The major averages trading at the moment. We are seeing a big boost coming from the news that kevin walsh could be the next fed chair. We are things that s p 500 trading at a record high. The dow jones feeling the pressure, not coming after two big of a gain, still seeing the longest quarterly win streak in a few years. The nasdaq gaining 1 . Top story today, President Trump and Steve Mnuchin are set tohave met kevin wars discuss a potential nomination for the fed chair position. Saw a minor reaction in the kbw bank index, the contest for the position remains open. Also already met with other candidates. Mckee, andhael elaine associates eva, economist for bloomberg intelligence. With todays coverage that kevin warsh is a front runner. We dont know that, it doesnt seem to be a case of reading into a headline that was incomplete at best. It was followed by the white house saying the president met with other people. In an ordinary world, you might view this as a trial balloon. The white house floating a particular name to see what wall street banks. If thats the case, we dont know if kevin warsh is really the favorite or not. There have been a number of people on the list that we know the president likes, including gary cohn, who seems to be back in favor now that the tax plan is out. Its hard to say that this is the nominee. Although an incomplete report, what would that do to the economy and the feds outlook if he was appointed . I totally agree that its not a done deal. They are interviewing other people. Bloomberg intelligence economics Still Believes that yellens chances are probably higher than 50 . A lot depends on who becomes the care chair. You really have to talk to other people, you have to talk to different here different hear different voices to see what the consensus is and actually communicate it. At least we do have his views when he comes to core pce. Lets listen in to what he had to say before these talks started. The core pce, the preferred measure of inflation is a very bad proxy for the underlined strengthen the economy. Is not a perfect proxy for what policy should be. Its not a good proxy for the rockies of financial stability. He seems to be a little bit against what the fed is currently doing. With that mean he would take policy in a different direction . What else do we know about other potential economists and even gary cohn been able to head . When that interview to place back in may, he was talking not as aking at pce point estimate, but a range, which seems to be reasonable. Inflation can fluctuate. Ithin certain ranges, doesnt have to be at 2 all the time. It can go up, a penn state below in it can stay below. I dont think he will change the course of policy to a great extent. We know some of the other contenders whose names have been floated around, how rulesbased is the . He says he doesnt like rules because he doesnt know a role that applies in all situations. They look at rules for guidance, but they dont follow them. He was probably push back on that kind of move in congress and would not be try to institute a rule. What he might do, if it were announced that he were nominated, what you might see is the rise in the term premium go up a little bit because hes seen as more hawkish on inflation. Throughout 2008 he was calling for a big outbreak of inflation that never occurred, he sees the feds monetary policies as being too loose. So he might try to influence the committee to move faster. Did he talking about the fed communications, might he change it . Tothey have been trying change the Communications Style for a very long time. Stanley fischer suggested that perhaps there are too many voices, but he also knows that you have to live with that at this point. The Bank President s are not going to suddenly shut up. And elainemckee, initially at tara economist for bloomberg intelligence. Lets get a check of the bloomberg first word news with this afternoon. Mark the United States is warning citizens against travel to cuba, and has ordered about 60 of its staff off of the island. The embassy in havana will also stop processing visas in it definitely indefinitely. A travel warning being issued that says american tourists could be exposed to harm after specific attacks on u. S. Personnel. President trump will head to asia in november, the president will visit japan, south korea, china, vietnam, and the philippines. It will be his first visit to the region as president and it comes amid rising tensions with north korea. The white house says the visit will strengthen the international result to confront the north korean threat. At least 22 people were killed and dozens of others injured after a stampede on a crowded pedestrian bridge connecting two railways railroad stations in mumbai. Others were crushed or fell and were trampled. 27 European Union nations, not including britain, will be coming up with options on a more tightly net future for themselves in a postbrexit world. Eu counter president says he will be presenting what he calls a political agenda in two weeks. That will follow racing eu vision statements, french andident emmanuel macron, others on how to reform the block. Global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. Im mark crumpton, this is bloomberg. Up, is the trump trade revived . We look at were stocks are as we get closer to the last quarter. This is bloomberg we look at where stocks are as we get closer to the last quarter. This is bloomberg. This is Bloomberg Markets. The now for our stock of hour. Shares of katie holmes are rising after the Company Posted betterthanexpected earnings yesterday. Revenue and earnings per share were higher than estimates, pushing them higher by as much as a 4 this morning. We are now seeing a rally more than 12 . Its at as much as 4 , install. 6 now its 12. 6 now. Top line and bottom line were great. Earnings for sure coming in at . 51 versus . 45 per share. Going forward is what im always curious about. We have a for your revenue for 2017, it looks like it will come in line with estimates at 4. 3 , 2018 gets interesting. They said they are going to fall short of 4. 7 billion mark. Nonetheless, the stock rallied. We have another chart in my terminal. G btv 4951, which shows the stock prices have gone up so much since march. This is some of the short cover. Thetarts to close down position of 11 of the equity flow outstanding. Quite a good performance. Other homemakers talked about the damage from the hurricanes, will it affect them as much . They did say damage was minimal. It was 50 have 5060 orders that were affected. We have a that, homebuilders index that shows the tech correlation of them and the s p homebuilders index. There are two other leaders, the index both that provide Home Construction services. Those were up more than 2 today. We look at the recovery effort, and the boost they may get from the hurricanes we saw in the Third Quarter. Quarter. That is our stock of the hour. It is time for our latest Bloomberg Business flash, the biggest business stories in the news right now. Procter gamble chief executive officer says helps hasnt paid attention. He was looking to reorganize the democratic giant, the ceo says it has made progress in its turn around. Genuine interest in learning about the changes, the proxy battle will face october 10. Hsbc will pay one of the 75 million to settle claims. Improper trading, and misuse of customer information. Hsbc is required to fix an adequate season its governance, management, and compliance procedures. Go a 300as plans to billion asset met management arm in the next 45 years. The fed requires Investment Group that is considering additional states in the sector. Originallyded and focused on it deals in telecommunications and ecommerce. That is your latest Bloomberg Business flash. As markets around the world wrap up the Third Quarter, u. S. Equities have managed to post its seventh straight game with Tech Companies powering. Peter chung is an equity strategist, he joins us now. We are seeing a lot of momentum for these stocks. That s p 500 now at the highest on record. We did get some weak inflation numbers. Its been an interesting dynamic where you are seeing rotations in leadership and equity market based on what you are seeing in inflation. Without Inflation Expectations dropped during the summer, factors like financial and energy are about midmonth what you saw. Accommodation of that cpi, coming out with a more hawkish stance. With that, a report resurgence in the reflation trade. We subrogation away from the leadership in tech. Over the last two weeks using financials and energy really outperforming and carrying the markets. What about going forward, can we predict that . Say. Difficult to its very fascinating to watch all year how the markets have been to these inflation trends. As they rise and fall, you see the rotation between different sectors and stocks that drag the leadership of the market. Where youke today, saw that Inflation Expectations were high, but surprised numbers this morning for inflation. It tends to cause rotation. When you see the reemergence in you saw that Inflation Expectations weretechnology resuming leadersp in the markets. We keep continuing to see these very small moves in stock markets. What is that telling us . The stock market seems addressed. Its a systemically low growth environment, with incremental shifts in monetary policy. I think as a result, markets keep searching for these new catalysts in terms of why they want to keep buying stocks. Which is why i think they have seen so many Investors Holding to this inflation idea and using it as a catalyst to rotate in and out of various sectors. Lets take the chart 2437 in our bloomberg art library. Its a Consumer Sectors correlations. Breaking down the blue line is the price, not a massive divergence yet, but its grind. Its growing. Consumer sectors have been a weird trouble area for equity markets throughout this year. Over the last month or so, you have seen a larger divergence between the two major consumer segments. A lot of that is driven by what you are seeing going on in dates. R staples the worstperforming industry is actually pulled retelling. With the acquisition of whole foods by amazon, that pressure on what is already a tough business for food retailers. You take that, also with the fact that Consumer Companies tend to be pretty domestic locust focused. The weakness of the dollar pressured them more. We have to talk about small caps, they have broken out of range. Ading the chart 2823 showing the russell 2000 michael cap index as well. You see that range being broke, is there further upside for for room . Small caps is another area where i think it is holding to this idea of reflation. Small caps tend to be more domestic oriented companies, they are sensitive to trends in the dollar. Another thing going on, tax reform going back to the conversation. Likelyap companies are to be the net beneficiaries of any kind of reform to corporate taxes. S p 600 companies have the meaning get effects of. Tax rate about 30 compared to s p 500 companies were the factory is somewhere in the mid 20s. Companies are larger, and their international. Have a larger discretion to take advantage of more theyidual tax benefits also have larger discretion to take advantage of more individual tax benefits. Does not reverse itself, does it continue . 2 ,where we are at, in the thats a big move. I think a lot of that is a course correction, in terms of an oversold place of where yields were. I think its still very much in this rain, you would see a bounce around probably 2. 5 range. Inflation expectations are soft today, i think that helps keep yields in a tight range. That will also affect what the dollar is going to do, because of and quarter flows we are seeing obstacles. The dollar very much seems to be hold into what going on with Interest Rate differentials. To the extent that domestic Interest Rates are contained within this range for the foreseeable future, its really going to be dependent upon what you see going on with International Central banks and what they do relative to domestic policy. Peter chung, u. S. Equity strategist for bloomberg intelligence. Up, deutsche banks john cryan is facing increasing skepticism to revive growth as they struggled to win back right clients and market share. We will be asking hard questions, this is bloomberg. Markets. Bloomberg im vonnie quin. Deutsche bank at its longterm credit rate cut one level by Fitch Ratings yesterday, citing that the vendor will take longer under ceo john turnaround plan unveiled in march. Here are all the answers with fitch was fidgety doing the right thing by cutting by one notch . They have been following what the equity analysts have been saying. This revenue rebound that people were hopeful for the beginning of the year isnt quite going to come through. Deutsche bank, even in the Second Quarter was more pessimistic on that rebound. Some of the other Credit Rating bullishs have been more on the bonds. You had an upgrade earlier in the year, but that was partly because of technical reasons and the banks Capital Raising as opposed to the outlook of business. How much pressure is john cryan facing now . This is the third revamp in three years. It certainly is under pressure. The strategy they laid out in march was a bit of a 180 from what they had previously been pursuing. They were trying to get more growth, so far that hasnt come through. We will see whether Third Quarter looks like, they really need to bounce back in revenue, theyve done a lot of costcutting. Now they need some help from the other side. Its not a great environment to be looking for extra revenue in. Theres going to be a lot of association coming into the fourth. Theres the fact that Interest Rates are only rising incrementally, if at all. Theres been more optimism around the u. S. Banks,. The potential for deregulation not as much on the european side. Most of the banks have talked about Third Quarter being a tough trading environment. Clients arent as active as they were earlier in the year, they are thinking a wait and see approach both on the fed and the political regime. There has not been much activity, its harder to bounce back that debt deficit. Theres been a lot of speculation about its capital strength, how have clients reacted to that . You still have a lot of fear in the second half of last year. A lot of the clients kind of those fears. Since the Capital Raise they did year, the fears have kind of it subsided, but they havent seen as much of the year, the fears have kind of it subsided, but they havent seen as much of the clients return as perhaps one might think. They are still trying to win clients back over, certainly the Capital Raise helped in that. But i think analysts want to see more progress on that front. Andhe people a credit sweep give up 14 more restructuring ideas before christmas . Does he sit with this one . I think he has to stick with he went in a different direction and kept postbank and i thinkof sydney ipo, he has to stick with a strategy that Shows Progress on that front, rather than trying something new since its only been six months. The stock is up about 1. 6 in todays trading. Thank you michael moore, who is Bloomberg Finance team leader. We are going to have a quick look at how markets are faring the far we go. We saw that boost coming because of those regulations. It has beenall, weak inflation, weaker than expected. That leading to speculation will the fed do anything, december . You can see we are seeing a little bit of momentum in the s p 500, but not so much are the dow. A lot of lows related to that. It definitely was in yields with the tenure. Tuned, we have a lot more coming. We have an exclusive halfhour interview with former u. S. Treasury secretary jack lew. This on tvsee all of. This is bloomberg. Its 1 00 in washington, 6 00 in london, one 00 a. M. In hong kong. I shery ahn with david gura. Welcome to Bloomberg Markets balance of power, with a focus economy. Cs and the president is touting the gops tax reform plan, but is he moving the needle with Corporate Leaders and capitol hill . The formeroment, u. S. Treasury secretary joins us for an interview on a wide range of issues from tax reform to trade, and much more. And weiss in your why senior lawmakers are expressing growing frustration with Companies Like facebook and twitter as investigators look at social medias role in russias attempts to interfere with the president ial election
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