U. S. Trading session. Post fomc trading session. We are seeing red and declines which we have not seen for some time. The nasdaq is down more than 0. 5 . After the fomc decision yesterday, it was hawkish in tone and the fed indicated it the balanceing off sheet in october and december is likely for a rate hike, we did not see much of stocks. We saw a record highs but now we are seeing declines. Two weeks ago called for new record highs despite the fact that there were declines about time says this is healthy consolidation. Its can tell its consolidation of the record highs. We have a great chart that shows a money record closing highs we have seen this year. Dow, 42, s p 500, 37 and the nasdaq 49. Consideringeme are there is still more than three months of trading action left for the rest of the year. The s p 500 and the nasdaq are on pace for their best year since 2013. The nasdaq is up about 20 this year which is extraordinary. Where we saw the fed have an immediate impact. This is a two day chart and after the fed fomc policy decision, look at that spike higher, more than six 10 of 1 . The dow is down in a big way, its worst year since 2003, down about 9 . Yesterday, this really hit the commodity complex as well as today. Commodity index is down about 0. 75 with gold and copper down. The us trillion dollar had an unusual fall out. Australia is more sensitive to the commodity complex. Plus trading against the gains of the dollar. Finally, it an interesting story in the chip world, gains nvidia. Nd the klein for there was a report saying that chipsuld be used for ai in tesla. The report is full of errors and is speculative and could be irrelevant and is no proof this will happen. No substantiation behind it and reportoves are big for a where there is no proof. And fact, amd doesnt even make ai chips. Vonnie interesting, thank you. We are about 90 minutes to the close in europe. 1 . Up about two 10 of higher andmoving looking at the equity spectrum, you can see gains in greece. Is lower but generally we are seeing Equities Trading higher. We are talking about a stronger dollar. Even though that has been the up 10 of 1 . Uro is has beengian krone gaining against the dollar but also the euro. I was talking about yields moving higher in fixed income. You can see that happening in the long and moving higher. Aboutalian 30 year is up 13 basis points. Certainly have leveled off. Here is eurodollar over two days. 9 10rday, we saw a drop of of 1 and has not made back those gains. We are seeing a rebound today and a drop below 1. 19 yesterday and we are back above that today. What tends to be pretty key for where the eurodollar goes is the treasury bund spread. A little bit of tightening today in thats red. How much more does it need to blow out to see more strengthen the dollar . Finally, taking a look at the euro stoxx 50 index, this is the eurozone stocks, its important what happens. The correlation is still alive. The index has risen to its highest level since june and its now above its 50 day moving average, the 100 day and the 200 day. Vonnie thats fascinating and great chart. Lets check in on first word news. Toa President Trump plans make an announcement a north korean sanctions today. The president will discloses of japanh the leaders and south korea and a strategy session on the north Korea Nuclear program has President Trump nudging south korea taking a harder line approach. Hurricane maria has picked up speed and was the coast of the Dominican Republic today. It moved on from puerto rico where caused more misery two weeks after Hurricane Irma strock. The storm knocked out power to the entire island and will cause billions of dollars in damage. This threatens the population axis that pushed puerto rico into bankruptcy. In mexico city, there is a racing ands time to rescue a young girl trapped in the rubble of a school. She has been there for more than a day since the killer earthquake rocked the mexican capital and the surrounding regions. The death toll is now at 245. Thousands of buildings collapsed and many more are in danger of falling. Complications, the first time Unemployment Benefits plunged last week with jobless claims. Lunging a key factor is the Hurricane Harvey relief. The texas filings continue to reverse. This is bloomberg. Vonnie thank you. Lets get to the markets as investors digest the latest decision from the Federal Reserve plus the news conference. Janet yellen set october as the unwinding of the Central BanksBalance Sheet and signals that more rate hikes are coming. Certainly, if growth is stronger or if inflation picks up more rapidly, we have room. We have a certain amount of room now and we have raised the funds rate four times. We believe that we are on a path where they will likely be further increases over the next couple of years. This will give us greater room. Vonnie joining us now on the phone from st. Louis is the senior Global Equity strategist at well for at wells fargo investment. His firm released its own outlook for the year ahead and well get some of those prognostications in a moment. What do you take away from the idea that Janet Yellen Yellen wants room, in other words, is it possible we will see a recession before we see better growth . I think we are not going to see much of an acceleration in the economy whether its going into the end of this year or next year. Its still going to be very modest growth. I think the me equity market expected the fed to back off of these three hikes in 2018. Hike was a given for the most part. Little surprised yesterday. As you saw, the statement came out, the s p 500 was off about 10 points pretty quick i thought we would see more follow through to the downside. Hiking rates for ties between now and the end of 28 teen is a headwind for the stock market. I think the bond market thinks its a headwind and thats why we are seeing the 10 year yield down. The stock market was a little bit of a mystery to me yesterday. It makes a lot of sense whats happening in the s p 500 today and it would not surprise me to see more downside followthrough. Vonnie even today, its only of 1 . 10 having the fed forecast, are you thinking of changing your forecast . The s pe looking for 500 to close this year in the 23002400 range. Lets call it a 4 6 pullout from where we are. Year end 2018 which is the target we just released, the midpoint of that target range is 2500. As you look at the screen, thats right where we are. We dont see much upside whether , the russell500 midcap, russell smallcap. We see some russell smallcap downside from here. A couple of Percentage Points in the ifa and emerging markets index but for the most part next year, if things play out to the end of this year, we will see ine modest returns netnet 2018 more modest returns in 2018. Vonniemayra you talked about tt that the lack of much of a downside is you expected came as a bit of a surprise following the fmo say. The resilience of this bull market is surprising many. We have said how its one of the most unloved bull markets in history. Bases, the s p 500 keeps hitting new highs but is there anything below the surface that concerns you whether its to do with market breadth or volume or the people are buying on the ticks rather than the dips . Was like to, you see more via money market the market is going up in the really is not a lot. I think its natural especially when you get later in the cycle and using the baseball and natalie, i think we are in the eighth inning here. What really stands out is the fed rate hikes are still going to happen. Then valuations, if you look at the trailing p e on the s p 500, its north of 20 times. If you look over the last 30 years, the average is about 16. 5. Valuations are stretched, the fed is hiking rates, the economy is not accelerating. Those are some of the things that concern us and make us look for a little bit lower market. We are in the pullback camp. We are not bears and we dont think the cycle is over. Mayra you have said that smallcap seem to underperform late in the cycle in the u. S. Rest of the world in the Business Cycle in relation to the u. S. And what does that mean for Global Equities outside the u. S. Versus the u. S. . Are in the eighth inning, maybe one out in the eighth, the rest of the world is probably in the third inning. Traditionally, the u. S. Leads the world into recession and lead the world out. I think the rest of the world is earlier in the cycle. Thats one of the reasons why we are expecting better performance out of the developed International Markets ,the ifa index and the emerging markets. If we had to rank the performance of those five asset classes, we would say developed International Come emerging markets, u. S. Large cap, you is midcap u. S. Smallcap. That is our top to bottom ranking of our expectations through the end of next year. If we look at i. T. Come you talk about it as a larger sector. I have a chart that shows that em commodity stocks are more attractive than the tech pos when you look at valuations. Could we see commodity stocks in the em space make a comeback . I think commodity stocks will be a tough haul overall. I think you will need some other things to happen besides a material increase in commodity prices. Difference for emerging markets. Had they bounced off the bottom, some have. Are we going to have a lot of follow through to the upside . I dont think so. Vonnie what Industry Groups might lead us lower if we get this pullback . i think its the more sensitive economic sectors like staples, utilities continue to do well, health care. Like health care but we do not want our clients getting defensive. Somewhere on the horizon, they will but we dont think its now. You want toback him look at industrials, technology, financials, consumer discretionary. Thats were the opportunity will be should we see the pullback we expect. Vonnie thank you. Up, oil struggles stifles. Utput futures in focus is next. This is bloomberg. Vonnie from new york, this is Bloomberg Markets. London, letsom turn to futures in focus. Gold has taken a dip over the last two days since the fed indicated they will raise rates this year. As well as three more times next year. Lets start with gold. Is the fed going to undershoot on rates that will boost gold from here . Thats a great question. Janet yellen talked tough yesterday which is unusual. She said she would raise rates and they will let the portfolio run off and said it and forget it. The fed also said we would do qe two and then qe3. They have a plan and it has not worked. What they save they will do when actually do, we are seeing market skepticism. The only markets that have reacted is golden that has been a little bit of a move. Its above its average for the year so it will pullback is not a surprise but i dont know that everybodys willing to believe the fed will raise rates but they need to see it in december and see the portfolio run off until you see a new move in rates. Oil, we areng to seeing that opec is really keeping the market guessing over further action. This is a ahead of the meeting indiana coming up tomorrow. This is ahead of the meeting in the and a coming up tomorrow. Opec talks tough and then everyone sheets. The u. S. Flow is on interrupted. We had a massive hurricane a flood in houston and the supply seems to be uninterrupted. I think opec can be discounted because there are a lot of nonopec members like russia and iran and the u. S. Wildcat is. The importance of wildcattter. Has oil will be in the range Little Something happens. The only thing that could happen is a demand is a dramatic increase in demand and that does not seem to be on the horizon. Nejra interesting, ignore what opec says. Thank you. Vonnie great stuff. It is time for our latest Bloomberg Business flash, a look at some of the biggest business stories in the news now. Google is trying to boost its hardware business and has agreed part of htc Design Engineering team for 1. 1 billion. By owning a manufacturer, it will gain tighter control over production of its pixels smartphone and other devices. Once one of the Biggest Smartphone makers is based in taiwan. The biggest italian bank is interested in a possible combination with germanys commerzbank. Credit has had talks with the german government. A deal is set to be unlikely the short term because both banks are cutting jobs and selling assets to boost profits. Homes isof kb cutting the ceos bonus by of his profanee tirade against comedian Kathy Griffin. They warn he will be fired if he does anything like that again. His outburst was recorded after Kathy Griffin and her boyfriend called police to complain about noise. That is your latest Bloomberg Business flash. Still ahead, is not easy being Mark Zuckerberg right now. We will discuss the political crises facing him next. This is bloomberg. Nejra this is Bloomberg Markets. Vonnie from new york, im vonnie quinn. Is Mark Zuckerberg running for president . He is contemplating his political future at a moment when he has not figured out his political present. Problems ofcebook fake news in russian propaganda and other tensions with washington. You can read all about in the new issue of Bloomberg Businessweek. Its the cover story. Caskin cowrote the story and joins us now. Tell us why people think Mark Zuckerberg might be thinking about political office. Going on is that zuckerberg is ridiculously influential. People dont totally appreciate the fact that this is a guide who is richer than almost anyone in the world. He is the fifth richest person. He has probably the biggest, most influential Media Company of all time and he is politically engaged starting after the election. He went on this crosscountry listening tour. If you dont know anything about him from the outside come it looks like the kind of listening tour that someone would go on if they were running for political office. He has brought a bunch of people, most noticeably david the 2008 campaign for barack obama into his orbit. Series ofere is a bilaterals around the yuan General Assembly with the president today. Right now its the ukrainian president. The president is speaking about russia right now. This, would heof have a chance if he were to consider it in eight years or four years . Wisdom isventional that no chance he is running. Number two, this is kind of silly because he has a really good job. If you talk to people in is angton and this opinion shared by people inside the Trump Administration maybe they have a reason to be paranoid but they think this is a legitimate possibility. Its because money, name recognition, hollywood worthy backstory, everyone likes facebook. Change theoved to facebook corporate charter to allow him to hold on to control were he to be elected. Will go to trial next week. We will see Mark Zuckerberg testify about these changes. My cowriter and i asked him about this and he said i was not thinking about a president ial run, i was thinking about somewhere down the line i might want to take a temporary job in the government. Would bence, he willing to step in and save the day like with the health care website. Vonnie we will talk more about this story all day on Bloomberg Markets. Its a fascinating story with lots of great details. Thats the cover story on Bloomberg Businessweek. More markets next. This is bloomberg. Vonnie live from World Headquarters in new york and london. Nejra this is Bloomberg Markets. Lets check in with first word news. Are on thesanctions way for north korea. President trump confirmed that this morning when meeting with the president of afghanistan. The president told a strategy session on the north korean Nuclear Program that he is expected to urge south korea to take a tougher stance. Puerto rico has been declared a central disaster area after Hurricane Maria battered the u. S. Commonwealth. That makes Puerto Ricans eligible for financial assistance. The storm cut off electricity to the entire island and it may be months before everyone gets their lights turn back on. Bedreds hope there will billions in destruction. S P Global Ratings cut china one notch from aa to a. The s p says chinas long period of credit grace has increased its economic and financial risk. In the u. K. , premised are theresa mays cabinet appears to support brexit. They had a to our discussion about how far she can talk about money and trade in a speech she gives tomorrow in italy. She is trying to revive flagging negotiations with the european union. Global news, 2400 hrs at day that 24 hours a day, powered by 1200 journalists in more than one of the 20 countries. This is bloomberg. Vonnie thank you. The securities and Exchange Commission is joining the ranks of governors and businesses that buy cyberattacks. It revealed that hackers had breached its electronic database known as edgar. The top u. S. Financial regular new of the breach since last year but did not conclude until last month that the cyber criminals may have used their antito make illegal trades. Lets bring in matt robinson. This is a serious hack. Its only if the hackers made profit from the information that we really care. This hack puts the agency in kind of a weird spot. They Police Companies getting hacked and how they disclose it. Now they have been hacked a may have been disclosing this yesterday after knowing they were hacked last year. It suck all the time to figure out if they were in the system did they getnd Public Information and use that information to trade above everyone else question mark actors do we know these did use the information illicitly . With the statement yesterday, they said they could have done so but the worst Case Scenario is they are in there and trading on inside information. Generally, hackers or not there to look around the looking for information to get an edge. There is certainly a strong indication that they traded on inside information and the agency said yesterday they are in contact with authorities. Sec is good on finding people who trade and or trade on inside information so will they be able to find these hackers . Tried to get ahead of illegal profits province to get restraining orders on that cash. Its an uphill battle for the agency to Police Someone in another country. Its problematic for the sec reputation. Given that companies have to abide by sec rules, do they have any leverage to say that we dont want to file our information in advance on edgar because its breach oable . Willthink those companies have a more receptive regulator saying when they are hacked to say that you guys a been through this and we are trying to and fromwhat we knew there what you disclose to investors. How and when will we find out more about this customer they obliged to give us more information about what kind of companies were hacked . I dont think there is any legal laws they have to follow to disclose this. They are saying this is what we know now and we are far and we are trying to figure outs of the things and when we do, we will inform those companies and investors what was going on. Vonnie the sec has complained in the past about being understaffed. Doesnt it have enough staff to look at this . Will have toey have a task force. Ae new chair started in may new review of all the data to make sure there are no open holes that hackers can get into. Vonnie thank you. Great story. Another story on the bloomberg, did earnings beat or miss, it will get tougher to answer the question next year as europe redraws the Way Investors pay for analyst research. Lets bring in our bloomberg investment reporter. That thisout the fact might Impact Research departments and us the small and midcap stocks that might be had hardest. Is earnings season next year going to look different . Not immediately. It will take several Earnings Seasons for the market to notice difference. Let me tell you why. It will take time for banks to redraw their research coverage. We know that Asset Managers will have to pay separately for research and for the first time, they are looking at how much they are spending. Because of that, they have to decide whether they need all that research they are consuming and the answer is that no, they dont so banks will have to spend less on research because managers are not prepared to spend. Nejra one thing i wonder about they want to increase transparency and competition but lets say some brokers start charging small caps in order to cover them because that could happen. To as not conducive competitive transparent landscape . Its an option that would work. Its questionable because that makes you question the neutrality of that research. That is how it works on credit markets at the moment. Model. One coverage is important. Covered,ies are not their stocks could be affected in terms of liquidity and we would see more volatility and evaluations. If evaluation is all over the place, its harder for the market to know what the company is worth. Nejra so how can Market Participants prepare for this . They will have to invest more into research. They will have to have Companies Models on andave an inhouse view another ways to track upgrades and thats called earnings momentum. That will probably fill the void. Nejra thank you so much. Show, miss our new Bloomberg Markets rules with everything related to financial regulation. That airs for the first time in at 8 00n friday evening p. M. London time and through the weekend as well. You are hosting that wonderful new show. Tune in, cant wait for that. Coming up, latin americas largest economy is trying to jumpstart and we will break that down with a finance minister of brazil. On the get his insight state of the economic recovery we will bring you that exclusive next. This is bloomberg. Nejra live from london. Vonnie live from new york, this is Bloomberg Markets. Pare announce its buying carbon. Pare expand its Global Presence as a specialty chemical company. It is quite a premium if you look at the close yesterday at 13. 20. The Parent Company does not have to sell shares will stop they will take Debt Financing for this. You have japanese cyber maker buying Calgon Carbon which is a to expand purifier their Global Presence to be a Specialty Chemicals company. When we talk about the Global Presence, they get about 13 of the revenue from the u. S. A barrett analysts said no competing bid is expected for this deal. This really shows the consolidation you are seeing in the Specialty Chemicals and material space. Who are the majority shareholders the benefit from this . On page two of the statement, the Company Released the information. Black rock became a number one with a 12 stake, 63 premium, im sure theyre happy. Its followed by vanguard and shapiro with at 8 but they should benefit stop. They shouldsays advance in the aqua an environment space and optics. As they continue to push that forward, those are their Strategic Initiatives they hope to achieve with this deal. Vonnie thats a phenomenal report, thank you. That was taylor riggs. Turning from asia to latin america, brazil is at a political and economic crossroads. The largest latin American Economy is attempting to put austerity measures in place to restore Investor Confidence as the nation gears up for next years president ial election. I sat down for an exclusive conversation with the finance minister of brazil. Countriesm why the economic recovery is taken longer than forecast. In my view, its exactly about the timing that i had expected. When brazil began to improve the , it went up about mid last year, we had the first leg of was sold as ahich deleveraging of corporations and families. Recession,the long theanies have borrowed up higher leverage and that was a problem for those companies and families. Than the first part of the recovery, companies were basically deleveraging themselves and families as well. The beginning of the recovery but it was very important that that took place at that time. Then the First Quarter came up short. Vonnie the gdp growth is for the year. 6 is that your forecast . No, its being revised up. Up at this point but the trend is to move that up further. There are some analysts who are already projecting closer to 1 for the year. Vonnie and yet there is a electoral uncertainty sel. How much is that way on potential growth . The potential growth as a result of the true debt of two important things. First, to eliminate the fiscal uncertainty that we are providing that would Structural Reforms were making. On the physical side. The ceiling on the growth of further expenses is important. Also Social Security form and audits. The second one is productivity. The productivity rate of the brazilian economy has not increased over the last years. Reformshave a series of aiming at increasing productivity. Those include more austerity on Civil Servants and pension cap but you need congressional approval. What is the plan b if you dont get approval . We feel that there is going to be an approval which is the most important element of the whole project. I think the general consensus is that its needed for the country to really grow at a higher rate. Vonnie do you have a plan b just in case . Know, we think that will be approved. If, for some chance there is a problem which is unlikely, we can have other things to do but i dont think we should be talking about those things at this point. Vonnie that was part of my interview with the finance minister of brazil. Was a next was of interview, great stuff. Its time for the Bloomberg Business flash were look at some of the biggest business stories in the news right now. General electric new management is taking aim at its corporate jet. Their corporate they are cutting back the number of flights. The company intends to sell its planes. Ceo is cutting back on the ge air force as part of a 2 billion savings plan. Theans as negative hitting two companies about potential rail combinations. According to people familiar with the matter, the German Company is in talks with both and bombardierom of canada. They could face big antitrust hurdles. The worlds most famous soccer star has 59 filion 59 million followers on twitter. He tweeted about his new that deals with a derivative that offers leverage as much as 500 times trader deposits. Regulators say it helps people lose money on bets they dont understand. At least seven major European Properties similar endorsement deals. And thats your business flash. Vonnie still ahead, a battle in the skies between Norwegian Air and ryanair. I sat down with Norwegian Air ceo to get his insight on the companys global expansion. More and then next. This is bloomberg. Vonnie this is Bloomberg Markets. Competition is sky high among airlines thes days. Norwegian air is expanding its global push and butting heads with the likes of ryanair in the process and other lowcost carriers. I asked of their ceo about the measures the company is putting in place to come out on top. You have to have a complete model especially flying transatlantic. It only with aircraft and you have to have a very efficient setup. Fly to some of the small airports, vonnie you obviously work out of laguardia and jfk but you also have hubs in places like Stewart Airport in Orange County and providence. Does it make it more attractive for customers who are desperately trying to avoid the traditional airports . Throughvery easy to get these small airports. 10 minutes and you are through immigration. Its very efficient and you can turn around the aircraft so you can get high utilization on the aircraft and that means lower cost and is cheaper to fly there. Vonnie are you getting deals for landing that you can never get in a place like jfk . Yes, its totally different. And it should be. Vonnie you mentioned the Larger Airlines and how you need the set up to deliver miles cheaply but its expensive. Ownership costs for the airlines are expensive so how do you plan to bring overall costs down . We have a very good financing system with the aircraft today. You utilize export Credit Facilities like you do in the u. K. Which gives you a favorable rate to finance the aircraft. You need to keep the cost down and you need to be efficient all over. Vonnie you are expanding out of the u. S. To other parts of the world. You are expanding constantly. How much growth do you see as sustainable with the amount of costs you have . Years we will have [indiscernible] we will be flying over the atlantic. Commodity. You have to have a larger scale. Routes over the atlantic it tomorrow, many more. Vonnie fuel and maintenance might be betty were might be better with the kind of scale but how are you defending your price point given that the large carriers also have scale and are defending their market share intensely . Thing becauseood then youll ramp up the volume. Thats exactly what we are after. If we have more people to fly, its enough for everybody. They have to come down a little bit on the fares. Fly over thely to atlantic for everybody today. It has to come down. Then many more people have the ability to fly there. Vonnie what can you charge and make a profit on say a flight from an airport in california where you are the second largest transatlantic flyer to rome or paris . Forou should be able to fly at least 250 on a oneway ticket. To 199 on a oneway ticket into europe. Its pretty insane. the Balance Sheet is getting a little stressed that norwegian. How do you plan to manage that . Vonnie we have so far financed 140 airplanes. Its not easy today to finance them. Instruments that they utilize to finance today. Finance today is very easy. Vonnie what if there was some kind of crisis, like a fuel price hike that would put pressure on the leverage Balance Sheet . There are always stumbling blocks. You have to face that. Plan on whether this can happen and whether his terrorist attacks or fuel spikes. The oil prices go up. Vonnie i have to mention your competition with ryan air. There is a Pilot Shortage in europe and it sounds like you have taken a lot of pilots from ryanair and now theyre offering an incentive for those pilots to come back. How does that shake out how do you gain pilots . Our package been very attractive. Pilots like to fly new air planes. They like to fly the dreamliner. Possibility to go to a popular place whether they are from spain or the u. K. Or the u. S. Vonnie you are just opening your boeing 797 base in Fort Lauderdale . Thats right. Vonnie how do you differentiate intraeurope . With all these lowcost carriers, if they are doing the same thing, why pick norwegian . Because then you have access to a large network. You have to pick norwegian to fight to fly lowcost transatlantic. Last question, longhaul transatlantic, how do you see it shaking out with the top three or four players. Its a huge potential as long as you can keep the fares low, its a huge potential. Its enough for everybody. It is 11 00 in new york in 11 00 p. M. In hong kong. Equity tradinghe day in your. Is the european close on Bloomberg Markets. Here are the top stories we are covering from the bloomberg and around the world. The fed deliver their hawkish forecast, marking the end of qe. And little for mario draghi the ecb . It was a summer of unrest in poland as protesters took to the streets. We will speak to polands foreign minister if he fears retaliation from the e. U. President trump is set to meet with this hour and says new sanctions are coming against h