♪ we are going to take you from new york to london and also cover stories in washington, france, and japan. before we get to those, we have breaking data. consumer sentiment did reach a 13 year high in january. >> the survey was calling for a rating of 98. it came in at 95 .7. .e dig in briefer it appears a cold in the month of february. we will have more on this. as far as the effect on averages, we are still looking at green from the major averages. it is worth noting after yesterday's record bringing

rally, we have more rallies here. -- itree major averages is not just the u.s. it extends globally. we look at a longer-term chart. we see the are at levels from may 2015. quite a rebound from the lows. some has to do of what people are calling reflation expectations under trump. especially after he said he will unveil a phenomenal tax plan within two or three weeks. ,hen we look at the bloomberg and white we have companies with a higher tax rate. in blue, we have the s&p 500 index. this is since the election. we see higher tax rate companies have been outperforming. there is an expectation that if trump were to cut taxes, they

would rally. one stock rallying in a huge way. lambert,king after a and promising to cut debt pension burdens by 1.5%. 28% for sears holdings. a fourthare up for day. best run since december 9. trumps promised business tax -- lifting sentiment. we are also on track for a weekly gain. basic resources up almost 10%. last year, they were top as well, rising 62%. let's stick with that theme. a .3% higher.

biggest gain since november. 20% increase. it decided not to reinstate its dividends. their performance has been boosted by the rebound in prices for steel. chinese stimulus simulating that economy. oil makers around the company -- still prices last year surging by 82%, boosting the world's biggest steelmaker. retailer owns gucci, shares up 4.7%. biggest gain since october. the high space since 2012. we had a rebound and luxury andnd, boosting gucci barmes the latest luxury company

to report. .hares are higher uknson nutrition, taking the consumer products maker into the baby formula market, providing a catalyst for growth as it sails him slows. the $90 -- year youer the last can see very clearly from that. shares are up about 5%. turning to politics, a federal appeals court has refused to reinstate trumps travel ban 26 minutes after the rolling, from tweeted see you in court. the security of our nation is at stake. for more, reporting from the white house, our cohost of

.loomberg law there has been some talk that in the wake of this latest court decision, the ministrations will revise the executive order. perhaps, make it more narrow. what are you hearing? >> that is one of the options on the table. they accept this loss, bring the executive order back and do it again that is more narrowly written so they don't run afoul. this is not in line with the personality of president trump who has gone through a number of legal battles and usually doesn't back down from a fight. settling great looking at president trumps tweet, this is something he is potentially looking at taking to the supreme court and fighting it until all of his legal options are offered table.

tweeted and also cited a law their blog which says the decision here did not or ithe relevant statute without getting deeply into the weeds, can you explain to us the rationale behind the ruling? >> first of all, the blog post says the appeals court got it right. the appeals court>> -- you haveo --p in mind this is not a the appeals court says they had the right to review the policy thesecondly, unless administration can show especially good cause that it's interests are being harmed even worse, we are going to leave in

place the lower court order. immediateppose an appeal would come before the divided court? >> they would. keep in mind there are proceedings for longer-term injunctions still going on at the district court level. should the supreme court decide to turn here. there are only eight. they would need five of them to agree and do what the ninth circuit wasn't and that would be to stop. they would have to get at least one of the court members liberal block and that is a pretty tall order. among all of the things they are expected to discuss, is the travel ban one of the topics that could be up for discussion?

have a lot of different things to discuss. this is mostly an economic focused meeting. they will talk about the trade relations between the u.s. and japan. they will talk about moving forward and talk about national security. it will probably be more focused on the asia-pacific from, things like the south china sea. julie: outside the white house .heir

thank you so much for your perspective. not a bit of breaking news. the uk hasffice of started an investigation of bribery and corruption. coming in with a statement. we will keep you posted on this. the stock is little changed at the moment, but obviously as you leg lowerok a sharp following the headlines. getting back to the story on ,apan and shinto abbe's visit and here's what he said earlier at the u.s. chamber of commerce. >> i wish to build a relationship of trust at the leaders level and to show to people around the>> i wish to ba relationship of world the unwavering alliance between

japan and the united states. i'm hoping it will usher in a new error of bilateral relations. joining us now, julie: -- joining us now, scott. .e heard abbe's comments japanese workers are complaining about american workers taking their jobs. how did he strike that balance between currying favor while also standing up for japan? >> that's a tough question and i think the japanese have sure but with that. in fact, i think some were suggesting it would not big it idea if he came and acted to passively in the face of trump. really, he is coming not only to build a personal relationship, but has made it clear he is

bringing a set of proposals for deepening cooperation with the united states and the headlines there throwing out is all of those proposals go forward and are successful, we maybe looking at 700,000 new jobs and also forget $50 billion of additional benefits over the next 10 years. julie: of these proposals, what is the most important? is there a centerpiece proposal? >> i think the core of this abbege is the soft pledge is going to make private sector investors and also the japanese morenment look investing in u.s. infrastructure projects. this is also a top priority for trump and abbe sees that as a way to demonstrate he is really wanting to work with trump to boost both economies. mark: trump has been outspoken

when it comes to japan's currency. putting that aside, does he appear favorably inclined towards japan? is there a feeling from japan that trump keeps his attention when it comes to negative attention to other countries? >> definitely. i think there is an understanding in japan that donald trump maybe someone who is always needing to bluster in a particular direction and they just don't want it to be towards japan. abbe was very quick to come and and has worked very hard to meet him again. i think trump is favorably inclined and my understanding is the meetings here in washington before they go to florida are relatively short and designed

not necessarily to provide an opportunity for either side to bring up difficult problems to discuss. mark: what about the island disputes? how will trump go about this? could this open the door to china having more of an impression on japan? if trump plays this very carefully? >> that is probably the biggest concern on the japanese side. abbe and his government are anxious to hear from trump that the us-japan security alliance extends to the east china sea which are at the center of a long-standing territorial dispute between japan and china. we heard it last week from secretary matus when he was in tokyo. he did reaffirm that the security alliance does extend and cover u.s. obligations to protect the islands in the event

of an attack. abbe is really hoping he can coax that same pledge out of trump. julie: how do you place the latest development in trumps relationship with china? supportiveying he is of the one china policy? happy place that in the context of the china trump relationship and greater asia as well? move.hink it was a smart i think ahead of this rather lavish welcome for prime minister abbe, it was probably important to reach out to the chinese to make that connection and certainly reaffirm the basic position of the u.s. government that trump intends to continue to respect the one china policy. i will take a lot of the edge of whatever comes out of this weekend that may be less

encouraging for china and japan. julie: thank you so much. senior asia analyst joining us from washington. rallying,ng up, oil opec achieving the best inclined in history. 1.6%.t all today, up this is bloomberg. look at oil today, up 1.6%. this is bloomberg. ♪

mark: live from london and new york, i'm mark martin. -- mark barton.

-- >> we have oil trading nicely. the end of january and about three weeks or so. apparently, this is the best compliance rate in history. there has been a lot of talk. production'sec chart. we see production is a down and close to the target range that was struck at this deal at the end of last year. not surprisingly, energy is at the top of the s&p 500 index. lots of green here. not huge gains, but modest. as for what could be ahead for broke the energy sector and oil, we have a great chart here. we go to the bloomberg and take a look. this is a longer term chart.

in orange, we have the xle. areoil and the blue boxes one million barrels or more. we see the oil and energy sector have a tendency to rally and a big way. it is also notable this convergence, that is called an inverse head and shoulder pattern. we see typically it would lead to gains some may oil energy -- so maybe oil and energy will continue -- sectors ahead, which -- still effective by this is bloomberg. ♪

julie: julie: this is bloomberg markets. for our index segment. here to discuss what this trend is eric function this. how are things this effect? >> let's start with passive. passive funds own about 10% of all s&p stocks. if you think about where the 13%

comes from, it is been guard and black rock. those two companies are in the top two holders of eight s&p 200 socks. you can see how much of each sector. in terms of what this means, they are passive. these firms are pretty active. they have written letters, corporate teams, part of an investor stewardship collective. they are very interested nothing much in effecting day-to-day decisions, but long-term value in julie: keeping boards independent, making sure they communicate. short-termmbating and going after long-term value. that is interesting because they are passive. abbe dividing their attention equally? what you invest, and say are these people doing in terms of getting more value. the answer is -- they are not

activist investors. some people thought they would be pushovers for activist, who would then be able to run rampant. against they vote activists or about half the time. they also vote against management about 10% of the time. they are very independent and do the research. what peopleombats might perceive about a passive hunch. >> as we look at the list, there are some sectors or they do on more than 12%. what determines that? >> it is interesting. ,n utilities and financials yields of the search and , they owned a little bit more utility stock. in some cases, they and up owning more than 13% of the stock.

there's a few cases where they owned collectively 33% because it happens to be a small sized large cap. you have it together and they can get up to ownership levels to about a third of the company. >> presumably, that waxes and wanes? >>. that's right. i think the 13% is a solid foundation. go?ow high could that obviously there are huge amounts of money going into these etf funds. >> if you're already at 13%, then guard and blackrock take $.75 for every new dollar invested. if you were to extrapolate the flows going forward, -- they own 6% of apple, but the biggest fund only owns 2%. you can own up to 10%. -- at this rate it

would take 20 years and a lot can happen. it is not implausible, probably unrealistic, but that is how big this could get. >> interesting. eric.you mark: still ahead, boosting the greenback. reversed the trump slump in the dollar? today, the stock index is gaining. this is bloomberg. ♪

quite that looks different from yesterday, a non-snowing new york.

live from new york and london. i am julie hyman. mark: i am mark barton. where is this now? julie: it is still there. mark: i believe you. emma chandra has more from our newsroom. emma: president trump issued his verdict on the appeals court that refused to reinstate his travel ban. in a tweet, he called it a disgraceful decision. a three-judge panel concluded the government failed to make its case that the freeze on the ban should be lifted and rejected the argument that courts cannot reveal presidential decision on immigration. the next stop will likely be the supreme court. not long from now, japan prime minister may said president trump. he has criticized japan's trade policies. today at the chamber of commerce, abe pointed out that 80% of the japanese cars intended for the american market are built in the u.s. and he is not concerned about it. japan complains

that his or her job was taken away by the americans because the japanese have gained in business, as well. truly, a win-win relationship. attended a wreathlaying ceremony at arlington national cemetery. after he meets a president trump, they will fly to the resort in florida. president trump questioned u.s. support for the one china policy. it acknowledges that china and taiwan are part of this and country. now, the president reaffirmed it in a call with president of china. it was the first time you spoke in president with the chinese leader. china's trade service with the u.s. fell to seven low -- a seven-month low. that may ease the threat of [indiscernible] global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. mark? mark: thank you.

bonds go selling off, dollar rising after u.s. president trump said he will unveil a phenomenal plan to overhaul business taxes, possibly the next weeks. joining us with this take on what trumps policy could mean for markets and impacting assets, management had it fixed income john stoppard. the couple of days ago, the trump trade is dead, four days uprising tenure, four years of declining yields, -- four days at declining yield. two days later, we are talking about this phenomenal business tax plan that the president will unveil in the next couple of weeks. how do you trade this schizophrenic market? john: i think you have to bear in mind that trump has made a lot of promises and they are not all business friendly. some are unfriendly, inflationary, dollar positive, negative, so on. i think our assessment is that he probably does want to go down

as somebody who has been beneficial to the u.s. economy and that probably means more of a bias toward the good things in the bad things. we will get plenty of noise and uncertainty along the way. one of the key things for us is to have an underlying field where we are going but also focus on where people are positioned and when positioning gets extreme in one direction, it is not very hard for the market to have a correctional reversal. mark: where is the extreme right now? john: pretty extreme in the bond market. most of the survey type numbers suggest that people got pretty short in the sort of first leg of the trump rally. i think we are still working that. also, the bond market reaction was fairly muted to the phenomenal deal yesterday. i think people are still relatively skeptical one equities and equities making new highs. i think people got quite a long

the dollar and positioning their looks much more balanced. mark: this is a charge for that schizophrenic take on the market and take on trump, of course. he suggests he was going on the more maybe the fiscal stuff and i will focus on the negative, which he suggested could push the guild down to 2% -- push the two-year yield by 2%. he knowledged about the trade, and said maybe we could go up to 4%. jeffrey suggested 3% this year. are you toward three or toward ?wo john: i think we are toward three. if you forget about trump are minute, there is an acceleration a global activity that has been going on for a while and it is not just reactivity but nominal growth, so inflationary measures but not in the big way. nominal growth books higher this year than it has been for a while since the crisis initial recovery.

challenginghat is a environment for the bonds. on top of that coming have central bankers beginning to every uc policy, maybe not quickly, and if you throw in the sort of trump next, most of his policies, good and bad, are to some extent inflationary. we think the risk is still up. mark: so a bit even. they have rolled over a bit. is that temporary or will they go northward again? john: i would say so. the other factor is stabilization or drop back in oil prices and they have a big influence on breakevens. we have had big inventory increases that were unexpected and oil earlier in the week. today, we have had the ia coming out and saying, actually, opec compliance is good, demand is picking up, so you have the flip side. we are relatively constructed that oil, the clearing price for oil over the next years will be closer to $65 a barrel rather

than $55, so that she put pressure on breakevens over the next year or so. plus, all the other step in terms of trump. mark: let's talk about europe. monday was a big day, that is and we saw the yielding on the french-german 10 year. why didn't to levels we have not seen since 2012 and levels since 2014. some of the chart highlights. yellow is the french line but it is the left-hand column you want to look for france, right hand for italy. the french wider than the italian spread. read what is going on. french election, but how much write a good periphery -- but how much wider could the spreads get as we approach the key political offense this year? john: we clearly have a lot of event risk ahead of us. we have the dutch election in a month or so than the various rounds of the french residential

election, the sort of ever live threat at some point this year of having an italian election. generally, we feel that the anticipation might he worse than the reality, so people will build in some risk premium in advance, but there are few scenarios with the possible exception of the italian election, where a eurosceptic party will be in the sort of we could see risk premium continue to build and they are probably built most in the government bond market if you look at things like the corporate want market and credit spreads are less evidence of a risk premium and maybe with equities, so maybe there are other ways of playing this, but if the risk premium goes up for the right risk premium into the event but it may turn out. mark: [indiscernible]

favorite part of the fixed income credit space right now is -- john: we are much more constructive on the equity side. with fixed income, credits had a fantastic run over the last 12 months with the recovering oil crisis and collapse in credit spread but we prefer u.s. high-yield to europe. europe is hard to call it high-yield when the main index is at some 3.4% or whatever it is at the moment. yields in the u.s. i think is more in favor of some of the sort of smaller government markets, so places like new zealand starting to build in high rates, which, we will not happen for a while, australia, maybe canada. you have to look around generally on fixed income with the rising nominal growth environment. , do comen stopford back. julie? isie: coming up, expedia fixing increasing costs as they work to get the acquisition of

homeaway. ill president trump's top of an effect travel booking? this is bloomberg. ♪

you are watching bloomberg. i am julie hyman. mark: and i am mark barton. this is your global business report. opec is making progress in reducing the world supply. the have reached the top compliance rate in their history as they implement their latest cut. julie: a big gain in full year earnings parade we will hear from ceo carlos ghosn, who will talk about business in an uncertain political climate. take, thethe quick battle over sending skilled

workers into the united states. will president trump do away with the program known as the h 1v visa? had the first month of an agreement aimed at ending the oil glut. according to the international energy agency, saudi arabia produced production are more than promised. french carmaker says profits assumed 37% last year, but uncertainty over the french election looms. the chief executive spoke with bloomberg about what a possible french exit from the eu could mean for business. carlos: it is something possible but something riches with a probability which is very low, but still possible. low within the contingency plan for the moment, but obviously, if this is the case, we will have to reshuffle completely our industrial strategy.

records ben kaiser has agreed to buy baby formula maker [indiscernible] 16.6 billion dollars in cash, wait way for the british consumer products company to jumpstart sales and increase presence in asia. -- boosting the stake in the paris of fame park, they are .uying a 9% stake in the park back is disney 86% and it wants to buy the rest . julie: timeout for our bloomberg quick take. with some u.s. business is talking about immigration, they picture people they would like to bring in, those with science, math or computer skills. president trump is considering overhauling the visa program used by tech companies to hire thousands each year. the result could [indiscernible]

businesses worldwide. he has called for an end to the visa program used mostly to higher tech workers. in 2016, the tequesta one week to exhaust the 85,000 allotted each it, most of which go to indian workers. facebook, google and intel have lobbied to increase the visas. h one b's are not the only way u.s. businesses can hire foreigners. agriculture workers, under the h2v program. and athletes and professional actors can get some. it kind after world war ii. the war led to a duracell farmworkers, said the u.s. a lot of mexican laborers and for short-term work. in 1990, congress created that forfor nurses and h1b skilled workers. in 2014, president obama

expanded the program that allowed foreign graduates in the sciences to look in the u.s. for up to 29 months. document is employers in tech and agriculture say there aren't enough americans available to fill the jobs. they also worried that it is good for global competition to hire more skilled workers. opponents point to an increase in u.s. students seeking degrees in science and they noted that offshore outsourcing forms the cpap of those pieces. this predated president trump and continues separately from the court battle over his travel ban. you can read more about the visas and quick takes at ni quick on the bloomberg. head to bloomberg.com for more stories. mark: in business, online travel site expedia has fourth-quarter results that fell short of estimates, spending more on investments in homeaway. joining us for more is bloomberg's technology technology caroline hyde, who is

in san francisco. to see it today. let's get to it. our guest is the cfo of expedia, mark, joining us to talk through these numbers we have seen to date and yesterday, site weakness in the share price. talk us through the margin, particularly with homeaway. you say margins will stop the increase in the third quarter, why then? greatwe felt we had a quarter that delivered broadly in line with expectations on a full gear basis. we did about 72 billions of dollars of that gains, up about 39%. as we look into 2017, we are making big investments at homeaway. homeaway is making an impressive transition from a traditional listings business to a real online booking e-commerce business and we will that, invest in hiring more talented

product and technology folks and sales and marketing. we are driving toward an impressive target in 2018 of 300 $50 million of adjustment for the business. caroline: what drives margins higher in the third quarter? pick up in revenue, stocks come down? homeaway is transitioning the monetization model. blaster, they added a traveler see such that consumers are they made the booking paid a small fee and in exchange, but with confidence guarantee, where homeaway would step in front of them, make sure they got their damage deposit back, etc. that is helping revenue rollout again in the middle of this past year, 2016, and we will see the full impact of that toward the back cap of 2017. caroline: we also see many way, airbnbnb and, expanding itself, looking at flights, entertainment while you are on the holiday. are you starting to see more overlap between homeaway and

airbnb and how do you see that level of competition? mark: absolutely there is more overlap and i think there will be more to come. the alternative accommodation space is about a $100 billion market. homeaway is going after it, having great traction, airbnb going after it. what we found in the travel industry is it is so bid, there is always room for strong players out there to do very well at the same time. caroline: aaron b has luxury retreats in canada. do you have the same business? mark: we do not comment on acquisitions. homeaway is happy with brands and businesses right now and are much more focused on core execution the next -- than acquisitions at the moment. caroline: i will shift your attention to politics. it is inescapable. the travel ban has been front

and center. you see it has not had any particular or meaningful effect on the business. do you see that the comes back into full-fledged? will it eventually hit travel bookings or the sentiment of traveling? mark: i think it is a real risk. at the end of the -- at the time of the travel ban, we did see volatility. they were several impacted really in a statement chaos. we had a number of employees impacted. things have settled down a little bit but to the extent that the travel ban comes back into effect, they could have immediate impact. beyond that, the travel ban to theust be damaging reputation of the united states, people from all over the world travels to the u.s., tourism is one of our biggest industries that one in nine workers in the u.s. is engaged in the tourism industry.

to the extent that the brand of the usa that stands for openness, tolerance, freedom is it damaged by these travel brands, it could impact tourism and that is something to be concerned about. caroline: you have come out in support of washington state. you have clearly made their voices heard, but how do you feel about the administration in general? we see stocks rallying today on the views of donald trump and tax reforms. do you see net negative or positive when you look at expedia and the current administration? for net are hopeful positive. rethink their positive moves on tax reform that we are probably in favor of. the devil is in the detail with all of these but we would like to see corporate tax reform. spurring economic activity for some of the infrastructure spending that administrations propose are in the right direction. on the negative side, we are

concerned about the preservation of one of the greatest brands in .he world, which is brand usa caroline: it has been wonderful having your time today. mark, alive with us. julie: caroline hyde in san francisco, thank you. ♪

this is bloomberg markets. i am julie hyman with mark barton in london. the world's largest cosmetic company l'oreal met analyst estimates but they say 2017 will be eight "chaotic year because of political risk." bloomberg spoke with the ceo. bethis year will truly

chaotic. last year was chaotic, too. [indiscernible] definitely, it is giving more and more. the beauty market was pretty good. plus 4% and our business is pretty good. we will see. expect in france for it to continue? >> i am not sure yet. i hope not. it is true that last year, france was [indiscernible] market of all, itmarket of all,. it was the worst market in the world, so i would really hope that this year will get better. and we will see. >> do you have a contingency plan in case of france's exit that europe? >> no. we would think about it later. [laughter] for the moment, i prefer not to direction.is

the think it would be really bad. >> what brand specifically could potentially be impacted by this new u.s. protection? >> i do not know. it depends on what kind of protection it is. it is important to understand that we have always had the policy of manufacturing where we for many years, we manufactured in the u.s. for american consumers, in china for chinese consumers, so in fact, most of what we sell in the u.s. is made in the u.s. arettle bit imports important, some luxury brands, for example, are imported from europe, but at the same time, we will switch from the u.s. [indiscernible] and when yourands

let it go, it is pretty balanced. julie: that was our interview with l'oreal chairman john paul -- jean-paul. stocks trading partially on the announcement of their body shop. the company is exploring all options for their brand, which is not seen a profit over the last three years. coming up, we are following stocks. 35 minutes into the end of the friday session. stocks are gaining for the fourth consecutive day. this is bloomberg. ♪

mark: 4:00 p.m. in london, midnight in hong kong, 11:00 in new york. i am mark barton. julie: i am julie hyman. this is the european close on

bloomberg markets. we will take you from new york to london in the next hour. plus, stores out of dallas, germany and japan. here at the top stories on the bloomberg and around the world. the trade moving on president trump. really get a sustained rally in the dollar as the president promises a phenomenal tax plan? julie: president trump is due to meet prime minister of japan at the white house any moment. the prime minister has already pitched japanese business interest to the u.s. chamber of commerce. how will having a developer in the white house affect global real estate deals? we will discuss the trump impacted real estate. the company just reported earnings that topped the forecast. mark: have a look