement and maybe not much will change. they will say, yes, things are since the last meeting. since the last meeting. [no audio] julia: consolidate that. michael: some very important data. i am actually watching two data points before friday. [no audio]

band. i can play guitar for you now. not as good as you. chief strategist and bandmember. coming up, allegations making its way into important territory. the government scrutinizing wynn resorts. we will discuss. this is bloomberg. ♪

mark: i am mark crumpton with first word news. the white house is distancing itself from deputy director andrew mccain's decision to step down. >> we have seen the numerous reports, as all of you have, and any specifics i can tell you, decision is made by that of the white house. mark: sarah sanders added president trump fans buy his criticism, who played a central role in the hillary clinton imo investigation. bernie sanders will offer his personal response to president trump's first day of the union address tomorrow night. landers, an independent, wil

deliver the speech via social media. it is the second time he will deliver a response separate from the democrats. the former democratic response -- formal democratic response will be delivered by joe kennedy. president trump met today with members of the un security council. they discussed evidence that iran is arming rebels in yemen. before today's working lunch at the white house, the president said "we are helping the world." the guests included nikki haley and more than a dozen foreign ambassadors, including attendees from china, france, russia, and the u.k. fighting cleared up again in yemen's southern port city today. clashes killed 12 people and wounded more than 130. pro-government forces and separatist deployed tanks and exchanged heavy gunfire as shops remain closed for a second day. violence arrested on sunday when a deadline issued by the separatist for the government

expired. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. is mark crumpton, this bloomberg. we have breaking news crossing the bloomberg. jamie dimon, the ceo of jpmorgan, says he will stay on at the bank for about five years. in addition, jpmorgan has named daniel pinto and gordon smith as copresidents of the bank. l highly has "severa capable successors for jamie dimon." all of these common serving offered in an emailed statement. now, if you are a jpmorgan shareholder, you have to know jamie dimon says he will stay on for about five years. julia: a lot can happen in five years. scarlet: a lot has happened in the last five years. julia: the fallout from sexual harassment allegations against steve wynn is spreading to the other side of the world. the macau government has met management, completing

the future permits up for renewal. it is sending shares of wynn resorts lunging for a second straight day. at this point, steve has denied the allegations against him. joining us is a bloomberg intelligence senior gaming and lodging analyst. great to have you with us. talk about what potential permits are under threat here. >> they're looking at suitability issues. nevada gaming commission, massachusetts gaming commission, and the macau gaming commission. julia: who do we worry about more and terms of the importance of revenue generations for the resorts? brian: macau is the most important. joe: obviously, wynn is called wynn, named after its ceo and founder. be on the name, there is a

believe and perception -- beyond the name, there's a believe in perception that -- belief that the ceo part of the ability to execute. tell us about what makes wynn leveraged to its ceo. you the predecessor of garage resorts. he is behind the entire vision of the company. a pioneer in las vegas, having built the mirage property in 1990. his association with the company from design, vision, strategic y is integral. resorts in know wynn las vegas is known as being high-end. it has a distinction in vegas. what about in macau? for those of us who have not gone to the casinos in macau, where is it in the market place? brian: also very high. i would say wynn is one of the

gets it from that the high-end customer. scarlet: what happens to the high-end customers in china? words they not coming because of the anticorruption crackdowns? brian: business had been quite weak for a number of years but it is on a resurgence. fourth quarter dnp revenues were up 22%. the market is down and now it is coming back. julia: we have seen analysts moving here, particularly tied to uncertainty and the importance of steve wynn to the brand and business. as he started out by saying is important as macau is, for the generation of this company, actually massachusetts here and the decision here is critical, too. explain. brian: this is a casino yet open in mid-2019. it will open up close to boston.

the massachusetts gaming commissioner says they will review possible further steps. because they are a newer gaming commission -- it was a gaming law passed in 2011 -- they could be under scrutiny in terms of how they react to the allegations joe: is the inquiry -- allegations. joe: is the inquiry among regulators surprising? brian: not really. i would say the past when there has been scrutiny, they tend to be a long corporate governance lines and not personal matters. this one is more personal. nevertheless, it is glaring and its impact. julia: we should make a point a lot of allegations made here, steve said they were preposterous. earlier on bloomberg markets, there are connections here with his ex-wife with a court battle going on. his ex-wife is also on the board, i believe, when these allegations -- brian: she is still a 9% stockholder. scarlet: a lot of parts there. bloomberg intelligence senior gaming and lodging analyst,

bryan edgar. thank you so much -- brian e dgar. thank you so much. why officials are warning over the russian probe outburst. that bloomberg scoop coming up. this is bloomberg. ♪

scarlet: what'd you miss? trump's frustration with the justice department coming to a head. we're learning that the president arrested in anger well traveling to davos after learning a top doj official warned against a memo that could undercut the probe. for more, let us bring in kevin whitelaw. give us some basics. what is the memo about and how does it relate to the russian probe? when did the president here

about this? -- hear about this? kevin: it was prepared by the republican staffers and alleges a set of things that went on with officials at the fbi and justice department that might have not been entirely proper when it came to the origins of the trump probe. democrats have said it is misleading. it is based on highly classified intelligence republicans -- highly classified intelligence. republicans in trump himself have been interested in releasing it. justice department officials sent a letter to the last week saying it would be reckless to release the memo. this is a memo the white house and no one in the administration have seen yet until this weekend. it came in the middle of a set of frustration that the president had with what was going on in the justice department, the way they were responding to different elements

of the probe into came after meetings with the president and also his chief of staff with different officials at the justice department, where varyi ng degrees of frustration were expressed. julia: i think the white house has made it perfectly clear they think this is a witchhunt, the investigation of special counsel is politically motivated. we suggesting thi -- are we suggesting this memo contains mi sdeeds related to the --? kevin: this came up in the context of what had started as a bipartisan probe. this is something that democrats have not been involved in in terms of reducing it or having any say in. this goes very far away -- in it. this goes very far away from where the probe had started. at its heart, the memo ultimately alleges political bias behind the investigation. the question -- alleges clinical

bias behind the investigation. we're looking at a partisan conclusion by a partisan group of people. it makes it hard to judge in the abstract. we're expecting to have the intelligence committee vote later today on whether to release the memo, and that could be released as early as tonight were in the next few days after what the administration could conduct a national security review of whether there is anything too sensitive to be released. where do jeff sessions and the fbi director sit in this? kevin: they just got a look at it too. is the first time he got to see do a certainill amount of betting to give his opinion on what, if anything, needs to be held back or what can be released. we do know officials had not wanted us out there.

that is what angered the president. he learned about the existence of a letter just as he was heading out to davos, and that is where on the plane he got very angry. in the immediate aftermath of that, and number of additional calls were made from officials at the white house all the way up to the chief of staff, john kelly, over to officials at the justice department to address their displeasure. the president a few days earlier delivered the message to jeff wray.ns and christopher julia: we will watch tonight and see what the outcome of the vote is. kevin whitelaw, thank you for that. , the u.s. dollar has been under up next, the u.s. dollar has been under pressure but critically overvalued by as much as 10%. our next guest thinks so. we will discuss. from new york, this is bloomberg. ♪

mark: i am mark crumpton with first word news. the european union has told the u.k. it will not have any say in eu decision-making during the brexit transition period. european affairs ministers met today to approve a new set of orders for brexit talks. bulgaria currently holds the eu's rotating presidency, and the deputy prime minister spoke to reporters in brussels. >> when it comes to the trade, during the transition. riod, the u.k. will be expected to comply with policies. this also means during the period, the u.k. will not be able to hold its own

international agreement covered by the eu law. unless it agrees otherwise with the eu. -- unless it agrees otherwise with the eu. mark: this runs from march 2019 to the end of 2020. iran's president said today africa will deal with president as leader of a country elected by its people. he made the remarks after meeting with president trump last friday during the world economic forum in davos. >> the president of the united states is trump. president trump. abouty have your views trump. that is ok. he is the president of the united states. when the people of the united states decided to electronic as

their president, we deal with that president of the united states. mark: u.s. diplomats scrambled for days to adjust outrage after mr. trump's reported disparaging comments about africa, haiti, and people from those nations. netanyahu traveled to moscow today with talks with putin. they discussed iran's military presence in syria. netanyahu is accusing the syrians, or rather, accusing tehran of trying to turn lebanon into a defective missile site for strikes against israel. russia and iran joined forces during syria's civil war, but putin has made efforts to keep friendly ties with israel. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. julia: we have -- scarlet: we have breaking news

crossing the bloomberg. metlife shares are lower in after-hours trading after they say they found material weakness in its reserve review. it will take as much as $195 million for a hit. it was searching for lost pension and inuit he clients. it will result anywhere from $165 million for net incomes. by $500 will be boosted million in taxes. the earnings report will be delayed, as well. has beenas said it given preliminary fourth-quarter numbers here. for $1.08ere looking for the fourth quarter number. this unexpected reserve boost and charge from a annuity reserves review. i wonder if there is any link -- not link, but whether it is similar to what ge's capital is

and what ge found with regards we charge their. -- there. julia: an interesting question. they were undertaking this review of practices and procedures. they push back their full announcement of earnings by two weeks, so we expect that to come in the middle of february. february 14 they will have the earnings conference call. at that point, we will get more detail way, we will get more detail of precisely what that found. find any other further weakness in other parts of the business. metlife, as you pointed out, under pressure there. any further headlines, we will bring them to you. pushing for a breakthrough. the u.s. is pushing for an acceleration of nafta talks through the sixth round of talks wrapped up today in montreal. our international correspondent was there with the action. >> the messages we have made

progress but not a deal. robert lighthizer while slightly more upbeat that after past -- and then after past negotiations, and leaning against a and canada are taking advantage of the u.s.. he agreed to continue the talks, but said they have to move much faster. >> we have finally began to discuss some of the core issues. this round was a step forward. but we are progressing very slowly. to our citizens who are operating in a state of uncertainty to move much faster. michael: he told reporters later he is not having a deadline on the talks, but he expects significant progress to be made in the next month. he rejected a canadian plan to increase north american-made coontent and -- content in automobiles. still, the canadian foreign pleased says she is with the direction of the talks so far as mexico's economy

secretary says the three countries are on track to reach a deal. ors will work until february until they reconvene in mexico city. lighthizer says they will continue to talk even though there is a meeting in mexico and one in the u.s. later this year. president trump says he will ask for an extension on fast-track trading authority, enabling the talks to go on. michael mckee, bloomberg, montreal. julia: that was really interesting. that press conference there. did you see it? there is one person there -- it was not a canadian or a mexican. they've been looking after trading what that means, especially for the dollar's exchange rate. joining us from washington is the managing director and chief economist at the institute of and sti international. mapping current account balances and how that interacts with real

exchange rate adjustments. started by talking about the work you have done here, and then we will tie it to the u.s. dollar. >> let me talk a little bit about that. hadre that, the dollar has a real roller coaster couple years. it went up massively three or four years ago. recently, it has been weaker. if you views policymakers, one person says we are in favor of a weak or strong dollar, i have some sympathy for them because the thing has been such a roller coaster. the framework we have laid out is the united states still has a big current account deficit. that is a reflection of importing lots of things that we consume, which are not produced domestically. the framework we have laid out capule calculates the dollar ons toos is too expensive, 10%

expensive. joe: you look at the valuations of currencies based on trade and the current account deficit. why am curious about is well it works in theory, does this work in practice? can you actually -- save the dollar could be -- should be 10 % weaker, will you be confident this is what the dollar will do? robin: that is a great question. we have done a lot of work on back testing this framework to see if on a medium-term horizon, five years much does this thing predict subsequent moves, and it does. for example, for china, which has been in the crosshairs for many, many years on currency issues, our analysis shows looking back that the rmb needed to appreciate from 2005 onwards. lo and behold, that is what it did in practice. there is a lot of information here. obviously, the information works better when over undervaluation

is sizable. scarlet: so you have concluded the dollar is 10% overvalued, particularly against some of the asian nations. part of all of this is because -- and you mentioned this earlier with the tremendous moves the dollar has seen, depending on what time period you look at, there is a lack of affect between the dollar's previous fluctuations. from late 2014 to the end of 2015. why is there this lack of affect? -- lag effect? robin: i'm impressed because you guys read everything we wrote. [laughter] joe: we did research. robin: i am pleasantly surprised. the way things work in practice is you are on the factory floor, exporting to country x, your currency appreciates, and so the goods you are producing become less competitive because you are exporting at a currency that is becoming more expensive.

do do something right away? no. currency is volatile. they can go up or down. who knows? you have to take in terms of your profit margin, and keep ex porting and hope the currency effect goes away. it is only overtime people start reacting in terms of production levels. that is why there are these lags. a situation, got and let us use the u.s. and thea as an example and terrorists we have seen applied, say those two countries say we are not happy. we are going to make an adjustment over a five-year billion, $1005 billion to try to realign what we see as far as the deficit is concerned. how does that then impact the currency? currency markets move far quicker than current account deficits do. the earlynk back to

days of the trump administration when the border adjustment tax was something that was being debated. that was a teax. there have been a lot of -- there has been a lot of water under the bridge and it is no longer on the agenda, but that levy taxes on imports. basically, the offset the currency would have made had that been introduced, the dollar would have appreciated significantly. ok? if we impose tariffs on other countries, the thinking is exchange-rate have offsetting effects. i think the easiest way for china to deal with pressure from the united states on the curre ncy and on trade is twofold. there are two constructive ways out. one is to let the currency appreciate. we're calculating 10% adjustment, especially against and other currencies in the region.

joe: going back to the question of whether it really works, the connection between trading currency i have seen argued in the global trade context for , specificns, countries make specific parts that are not necessarily even, they do not even out the same way. you cannot even outright by having the currency adjusted. how does that thinking work in your perspective? robin: that is a good point. clear ifhink it is you look only at china's surplus with the united states, ou are missing a lot -- you are missing a lot of the picture. china is the final simply point for a lot of things that get exported from somewhere else. of need tou kind take a bigger perspective and see the forest for the trees, which is china is a final assembly point for complex asia,

if that is what you want to call it. current account surpluses in asia are very large. singapore has a surplus of 20% of gdp. taiwan 13% of gdp. thailand 11% of gdp. you cut it,r how there's a big trade imbalance. julia: when i asked my first question to introduce the segment, you've made a comment about having sympathy for policymakers. i assume we're leading to steve mnuchin in the comments he made in davos. ofyou believe in the light those comments, anything has changed about the way ytthe unid states sees the value of the dollar or the reaction function? [laughter] robin: the dollar is the market price. is not actually set by u.s. policymakers. i would say that first of all. julia: but you can talk it around. [laughter] definitelycan

talking around. but, the strong dollar policy has always been about the united states having legal and institutional frameworks that are supportive of transparency and good governance. that is consistent with a strong, stable currency. we still have that. we have that 10 years ago. we have that now. we will probably have that 10 years from now. i do not think the dollar will be in freefall. i think these comments are a bit neither here nor there. with a: robin brooks couple of well-written reports. let's us recap the headlines we gave you moments ago on metlife. shares falling. the insurer will take as much as a $195 million hit to its full-year net income. reserves will increase by as much as $575 million before reportand its earnings and conference call were delayed because of a search for lost pension and annuity claims.

there is material weakness that metlife is responding to. this is bloomberg. ♪

scarlet: joining us to discuss is bloomberg's jenny simpson. >> i think they made this a two-man horserace. we will see how it ends up. five years is a really long time. it could be really interesting. it seems like jamie dimon and the rest of the bank are putting

a vote of confidence in these men. joe: tell us about the and will of the organization they come from. jennifer: gordon smith is the consumer bank part response will for everything consumers see, hear, feel about the bank. daniel pinto is the investment banking guru. overseas jpmorgan investment banking group,, mma capital markets, and equity trading. julia: and both in their 50's. scarlet: there are the two men. i'm looking at their page on the bloomberg. jamie dimon is at the top. . his title is -- at the top here. ceo.itle is president and there are a lot of women on this page. darah.ennfier,

how come -- sarah. how come there are no women being named as copresident? jennifer: it is an interesting question. i think it was brian who said there was a 50-50 chance the next ceo of bank of america is a woman. we will see. jpmorgan is historically very good, as the page shows, at promoting women and getting them --t women. that is something wall street says was very important. julia: we should point out how gordon this -- how important it is that we are even having this conversation about who is in the firing line. scarlet: for sure. julia: five years as you pointed out, and we talked about before, is a really long time. gowe track bback, let us

back five years and look at how many people from the operating committee have left the company to go on and do other things. material is this information today? jennifer: is material because it is signaling the bank has this as a discussion. i think the year ago bloomberg had a story saying mary and link and mary callan had a really good shot at this. things change. businesses perform well or do not perform well in certain cycles. we will see how some of these things impact the race. julia: no doubt we will come back to this story. scarlet: jennifer surane joining us. julia: they will take control of dr pepper snapple, combining soda in a merger. this is bloomberg. ♪ julia: what'd you miss?

big news on the beverage front. . agreed to combine with dr pepper deal that a would pay $18.7 million in cash to shareholders. bring dr pepper under urig coffeeand as ke systems. joining me now to discuss is jenny kaplan. this is a pretty complicated deal. talk us through the structure and what we will see it in terms of the combined entities and will be controlling it. >> it is, located. pepper entity keurig-dr be largely controlled by the keurig shareholders.

are owned by a private company in europe. they will own 30% of the new company. 13% of the company. another company is already a shareholder in keurig and they will hold 13%, as well. it is a, located structure is shaking of the way big beverage will play out. scarlet: what will it do the private company that it did not do as a publicly-traded company? >> it will still be publicly traded just a new entity. the big point is they are combining the strengths of the two entities separately to try to make them better as one. drpepper has its beverages, pepper and snapple and the

other names we see in stores all over the united states. they have that access to smaller stores, gas stations, your neighborhood store you go to on the corner. whereas keurig has much more access -- they have gone further in e-commerce and have strong grocery relationships. they are the biggest player when it comes to that single-serve coffee market with pods. it will be a marriage of these two in different areas to see how they can benefit from joining hands. julia: this is critical. this beverage distribution network you are talking about, keurig with alexa best buy, amazon -- with the likes of best buy, amazon. if you combine the two, i have seen comparisons made to the likes of coca-cola, pepsico. can you tell us about what you're talking about with market share? also, this is a different deal for me than what we've seen in

the space already dealt their options. jenny: certainly. ngsyou look at how the ranki of the beverage market are, this will still be the number three player. this new, pepsico, and be thedr pepper will third player but it will shake up the third player in a way that might spur the other two and action into deals of their own. i think this really shows the beverage market, as a whole, is waking up and saying we c annot just be in soda anymore. we have to have other beverages, like coffee. julia: the healthy option. the coffee option. i like it. scarlet: thank you for joining us. joe: coming up, what you need to know for tomorrow's trading day.

>> you are watching bloomberg technology pratt let's get a check of first world news spread president trump delivers his first straight of the union address tomorrow night --

president trump delivers his first state of the new address spread. time, independent senator bernie sanders will offer a personal response to the state of address. he will deliver the speech through social media, and will massachusettsy congressman joe kennedy. president trump reportedly erupted in and are while flying to switzerland after learning that top officials warned about releasing a classified memo. it outlines alleged misdeeds from the fbi and justice department related to the russia investigation. the move would be extra door leader -- reckless. --r months after her kenseth hurricane maria, officials say fema is running out and they