Transcripts For BLOOMBERG Whatd You Miss 20170929

And businesses, it is blamed for 16 deaths in puerto rico. Killedt 22 people were and Dozens Injured after a stampede on a crowded pedestrian railwayonnecting to stations in mumbai. Police are investigating what caused the stampede which led some commuters to leap over the railing. Others were crushed or phil and were trampled. European commissioner john klug junker saidde [inaudible] global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julie live from bloomberg headquarters in new york. We are 30 minutes from the close of trading. Is what youstion miss . Breaking news moments ago. President trump says he will in twofed chair decision to three weeks this after reports he met with Jerome Powell and kevin marsh. The rest of europe will be watching how he independent vote shakes out. The world could have a new fed chair nominee in two to three President Trump has been interviewing candidates including Jerome Powell and kevin warsh. We did see a Market Reaction when the headlines came out. The journal talking about Jerome Powell. Forhat good news perhaps the Financial Markets . It depends on whether they want high Interest Rate rates or low Interest Rates. Julie what will we get from him . The dollar reaction when it as a logical reaction. I thought we would get a bigger reaction. We are used to a certain type of fed, yellen sitting a cautious tone and here we can get a guy in that has a fundamentally different outlook. Picture, janet yellen and Jerome Powell, what do you make of the Smoke Signals were getting in terms of how this white house is approaching the fed chair question and how do you make a Market Forecast or think about the market given this uncertainty . Guest a couple of weeks ago we had only a few basis points tightening the price and very little the next year. This news is coming at a time when we have very little price, we were in the process of getting optimistic about tax reform. I think it is not only that there is some hawkish names floating around, there was also john allison we have not heard much about before who is at the extreme side of the spectrum on the hawkish side. We also have some other vacant seat so it is not just a chair that could be a different type of person. It could be the whole kind of flavor of the board can change. I think it is likely to go in a more hawkish direction, and is a matter of how much. At work i am looking go. Lets go back to the start of september and the odds were for 1. 4 . Does all this interviewing by President Trump of said candidates influence the way in december because if janet yellen is no longer fed chair she is thinking about how she wants to meet that normalization. Guest they have the Balance Sheet shrinkage underway. That is important preparation for a change in the chair. I think in terms of what they decide at the december meeting, i think they have a pretty clear framework for now. It is right with the market has done to prices with a reasonably high confidence. The only thing that can go wrong as if we get low inflation prints and the meantime. The bigger issue for the market is that if he comes in as new governor and we get a couple of other hawkish appointments they need to think about for hikes next year. That used to be the traditional pace of fed tightening. There are people who have memories from the last tightening cycle where the Housing Market went too far because the fed went too slowly. That argument could come into the equation. That is something we have not been thinking about. From a training aspect that is interesting. Coming inton is three weeks a pretty rapidly. Take a look at the bloomberg, we are showing the bloomberg dollar index in blue and the spreads between the twoyear yield and 10 year yield. It looks like we have seen a bottoming. Lets listen in. President trump the real question is what is going to happen later. It is a tough situation. The loss of life is always tragic. It has been incredible, the results that we have had with respect to loss of life. People cannot believe how successful that has been, relatively speaking. I cannot hear you. [inaudible] President Trump they president governor of puerto rico has been generous, he has been praising our efforts and this is difficult. This is a total devastation. When you look at texas and florida, it is a different level. Nobody has seen. When you have a category five wipe out an island, you have nothing. You do not have roads, you do not have the people to operate the equipment. That is why we have hundreds of Truck Drivers being brought in to the island to operate the trucks because those people have lost their homes so they are not able to do it. Have lost their homes. They are unable to do it. It is a tough situation. [inaudible] President Trump i can tell you this. We have done an incredible job considering there is nothing to work with. Question is what will we do with the power plant because the power plant has been wiped out. It is not like lets go back and fix it. There is nothing. The power grid is gone. We have a lot of Big Decisions and youre talking about the dollars that you are talking about are tremendous and it will be talking with the democrats and talking to congress about what we are going to do a little bit longer term. In the meantime we have saved a lot of lives and we have done a good job. Were bringing the people the distribution. [inaudible] President Trump in cuba . The problem we have had in cuba and will be coming out with something but there was a big problem in cuba. We will be announcing that fairly soon. [inaudible] trump were looking at puerto rico, that is a big thing you are talking about. Where spending hundreds of millions of dollars right now, it is a territory and these are great people. I know the people very well. These are great people that it is a massive investment. You are free building all of it. Rebuilding all of it at some point. There are hundreds of millions, a tremendous amount of money ricody invested in puerto by others before the storms. That money has been in serious trouble. Now on top of it, a lot of other money. Made, whathas to be are you going to do . Rhetoric go was flattened. And a big decision comes as to what are we going to do but ims there to help, i can tell you that. [inaudible] President Trump we have great secretaries and we have some that own their own planes. No moret in order that planes. If you look at past administrations, if you look at the Obama Administration and you take a look at the amount of time that they spent in the air, they spend a lot of time in the air. I felt very badly because the secretary secretary price is a good man but we are looking into it and looking into it very strongly. We will take a look. I will be announcing something in the pretty near future. [inaudible] greatent trump i have a cabinet. We have saved hundreds of millions of dollars through negotiation. X35 higher plane, me, myself, i saved hundreds of millions of dollars in negotiating. That is one of the reasons i do not like seeing anybody have a question about flying. Were saving tremendous amounts of money the matter where we go. You look at what we have done in florida or texas, we have done that for relatively little compared to what other people. I do not like to see that happen and it is a shame because as a human being, tom price is a very good man. I can tell you. That is unacceptable. That would be unacceptable. [inaudible] President Trump i have had four meetings with for the fed chairman. I will be making a decision that in the next few weeks. All rock has done a fantastic job at fema. Elaine duke is acting and working very hard. I think what fema has done has been incredible between all these hurricanes and doing so well but we will be making that decision within a month. Homeland security, yes. [inaudible] President Trump i have spoken to other owners and i think it is coming together. I noticed last night or i was told, i did not see it but i heard everybody stood for the National Anthem and that shows respect for our country, our flag and for the National Anthem. I am very happy. Happy i heard that and they should stand. You have to stand. It is our National Anthem, you have to stand. I spoke to numerous team owners. I did speak to jerry. It is not a question of confidence. I did not like it cosmetically or otherwise. I was disappointed. Administration that saves hundreds of millions of dollars on renegotiating things, on new trade deals that you will be seeing the results very soon create we are renegotiating nafta, we are rain negotiating many Different Things and making so much better deals. You will be see and seeing other things,. I do not like to see someone that perhaps it was the perception it was not right. To say but we will be announcing something today. [inaudible] President Trump we will be announcing something today. I am not aware of that, i heard but imery ministerial not aware of it. Anything else . He always treats me so nicely. [inaudible] President Trump probably something will happen, something will be announced area and i think he is a fine person. I certainly do not like the optic. We renegotiate deals, we are deals,iating trade renegotiating the f35 fighter plane. I saved hundreds of millions of dollars so i do not like the optics of what you just said. [inaudible] President Trump some very bad things happened in cuba. Very bad rings. You will see what is happening. The good some bad things. [inaudible] President Trump probably sometime today. I am not happy, ok . I can tell you. Julie that is President Trump on the white house lawn commenting on puerto rico before his visit to the island next week in the wake of the devastation from the hurricane. Things going about on and how he will make a decision on the fate of tom price as health and Human Services secretary following reports he had been chartering private jets to fly around the country. He said he is disappointed and not happy but tom price is a good man. He commented on the National Anthem and his argument with the National Football league. Joe kind of hitting all the big stores stories. Scarlet and the fed chair. Joe he was talking about how his administration saves money and that is what he does not like the cosmetics of the price story. Lets get back to the fed, the most relevant of that wide ranging conversation. That decision coming into or inee weeks so lets bring our guest. I was about to ask about a chart and want to look at that looks at the dollar in the spread between the twoyear and 10 year yield. A bottoming. It is not that we have seen that much of a rebound from that bottom but we have seen a little one. Do you plot out different scenarios based on if it is yellen or powell, or if tax reform happens, if it does not happen, or do you figure out first which is the most likely of the scenarios and it on that . Guest if you have to make a bet you have to do it on a pillow on a probability weighted runion or you will get over. You have to look at it with all the different scenarios in mind. What is interesting about these comments now is we have a timetable. If this is about a matter of weeks this could move the dollar in the short term. If you pretty important, have options strategies and play you have to focus these in the next few weeks. Scarlet do you think we will see new lows for the dollar . we have had a huge move in the dollar from the Center Summer of 14 till this year and a retracement that lasted till Early September and the dollar has been gaining for weeks. With this momentum around the and iair, on tax reform think also some factors, this move could have some further legs. We will go to have a fulltime high on the dollar. Joe i am looking at bloombergs inry, and it trumps hype Trumps White House everything is coming in two weeks. Things have been said before and they do not come to pass. One more question about the fed decision. Sometimes there is a thing that people say about this white house, they do not know where he stands on certain policies talking about President Trump. He said he did not like a strong dollar and he called himself a low Interest Rate guy and he is super into the stock market and tweeted about the s p 500 today. He would be shooting himself in the foot and not consistent with what he said if he were to hikent a hawk that might four times next year and disrupt what is going pretty well for him. Complex is a pretty decision. All the factors are pointing to the decision youre describing and he is catering to constituencies about that are conservative about what the fed should be allowed to do. With the names floating around, there are a bunch of them that are fairly hawkish and that is the key. We have been used to a cautious fed for many years now and if there is some shakeup around that, it is important to the market. Scarlet lets get your thoughts on bitcoin. As i do nots me know where the there is there. Block Chain Technology is important and being used i more realtime Financial Transactions but the exchanges themselves them to be have a little bit aughtont fr attached to them. Do you look at when you look at capital flows into bitcoin, out of bitcoin, and what it tells you about how money is moving around the world . Jens the reasons we have been watching this is we can use it as a measure of capital flight. If you look at how the coin is trading in different countries, sometimes there is a premium in china and especially in the second half of last year where there was a lot of capital flight out of china. The bitcoin premium was correlated with that so we used it to infer something about what is going on with the broader capital flows. It is not that we have strong views about whether there is a bubble. You have to be careful about going into the debate because it is a must like a religious one. We wrote a letter about this on our website. We were careful about going into this debate but we get so many questions we put out of you and we tried not to be too controversial but still some people got angry. Joe you are saying it is not the absolute level that your most interested in per se. Relative price on exchanges in different countries. China versus japan versus korea. The relative differences can tell us something about the state of capital control and the urge to circumvent them. Jens there were times that there were capital controls in place in china and it looked like tivo used up the coin market to escape and therefore they are willing to pay extra command to premium to trade in those countries. Are there any flows that you see in the bitcoin market that tell you Something Else . Jens china has tried to ease control so it will be less relevant but maybe there is a new region where it pops up. We are using it to track Global Capital view rather than having a view on howcoim bitcoin will go. A Catalonian Referendum is scheduled for this weekend. Does this have an impact on currency markets . At what point would it disrupt the european economy and the trading of European Assets . Learned this year around the French Election that politics really matter and even on monday morning when trading opened, the general election did have an impact area this is the next one. It is different from the other situations because the federal government has said this referendum is not valid. Whatost important is degree of social unrest will come out of that. It is not so much the voting percentages but is it going to drive demonstrations, maybe this is something that creates a movement underground that could spiral out of control. That i think is the most important. Joe is there a risk, investors have not cared about this story area did not much impact in spanish equities. Could there be a moment when people wake up and say see mass civil unrest and start to get nervous . Go back towe have to greece where we saw demonstrations on the tv screens and that could move the markets. If we see nasty pictures like nothing ist really priced that could move the market. Is time for the stock of the hour, it is revlon. They have been on an eightday rally of more than 70 . Revlon is taking a dramatic turn today. What is going on . 17 and down around 10 or 11 . We have an intraday chart we can 7 . You and that drop of. Hy it is not clear analysts note changes in peoples positions or anything like that. I was looking into this with one of our market producers. If you take a look at the five year you fiveyear chart, that might help figure out what is going on. If you look at performance here year to date it has pretty choppy. If you look back a few years, if you bought the stock last years price may have seen it seemed like a good time to get out since the company is having a rough time. Joe the stock is up over 70 . We do not know what caused the sale. Did people offer any theories for the massive surge since the middle of september . He had increased his stake, and it is above anybody else who has 5 . That stock rallied, people thought he was evidence that revlons come back was a motion. Maybe he will take the company private. It could be an acquisition target. Acquisition target, that would be interesting. Made some of not the moves that others have. They are very massmarket. Premium buyers want products when it comes to cosmetics. Some divergent performance. Couldis considered it be an acquisition target. Indexese have the major , all somewhat higher. The dow is little changed and the s p 500 earning. 3 of 1 . Closing another gain for the third quarter. From new york, this is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. 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. Scarlet whatd you miss . Are moving into record territory with the s p 500 on track for its eighth straight quarterly gain. I am julie hyman. Scarlet i am scarlet fu. Joe and i am joe weisenthal. A julia chatterley is on assignment. We want to welcome you to our closing bell coverage every day from 4 00 to 5 00 p. M. Eastern. Lets begin with market minutes. It looks like we are closing at our highest levels of the day, as well. The dow up marginally, up by 0. 1 . Modest gains, but alltime highs. A sixthhas gained straight month, for the eighth straight quarter, which makes it the longest quarterly winning streak since 1997. Joe pretty impressive. Thank you for our markets team for coming up with these statistics. Julie was talking about this, tyson foods getting a big lift, up almost 8 after they would top their previous forecast because of improvement in their beef segment. Also, they are cutting 450 jobs. Growth gross margin improvement. Quifax earlier this week, their ceo steps down. Joe lets take a look at the Government Bond market, focusing on the u. S. Rates higher today, two year yield up to 1. 48 . Getting a little bump on the news of the white house having talked to kevin morris, causing a hawkish told to monetary policy. By no means does that mean he will get it. One person the white house is talking to. 10 year yields up to 2. 33 . Lets look at a oneyear chart of the 10year to get perspective. We star rates shoot up after that election in november. Going up until the end of the year and drifting lower from the end of december until a few weeks ago. I think it was september 7 or ,ight, 10 year yields bottoming and then shooting higher to where they are today, 2. 34 . Julie that twoyear at its highest since 2008. Moving on to currencies, if you look at the dollar index today, really had a bouncing around kind of day. A. M. That headline crossed that kevin moore was one of the folks President Trump was interviewing to be fed chair, he viewed him as more hawkish. Considerable choppiness over the session, with the dollar ending little changed. If you look at the dollar over the past month, you will see that uptick we have been talking about. May a change in direction that could beat potentially worse. The dollar index positive for only the first month since february, second time this year, that on a monthly basis, the dollar has been higher. Joe on commodities, lets look at oil and gold. Not a ton of action there. Oil ending the day flat with west texas intermediate crude at 51. 55 cents a barrel. Scarlet lets take a quick look at the bigger picture, the s p 500 finishing the quarter with a 4 gain. About nine sectors within the s p 500 rose. Staples declined. When you look at treasuries, the 10 year yield, you can see it is that 2. 34 . At 1 , it was just a hair above 2 . Point, it was just a hair above 2 . Dollar index up by more than 2. 5 . Oil, up. The massive hurricanes send prices falling, now well below 50 a barrel. Opec and allies firming pledging to hold firm. Whatd you miss . The final trading day for september has markets ending on a high note. Nasdaq ending in record territory, the s p closing out its eighth straight quarterly gain. Setting on gaining because of bets on tax reform. How will things shakeup in the Fourth Quarter . Joining us is Douglas Ramsey come alive for minneapolis. Do you see the trump trade back in action again . Doug i do not know. Movement in small caps gained attention, but this has been going on for a couple months. They had a nice quarter. Work, they spurred up like they have this week a to a newon wednesday, high. Exhaustiveows it is and they tend to underperform threemonth rise. Bigger picture, we do not have a strong view between large and small. The market is broadly expensive. The good thing i would say about small is that over the last 3. 5, four years, they have grown to their valuations. There pe peaked 3. 5 years ago at 40 . That went down to 7 or 8 . Over time, there is no average premium or pe discount for small caps. The market is still monolithically overvalued. Julie i just have another way of looking at that. We are looking at the ratio of small to large caps in blue. Essentially showing what you just talked about, that they have begun to outperform again over the past six weeks or so. The same thing has appeared to happen in value relative to growth. Value from growth. A view or not you have on small to large or value to growth, the underlying impetus for these moves, at least one of them, appears to be outlook for tax reform or tax cuts. Are you a believer in the , it is goingat a to happen, and, b, is going to be good for markets . Doug i do not think there is a lot of momentum in the congress to get that done. The other issue, there is talk about this being relatively relevant revenueneutral. It is about shifting the burden around. That great release of animal spirits in terms of more disposable income. There is so much so little detail. Brackets,these three the 12, 15 and 35, where will they kick in . It is too early to say. Unless there is significant change from what has been first but on the table, i do not expect a lot. Joe it is interesting. There has been so much hype about tax reform and boosting growth and simplicity. Proposallook at this so far, and presumably it will change a bit before there is a vote, if there is a vote, you do not see much that moves the dial. Doug i dont. I think there will be more Significant Impact on the corporate side. Issue is it we have done some work on this. If it gets done around it year and the impact s p 500 earnings per share might be 5 or 6 . Pe, multiple swings multiple swings will overwhelm the that. If we do get to the point where we think, our quantitative work shows the bull market exhausting itself, the compression in the pe will far outweigh any increase in e that we get next year. Joe how does uncertainty at the fed play into your fear . That trumpdlines will make his decision in the next few weeks. Is this something you are thinking about as you make your Market Outlook . It, assumeink about these get impounded in the price structure and sentiment measures we look at. We do not think we are quite smart enough to pick the one that will be the one. From what i know about kevin warsh, he would be an excellent pick, an excellent take for five years ago. Moving away from the emergency stimulus sooner than what we have. That was an intriguing name that trickled out this morning. We will just have to see. We certainly talked about it, but it is not something that is going to trigger a major allocation or sector change or bond market change. Might not even happen in the two to three weeks the president has said. I want to get your take on inflation. Be the fed chief and making policy will be looking closely at price increases. I am looking here at g btv 6030, which shores the core cpi and cpe. Moving further away from that 2 target. Talk about what your inflation models are showing. You wonder to what extent companies have Pricing Power to maintain their profit growth. Doug our models would show that inflation and work tends more toward the commodity side, than the feds. I hate to use the word from 15, 20 years ago, but this goldilockslike knife edge. Commodities, prices have turned sharply in the last 18 months. There is more pricing and you can see a trickle through to profits. Clearly, it has not hit wages yet. We are in a happy zone from a corporate profitability perspective. It is certainly one of the things, pulling down the cpi and the feds other measures. It had not oversold bounce last year. But it has set out a commodity rally. I suspect that is where the broader Inflation Numbers like the fed likes to focus on have been wellbehaved. We arek would show, right at the bearish threshold on a handful of these different leading inflation measures. 3, 6e talking leadtimes of months. It might not be until the summer the fed would see the same thing. Julie i want to ask you about your bets in the market, your preferred areas. Happy profitability places, you might put it. Technology is a place you are looking at. Tech has taken a hit recently, still strong on the year. There seems to be big, societal discussions about these tech giants right now, particularly when you look at facebook. Is that a concern for you at all, over the longerterm, that that will eventually affect their popularity and profitability . Doug it is certainly a discussion. Our work is quantitative. I should mention, we are heavily weighted in tech, but we are not in the things stocks fang stocks. We tend to be thematic with things done well on a self basis, Data Processing and outsource services, i. T. Consulting. A lot of people when they think tech, they think the top 45 names of driving the thing. But underneath it all, you really have i do not want to say fair. The entire market is overvalued. I do not think tech is overvalued more than anything else. The median price, cash flow ratio that we like to monitor, the median price of cash flow ratio for technology is 15 times exactly where was four years ago. The cash flow needs to come underneath these stocks. Joe doug ramsey of the leuthold , i appreciate your time. Thanks so much. Coming up, that tenuous future of health and Human Services secretary tom price. This is bloomberg. Mark i am mark crumpton, it is time for first word news. President trump is promoting his plan for a sweeping overhaul of the u. S. Tax code. He told a meeting of the National Association of manufacturers he is working to help American Companies compete globally. Pres. Trump my administration is working every day to live to the burdens on our companies and on our workers, so that you can drive, compete and grow. And, at the very center of that plan, is a giant, beautiful, massive, the biggest ever in our country, tax cut. Mark the president would like to sign the tax legislation into law by the end of the year. The plan would deeply reduce taxes for corporations and simplify tax brackets. Summit in european estonia, french president Emmanuel Macron said there is a groundswell of support developing in the e. U. To make sure american digital giants pay more taxes on their lucrative business on the continent. The plan for tax system which could hit u. S. Companies harder, will be brought up at e. U. Ministerial meetings this fall. A sean collier said he is convinced the deal will be reached. Another death confirmed in mexico city, bringing the toll from last weeks earthquake to 345. Crews have finished clearing away the rubble from the dozens of buildings that have collapsed in the magnitude 7. 1 earthquake. Using a jet at the expense of u. S. Taxpayers continues to emerge. Help then Services Secretary tom price admitted using such aircraft thursday and agreed to pay his tab. It is reportedly above 1 million. Epa chief scott pruitt reportedly took right or military planes at least four ines at a cost to taxpayers nearly 60,000. Interior secretary ryan zinke reportedly chartered a domestic energythat was owned by executives. It started after Steve Mnuchins travel came under scrutiny earlier this year. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Joe thanks, mark. Julie thanks, mark. Our editor for International Government and economics, and our chief content officer. When we look at this tax reform issue, we have been talking to investors today who are somewhat skeptical. Certainly skeptical of anything that we do not have a full framework as of yet. In washington, how are they putting it in terms of whether this will get done . We have had a lot of fits and starts. The consensus is, it has a decent chance of happening, what you call a tax reform our tax cut plans. Scarlet that is what the president has been doing it, calling it tax cuts rather than reform. Tax reform need to something 1980 six, where it took months and was a complete overhaul of the tax code. I do not think anyone is thinking that is what we will get. We may get significant tax cuts, but the process is complicated. It has to emanate from the house of representatives. Paul ryan runs that. He is critical to this program. Tax planheory, a new should be something we are excited about, more money, lower taxes, stronger economy. But as we have talked about this week, no one is giving this good reviews from any perspective, the right or left or anyone. Or, the markets. Donald trumps right, it would be the biggest tax cut in the nations history, and no one is saying, lets go get them. The roots of that is the way this tax plan was developed. Scarlet secrecy . In secrecy, six guys in a room, there were no details, so there was no constituency for it once it was announced. The congress was not involved, the democrats were not involved. Even some senior economist were not involved. It did not have a natural constituency once it was announced. And that is not usually a recipe for grand support. Scarlet you compared it to 1986 julie, when the democrats were part of the discussion and in fact introduced the bill. Julie there is not much bipartisan discussion on anything these days. The president is going out to sell it. He made the announcement today. Presumably people do more lobbying on behalf of the tax bill elsewhere. We saw a lot of public opposition to repealing obamacare, that proved ultimately successful, or at least was a factor. Is it important for the president to get the support of the public on the tax plan . Marty not to be too cynical, but who does not like to have their taxes cut . It is not like he is going out there proposing a controversial notion of cutting your taxes. Julie but people dont seem that enthused about it. Marty no, but it is much more important you figure out how to get it done in congress. Bipartisanship might be where it winds up. He may get people in a room and say, you are not coming out of here until you agree on a tax cut. Joe lets change gears. Tom price, the president making negative comments about him, saying he is about to decide his fate. About this scandal, the private planes, that has resonated so much . B, what is your guest is he done . Marty my guess, he could not send his stuff to the dry cleaners. Ultimately, it was Donald Trumps feelings that the optics of him seemingly not caring about what taxpayers were paying for was really terrible. As you heard in his impromptu press conference, here he is cutting deals, cutting costs for the taxpayer and a whole bunch of things, and then everybody is focused on tom price taking expensive travel. He does not like that muddying his message. His other reporting, not ours, that he considered price the weakest of his cabinet members. There was not a reservoir of goodwill to begin with. Scarlet what value did tom price bring to the Trump White House . It was hisosedly, expertise on obamacare and his opposition to obamacare. He was going to be incredibly useful tool in getting repeal and replace done. Obviously, it did not happen. Scarlet perhaps he has run his course. , thank you. R markets are already responding to the gops tax reform land in that they kind of young yawned. We did see a boost in those trump trade names. This is bloomberg. Scarlet whatd you miss . Gops tax with the reform proposal as it currently stands. A reporter quantified it to the tune of 6. 4 billion. That is because banks would benefit more than other industries because they have more deductions and higher tax rates. We are talking about wells fargo, bank of america, jp morgan. Almostar, they pay 26 , double the average for nonfinancial companies. Julie their margin of improvement is larger because they do not have these existing deductions they can take. Scarlet that would flow to the bottom line, a 7 boost in net income. We doesnt ever seem like get on here and say, look, the major indices did not move much today . Out, the mass back set up math back set up. For september, the s p has averaged 0. 5 0. 5 points. Bumpsone of these little in september for each year. This was the quietest of september in terms of the average daily point move of the s p 500. It is not an illusion. It does not just seem like the market does not move. It really is not moving much. Yes, it is going higher, but in tiny increments. Julie we talk about that frequently, but we need to talk about, what are the implications of that . It means a lot to the banks, for example. All of whom have reiterated the trading revenue continues to be week. If there is not much activity, there is not much gains. There are also questions to be asked about the future direction, if there is been such little movement. Scarlet especially as we head into october, traditionally a nasty month for equities. Supposed toer was be a busy month, with idc drama. D. C. Drama. Julie we have the drama. Coming up, an interview with the jack lew. Why he sees dangerous ideas in trumps tax plan. This is bloomberg. Mark i am mark crumpton, it is time for first word news. The United States is warning citizens against travel to cuba and is awarded 60 ordered 60 of its staff off the island. Havana will stop processing passports visas indefinitely. They say american tourists could be exposed to harm after specific attacks on u. S. Personnel. Been reporting Unexplained Health problems, some as series serious as brain trauma and hearing loss. U. S. Ambassador to israel, david friedman, is describing settlements as a part of israel. That is according to the washington post. Declaredr friedman only 2 of the west bank is occupied. The state department has issued a disclaimer, saying it does not reflect a policy shift. Most of the International Community consider the settlements to be illegal. I know found in the car of a man charged with a deadly shooting at a Tennessee Church made reference to revenge for a white supremacist nasa cured at a black church in North Carolina two years earlier, according to the associated press, citing law enforcement. The manual simpson is accused of killing one person and wounding six others outside nashville last sunday. The ap said the note referenced retaliation for the white supremacist two killed nine black worshipers at a trusting, South Carolina church in 2015, and had since been sentenced to death. Ben int of repairing big london double following detailed announcement by surveyors. According to the house of commons, repairs to the elizabeth tower, will cost 82 million, up from an original estimate of 34 million. The name big band comes from the 13 ton bell in the clock, which fell august fell silent in august. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton, this is bloomberg. Record highs for the s p 500 and nasdaq. This is the small cap benchmark. The dow jones finishing up by 24 points. It is the longest quarterly winning streak for the dow since 1997. It has been up for eight straight quarters. A quick mention here of what happened in the quarter. You can see the s p 500 up 4 . The twoyear moved quite a bit. You can see there are 11 basis points in the threemonth. There is a big selloff in the middle of the quarter. Dollar weakness continues, there is a trend. There is room for gains. Oil up by 15 , 50 a barrel. Opec and its allies of improved on committing and following through, executing production cuts. Julie whatd you miss . President trumps tax plan to take a toll on the middle class. We had an exclusive interview lew. Jack it is just a framework. We have to cautious because a lot of details are not there. There is something dangerous, ideas that are out there. 5 fantasy that you can do trillion to 6 trillion of tax cuts and have them pay for themselves is a fantasy. Fantasy is good for fiction, but not fiscal policy. We try this experiment in 1981, 2001, 2003. They did not work, and the deficit exploded, each time. Just the last come all couple years, kansas repeal the tax cut because it was not working. Congress puts hope and fantasy over experience, it will unleash dangerous forces. A deficit the spirals out of control becomes a threat to everything from vulnerability to national defense. The first and foremost thing, it has to be done with honest numbers and in a realistic way. We cannot turn around and find out we have destroyed our fiscal conditions. Let me take one component part part. They say they will be preventative measures to keep them from abusing them. How do you prevent that from happening . What does it mean for the irs and how they would enforce them . The passthrough proposal is a dangerous one. Is idea you can police it something i do not think anyone knows how to deliver on or execute. It is easy to reorganize on paper, partnership or entity, that can take advantage. 25 , and the rate i an individual is 35 , guarantee you that anyone who can will reorganize. In an experiment they created a passthrough rate, they had an enormous increase in passthrough filings. The coach of the University Team reorganized as a passthrough. It is really hard to police. It could become an enormously expensive provision, a loophole that people years from now would say, how did you ever create that . It will contribute to the inequity of taxes because it will deliver a tax break to the most fortunate. What is your reaction to the attempt to get so much done through reconciliation . What are the problems associated with that, as you see them . Reconciliation permits congress to do by a majority vote what would otherwise take super majority to do in the senate. If you are building a consensus to do responsible policy, they can be an important and useful tool. What we have seen in recent weeks on the Health Care Bill to use the reconciliation device to have policies nobody understood, that had an enormous impact on the wellbeing of American People, come through on an express train in a dangerous way. Good news is, on the health care debate, facts actually mattered. When it turned out that underneath at the hood what you were doing was cutting taxes but for people with a lot of capital gains, and Cutting Health benefits through those getting Health Benefits through the Affordable Care act or medicaid, they cannot get the votes. A simple majority does not guarantee smooth sailing. It makes it easier and faster. News,e have breaking health and Human Services secretary tom price has resigned. President trump we heard expressing his displeasure about the news of secretary prices expensive travel on private jets. Announcement from the white house, hss secretary tom price has resigned and the president has excepted. Don j wright. Ed we have it again, secretary of secretary tom price offering his resignation to the white house earlier today. Of course, the news cannot over the last few days over those expensive plane trips he took. Trump did not like how it looks, especially because he wanted his white house to be known for saving the tax people money. His value to the white house was that he was a big proponent of repealing and replacing obamacare. He was supposed to play a Critical Role in that effort. That effort failed twice. Joe you have to wonder how much he wanted to stick around their. His tenure here has not gone as he had hoped. Julie the president saying he did not like the cosmetics. But not good man, working there anymore. We will talk about the next fed chair and perhaps next health and Human Services secretary after tom prices resignation. From new york, this is bloomberg. Scarlet tom price has resigned as the white houses health and becauServices Secretary of the probe into his taking private jets rather than flying commercial. We gone to get more context. The president earlier today said he would make a decision on tom prices fate later tonight. It would appear the secretary beat him to the punch. The for the secretary resigned he said he would pay back the u. S. Government for some of the expenses associated with his flights on those private jets. He said yesterday he would write a 51,000 check to cover the costs of his seat on those private planes. It looked pretty bad for him since wednesday, when the president first said he was for it disappointed in him and considering firing him. I suspect what happened here was, this decision was made before the president got on Board Air Force one to travel. Were just seeing the press release now. Scarlet we are also sing the president come down from the airplane, arriving in jersey, because he will be spending the weekend at his golf course, his resort in new jersey. Thatwhat was it about this , he had to go . Why did he not survive this, where as other people in the administration of times who have earned the president s respect stuck it out . Alex it was just so egregious. Politico credit for this, they sink their teeth into the story. Plane flights in seven months, the secretary costing taxpayers 400,000. Another half 1 million in military Flights International conferences that his predecessors would have flown commercial to get to. It was just too it was just too outrageous, even for this administration. Julie ryan zinke has also employed private charter flights. He brushed it off, says it was a little on travel that he has gotten flack on this. Say, does theys white house have to force his resignation, as well . Alex it is a great question, and we do not know. We have not heard the president thielen up the heat on zinke like he has on tom price for abusing the taxpayers trust. Zinkeflights were more limited. Took a charter flight between a couple of the Virgin Island after the storm hit. He took a charter flight up to his home in montana, from reno or las vegas. Is definitely not as egregiously using charter travel as price. Joe are there policies about this in terms of when these people get these roles as cabinet secretaries, do they get a set of guidelines that say, you can and cannot fly this way . Alex we do not know exactly what happened in this administration. In the Obama Administration, yes, there were guidelines. The former health the secretary told us a couple days ago that she was required to fly commercial, unless the flights were 12 hours in length or more, and she was supposed to take Economy Class domestically. Maybe Business Class internationally. It was strict under obama. The Trump Administration was tacitly operating under the same rules. But im not sure was ever communicated to the agencies. Joe we have not talked anything about the substance of prices tenure at hhs. But it has to be marked by a failure to repeal obamacare. Going forward, listen to hhs secretary, what is that mean in terms of another whack at the apple one day in the future, but trying to change health care . Alex the first thing the new hhs will have to do by the way, the acting guy is a guy from virginia. T there will be open enrollment for obamacare in november. The law is in the books, people still still need insurance. This government is still obligated to make sure proceeds as smoothly as possible. They have done things to make enrollment not as easy. They have cut the advertising budget, the budget for people to get assistance. They have shortened the window to sign up. We will see how it goes of this year. In the words of the president. Scarlet something he likes to say a lot. I am taking of departures partners like sean spicer, anthony scaramucci, steve bannon. And now health and Human Services secretary tom price, who is leaving under different circumstances. A relative question because the Trump Administration has been anything but normal. Is it typical for there to be this quick of a departure . Alex no, that is an easy answer. No, this is not normal. There has been incredible turnover within the white house. This is the first cabinet secretary to step down. There has been significant turnover in the white house. He has had three or four people just in the communications job, not to mention he is on his second chief of staff. Nothing normal about that kind of turnover. Julie the president today, in talking about what he called the cosmetics, what we might call the optics of what tom price did, he emphasized it was a disconnect from what his administration is trying to achieve, deal, saving the American People money. In our reporting, how much has the white house achieved in doing that . You mentioned nafta negotiation, which has not happened yet. Has the white house succeeded in saving us money . Alex that is an interesting and very good question. If they have saved the government are taxpayers money, it would be by not filling jobs that other administrations would have filled. There are a ton of political positions across the government. To pick a couple, treasury, deputy secretary, is still open. I think the secretary of state still need to deputy. They may not have a confirmed to deputy over there. A bunch of political jobs that are not open. They are saving taxpayers on salaries, i suppose. Pointed out on twitter earlier, it costs 200,000 an hour every time air force one with soft lifts off with the president aboard. He spends nearly every weekend outside washington. Scarlet to your point about not enough staffing in government departments, to what extent does tom price have any allies in who did stand up for him and say, he provided value to this department . Alex no, this was an easy decision by the president. Technically, he resigned. I am pretty sure he was pressured out. This was an easy decision. Tom price did not have a constituency, anyone in Congress Standing up for him. The Healthcare Industry hates him because of what he is doing to the Affordable Care act and the administrations attempts to repeal obamacare and replace it with something inferior, in the eyes of the health care industry. There is nothing saying the president should keep him on board. It was an easy call. Call, something the president said he would make a decision on later tonight. Looks like tom price beat him to it. Alex wayne, thank you. Something else President Trump said he would be focused on in the next few weeks is the next fed chair. Then moore, up . 48 on dollar. They are making bets on who the next fed chair might be. According to an online foriction market, a Place Investors and gamblers alike, who want to hedge their bets on future events, that is kevin warshs value. We are joined by the founder, john phillips. When did you see the movement on kevin warsh . The last couple days or weeks . You see movement every day. Ohn and yellen reversed themselves in the last three weeks. Three weeks ago it was cohn at 43, warsh at nine. Just to be clear, these prices are contracts that expire. If it is at . 48 you are making could earn au dollar or lose everything. With yellen, it would be four to one. He website is called predicted this is no different from other markets. . 52,t . 48, if he took and it does not happen, you get paid a dollar. Joe you can trade it both ways. And you do not have to stay in the stock until it occurs. It . 50price to resign and get out of it. Thishow much volume is in market, and how big is the interest in the fed chair raise versus other things people are betting on our trading on . It is a sizable market. To put this in perspective, in 2016 we have 1 3 of one billion shares traded in the market. The fed market has been volatile. We saw thisrket, start to tank earlier in the day. That means information is flowing into the market, or people who like to speculate on this are shorting price. Julie what about other politically or financiallyoriented events, such as tax cuts . How are people pricing that . Also, because there is a range of different outcomes in terms of sizes of cut, either options for them . It depends on the market. Market, thected possibility of individual and Corporate Tax cuts was very high right after the election. Early november when we first put the markets up, it was in the . 70 or . 80 it would happen. It is individual tax cut, . 29 to . 30, a one in three chance of will pass this year. Right now inking your website of tom price, not a good day. In terms of this administration, what are the popular things people like to trade . One of the big markets is trump impeachment. Willie last the entire term . Scarlet is a volatile . It changes. Willr things republicans retain control of the house and senate . Traders are skeptical, but it is not by a big margin. That is where it goes up and down. Holiday, thaton is . 28. This is before the end of the year. At a dotuys are org. We create Prediction Markets and compliance. Is set uppredictit with universities. They wanted to study whether addiction markets are predictive predictive markets are predictive or reactive. Thank you so much, appreciate it. He is the founder of predictit. O rg. We will keep watching those markets to see how the odds are looking. Lets get more on the odds of one of those potential markets, stan mas writes about the economy for bloomberg view. He has been watching this race very closely. We heard new reports today. Most gets the market excited. Jerome powell was discussed, as well. If you had your own personal predictit. Org, where would you put the chances of these gentlemen . On theuld run a sidebar website which says, one of the names you would expect from a Republican Administration whenever a top up at economic job comes up, people like kevin powell, other names mentioned, john hubbard, taylor, these are people who served in recent Republican Administrations, so it is natural they should be on the list. That is the 30,000 foot view. Drill down, and some of these people are more interesting. Kevin warsh attracts attention because, although he was the consummate fed insider, since he left the fed, he has inflamed the institution a bit. There is a contradiction. L served in the bush 41 administration, was appointed by obama to the fed board in 2012. He is very powell within the institutions, but not a flamethrower. Joe lets talk about warsh. We know he has been critical of postcrisis policy responses. How big of a 90 degree turn would it be to go from yellen to warsh . It would depend what he would do in office. He was there in the eye of the crisis and did not defend once. He went along with all the right cuts, the cut to zero. He voted for qe1 and qe2. Thats shortly after qe2 this controversial oped written by kevin warsh appeared in the journal. It was subtle, but the criticism was there. He has spoken publicly about what he think the fed got wrong and right. Into dont be lulled into the sense that warsh is an outsider, he is an insider. Scarlet but the fed has changed over time. It is no longer the fed under greenspan, where he called all the shots. It is much more democratic. A couple things that constrain the fed are things the fed itself has put in place. It is much more democratic. Every time a Bank President they are out there with their own press conference and alternative statement. They are talking all the time. There are projections the fed puts out, the forward guidance, they apply a love more scrutiny to the fed than they used to. It is not your grandfathers f ed. Joe we will excitedly be watching this race. Our glum our Bloomberg Economic editor. Julie that does it for whatd you miss . This is bloomberg. Alisa i am Alisa Parenti in new york and you are watching bloomberg technology. U. S. Health and Human Services secretary tom price has resigned. The white house says he offered his resignation to President Trump earlier today and it was accepted. Prices travel itinerary came under scrutiny after he frequently used military planes. The tab reportedly in excess of 1 million. The u. S. Is warning against travel to cuba and ordered about 60 of its staff to leave. The embassy in havana will stop processing visas indefinitely. Washington says u. S. Tourists could be exposed to harm after diplomats experienced Unexplained Health problems. Senate republicans have unveiled a budget revolution for the coming year which they intend to use to push through as much as 1. 3 trillion worth of tax cuts in the coming months. It will not allow a full repeal of Affordable Care act but leaves the window open to consider repeal of the individual mandate. Israel. Ambassador to described settlements on the west bank as part of israel according to the washington