Transcripts For BLOOMBERG Whatd You Miss 20171009

The Associated Press today, i had a lot we said hes urging all sides to show restraint when it comes to disputes. A top him iraqi official says qatar can and its diplomatic hostingf it gives up its 2022 world cup. Saudi arabia and the United Arab Emirates cut ties, which they accused of funding terror. Corruption linked to Qatar World Cup running bids the tournament has, not come up with a list of demands by the boycotting countries. Global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. Im Mark Crumpton, this is bloomberg. Julia live from bloomberg World Headquarters in new york time julie chatterley. Scarlet im scarlet fu. Joe im joe weisenthal. Next anduity trading treasury markets are closed on the columbus day holiday. Joe what do miss. Scarlet tensions between the u. S. And turkey take a turn for the worst. Markets stopped issuing visas for its citizens. What led to the abrupt titfortat . University of chicago professor Richard Baylor wins a nobel prize our economics, his work in behavioral economics on how rationality could affect markets make its way to policymakers around the world. Trumphington, president gets into another spat with a member of his own party. War of bob corkers words with the president could create hurdles in the past towards tax reform path towards tax reform. Julia officials from the Trump Administration have articulated their wish list for the next fed chair. The white house is looking for a chair with Monetary Policy experience consensusbuilding skills, and a willingness to roll back regulations. 11,more, lets bring in and he is a professor of economics and a former economist at the fed. He joins us from new hampshire. Its crucial for the fed chair to be an effective leader and have a high degree of common sense. Does that rule any of the candidates out . I think the key point to make is that its definitely pointing toward the case for reappointing janet yellen as chair. Has a solid she record, anyone who knows her thinks of her as someone with superb common sense. She is an exceptional leader, she has built consensus at the fed. They have many top decisions to make over the years, she has consistently built strong consensus. Not always in and it does unanimity, but a consensus around the key decision. Joe something that i am curious thet, talk about institutional constraints of the Federal Reserve and the difficulty it is to change the policy inertia that has been set. Its not janet yellen is renominated, but someone else, how hard would it be to take the fed in a new direction . The Federal Reserve act established by congress has been in place for a long time. There are seven Board Members in d. C. , they vote on Monetary Policy at every meeting. The president votes at every meeting, for other president s alsoaround the region are rotating in and out of voting. I think what crucial over the next year is that the president , with confirmation from the senate, are going to be appointing four or five members of the Seven Members of the board of governors and the d. C. Fed. There is a chance for the Federal Reserve to be somewhat less in our show than in the past left inertial than in the past. Scarlet i want to bring up a chart that we have on the bloomberg. Eacha has quantified what different fed president or chief would need for the treasury yield for the twoyear. If kevin warsh were nominated, it would be a 15 basis point. If yellen or powell were nominated, it would go down slightly. Do you think that plays into the thinking of the white house when they nominate a fed chief . Question, theey Federal Reserve unanimously adopted an inflation goal five years ago. It was with rob support from beeness, they have maintaining that inflation goal ever since. That inflation goal could be resist revisited, one of the candidates want to reduce it. A couple of the others, certainly chair yellen and board member powell would probably maintain that goal. A key question for the president and the senate is are they reasonably satisfied with the Job Performance and inflation performance of the fed over the last two years . Last few years, if they are, lets stick to the known quantity. Joe speaking of that inflation goal, they havent been hitting it. They havent been hitting 2 , do you think the fed has a handle on why they havent been hitting it, or do you have a favorite among the various ones out there . I think there are a couple of potential factors. One is that the measures of Household Expectations have slipped downward somewhat. Its important for the Federal Reserve to maintain credibility, showing that its really committed to its target. Theeans taking action over next several years to bring inflation up to the target. Overtime, inflation may be above the target, sometimes below. We would expect it to average out at 2 , which is the inflation goal. Over the last five years, its been consistently on the low side. That inflation performance has quieted, some of the critics 56 years ago 56 years ago who were giving warning signs that inflation was going to take off and get out of control, that clearly have not been the case. Julia i want to ask you about kevin warsh, he has criticized the fed on a number of occasions. There are those that believe it would be problematic if you were the one chosen. You also argue that the fed can be improved, do you think he is someone who can come in and look at the level of transparency, the efficiency and change things for the better . You need the fed chair to be a consensus elder and a leader. I think builder and a leader. Janet yellen has done that over the last four years consistently. You also need a diverse board, diverse in always, gender, ethnic background, educational backgrounds, it is healthy to have one or two people from wall street, we need more people from main street, as well. I do think there is room for the fed to improve, to make its Monetary Policy more systematic and transparent. I think theres also enough room or the transparency side, especially to help Community Banks provide credit to Small Businesses and entrepreneurs. These are Critical Issues to make the economy stronger and more resilient. There is room for improvement. Scarlet its not always about reaching the inflation target. What is your confidence that any fed chair nominated by this white house, that serves this president , will remain independent . This is why we have a careful house votes white candidates and consults with the senate, and the senate has to confirm the nominee that the president puts forward. These are the questions that the senate needs to ask the nominee in hearings and meetings and interviews. Absolutely critical for the Federal Reserve to maintain the Public Confidence and its integrity of its decisions. Its nonpartisan, it doesnt the Federal Reserves boss is not the United States or the secretary treasury. Its the congress and ultimately the american people. Joe you mentioned the diversity of backgrounds being important, people having representation, how important is it that the fed chair be on academic economist . Have a phd . Do you think it would be ok if the fed chair didnt have that background . I think the fed chair must have some a sick background in economics. It doesnt have to be a phd. We have had a very prominent and successful fed chair, one of the buildings was named after bill martin during the 50s and 60s, he was viewed as a successful fed chair. He was not a phd economist. By contrast, arthur burns in the 70s was a very distinguished phd economist from a top university, and hes generally viewed by the profession as having been a complete failure as fed chair. A phd is not a critical element. Janet yellen has a phd in economics, but she has also shown herself to have a lot of common sense and ability to connect with people around people. Normal working i think that communication ability is a key element of successful fed chair. Julia can i ask your views on the award for the nobel economics prize, and whether you would like to see behavioral economics adopted more by Central Banks like the fed . Absolutely, i think the fundamental idea of behavioral economics is that ordinary people have to make plans and decisions, and its not always easy. The world is constantly changing, we face a lot of different uncertainties, some things are hard to plan for. Its one reason why its so important for the Federal Reserve be systematic and transparent, so the general public understands what they are doing. Every american is affected by whether youlicies are a sabr are thinking about taking out a loan or mortgage. The feds decisions are crucial for everyone. The kind of insight and behavioral economics absolutely need to be recognized. Andrew 11, and of course a fed economist. Thank you for joining us from new hampshire. Julia very few of us behave rationally. Scarlet a diplomatic spat between turkey and the u. S. Have rattled markets, we take a look at the deteriorating relations between the countries. This is bloomberg. A diplomatic feud between the u. S. And turkey has investors worried. Washington announced it would stop issuing visas to turks, citing the arrest of a turkish employee in istanbul. Turkey responded with its own visa freeze. If. You look at the turkish lira, it it plunged. For more, lets bring in Bloomberg News Senior Editor van hollen from our Washington Bureau. About thetle bit backdrop for this latest move. The relations between the u. S. And turkey have been worsening, even as President Trump and present her to one originally embraced one another. There is a long standing turkish grievance related to the coup that took place in turkey last year. Turkey believes that was instigated by a preacher based in the United States. May have been trying to get amex and i did expedited. There is no move on that, thats the immediate trigger. I think underlined that, like most things in the middle east, it relates to the syrian civil war, where the americans and turks began on the same side, but it looks like they are on opposing sides. Joe we saw the turkish lira really get clobbered with when this news came out. Without commenting on why the currencies do what they do, it looks like investors read into this event something deeper. This tells us something profound about the state of u. S. Turkish relations. What does it say about where we are . Deterioratingen for a wild, what is the news today what does the news review today . These kind of geopolitical questions are difficult to quantify in the way that you can quantify economic fundamentals. Its certainly true that a lot of investment in turkey is kind of pinned at some level, may be subconscious level on the premise that turkey is a solid member of the western alliance. Anything that throws that into question delivers a shock to investors. When you are reaching a stage where the United States is taking actions that actually directly impact individual turkish citizens and vice versa, its clear that something is wrong. That we arelieved on the verge of some massive schism like turkish departure from nature, nato. Spat onhy the latest the visas, why do this now . About trumps comments him where he was becoming a friend of mine frankly, hes getting high marks. What brought us to the point to where these decisions were made and what do we know is going on behind the scenes to reverse it . We dont really know quite what level the United States was taken. There was really about turkish behavior there was resentment about turkish behavior. Was level of the decision taken to escalate this in the way that it has been escalated on the american side, i think we dont know. Tv thist erdogan was on afternoon, and he didnt really go into it much. He really said it was saddening, we dont know whats going on behind the scenes to deescalate this. He certainly didnt speak in a provocative way that he sometimes does. We can say thats they sign that he might be looking for a way out. When you say we dont know the level in the u. S. Government with which it was taken, are you saying its plausible that the white house and the diplomatic corps, the state department are not necessarily on the same page in terms of how they see a relationship with turkey . I think thats a natural read based on trumps comments that you referenced a couple of weeks ago. That doesnt at all with what the president the americans have done in the last couple of days. I think we have to see that it might not necessarily on the other hand, you are talking about a nato ally thats important for all kinds of strategic things. I think we have to see that it might notthe natural assumptione that if youre going to take action against a country like that you see how far up those bosses we dont know. Julia we are talking about being at the point where turkey turkish troops are preparing to deepen their involvement in syria next door. They are doing joint missions with russia and iran, in terms of the involvement in the middle east, the timing is delicate. Its very delicate. Everything in the middle east is delicate, now even more delicate than usual. Arething that the americans probably thinking about in terms of the relationship with turkey turkey hasnt been huge contributors to the fight against Islamic State in syria. The best allies that the americans have found inside syria turned out to be kurdish crews. In terms of the fight against Islamic State, turkey wasnt a crucial part. That fight is drawing to a close, the United States is going to be shifting its concern aftert happens in syria Islamic State is defeated. There, its undeniable that turkey is going to play a huge role. We think the United States would want that role to be in alliance with them, rather than with iran and russia. Scarlet going forward, what are the; grounds for common interest between turkey and the u. S. . What can they build off of that could potentially close this risk . There was ak time when they were united in the belief that the syrian president had to go, he didnt go, its not looking like they can make him go. That has been removed. They would probably share an thatest in making sure assads syria after the war, it is not that iranian influence doesnt spread there. Diverge when it they xinahe kurds, stirs, the United States see them as an ally the United States sees them as an ally. Julia thank you for joining us. Stock is tumbling, they have been sliding since last september. What has investors spokeed spooked . From new york, this is bloomberg. Julia its time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. A settlement with adp is close unlikely. They have been fighting to her place three of the companys longest tenured directors, including chairman jon jones. The billionaire investor who says the company is not meeting its potential, is unwilling to compromise and accept a single policy. The next shareholder is september 7. Beginning support in their efforts to unionize Southwest Airlines pilots union is joining American Airlines and offering to pilots. Management crisis at rhine air has caused 20,000 Flight Cancellations over four weeks. Chief operating officer Michael Hickey also announced he will leave at months s end. Scarlet it is time for our stock of the hour. General electric falling for a six time in seven days. Now at twoyear lows. Now at twoyear lows. The stock is on pace without a monthly monthly events. It certainly is more than just today. What we are talking about is the big turnaround the ge is trying to do under new ceo john flannery. Hes really trying to make this company move in a way that it has not for a while. Friday, afteron the bell, they announced a slew of executive departures, people expected to be part of the old guard. Also vice chair fed comstock, he was the top female executive. And also john rice,. This is all ahead of their earnings next week. Joe what is the makeup the specific move today . Is it a verdict our response to those moves . I think what it is is a concern that so many people all left at the same time. The fact that you do have a earnings next week when etf is already expected to reduce epf targets. There are move rumors that he could the dividend. Theyre trying to turn around the stock. We have a chart that shows gei has fallen 20 this year, that is the biggest fall. Theyre trying to implement a number of changes i think its perhaps the growing pains before you see him making a big announcement next month when he was the changes. Scarlet thank you so much. The market closes next, this is bloomberg. Stocks softer in Light Trading on the dollar failed. Held. And it is columbus day. I am julia chatterley. Scarlet i am scarlet fu. Joe i am goes at wheaton joe weisenthal. the market minute, another day of declines for the s p 500, down to Straight Days and same for the dow though not Much Movement on friday. More Movement Today but only because a little bit more of a drawdown in the final hour of trading. Joe this looks like a huge selloff by recent standards. Volatility is surging. Scarlet because you a lot about what kind of movement we have been seen as of late. Individual movers, watching media names, viacom, fallen to its lowest since march of 2010 after citigroup says there is an facesrisk that viacom that Charter Communications will stop carrying its content. Atvi down after a downgraded gaming stocks, said it implied expectations are unrealistic given the level of aggregate growth, especially on the level of aggregate growth. Amc declining after the blade wellr remake did not do as. It was decent but not as high as people expected. Medtronic offf almost 4 . Joe Government Bond markets, no trading in the u. S. Because of the holiday but interesting action overseas, starting with turkish 10 year yield. These that we talked about earlier, diplomatic between the u. S. And turkey creating a risk risky moves across turkish assets. Resilient rates had been higher on the day brazilian rates have been higher through the day, spillover on turkey but those came down and south african tenure yields higher. 10 year yields higher. Initical risks still exist an otherwise encouraging backdrop for those assets. Julia a comparison, what is going on for the lira versus the dollar no, a move upwards, the weakness in turkey relative to the dollar, a Movement Year to date to give you a sense of what is going on. Rocky and a volatile currency but the trend had been the dollar lower and lira stronger until the second week of september. We saw the weakness and the fight with the deterioration in the visa issue over the weekend. , i want to show you the white line is lira versus the dollar. The move lower is a weaker lira. Market currency index, no broad spillover. And is an isolated incident want to watch as far as broader spillover in emerging markets. Isolated incidents. Dollar turkey should rise to four. A surprise rate hike could push it as low as 3. 55. The u. K. Releasing a white paper on brexit which gains auctions for calls and taxes, if we get a no deal scenario. Mayling, Prime Minister says she will not someone from the ecb said the Central Banks should scale back qe, starting at the beginning of 2018. She is a german. Joe lets look at the commodities, starting with oil, not a lot doing, oil prices a little bit higher, still below 50 a barrel on west texas intermarry or. Intermediary. ,old with a slight risk off still well below 1300 per ounce. Oco falling, down 3. 7 growing conditions in the ivory coast are very favorable and traders expecting a bump in cocoa production. Perhaps cheaper chocolate prices. Scarlet lets celebrate. Economicay with calendars and the bond market closed for columbus day, traders looking ahead to wednesdays release of the september fed minutes. And the start of third corner earnings season later this week. Big banks including j. P. Morgan and bank of america, set to report at the end of this week. Here with insight is Michael Kelly of pine ridge investments. We were joking earlier about how the u. S. Stock market has been moving in this very narrow, tight range, new highs but incremental moves. We know a lack of volatility has been hurting banks, will the start of earnings season change this dynamic . I think it will revive it. The u. S. Was the odd man out of the move up and markets. Now, we are seeing the u. S. Economy rethinking with the rest of the world. I think you will see that in the Earnings Releases as they come through. I think it will be more of the same, which is a slowmotion acceleration of the economy, earnings, and markets. In the marketct we have not seen a major shift on is the rates market which bottomed in early september, we have seen a substantial move up and longterm right, 10 year hitting 2. 4 on friday before pulling back a little bit. Is this real this time . There are always hedge fakes along the way, is this different . We have been using the words on the rates curve is lobotomized. The Central Banks have that loops the markets and distorted them to such a degree. That will not get better until 2019. 018, the ecb and boj will be doing more Balance Sheet growth than the fed will be doing raining in. We will get a little bit of next year is, we finally have broken the stall speed mentality that the world had been in for so long. People are spending a little bit more and investing more aggressively. And set of cash piling up in companies, which is cutting into the bond market, they are using it. 2019 is the fireworks in the bond market. Do i am excited already have you back to see how that goes. [laughter] , wea you talk about china have the effect of elections coming up. A benign thing for markets this year, in that china is quiet and performing quite well. Is the expectation that, beyond the Committee Meeting in the fall of this year, then perhaps things may change. What is your view . Most people agree they will change and most worried they will change for the worst. He needed to abuse the economy goose the economy to get everything he wants. He is getting everything he wants with a good economy, that economy, people focus there has been a fiscal thrust, but more than offset by monetary tightening, by getting less generous on credit for speculation, roughly those ballots each other out. China is doing better because they are participating in the global economy, and they are finally, for people who up talked about wanting to have more of a consumptionbased economy, the banks have not been open for the consumer. All the money has been going to the soes and now coming to the consumer. We see the consumer coming alive in china in the last four months, five months and we think it will be a benign there would be a lot of interesting thing to watch on tv, but no fireworks in the market. Joe when you say in the last four months, five months, the Chinese Consumer coming alive, what are you looking at specifically that shows you that . Alibaba, they previewed their sales number by saying, the top line is a little too conservative, instead of 35 , maybe 45 . Then they reported 49 . There are a lot of signs that the chinese millennials are getting the spending by. Bug. If they spent like a millennial from singapore, difficult or, it would be a different world, once a city percent of their income in the others a 35 . 50 of their income and the other spends 35 . Scarlet singaporeans still like shopping at shopping malls. Talk about how you are giving up your investments, do you want to be in emerging markets, china, u. S. , they sent come . Fixed income . In growth assets, we are in a slowmotion recovery and everything is beating up. The one thing speeding up. The one thing you do not want to is fixed income, the fireworks of 2019, not now, there is a slow dribble that will not help you from here to there, so growth assets. The stock market is going up five out of six based around the world and there are good reasons for that, we are in a massive earnings acceleration. We have not had a good global synchronized recovery in 20 years and when you do, earnings go rate up. The rates curve is not capable of following that as quickly. Think about discounting cash flows with accelerating cash flows and a mechanism to discount that is stuck in neutral. Very bullish for growth assets. Julia great to get your insights. Up, republican senator bob corker calls the white house an Adult Day Care Center and his public feud with President Trump he cap, why the dispute could derail the gop tax reform plan . From new york, this is bloomberg. It is time for first word news. Environmental Protection Agency administrators stop that scott pruitt says the Trump Administration will abandon the obama era Clean Power Plan and get speaking today in kentucky, he said he will sign a proposed rule on tuesday to withdrawal the plan that would restrict Greenhouse Gas omissions from coalfired power plants. Nato does not want a new cold war with russia, despite members concerns about the Russian Military buildup. A secretarygeneral spoke at the end of a fourday Nato Parliamentary Assembly in the romanian capital. They said nato is concerned about russias lack of transparency when it comes to military exercises. Another white house suite raising questions about whether President Trump is considering military action against north korea, he said that the u. S. Has been giving north korea billions of dollars for 25 years and getting nothing. He said, policy did not work. A newly discovered email in a meeting between donald trump jr. And a russian supports the russian lawyers claims according to the Washington Post , she says the meeting was to discuss a 2012 law and impose russian sanctions. Another correspondence show a music motor telling donald trump jr. That the meeting would provide damaging information on hillary clinton. It came from a lawyer representing a russian billionaire who helped arrange the meeting. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Trumpsresident donald feud with bob corker of tennessee was front and center this weekend. The president said that bob corker day to me to endorse him for reelection in tennessee and i said no, he dropped out. Mying he cannot win without endorsement and also wants to be secretary of state but i said no thanks. He is largely responsible for the her rent is iran deal that horrendous kare iran deal. Washington ism our Washington Bureau chief. I dont know where to start, bob corker said he is not up for reelection so he can speak his mind freely. Alluded to the fact that he spoke to most of his republican colleagues, to what extent you believe that is the case . He is speaking for a fairly large number of republicans but not everyone. If you are a republican in washington, your fate is tied to the fate of donald trump and you cannot help it. They are watching a president who has had no legislative compliments, a significant accomplishments and trouble getting his warm policy often ground, iran, syria. Bob corker is wondering where do we go from here with this guy and they do not like the way it looks. Joe is there any more to the comments by bob corker other than he is retiring and free rolling, or is there something specific he is seen, world war iii, really unnerving him, and he feels a moral duty to speak out . I cannot speak for corker, but i can tell you that i have been in meetings with bob corker where he talks about his concerns about donald trump and his close with Rex Tillerson. He has seen up close how Foreign Policy is made in this administration and he is sounding an alarm bell. Anybody who is seeing it from the outside, imagine what it looks like for the inside. He is close to Rex Tillerson. He has seen Rex Tillerson get his knees cut out by donald trump on several occasions. Most recently on the north korea talks were Rex Tillerson said yet an open line of communications with north korea and donald trump then he does not want to talk to north korea. Muchorker, who has a keener insight into how u. S. Foreignpolicy is being made, he is trying to sound the alarm and tell americans, it is as bad as you think. Scarlet talk about what barb corkers relationship with donald trump is. They were fairly close at one point and he was under consideration for Vice President when President Trump was running for office. With this world affords staff war of words, things have deteriorated war of words, things have deteriorated, do they still talk . It probably ended. Bob corker had been in close contact with the white house and is chairman of the Senate Foreign relations committee, a Senate Chairman in this town is republican,lty, donald trump is a republican, they would have talked about what we are talking about in this conversation, iran, north korea, syria, very important topics to bob corker who leads the congressional response on Foreign Relations as it and is in close contact with Rex Tillerson. Bob corker is viewed with respect in this down. Buts a conservative guy talk to both sides of the aisle and seems intent on an open line of communication with donald trump. He was considered for Vice President and more seriously for secretary of state. He kept open a line of communications and what is troubling him now is what he sees in this conversation and meetings he is having at the white house with Rex Tillerson causing him to feel like he has to take it up a notch and callout donald trump for what he sees as irresponsible behavior. Spareot many votes to when it comes to policy goals like tax reform, with bob corker already a no on taxes and talking about how he would not vote for a reform bill if they added one penny to the deficit. How much does this change the calculus . Politics is all about relationships. Bob corker has been on the record saying, if the tax reform plan increases the deficit, i will be a no vote. He could be talked to, donald trump, if they had a good relationship, he could convince them to see it differently. That ended this weekend and now bob corker probably is a hard line no and that would leave donald trump with only one other republican who do not want to pass a tax reform bill. I am always struck by how donald trump seems to have trouble connecting different strands of his presidency. Upset about north korea but his tax reform plan could get hurt by comments to corporate. Bob corker. Some of these issues are foreign and domestic and bob corker is at the center of all of them. Why the president would go after a guy that important to keep parts of his agenda is a mystery to us in washington. Ryan, mitch mcconnell, throw other names in there and that does not seem to worry the president. Lets separate bob corker, how much the concerns about tax cuts for the middle class . Some of the noise from the likes of the tax policy institute, a center saying that there would be a significant proportion of those in the middle class that an overallising or increase of burden as a result of the socalled tax reform plan. How much concern is there . A great deal of concern, every house member is up for election in 2018 and one third of the senate, a good chunk of republicans. Donald trump ran and said i will not give the tax will be a big tax cut, i will give the middle class a big tax cut and peoplesofts plan and say it does the opposite and the wealthy benefit. People sought the plan and say it does the opposite and the wealthy benefit. Are a republican who would love nothing more than two laps yourself to a tax cut for the middle class and having a hard time explaining how they are getting a tax cut, not helping the republicans in congress and donald trump and he needs their votes to get this bill through. Scarlet that stuff, thank you for joining us. Coming up, the Deutsche Bank ceo said to be losing support of the banks biggest investors, seven months into his latest turnaround plan. This is bloomberg. Julia lets get to one of the stories on the bloomberg, the Deutsche Bank ceo is said to be losing support of some big investors. Seven months after he pledged to resurrect gross growth. Shares of Deutsche Bank have fallen 7 since his turnaround plan was announced in march. Joining us is our senior u. S. Ask analysts for bloomberg. Bank analyst for bloomberg. This has been a long process, how long are these investors giving him to fix this . With theot familiar specific investors and cannot comment on the story specifically but, if we think about Deutsche Bank, it has been a long and disappointing road. They have come back in the market several times and have had changes in management. If we think about what has happened over the last seven months, it probably is not anything the ceo has or has not done but the environment has gotten worse with less optimism. One of the challenges is trying to fix this business in an environment that is very difficult. The macros are not helping and when business is bad, to try to execute a turnaround is challenging. Julia they got in the cleanup and bringing it back to growth. Scarlet cassie articulated a strategy to bring the bank to growth . The biggest amendment has been that they have been committed to fixed income trading business, something a lot of people have questions and talked about growing the equities business. Interestingly, the Asset Management business, one of the better businesses, they have talked about spinning out interest in that business. In terms of fixed income, if you think about where we were seven months ago, we hit a secular trough and everyone was excited with several quarters in a row. Four quarters in a row with the fourth one being the Second Quarter of better fixed income trading and now things have fallen apart a little bit. Joe does anyone have better ideas . One thing to say i have to go, but in terms of other strategies people have proposed for turning the bank around . He inherited a tough portfolio. The business is tough and the other part of it is under investment in technology for years. See theycompanies, you are capitalizing on technology. If you think about blackrock, the leader in Asset Management, how they invested in the future years ago. Jpmorgan is a universal bank, and many investments they made, even hike of america, their ceo bank of america, they turned grow . Things but can you Deutsche Bank being under pressure because of the cover revenue environment and not being able to invest as much. Julia talk in the press about tensions in the chairman over scheduling conflicts and not meeting hna come a key investor. , julia he has a long to do list. Thank you for joining us. Coming up, Behavioral Finance taking center stage as Richard Seiler takes on the top prize in economics and we will speak with his peers about his Lasting Impact on the field. This is bloomberg. Are you on medicare . Do you have the coverage you need . Open enrollment ends december 7th. So nows the time to get on a path that could be right for you. With plans including aarp medicarecomplete insured through unitedhealthcare. Call today or go online to enroll. These Medicare Advantage plans can combine your hospital and doctor coverage. With Prescription Drug coverage, and extra benefits. All in one complete plan. For a low monthly premium, or in some areas no plan premium at all. Other benefits can include 0 copays for an annual physical and most immunizations, routine vision and hearing coverage, and youll pay the plans lowest prescription price, whether its your copay or the pharmacy price. Or pay as low as zero dollars for a 90day supply of your tier 1 and tier 2 drugs, with home delivery. Dont wait, call unitedhealthcare or go online to enroll in aarp medicarecomplete. Sfx mnemonic i am Mark Crumpton and it is time for first word news. The white house is finalizing an executive order that would expand health plans offered by associations to allow individuals to pull together and buy insurance outside of their state. That is according to a senior Trump Administration official who says the president is expected to sign the order this week. The president has asserted that selling insurance across state lines would trigger competition that brings down premiums for people buying their own policies. Senator Dianne Feinstein is running for reelection, the california democrat took to social media to say she is running for her fifth full term. She is the oldest sitting u. S. Senator at 84 years old. Turkish president traveled to kiev or talked with you the the ukrainian president , at a News Conference following their ukrainian president said Human Rights Violations have deteriorated in the region and he urged russia to comply with you in resolutions. The turkish president said turkey would not recognize turkeys death russias annexation of crimea but what support ukraines sovereignty and territorial integrity. The French Foreign minister is doubling down on the nation support for united spain, officials as officials for catalonia continue their push for independence after a referendum that was deemed illegal. The catalonia regional president will address Parliament Tomorrow. Hundreds of thousands marched in barcelona sunday, the capital of catalonia to demand it remain a part of spain. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. A recap of the market action, the clients all around for the s p, these are big moves for indexes. By recent standards. The dow and s p losing for a second straight day. These moves are fairly marginal, given we were at record highs last week. What did you miss, from derision university of chicago professor Richard Thaler won the nobel prize for economics. Over the past decade, his work has entered the mainstream of academics and embraced by policymakers. Here is what he said today about winning the prize. Todays prize does compensate a bit for my disappointment at the oscars two years ago. [laughter] there is no prize for best behavioral economist. Which i think is unfair. The topic i have studied in some length. Scarlet a sense of humor and he was in a big short in the big short as well. We are joined by a professor at caltech. Thank you for joining us and seeing Richard Thaler when the nobel prize, what does his award mean for the field of behavioral economics . It is like winning the super bowl in a way for a sport that is not as popular as others. It was a terrific prize. Was teed up for a while, behavioral economics has become quite established, we can get papers publish more easily and companies are anxious to think about Behavioral Insights and helping customers and governments. It is an affirmation that something would start as radical has made it big time. Joe what aspect of our world, whether government, policy, decisions made by businesses, is most clearly informed by the breakthroughs that people like professor Richard Thaler and yourself have made in behavioral economics . Whered say that there is the most activity is about socalled nudging, the idea the way you design and make something simple or easy for people can have a substantial advantage. Come sun his comments in psychology and design and some things were surprising economics, like if you tell somebody they will default into a savings plan but they can opt out by clicking a button, most people do not click the button. When it was first demonstrated, it was quite shocking. Quite a few of these have changed policies and help people save more. Lots of experience are going on. ,n more than 100 countries trying to simplify what governments do to help people make better decisions. Joe i like the line from Richard Thaler today, he said if you want to get people to do something, make it easier. Julia incentivize them and understand their behavior. Businesses have exploited Consumer Behavior and their incentives, and the irrationality at times of their behavior. When you look at what we see from finance ministers across the world, and Central Banks, their policies still seem to be far more targeted to traditional models, rather than incorporating behavioral science. Do you think this is a beginning of a broader change, understanding and incentivizing better . First of all, it is important to remind people that academics divide economics into micro, which is particular markets like housing in los angeles, where the stock market, and macro, running an entire economy and the fed and inflation. Accra economics is much tougher macroeconomics is must never, similar to understanding geology versus predicting a big earthquake. There are quite a few of macroeconomic puzzles. If you tell people that there is a policy that will be implemented in two years or three years, the standard theory is that they will plan ahead and the announcement will have some effect. It does not work that way. , thinkin macroeconomics about this basic policy question are starting to build up more behavioral models, which very much like Richard Thaler pioneered. People are not completely stupid, they patent and are busy and do not notice everything and do not plan that far ahead. Julia advice for members of congress scarlet advice for members of callers congress,. The president often behaves irrationally. Some ways to incorporate lessons from Richard Thalers research and getting the president on the same page they are on . There. Have to go certainly, there are particular types of irrationality, it is a word we use as fairplay as we can as academics. In some ways, donald trump is a simple creature. He pays attention to the news. He is not a reader. He looks at charts. He seems to have in terms of personal preferences not policy preferences, basically just a list of things that bothers him or terms him. Charms him. There have been some incidences, if you are the last person to talk to donald trump and he is in a good mood, that becomes an executive order. Or somebody close to donald trump. In some ways, you need a combination of a media expert, psychologist, psychiatrist, and behavioral economist to figure it on figure it out beyond that. Julia talking about policy, in terms of tax policy, to incentivize companies, individuals in their behavior, companies to invest. How do you bring in behavioral science and how can they do that better to create the best policy available . I think there are a couple of general lessons, that is people do not Pay Attention to everything. We taken a huge amount of information with our eyes and the brain only pays attention to a tiny fraction of it. There are a number of studies showing that, for example, if, on a website, you add the price of shipping into the cost of a ifk, it is different than you put them as two separate numbers even though the brain should be comfortable adding them up. ,n the domain of tax policy whether the incident of the tax is really visibility, makes a big difference. It centers in, there is a copy question, if you lower Corporate Tax rates, how much of that savings goes to people who own stocks and how much of it goes to workers . There is a huge range of opinions about the answer to that and it is difficult to elucidate. If we had better data, a chance to dig into it, you may be able what kind of taxes to individual people and do ceos think they are actually paying or what do they pay when the economy equilibrium. We are a long way from having anything crystalclear to say about that. Most politicians understand that the incident of visible tax is a big deal and you want to hide the tax. Where people will not complain about it. Joe the picture, stepping back, tell us a little bit about how your work or this field was received and viewed when you got into it, versus today . And are there certain areas within the world of academia or academic economics, where people are still very resistant to your ideas . We definitely went from the starting point was when limitsbegin to discuss on rationality. The standard line was, only one way to be rational, maximizing an equation, and many ways to be irrational. That is mathematically kind of true. The goal was always to 10 down a particular type of irrationality. People say are overconfident. Pattern, ac different kind of math mistake most people make. We got past this rationality by showing specifically was driven by data. We got to then you have to show what happens in the world and that it is important and there were demonstrations about that, involving consumer naiveee and savings. And credit card construction. Eventually, you get to, we knew it all along. Which is a victory. Caltech professor of Behavioral Finance and economics, great to chat with you. T, we talked to this is bloomberg. Scarlet caesers entertainment launching a new strategy, expanded brent. Spokeceo Mark Frissora with Erik Schatzker about the value he sees and relinquishing control over the caesers name. Branding and licensing are a huge opportunity, caesers has always wanted to build their own properties and own their own properties. This is a shift in strategy. A can do what is done by hilton and marriott, we take the caesers brand, the flamingo brand, a Popular International brand, we will market those two hotels and, instead of building a great resort, we will build entertainment centers. The notion is, all over the world, today, there are developers that will lead to have the brands, they built it and we manage met we manage it for them with these we charge. Then they hit our standards. Then we get total rewards expanding globally around the world, which drives people to las vegas. The more total rewards members we get, the more powerful the network and the more revenue boosts we get. And those people start to get the network and get up and running. And what does the caesers forming a brand stand for and flamingo brand stand for, that they would want to do things outside the gaming industry . Caesers is everyone is treated like a caeser, upscale and most like las vegas. When you think of caesars palace, it is the most powerful brand that equates to vegas. Brand, the an old first hotel on the strip in 1946. It was built with a tremendous international presence. A lot of people want to be in the middle of a branding standpoint and flamingo represents that. We have a lot of demand for it. The moment we started talking about this strategy, the phone right off the hook and we hire new people to help the people who are experts in hotel and hospitality. It is amazing. We are trying to build a staff that is the enough and have the resources to handle the demand we are getting for our brands around the world. How soon until we see the fruits of these efforts and where . You will see them in the u. S. , probably over the next 612 months, we will be announcing Development Deals that have to do with this branding licensing strategy. I think that, over the next three years, there will be rapid growth in that area. It will be very fast and we feel we need to ramp up quickly and get total rewards expanding. How important will this be, three or five years from now, as you have traction, licensing revenue could represent what a caesars topline . We have not been able to talk about that because our plans are not mature enough. I want to hold on that. It will be a significant piece. Material. 5 to 10 ofs say our profit stream weekly. Julia that was caeserss ceo Mark Frissora talking to Erik Schatzker. That was filmed before the shooting. Pro spainbrought demonstrators this we but even the protesters and warnings of an economic meltdown not enough to stop catalonian separatists and we will discuss. This is labor here in this is bloomberg. Julia scarlet they look at the biggest business hours, google cannot evidence that russian agents but thousands of dollars of advertisements to interfere with the president ial election. These the investigation is ongoing and more advertisements good service, google has been called to does fight at a Senate Intelligence Committee Hearing on november 1. Lvmh with strong thirdquarter sales, especially in asthmatics. The company benefited from rebounding demand in asia and better online sales in efforts to appeal to younger consumers. They became the french most Viable Company in may by market cap. That is your business flash update. Julia catalonia, Parliament Prepares to meet to consider the next move. Demonstrators took to the streets in barcelona over the weekend in support of spanish unity. Speaking exclusively to francine lacqua, the Energy Minister said catalonian independents is bad for the economy. To tellrow, they want us something and we do not know what they want to do. We told them the best thing they can do is to stop this process. Because, first, it is not legal and not sound in the sense that independents do not get a majority of the votes in the next last Regional Election and the third time, it is bad for the economy, many very Important Companies in catalonia are leaving catalonia to other parts of spain because they do not like uncertainty. Catalonian politics is leaving that part of spain. Scarlet catalonia does not see it that way and it spokesperson spoke with us in barcelona. We will always be at the negotiation table. To start negotiations, we need a partner. If they want to come to the table, we will be there. We have always been there and no reason for not being at the negotiation table. Whatever the situation is. Politics is the answer and that is what we demand. So far you have been fake about dates and we do not have a sequence of events with what triggered the loss to create a town loni an independent republic. Well the document carried the word, a declaration of independence . Sovereign is they will decide what it has to do. Sovereign andt is will decide what they need to do. You do not know what to expect . The parliament is sovereign. As all democracies. Europe he warned all of. Projectg i read in syndicate, from the former greek finance minister, hes a catalonia provides an excellent case study of europes broader conundrum, choosing between an authoritarian Spanish State and a make catalonia great again national on him is the equivalent of choosing between the dutch finance minister and head of your group, and marine le pen, the head of the French National front party, either austerity or disintegration . Julia separatist and nonseparatists in catalonia would disagree, it is about the history and a culture far richer than that. Scarlet a ghost the idea that spain Central Government says catalonia cannot spent its Budget Surplus the way it wants to. Julia there is an economic argument. Scarlet because of the europe onesizefitsall policy for all of the eurozone. To be onpe is supposed the rebound everywhere, spain has been one of the more impressive growth stories of late and this is one of the richer regions in spain. Inmany, the richest country the eurozone and now with the strongest or one of the largest nationalists right factions. This is something deeper than economics. A few years ago we may have thought get the economic recovery and all of this dies down. This year, the relationship between nationalism and hes movements and the economy growth julia this goes back to the point we were making last week, a lot of people who do not want to separate from spain, they state of home and this was them representing themselves, protesting and saying we do not want to separate. Interesting to see what the president says when he speaks to the Parliament Tomorrow in catalonia and whether he takes a firm line or couches it slightly , because this is a negotiation. Joe very important to see there are other people on the opposite side. Scarlet spanish unity as what theyre looking for. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet a modest decline in u. S. Stocks, the dow and s p 500 falling for a second straight day but the bond market was closed. Coming up, the battle between activist investor nelson peltz will nelson peltz get his one seat . Joe the canadian Prime Ministers meeting with donald trump in washington to discuss International Security insurance. Scarlet looking forward to the handshake. Julia nobel prize running economist paul krugman joins us at 3 30 p. M. Eastern to get his insights from leadership at the fed and it going that bit going that b bitcoin. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Im in washington and youre watching bloomberg technology. Lets start with a check of your first word news. The white house is finalizing an executive order that would expand health plans offered by associations, to allow individuals to pool together and buy insurance outside their state. President trump could sign the orders this week. E. P. A. Administrator pruitt says the Trump Administration will abandon the obamaera Clean Power Plan aimed at reducing global warming. Pruitt says he will sign a proposal tomorrow to withdraw the plan that is aimed at restricting Greenhouse Gas emissions from coalfired power plants. Officials say at least one person is dead and two others seriously injured in more than a dozen fastspreeding wildfires in Northern California wine country. A fire official says at least 1,500 structures are destroyed. And turkeys president says the diplomatic dispute that washington anding an are a is having is very and an cora is having is very saddening. Visa. The dispute started after turkey arrested a national who works at u. S. A. Consulate. And senator