peter: i think capex will pick up. fewaw up until recently companies are investing in the rapid rate. ther'ee's been a long period of sluggish growth and technological disruption. we do expect capex growth to pick up. we have been looking at finding companies that are reinvesting in their own businesses, particularly when the catch return on cash investments is ri sing. there's surprisingly few companies in those markets that fit into that bucket. but those companies reinvesting for future growth, we think they will do very well. to see you great this morning. thank you for joining matt at the conference. peter oppenheimer, chief global equity strategist at goldman sachs. we are minutes away from the market open now. expertsg's top equity will be joining us every day to look at the big market themes and individual stock stories before the open. joining us now are the equities reporters. good morning. >> good morning. guy: big picture, the market has been on a tear. has it got further to run? >> the insert we are gettin

i think they are already pricing a resurgent into capex already.dustrials, some of the best in the world, trading more than historically. it is pricing a high growth rate the next three years. i think there is a reason to be skeptical about the capex. the u.s. might buy more buybacks. guy: freddie lait, stays with us. billionaire altice is looking --patrick drahi is looking for expansion and focus on the debt story with the european parents. we will break down the strategy. what does that mean. this is bloomberg? ♪ ♪ nearly 11 minutes into the trading day. let's show you what is happening here. the standout story is what is happening in russia this morning. brighter green than anything else, the oil trade is on this morning. elsewhere in europe, we are .3% up. london is leading, germany is lagging, that seems to be the same. the balkans are a little ahead but they are not big markets. london is up .4 percent. some nordics are outperforming, the iberian peninsula a little soft. the oil story feeding into russia and the ruble on the move. let's get i

in europe it's coupled with mo e traditional capex and construction areas as well >> does that make youore positive on tech stocks? there's been chatter about the performance of fa.a.n.g.s in 2017, but based on what you said you would still want exposure to tech stocks. >> that's a good question. we do think technology is well placed to continue to benefit from the environment ahead however the names you named are more consumer focus. >> mainstream. they've been benefiting from secular types of growth in earnings we think the next phase of growth is much more geared towards technology companies that are facing corporates where we see corporate investment accelerating, that's where the next leg of growth will be within technology. there the earnings on a go forward basis look attractive and valuations are actually much more reasonable. >> can you give a couple of names? >> names within cloud computing areas, software as a service, cybersecurity, areas which are much more geared towards corporate capex are much less pricing in the earnings growth still to come. >> brilliant thank you very

they make huge profits and don't invest in traditional capex.st in people, ideas, and their brand, but they are still hoarding cash. not ack of cash was reason why these companies have not invested in the past. in the new economy, you don't need that much capex anymore, so they have become net providers of saving to the capital market and one of the reasons why interest rates are still so low. scarlet: it brings to mind whether the repatriated cash than inmuch other flight asset prices further. the risk that inflation could move higher past that 2% threshold is a nether risk that you cite. >> that is correct. we are at a stage where the unemployment rate is very low. wentast time unemployment below 4% was in the late 1960's. that is when inflation ofelerated a lot and a time fiscal stimulus for different reasons back then in the 1960's. wages could pick up and the flat phillips curve could actually bend upwards. another reason is that commodity prices are rising and the dollar has been weakening and we are seeing globally synchronized growth wit

but again, pricing policy and reducing costs as we are doing, capex, just to give an example -- we arengy, out of time. i want to thank pedro. thank you very much. he is the ceo. vonnie: unfortunately the one thing we cannot stop is time. don't forget, you can rewind some of these interviews and your bloomberg at tv . coming up, trades is a major focus and apple, and canada represents the annual gathering a. we'll talk with morneau in the next hour as talks enter a critical juncture. this is bloomberg. ♪ vonnie: live from new york, and vonnie quinn. mark: this is the european close on bloomberg television. let's check on first world news. jerusalem, vice president mike spence says that the u.s. needs to maintain its leader role in conflicts. palestinian president says that there for several i recommended in as israel's capital. multiple casualties in a shooting at a high school in kentucky. authorities say at least one person was killed and many others wounded. state police say a deputy sheriff has arrested the suspect. the state department says multiple americans were killed shoot

the other aspect is around capex.ther that is shale or whatever else, it is likely to leave a capex bloom. aspects,a two inflationary aspect am the boom. plenty more to talk about. joshua crabb. still ahead, who is down but the tpp? all of the members except for the u.s. and we tell you how the transpacific partnership is getting a new lease on life. next, hongming up kong stocks are red hot. however, we are looking for signs that investors could get earned. this is bloomberg. ♪ ♪ haidi: this is bloomberg markets: asia. i am haidi lun in sydney. rishaad: i'm rishaad salaam it in hong kong. smashing one record after another. signs of overheating popping up everywhere. should investors take a bit of a breather? joshua crabb is with us. our people at the moment concerned? doesn't that worry you? joshua: in the short-term, absolutely. forget asia for a minute here it let's look at the dow jones. at the level of overboard. 1929, 1956, 1987, 2000, and now. keep in mind. markets move sideways for a while and then have a smal

it is mainly an equity story and boosting corporate earnings but tick in wagesler and smaller capex. think there is a slight positive cycle in the u.s. and that helps the idea that the u.s. looks like it will grow faster than most of the g10 countries even though it did not last year. the narrative seems to be the exact opposite. guy: the [indiscernible] speaks in 20 minutes. mark: he is a notorious hot. the whole market is bullish the euro. nbelievable the feedback i got yesterday. the main argument was this ridiculous euro is going higher. they did not believe the euro could pull back and that was internal and external. people believe in the euro story. one of the elements is people expect him to talk hawkish lee. if the euro cannot rally it is looking negative for the ecb. draghi will air on the dovish -- err on the dovish side especially given the comments of the last few days. teamyou can follow the mliv and tliv . you can mention we have -- we have a statement coming from undervalued for the company. next, market cap has fallen below morgan stanley's for the first time

is this going to be the year the industrial capex style kicks in to gear. -- ballot 25, plenty going the emerging market currencies, yen is trading off, a risk on kind of day. let's show you the commodities space because this could set the tone for this year. down, bloomberg commodity index down, crude down, brent down. a strong run beginning to fade a little bit this morning. let's get a first word news update with juliette saly. in the u.s., a bombshell book detailing dysfunction, backstabbing and chaos and donald trump simmons station has been published ahead of schedule. excerpts of the "fire and fury" triggered a rupture between the president and steve bannon. meanwhile, the white house has been defending trump's friend health fitness for office, an issue raised in the book. is disgraceful and laughable. if he was unfit, he probably wouldn't be sitting there and have defeated the most qualified group of candidates the republican party has ever seen. an incredibly strong and good leader. that is why we have had a successful 2017. north korea accepted a proposal to hold talks with

has been left out, the reverse of that, a negative job from capex, then the prospects for the u.k. not great. guy: peter schaffrik, joining us from rbc europe. up next, we have been talking a little bit about it. we are going to continue on the conversation. commodities starting 2018 and positive territory. oil gaining, highest close. this is bloomberg. ♪ guy: good morning. 30 minutes into the trading day, let's talk about the headlines. asia stocks pushing for his new record highs. the s&p clearing 2700. europe joining the rally this morning. the chips are down. intel and microsoft with a security gap that could affect billions of devices to which companies could get caught up in this story. stuck in traffic. tesla breaks another production promise. will elon musk be back to investors for more cash? good morning. welcome. you are watching "bloomberg markets: european open." i am guy johnson of bloomberg's new european headquarters. talking of elon musk, what's happening in europe this morning? the car data out of the u.s. yesterday, particularly for luxury manufacturers, was a str

trump and business current administration low interest rates building capex do you see extra capex spentatriation, i just don't think a lot of capex because we have seen a lot of it. >> you know we have we have seen money come back yet you are not seeing it i think you will see it going forward. but the big where i see you know i look i would get same numbers everybody looks at bureau labor statistics look and see how much money -- conditions are us bureau whether -- gdp has gone up, you look at -- whether it is because people invested or not they have been saying during obama administration, people weren't vesting couldn't gdp down last two radiators saquart up. >> i was surprised -- repatriation rate we were talking 10%, 8% 15 1/2% do they have to bring money back at this point. >> i don't think they have to bring money back but i think they will want to bring it back people want to build and invest in united states. >> this -- they will -- >> if germany he can very he have in united states without a tax penalty bring money to invest if you make money i in german pay higher than 15 1/2

then you have the growth capex.re prepared to go down that path they have to come to us and all of their investors and say this is why we are doing this. not because we think of id prices will go up. there is a return on the investment. the same will be true for m&a. in the absence of that the money should come back. manus: thank you very much. we have a little bit more to get through. coming up. anna: oil is holding near its highest close as u.s. stockpiles decline. we'll discuss that next. manus: we will bring you our interview with germany's state secretary for economic effort and energy. this is bloomberg. ♪ a.m.: it has gone 7:21 we are 30 minutes away from the start of your trading day. futures are at a higher open. we have marks & spencer's and tesco. let's get the bloomberg business flash. here's juliette saly. has cut itsyer stake to 14.2% from 24.6% as part of its ongoing plan to focus on drugs and life sciences. due to strong interest the placement volume exceeded you citations amounting to 1.8 billion eu

we are buying equities, not debt, equities of industrial companies linked to capex.boeing or s like airbus are some some of the companies we have been buying. tom: this is what we like to do atsur sur. a conversation with someone making news. john levy will join us. can the chief operating officer of airbus. an important transaction for airbus. they do business this morning th emirates of the unite emirates republic. stay with us. from london, this is bloomberg. ♪ >> this is bloomberg "surveillance." let's get the bloomberg business flash. rupert murdoch has settled phone hacking claims with four celebrityity. no news on how much newscorp will pay over algailingses that journalists and those working for them hacked their voicemail. ready for its i.p.o. in the second half of this year according to the c.e.o.. the oil giant is looking at the possibility of -- locally at first and then having an international i.p.o.. . on the e not decide yet what could be the biggest equity offering ever. nestle will share chocolate kit kats in japan. ruby chocolate has a pinkish huean

>> very simple number, the government expects 205 billion capex expenditure in 2018, and one of the potentiales of this is credit growth, lending coming back, and banks a good space to be in. saudi banks are well capitalized. compared to peers in the emerging markets, they are trading at an attractive valuations. there is a theme of more dividend distribution, which is attractive to investors, so a good space to be in. combined with the big event, everybody is following the potential inclusion into ftse and msci, this is a big event. yousef: a major catalyst. >> absolutely. at the end of march, we hear about ftse inclusion, $4 billion, $5 billion of inflows. msci is another $16 billion of inflows. the flows are dramatic. yousef: up next on the "best of bloomberg markets: middle east," as saudi arabia winds down its corruption drive, go to top $100 billion? we will find up next. this is bloomberg. ♪ yousef: welcome back to the "best of bloomberg markets: middle east." as saudi arabia winds down its anticorruption drive, a senior government official told bloomberg that officials are likely to r

capex -- if you look at the year-over-year dollar value, we are negative.id: i thought capex was coming back. lori: it is starting to get nas -- less negative. you are seeing sales rise, but it is still down year-over-year. isx: what is interesting bank of mine in new york said they would spend money investing in their business, and their stock got slammed, versus big banks hinted they will do some kind of share repurchase -- what you make of that? lori: i did not look at that one specifically, but i think in general is something you have to do today competitive. there has been all of this discussion about will tax form get competed away? no one is -- david: and there be oh why mel and said that. i am worried about the long-term. lori: and will they end up competing away the tax benefit. alix: lori calvasina, you're sticking with us. coming up, the future of the fed. this is bloomberg. ♪ ♪ fedd: san francisco resident john williams is said to be in the running to replace stanley fischer as vice-chairman. this puts him alongside lawrence lindsay and mohamed

the only thing is the cto did be there wasn't going to capex.hat affect particularly seeing as verizon is not a national broadband player and you just talked about mobile being extremely important? >> i would think about it slightly differently. announceds over time basically a $10 billion capital reduction expense reduction. i think that's different than what verizon has been doing in five j. -- 5g. i think you basically is doing an amazing job leading where the next generation of broadband and 5g are going. verizon has does coming paths. the buildout of 5g and the future of connectivity. hard to argue they are not the leader in that space right now. two is how do you bring services to the auto industry, to media. you have seen verizon consistently follow through on the 5g announcements. the announcements of how those services will benefit consumers in cities and the infrastructure. i think that's totally consistent. how the company is getting managed financially. the bigger story is the strategy around 5g and the future of is reallyhich exciti

perspective, i'm not really worried yochl view a pickup in strul activity let by the global capex cycletes have been coming down, a fiscal package on the table. when you think about the external sector and the dollar, that's one of several factors pushing the u.s. in terms of the equity markets, it's redistributing. as a whole, it's not affecting global equity returns, but it's pushing returns into markets that benefit from a weaker dollar that's e.m., the u.s., and pushing them away from those who suv when the dollar is weaker. that's japan and that's europe. >> i would actually be far more worried if the dollar is strengthening here. when we had the fed rates in 2015 and signaling rate hikes in 2016 the dollar fell significantly. we at on enjaimer funds were saying if this goes on, we're going to have a recession. fed backed off, oil prices went back up, and the cycle continued. so the way this cycle is going to end is probably like all cycles end higher inflation in the u.s. or europe, tighter monetary policy in u.s. and europe so this weakness on the dollar was a favorable thing tha

, the expectation of the administration is you get the capex, it leads to the pro duct tifft it leadsages this stuff we're seeing up front is not precisely what guys like kevin has set expect the process to be. it takes place over time that wages go up. right now the expectation is that it's about 12 cents on the dollar some of the other things we've seen, lower prices could come from the tax cut, higher salaries also an increase in catch earnings. >> a common strategist as opposed to the ceos. >> we're working on some other stuff. we'll ask the cfos look at the numbers you've seen when these announcements come out. how much is really going to workers when you see it's a portion of it. it's not the majority of it. and what the expectation among the administration is that it's going to be 70 or 80 cents on the dollar that was always on the high side in terms of where conventional wisdom is. >> thanks so much. >> now to washington and this evening's state of the union address. joining us right now is alaska senator dan sullivan good morning to you. >> good morning. good to be back on th

so maybe we don't get that accelerating wage growth or the capex on the back of the tax reform >> inf some of that data coming in, what is your expectation this year for economic growth and beyond >> 2.4%, q4 to q4. that includes about 0.5% on gdp growth, a tailwind from the tax reform not all of it was tax reform, some of it was tax cuts, but it provides a more positive back drop for business investment and for consumers. by february 15th all of us will be getting higher take-home pay. so there's a lot of positive impulse for 2018 if i were to look forward and at some point investors will look forward, you lose a lot of that positive impulse from fiscal policy and you get slower growth in 2019. >> you just had a big morgan stanley equities conference in london, what was your framing of the main questions investors have, particularly as it relates to u.s. equities and u.s. economy versus the rest of the world as they try to balance the portfolios for the year ahead. >> everyone is still trying to gauge is the fed going to do more or less than the three hikes they see this year the co

economy you are seeing if you look at capex intentions across the u.s., surveys suggesting a further pick up. most acceleration you've seen in the business investment part of the u.s. is coming from that pick up in shale we think that's got further to go that will be a support for u.s. growth in the first quarter. >> thank you very much that's mike bell, global market strategist at jpmorgan asset management >>> coming up, announcement gaffes and surprise resignations we are talking about british politics as theresa may reshuffles her cabinet stay with us for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. >>> welcome back to "street signs. silvio burr llesconi says leavig the eurozone would be back for the economy and he backed mario draghi's easing monetary policy. burlesconi's center-right bloc looks to come in first place in t

bringing into question why do corporates need tons of office space for occupation so it means more capexr returns for real estate and it means reit managers and owner also have to be more active as they manage real estate. >> your ten-second view, where do you want to invest next year? offices on the continent as a macro environment improves and residential real estate, niche sectors, self storage, healthcare >> peter, thank you very much for your time this morning >>> not too long to go now until the u.s. opens a quick look at some of the futures. s&p 500 with an implied open up 1 point. dow jones with an implied open up 60 points nasdaq with another positive open, up nearly 14 points. >> the dow is almost going to break through 25,000 today it will be a big day for dow >>> that's it for the show here in london. i'm willem marx. >> i'm joumanna bercetche. "worldwide exchange" is coming up next. is this a phone? or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up

capex trend.tructured themselves in the developed a lot of emerging technologies like iot will benefit from this kind of global capex uptrend. tom: thank you for joining us. up, thailand is set to see another monthly trade surplus that it may not be good news for the authorities. more on that next. this is bloomberg. ♪ ♪ welcome back, we're just checking in on the currency markets, getting some substantial info coming in. have a look at these. look at minutes we the trade numbers out of thailand. look at your currency renter on your bloomberg. we're looking at asia, apart from philippines, virtually every currency is gaining against the u.s. dollar. there has been some substantial appreciation against the dollar, not just this year, but maybe back to the third quarter of luster. tom: let's cross to singapore and our southeast asia after. -- asia editor. thailand recorded another trade surplus, but it might not be good for the thailand authorities. while they be worried -- should they be worried ab

stephen: you would expect at this point in the cycle to see capex picking up.-- that disappointing in the united states. it is entirely rational to expected to pick up, and embedded within the tax plans is an incentive to bring forward capital spending, so that may be another leg to u.s. growth this year. that would come back to what i was saying, good things are happening underneath the surface. 25,000, we will see. shocked, thunderstruck the last time i spoke to the admiral of tufts university. on bloomberg radio today, an important conversation. he knows and understands there is no nuclear button. this is bloomberg. ♪ ♪ this is bloomberg surveillance, i am taylor riggs. debenhams are plunging today. the company warned earnings will be less than expected after a week holiday. their post christmas sales fell 1.3% despite aggressive markdowns. the world's biggest chipmakers and software companies are having to deal with a widespread problem that leaves computers and smartphones open to hacking. a feature in computer chips could give hackers access to sensitive

with a real business right here and now infrastructure buildout and technologies all coming with this capex, this stock is cheap to its peers >> i think intel should be bought aggressively. >> even with the security flaw >> that will be plugged up and fixed. we saw this in equifax, that was an even worse scenario, and remember what i said there, the solution will occur. it's not a detrimental scenario to their model >> why wouldn't you want to own the two hottest areas in tech, ai and blockchain? that's what ibm is >> i get it. ibm has legacy businesses. >> but that's the growth >> the upgrade from rbc, to be fair, cited legacy mainframes which will lead to software and services revenue they said the legacy was a good thing. >> i have not liked ibm for years. collectively we've been right. the last quarter in ibm was shockingly decent. so you have to ask yourself, to bk's point, do people want to sell ibm to january '18 when they report next, with the potential to build upon what was a pretty good quarter? because if they do, instead of being $161 stock, where it currently is, you're probab

as long as the consumer can continue to spend, capex could drop in exports could drop, china could haveg and we would avoid a recession. at some point in the next several years, we would have another growth scale for whatever reason and our confidence in the ability to bail us out would be lower given how low consumer savings is. for mineral it happens with growth scare's. can jack up that savings rate. and not only do you have consumer spending growth, but you have a contraction. next 12 to 18 months, the coast is clear. but at some point if we run savings rates this low, we could have a mild recession. >> what could speed it up or get us there faster? tony: it is hard to see. is, sentiment, growth overseas, where the dollar is, financial conditions, all pointing up. you need them to start to go sideways and then turn over. we had to take a stab at something. it could be the increase at the back of the yield curve but even that to us with the confirmation of economic bulls and the inflation will actually come back in the reality -- the rally in equities is justified based on future gro

we had a 53% right off of -- ff of capex. writeo our targets were forced higher, and after that adjustment, we were looking for an 8% return this year for the entire year, as you just mentioned. we are up 4% already. we do not want to annualized what we have seen so far this year, and we are expecting some gains. i think at some point, it seems like a stock market wants to go about every day -- but at some point, we will see some more volatility. i think what is going on with , andback and forth trading what is going on right now, you are in the very early stages of seeing some chasing going on here. i would argue there is a lot of institutional chasing the back half of last year. the benchmarks, the s&p 500, thing keeps going up every day and you have to be in it. moree going to see some broad chasing going on, in the very early stages. and that can carry you for a while before anything that happens. scarlet: how can you tell that there is chasing? how can you tell this is here, acting out, and people are afraid of missing o

you know, better capex, and so on.k those are companies that have fundamentally adjusted their approach to a new reality, less about volume, and more about return. and now, they are getting this sort of tailwind of higher commodity prices. that is not in the price. matt: there was a time when any time we spoke about inflation, we would talk about old. i just noticed that has not been happening a lot lately. guy: because we are talking about bitcoin. john: bitcoin is the new gold. it's one of the two. matt: i just wanted to show you this chart, 9171, on the bloomberg, which shows gold in white versus tips and blue. it ghosted show that based -- it goes to show that they still track it, gold and its relationship to inflation. i want to get back to -- john stopford, head of multi-asset income at investec asset management -- is going to stick with us. i want to get back to the stocks story, 23 minutes into the stock market open. nejra: mid-cap movers, and starting with william hill, i'm going to look at the retailers. outp

wasefore the tax bill approved, there wasn't a lack of it that caused them to not spend on capex.hat is going to trigger them to do so now? >> the technology is coming in a way that is changing the bargaining position of capital versus labor in the u.s. and elsewhere. terms of downward pressure and wages, you can hire people by the task as opposed i the annual salary for example. the bargaining position for companies has gone up. ofsee is expansion going up hiring people run them through investments. corporate office ability is not good news in terms of investment and productivity. it is not good news in terms of long-term growth. of jobs, butnty there are plenty of low-paying jobs. growth,rms of wage there are bonuses -- does that add any inflationary pressures to the picture? wagesis interesting that -- and a plummet rates in the u.s. are very low. the wage pressure is minimal compared to what we normally expect to see at these kinds of an employment rates. the old-fashioned phillips curve -- of wages and inflation, is not working very well anymore. wageschnology is driving down

>> it depends on what side you're coming from, the things we care about the most is -- capex.e they retained the lessons they learned for the last couple of years or will they go for it again. ? we have some big projects being talked about, a couple of approvals. is whatr side of it will happen to the dividends. does the money return to shareholders after we were told to be patient, or does the money get sold into something more exciting as a way of projects. alix: thank you both. david: what strikes me as, it's more placid this is than it used to be, it used to drive inflation and volatility. she was the founding director of the cbo and omb and a former fed vice chair. this is bloomberg. ♪ this is bloomberg daybreak. here is where we stand. atimism in the markets after two-day drop. a triple digit rally. unemployment in germany fell to a record low. nothing seems to be able to stop the euro. basis points decline. so high and japan, the boj had to go into the bond market and by for the first time since last july. crude getting hit again. copper, you can make an argument that o

there will be more capex. low interest rates have been restraining that kind of activity.ve higher, you will see more. david: computing for the workforce -- it's as they are doing this to catch up with target. employers having to compete for wages, thatn w is a real turnaround. drew: everything takes time. nobody is paying attention when the first couple of people walk out the door. it's only when enough people walk out the door that someone in hr goes, my goodness, we have this issue. it usually boils down to wages. alix: what is the pass through to the consumer? drew: maybe if they pay people they productivity goes up, can afford to pay people more and raise prices. if you are attracting the talent you want to attract and providing the services you want to attract and getting the services out of your employees that you want, you can get higher levels of productivity from those employees. that can offset higher wages. higher wages don't have to be inflationary. david: we talked to the ceo when they did this last time -- they will buy our products, so we can sell our stuff

announced bonuses, raising wages, increasing capex.s working, as the president promised? thegiven how late we are in business cycle, these wage gains were expected even without tax reform? steve: i think it is a tailwind, no question about it, to what was already coming, which was, higher wages and greater capital expenditure. the two major pieces of it in terms of domestic businesses, andlowering of the tax rate one year expensing on capital equipment, the one year expense is a much more meaningful one. get a boost in capital expenditures, 2018, in any event. but i think the way to really look at this tax plan is, not in the impact it has in 2018, but going forward. , this taxas a problem plan, whether you like it or not, is attempting to solve. that is the erosion of production relative to gdp in the united states. this is an attempt to shift terms of trade, favor domestic production. this is going to take three to five years before we see whether it works. it does not stand alone. you have two other pieces of it. one is deregulation

. -- capex isvels that low levels.t cycle we just set ourselves up for the next downturn or do we actually learn from the cycle. francine: how do you invest smart? >> this is a situation where mining assets are invariably wasting assets. you need to constantly replenished. it is a capital sector. we need to invest in projects in sequence, not in parallel. we can't go back to spending $20 billion for every single mining company as they all attempt to bring online a 90 million ton project. and they all want to do exactly the same thing. tom: exactly. you are an expert on this. does anybody have humility anymore? you and i remember the certitude of the australian conglomerate. this company, that company. do they have a new more humble attitude about the dispensing of capital dollars? >> that is the $64,000 question. everybody is talking about klein oftrying to claim the mantle the legendary ceo of rio tinto when this was regarded as a paragon of capital discipline and smart investing. everyone is referencing back to that

what you're likely to see, which is share buybacks, more dividends, you know, may see an increase in capex and also some mergers and acquisitions and what we've seen is we attract a basket of repatriation stocks we have clients positioned there and certainly this year they've been happy with it. >> we're waiting on the etf, bill there's going to be some catchy rept or something. >> it's going to be called cash. >> yeah, tax -- i think that already exists bill and darren, thank you very much, guys. >> thank you >> let's try to get more intel on a threat of a shutdown. let's bring in james honeman. >> good to be with you. >> we've heard from kayla tausche. are they going to be able to get a deal done? >> i think the probability is higher than the markets think. i think negotiations are fluid but the reality is that someone has to blink right now there's a lot of people on the right and left holding firm more senate democrats coming out against the deal nine senate democrats are going to have to cross over and vote with republicans here. and basically kick the can down the road for a month bu

. >> could you see corporations in in as a result capex as a result of this? one could say yes.hand, on low rates on balance sheets, those were there before, and i don't think corporations need to have indications to have new investments. i think it is better for small to midsized businesses and large companies. francine: that was tom mackenzie speaking exclusively with the ubs ceo. joining us is patrick winters. great to have you on the program. when he says he is expecting more volatility to become more normal in 2018, how much does that help the swiss bank? >> listen, i think the first thing you have to know about ubs is it is an investment bank. low volatility hurts the investment bank. people are not trading so much. it also means for the wealth management that clients are less inclined to trade. if there is low volatility, and stock markets are rising, that is still a good thing for wealth management. that means assets under management are rising. francine: there is always someone new heading up wealth management. is this important? >> i think you have to look at the backg

it is likely to be a mix, but the one were paying attention to is the piece about capex.s that hurt earnings and animal spirits in the u.s.? >> when we talk about optimism when it comes to the global economy, it does not mean there are not downside risks. we would put trade disruption as a downside risk. what we saw last week in terms of tariffs on solar panels and washing machines, those are still very, very narrow in scope, but when we talk about bigger disruptions to trade when it comes to bigger industries, when it comes to entire countries, that could cause volatility because it would have an impact on short-term and long-term growth, and that impact would likely be negative. tom: thank you so much. on bloomberg radio, she will continue with us. we will drive forward the morning on bloomberg. let me do a foreign-exchange report right now. yields higher. 108 on yen. sterling gives it back a little bit. from london and from new york, this is bloomberg. ♪ ♪ , the bond yields selloff surging to on multiyear high on earnings and data. the fomc makes a rate decision this w

it is against that backdrop that i think it will be down to the individual companies, how much is capexbe brought forward with bonus payments, how much will be investing by buying other companies. i think dividends will be far back in the cue. tom: why is that? dividends are back because of taxation? james: i think the dividends will be unpopular relative to buybacks. i think we will see more buybacks in more reduction in the capital flows and we could see more bond issuance. mentioned first quarter earnings and folks are looking for the banking earnings coming out in a bit. mr. dimon quiet on bitcoin. bevan, are you overweight on financial shares? james: i am selective in financi als. but i am absent deutsche bank, if you would think of that within a global context. i do think we have to be focused on quality and i worry there's a series of economies that are now overexposed to heavily indebted consumers and overblown housing markets. i will put into that category australia, canada, and ws weden. francine: what is your take on at what point do treasury yields, if they go higher, start

you seerms of capex, corporation starting to invest more going ford as a result of -- corporation startinge hand, one could say , lower the other hand rates and a lot of cash on balance sheets were there before, and i don't think the corporates needed particularly to have new cash in order to make new investments. mean more forly small and midsize businesses than larger businesses. >> what is your view in europe? are you starting to take a positive line? the equities are positive, the macro line positive. or are you more sanguine about the progress? >> there has been a lot of progress and issues avoided in 2017, but if you look at what happened in 2017 and what we see right now, the ongoing brexit , thessions, catalan upcoming elections in italy, that in germany we still don't have a government, so there are still a lot of open deals to be addressed. the fact that there was a little bit of an economic rebound is helping to mitigate some of those fears, but we need to stay focused on making sure those issues are not derailing the good progress made in the last 12-24 months. >> is europe a c

since 2014n arguing this will be one of the longest expansions on record and a capex -- the -- fact thatow is getting higher take-home pay starting sometime in january, if you are a business that can adjust withholding that quickly, but certainly by mid-february. i would like to see more from companies that they are raising permanent base pay. tom: rather than bonuses. ellen: we will take these one off bonuses but i would like to see it generate into higher pay. john herrmann at mufg has a single point estimate of 3.1% unemployment rate and it is out always as well. is the central bank of the united states ready for a 3.7, 3.4%, or 3.1% unemployment rate? i don't think -- it is not within their framework. their it is not within forecast and most economists' forecasts because getting down to the threes is scary. the reality is, regardless of how healthy the labor market is, we have an incredible amount of downward pressure on labor force participation coming from aging populations moving further into old age groups. what does that mean? it means full employment is simply much lower than w

are potentially further boosting this capex cycle we are in.ee main risks, economic and political. the economic is this is the consensus. everyone has bought into global growth. i would expect that to continue, but if there are risks, it's in china, where policy remains very tight. i think the political risk is probably trade. lester it was all about tax. -- last year it was all about tax. this year it is all about trade. donald trump has got to make some decisions regarding transfers and the national security investigation. if there's anything that would dim optimism, it would be the u.s.-china trade. francine: does the correlation come up between those two asset classes? >> i believe we are in an environment where we don't want too many u.s. treasuries. tom was talking about the curve flattening and i believe that will continue. it is a bullish midcycle. i agree, it is a nice chart. it probably feels more mid to late cycle. yesterday we sell weekly claims out of the u.s. it's beginning to look like it is bottoming. you can't really push down

videos on their platform, watch for tax law impact that is going to be important might see additional capexe up about 3% for bottom line it is primary competitor to amazon in cloud competing with product watch for cash may give news about how going to handle that repatriation of that, amount of money, back to you. maria: all right. thanks so much watch all that the president is looking forward he laid out vision last night, offering olive branch to democrats did not exactly get the warm evident reaction from them joining me host of "varney & company" stuart varney toaway in good morning. >> maria i think trump won last night i think democrats lost the president came right out there with a very up beat positive message, he was very inclusive a lot of outreach to the democrats, on immigration, and infrastructure. i think the man looked presidential, in front of a very large audience of tv viewers, 75% whom thought it was nice and good speech very wisconsini big contrast to a adamantlies sour and angry face of total will rejection throughout the speech i don't think that is a winning philosoph

statements and have earnings drop to the bottom and tacks are a part of that >> mary ann, you said capexl see companies putting money to work? >> we see capexa and the return to m&a >> that means what for which sectors? >> your space will do well in the small and mid cap -- chris's sm space will do well we see a lot of potential m&a activity in energy consolidation there, a lot in healthcare, that's something we've been bullish on. stek our forga tech is our favorite the true leadership in the market is technology we moved into the digital period >> technology was a big leader for last year. some people thought that leadership needed to change hands. >> heavens no. this is a major cycle. it's a long-winded answer. but in the 1500s the u.s. economy was driven by agriculture. we had a new major technology called the steam engine, we went into this industrial period. in 2000 we went into the digital period technology is in early stage of birthing it's not just in the united states, it's global. your emerging leadership can be industrials. >> can i ask something on the m&a side talking big m

would be -- >> smaller tax -- >> something like 3.7% another thing i would argue as far as energy capexown substantially from where it was three or four years ago. so in some ways you're in the early innings. the last thing i would say, another three is wild idea in my opinion is that people will get their statements at the end of this week or the beginning of next week. >> their pay statements? >> their pay statements. withholdings -- that's another thing that will change another thing that will happen. >> their financial statements. >> i think the other thing i think you have to look at -- >> people aren't looking at that online come on, jason still using paper? >> in terms of what people are looking for in terms of their bond market matt actual funds. the only other time you've seen redemptions was in 2013 during the taper tantrum. most people in my opinion are looking at bond funds as a proxy for cash they are unaccustomed to losing money in bonds unfortunately on paper they're going to have to start getting accustomed to it. >> are they down last year >> what? >> are they down last

they are investing in capex to give more money to the clients that is exactly how capitalism is supposedo work. >> mary erdoes, excellent point. >> coming up, president trump's comments to cnbc , i'm just surprised it means in my kitchen. so that means no breakfast? voya. helping you to and through retirement. we've been preparing for this day. over the years, paul and i have met regularly with our ameriprise advisor. we plan for everything from retirement to college savings. giving us the ability to add on for an important member of our family. welcome home mom. with the right financial advisor, life can be brilliant. with the extra third rowr... of seats. they think it's theirs. look at them, they have no idea! it's not theirs. it's mine. mine. mine. mine. the new lexus rx 350l with three rows for seven passengers. are you excited about your baby sister coming? experience space for the unexpected with the rx l, part of the rx family. experience amazing at your lexus dealer. ronoh really?g's going on at schwab. thank you clients? well jd power did just rank them highest in investor sati