Im looking at the downside of the euro when it comes to sterling, down by 2 . The tech selling down by. 2 . David it is time for the morning brief. Will, Emmanuel Macron deliver a speech. He will propose reforms to the eurozone. This afternoon, janet yellen will deliver remarks at the in abe meeting in cleveland. At 1 45, President Trump will hold a joint News Conference with Mariano Rivera at the white house rose garden. We expectl, those after 4 15 this afternoon people later, trump will be traveling to new york. There will be a part of this rollout of a tax reform package. Running us with more is marty schenker. Program. Ack to the i want to start with marty. The president has put his priority, texas. We have three tweets. They are about the nfl, the nfl in the nfl. How does that fit together . Marty it fits together with the message that trump wants to project to his base. He is going on the stump. We have north korea threatening war. We have an entire travel ban that is in place. And he is tweeting about the nfl. This may be the end because he seems to have declared victory in that last week. David Dallas Cowboys stood before the National Anthem at what do we know about this tax reform package. Marty we have gotten some broad outlines. The big elephant is the state and local tax reduction. When you look at what is affected by that, it is the big states, newoutlines. The big york, new jersey, california. There are moves in congress to kill that. It will be interesting to see how this gets done. Lets go to you. I want to talk about what is in this plan. What are the major drivers here . We talk about the animation of deduction for state and local. Afford taxotal to cuts he is going to propose . That is equivocal source of revenue. It is 1 trillion over the next decade. If that goes away, that really limits what you can do in terms of lowering individual taxes. That is on the individual side. That is not on the business side. Is this notion that individual desk there is this notion that individual will pay for individual. You also lose that in terms of rate reduction. It shouldnt affect what happens on the business side. David go over to the business side because when of things were told is they will cut the tax rate. How much is that likely to cost that. W could they pay for rohit a good rule of thumb is it is a little over 100 million of foregone revenue that. For every one point reduction in the Corporate Tax rate. If youre talking about a 15 point reduction, you are talking about 1. 5 trillion of foregone revenue over the next 10 years. 10 years is the budget window that Congress Typically uses. Youve got to go back and look at the very chairman dave camp when he was chairman of the house, had a bill in 2014. He had a host of revenue raises. All of the stuff is on the table. It looks like they are going to add a pay for it by adding some of it to the deficit. They are talking about a 1. 5 trillion tax cut. That is one point trillion dollars less of revenue raising you have to do on the other side of raising. Alix wrote it, there is a debate. Which sectors have the highest tax rates can we know it. It is energy, Consumer Staples have the highest tax rates of the last four years. Detectives lois. Just tech is the lowest tech is the lowest. What do they end up doing with the money . Onet it is hard to say sector benefits more than the other. And ask cap spending, there talking about doing butecedented spending theres an interest in lowering the rate. There has been discussion on maybe doing temporary to juice the economy, bring some investment forward in time to trying get things going before november 2018, or november 2020 to pick a date. David on to pull together two things. One is the health care, the other hand texas. Where a chart that shows there. S a percentage of u. S. Gdp what is going on with tax rates as opposed to what is going on with health care. The yellow line at the bottom shows the percentage of gdp from zenit by Corporate Taxes which is less than 2 and it is not it has not been going up. A percentage of gdp has been going up rather dramatically so is this really a problem for corporations. Soon be addressing health care . Should we be addressing health care . Rohit health care continues to be an issue. , health carehand, is complicated. The question is if you cant solve the huge problem, are there other problems you can solve the make the u. S. And more competitive place to do business . One. Rate tax rate is we have the highest Corporate Tax rate in the world. The matter how you slice it, were just not a competitive place to locate and grow a business. You can do something about that. You can prove the life of notches corporations, the life of not just corporations. You can improve the lot of all working americans. That is something that congress is always interested in doing. It is good policy and politics. Unlike our health care, they can start from a position on taxes. Republicans can agree on lowering the Corporate Tax rate. Shiftingall aligned on the u. S. From a to a territorial system. It may effect be easier than of care. David thank you so much. Alex . Alix easier. What we have seen has been a reversal of the winners of the last eight months. The big start one to me is tech. The ella barr is the the yellow bar, tech is obviously the performer. Tech returns really come down. Small caps starting to pick up some juice. Value than better than growth. The growth return really slowing down over the past three weeks. The question is why. , edmund. E is that a trump tax trade . Is that a rebalancing into the end of the quarter . When we look at the u. S. Specifically, it is very much a return to looking at the tax cut package that you have been talking about, because what is clear is when we look at our own companies that should benefit should Corporate Taxes because it, this bar is going to unperformed dramatically from february this year until a month or so. You have seen a dramatic recovery in these companies, as the market has gone from refinancing pricing the 0 chart to something more than zero. That is also what caps on do better because they have more domestic exposure to the us economy and therefore have high just to the u. S. Economy and therefore have high tax rates and should benefit more. Jonathan i wonder whether we are having a pivot away from that. The market is identifying almost peak growth. What do you think about that . Edmund i am not so sure about that because if you look at the u. S. Again and you look at the breakdown of the performance of the s p 500 index you today, you would observe a very select haver of Technology Stocks been this reportedly driving the gains in the s p 500. What we are seeing is not so much an underperformance of large caps but an underperformance of these leading tech stocks. Maybe some disappointment over the announcement of the iphone 8 and 10. You have some unwinding and amazon and facebook and google as well. All of this has been happening at the same time. That is very specific. Some reversal of means as opposed to large cap underperforming on a greater scale. Alix three days from the end of the quarter. Edmund shing, you are going to be sticking with us. Coming up, interview, Francine Lacqua will be sitting down with bob diamond. Cannot wait for the conversation. This is bloomberg. Jonathan from new york, this is bloomberg daybreak. Francine lacqua is then by in the line. In milan. Francine jonathan, thank you so much. I am here with bob diamond. He is on our panel. About the relationship between eu banks and wall street. Bob, thank you for joining us. Did you understand where the opportunities about the relatiop were . I know you are here in europe to find deals. Bob we are very bullish on europe and banking in europe. I say that recognizing that i have not been bullish on europe as an economy, as an Investment Opportunity in at least 12 years. We heard the finance minister talk about the progress that is being made on nonperforming loans with the banks in italy. It is not enough but it is progress. They have a hidden Inflection Point where banks in italy are becoming investable again. The ideal situation would be to find a great bank that has immunized or ring fenced or sold the nonperforming loans, so that we could focus on deposit taking, lending, smes coming driving upward in performance. We dont have one yet so i am saying it speculatively. Francine this is with retail . Retail, we arel looking across Financial Services but when you think about the opportunity here, Asset Management is very exciting. I think retail and commercial banking is very exciting. Francine a lot of investors like european banks. A lot of investors are looking at italian banks but we have listened to and a whole lot of problems. How would you describe these Banking Sectors . Is it challenges are opportunities . Bob i think it is challenges and opportunities it we are now looking at italy and post the crisis people were very focused on germany. Maybe germany and france, core europe. Some of the best opportunities right now are in the periphery such as greece. Greece was the first to be hit hard, but first to have to address some of the fundamental issues. The opportunity for us, we have bank where we can really grow deposits and lending. We dont have one nonperforming loan on the Balance Sheets. Bankfrancine is europe still overbank . Bob is there going to be consolidation . Definitely. The kind of consolidation well see across europe will be within borders. It will be within the countrys. Well see some crossborder consolidation. It is not clear yet whether synergies are for crossborder acquisitions in europe. Is very clear where they are domestically. One has to look at the situation in greece where there was consolidation. There were 25 banks prior to the crisis. Today, there is for. There is cointreau. Those there is cointreau. They have trouble keeping deposits because depositors are worried about being bailed in. Our chief executive is focused on driving a limited number of branches but more technology to tech deposits. We start with that, we can move quickly into sme lending. Francine what is your take on brexit . You found space . I am lucky enough to be up to be of the vote both in the United States and the u. K. And i voted to remain so i definitely had the view that the right decision was to remain. Now that that is not the situation, i think there are some positives and negatives it is anportunity opportunity to invest seriously in the u. K. Based institution. It is very focused on equities,. Dvisory, m a, but u. K. Based ,fter 20 or 30 years, of global be all things to all people, the opportunities in the u. K. In europe are for more national, arm original. Farr more regional more regional. Focusing on the equities in the opportunity. At you are talking up desk talking about investment banking. To give credit where credit is due, the u. S. And secretary of the treasury were very quick to implement tarp which put equity in every one of the big banks. More importantly it was then able to say to the banks, you cannot pay that money back into the cleanup your Balance Sheet so nonperforming loans, Balance Sheets are clean. Then he said, you cannot pay your people until you pay the money back to the treasury. Happened . Over two to three years, we saw a fairly accelerated recovery of banking in the u. S. The midmarket banks are quite healthy. High multiples. In the u. S. Banks that were most impacted know the crisis have recovered for more quickly and to a greater degree than the u. K. And european banks. Therefore are accelerating and investment banking. Francine you think u. S. Regulators are close to the banks . I hardly here u. S. Banks complaining about their regulators. Bob you havent been there enough. [laughter] francine fair. Bob i think the big brushstrokes are not regulatory. Secretary,ury of the steve mnuchin, he has been clear that is a summit to accelerate banking. He was to roll it back for the smaller banks. Less expense. Francine do you have an amount of money youre willing to spend on an italian bank . Bob we are pretty open on that. It depends on our resources but in a number of the instances we looked at large institutions, we have done it in partnership with other investors. We dont start out with a set amount. We start out with where is the best opportunity. Francine bob diamond, thank you for joining us today. We will tell you more about the exclusive interview we had on the future of european taking. David thank you, francine. Now going over to taylor riggs. She has our Bloomberg Business flash. Taylor Neel Kashkari is backing janet yellen for a second term. I think janet yellen is doing an excellent job and i really hope she gets i cannot think of anybody was better equipped to lead the Federal Reserve for four more years than her. Economist with leadership skills. Taylor yellen speaks on Monetary Policy in cleveland this afternoon. You can watch it live here on bloomberg television. Some are calling it chinas netflix. They are targeting u. S. Initial Public Offering as soon as 2018. It could value chinas was popularnetflix. Streaming service as much as 10 billion. The biggest diamond found in more than half a century is off the block. It was sold for 53 million. Is the size ofch a tennis ball went unsold last year and has been expects to go for as much as 86 million. That is your Bloomberg Business flash. Is the size of i was waiting forjonathan kashkari to say apart for me. That i am not sure President Trump is listening to Neel Kashkari. Neel kashkari would like to push his name forward. Alix can we talk but the diamond for a hot second echo that was the size just for a hot second . That was the size of someones head. Dependent would weigh you down. The pendant would weigh you down. That is a big chunk of change. Maybe my anniversary present. Something is that your story of the morning . Alix you bet you. Bubbley anniversary presentjonf are not. Rik schatzker set down this is going to be largest all of our lifetimes. Bubbles happen around the things that change the way we live. Railroads change the way we live. The internet bubble change the way we live. Prices are going to get way ahead of where they should be. You can make all of money on the way up. And we plan on it. Edmund shing, ive never heard someone describing a bubble and buying it all the way up. That is a new one for me. Edmund the problem is, even if you look at investment bubbles of the past, you can only ever really identify them in hindsight. I can understand very much where he is coming from in the sense that even if you do think it is a bubble, you never know when it is going to pop. Theyre still potentially a lot of upside ahead. That being said, i am a little bit nervous because what i dont it isbout it is the way easy to go along and take a long position in this and it is to go short. Going short is very difficult and expensive. Really that skews that symmetric. What i would like to see is a more symmetrical outlay, in other words i like to see investors able to go short just as easily as long. Bitcoin mabel maybe of to find its way. A store bitcoin being to value and not a currency. The given the same weight . Just do you give it the same weight . Edmund there in mind, i personally have the view that a lot of people who invest in bitcoin dont really understand the intricacies of bitcoin. When you look at bitcoin, one of the proponents has always been. T limited unlike paper currencies, you cannot rent as many bitcoins as you would like. Central bank that can do quantitative easing. That is true for bitcoin pete when you look at the cryptocurrency universe, the number of cryptocurrencies out there runs well into the hundreds. You can create a crib the currency through an initial offering very easily an initial Coin Offering very easily at the moment. Jonathan catherine civilian Kevin Cirilli us coming in from new york. Jonathan from new york, this is bloomberg daybreak. Lets whip through the Market Action. Futures really unchanged. The United States. The negativity yesterday and risk aversion that doesnt carry through to tuesday. Treasury yields pretty much unchanged. 222 is your yield on the u. S. 10 year. Dollar strength, eurodollar on the back for a second straight day at 117. 96. Bullish sentiment around the sentiment continues to drink of the market and the politics is the critical aspect. Crude, that bullish move yesterday, we start to reverse it a little bit, down about. 1 . That is across asset picture. Lets give you an update on what is making headlines. Taylor french president will make proposals for reshaping europe later today. Macron and Angela Merkel backing plans to overhaul the various. The prospect of radical change in europemacron and angela looke diminished and u. S. Senator Susan Collins budget any remaining gop hopes of repealing obamacare anytime soon. Dealing a fatal blow rejecting a Republican Health care bill. She became the third gop senator to oppose the measure spanish Prime Minister Mariano Rajoy meet donald trump at the white house today, days before the catalonias Regional Government it is the biggest challenge of the countrys constitution in more than three decades. Some of the biggest names in finance and real estate are expected to gather in new york tonight as President Trump raises money for the Republican National committee. People with knowledge of the preparation says for 250,000 per couple, donors can attend a private roundtable with the president. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. David if you cannot get that big diamond, maybe can get a table with the president. 150,000. The president may be coming to new york today, janet yellen is unclear. This afternoon she is going to deliver an address. Investors will be listening closely for any clues that she might give after two other fed officials gave conflicting views yesterday. Bill daley saying he supports another raise this year but Charles Evans saying he wants clear evidence of inflation before taking the next step. Joining us now with a preview is mike mckee. Mike, you are going to be there and the room listening. I know you dont like to make predictions, but give us your estimate. You expect her to take a position or is she going to bridge the gap . Mike i think she will bridge the gap but she will make it clear that she expects a rate increase. Hat is the base case that is what she suggested in her News Conference last week. She is supposed to be talking about inflation. The feeling is soon going to little more depth than she did with the reporters at a News Conference. She is talking to her peeps here. The point she will make is we do expect inflation to go up and if conditions remain, there is justification, the rate move at the end of the year. David an interesting idea that economists have peeps. Look at w rip, it is way up wirp. It is up to 63 this morning. That is a little bit of off of where it was. As a part of her goal to get the number of higher so they have a realistic possibility of moving up . That would be the case in this was later in the year. I dont think she is as worried about it. They have another meeting between now and was time they will not do anything because it is not a News Conference meeting. We will see if the fed is on the course, more people talking about a rate increase as we get closer to that december meeting. Right now, we are focused on the fact they are going to start tapering the Balance Sheet reinvestment in october. You may hear more about that. I will think she is worried about what the market thinks. Jonathan the Federal Reserve looks really divided if you listen to what was said yesterday in compare contrast that with the likes of evidence. How can she get the fomc back together . Can. I am not sure she there is a really divided about inflation. At this point, the number of is ae who think inflation problem is smaller than the number who think they should go ahead. At this point, and she is taking account of their feelings but she is not going to worry too much about it. Especially if those people dont percent publicly. You might see kashkari do it. Be there could be some dissent that we are a long way from december. It is time to move. We are going to watch those Inflation Numbers carefully. Alix thank you so much, Michael Mckee. As we were just talking about, bill doubly was talking about this bill dudley was saying, i expect inflation will arise. That better we are talking about, the temporary inflation versus more widespread. Still with us is edmund shing. Do you agree with Michael Mckee that we are going to see this reaching the gap . She seems a little more cautious. Chair i think the fed has to steer a middle ground amongst the committee of fed president s. Really, to some extent, the markets have been a little too focused on this question. What we really should look at is the long end of the curve. Whether the fed funds rate goes up inmarkets december or littlet after, it isnt really the biggest story. The biggest story is what bill doubly was talking about about this bill dudley was talking about, longerterm inflation bill dudley was talking about, longerterm inflation. Debate of the syllabus curve. This is the difficulty that we have. We know employment is very strong in the u. S. And get there is no pickup. Will wage growth account . Up . Ill wage growth pick alix take a look at this chart. Is the probability of a fed rate hike by the end of the year and the blue line is the bloomberg dollar spot index. We are seeing a nice move in the dollaris the probability of a fe today. How do you get bullish on the dollar when you see that gap shortterm . You dont know what that rate hike is going to be over the next two years . Think about the dollar. Lets put this into context about the dollar. Clearly, the depreciation of certain 13 to 14 was quite a substantial move. You would expect if for no other reason, a simple slight reversal. My ethics colleagues think alone the further to Something Like 114 against the euro. There could be more the pipe. That is conditional on stronger gdp growth in the u. S. When you look at the manufacturing survey, this would suggest that we are going to get pretty robust growth as a move toward the end of the year in the u. S. David we focus too much on december whether they raise and the howtalk about important is where the in point is . Edmund i think that is interesting. They did bring that terminal quarterpoint. That is important because it is hinting at the fact that they dont expect a core inflation to really rally structurally over the next few years. That is an important point to make. Maybe the neutral rate should be lower at what i worry about is the bond market. We are at a point in the economy where corporate household government are all very leveraged in their leverage to. Ond yield long yield it is uncertain they can control the long end of the curve. Vigilantes just bond of the damage to the Global Economy. Jonathan to sturdy, the spread right now and the treasuries. We just wanted up on the bloomberg. How does that involve . To my if i listen colleague on the bond side, the fixed income side, my g10s rate savages suggest that will rates will go rate strategist suggests that rates will go higher. That is what we would expect, real rates to rise even as the fed raises rates. That is going to be something that is what be quite tough for risk assets to absorb. What it does do a Banking Sector, maybe u. S. In eurozone banks will do well. David edmund shing, thank you very much. Please stay with us. You are watching us on tv but some of you may need to commute into work and if you do, you can still tune in to our colleagues on the radio. Bloomberg surveillance can be here thats can be heard in new york, d. C. Live from your. Live from new york, this is bloomberg. Alix this is bloomberg daybreak. The enterprise greenroom coming up today at you can watch janet yellen speak in cleveland on bloomberg tv. This is bloomberg. Now to your Bloomberg Business flash. Nestle is embarking on its biggest overhaul and at least a decade. Businesses with combined sales of almost 10 billion. It has been called for shakeup from activist investors. Private equity owners including cbc Capital Partners are export options for the generic form a Single Company which can be valued at about 4 billion. Familiar to the controlling shareholders of the drugmaker have held talks with Shanghai Pharmaceuticals focusing on the sale of the u. S. Business. Uber is locked in london and a new consolatory tone will face tax as well in the u. S. The attorney is investigating whether uber is a public nuisance and u. S. Officials seattle has tossed oregon in to make it easier for uber drivers to organize. Jonatn eanuel macron is due to speak later today and france. Macron willmacron will need ges backing for his plan to overhaul. Angela merkel, she is busy at home. Complex coalition while the situation may be seen difficult, Alexander Stark says do not underestimate the power of Angela Merkel. The situation might seem difficult but never underestimate the capacity of as a merkel of Angela Merkel. Jonathan edmund shing, looking at the situation in europe, macron is gone to come up with proposals for europe. What are the chances they get think the . Edmund i reallyf president macron is much more domestic. We take a great deal of interest in the reforms and france and personally, i am relatively optimistic on the chances for boosting french economy. That is where it is the focus. He needs to focus on his core voters. The first have seen steps taken in terms of labor market reform is epic is crucial given the high youth Unemployment Rate in france. Next we will see the whole story about Corporate Taxation, bear in mind that if President Trump cuts the Corporate Tax rate in the u. S. , france will then heavy highest Corporate Tax rate in a hold of the he needs to do something about that. Jonathan do we look at the situation currently, spain has a domestic problem, theyve got to deal with catalonia. Francis trying to do something ambitious for the whole of europe. Angela merkel is increasingly focusing on what is happening domestically. How is the stuff going to get done . Edmund you do wonder whether it needs to be done. I would really focus on domestic growth situation in these various economies. What is interesting is whether you look at spain, ireland, france or even italy, you are seeing a resurgence in the the housea, both at level but also the industrial level. We are seeing the growth and it has built through this year within the eurozone. Thealso in countries such as france. Consumer confidence is at a multiyear high and i think one should not miss the wood for the trees. We should not be too tied up with these political shenanigans. Jonathan we caught up with bob diamond earlier. This is what he had to say on european banking. Bob we are very bullish on europe and banking in europe. I say that recognizing that i have not been bullish on europe as an economy, as an Investment Opportunity in at least 12 years. Jonathan you take a place like italy, can you really be bullish on banking there without being bullish on the government at the same time . Edmund as mr. Diamond mentioned, the momentum in italy is going in the right direction, then maybe you could are you this could argue that eurozone banks have taken a lot could argue that eurozone banks have taken a long time to reform. Italy is a clear example where things are improving. It is not where we are in terms of absolute but the direction of travel is going the right way. We can see quite a lot of optimism. I am not convinced that elections next year are going to change the outlook for the italian Banking Industry or even for the european Banking Industry. Alix why not . Theres a story that italy is going to be different with a fivestar movement. Why are you so sanguine . Edmund i think again the argument i would employ is sometimes it is let thats it is best to let the economy do what it does and let the government stay out. The economic momentum is strong and going the right way. Really as long as governments dont rip up the economy, there is no real reason thats a change. That is the much bigger story. Alix on the other bloomberg terminal, check out tv. Click on our chart and graphics. Through , scroll and check out any interviews you may have missed. Is is bloomberg. Xcode 60 brent is nowsight alix safety dollar brent is now in sight. My question is why . A kurdish independence vote, you have more than 93 of voters approve the independence from iraq. That oil supply is quite out of the pipeline which runs from the turkish port to the landlocked kurdish. You can see that pipeline there, the oil goes up from the greatest reason and into turkey. Yesterday, turkeys president warned that he could foreclose the valves on oil exports from the kurdish region after they voted. Joining me now is tom petri of peachy partners. Of the tree partners. Can we really look at the rally and blame it on the referendum . Tom that is the catalyst for sure but it is also against the backdrop of for a good part of this year. At least six months, the last six months, we have seen the market buying into the notion of lower for longer is a theme. It work intoseen. S forever against the backcheck, this is a new element in the equation where the turkish sensitivity to kurdish independence may prompt that kind of impact. How long is it sustainable . Hard to say. The other factor if you judge it against the backdrop is this location that occurred in the u. S. Which has begun to widen the gap between brent and wti with the u. S. Having a temporary surplus in the aftermath of the disruptions in houston. Alix before we get to the spread, i want to ask one more question about the issue with iraq. We have seen disruptions between the kurds and that and iraq many times. The reason this is different is because turkey is really scared. That is a material conflict in the region. Put it into perspective how much oil is in the kurdish region echo how much is shipped on that pipeline . Tom it is theand we have seen in any part of iraq. We are talking several hundred thousand barrels a day. The 12 you mentioned would suggest it is somewhere between somewhere at the upside. You know . How long would it be cut off . That is hard to say but it is a big enough factor. It is a variant that is as big as the overproduction out of libya that we have had in recent months. One offsets the other. We were spending a lot of the last few weeks worried about how long the libya stay up . How long could nigeria stay up . Now all of a sudden we see a possible decrement that could mitigate the overproduction concerns that were really dominant for the last 60 to 90 days. Alix lets wrap it up with the wti brent spread. How does that make sense . Resolvesink it only with two factors. The runoff of the relatively temporary problems in the u. S. Should enable wti to gravitate higher, if we were to see a sustainable price. I think that is unlikely. Will get a convergence where brent comes down some. It wasnt two months ago that the concern was we are going to be below 50 all the time. This has introduced the notion that we may well be seeing the first signs of embedded declines in the global producing base. Range ofs a case, a the high 40s to the mid50s for wti could be could become more the norm than most people wouldve expected even a few months ago. Alix tom, great stuff. Thank you for the insight. John . Andthan David Rosenberg later, max barker. A key architect of obamacare joins us to Talk Health Care and much more. From new york, this is bloomberg. Jonathan the latest of him a care repeal effort is set to fail. We enter the final stretch of the year, republicans still divided without a major win. They split between Federal Reserve officials is just as apparent. Attempts to find agreement on reshaping europe hits another roadblock. President macron will make proposals. Merkel is busy at home. Good morning, this is bloomberg daybreak. Risk aversion, yesterday, a mild softness to futures. Down by a single point on s p 500. Eurodollar at a onemonth low. The dollar as well as oil, the dollar index getting a nice rally, up by 4 10 of 1 . Well,making headlines as barely near 50 a barrel. The difference between wti and brent is now 6. 50. Lets get an update on what is making headlines outside of the business world. Taylor riggs is here with the first word news. Taylor h. R. Mcmaster says the put out scenarios u. S. Officials dismissed as absurd, the north Korean Foreign ministers comment that President Trumps comments amounted to a declaration of war. Dashedng gop hopes theng the last gaffe last gasp republican gop bill. For the latest on brexit is, theresa may will have a working lunch in london with European Council president donald tusk. He would like brexit to be reversed. Israeli police say a palestinian attacker opened fire at the entrance to a settlement outside jerusalem, killing three is really security men. It was the deadliest attack over a twoyear long state of violence. Global news, 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. President trump is meeting with house ways and means leadership. He has promised a tax reform plan, coming up tomorrow. Here to explain how it is going to play out is marty schenker. The president is telling supporters he is going to get a vote on the tax plan by the end of this by the end of october and through the senate by the end of the year. Any chance of that . Marty good luck with that. Obviously there is always a aance, but tax reform or even significant tax cut plan is going to take a lot of time. The last time they had major tax reform, it took 18 months, and it was a bipartisan effort. This ways and means meeting is bipartisan. That is a path for success. If the exclude the democrats, it will take a long time. David there are reports they are going to exclude democrats. If they go that way, who has the power with the republicans . Does that make the Freedom Caucus the driver . Marty paul ryan is a. Leader, here he knows all the numbers, inside and out. He could lead the republicans in an effort to do a grand tax plan. What he decides he wants to do is more important than what the white house wants to do. David what is the role of the American People in this . It looks like President Trump is going to try to get support across the country. Is that likely to work . If i wasst people say offered tax cuts, i would be happy to take them. He is preaching to a cwdhat is already supportive of the broad noon of ta cuts and simple find the tax code. I dont know that this is going to have a great impact. He will get great crowds and applause for his high points and that is what bound trump loves. David marty schenker, thank you so much for being with us. Jonathan joining us now are on the table, David Rosenberg of the skin chef of Gluskin Sheff. And jim bianco. We got a move. Were you surprised . David we still we see bellicose language out of north korea and we had were recent talks and all of a sudden, yesterdays worrisome talks seemed to trigger a notice in it. If i had to say what the market is worried about, it is not that we are going to go to war, but that we are going to have an accident and force people in on each other and something is going to escalate and get out of control. Jonathan not the first time we have heard north korea talk about war. That word has been banded around many times. Im still trying to grapple with why we care about it and ultimately, whether this continues or if yesterday was just a oneoff. I think it is a bit of a change, bigger picture. We care about it now because he is setting off atomic bombs and firing missiles over japan. If he wasnt doing those, it would just be words we dont care about. Alix already is because there was liquidity and traders in asia are jumping in the fx rket. John it was a pretty small move. Gold had a small pop. The stock market was down 20 basis points. In the overall scheme of things, these are very small moves. If there is going to be an escalation that involves military action, that is Something Different altogether. The route that is going to be taken is going to be more in the way of economic or cyber warfare or maybe naval blockade warfare as opposed to outright military strikes. Up, not seeing a step just in words, but in terms of military, the markets are going to move. Yesterday was a walk in the park. Alix what i thought was interesting was the rotation we have seen. This is the s p value versus growth. In the last few weeks, value has started outperforming growth. Every time we have seen that, you have out performance, and then a cave. Is this time going to be different . Is value going to be able to hold up . When youre in bull market, you are up 12 in a year and growth almost always leads the way. If value is going to stay its course, it suggests that we will end the year at these prices or lower on the s p 500. You will see growth reassert itself. It is more of a hedge. Right,if this term is and indicating the market is struggling, why would it be struggling . Do you see factors that would justify struggling . Jim the economy seems to be ok. Earnings seem to be ok. I know that there is political chaos, but we have studied that in there and has never been a correlation. That is a nonissue. Something could change this afternoon or next week. Until then, this is just part of the regular rotation. David of you are just wrote in jonathan if you are just wrote into me and wants to know why the halflife of some of these markets is so small. Tradersause most of the are siliconbased and take nanoseconds to trade. Jonathan is that what you put it down to . Jim some of it. A 30, when a new story comes out or economic like payrolls. Before you have loaded it on your bloomberg, it is already done. Alix is this all of the is this all end of the quarter rebalancing . Do we need to take any of the moves we have seen seriously . David it goes back to what jim talked about. What has defined this market is a complete lack of volatility. With theit has to do wave of inflows. The bull market in the market the bull market has been investing. It has reduced the amplitude of the overall marketplace. You are looking beneath the market and talking about growth against value. Growth is technology. What are the most expensive parts of the market and the most beatendown part is energy. Energy is the poster child for value. It has been a energy story over the past couple of weeks, reflecting the oil price. David is energy underpriced . Jim it was a bargain, a couple weeks ago. It is moving closer to fair value. Im having a hard time thinking crude oil prices are going to go much higher. Be that excited about energy. Jonathan David Rosenberg of Gluskin Sheff and jim bianco. This is bloomberg. Alix janet yellen speaks in cleveland this afternoon. To is delivering an address the National Association of business economists. Two other fed officials give conflicting views, yesterday. Bill dudley supports another rate the rate hike and Charlie Evans saying he wants clearer evidence of inflation before taking the next step. Joining us from cleveland with the preview is Michael Mckee, Bloomberg International economics correspondent. Ive got jim bianco and david from Gluskin Sheff. They go fishing with you. Michael i would imagine they see things the same way i do. Cair yellen has made it clear she is in favor of another rate hike as long as Economic Conditions remain as they are. It will be hard to tell what the economy is doing because of all the hurricane related distortions. Right now, it looks like inflation is relatively stable. That is the point bill dudley was making. You kind of assumed the economy is not going to change a whole lot. You will some gasoline price inflation, but not a lot of changes in the overall economy. And janetn track yellen is going to be talking about that. The interesting thing everybody wants to know is what does she think of the phillips curve, the idea that as unemployment goes down, the inflation rate should rise. Here is a chance for her to elaborate on what she thinks because she is talking to people who speak the same language. And you are going to get to hear it, in person. Michael mckee, thank you for joining us. Still what this is jim bianco of the juncker research and David Rosenberg of Gluskin Sheff of beyond go research Bianco Research and David Rosenberg of Gluskin Sheff. They have been talking about a series of oneoff events. The last one was cell phone plans and unlimited data. That has come and gone and it is still down. Charlie evans who spoke yesterday, i think they are thinking more on the right along the right lines. Change coming with inflation and maybe they have to update their thinking. David are we asking the right questions . Thead a guest who said fellows curve works fine in terms of protecting wage pressure but wage pressure does not determine overall cpi increases so you cannot directly tracked the phillips curve to inflation. David we are talking about nominal wages. The reality is you cannot look at wages without looking at productivity. Ultimately, the driver of inflation is going to be labor costs. What is interesting in the past year is we are starting to see at productivity growth, roughly a year ago, it is running over 1 . Labor costs right now are running fractionally below zero. Davos,an a year ago, at with those liberal lattes and the theme was the fourth industrial revolution. We are seeing the same old banter about is inflation idiosyncratic or not. Something is happening here, it is abouty and technology, automation, Artificial Intelligence and robots. Labor force growth is running at about 1 . Leaving, the population of robots, is running at a 20 annual rate. You should include robots in the population, considering they are doing more and more tasks, even in the service sector. Maybe they will come up and give speeches. It does not tell you very something very critical and behavioral which is the degree of security you have in your own job. That is something that is really missing. If you count the robot population in, the Unemployment Rate is actually a lot higher than 4. 5 . Jonathan is that a for is that if that is the appropriate framework, what is the appropriate response . Fed, it is the same old they overdo it on the easing side and under do it on the other side. Gyration,ere is no there will be down the road and i heard this all in 2004. They finally go to 5. 25 two years later and this was all gradual. We know this, we know there have been 13 fed hiking cycles in the postworld war ii experience. 10 land of the cap the landed in recession the economy in recession. What i am trying to grapple with is what does a soft landing look like when the runway on gdp growth is not 5 , it is barely 2 . We have not seen all the legs kick in. The fed is pledging to do more. I say focus on the yield curve. It is still the best indicator. It is not telling you a recession is around the corner. If there is no big mover in the bond market and the 10year note is about the same today as it was when the fed started hiking rates in 2015. Economists will find a way to say it is different this time, but it wont be and we are setting ourselves up for recession by 2019. Alix jim, are you as bummed out . Jim i would like to add to that. Market, it at the says 1. 5 and one of that could just be the Balance Sheet coming off. The market is saying you are done and the market is done if the market is right that the fed should not be raising rates and they force this through, then dave is right, we could be looking at a zero yield curve in the next couple months. The fed has give speeches to explain to the market why it wants to go as aggressively and when the market is saying no, we want you to go that aggressively. David jim bianco and Dave Rosenberg are both going to be staying with us. Coming up later, we are joined by max baucus. He will be joining us to discuss the gop ticket latest failure to repeat to repeal the Affordable Care act. This is bloomberg. Taylor this is bloomberg daybreak. Nestle is embarking on its biggest overhaul in a decade. It may buy orys sell businesses with combined sales of almost 10 billion. Mcdonalds has priced one billion canadian donald in bond one billion Canadian Dollars in bonds. Before 2008, most that sales were generated by banks. This year, apple and pepsi sold securities of the first time. Private equity owners including cbc Capital Partners are exploring options for the Generic Pharmaceutical Company which could be valued at 4 billion. The controlling shareholders of the drugmaker have held talks with Shanghai Pharmaceuticals, focusing on a sale with u. S. Business. That is your Bloomberg Business flash. Jonathan still with us around the table is David Rosenberg and of Gluskin Sheff and jim bianco of beyond go reis Bianco Research. Where do you see weakness currently . David the fund the economy is fundamentally weak. I cannot believe people talking about the Second Quarter snapback. Two nonrecurring factors in there. Last gasp in terms of the bounceback we had an Energy Related Capital Spending. Gdp growth was 1 . The underlying trend in the u. S. Economy is basically one boards 1 or 2 . Big drivers are clearly rolling over. You can argue and say that jim has done work on this, but at on topime, we have of that, in canada, there is a statement that the bank put out where it only raised interest , in terms of time to market we are going to cap this thing very soon, was the impact that Interest Rates were going to have on debt laden Balance Sheets. ,he debt ratio in the u. S. Deleveraging only took place in the mortgage market. Than at the today peak of the last cycle. A debtoing to compound interest problem, especially in the corporate sector. A lot of the equity mark market was basically boring money flying back and forth. Alix i should point out that i am going to channel sean darby. To theician to cater fed, looking at the capex forecast, six months out. Jim, is there a capex regulatory positive story . Jim there are two things that would support the market. One of them is regulatory relief. Competitive enterprise institutes in washington say the average company spends more money complying with regulations than they do paying taxes and by most measures, we have had more regulatory rollback than any year in history. We have seen a huge relief from corporations and that might be playing into the second number. S p 500 Earnings Growth plus 2 and we are not expecting 10 in the Third Quarter, but a good high singledigit number. Measures of gdp are slow, but the corporate Balance Sheets the Corporate Income statements are doing well because we are seeing good Earnings Growth. Jonathan jim bianco is staying with us. David rosenberg of Gluskin Sheff, thank you for joining us. The wto director general will be joining us later on the program. From new york, you are watching bloomberg. Jonathan 60 minutes away from the cash open. Futures are a little softer but pretty much dead flat. Futures are negative about duke two points on the dow. The story in the bond market, yields driving a little bit lower in yesterdays session, today unchanged. Dollar strength slowly creeping through against the whole of the g10 space. Keep an eye on that. Lets get you up to speed on the headlines outside the business world. Taylor President Donald Trump told dinner guests last night that he expects the house will december tax bill in in november and the senate by years end. President donald trump said puerto rico is in deep trouble with devastation caused by hurricane maria. Comment amongst pressure from washington to extend more aid. French president manuel it manuel macron will attempt to unify europe today, despite brexit looming. This is what europe needs. There is a rich agenda out there and italy is working hard with other countries to develop an agenda and push it forward. Taylor macron will be speaking later, today. Sc fcc isof the likely to face a tough talk following the agencys disclosure that it was the victim of a cyber hack. In prepared remarks, jay clayton will say the agency told Government Cybersecurity officials about the breach soon after it happened, months before the agencys new chairman made a public. Global news, 24 hour today powered by more than 2700 journalists and analysts in more than 120 countries. Brent is in r 60 brent is insight. Is in sight. A lot of bullish rhetoric coming out of asia through an apex conference. The big headline for me is the saying lower for longer is coming to an end and the Global Market could face a crude shortage by 2019. Joining us from london is julian sayingu also had the same thing, and market squeeze. Julian i think there is a shift in Market Sentiment and we have got not just the analysts and forecasters in place, but we also have traders who are intimately involved in the buying and selling of oil, saying things are getting tight, in particular that the Global Oil Demand is much stronger than we had earlier thought. I think there is also a little bit of a situation. It depends at what point you are looking from. When this lower for longer was point back in 2015, we were comparing oil prices with a prior level of over 100 per barrel. Now the comparison is made with sort of 40 per barrel. Depending on where you are starting from, 60 either looks low or not low. I think that is part of it. Alix how many producers are hedging at 60 . It has been a quick move, it feels. I can imagine producers getting in their hedging which just means lower prices later. Julian there are two things here. The 60 a barrel is a brent crude price. We have seen the differential between brent and west texas intermediate widening. The ugi is around seven dollars a barrel below brent. That is down from two dollars a barrel lower than brent to get brent, two months ago. Is the part of this rally, if you say this happened very quickly, it has happened because of rising geopolitical tension in the middle east. This is something over the last two or three years that has not been a factor in oil market and suddenly, it is back with a banging as the kurdish population in iraq goes to the polls to vote on independence referendum. There is no real likelihood that this will be implemented immediately. Itlook like it is looks like it is going to be a landslide in favor of independence, but it will be difficult for the kurdish government to implement that. Everybody in the region is against it. The rest of iraq is against it, iran is against it. Is back, and that is having an impact on prices. Alix thank you so much, julian lee. What is weird is that oil price stocks are not having the same kind of upward momentum that brent is. Equitiest european gas versus brent crude. The bottom panel is the correlation between the two. It is at. 18. You would think you would see that, much higher. Bianco, why not . The spot price which we talk about, at the end of the year, it is 52. In 2019, it is 52. The market is not believing that the price of oil is going to go much further from here. Julian was right, it is all about the frame of reference. Is it going to be higher . The market does not think that and it is reflected in the stocks. Alix are we not seeing higher prices or stable prices . Jim the problem with energy is the longterm prospect for energy is you have to break them into two groups. The Technology Group like the fractures. There is a lot of technology coming into the oil field and lowering the price. Andnational Oil Companies some of the older companies cannot implement those technologies. It has been a very difficult period. Jonathan one of how do you think about fx markets and holding that in . Do you have to think about that . Jim i think you do. The problem with oil is that it is such a volatile commodity. Within that, if you look at the futures market and the breakdown which is a commitment, they have had record speculation on currencies, setting in a lower dollar. It looks like we might be seeing the beginnings of that. We just over did it with the believe this dollar was not going to go up, again. Might notanup we be seeing oil spiking up to 80 80, we have seen a profound change because of technology. Oil companies can make money at much lower price points. What is in that answer alixs question . Why doesnt it make it a good band a good investment . Jim it does for those that can take advantage of it. If you want to go to the extreme, the national Oil Companies, a lot of third world ifntries need 80 oil and they can survive with 30 oil, if this world can, they are in real trouble. There are others that dont have the technology and cannot make that kind of money. Alix we saw anadarko issue a buyback. Where does that fall for you . Do you want to look for Energy Stocks that would be willing to return money to shareholders or those that would just final it back into their business . Jim i want to think of energy as more of a tech play. Ago, a 300 horsepower car got 30 miles to the gallon and now and today, it gets nearly 45 miles. If you cannot make money at 30 because you are in trouble because that is where the technology is ringing us. If you are not ready for that, you will have trouble. Hopefully they are putting the money back into capex. Goid jim bianco of beyond of Bianco Research is going to be staying with this. Janet yellen in cleveland, ohio at 12 45 eastern. We hope you will keep watching bloomberg television. You can tune in to our colleagues, tom keene and david gura on bloomberg radio. York, this is bloomberg. Taylor this is bloomberg daybreak. Coming up, you can watch a chair Janet Yellens cleveland speech. This is bloomberg. Now to your Bloomberg Business flash. Backing janet yellen for a second term as fed chair. His comments come as President Trump weighs who he will nominate to leave the central bank, next year. I think janet yellen is doing an excellent job. I cannot think of anybody who is better equipped to leave the Federal Reserve the next four years. 20re is nobody else who has plus years of Monetary Policy experience, financial crisis experience. She is the rare economist with excellent leadership skills. Taylor chair yellen speaks all Monetary Policy this afternoon in cleveland, at 12 45 eastern. Uber is lost in london and a new conciliatory tone will face will face tasks in the u. S. New york officials are looking to tighten controls on right hailing. Some are calling it chinas netflix. Ite is targeting a public u. S. Offering as soon as 2019. That is your Bloomberg Business flash. Jonathan i find the rating of uber drivers a public nuisance. Is it that often . Uberis in the power of the system the dual rating, where you have to behave and they have to behave . Bitcoin is dividing some of the biggest names on wall street. Down with r sat and asked him how he feels about the rise of bitcoin. Eric i have heard you are raising a 500 million hedge fund. What can you tell me . I cannot confirm or deny it. I am excited about the space. C why . What got you interested in bitcoin . I d a roommate from college who was one of the key guys in building the interior project project and i called him and said can i come to your office and you can give me a tutorial on what i know what i own, should i buy more, and i went over to bushwick. This would have been january of last year. Joe, a dog andee one assistant and i saw 30 crammed inng people a bushwick warehouse, coding, talking on the phone, making plans for this revolution. Sudden, he pulled up video screens and there were people in other countries. He already has 40 employees. Ium was point, ether . 80. Macro guys are instinctive and my instinct was i want to buy this company. As we started talking about a deal, he said it is going to take it while to figure out exactly what the Company Looks like because it is just to be trust it is distributed and ownership. It was a bit of a spaghetti map of ownership. He said give me a month, come back and we will talk about it. I learned from trading, if you know something is good, by something buy something. And iht a bunch of it came back and they were trading five dollars or six dollars. At that point, the Company Consensus was it was not my capital anymore. That is when i really got reengaged and i sensed this almost revolutionary zeal amongst the people, their. Day, the more exciting the more i dig, the more exciting it gets. It is not just about bitcoin. Is a revolutionary revolution in economics and cryptography. Can you create this currency with a fixed supply . There was a architecture to build on top of. The real revolution is this revolution of decentralized world, we have all these big institutions that we come to trust. Somarthis community thinks thera different way of doing things, the punchline gets missed whenever one focuses on bitcoin, when it really is revolution, moving to the centralized world. Still with us around the table, jim bianco of Bianco Research. Within that interview, he talked about that being a bubble, but he talked about it as a opportunity, to bid it up and carry on chasing. What do you think about that as a approach . Jim it is unlike anything we have seen. The closest analogy i have heard of was napster. When it came, it was a threat to the Music Industry. The industry minutes together and drove napster out of business. But was left behind was the peertopeer technology which eventually gave us spotify and the very thing the Music Industry was trying to avoid. In and there are over 1000 cryptocurrencies right now. One of them could take hold and in the future, this whole idea of a Digital Currency that is not backed by a government looks like it jonathan is not going to disappear. Looks like it is not going to disappear. Jonathan is it a currency . Jim a good question. They are so speculative in nature. It cannot be stored value if it loses and gains 20 a day. Infancy,d of in its even though some of them are five or six years old. David the question is are they a ecurity . I wonder how much of this is just that search for yield, particularly for a hedge trader looking for volatility. We compare the volatility of bitcoin with the s p. If you are summit he who wants to trade, you want built volatility. How much of this is just there is volatility in bitcoin . Jim there is a lot of that. If you are looking for excitement, you would be hardpressed to find other spots that are going to have that kind of excitement. It also lends credibility. If you are going to get real traders, then it is going to act like something real. I guess those traders dont work at jpmorgan. Alix at least if they do, they dont anymore. Jim bianco, great to have you with us for the hour. Check out tv. You can interact with us directly. This is bloomberg. Alix the 10 year yield stays stuck in its rain. In its reign. Still with us is jim biancoof Bianco Research. How do you invest in banks when it is hard to see a catalyst . Of getting the regulations on the margins and a yield curve going nowhere. Last two arethe what really push the banks as a group. You need a steeper yield curve of the problem is that the yield curve has been going the other way and deregulation. Bank stocks are up 34 since the election. Most of that came through the spring and a lot of that was on the back the fact that we were going to roll back some doddfrank and get some really toy relief and we have seen that. Now we need something more than that regulatory relief and interest margins were help if we would help if we had a steeper yield curve. To trybeen a tough one and figure out what the next trick is going to be for the bank stocks as a group, in order to move forward. Alix what is that going to be . The yield curve is being influenced by etc. External factors. Still going to have flooring Foreign Investors buying treasuries . Jim i think that is the reason why they have not gone anywhere for the last six months. After the big deregulation push we had into the spring, they have been waiting for a steeper yield curve or for a more a Stronger Economic environment where home growth could pick up, and neither one of those have been happening. They have been struggling in their trading process as well. I dont see a catalyst. I dont think theyre going to continue to mark their time until they find one. David is there for the regulatory relief that could kickstart them, again . A lot of the regulatory relief came early on, but right now it is more of the doddfrank kind of stuff. One of the hallmarks of Bank Regulation is it is so complicated that if you put everybody in a room, they cannot explain to each other what it is and that is their job. If they could simplify it so they could explain it, that would be a help. Jonathan for a lot of people, it is a choice between the u. S. And europe. Europere very bullish on , very bullish on banking in europe. I say that, recognizing i have not been bullish on europe as a Investment Opportunity in at least 12 years. Think thato you bullishness around the european Banking Sector is justified . Jim i think it is. 18 months ago, it was kind of the opposite. The Banking System was down. You had Deutsche Bank at a 40 year low. All of that has turned around. Economy is doing better. We dont have those deeply negative Interest Rates that was confusing everybody. That bullishness has been justified, in europe. Alix jim bianco of Bianco Research, thank you for joining us. Next, lookoming up out for this interview on global trade with the wto director general, joining us right here on bloomberg daybreak. As we count you down to the cache open, about 34 minutes away. Futures just turning to turn higher. Positive 15 points on the dow. Elsewhere, mild risk aversion driving a bit into treasuries. Yields up a single basis point. Stump thats something that does stick for a second straight day, Dollar Strength against the euro. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Jonathan the latest obamacare tofael it repeal is set fail. Republicans look divided without a major win. The split between Federal Reserve officials is as a parent. Chair yellen is said to address inflation and montero Monetary Policy. Investors shift back into value and start selling growth. From new york city, good morning and welcome to bloomberg daybreak. Im Jonathan Ferro alongside david westin and alix deal. Alix steel. Almost by a a bit single point on the s p. A similar move on treasuries. Yields are unchanged, now they move higher on the 10 year. Some Dollar Strength has started to emerge in the last 24 hours captured by eurodollar on the back foot at 1. 1792. That is your cross asset picture. Lets get you some movers. Equifax, atock is delayed opening pending news. The stock was trading down by 2 10 of 1 . The chairman has retired. We will have to see what it does when it resumes trading. Haschairman of equifax retired. Nvidia getting a pop up by 3 in the market. It made a deal for ai chips with several china companies. It is introducing companies to speed along the ai algorithms. Chinese companies are among some of its clients now. Red hat getting a nice pop. A softwe Services Company got a bead on revenues and earngs it raised itsutlook as well. Aking a look at darden, down it beat on earnings but did not raise its fullyear outlook. All of garden not holding up as great. Things were up about 2 versus estimates of 2. 7 . Their overall firstquarter sales failed as well. Yesterday we saw what looks like the final chapter in republican efforts to repeal and replace obamacare. When senator Susan Collins added her name to the senators who would vote against the Graham Cassidy approach. Max baucus is someone who knows obamacare like few others. He served for 36 years in the u. S. Senate representing his home state of montana. As chairman of the Senate Finance committee, he played a Critical Role in getting obamacare passed. Welcome back to the program, good to have you. Ask you the most obvious question. Republicans talk about repealing obamacare from the moment you got it passed. Why did it to be so difficult . Max i think for two reasons. I think the people of become accustomed to the Affordable Care act, Insurance Companies and doctors have. And have made adjustments to a to make it work for where they code. Frankly not a bad bill. Its increased coverage for about 20 million, 30 million. Mericans its somewhat controlled costs, not as much as wed like to. It is not so bad. Third, people are very nervous about any major change that they just dont know much about. The senate has not had hearings. It has not been a give and take between the political parties. The cbo hadnt come out with this final estimates and i think thats bothered a lot of people. Explain to me something about the way the u. S. Senate work. You have the majority leader who says he is going to have a vote today even though he has at least three republican senators saying youll vote against. Whats the point . Max i will be surprised if he has the vote. Ordinarily the leader doesnt bring a bill to this floor a bill to the floor of this magnitude unless he is the vote. David take us to what happens next with the Affordable Care act because there are these issues of subsidies for insurance that if they are , would cause real chaos in the Health Insurance market. What is the deadline on that . What does Congress Need to do to keep that going . Max essentially, the right make theis to work to Affordable Care act work better. Is for to do that chairman alexander and patty murray to go together with their efforts for interim legislation so theyre not cutbacks on payments to Insurance Companies which were there in the first place of that they could provide insurance for people otherwise would be able to buy it. Those hearings will seed and ill be a good next step. David is that realistic . We have just seen no kind of bipartisanship on health care for some time. Frankly when the Affordable Care act was passed, it was not a bipartisan effort. Max going way back, it was untilisan for 15 months my judgment for the republican saw political advantage in opposing it and calling it obamacare and stirring up discontent in the country against the president and saying it will hurt people when really bipartisan andh in the end, it was partisan. Ith feel the longer a possibility, the senate will go back to murray and alexander and there will be huge pressures to go back and get something that is bipartisan along those lines. David max baucus, thank you very much for joining us today. Jonathan lets get back to breaking news. Equifax embroiled in a data breach that affected millions of customers. Here comes the management shift. Retire asith will chief executive officer effective today. The board of directors has appointed mark fields to serve as nonexecutive chairman retires chief executive officer effective today. The board of. Succeeding Richard Smith. The board now will undertake a search for the new permits ceo considering both candidates from within and without the from outside the company. Richard smith will serve as an unpaid survivor unpaid advisor. Alix how long was it going to take until that happened . When it was released in the drama that happened in the stocks. Analysts are so bullish on it. Good for them for taking definitive stats. You have to wonder do they know something behind the scenes about what the real story is that may be worth and what weve heard so far . Wecant be good facts that they know that we dont know. Jonathan its a question that is been popping around the company. The stock is still suspended giving the news. We are waiting for that to resume trading. When we get the move on the stock we will bring that to you. The other big story, facebook suffered its biggest decline. Ince november 2016 sending the stock to as low as level in more than two months. It has come under pressure from World Leaders to combat terrorism and now it is part of Robert Muellers investigation into russian meddling in the 2016 election. China is weighing on facebooks blows. Woes joining us now to discuss is tony dwyer. Joining us from his office in new york is scott kessler. Lets begin with you. The situation with facebook, regulatory issues. You got mr. Zuckerberg selling stock. What is weighing on this company on the last 24 hours . I think this is largely one of those situations where the company and the stock have performed very well. There is uncertainty out there in terms of lets say geopolitics as well as the Global Economy and in stock markets. Typically we see these pullback in september and october. , but theis pulled back stock has performed well over the last year, three years, five years. I think it is taking a breather. I dont think anyone of those things is particularly concerning. Together, they are weighing somewhat given that the stock is done so well. Jonathan the news around tech has changed so dramatically. Faced with a big secular growth opportunity, now the change the companies in the political spotlight. What is going to happen from here . The our view has been market since the election until a few months ago was in the slow growth trade. By that i mean a bond surrogate will lead like the utilities, telecom, and also technology. If youre in an economy with sustainably slow growth, where will you invest . Where there is growth. You know it will be in technology. Technology outperformed. We had recommended if youre over exposed to technology, you want to pull that back to an equal weight because the progrowth trade is now on and that is clear. Ago, a month ago, nobody wanted industrials or banks. Those are all doing well because the upside surprise here is going to be the economy is going to be better than expected. Economicndicators on activity in the areas that are constrained growth are picking up. Alix that is one view. Scott, come monday will we see russian money coming in a rush of money coming into the banks . Scott it is possible. Research that i have seen indicates that the first day of the month typically is the strong relative to other days. The reality is yesterday was a tough day. I think they were down 1 and 5 aps. If you look at how they performed year to date, it is just a blip. Have buy up ins on all the fang names. We like facebook and amazon and netflix and alphabet and apple as well. That sck is pulled back well. Could be a this buying opportunity, particularly as q3 earnings are around the corner, we steve tech stocks we ceased tech stocks we see tech stocks taking advantage. Repatriatede earnings being taxed at a lower rate according to the proposed tax cuts that we expect to manifest this week. Those could be big catalysts for these companies. Alix good stuff. Scott kessler, thank you. Tony dwyer, you will be sticking with us. Equifax has started trading again. You can see what has happened over the last half hour. It was paused at about here. When it opened it immediately ticked lower but now we are almost trending right in neutral. Fairly down on the day as Management Changes common to the foreground. The current chairman and ceo got the boot and they are initiating a search for the next ceo, internal and external. The stock is down 3 10 of 1 . ,oming up next, Robert Azevedo wto director general will be joining us. This is bloomberg. David im david westin. We have heard more about the wto over the past several months than weve heard before. President trump with trade on the top of his agenda without having many kind things to say about the world trade organization. Wto rules being the default if britain cannot reach an agreement with the eu. Some of suggested the wto should get involved in the dispute between saudi arabia and qatar. Joining us from the public for them is wto director general roberto azevedo. Tomorrow he will release the 2017 world trade report which will focus on the connection between trade, technology, and jobs. Thank you for joining us. Sense of the state of a union the union of wto. There is a sense that there are more trader spirits trade disputes being managed by the wto. Is that accurate . Are they bigger and more complex . There are not necessarily more disputes, but they are in fact bigger, they are more complex. They take more time and resources run the organization. We are responding to those demands in a way that i think is satisfactory. Never perfect, but i think we are doing the job since the wto was created, weve had more than 500 disputes and that is incredible. The fact we have so many is because the system is working well. You asked about the state of play, we are getting david go ahead, please. Roberto i was going to say we are preparing for one as far as ires. Eparing for bueno a there is clearly antiglobalization sentiment mixed with antitrade sentiment. I think we need to hear Public Society and the entrepreneurs, academics, thats what the is for. Orum to understand these so we can better respond to it. David you are getting ready for bueno aires. What role as the u. S. Playing in helping that . The u. S. Administration hasnt always been important in favor. Are they really cooperating . Roberto they are much more measured in their actions here than before, that is for sure. I think they are taking a more cautious stance. They are looking at things, understanding better what people where people are going with several proposals on the table. The u. S. Is more cautious. I cant say much more than that other than the work is progressing in the u. S. Is not stopping work. The work is progressing and organ negotiations ongoing. They are participating in a more measured way. David President Trump has said he does not believe in multilateral trade approaches. He believes in bilateral. This is against going back here predecessor, that goes against that multilateral approach. Is that affecting the work of the wto . The fact the u. S. Is not is skeptical of u. S. Of death multilateral approaches. . Of multilateral approaches . Measuredthey are more in the negotiations and conversations here. I cant say more than that. In most situations, i think bilateral negotiations are easier. The results are quicker, its more focused. Especially if you are talking about Market Access in the terms of negotiating specific access to some markets. ,ultilateralism is more complex its more difficult, it takes more time, but the results are bigger and the benefits are also bigger. But it takes patience and more time to get these done and we are doing that. I think we do that in the last two conferences. We expanded Information Technology agreement. We eliminated subsidies for export of agricultural products. Things are mong. David vered carefully is brexitd the negotiations over the United Kingdom leaving the european union. Does the wto have a constructive role to play in that . We know if there is no agreement, resort to wto rules. A constructive role in that negotiation and severance . In that not necessarily negotiation. We can help, we can provide support to both sides and we have been doing that. We are talking to both sides. Especially because whatever ends up, whatever we have coming out of this particular negotiation, tol at some point will have come to the wto to be presented to the other members because both the eu and the u. K. Will have to present the members their new commitments, what they proposed will be the relationship between them and the other wto members. And what happens now in that bilateral conversation will affect the conversations in the wto down the road so we are looking at it carefully. There has been talk about the possibility of wto playing a constructive role in resolving some conflict in the gulf. Have you been approached about that possibility . Is it something the wto would be open to . Roberto we have been approached ray cautiously by the sides approached very cautiously by the sides. There is a potential dispute in terms of a trade relations between those parties, but this is still in the very early stages. The parties how want to conduct these conversations. We will be ready to help and to assist the parties to the extent possible. I myself will be available. At the end of the day, the parties will have to agree on what role they see for us. That conversation is still very early on. It may develop, it may not. Azevedo, thank you so much for being with us today. Alix turning back to breaking news from equifax. The company ceo has resigned amid an uproar over a data breach that impacted 143 million americans. Company veteran was named ceo. Here is the walkthrough of the trading. It was paused down to 10 of 1 , then it reopened down by about 2 , spiked up to neutral and is down by and is down. Michael they are going through the investigation. You have seen them push out the chief Security Officer and the chief Information Officer previously. Spiraledomething that even more than they expected. Alix where are they looking for the permanent ceo . Michael yet to be seen. Piraled even more than they expected. The current is 61. Term not a super long solution. I think they will want to move quickly given this. We have yet to hear if he will be the one approaching congress. Smith will stay on as an advisor during the transition. I imagine they will want to move quickly to find it from its ceo. This shows they are still in crisis mode. They are trying to get a handle on this. From the time they found it to the time they announced it was over a month. It has been a few weeks since then. This is obvious he summoned at taking time for them to get their hands around. There have been missteps and the way theyve reacted and the way they have dealt with customers who are trying to find out if their information is been breached. Has been breached. Jonathan it wouldnt be the first time the Analyst Community got a hard time. The Analyst Community is staying bullish. Zero holds on equifax stock. Wheres the faith coming from . Michael i think most of the analysts weve seen said all bad news is being priced in immediately. Certainly they have been wrong so far. There were some notes coming up the day after this was announced , the original breach was announced, saying this is a buying opportunity and certainly it has not been so far. The optimism is not been warranted. Tony dwyer is also with us. Whats the relationship of d. C. And regulation with equities right now . Tony people have been looking sector rally or the rotations, the trump move. It had nothing to do with him. What been driving the analysts the last nine months has been the fact of the republican agenda and companies now know the Regulatory Environment is not going to get worse. That is such a huge deal. When you are trying to make Capital Spending decisions for the next three to five years, youve got to know you wont get increased regulations and taxes that may offset that cost save or the improvement in the companys Capital Spending plan. I think its a big deal and why all the Capital Spending surveys coming out, whether it be Small Businesses or the fed Capital Spending survey, they are all making highs on the spike because of the Regulatory Environment. Jonathan thank you very much. The opening bell coming up next on bloomberg daybreak. Futures just down as they continue that trend higher. Almostted price gains two points now on the s p 500. This is bloomberg. Jonathan counting you down to chair yellens speech. Lets whip through the scores. Futures mainally posite. Up on the dow and s p. We retreated from that alltime high over the last couple of weeks. Freds some weakness yesterday but it does not carry through to today. The bond market is like this. A busy day is dollarm yesterday strength starting to come through. The dollar index through the 50 day average of 4 10 of 1 . We reclaim a 93 handle and that will be the topic of debate. Across asset pitch, lets get that open. Alix a bit of strength percolating in the market. The dow jones up by 31 points. Was the heaviest hit of all the indices yesterday, down by almost one full percentage point in part because of faang. Facebook, amazon, netflix, google, all rebounding today. Hardest hithe yesterday. They were both off by about 4 . What im trying to square away with this is is it a real rotation from growth into value . Is this a rotation away from the highflying tech names that have driven the stock market over the last year or is this the end of book balancing as we head out of the Third Quarter into the Fourth Quarter . Monday will be an interesting day to see if there is buyback happening after the quarter ends. Part of the rotation we have seen is into small caps. The top panel is the russell 2000 versus the s p relative strength. When you wind up moving higher, it means the small caps are starting to outperform. Weve seen this before. Obviously around the election and in june and now again. Is that sustainable . The bottom panel measures net future positions. If youre agreeing, there are more bullish positions in the green. We are pretty much neutral right now. We are starting the reversal this bullish positions. Is it sustainable . A real shift, does it Say Something about the dollar . Or is it really about and a quarter rebalancing . David a bit of breaking news. The u. S. Is charging 10 people in the probe of college basketball. What has been going on is that some coaches from several division i schools of been directing players to associate with certain companies, including at least one Apparel Company in exchange for kickbacks to the coaches. Theyve been directing agents and Financial Advisors as well as apparel companies. Jonathan another story we are on top of his equifax. The Credit Reporting Company is going through a bit of a tough time with a data breach they experienced several months ago, but unveiled just and last month or so. A management change. Richard smith has resigned. He will step down effective today. Veteran who company most recently was president of asiapacific will be taking over as interim ceo. The stock is down just over 2 . That is the equifax move. E will keep you up to speed still with us around the table turning to great to have you with us in new york. The dollar index, nearing. Esistance bloomberg said the technical moment of truth for the fx. The upper channel right there, we are vy close to preaching it. How close is that down i use the weekly stochastic and you oversold plus youre pumping again. I think you will break into the upside. Its in the context of a longerterm downtrend. Earlier, 103 on the dollar index, no one thought it could weaken because our rates rise and everyone else. So it 93 we go to a sustainably lower dollar . What we are really setting up for his summing david talked about, a countertrend trade. The Dollar Strengthens, the market will weaken and have some volatility. And it continues to come in it sets the stage for the next big move in the market which i think is being underappreciated into the first half of next year. Jonathan tactically speaking, there is something in this being a bit of an Inflection Point in the shortterm . Tony everybody is on one side of the boat and i think thats an appropriate. The only reason you get is significant and sustainable rally in the dollar is when you have Global Economic demise. 1990s. The late think of this cycle, 2011 through 2015. You really have to have a global issue and right now there is simply no global issue. To your point, it is just a technical trade. Tie this altogether to the small caps i was looking at as well as the dollar. The dollar is going to outperform. Is is another instance where the rotation of small b were attainable . Small caps will retainabed of the . Le . We were waiting for the small caps to get a bit of a lift. Suddenly the thought came up have their will be some potential for tax, if not reform, but a cut by the end of the year and that will likely help domestic stocks in particular. Those who faced domestic versus global stocks on the u. S. Platform. We think that is happening. We also think the spread in terms of performance has been pretty dramatic this year with the small caps, with the s p 600 russellforming the 2000. We are going for the john deere stuff outperforming to the more quality stuff. From a good chance to ride here to the end of the year barring any reversal of political situations. We think the process of elections next year are pressuring politicians on both sides of the aisle to do something. Dont just stand there. Part of it would be some kind of agreement about taxes. As a boldt strikes me call in a sense because you say barring anything going wrong with politics. Not that anything ever goes wrong. Investment in small caps a bet on President Trump in Congress Getting their act together . I also think there are plenty of fundamental reasons. Less regulation in the system, an environment with a business friendly administration. All of this stuff, better sentiment in terms of workers, even if wages arent rising at a normal rate post a crisis and recovery cycle, it just looks good for small caps. They are being ignored they have been ignored. Laster they were rock and rolling. This year there up about 5 . It has some room to move. , john brings up a good point about moving up the quality scale with small cap. Historically what really drives it in the market is in politics. Fortics are a great excuse what traders and investors want to do anyway. What really drives it is the slope of the yield curve. Typically when the real fed funds rates starts to trend up, when the real yield curve trends , typically small cap does not outperform large cap. Similar to our comment on the dow. Shortterm, small caps have done well, but ultimately over the course of the next year as the market tries to come to grips with the Interest Rate environment offsetting the political environment of fiscal and regulatory change, you really may run into a bit of a headwind for small caps. Alix im still trying to get my mind around we are not going to be having a conversation in two weeks about how the search for yield is on. You want to buy Growth Stocks and value trade is not working. What do you see that it feels like the market is completely missing consistently . Tony im in the pullback camp. For the life of me, i dont understand why people havent raised their economic assumptions for next year. What has held us back his entire cycle is a weak Global Economy. And mediantimulus incomes in the u. S. Being poor with no caps off spending. All of tse headwinds have become significant tailwinds, yet everyone is still in the 2 two. 5 cap. 5 cap. The problem becomes you up to come to grips with a much more hawkish fed, which creates increased volatility with increased upside. Jonathan gdp with a three handle is not necessarily bullish . Tony i think it is right bullish for the next ninemonth and that it will become problematic because im not the come to grips with a fed that will likely invert the curve. Ive got to think what weve got here is robotics on the factory floor, a globalization keeping Business Owners very much focused on cost containment. Increase headcount less. Rampup technology. 2. 5 is continues, we think of the regiment for the Economic Growth ahead. We think we have a chance for heading towards 3 if we get a tax cut. The real boost will come from infrastructure spending, which is another one of the few items both sides agree on. Alix a lot of talk about robots today over the last three hours. You might even get infrastructure spending. I did include that. Alix you are getting all right up. Small caps, record high today. John stoltzfus and tony dwyer, thank you very much. The nasdaq up about one half of 1 . The s p 500 on the front foot as well. Positive six points, up about a quarter of an eight from new york, this is bloomberg. Alix this is Bloomberg Taylor this is bloomberg daybreak. Rahm emanuel, the chicago mayor. This is bloomberg. Now to your Bloomberg Business flash. President trump battles President Trumps battle with the nfl to eat continued. Brewing washat the the loudest you ever heard. He said ratings are way down etc. Before the game starts. Heels once the league to have a rule you cant kneel during the anthem. The Pittsburgh Steelers player who took the field and stood alone for the National Anthem sunday now has the bestselling nfl jersey. Fanatics say the jersey was the top seller from sunday to monday. Army ranger who toured several times in afghanistan. That is her Bloomberg Business flash. David i want to bring your to speed on this breaking news story. The u. S. Is charged 10 people, it includes coaches, managers and financial representatives in the Southern District of new york with a kickback scheme involving college basketball. Several division i schools are involved. The way it worked allegedly was that certain individuals like these advisers, agents and in Apparel Company gave kickbacks to coaches for the coaches to encourage their College Players to associate with that Apparel Company and with those advisers. We will continue to cover this as the story develops and we get more information. We are joined by randy contact were joined by randy, who covers nike. He is a whole rating on the stock. He joins us from new york. We have a lot to talk about with you today. A lot involving sports. I want to talk about nike and its earnings and what its challenges are. Lets spend a minute on the president and his relationship with the nfl. He sent at least three tweets out today on the subject. Is this dispute with the nfl going to affect a company like nike at all either to the upside or downside . Randy no. Is going to vote with their wallets for the fashion they like, not going to view politics as a huge impact on their business. It wont impact nike. It wont impact ideas are under armour. The way that we should be thinking about these stories is who has the best products, who has the best looking products and who is doing a good job on the sponsorship side and distribution growth globally. Alix im interested in the relationship between a brand and highlights like this. The Football Players jerseys are selling like gang buster. Does nike look at that . How do they capitalize on a thing like that . Randy the bottom line with these sponsorships is that the teams that are doing well will have the best selling jerseys. The gentleman from the Pittsburgh Steelers, he stood for the flag, obviously the consumer is rallying behind that and its great for nike, but in the grand scheme of things, it wont be a big dent to their revenue. Alix lets talk about earnings. The stock is been really hammered. Earning estimates down 20 . 0 Revenue Growth in the company reports. What you looking for . Isdy the only good thing what you just said, low sentiment. Our concern is what we see in the data. , but we alsosites call footwear retailers per month to gauge brand share beens and what data has telling us is one simple theme. The theme of adidas gaining market share against nike and thats what we think is a big risk into not just this quarter, but something that can create a significant Pressure Point for nike over the next year or two, considering adidas is only 3 billion of north american revenue versus nike, which is 15 billion of north american revenue. You can see how adidas can make a big dent into nikes numbers. Alix also in the market, one of the big stories has been the big jump in the dollar index now sitting at 93. The bulk of the revenue comes in north america for nike, but what is the lag time between Dollar Strength and the impact on nikes earnings . Randy about a year. The one good thing about nike is they hedged out there dollar exposure from a foreign currency perspective going forward. The company has already guided to the foreign currency impact on the business out for a year. We wont see any impact from a dollar perspective change versus other currency for at least a year. The real thing we will see impact the companys numbers are really market share shifts and also markdowns, which will impact the gross margin. Alix really appreciated randy. To healthwill turn care now. It is back in the news with the latest republican attempt to repeal obamacare apparently about to fail because of republican defections. Joining us from washington is , former healthus and Human Services secretary and former governor of kansas. She was charged with putting the Affordable Care act into effect under obama. Welcome to bloomberg. I wanted to about talk about what comes next. I have to ask one time. Why is it so hard for republicans to repeal obamacare . They of talking about three years now. Kathleen the president signed the law in march of 2010 and i think what we found is that once benefit started to kick in, once people understood that they actually had the security of Health Insurance, many for the first time ever, more parents with kids who had pretty convincing conditions could rely on the fact that children have coverage. Its difficult to take away. Definitely some help is needed. Definitely some attention to price, to choice, to competition is urgently needed. Im hoping that is where they go next is actually listening to , republican,ander tennessee, former governor, working with senator patty murray from washington state. They been holding hearings, talking to insurers, they are coming up with a package of proposals that actually stabilize the market and help it become more competitive and i think that is a really important step. David it is hard to take those benefits away once theyve been extended. Is there a risk to some of them will come away without a legislation without legislation in the form of those subsidies . Those may be in jeopardy . The the kathleen administration has a lot of tools and their toolkit to really sabotage the law. Even if the Republican Congress , thed to change the Law Administration has to make a choice of whether or not they are going to follow the law or ignore it. So far they have ignored it. Verynk they have sent difficult signals to Insurance Companies. You talk about the subsidies, thats about 7 billion a year. The law requires Insurance Companies to sell a policy to someone of lower income that has less copay, less deductible and then get reimbursed to the end of the year. The administration wont tell the Insurance Companies whether they will be reimbursed or not cc rates actually being raised anticipating they wont be reimbursed. Thats just hurts consumers. If the administration would make it clear as chairman alexander and patty murray are saying that the subsidies absolutely will be forward. Rantee going i think you will see rates come down quickly across the country before open enrollment starts. David is there any way to quantify that cost . The very fact of the and certainty of the Insurance Companies on whether they have it actually increases cost for health care. Sort of needlessly. Any idea how much that adds to the cost . Kathleen we know what the real cost is in terms of 7 billion was paid back to Companies Last year. If you count the subsidies that they were owed. Tage is a 7 billion price remaining for 2018 and this administration has basically told Insurance Companies a month at a time whether or not they will be paid back. That is no way to run a business. You cant actually file a break. Just tell them what the rules are that they can file rates. I used to be an insurance commissioner and what we knew is that companies will sell product, but they need to know what the rules are, what the operation operating guide rails are. Not telling the makes it very difficult to actually offer products in a marketplace. This doesnt affect people who only just affect people who require subsidies, it affects people throughout the individual market. There are millions of americans will see their rates increase based on the sabotage from the current administration. David it strikes me what you said about the proper solution as requiring bipartisan support. There hasnt been much bipartisan thus far in recent years and health care. Whoevers fault it was, the Affordable Care act was perceived to the end is being quite partisan. What is the path back to some form of bipartisanship . The republicans could say to stomach sent we did repeal it so they could say that and feel good about themselves and at the same time the democrats a cobbles will they want to accomplish. Where is the middle path . Have hearings underway the got sidelined a bit with the current discussion of the Graham Cassidy bill. Hopefully they will get back on track immediately with a bipartisan approach. You have a republican chairman and democratic counterpart who are crafting proposals that actually would stabilize and hopefully deal with some of the of the current uncertainties. That is a great place to start. It will pass if the bill is crafted with republican and democratic support. That would be the first bipartisan activity really in 7. 5 years since the bill was passed. That is a big step forward. Then lets talk about some of the things americans continue to complain about. Oo high outofpocket costs and copays. That can be addressed. Drug g pricinomething disconcerting to everyone. None of the republican proposals have anything to do with drug pricing, including medicare negotiations. There are some areas that i think could be a lot of bipartisan activity and support, but i think the republicans have to be open to that and chairman alexander seems to be on the right path. David madam secretary, thank you for your time. Former health and Human Services secretary. Alix taking a look at equifax and how trading how it is trading now. Down about 1 . You have the equifax ceo Richard Smith resigning, joining other senior managers who left the onpany after private data 143 million americans was stolen. Whats interesting is that the board says they remain completely focused on the cybersecurity incident. Be Richard Smith will still consulting chairman. Jonathan he will testify on the hack to the housesenate chief panel that will hear from them on october 3. David and the Justice Department is investigating possible insider trading. Jonathan he doesnt get to retire quite yet. Lets wrap up the Market Action for you. , then weere softer turn higher. Stocks turn high as well as well. Up about a third on the dow. A raise from yesterdays losses. Small caps get back to record highs. Full market coverage continuing on bloomberg. 10 00 a. M. In london, 10 00 p. M. In hong kong. I have vonnie quinn. Barton. Am mark welcome to bloomberg markets. Vonnie plenty to cover including tax reform and the echo fax ceo resignation. Julie hymen is here and the numbers are out. An annual pace of 260,000, less than estimated. The prior month was revised higher. New home sales month over month, down by 2. 4 . A little bit of a disappointing number on the home sales front. We also have Consumer Confidence numbers for september, more recent numbers. The Consumer Confidence index coming in at 119. 8