Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20170920

Citi reiterating its bullish call and aluminum getting a nice pop, at the highest level in five years. David we will be bringing you live coverage of the blue ball Bloomberg Global business form. We have a panel between Christine Lagarde, the Prime Minister of canada and the netherlands, and larry fink of black rock. That begins at 8 30 a. M. This morning right here in new york. Lets get an update on what is making news outside the Business World. Hurricane maria made landfall in puerto rico. The category four storm had top wind of 155 Miles Per Hour when it came ashore on the southeastern coast of the island. Ago, when arrigo suffered a billion dollars in damage from Hurricane Irma. Puerto rico suffered a billion dollars in damage from Hurricane Irma. Mexican Officials Say at least 270 people were 217 people were killed in an earthquake that collapsed buildings and left millions without power. Hundreds may be trapped in the rubble. Investors are waiting to see what Federal Reserve policy makers say at the end of their two day meeting. It is expected they will start shrinking their Balance Sheet. Investors are looking for clues as to when the fed may raise Interest Rates again. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Alix it is fed day, but you definitely should care about it. Carl riccadonna as our senior u. S. Economist. Cannot get it out there. Carl, the real issue will be with the timing of the Balance Sheet reduction. Carl this has been so well telegraphed that even though it is a major moment for the history of central banking in the western world, i have been so smoothly communicated that it should have Little Market impact initially because everyone is basically understanding this to start at the beginning of october. Further on . Bout how will you measure the success of the Balance Sheet reduction and the measure on markets impact on markets . Carl this is supposed to operate passively in the background, so if the fed continues to use Interest Rates as an active policy lever relatively on the timeline they are providing, two to three rate hikes over the next couple of years, that will be the determinant that this has been a success. If the fed stops ray kites that may meanikes this was too much tubing soon. Too soon. Alix we have a 50 chance of a rate hike in the back half of this year which winds up meeting december. What will be the signal we will get from Janet Yellens press conference that could move the needle . Will depend largely on her commentary regarding inflation. The economy is doing decently in terms of growth prospects,mployment, and job creation and the level of unemployment so the real variable will be how she is interpreting the recent soft patch in inflation data, which has continued to extend over the last several months. Initially the fed wrote that office being transitory. Thea significant cadre of fed is confessing this is a bigger problem, not just cell phone contracts and drug pricing but persistent low inflation. Her tone on that will be key in setting the tone for december. Using the thatcher expression, the lady is not for turning. Janet yellen tends to stand by her forecast and does not easily dissuade. Research,absolute cofounder and chief strategist. What are we looking at from a Balance Sheet perspective . Ian janet yellen has already told us she wants it to be like watching paint try. The idea is it is preannounced and the scale will be modest initially and building up from 10 billion a month to Something Like 40 billion to 50 billion a month. In a year or so. And a maximum level. I think what we are watching for is that, well quantitative tightening have the opposite effect of quantitative easing . It was all supposed to be about wealth effects, driving down Interest Rates and that is why it worked. Now we are being told the opposite will not have an impact and that is the big challenge for the market. Our view is you will see real Interest Rates go up and that will be a bit of a squeeze. Water rating that squeeze is the real key. Jonathan looking at the situation at the fed it seems like the Balance Sheet discussion has bailed them out on making the decision about rates. Ian the economy has bailed them out as well. We have constantly heard ideas they will be raising rates and the Economic Growth sticks around the 2 level. We are worried that sticks it to percent this year and even though the dot plots might suggest they are hoping for a rate hike we are nervous they will not pull it off. James sweeney joins us around the table as well. What are you looking for from todays meeting . James we expect the announcement of reduction every investments, and i expect yellen to continue to be very reasonable in terms of the description of the data. I think a description of the data right now will emphasize the hurricanes and the uncertainty that will be in the numbers ahead. We will get some numbers that are probably too strong and too week and they should be because the storm will jumble things up in the near term. I think the december hike is still on the table. The question is the markets reaction. This brings into question reserve balances and what happens in funding markets as a result. It brings into question duration securities asrm you play with the supply of longterm securities. Thinking about this in terms of those different channels as the right way to assess this move. David what does the fed have to do to tighten conditions . Raising rates does not tighten conditions. Do we become concerned that they cannot tighten conditions . Ian probably not because when you look at the underlying strength of the economy it is not showing a great deal of excess. The supply constraint you get from the hurricane effect will push up inflation temporarily and make the claim numbers pick up sharply, but that will not be signaling an underlying strength in the u. S. Economy. Our sense is how much you need to tighten just from Interest Rate perspective, i think they want to do that because they are trying to normalize things and they are saying with the ism at 58. 8, if we do not do it now we will never do it. Underlying that is a soggy economy. Chiefcatherine mann is a economist at the oecd and weighed in on what would happen to the economy and the market on a 25 or 50 basis point hike. Looking for 25 basis points and continued on with a very clear pattern of how they plan to change the size of the Balance Sheet and allow things to mature and not reinvest. Alix she also said it will not be a big deal for businesses that will take the fluff out of the financial market. Ian i think what we have seen is that liquidity has found its way into financial markets. We have low levels of bond markets and high priceearnings on equity markets. Trying to get that down, that is going to come through the picking up of Interest Rates gradually. We think nothing more this year, two next year and probably a shortterm appreciation of the dollar back up, that is another form of tightening that the fed might allow. It is hard to get that fluff out cute markets are extended and vulnerable from our perspective. We think they will come back pretty endogenously. Alix 5 , 10 . Ian 10 . The markets do not fully reversed until we see enough monetary tightening to reverse unemployment and that does not look to be happening anytime soon. And James Harnett sweeney will be sticking with us. Have reaction from alice rivlin and Jeff Rosenberg of black rock. We will take Janet Yellens remarks following the fed decision at 2 30. Live from bloomberg, new york, this is bloomberg. The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. That was President Trump yesterday in his first address to the uns general assembly. He also targeted iran calling it a corrupt dictatorship that supports terrorism. Joining us is marty schenker. I have to give you credit. You predicted if the president left washington they would start getting some stuff done so he comes to new york to talk about iran and north korea, and back at the ranch they are doing some stuff. Marty it looks like they are getting close to a deal on the budget and that would accommodate 1. 5 trillion in tax cuts which would accommodate tax reform. A are making some progress, although they are not making great progress on health care. David where are they on health care . Marty end of the month if they want to get 50 votes on reconciliation. Mitch mcconnell is not guaranteeing a vote yet. It would be totally insane for him to have a vote if he did not have the actual approval in hand. Now jimmy kimmel last night that a monologue that is going viral on youtube, accusing cassidy of lying to him on air. That is going to be a factor. David jimmy kimmel may influence whether we get health care . Marty it is a different world we are living in. He has a son with openheart surgery and people respond to him. David his first monologue when viral. Marty there is a second one becoming viral today and he is asking all of his listeners and watchers to message their congressmen and say, do not pass this bill. David coming back to tax , andm, what is the chance is this going to be like everything and the kitchen sink . We will give everybody something and run up the deficit . Marty there are still some deficit hawks in congress who will not be happy, but if they craft some sort of bipartisan bill it is possible. I would actually be cautious about using the term tax reform. It may be a tax cut of significance, but how much of it will be permanent is the key question. David marty schenker, bloomberg Senior Editor for government. Alix still with us are ian harnett and James Sweeney. A potential 1. 5 trillion tax cut, tax reform. Do we need it . James no, we do not need it. Frankly, i think the Unemployment Rate is reasonably low in the u. S. , the economy is growing. Incomes are not growing evenly across economy but tax breaks do not flow evenly either. I do not think this is something which the economy needs. The fact that we are talking about not really tightening Monetary Policy meaningfully anytime soon means the economy is still a little bit sluggish. But it is ok. It is a very kind of balanced fiction right now. Alix to just push back your 10 potential pullback if you get that kind of tax infusion . Ian i think what you would do at that stage is left that Economic Activity. When i do think needs to happen is that we need to get nominal growth higher, so one of the frustrations that we have with the policy environment is that every time you just get to the point where growth might be getting Strong Enough at we can get some headwind into getting the debt to gdp ratios down, nominal growth picking up, inflation getting higher, than policy makers seem to knock it on the head. Statet to get to that the velocity because otherwise getting the debt to gdp ratios down will take 20 years. Jonathan for much of our againce, they have heard and again from bernanke and yellen that d. C. Needs to do more. People will find it funny that d. C. Is about to do more but we do not need it. James the Unemployment Rate was much higher when bernanke was saying those things and now we are in hiking mode. About central bank talks fiscal policy they are not necessarily calling for massive stimulus. I think the politics are very unlikely to deliver massive stimulus. Bewe get a tax bill, it may some stimulus but it will not be a massive stimulus. Jonathan is it a Financial Stability risk if they inject 1. 5 trillion into the economy in d. C. . James i do not think so, not really. I do not think the fiscal policy is a financial solution. Either, butdo not given where rates are if you start pushing stimulus into the economy . James we have a negative term premium right now. Investors are not being compensated for holding longerterm bonds and that is likely to unwind, causing market turbulence. People will lose money and you will have Financial Stability issues. I do not think that is so fiscal. That is just markets going from here to there. Well the Balance Sheet potential change today trigger that move . It is possible, something we are on the lookout for. Well a fiscal announcement triggered that move . Hat is possible well good growth and normal Inflation Numbers trigger that growth . You start to see a lot of candidates for higher Interest Rates over the next weeks and months if these things fall into place. David can you draw a direct line between Corporate Tax cuts and underlying growth, or middleclass ian i think it is more the corporate sector tax cuts. Investment tends to drive up the , broadening further out from lowwage jobs which have been the bulk of this employment rate to broadening it out to allow the economy to have a much stronger selfsustaining growth path that will get the debt to gdp numbers down. Our concern is we are still not on that path and it is so fragile. What we can see is as soon as you get talk about tax cuts, the bond yields will go back up, Economic Activity slows, and that is where we are stuck in this muted Economic Cycle that is getting no where in terms of resolving the debt overhang that persists from the financial crisis. Alix it is like a line that goes like this. We used big cycles that to have seemed to be things of the past and now we are seeing smaller, many cycles that investors have to deal with. Alix both of you guys are sticking with us. We are live from the Bloomberg Global Business Forum. Panel you have got to see Christine Lagarde monitoring a panel with larry think, steve schwarzman, and much more. This is bloomberg. Emma this is bloomberg daybreak. That contentious eightmonth battle over who will buy toshibas memory june it chip unit has come to an end. The board has agreed to sell the theyunit, saying previously offered 19 billion for the unit. A new deal will create the second largest steel maker in europe. They have agreed to merge their european steel business, aimed at ending overcapacity. It is likely to result in 4000 job losses. A warning on Deutsche Bank, Autonomous Research says the ender may be beyond repair amid its mighty bond trading business. Beay that unit cannot counted on to drive Deutsche Banks profits and they warn investors are questioning leadership. Call fromt damning autonomous is hitting shares of stock today. I will just quote here a little bit from what Stuart Graham had to say. He said the strength of a bank pins on trust of a brand, andnce sheet technology, says they have not invested in technology for years and years and simply cannot catch up with the likes of jpmorgan. Is his analysis plausible . Ian absolutely. They are very knowledgeable in this area. We have a situation where the eurozone banks are still questioned and generally there are still question marks. I think Deutsche Bank remains one of the potential hotspots. We saw they escaped the credit crunch relatively well but they probably papered over some of the gaps and our worry is that is coming home to roost. Will they go bust . No. The clue is in the name. Germany will not let that happen. Will they be broken up, restructured . Yes, that is very likely. The underlying problem is still one about such a large book of assets and how they actually run those down. David he focused on reputational damage at almost all of the european banks have had problems and so have the u. S. Banks. What struckgy is me, they have really not invested in technology and that has become so critically important. Ch has become critical in the banking sector. I am not aware on the detail of how much they spent but this highlights that you have to be on top of your game if you are going to survive in this environment, and that is true for all the major banking players. Jonathan ian hart at sticking with us. We are live from the Bloomberg Business Global Business forum all day. We will be catching up with former president bill clinton , steveng apple, tim cook schwarzman, the lineup is phenomenal. A lot more coming from the Bloomberg Global Business Forum all day. Jonathan two hours away from the cash open in new york city. Record high after record high on the xp market. This morning, futures are dead flat on the dow and s p 500. Everything is stronger against the dollar. A move over the last five days 1 10 of 1 , positive on the day so far. 1. 3546, up about 32 on the back of some decent retail sales. Bit lower,a little about two basis points at 2. 23. That is your cross asset picture. Lets get you some headlines outside of the Business World. Emma the governor of puerto rico is warning that the island has not suffered anything like this in 100 years. Hurricane maria slammed into the coast of the u. S. Commonwealth this morning. It is still a category four storm with winds up to 155 Miles Per Hour. Just two weeks ago Hurricane Irma caused 1 billion of damage. For the second time this month, execute a was hit by a killer earthquake measuring 7. 2, mexico was hit by a killer earthquake, measuring 7. 2. 217 people are dead. This is on the 32nd anniversary of a previous one that killed thousands of people. According to people familiar with the matter, President Trump told the leaders of both countries and warned them against it. Military action would trigger a crisis that would only benefit iran. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Jonathan amazing what happens behind the scenes. David exactly, a little frightening. Anathan i would like to be fly on the wall, a conversation between Boris Johnson and the Prime Minister. Reportedcial times tos is mays first attempt break a deadlock in brussels. She will include the offer in her speech in florence, italy on friday. Still with us are James Sweeney and ian hart net. I understand that Boris Johnson will also be in florence on friday. Apparently he is no longer threatening to resign. What do you make of the current spat . Ian it highlights the fact that we have a very unstable environment. When you get political uncertainty, that tends to raise risk premia for assets. Sterling at 1. 35, we think that is unsustainable. Sterling has got to be a lot lower. The politics of the u. K. Are still chaotic and we do not like u. K. Assets, bonds, or the market. Jonathan Governor Carney says the outlook looks risky yet he is still talking up a rate hike. You are saying the rate hike is coming but you think it is a mistake. James the textbook says you could do it, retail sales are little better, inflation is high. The inflation thing is a temporary boost driven by the currency, and we have a muted growth forecast for the u. K. Going forward. Some brexit expectations are related to that. I think or realworld, that is the question at this point but i do have confidence in carney. , what is the reason to hike right now . They signaled they want to in the next several months, what why get involved in brexit . If they moved they are getting themselves more involved. Ian there is does cofactors. My sense two factors. My sense is that they got together and said we need to normalize. I think there is a synchronized incentive. Is remember the inflation target and that devaluation of sterling that we saw previously is driving up those Inflation Numbers. Mr. Carney cannot meet his inflation targets, and to be seen to being doing something, that is what is driving that rate rise. The danger is the u. K. Economy is only growing as it is because the savings rate has collapsed. U. K. Consumers have been told, it has not changed. They carried on spending they have had to draw down there savings because everything is getting more expensive, and that is why the credit number is going up. We are having to borrow and that is the danger. Jonathan the former governor of england mervyn king had an inflation target. This is what he had to say earlier about why things might be different. Lord king what they want to do is make sure any movements and inflation resulting from the Exchange Rate do not feed through two wages or inflation expectations, and that is something that is probably harder for them now than it was when i was there because unemployment is so much lower. That is something they will keep a careful eye on. Hadthan you also unemployment of 7 . How nervous are they about unemployment drifting lower . James i think what he said is a statement of the policy, textbook orthodoxy that carney is following but what ian said earlier about the global element, there are fashions, moods in Central Banks globally. Right now, getting away from zero bound, may be getting away from negative rates is the plan for Central Banks looking out a couple years. I think the u. K. May be is taking a little bit of a global push in the back on this move as well as the domestic textbook rationale. Even if the first pays rationale does not seem there. Jonathan is a 25 basis point hike in december a policy mistake question mark mistake . James it might be but 25 basis points do not usually change the trajectory. David overhanging is the uncertainty over brexit, and reports are that theresa may will move forward associations by putting 20 billion pounds on the table. If that moves them forward, lets talk about trade and participation in the markets. What will that due to the british economy and the bank of england . Ian we have this lack of clarity at the current time which is forcing Global Corporate in the u. K. To think about where they will be located Going Forward. If we get some clarity the u. K. Is trying to find some accommodation at the moment there seems to be no accommodation with the european that that would be a way forward and might help stabilize the economy to some extent. As we get closer to that twoyear deadline without any kind of compromise, the danger is the chaotic brexit becomes the option and you will see a mass exodus from the u. K. Inx if we see a rate hike november, the probability of one and done is pretty high, right . Ian yes. Alix why bother at all . If everyone knows it is one and done, does it negate the impact of a hike . James i think it is what mervyn king said, which is you are trying to prevent the higher inflation now which has come from the currency move, from becoming an entrenched expectation Going Forward so you will run higher inflation for a given level of growth. That sounds like a really nerdy, boring answer. [laughter] i think the market does not think that way, the central bankers think that way. Jonathan unsecured lending is expanding at five times the pace of wages. How is this happening, you nailed it when he talked about the credit situation. I am wondering whether this has started to bleed into the Monetary Policy decision and they do not want to say it. I think there is some of that, but the real problem is that debt overhang is still there for the global economy. We have got to get this balance between getting Strong Enough growth but not creating an environment that becomes unstable once again. Our worry is it is a very tough game to navigate. They are concerned about this unsecured lending and the degree to which credit expansion is wasng through, but as alix saying, is 25 basis points going to do anything . Do you need a strategy of how to get the economy under control . Alix at least pretend it is not one and done. David pretending works well. James sweeney of Credit Suisse and james ian harnett, thank you for being here. Coming up this hour, stephen ross. He has just completed nearly 4 billion in the financing of his next project, and has a big announcement to make right here with us. Live from new york, this is bloomberg. Emma this is bloomberg daybreak, i am emma chandra. , ceo ofp, tim cook apple, live from the Bloomberg Global Business Forum. This is bloomberg. Today we are live from the Bloomberg Global Business Forum in new york, speaking with World Leaders, global ceos, and business titans. Ahead of the forum Francine Lacqua sat down with Michael Bloomberg and they talked about the importance of bringing together leaders of industry right now. We have 55 heads of state, 250 odd leaders, captains of industry if you will. They will get ideas, build relationships. I do not know whether there will be a deal of, will you buy my company or my whole country . That will not happen. You can see a lot of people that you would not otherwise see. I will pick up the phone, call them, and go see them, except a lot of times i do not know who to call. I do not know that there is somebody there that is interested, what if i hear them speak or somebody introduces me and says, you should meet this iy or this woman, ok, then start something. The fact that they are all willing to come means tells you they think it is interesting. I think there is an opening here. Davos has gone on for a long time, and there is still a place for it, but there is also a place for a oneday conference, particularly in new york, sort of the center in the world in many senses. Because the u. N. Is here, government leaders are here, and new york represents the world in a way no other city does. Close, butbe comes america, remember, it is a funny country. We have more embassies in new york than washington, d. C. Because there are a lot of Company Company countries that do not have a relation that are in the united nations. If youre going to build products of the world, you have to go where the world is, talk to the world. Ofncine do you think a lot these World Leaders share the same concerns . Fundamentally, everybody has to provide services for their citizens or they do not stay in government. Everybody has got security concerns, not just big war but that and terrorist attacks can kill a lot of people and destroy a lot of industry. Hey all have Health Issues we are all dealing with how do you pay for health care . It gets better but more expensive all the time, and that will probably continue. There is no easy answers. Can you rain train people retrain people . The public has to learn more today than ever before. Alix that was Michael Bloomberg, and joining us from the Bloomberg Business forum is Francine Lacqua. New york is the center of the world. I am glad mike said that. What are you looking forward to . Francine this is the First Edition so as Michael Bloomberg was saying, 50 heads of state. The underlying need for the form is to figure out what the next 10 to 20 years will bring. If you look at the pace of technology, the change over the last eight years is more than we had over the last 250. By bringing people together, this forum is trying to get a conversation started on how to fix some of the problems. I will be focusing on a panel of the uns Sustainable Development goals. It is a way of getting your brand to be good and liked. Is it a massive pr exercise . Are certain businesses taking it seriously, and how do you measure it . How do you know someone is not cheating when they say they want more Financial Inclusion in the world. Alix what about u. S. Politics on the ground . Of the key lot sessions will address the concerns that may be more emerging markets have had. One session i am particularly keen to listen to is the march of multilateralism. This is another way to talk about globalization. We will hear from the french president , he will be joining us. We will also hear from the turkey president. If you are a world leader, how do you react to this America First policy we have seen from President Trump . Do you coalesce and try to figure, it does not mean America First or second, how do you find a solution . Alix thank you so much, really looking forward to all of those panels today. On the bloomberg terminal you can watch us online. Check out our tracks charts and graphics. This is bloomberg. Bloomberg. Is i am david westin. It is the largest private Real Estate Investment in the United States, transforming the west side of manhattan. When it is done it will include 16 skyscrapers, a cultural space, public school, and 14 acres of parks at an estimated cost of 20 billion. With us is the man behind the project, stephen ross. Thank you for being here. One of the reasons to be here is you Just Announced you completed financing for 50 hudson yards. You have got 18 billion already raised. Stephen yes. When you think about it, those are large numbers in a real estate deal. The last 4 billion was for a building that blackrock will be the major tenant in. I am very excited. We have over 7 million square feet of office tenants, some of the best tenants in new york. It is part of the transformation that is taking place, with hudson yards running the position to be the new center of new york. David what does this tell us about the commercial Real Estate Market in new york and across the country . This is a lot of space. Stephen it is replacing a lot of space. Corporate and Business Needs are somewhat different than they used to be. They use a lot less Square Footage for employees. It meets the needs for technology that corporations are really looking for, so they can do business in the 21st century. That is really an amazon story at the end of the day. Have you noticed the amazonification of the retail world . Stephen it is having an impact but amazon is still less than 8 of retail sales, our online. It is a small percentage. Certainly it is growing. I think people are saying they want something different. Today, the disruption is really coming from people and retailers who are doing something new and creative. I think that is probably having as big an impact as everybody is thinking it is all the internet, it is not all the internet. It is what people want. Alix on amazon, do you think it is realistic they set up shop in brooklyn . Themen i cannot see coming to new york realistically, as much as i would like to see them. The cost of business in new york is far greater than anywhere else. At the scale they do things, not at the highest priced places. David whether it is amazon or office space, digital is disrupting your business. We be intended 15 years as far as the demand for space for commercial services . Tephen that is hard to say with jobs in technology and Artificial Intelligence, that is the key factor. What will we look like Going Forward . Where will these jobs come from . Today you have a lot of corporations moving, downsizing, and being ready for the digital age, if you will. I think major cities like new york will be hubs and there will still be a lot of jobs in the office sector. I am still very bullish. David you have been very generous to our alma mater. You have a big announcement, you already contributed a lot and you transformed the campus. The ross school, it is amazing. Stephen one of the announcements is that i am chairman of the Capital Campaign , and we had a goal of 4 billion. We have about 18 months to go and we have exceeded 4 billion so that is very exciting. I personally have made an additional contribution of another 50 million to the Business School david . 50 million, and this is not so much for bricks and mortar. Stephen today, michigan is doing a lot of creative, innovative things. The president has been there for about three years and brought in a team, and the innovation that is taking place and creativity, it has become a very dynamic, exciting place. I gave my gift to the Business School. It was somewhat easy since my name is on it, but wanting it to be the best. You know when you go to michigan, the fight song. Alix are you going to sing it . Stephen it is kind of ingrained within you. David if you go to the big games. Stephen we have a great new dean. Michigan is an elite school and we wanted to be number one. I think giving these type of gifts can take the school to the top. It is for students as well as the faculty, the retention of faculty and bringing in new faculty as well as student support. Hat is so important today it is giving students the opportunity, knowing the cost of education. Alix i am going to ask you one more question on commercial real estate. You raised so much money. Where is it coming from . With a project the size of hudson yards, traditionally in real estate deal look to traditional sources. But today with regulation the way it is, it is almost all foreign capital coming in. Different sources of capital, not the typical. Fortunately, with a project like that, we have been able to attract all this outside capital. David stephen ross, thank you. Jonathan coming up next, john ryding and andrew slimming. We will have more from the ,loomberg Global Business forum including opening remarks by the 42nd president of the United States and the president of france. Jonathan it is Federal Reserve decision to. Day. Investors look to chair yellen to look if there is a hike in store this year. Back in d. C. , republicans push forward the plans for tax reform. The Bloomberg Global Business Forum begins. Interviews with Global Leaders from tim cook to Emmanuel Macron. Welcome to bloomberg daybreak. I am Jonathan Ferro alongside david westin and alix steel. Looking at features 90 minutes away from the opening bell. And the fx market, largely a dollar weakness story. The eurodollar up for a fifth day. Treasuries catch a bit by about two basis points. We have sterling losing a little bit of the wind it had earlier after this killer u. K. Sales. The curve keeps getting flatter here in the u. S. We have 83 basis points as your spread. Citi reiterating its bullish outlook on commodities for the Fourth Quarter. Aluminum also at a fiveyear high. David we will be bringing you live coverage of the Bloomberg Global Business Forum all day today. We will hear from apple ceo tim took and they will be panels featuring Christine Lagarde, justin trudeau, larry frank, steve schwarzman, the Prime Minister of the netherlands. They will all be on a penalty other emceed by Christine Lagarde starting at 9 30 a. M. In new york. Ts good and update on lets get an update on what is happening outside the Business World with emma chandra. Emma Hurricane Maria has made landfall in puerto rico. Had topgory four storm winds of almost 155 Miles Per Hour when it came ashore on the southeastern coast of the island. Just two weeks ago puerto rico suffered 1 billion in damage from Hurricane Irma. Earlier maria struck the caribbean islands of guadalupe and dominica. Investors are willing to see what Federal Reserve policymakers say the end of their twoday meeting today. Fedctations are high the will start plans to shrink its Balance Sheet. Investors are looking for keys as to when the fed might raise Interest Rates again. Authorities in mexico now say at least 270 people were killed in the second devastating earthquake to hit the country this month. The quake had a 7. 2 magnitude and struck the region near mexico city, destroyed buildings and leaving hundreds with out power. Global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. David lets stay with the story of the mexican earthquake. Its struck mexico city and reduced buildings to rubble and left millions step dead. D how close are we to knowing how bad this is . There is still a lot that needs to be resolved here and a lot that needs to be discovered. We dont know how many people are missing. We know that more than 40 buildings are collapsed and will work is continuing around the number of them. And maybe another day or two before we know how we people have died in this incident and how he people have to be rescued. Assistance geographically how much of the devastation is in mexico city itself instead of outlying areas. Eric some of the highest fatalities are focused in the neighborhoods that a lot of tourists and visitors to mexico city would be familiar with because they are filled with cafes, restaurants, parks, very densely populated neighborhoods. Theres also part of the state and puebla nearat nea the quake,. A lot of the devastation happened in land that has not the most solid soil in the area. David our thoughts are with the people who have died and have been displaced, but we might have to think about what this does to the supply chain. If heard about Mexican Company supplying to the United States and strength was elected since trump was elected. Is there disruption to supplies . Eric this raises concern given the state of mexico and puebla are very important manufacturing states. They are very important from a services perspective. We still see that millions of people are without electricity, although the state oil company has said the gasoline supply should be guaranteed. I think we are a little ways from knowing to what extent this is going to affect the economy and mexican manufacturing and production. David has eric martin down in mexico city. Thank you so much. Alix breaking news we heard about it and now its official. A ban led group will be buying oshibas chip unit for 2 billion yen. Ban had been trying to get money from the likes of apple and dell , but the rumor from apple was between 3 billion and 7 billion, contributing to the deal. There is a jv between tennessee toshiba and western digital. Toshiba will have some kind of equity in the affiliate, so they will still be in part wrapped at the toshiba chip unit. That is being sold to the ban led conglomerate for ¥2 trillion. It is fed decision day. You have said officials expected to leave rates unchanged and expecting a wind down of the Balance Sheet. Joining us now is carl riccadonna. Heres what i dont get i. The fed says is going to be is easy and wont disrupt markets. You cant have it both ways . Carl that is what we will find out in the next quarters. Presumably administering medicine when the patient was sick and the fed hopes that as you take the medicine the ways, once the patient is more healthy , you do not fall back into the doldrums. Certainly the economy is on much sounder footing now. As long as we move slowly enough and cautiously enough, we should be able to avoid major market disruption. That being said, i think there are two legacies of qe stocks slump qe. The dollars are not like he. Those are the markets we have to watch carefully as we backed away. If i could have a third, it would be the mortgage market. As mortgages are rolling off the fed Balance Sheet, someone has to buy them. Will they be willing to buy mortgages at current rates or do they meet a more enticing Interest Rate . That could deal a significant had went to the housing sector, which has not performed all that well in the last several quarters. We have a reduction in Housing Affordability due to not only high prices but now potential mortgage rates. Alix lyle brainards idea that inflation is low because rates are trenching to the downside. How much has that affected the rest of the fed . Carl i think its becoming a more pervasive issue. The fed is warming to the notion that full employment may be lower than previously expected. If we look at the longer run estimate, that has been drifting lower. They are asking some philosophical questions about whether technology or globalization or other factors are resulting in a much lower neutral Unemployment Rate that we have seen in cycles pass. Economicsthe chief economist joining us as well, good morning to you, john. Try to get back to some semblance of normality. Why did we continue qe for so long . The recession ended in june 2009. Of it is september 2017. Im sorry. Its early in the morning. It is now eight years into this expansion. We still have the feds Balance Sheet on emergency standing. This makes it one of the longest expansions in u. S. History. What would happen if the u. S. Fell into recession against . You are still flat to the floor. We should have started much earlier than this. But today is the day. The fed is going to discover how much it has lowered bond yields through this policy. The wind down is so slow. We are still going to have much on the feds Balance Sheet and for five years time. You have to decide how far they take the Balance Sheet down, but have told us how fast it will take it down slowly and picking up pace that will take for five years to get the Balance Sheet down to whatever is normal for the Balance Sheet. Jonathan is this about given to a place to where we can respond to the next downturn in a more efficient way . What kind of numbers do they have to get to . Larry summers said for rates that you need to 200 or 300 basis points to play with. What you need the Balance Sheet to get to . Does it matter . John i think the Balance Sheet will go to 2. 5 trillion. That is much larger than the Balance Sheet used to be before the great recession. The Balance Sheet used to be about 800 billion. We will still have a much larger Balance Sheet than we had before. And then rates. I think the fed will signal that they are on track to raise rates. I do not see them taking the socalled dot plot media projection for Interest Rates. I still look for a rate increase in september and i still up for three more rate increases next year. Inflation is the key. What we will see over the next few months is with all these disruptions to the supply chain and the energy markets, inflation may not be as dead as some in the fed thinks it is. Jonathan john a sticking with us coming up on the program. The fed special will begin. We have the latest analysis and reaction from former that share alexhair rivlin. That is at 2 30 p. M. Eastern time. Its a countdown down to the fed Decision Just hours away. This is bloomberg. David this is bloomberg. Im david westin. Business leaders are gathering in washington today for a Business Leader tax reform event and it will include ceos from Lockheed Martin and at t. The event comes a day after republican senator bob corker and pat toomey announced they reached a tentative budget deal that would allow for significant tax cut. Bloombergs chief watche washington correspondent Kevin Cirilli was at the event and joins us now. The reports were 1. 5 trillion. How is that can sinc consistenth deficit conservatism . Kevin thats a great question and theres an idea being floated of a 2. 2 trillion for expensing model, but i Business Leaders are actually against that. From sources ive spoken with over the last couple days, it would mean lowering the Corporate Tax rate would be impacted by that. Right now the focus from Business Leaders is to really highlight lowering the Corporate Tax rate. Just yesterday, two top senators senator pat toomey as well as bob corker both on the Senate Budget committee saying they have reached a 10 year tax cut deal known as extenders inside the beltway. That means we are one step closer to their hypothetically being some type of tax reform. We all remember september 25 early next week is when we are finally anticipating those details. Thats from the administration as well as lawmakers on tax reform. I can tell you that i expect these top ceos letter going together behind me in just under an hour are going to have a lot to say about some of those details we cans next week. David what has broken a long the logjam . We are getting republicans try to get democrats to go on it. It seems like they are throwing everything in the kitchen sink. Kevin i think thats a pretty good assessment of how were watching this all unfold. Meanwhile we are also hearing chatter that there could be development on health care. It looks like that has continued to be, and the political issues of the day so to speak caught up in the political issues of the day so to speak. No support from rand paul on grahamcassidy. This is a department hungry for some type of policy when by the end of the. Year. It looks like longterm tax cuts are perhaps more viable of an option been comprehensive tax reform. 11 negotiations happening behind lot of ludwi negotiations happening behind me as we get closer to that september 25 marker. David kevin covering that roundtable event all that long. Such as tax reform. Theres also a real deadline coming up on Health Care Reform with republicans trying to repeal and replace once again. The president tweeting that rand paul is suc a friend of mine but such a negative force to fixing health care. Grahamcassidy is great. And obamacare. We will see. Jonathan he is in new york hosting foreign politics. With us is john writing and joining us now on the phone is interest from Morgan Stanley. Central banks killed the bond vigilantes. Who killed the fiscal hawks in the United States . John when you did the trillion dollar deficits in 2009 at 2010, there were rules about loose fiscal policy that change back then. I think this issue of taxes is still going to be a very difficult one because tax cut are easy. Tax reform is hard. Lowering the marginal tax rate or the Corporate Tax rate ive said on the show and other shows that to me thats the number one thing to reinvigorate the u. S. To get investment spending and productivity growth up. You have to take down those tax breaks, the various deductions. Every one of those has a whole lobby behind it. I dont think the fiscal hawks are quite dead as you might have suggested by your question when we see what numbers are. If we dont to tax reform, the numbers are going to be 5 trillion or six chile of our deficit cost. Six chile and dollar deficit cost. Cost. Llion deficit jonathan you are brilliant economist and lets not look further now. What is your fiscal response of the moment given what you know what is in front of you . John the economy is pretty close to full employment so we do not need to inject demand. What we need to do is reinvigorate the supply. We have this ironic situation of all this technology and the slowest productivity growth of a sustained basis in the last 10 years that we have had in decades. Half theer than longrun growth rates of productivity. We need things to encourage Capital Spending and to encourage Capital Spending in the u. S. Theres too much in the u. S. Tax code that encourages people to do their Capital Spending and their earnings overseas. Is the fiscal start. We need to reinvigorate the supply side. Monetary policy cant tackle the issues where they are. Theyre really hurting pockets of unemployment in the midwest as was away from the coast. David we want to bring in andrew right now on the telephone. You have been listening to this. Is there a danger at some point if we inject 2 trillion in tax cuts to this economy right now given the fact that we are close to full employment that we may actually overheat the economy and cause the fed as a result to really hike rates more quickly . Andrew absolutely. Thats the number one risk. You nailed it. In many ways, we make it to full growth faster and that means the fed move more aggressively and you get an inverted yield curve and you get a recession out in a couple years and markets start to discount that in advance. I think thats absolutely the risk. Talk about too much weakness and i think theres too much strength and i think thats the risk. David are there ways to direct the tax cuts that would generate more growth rather than inflation . Andrew i certainly think what you have been discussing is dead on. Its about capital investment. I think that is the key thing for capital tax cuts to induce capital investments. Are goingew, if you to have to reallocate or adjust your expectations, how do you do that . Andrew what is fascinating going on here is that jonathan interviewed and he had a conversation about the fed and the changes in fed policy. Maybe that was more financial tightening, but who is going to short the equity market if you have got potential major tax reform coming down the pike . I think that is why the stock market is sitting at an alltime high because theres a lot of countervailing forces. I dont think there is a repositioning going on. Alix andrew slimmon, thank you very much. John, youre sticking with us. We are live at the Bloomberg Global Business Forum. Coming up, bill clinton, the 42nd president of the United States. I hear we dont know what his remarks are going to be, so this can be very fun. David he is always good television. Alix this is bloomberg. Alix it has happened once before any may happen again. To sponsor offst into a third version in november as socalled miners debate how best to scale the growing marketplace. Called. Com ceo is often Bitcoin Jesus because he preaches so much about bitcoin. He says its actually a good thing. Theres probably going to be another split between the bitcoin legacy and the two x version of bitcoin, but from my point of view, thats gives me more coins that i can sell for the bitcoin cash version, which i think is the most useful one because it has limited supply like the others, but its faster and cheaper than the others around the world. Im a fan of bitcoin cash. John, not going to pretend that understand what the splits mean in bitcoin. What i do find interesting is that you have the fervor and then you have the actual cryptocurrency behind it that could be more viable. John im not sure what the actual currency is. But i will say that youre asking the wrong person. On the mother bloomberg show years ago when bitcoin hit 70 or 80 a coin. Someone was doing a bitcoin atm. I said its just a big tulip. Now its gone from 80 then to 4000 now. What is bitcoin really . It is technology that enables people to move money around anonymously. , you had theweek chinese authorities further trying to restrict the ability to purchase bitcoin in china because thats a way for people to get their money out. China has Strong Capital controls. Im not sure what a bitcoin is. Kinds of rival currencies that are emerging. Just different versions of zeros and ones on a computer. I like to go back a bit when i saw that 80 and out at 4000. Theres clearly a demand. Its not money though. Money has stable value. Bitcoin does not have stable value. Alix thats true. John will be sticking with us. We will have much more from the Bloomberg Global business form later on today. Coming up, the president of france on a panel. This is bloomberg. Jonathan one hour away from the opening bell in new york city, lets get you the scores. Record high after record high on the s p 500. Today dead flat on the s p 500 and the dow as well. Negative seven points on the dow. Pretty much up half a point on the s p 500. The story on the bond market as follows treasuries, we kiss those lows for 2017. Then we reached to 24 yesterday. Down a couple of basis points. Largely a dollar weakness story in the g10 space. Eurodollar was north of 1. 20. Cable at 1. 35. The u. K. Retail sales coming in strong. People are shopping. How are they spending that money and where are they getting the cash from . Is it savings or unsecured lending . My mom is going to give me a call and tell me whats going on with the u. K. Retail. That is my read. Is that how you get your read . Mom butt from your my mom. Jonathan now lets get headlines from emma chandra. Emma the governor of puerto rico has warned that the island has not suffered anything like this in 100 years. Hurricane slammed into the coast of the commonwealth this morning. It has weakened slightly, but urs still a category fo storm. Hurricane irma caused a billion dollars in damage to puerto rico. The second time this month, mexico has been hit by killer earthquake. Measured 7. 2 and struck outside mexico city. At least 217 people are dead and hundreds more baby trapped in collapsed building. It hit on the anniversary of another quake that killed thousands of people. The uaeabia and consider military action in the first stages of their battle with cutter. President trump won them against it. The president and the fed have told the leaders that military action would trigger a crisis that would only benefit iran. Global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Jonathan lets get to u. K. Politics. Prime minister theresa may is planning to offer a brexit payment to help fulfill the postbrexit budget hole. This is mays first attempt to meet european demands and break three months of negotiation deadlocks in brussels. May will include the offer in her speech in florence, italy on friday. Still with us is john. We understand Boris Johnson is going to be in florence, italy alongside her. They are going to settle their differences. John thats going to be interesting because theres a bit of a spat. Million that could be spent on the National Health service . That number turned out to be less than half that. Jonathan they rephrased it in a more accurate way. John the thing is that it was such a typo. That changed. And jonathan really . John when it becomes so tight, that was certainly a factor. I think 20 billion. Its hard to get your head around 20 billion pounds. The idea that the u. K. Has to pay that to europe in order to get out of europe, i think a lot of people are going to have difficulty with that. David they may be having difficulty with it, but doesnt everyone expect that . Isnt it clear what will have to happen in order to have an orderly brexit . The uks going to have to pay some money to get access to the markets. John it is. You know, its still a question of what that access is. So the cake finance is such a disproportionate part of the cake economy relative to a lot of economies. The passport to the Financial Companies is key. Wheres that coming . The u. K. Is the biggest recipient of an were direct investment in word direct investment into europe as sort of a market friendly access to the european markets. If we dont get that relatively free trade access, we have all been waiting for the Brexit Economy shoe to drop. It will drop when people start saying maybe the u. K. Is not the destination. You are absolutely right. Theres economic logic and this political logic. And theres political logic. The snap election was a disaster for the tories and theresa may. Jonathan talking about the prospect of a rate hike with inflation south of 3 . The former bank of england governor had inflation north the 4 . We, up with him earlier on bloomberg tv. Take a listen to what he had to say. What they wanted do is make sure that any inflation resulting from the Exchange Rates do not see through to wage or inflation expectations. That is something probably harder for them now than it was when i was there because unemployment is so much lower. That is something that will keep a very careful eye on i think. Jonathan we all thought he would reach for the mervyn king playbook. That is look through inflation and focus on supporting output. Why is it so different now . John i think the Exchange Rate move theres a bit of recovery going on, but its a sustained move lower. Bk is a relatively open economy. The economy has not fall into recession what many of us expected. I think theres a really good case for the bank of england to move rates in november. I would not be surprised to see them nudge rates higher. You can always lower rates later. I do think as the former governor said that you have to make sure the shock does not see through into the rest of the wage private setting price setting behaviors. Full employment, not recession. Alix heres what i dont get. If you take a look at this chart, it shows what the market thinks the rate is going to be for the u. K. And the u. S. The white line is the u. K. And the blue line is the u. S. I get your idea, but should the market probability should be so much higher than it is for the u. S. . That doesnt make any sense. Jonathan the u. S. Probability is lower. John lets see where the probability is after janet yellen gives her press conference this afternoon. Whend it very strange that i moved up to more 5050 territory that the markets were not looking for that rate in december. I expect the rate hike to be in the dot plot and i expect Market Expectations to move. I think absolutely right, but using the chart with the blue line probability is too low for the u. S. Do you makeat t of the job Governor Carney has done . I i get my passport think i have been less impressed with the governor of the bank of england than i was in his role. Jonathan why . John i think he was a clearer, stronger central banker in canada then he has been at the bank of england. Im not entirely sure that we know what the Governor Carney playbook is. Now having said that, i think if the bank gets on with the job and begins to renormalize policy and navigate through these postbrexit waters, he bel be maybe he will judged to have had a better performance. We will see. I think november is a really good shot for him to revisit the question. David in fairness to mark carney, nobody sat down and his Job Interview and set by the way, we will vote to take the u. K. Out of europe. That sort of change the rules a little bit on him. Hes had to really call some audibles to use a u. S. Football fieldn the playing because its so unexpected. John yes, i think thats right. Difficult to handle circumstances, but at the same time, we do have an inflation rate that is close to 3 . And central bankers are not supposed to like that. I think Governor Carney from the bank of canada would have been more resolute in making a move to combat that inflation. Thats one of the reasons i suspect we are going to see that move in november. Jonathan arguably the most criticism for Governor Carney is the prebrexit Governor Carney, not the postbrexit governor connie. People didnt like what he had to say leading up to it and it didnt like what he did around the 20 for to mark when he talked about rate hikes and did not deliver. Alix they also didnt like when he cut rates. Jonathan the brexit argument is not bailing out to that extent. It is the prebrexit governor conni that ha carney. Thats why so many people in london are scratching their heads thinking, not against. Alix didnt he also get criticism for hiking before that for cutting . Jonathan he got a lot of praise for his response after brexit. David he was the only one there. Jonathan he was the only man standing, Governor Carney. David im sure we will have much more to talk about in the coming days. John will be staying with us and we are coming life from the Bloomberg Global Business Forum. Coming up next, it will be William Jefferson clinton, 42nd president of United States speaking of that forum. Live from new york, this is bloomberg. Emma this is bloomberg daybreak. Im emma chandra here in the hewlettpackard enterprise greener. Coming up at the Bloomberg Global business form, bill gates. This is bloomberg. The message from the oecd this morning is that things are looking good. Take a look at this chart hit this is what it looks like in terms of its Global Growth estimates. For 2017, theyre looking at 3. 5 . And 2018 is 3. 7 . That would be the fastest growth since 2011. Johnwith us is ryding. In your view, what will have the most upside . John look, europe right now is in an upswing. Theres always room for policy problems in europe. A lot of issues have not been solved. They have just been forgotten about. They have gone to the background. I think the eu is probably going to be the strongest growing region as it comes off of the problems that we had around the whole currency issue, the banking crisis issues and so on. Its hard to see that for the u. S. Because the u. S. Is relatively flat with low productivity growth. growth will be 2. 25 until we get that Corporate Tax reform spending kicking and. Its hard to move the needle in the u. S. Up to 3 or so growth. Alix we are there, but you mean its not sustainable . John i think the u. S. Giving up to 3 growth sustainable is going to require on our calculations, looking at the ratio, we have to see a sustained 20 boost to Capital Spending in the u. S. To move the capital to labor ratio and start getting the productivity growth we need. David when you talk about europe, what part of europe will drive that . Is it germany. John germany david. David alix not not the periphe . For some time it was Eastern European companies driving the growth. John when it comes to european growth, it is driven by germany. Thats not to say that think of it like a train. You have a lot of countries connected to the engine. Thoset going to save other things will not grow faster. Growth in the post brexit era is germany. Jonathan now many people are optimistic about the global sink in escrow story. Is it going to be persistent . Is there any reason to believe it should be persistent, specifically more so in europe . John no. Go back to the economy and look at it over time. There are expansions that are interrupted by recessions. In terms of continuous growth, growth is not persistent yet growth is a persistent property overtime if we look through those recessions. Have we had the policy reforms that we really need to put europe on a stronger underlying sustained foot . Awould say no we havent had european wide banking reform. We get close to it and then we kind of backed away. The way that qb was done was sort of like silo in each country. Each risk owned it central bank. We have not had more of a european fiscal sharing system apart from 20th billion that we talked about that the u. K. Will kick in. Jonathan the u. K. Conversation is interesting. We have discussed the u. K. On this program quite regularly. When we do it, usually has a pessimist twist to it. When you look at the forecast growth, 1. 6 . When you look at the eurozone, a 20 basis point spread. The conversations are vastly different. Why . Given where europe came from and what couldve looked like and i think that number 1. 8 is probably going to be low. Upsideink there is relative to that. There europe sat there with negative Interest Rates. Jonathan we have got to leave it there. We cross it over to the Bloomberg Global business for um where bill clinton is giving opening remarks. Mr. Clinton thank you for sponsoring this important event. I think the fact that we need to as been very much highlighted by the headlines of the last two or three days with the terrible earthquake in mexico, be awful storms in the caribbean, and a few of the storms at the united nations. Because mayor bloomberg was kind enough to mention our dozen years of the clinton global initiative. I want you to look to the future. But i believe that underneath all these debates that are going on today theyre still lingers one simple question. Live in an that we interdependent world. We know theres lots of good about it. Otherwise we would not be in these chairs today. It has been good to us and to a lot of people we know. We are also quite well aware that a lot of people feel left , alienatedt behind the, socially, and economically, and are very much in need of a hand out to be part of the future that we now take for granted. So i think its important to recognize the most important notacle to that future is whether we are able to roll back this most severe threats of Climate Change, not whether we are able to find ways to generate employment, education, social justice in every corner of the globe. It is about whether we are able to think about it and act on it in a way that permits us to do these things. Everyone of you can speak just as well as i about the positive and negative trends in the world today. You all know in a decade that we just finished and a decade that was characterized by the morning and Development Mo Williams Development goals Millennium Development goals. We met some and met some others. The real debate as you saw. N. And yout the u feel looking at those horrible pictures from the earthquake in the awful storms of the caribbean is how are we going to do that . In the years that we had the global initiative, there were thousands and thousands of commitments made. More than 80 of which have been fully completed. We are still working on the others. 400 millione than people in 180 countries. Why did they work . , they work because of partnerships between government and business and philanthropy and nongovernmental groups. And so before we finished up our work, we had an independent survey done of the commitments. They found that the partnerships were far more successful than governments acting alone and businesses acting alone and alone philanthropist acting alone. Diversity weref powerful and other peoples lives. I would argue to you that at this time of debating what that means in practical terms for the future of the u. N. And the future of the european union, the future of the United States, who should vote, who should have a voice, the most important thing is whether you believe that social strength, economic powermance, and political flow from division or multiplication. Addition. Action or you are all here because in one way or another you intuitively know this. You believe that multiplication is a superior strategy to division. You believe that edition is a superior strategy to subtraction. In economics, social inclusion, and politics. You believe that there are severe limits on the ability of to separatism and tribalism to solve the problems in the modern world. You as a citizen of this country that i love so much and the world i believe we can build together for our children and for old people like me, our grandchildren, i want you to find ways to say that an act on it every single day. Because he listens all these people talk all around the world and you watch all these conflicts all around the world, when you strip it all away, thats what it comes down to. Now thet wilson, who is almost 90, in his book, he says that of all the species that ever lived on planet earth, including 4 million still around today, with 2 million more probably not yet identified, the most Successful Living species has been humans. Closely followed by ants, termites, and bees. [laughter] he said thats because we are the best cooperators. We get the nonahead of the ants and termites and bees because we have consciousness and a conscience. But they must be employed in the service of that cooperation. You really have to decide whether you believe that. , lot of us in this room particularly those of us who have had a good long life, could just take a hike and ignore that. Mike bloomberg could. Could live on a month of his interest for the rest of my life. [laughter] why is he doing this . Because he knows somewhere in every corner of the world there is somebody that will grow up with just as much ability as he has had an nowhere near the opportunities, because he knows with people as as much money and power that he has that division iseve that better than altercation and subtraction is better than addition, they will never achieve that. You all have to believe it. As my friend lebron james said, not just our words, but actions. That is why you are here. This is the great debate of our time. The separatist tribalism that you see in everything from the expulsion of the rohingya in myanmar to the 11 million syria to the seriou out of pressures on jordan and lebanon for what is happening in venezuela, all this everywhere is about whether we should share power or grab it and whether social inclusion is better than domination. Far, according to the book, has been the one thing that has brought us now to the present day in the whole history of life on the planet. We have to take it to another level and it depends upon our mind and our heart, first believing that we can and must every day expand the definition of us, strengthen the definition of them, and we should not have to have an earthquake or a hurricane to know that that is what we are about. That is the promise of the united nations, the objective of the Sustainable Development goals, and the potential of this room. Thank you very much. [applause] that was president bill clinton giving his opening remarks to the Bloomberg Global business for the in neum in new york. You can watch a full on bloomberg at life go. My favorite was that you have humans and ants and termites and bees when talking about cooperation, but they idea that you can have government and private businesses, you have to make that work. Jonathan i think the message is to get together and do something that needs to be done. You do think of d. C. When president bill clinton was speaking there. We dont need a hurricane to get this done. Julio was the hurricane that brought republicans and democrats together. I do ask the question that once this gets sorted out after the months rolled by and the rebuilding process begins, does the fractured nature of tc boyle back up again . D. C. Actured nature of boyle back up again . John fractured tribalism one can read into those words where he is going into that. Some of the things we talked about this morning have been referred to, going back to revisiting the health care issue, going back to tax cuts, its all going to be done alone budget reconciliation. If its going to be done on strict Republican Party votes. This strange move by the president to reach across. Jonathan weve got to leave it there and crossed back over to the Global Business forum in new york city where the president of france is speaking. Macron we had a lot of global challenges, migrations, that andhat we do need that is my main message in new york. We need some commitment for different nations and our organizations, but we need some commitment from the private sector as well. This is not just in the governments hands. It is how we deal with our becauseoods altogether the existing model is not more sustainable with the existing rules. I think thats a big challenge over by you guys. It is how to factor into your model this big this big change about climate, about inequalities and the main in balances of our global organizations. As long as we do not take that into consideration, it is a missing point. Governments are in a situation to take the whole burden of this current dysfunction. As for that, my wilderness in france and europe is to have willingness in france and europe is to have progrowth and transformation agenda. What we are passing in france is a series of reform where we want the labor market in order to fix the existing situations and have more security to create more jobs and in order to be more adaptive to the cycles of this new environment, we want to invest much more on education, training, Artificial Intelligence because that is one of the critical battles and we want to do much more and we have a big plan on Climate Change. Order to get an objective as that is my main goal or friends and for your, how to be a europe, how to be a leader on Climate Change . It is good for the people and business and innovation. How to build leader of new finance . It should be more useful with people with less inequalities. And how to be a leader of Artificial Intelligence and transformation of the new world . These three objectives are feasible. And for me, at the core of how global changes. I do not want to be longer, it was my commitment, i wanted to share this global and National Convictions about my word. Thanks. [applause] jonathan that was president Emmanuel Macron speaking at the Global Business forum. The former president of the United States, bill clinton, talking about how to get things done. Macron will come into big resistance when he tries to push through and forward wes at labor reforms he is talking about. Alix he is only a party of one. Push through afterward with labor reforms he is talking about. David to see how the unions respond. Jonathan politically, he much more than anybody thought he would with electoral politics and now comes and politics. French politics, you have to navigate reform when people come out in strength and strike and strike again. Alix is popularity really, really love . Rates his unpopularity really, really low . Jonathan let me get you set up for the trading day. We came with stops at record highs. 2500 and we reached that. High p 500 at an alltime and futures are positive. 119. 95. Lar is lowsuries still with yields on a 10 year. Alix we will have individual stocks want to watch. Fedex is front and enter. A cyber attack that will slash about 300 million in earnings. They are cut to a max of 1280 from 14 a share. Increase securities and recovery upses costs all wind hitting the bottom line. All about the Grocery Price war having a particularly bad effect on packaged food company. First quarter earnings missed and revenue as well. General mills said pricing nonetheless the start getting hit hard. Western digital losing almost 5 in premarket. Toshiba took the bainled group to sell the chip unit. Part of bain, dell, and apple. A mix of equity as well as debt. Venture and a joint western expected to challenge this in court. That is hitting the stock. Setting up for the big event, the Federal Reserve decision and in and tell extraordinary and an end to extraordinary policy. Joining us with more to expect from the fed is Michael Mckee, international and policy correspondent and Bloomberg Intelligence chief u. S. Equity strategist. Let us that the decision day. Where do we go and when . Michael it will be a more consequential meeting that we have seen because we will probably get a date when the fed will start tapering. The first banks to start and the first banks to start and we will get economic projections. Will they take into account inflation has come in lower than they forecast . To we will get the dot plot bring down the forecast for how many rate increases we will see in 2018 and will there be another 42017 . Andy janet yellen explaining all of that and she will be asked about her future and janet yellen explaining all of the issue will be asked about her future. Pleased by why me be worried by dot plot. Stagel it will set the for currency, look at the reaction function and whether the fed is inclined to raise rates when you trade off of that or back off a lot and rates may be lower for longer. Signal to thetant market Going Forward for the rest of this year and into 2018. Jonathan the Bloomberg Global Business Forum that just got started i wonder if paralysis is something that taken notice of and actually d. C. Might be getting their act together. Michael they will wait and see. The fed cannot really do anything about what happens with fiscal policy and only reacted to it. Is in they know what it it, there is no point in doing any kind of preemptive fed moves. , therehe equity markets was a great chart you could check out on your bloomberg. It is basically the yield curve versus the s p. The white is the s p. We are freaking out about what happens to equities when the fed ends up raising rates. You said it is not a problem on till the yield curve inverts. It shows a classic relationship between stocks and inds and bonds capabilities at u. S. Economy particularly important for stocks. It shows the twoyear and the 10 year treasury. When an that inverts, twoyear are higher than 10 year, an indicator of impending recession. It is a naturally leading indicator of poor performance for the s p 500. An inversion is one of the most consistent tools to forecast the Climate Equity prices and we are no longer we are no closer to seeing an inversion. Jonathan many people bullish on europe and for a lot of people, we can cross over to the Global Business forum where the president of france is still speaking. A lack of ambition. An approach during the first decade trying to fix crisis at the very last minute without any project. The relevant cell in scale and i do promote european Single Energy market. It is critical and we have french leaders and we have european leaders and europe has to be stronger. It is the same for digital, security, defense that an investment in economy. What does it mean . We have 10 year objectives for europe. And we have to decide convergences and some Investment Decisions in order to reach. , but we have to change need these new ambitious because my generations produced, do we want the dismantling of your it is an ongoing process in europe and it is an ongoing process. Nows all about brexit and in a few months or years, you will have other countries suddenly raising and saying [indiscernible] so, we need more vision, less bureaucracy and objectives and indeed a process. I do not want it to enter and i will revert into that next week because i want to launch to resume in europe. We need a new ambitions and that is the best way to embrace the brexit issue. Why . Brexit is all about refusal of middle classes against dysfunction europe. So, this new europe has to provide a place, be efficient and provide a place for our middle classes. No moreate, there is middle classes in europe. There is no way to progress when middle classes do not have any protections and something to get in this environment. In order to do so and push with a germany and other leaders, this new european, i need a strong plan. And in this context, i want to promote this new information agenda of france. Without that, i will not be in a situation to push france. On passing labor reform with the government in order to promote security and to fix the past situations. To a doubt to adapt to a short cycle economy and an economy of innovation where you have to destroy some jobs to create some jobs rapidly. Second, we will launch a big reform of Vocational Training and started [indiscernible] you need qualified and skilled people. E reinvest in education there were rapidly and aggressively in order to train our young people. We will invest 50 billion euros in order to train or retrain people during the life. One of the main challenges of my country is people without of the adaptive qualifications for this change. We will destroy a lot of clutter classical sectors but will create jobs in digital, energy. We have to retrain people to get to this environment and our system was not adaptive. And we are passing and we will push into coming months. And a big reform of [indiscernible] if you want to do so, you have to reduce your Current Expenditure in order to reduce the level of spending and france which is too high and to reinvest in your top priority to prepare the future. And our top priority as Climate Change, Artificial Intelligence, as i told you, and education and training. We will focus everything on that. Think i think i see for every body in this room we are behind you and the people in france are lucky to have you and thank you for coming. [applause] thank you very much. What the thats president of france speaking at the Bloomberg Global Business Forum in new york city along with Michael Bloomberg. You could go ahead and watch that continuing coverage of that forum at bloomberg life go. Still with us is Michael Mckee and in new york, gina martin adams. Gina, the theme is a bullish europe. On hopes of Emmanuel Macron seemingly. It is interesting because investors have been bullish, one of the areas we have seen strong inflows. It is tricky because the bullishness has resulted in a strong surge in the euro and makes the investment landscape tricky. If you look at the european stocks index and how they have performed, they are down since early may. As the expectations get the so europe toor outperform this year and became an overloaded vote in favor of europe and we are we setting. Going forward, a lot of the future will depend on whether the Economic Data can continue to surprise in at the face of the strong euro strength because of that will see through two probably more competitive conditions for a lot of external sales and cells on the stoxx index from outside of europe. Jonathan thats the view for europe and let us get the fusion vision of china. Alibaba group speaking. In this world, most of the people by seeing is believing, only those great leaders when they see and believe the future, they see the real steps. I think today, people worry a lot, but i think we underestimate the huge technological evolution that it is going to bring to the world, the impact. We are entering the world that is full of opportunities and challenges. This era, we have seen very few of them and in the past 300 years, we have only seen it three times. And the problem of today is so big and too big, not even one government or one business caps off. We have to Work Together. Or one business can solve. If we do not, there will be much more frustration. The world is moving from i. T. To d. T. A lot of people do not know what d. T. Is. I. T. Is switching to Data Technology and not about the technology but philosophy and the way we are doing things. The world needs focus, used to focus on 20 80. A lot of Financial Institutions are focused on supporting 20 of Big Companies and by making 80 of the profit. The world should be a two 20 in the future and focus on the 80 of Small Business and a young people. The world should focus on 18 20. 80 20. Butworld not only means g20 g 200 and be 200. Our kids also change. The kids do not want to get informed, they wanted to be involved. In the past 200 years, we, human beings, always want to use knowledge to predict in the future. Entering in a new world, nobody is the export of future. We have so limited knowledge of the digital times that i think we are entering a world that everybody is starting to worry. Today, those people say i believe the future are considered as crazy guys. And also, id like to say people worry about the data, Artificial Intelligence, computing, Cloud Computing and i think these worries are very normal. 200 years ago, the steam machine calms and people were rooted in a thing it will take them comes and people were worried at think it will take a lot of jobs. I believe human beings have solutions. If we do not have the solution, our kids will have the solutions. In the past 10 years jonathan that was Alibaba Ceo Jack Ma speaking act of the Global Business forum and we will hear him more for a one on one interview with emily chang. Coming up is the opening bell about 11 minutes away. Record highs in the u. S. Equity markets. This is bloomberg. And i think we should accomplish in a resells and the new technology will destroy a lot of david this is bloomberg. New hope for tax reform today. Topblican senators corporate and pat toomey announced they have reached a tentative deal to allow for bob corker and pat toomey announced that was a tentative deal to allow for significant debt cuts. Some people are saying north of 2 trillion. Where is this money coming from . There are two answers. One is they borrow it, basically, and go into the bond market and sell more treasuries or try to cut spending elsewhere and offset it. The original thought is they would offset and would be revenue neutral the cuts that is what republicans do. The thinking and washington has changed and they seem to be embracing deficits and the idea you can stimulate growth enough that you will not get another 1. 5 trillion of deficit is something smaller. David it seems like a magic word is dynamic. Dynamic scoring. We have a fiscal conservative and he said he would be willing to run substantial deficits if it could lead to real growth to the 3 number. Are they going to say we are going to make it up on the back end . That is the theory. The idea if you put more money in the economy, it will stimulate growth. The problem is it doesnt do that but does not do 100 . We have had a number of studies and they show you can get some additional test collection but it will not pay for it self. How for do they want to go into debt to do this . They cannot plausibly claim they will make up all of the deficit. Nobody is going to tell how much they can make up. Certain amount of is leap of faith. David we are closer than we were 24 hours ago. How are the equity markets going to respond . The devil will be in the details, certainly. With respect to Corporate Tax, we have gone through if the Corporate Tax rate were to be dropped to 20 as originally proposed the last year, we could get a 7 boost on earnings for the s p 500. If we got a Corporate Tax rate on 15 , we could get a 13 boost Holding Everything else equal. That is not accounted for any changes to household taxation, not accounting for specific changes to repatriation which is a big part of the issue. David that 7 is on top of whatever increases . Exactly. David that would be substantial. It could create a substantial number four s p 500. The s p 500 does pay about a 28 rate and companies in technology and health care pay will below 25 . It depends on where we land and repatriation. If we got the repatriation level lower, it would impact different sectors differently. Alix and also how quickly it happens. Christine lagarde was talking about potential reform. Will be veryt difficult, yes, if the reform pays is as slow as it is. That contrasted with the rest of the world. Alix that is the issue. Do you get it tomorrow or in two or three years . That is another open question. If they do it this year and was something, it would be something about making it retroactive to 2017 which would be significant refunds to people in april of next year or in january. Otherwise, it might be 2017 before you see significant money in peoples pockets them contribute to higher earnings through higher spending. Jonathan Michael Mckee with full coverage of the fed a martinn later and gina adams will be sticking with us. The opening bell about four minutes away. We are dead flat on futures. Again, as we have done previously, record highs on the dow and s p 500. Lower. Ies had a marginal dollar softness against of the euro and sterling much more so. From new york, this is bloomberg. Jonathan we are back. 28 seconds away from the open. Alix will run you through the numbers. Record highs, futures are flat. Positive about a single digit on the s p 500. The story, the bond markets over the past couple of weeks, all 223 is how were training at the moment. The dollar is a touch of softer at 91. 76. The cable rate pushing higher by a decent amount of the back of strong u. K. Retail sales. Crude, 60 a barrel. Across asset the story, 22 seconds in. Here is alix steel. Alix traders are waiting for the fomc meeting. The dow jones is flat. Nasdaq is flat. Yesterday, the s p had 36 record closes so far this year and in the dow is up 4000 points since in the election last year. Individual stocks, retail is not doing so well. Bed bath beyond off by 16 , mr. Earnings and a weak outlook and cut fullyear outlook by 25 this time blaming hurricane harvey. Adobe off by 3 and beat q3 estimates but outlook only matched consensus and the street was looking for better. General minerals General Mills down. The gross rewards with the names like General Mills. Earnings are pushed up back in the second half and slowing sales in china and india. Of liquorclosed 1 3 stores because they want to reduce highway accidents and that is tricking down trickling down. 5 50 is what the market sees for a potential hike in december. Some traders are getting more bullish. This is the ratio between calls for the spider financials etf and his huge a jump in the ratio up at 1. Traders are putting out more calls and pretty much even backtoback. The idea is if you have a hike or a does it feed into the financial sectors . We have ccar. Now it really needs to come from the fed. Jonathan 37 record high this year as of the close on the s p 500. Still with us is bloombergs Michael Mckee and jenna martin adams. Gina, yesterday, how does Morgan Stanley get the s p to 2700 which is his year and forecast and you came with stats. Run me through. If we have an average Fourth Quarter, we end up at a very strong number in the face of most analysts. If you look back at history, go forth quarter is the Fourth Quarter is the high. You have this manifesting the effect. On average over the last seven years, s p 500 has recorded a 4 record and it has been stronger in the most recent decades over the last 25 years. This is much stronger than any other quarter of the year. It is tough to work against it and part of the reason you can remain fairly optimistic. Jonathan we are gearing up for earnings and earnings expectations are right up here. They are high but our macro models show they are achievable. What usually happens on any given quarter, the two weeks before, we see analysts pullback and companies guide a lower. Over the subsequent four to six weeks, they beat expectations. Youre working assumption is we go through the period where assumptions are reduced and over the past month, we have seen them follow the 1. 2 . We will see that happen and as we can to earnings season, companies will most likely be. Beat. David is the marketplace a little bit more for devil forgivable . Doesntt a slight beat do much. Isnt the market more forgiving . Yes, it is a great point. Mrs. Have been punished even more misses has been punished even more. Core earnings, you have to beat on the top line to prove a more sustainable trend over line over time. Gina martin adams, thank you. We can cross back over to the Bloomberg Global Business Forum for a conversation about civic leadership. Murphy is standing by with tim cook, the ceo of apple and a Michael Bloomberg. Has resurfaced and of the private sector has had to take on more of a role not just in the u. S. But around the world. I am going to start with you. You have made a conscious effort to move apple to step into this void. We see governments not as effective and not as fast. How are you position and where in theapples role environment we face now and your personal responsibility of the company that touches on many peoples lives . Thank you. And i want to say thank you for getting us all together. Thank you for coming. Tim cook everybody is going to buy an x. [applause] my view has always been that people should have values. Companies are nothing more than a collection of people. And so by extension, all companies should have values. And so as a ceo, one of your primary responsibilities is like what the value of your company is and lead accordingly. The thingthing is that president kennedy used to say, originated from the bible is to whom much is given, much is expected. Apple has had some success. A responsibility to give back, to help in some a societys greatest problems. And so for us, we tried to look deeply at what issues is what the government is working on and what issues are key in society. And with think about the skills we have. There are some issues we have no skills on. There are some that we can really either amplify government handinhand,ng for we could pretty much ado ourselves. Or we could pretty much do ourselves. Apple has always been at the core of changing the world. You cannot change the world if you are ignoring the world. That is the way we look at it. As a ceo not only today but in the past as well, i think that silence is the ultimate consent. If you see something going on that is not right, the most powerful form of the sent is to say nothing consent it to is to say nothing and that is not acceptable to your company, the team that worked so hard for your company, for your customers or your country or for each country that you happen to be operating in. That is kind of the way i see it. I have to say i am more optimistic today than i have ever been. I mean that sincerely. That is despite sometimes not overall,ike that, but i think we have an Incredible Opportunity because never before have i seen the ability all across the world to Work Together on some of these common issues. Let us talk about one of the common issues, mike, Climate Change. We talk about putting together a model of the engagement after the Trump Administration announced intentions to withdraw. You have been at the forefront with mayors, governors and also with the dozens of Companies Across every sector to make of their own commitments and on pledges to maintain or exceed those standards. It is not easy and there will be many issues where there is not the level of agreement that there is on climate. How do you see that as a model and take us behind the process on achieving that kind of coalition at that scale for problems that will be more difficult, trade, infrastructure. Michael bloomberg i agree with a Group Companies are of people. Ur employees care when i support a cause or do not support, i hear it from our employees and from our customers. And i hear it from my family. None of us operate in a vacuum but we have to let ourselves go out there and take the risk and say what we really believe. People want you to be genuine. Not everybody is going to agree on everything. I always thought if they believe , that the person believes your honest and genuine and trying, they will forgive the fact they do not agree with you and will respect you more. I think that is the secret to three elections we won. I do not have a lot in common with everybody in new york city. I was wealthy and running as a republican the first few times in the city that does not have republicans. Cuba thought i was trying and the people i put together people thought i was trying and the people i put together. With Climate Change, it is good for the environment. What i tell recruiters to stress, we are good on Climate Change and all of the profits from bloomberg go to bloomberg for p. Philanthropy. Gold were for apple and you are going to work for rich stockholders a goal to work for bloomberg a you are working for the environment. Tim cook wait a minute. [laughter] i always thought our company had an ability to give back in every city. We are guests in every city and we owe them something for the privilege of setting up shop and making money and do what we want to do. Different locations around the world and we try to have our employees whether going out painting of school or we support charities or send money to people in places where there is a natural disaster. I was down in st. John and st. Thomas two weeks ago. We do not live in a vacuum. I have always respected about tim is he has his values and he goes out there and does not say profit is the only thing. I happen to think it is very good for business if you do the right thing, it will help the bottom line. The first thing is to do the right thing because it is the right thing and you have to look in the mirror. The last thing you see before you go to bed is yourself and have to be proud of that. Let us give you a bit of a reply. A flash back and let us talk to immigration. Issue ina america and around the world and you havent been a public about the necessity to ease restrictions on highly skilled workers in the u. S. And for younger people who came your children known as dreamers and america under what we call daca. When it i stand was indicated we may see a retrenchment on the policy, you tweeted i stand with the 250 dreamers that work with apple and they deserve our respect as equals. All us and tell people in this room, these are your employees and you called them your neighbors, people we work with everyday. How are you engaging with the administration on this issue . Tim cook we are pushing extremely hard on this. This is i think it is the Biggest Issue of our time currently among all of these big issues. This goes to be values of being american. This is, are we human . A track ofng in morality . These people, if you have not apple, we have many that came to the u. S. When they were two years old. They did not exactly make a decision to come. They came here, they only know our country. This is their home. They love america deeply. I wishu talk to them, everyone in america loved america this much. They have jobs. They pay taxes. They are pillars of their communities. They are incredible people. And so, to me, it would be like somebody coming to mike and saying, i just found out you are not really a citizen here, you need to leave. This is unacceptable. This is not who we are as a country. Shockedi am personally that there is even a discussion of this. This is one of those things where it is so clear. It is not a political thing, at least i do not see it. It is about basic Human Dignity and respect. It is just that simple and straightforward. On the broader subject of immigration, if i were a country leader right now, my goal would be to monopolize the worlds talent. I would want every smart person coming to my country because smart people create jobs and jobs is the ultimate, ultimate a thing that creates a great apartment and a country a great country, where everybody can do well if you work hard. These are the things that drive people and give people a sense of purpose. A very aggressive plan, not just to let a few people in, i would be recruiting. I went into ellis island on sunday because i what ito feel myself was like to come to the country. If you have ever sat in the great hall and what of the benches there in the early 1900s, you can feel the people in that room. You can feel both the anxiety and the hope. And i think, that is where we all started from. , maybe itellis island was virginia like my family. We all started somewhere. We are all descendents of immigrants in the United States. One of the fascinating things people,ca, these young a woman carried her newborn baby in her arms, walked into a bank and pulled out a gun and held up the bank, i do not think we would prosecute the infant. That is exactly the same thing. What on earth are we thinking about . These people may be here illegally, but they did not commit a crime. We desperately needed them. [applause] me, we is worrisome to not want todo overstate, we have had a handful of people in the United States and a handful of people in a london were without 4000 odd people say i would like to transfer to an office in another here. , we are not alike liked here. That is what happens with this crazy rhetoric with immigrants. Words have consequences. You do not see them immediately but they will hurt us. We need a constant source of new blood coming into this country. If they cannot come here, they will go somewhere else more welcoming and create the next industries, the culture over there and we will never catch up. I am as optimistic as i have ever been but the challenge for this country is greater. I know you feel passionately about to these issues but how are you deciding where to prioritize your time, your effort, the philanthropic money, whether trade war immigration or climate . It does feel like, as everyone have said, a true moment. It would be helpful to hear about what you are doing in response. The private sector can do things the government cannot do. I went to down to st. Johns and st. Thomas the other day im a one of our partners has a house onehe called me one day, from partners have a house and he called and said they do not have the medicine or electricity. We put some for team on a plane. Fema will come in and the federal government will come in and they will do a good job that the Government Works slowly because they are being and cumbersome and have these protections built in. The private sector can just do things and that is why they are more innovative because they think it is right and we will send our people and figure out what to do when we get there. That is not the way the Government Works. We took lots of medicine down and sent more people down. I think to answer your question of priorities, you have a whole list of things and some you can get involved in some totally up to the government and we cannot defend the country against terrorism and those types of things. We can do things like trying to lobby for better education and on Climate Change and trying to convince congress to vote to get guns out of the hands of kids and people with psychiatric problems and criminals. That the things private sector can do. And in some senses can do it better than the government. We both need each other. The driving forces are very different. A company like apple, you look at them, they are innovative and have done the things nobody thought was possible. If they focus on some of the societal problems, you can expect the same kind of results. Let us talk about some of the problems that you are committed to the company has been committed to. Let us talk about education and the lack of innovation whether prepare were workers for the jobs of tomorrow and not the jobs of yesterday. Out of has been very vested in education particularly on coding inapple has been very vested education, particularly on coding. Havehavent been very i been very heartened by the Public Sector and their wilderness to engage and be willingness and to engage. We started crafting a language that would be as easy to learn as apple products are to use. Andhen design a curriculum we found an incredible number of k12 institutions wanting and pulling the curriculum. We then took that Community Colleges. May thed that out in where talking to 33 Community College systems in the state. These are huge systems with hundreds of thousands of people. And so, i am seeing an incredible desire to bring coding to the masses. This is one of the keys to the middle class. Were manufacturing was a key to the middle class years ago, coding is a key tomorrow and today to be frank. There is mass shortages not only in tech barcoding has become incredible fundamental to all of our businesses what the running a retailer or automotive manufacturer or whatever you may be doing or the guy on the street corner. Seen teachers not not willing or wanting to do this. I have seen a lack of Development Dollars being spent in schools and we are training teachers right now. Through every classroom, i can say through every classroom we have been in, we found willing teachers, administrators and the kids are more engaged than ever before. Kids want to learn about the Digital Economy is a of growing up digital. Digital economy and they are growing up digital Digital Economy and they are growing up digital. I am seeing a credible Government Support and we are running out of on what apple 100 renewable energy. I have seen incredible Government Support particularly in china and we run our chinese operations on 100 renewable energy. That is going well and were spending a lot of money on human rights. We believe everybody should be treated with dignity and respect. If youre born with a disability, we want our products to work with everyone whether you can see or hear or not. Trying torse, we are do our part in enlarging the definition of human rights for everyone. A lot of that, the immigration discussion earlier plays into that as well. About something i spend a lot of time thinking about, the moment we are in and whether or not, i think there are a lot of people in this room will think a lot of the ruptures we are facing a temporary. That was seen the pendulum swing and swing back whether populism or political movements we have seen closing borders, less belief in globalization, thats how the pendulum swings. What if it is not . What if we are facing a rupture in terms of people believe in the establishment . For a parent of that trust, that since the repairing that trust the government can do something for you. That too many people do not believe that anymore, what can we do . Think, youerg i talk about pendulums, a good example would be Climate Change. There are virtually, most reputable scientist think there is a Tipping Point that if the world cap the warming up, it up, it would keep going a you cannot stop it. My inclination is to believe the reputable scientists who come up with theories of this is what is going to happen. One thing i know is it the remotest possibility that i betterhange is real, buy an insurance policy and i better get ready just in case. It is irrational to say i do not believe and i will not do anything. If you have a plan to buy the water, i would say to move the plant and have a backup facility and do those kinds of things. If you do not, youre bored with fire you. The pendulum may go. If you do not, your board would fire you. There is an history times when things got better and the world was more open and times when we went backwards and had terrible wars and a genocide. I hope that is not the case now. When youy the dialogue get involved in fake news and i wanted to be careful how i say dumbf you dont down down the dialogue, did have consequences. We expect the less. It is the leader of an organization that sets the tone whether in government, the president , at the state level, the governor, the mayor, in the case of corporate america, people like tim. Deans and chairman of the board and president of the University Set the tone. If the tone goes down, everybody goes down. How you recover from that is not clear. The real answer is you have to get a better leader down the road. We have seen, new york city is a good example. It went down terrible times and and mike ed koch bloomberg and i hope bill de blasio will continue it. We are the ones that set the tone at the city level. And you go back and some president s you agree with and some you do not. We follow the leader whether we like it or not. Beliefs system, the way we behave is set to buy what we see on Television Set by what we see on television. Words have consequences. It is not immediate but it israel. It is real. You have stepped up and wanted to be counted on issues. We are called by your legacy before in reference to steve jobs. Four people in a this room, what do you want your Lasting Imprint it to be on apple . Tim cook i do not think of it as a legacy. If peoplehen say he was a good and decent man, that is good enough for me. That is my goal. I am sure they will be listening to what you say and making their judgment. Thank you so much for being here. [applause] done at the bank that was apples ceo tim cook speaking at the Bloomberg Global Business Forum in new york city and we will bring you more through the day and you can watch it in full on the bloomberg at life goal. Jonathan that was apples ceo tim cook. You can watch in full on bloomberg at tv go. Chair janet yellen speaking a little bit after that and we will bring you for coverage on bloomberg tv at 2 00 p. M. New york time. That News Conference will come at 2 30 p. M. Full coverage on bloomberg. 29 minutes into the session that looks a little Something Like this. Flat after dead kissing the record high after record high and we shred water tread water. Strength off the back of decent u. K. Retail sales. Thats it for Bloomberg Markets and bloomberg coverage continue. This is bloomberg. 3 00e 10 00 in new york, p. M. In hong kong. From new york, im vonnie quinn, this is Bloomberg Markets. Vonnie we are about 19 minutes into trading here, and a half hour in the u. S. Slightly shy of estimate, 5. 35 august,for the month of down over the month for 1. 7 , following a decrease of 3 a little earlier. We get the rate decision, and a half hour later, janet a newswill get conference. Lets take a look at how stocks are doing into the u. S. Session. Here is julie hyman. Julie we are seeing not much change, just like yesterday. Although yesterday, the bias was to the upside, today it is to the downside. But it is because investors are waiting