Negotiations. Mark he pushed back at the suggestion that he should release cash now. Make thee will not demonstration point. The syrian foreign minister today accused the coalition of wreaking discretion distraction while sparing the islamic state. Washington aims to destroy syrias economy and drag the were out. He said he would like to focus on a political settlement in syria. Rick snyder is standing by his the when in congress he learned of a fatal out rick despite a new disclosure by a senior aide who says weeks earlier the when he learned of a fatal out nearls before them including 12 deaths when the city was using the flint river water in 2014 and 2015. A spokesman said the governor was under oath and stands by what he says. I am Mark Crumpton. This is bloomberg. I am julie shapley. I am joe weisenthal. A touch softer. Joe the question is, what did you miss . Quite the claims it will be a huge tax windfall. New normal of weak inflation. Policymakers expressing concern, leading to a close call to support another rate hike this year. The fourth round of nafta negotiations begins in washington. And Bloombergs National political reporter and they both join us from washington. It is a fact factfinding mission. From that point of view, things look good. Are you going to stay in nafta or arent you . It is a little bit of a step back from yesterday. Joe there are a number of priorities of the Trump Administration in these talks and canada and mexico may regard as being employees until real deal breakers regarding origin role, it seems like that. We see the head of u. S. Chamber of commerce said yesterday, it could be a poison pill. It from theke start. Another content being raised, even from the u. S. These are the details President Trumps team will be working on and they will be hashing out with canadian counterparts. Take a look at the bigger picture. Wanting to talk to the bank and flees his base. Economic war against china, or tax cuts or immigration. How big is it . It is a high priority because it is an essential feature of the Campaign Platform back when he was a candidate. His entire thesis was one of the big job cuts out of the United States is nafta. That is a reason it is going overseas to canada and new mexico and china is a separate issue. He has other things to blame for that. But how you get there is a different issue. I do not quite think it is Campaign Stops to the tradeoff, all the job losses that would occur in the United States. In 20 for lot less pulling out of nafta. I spoke to a republican member of the ways and Means Committee who oversees in trade which oversees trade, that met with justin judo earlier today and basically, the canadian Prime Minister gave a smooth and eloquent defense of nafta and its importance. He also worked with members on capitol hill. It is mindboggling the u. S. Trade minister is saying we do not know whether we will get the conclusions. That is the problem here. The timing is also a critical element here. Not that is moving at lightspeed or any kind ofs deed. It has stalled, quite frankly. Yet been laying out the different negotiating positions here in the challenges once again in getting the vote. Talk through that. We have seen this nine page mostly a sketch of the policies they are aiming toward. In the house, the single Biggest Issue is getting a few dozen members who are concerned about the local tax production on their district if it is eliminated. , upper middle cut it income families will be hit hard by the framework as it passes in some way, shape, or form, to what is reflected here the senate, it is a different issue. Much wipedave pretty out republicans in states like california, new york, and new jersey. What they are concerned about, it is the same problem that bedeviled them on how on health care. 52 senators on board for a farreaching and sweeping plan when you have got all sorts of competing demands compete no new deficits than rand paul saying no tax hike on anybody and brought tax cuts on everybody. I do not know how you reconcile things. Cosan murkowski, seeing as eating on the more liberal end of the things. Senate. What are the sticking points for them . Have not said much. I asked them before and after what she thinks of it. The response was it is still a work in progress. We know she has voted against the repeal of the state tax in the past. We know income in the multimillions is something that republicans are not enthusiastic about. A more interesting figure in some ways, her record on taxes is more in line with the rest of her party. She is an independent minded senator. 2010 afterlection in. Osing the primary she does not feel like she owes her party anything. She was one of the key senators who killed the repeal of the Affordable Care act. She will be one what one to watch. And you have got roy sarah, let me end with you. There is now tension between the white house and the imf, which decided not to include any from tax reform in its assessment of the economy. Yes. Year, beginning of the the imf had included in its estimates for u. S. Growth the assumption that tax cut would go through this year. June, it removed those assumptions and lower the forecast largely because of that. Now it has bumped up the u. S. Forecast slightly but still has not added back in the assumptions of tax cuts. We heard from the treasury today saying, it is not something you guys should be weighing in on. We say we will get them done, and they will get done. Likewise, theguys imf said in a separate report that shifting some tax to the highest earnings can help with any quality. And again, the u. S. Kind of swiped back at that and said the plan for tax cuts for the middleclass is the way to go. The white house not appreciating the imf framing. Economicer for u. S. Policy and the Bloomberg International reporter, thank you for joining us from washington. Coming up, we will go over the latest fomc minutes aired what will they expect for the rest of the year in 2018. This is bloomberg. Growing concern that low inflation is more than just a passing fancy. Policy said another rate hike would depend on the strength of Economic Data coming out in the next few months. Analysis, chief u. S. Economist for bloomberg intelligence. Karl, thank you for joining us. Interesting comments from the fed. Did not seem to move any shortterm expectations but these ongoing concerns about inflation and what causes it seems to be a real issue. Transitory and video cinch idiosyncratic. It means theyre hinging on the decision to hike by yearend on the next couple of economics the next couple of months of Economic Data. Hurricanesnowledge will muddle those reports. They are in a complicated position. Roster,ok at the voting we have wellknown hawks. As with the roster of who will be at that meeting, it is about four or five. I am not sure chair yellen will have the vote count. Joe you do not think it is a lock yet. I deftly dote dont. Suspect if we see some stumbling in the data, that we could potentially see repricing of that. Hopefully, all systems go. Data,see weakness in the that will be we have the cpi coming up on friday. You have big spikes in certain price categories. Gas prices and anything related to hurricane rebuilding and whatnot. It could seal out the oxygen from the room. You could see more broadbased weakness as people really devote funds toward hurricane rebuilding. Do you think this probability will be downe, 77 a little bit . In the past, it is something they have been careful of. Heardterms of the tone we absolutely. They are happy with market expectations. It is a turn from what we have seen in the last rate hike. They really talked it up. If the data are not cooperating, the fed will back off of that. Not say itt i would is a firm conviction. Dry. Nk is not what would convince them . Lets say we haves. Nflation where we go and those a strange noise. We know inflations inflation is a lagging indicator p are policymakers, though they are focused on the inflation side of things, they need to see evidence that the economy is on sound footing. If the economy is growing at a sound case, you should have confidence and inflation will eventually turn up. We will have to watch activitybased indicators. When you watch things like the nonmanufacturing eyes m and whatnot, it is telling you we are growing at a healthy clip. Do they hike at this stage . . 80 might be overstating things. There will potentially be downdraft between now and yearend. If they are rushing to get in that hike by yearend, there may be a buyers remorse and that could the is slower pace for hiking next year. I saw someone tweeting that cpi data is the new jobs i think it is. But both are noisy. We are hitting the feds target for full employment. The question is really on the inflation mandate. You could say cpi is the new jobs data or even core pce in the monthly income and spending data. Paul krugman yesterday, he chair. In on the fed while, it was kind of, the Prediction Markets were thinking that the most likely pick was the former fed governor who has a lot of things to say about him, but one thing is, he has been quite consistent and wrong about everything. He has picked on the phd economist. They are punching back. He has come out on the more hawkish side of things. He is saying we are essentially and theiris demanded focused on Financial Stability concerns are they are valid concerns. I give a little more weight to the fact we are not hitting the fed inflation target. They want to say they really have a symmetric target of 2 . You miss that for eight years running and you continue to normalize policy and you may never hit the 2 . On the dovish side. We wanted him to throw something at the wall. Great to have you want p are chief u. S. Economist at bloomberg intelligence. Thank. Imf managing director Christine Lagarde joins bloombergs bloomberg television. 3 00 15 p. M. London time. Amazon is giving an allowance to go shopping or stream their favorite shows. Well give you the details and you can work it outamazon is ne. This is bloomberg. \ time for a look at some of the biggest business stories in the news right now. Is projecting a loss of 10 to 20 million in ad sales. This is according to people familiar. Eight 75 , the network 400 million for rides to the 2018 and 2022 world cup. 2018 apart its u. S. Businesses according to people familiar with the matter. Aroundurance giant sold 20 , including a stake proceeds from the ipo such as health and commercial property. Amazon is allowing teams and they canance stream content with parent approved tax. They also have access to the benefits such as gaming by twitch. Amazon found a way with the next generation of consumers. That is your Bloomberg Business flash. This. M shaking my head at i am not a parent, but this is shocking. I got emails from amazon think someone on my account purchased this is by the creators of captain underpants. Wow. Zed of course i run a tight ship at home. [laughter] lets get to the stock of the hour. Julie hyman is here. Surgeon more than 20 today. What would they do . You do not know . The company in which they own a majority stake might ring a bell. A lot of attention for offering a deal. You get a credit card and you can go to as many movies in the Movie Theater as you want over the course of the month. They bought a majority stake in the company. The former cofounder of netflix and ceo of a talks. The 20 understates from about two dollars to 33. All they own is an act, something called trend it, son words, 6. 7 million in revenue. Retail investors sounding the alarm bell. Julie hyman, thank you for the stock of the hour. Modest gains for the dow and the s p and nasdaq. Whatd you miss . , the dollarcords weaker postfed minutes. I am joe weisenthal. Whatd you miss . You forto welcome closing bell coverage of every weekday from 4 00 p. M. To 5 00 p. M. We begin with market minutes. Another day of gains. Even when we pull back, they go back up again. Joe did we have the down way . Day . Scarlet we did. It feels like that, modest increases, the melt up. It mightllying after sell its Convenient Store business, up 1. 2 . Dicks Sporting Goods off by 7 , despite having forecasts. Coaches changing its corporate too broad intry sh its image. It is no longer just coach. Investors not responding positively. Walmart up 2 , selling bonds to refinance debt. About walmarts prediction yesterday about ecommerce sales and its plan to buy back shares. That rally extending. Joe lets look at the Government Bond market. In the u. S. , fed minutes, not 8iron of action, no change in the twoyear yields, implying no one sees the minutes moving the needle much in terms of the shortterm rate path, most affected by the eminent mood. Little bitlds down a come perhaps uncertainty about inflation weighing on rates. 10 year yields in spain coming down. Declarings independence or not. Investors liking that. Mexican longterm rates had been up, now down. In the spotlight with those that thees, concerns deal might get blown up at some point due to poison pills from the Trump Administration, but 30 year yields lower on the day. Im going to hit the same themes, the dollar declining for a fourth straight day. The dollar index sevenday move to give you a sense of the last few days. Malaise, earnings season coming up, a lack of strong, fresh drivers. Have the fed telling reporters too soon to decide on december rate hike. ,ets take a look at the euro the only other thing to watch, the spanish Prime Minister mooting the possibility of suspending the catalonian government and asking for clarity on the declaration of independence. Touch on the other team, mexico. Ats look in the bloomberg 9386. We had speculation the populist candidate becoming the front runner in the july 2018 election concerns about the nafta renegotiations and the timing sensitivity here. What youre looking at is implied volatility. You can see that soaring if you look at the white line. That is nine months volatility, so huge swings expected in ninemonth contracts. Line is the one month, the white line is the ninemonth. You can see that concern in high yields. Joe on the commodities front starting with oil gaining again. There has been optimism about supply cuts. The low 50sn the for a while, so not a ton of action lately. A little bit, just shy of 1300 an ounce. Copper futures gaining 1 , often seen as a global bellwether. The latium having a nice day. It has been on a surge lately come antipollution, high tech uses, so doing nice and extending gains come up nearly 3 . Those are todays market minutes. Scarlet a key tactical level for smallcap stocks. That is raising a flag. Newton,us from massachusetts, our guest is with us. Im looking at the relative strength index for the russell the red78, well above line, which would indicate something is ripe for selling. The stage being set for some big rotations this quarter. One of the things we have seen this year and the last 12 ,onths, the postelection rally the vast majority took place in the first four months. Movesthen, the real big has been in the right groups of the right time and avoid the ones going down. The first half of the year, you did not want to be in energy and bank stocks. That is starting to shift. Technology is one you probably still want to be in, but we are looking at key moves in markets that could be showing a trend change. Now. E pulling back right the dollar has rallied nicely and starting to pull back. That is ok. Same thing with Interest Rates. If they move up one more time, the long bond yields 2. 4 was the key resistance level. The dollar index got to its 94 level, key resistance. Take another leg higher, which i think they will, that could he a big shift for the marketplace. Equity groupsrent are dependent on what happens in these two markets. At a chart that demonstrates these shifts, the ratio of the russell 2000 two the s p 500 shooting up after the election, then grinding lower into midaugust, shooting up since then, down lately. We can probably overlaid the 10 year yield and it would look similar. It, taxes,ind something totally different, and could the fate of this ratio to some extent be tied to what happens in the United States . A lot of what we see going on is goingtax proposals to help Domestic Company earnings, whether a lower tax rate down to 20 or the repatriation move for international companies. It will help companies over all. For the russell 2000, they are highly dependent on what might happen for small businesses. The problem is the president keeps tweeting and having some problems, whether senator corker or others, it gives me a big concern we will not get anything this year, and even well into next year. That is one of the growing concerns with the russell 2000 on its rsiabove chart. Wateredsee if this is way down or not come at all. Julia tie this together for us. You think the dollar and the rates will push higher. How much upside in the dollar endrates adding to the back of this year in the final quarter of this year and what will be the spillover of fax to a emerging markets . Or spillover fx to emerging markets . There are a key levels on the dollar and the 10 year yield, the ones i mentioned earlier,. 4 on the 10 year yield above that, i think it will be a quick move to 2. 6 . Whether we get to that level by the end of the year is questionable, but could get close. The dollar,ng with 94. If you break above that, you dont have much resistance to 96. You look at emerging markets, the correlation between the dollar and emerging markets has been strong for quite some time, so if we see a breakout in the dollar, emerging markets have been one of the best performers this year and will probably see weakness. It rallied as the dollar sold off strongly, but they are doing better than they were last year, so i dont think it will be a major crash, but will hurt that airy and people will want to rotate out of emerging markets into the energy sector, then of course with Interest Rates, people made a lot of money buying utilities stocks. If rates move higher, that will be a problem for that group, but positive for banks stocks. The bank stocks have done poorly most of this year and have only broken out slightly early on. As i said earlier, rotating in and out of correct moves will be important. If the bond market and currency markets see this change in intermediateterm trend, that will turn out to be a lot of rotation and create a lot of rotation. Thea some volatility in Fourth Quarter. I better not say it too loudly. Coming up, ubers mounting legal troubles, the Justice Department has the right hailing giant in its sights. We would discuss it now. This is bloomberg. Washington post site for Administration Officials who say President Trump is expected to security expert and Deputy White House chief of staff as Homeland Security secretary. Vacant sinceeen john kelly left to became white house chief of staff. An official announcement could come today. 21 people confirmed dead in what authorities are calling the most instructive wildfires in californias history. The chief of the state department of four street protection describes the fires as an serious, critical, catastrophic event. 8000 firefighters are battling the flames. Toch mcconnell promising speed up the pace of confirmation on a backlog of president s judicial nominees after activists including the Judicial Crisis Network threatened to run ads against mcconnell this week. Willnell says the senate no longer abide by a longstanding tradition that home state senators must sign off on a judge before a senate vote. The spanish Prime Minister set a for officials to clarify their independence declaration. He also categorically rejected offers of mediation. In a speech to the lower house of parliament, he criticized the referendum which spain contends is illegal. Nobody is going to like what happened on october 1. Nobody can be happy about that or satisfied. Againstpulations done the police. Official sign with they called the declaration of independence tuesday. Suspendedal president the documents implementation to allow for dialogue with the Central Government in madrid. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julia the growing list of legal troubles for uber. It was already facing three criminal probes by the doj, and now it is facing two more investigations into whether it violated Price Transparency laws. The company is being of thegated in its role theft of self driving car documents from waymo. I make that five criminal probes, dozens of civil suits, when the ceo came in, he said they had to brace for six months of trouble. Hyundai going to wrap these up in six months . I dont know. We are seeing a consequence of that investigation. Reported, uber is looking into activities that the chief Security Officer was leading, and that may be related to some of these probes. It as an internal spy agency inside uber doing counterintelligence work against other ridesharing firms. Joe one of the things i found interesting from your piece is the previous era of uber, they saw the legal system as a palette to innovate on. Right. One persons innovation in legal matters is another persons lawbreaking. They were public about this. Public comments made by the general counsel about meetingsnovative and where Travis Kalanick suggested they did not have a responsibility to follow the local laws in all cases, which was later pointed out was problematic. Are now facing some blowback as well. London how long the service, yet no one has followed londons lead. We are talking about five u. S. Justice department criminal blowback, but the could be global because uber operates in hundreds of cities. Each city has unique politics. I may or can go out there just as londons mayor didnt say we dont like what we are reading in the american press, lets look into this again. Brazil is talking about legislation that would an uber in the country. Thats not the worst thing could happen, but it is an important growth market. There is a sense that new york or any other city could come along and change their mind. Julia you pull out this idea in the story, travis it was a micromanager. Planet calamity then you bring in their longterm legal chief, and she had a similar view. We will deal with innovation and the legal trouble is something we will deal with and put it aside. Genius of thee company, its willingness to push boundaries and to work at this hyper local level and ignore what in some cases local regulators of the law said. Joe do people inside or outside the Company Think it will be profitable if they have to be buttoned down by the law . Investors still believe in this company. That thepossibility vibration could come down 20 billion in the softbank deal, but even then that is still a huge valuation. Most people still believe in this as a business. How many of these scandals can uber withstand . Atre are competitors, and some point ubers brand becomes so tarnished that consumers are more willing to go with lyft. We are seeing that dynamic with the softbank deal. Softbank was threatening to invest in lyft. If enough bad happens, a competitor could take the lead. Joe thank you so much. Intoill want to turn Bloomberg Businessweek on saturdays and sundays. Julia trouble in the skies for boeing, u. K. Shadow secretary of bete calls for boeing to investigated for business practices, including its push for tariffs against bombard e ier. No aircraft comes to the market these days without support from government. It is all through support from a way oft, and we need recognizing this in the international community. Comes from that government has to be within wto rules. By slapping not only the countervailing duties for the subsidy on to the company, but putting on additional to that 300 of cost to delta and american operators. I want to be clear. Is this a complaint against boeing of chicago and seattle come or is this a complaint against the Current Administration in washington . Petition launched the with the department of commerce, and they knew this petition was illfounded and why did they do it . Alongy knew it would run and want to force a depression in the share price of bombardier so they can try to do a hostile takeover. We do need to get boeing in because they are not on the set. They would push back against everything you are saying. First of all, the u. K. Is negotiating a brexit deal where it would not be under the European Commission. Doing not need the European Commission to look at some of these accusations . I have been to the European Commission. If we still want the commission to handle moment, we are a member of the European Union and the European Union negotiates International Trade members matters on behalf of members. It is right that these things are done through the wto by the European Union. Went to thei commission and why i was pleased to get the assurance that whilst of the u. K. Is a member of the eu, they will be supporting morley, technically, and legally any actions the u. K. Needs to have taken there. Have a realto investigation by the European Union has to the involvement of boeing and dumping of aircraft through monarch airlines. Accusations we cannot verify at the market. They were widely reported at the time. Hes just trying to get a good seat on the class and a boeing 747 coming to jfk in a couple of weeks. I think i need a parachute the next time i go on boeing. Good luck with that. Thank you so much. Joe extraordinary. Shadowthat was the uks secretary of state for International Trade responding to allegations saying to bloomberg that the case in the u. S. Is about compliance with trade laws. Boeing complies despite the recent rhetoric of proceedings, this case continues to focus on preserving a level Playing Field in the aerospace market. Scarlet record 500 has hit a number of closing highs, including today. Ari wald explains why this rally has more room to run. From new york, this is bloomberg. Scarlet it is time for the Bloomberg Business flash. 700 73 Million Dollars by the thai one for the way it prices its mobilephone chips. Qualcommssay monopoly status has abused its advantage. Qualcomm disagrees and will appeal. Bank of americas postbrexit european hub is paris. The firm signed a lease for office space to accommodate 1000 workers. The bank is considering a second location for investment banking. Brian moynahan said dublin was a preferred location. A new name, Tapestry Incorporated as part of the a brand. Witch to the ceo says tapestry was chosen for its references to creativity and authenticity on a shared platform. That is your business flash update. Next, how is a dabbling in 3d technology. That is next. From new york, this is bloomberg. Scarlet we have a headline crossing come the president said to meet this week with Stanford University for the fed chair pose. The president set to meet with john taylor. Oliver from a markets perspective, he would be seen as the most disruptive from a most hawkish, relative to where the fed is now. Rule, ar the taylor rule based on monetary policy, which according to the official inputs would call for a much higher rate than what we have. Julia according to our reporting the only shortlisted candidate not to have met or spoken with President Trump is now fixed with that. Perhaps they are moving towards finalizing who he will pick. Lets go to two Mark Crumpton for first word news. Thank you. Word news, president and mrs. Trump welcomed Justin Trudeau and his wife to the white house today. The meeting comes at the start of a new round of nafta talks. President trump has threatened to withdraw from the court in less the United States gets a better deal. Spains Prime Minister said the Central Government is giving catalonias leader a deadline of monday to clarify whether he declared independence from spain. If the catalonian president s response is that he indeed formally proclaimed independence, he will have a few more days to drop the implementation of the declaration. Includedlines would be in a formal the man to the government. Sheryl sandberg is meeting today with leaders of the house intelligence committees investigation of russian meddling into last years u. S. President ial election. That is according to a person with knowledge of the meeting who said sandberg will set down with mike conaway and adam schiff. Also scheduled to meet with members of the Congressional Black Caucus thursday for discussions on race related ads. The whales to vault government believes in no deal brexit could be potentially catastrophic. The first ministers spoke today to Bloomberg News in london. It is massively important we have a deal. Deal is al is disaster. If the u. K. Cant get a deal with its biggest market on its doorstep where there is regulatory convergence anyway, how with a deal with any other markets . Johnson says contact between downing street and the Welsh Government has been virtually nonexistent despite Common Ground on a number of global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Issues. On a number of issues. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. The rally continues for stocks. Julia the major u. S. Averages at new highs today. The s p 500 has put in a total of 44 record closing highs. Our next guest thinks this action continues. Atjoining me is ari wald oppenheimer. Thank you for taking the time. You, gettinged by the calls right, bullish for the the last two years, but we were both on a Technical Analysis panel and you said something that almost called me to fall over. You said we are in the second year of a new bull market. I have not heard anybody say that. Thats right. While the economy has not reset and violations have not reset, price action has reset. February 2016, the cycle low. 18 months0 retreats of prior performance. That is significant. Definition of a cycle low. I will make this case from a different perspective and look at the market from a bottomup viewpoint. The percentage of stocks above the 200 Day Moving Average on the nyse. This is in a twoyear decline from 2014 two 2016. This big surge in 2016 off that february bottom is marking a new bull market like it did off the 2009 low after a twoyear decline. At a market top what you usually ae is price action s p 500 at new high, but fewer than 60 of stocks above their 200 Day Moving Average. We are currently at 65 , indicating a healthy bull market. I just have to make a contrarian call a question, it looks like we are hitting resistance with support down here. Could you see that indicator move back towards the lows . Big call. The it is the level that is more important. Highs, is making lower but as long as you are above 60 , you are ok. Thatmething else you said caught my attention was the idea that a market top is accompanied by at least one sector dropping 20 or more. I know you have a chart that makes the case around one sector that has been questionable, energy. Thats right. It is usually led lower by one sector. Least 20 at a market peak. In may 2015, it was the energy sector. This was the markets peak, may 2015. It was the inflection lower from the 200 Day Moving Average that marked the final top in the market. Fastforward forward to today and energy once again testing that falling 200 Day Moving Average. Here is the key difference between now and then, the dollar. In 2015, a strong dollar weighing on commodity prices, but right now this weak dollar provides a floor for market, energy, and market as well. The best sector is technology. It as a high data sector. You are talking about other stocks as high data and you say it is only getting going. It is not just tech anymore. Theake that case, look at s p high beta index, an aggregate of the most cyclical stocks in the market. Proxy for the reflationary trade. In the Fourth Quarter last year, it had a terrific run, but this index has been sideways for the last nine months. It has corrected through time, the moving averages have caught up to price, and now breaking out to the upside. We think this is a meaningful breakout. Tough to make the case for a market top when you have this cyclical index breaking out to new highs. Thank you for taking the time. Scarlet whatd you miss . Online real estate listings got three dimensional. Here to fill us in his emily chang with a special guest. Whom with Spencer Rascoff just got off stage. Talk to us about these 3d listings and what they bring to zillow. A home sellerwing to take 3d panoramic photos with a regular smartphone. That allows a homebuyer to get a full perspective of the home. We are testing this in one city. In 2018, we are rolling it out nationwide. Tools that providing scaled so people can do a better job. Realtime Consumer Insights on rentals. We have a very large rentals business. We have taken this data and activist it for partners. The people who operate buildings now have information on what types of buildings people are looking at, what rents are being paid, with the demographic information is for these renters , and they can make decisions of these buildings. This is how we are empowering professionals with information. How does this impact your bottom line. For that data, we give it for free. We think becoming of bigger part of their Business Strategy is the better way to sell advertising. 3d photography is about providing differentiated content to generate traffic and audience. Where do you see signs of strength and weakness across the country . The whole country is doing well. Home values are up 7 year over year. More than half the country is back above peak value. We dont think this is a bubble. The last bubble was held on a foundation of sand, easy credit. This housing boom is built on a supplydemand mismatch. Homes. Re not enough going through the recession, homebuilders were building fewer homes. Deficit of a couple million missing homes that dont exist in stock. Good demand, not enough supply, home values go up. In seattle are appreciating 12 year over year. There is an environment where it is difficult to build new housing, and that has driven prices up. Is anit possible there isolated bubble in some of these cities . Calling it ae bubble because depreciation has a foundation that supports it. It is limited supply. Of course it is unsustainable in the sense that home prices in seattle cannot go up 12 year after year. When does the slowdown happened . Aree see home via set 7 forecasting 4 over the next couple of months, so certainly not a rate of decline. Are using impact from the hurricanes in texas and florida. In the nearterm, absolutely, but housing is resilient. ,e saw this with sandy, katrina typically within a year or two, home by use bounce back. How important our firsttime homebuyers . They are very important. Half of all transactions are going to firsttime homebuyers. Bought 500 have Million Dollars in real estate in the past 12 months, representing a huge portion of the market, and they are finding ways to get creative because of this limited supply. They have to make multiple offers, look at renting and buying at the same time, trying to get preapproved. A lot of political uncertainty. You expect that to trickle down to the real estate market. It has not affected housing so far. As Mortgage Rates pay cap, that will make housing slightly less affordable. Thank you so much. Back to you in new york. Thank you so much. Coming up, emerging markets having a big rally, sparking renewed interest in the sector. Where do the opportunities lie . Of ubs will join us next. This is bloomberg. Scarlet whatd you miss . Emergingmarket smallcap stocks are back in bogue. The resurgent comes amid a Broader Market rally. Now why now . Anything to do with u. S. Small caps making a comeback . Yes, to a certain extent. The improvement in smallcap stocks in the u. S. Since the middle of august has played a role. It is more broad than that. Emerging markets are up 60 since january 2016. Investors are looking for new ideas further down the market cap foodchain. Past, smallcap names have been high beta place in outperform onts, the way up, underperform on the way down. In this rally, they have under preform because of technology which has been the big performing sector. May be are looking at small caps as the way to play catchup and to diversify out of technology. Standpoint,sectoral what kinds of industries dominate the small caps you are looking at . When you get more traditional in terms of sectors in the smallcap index, so relative to the general emerging markets, industrials, consumer more real estate, more health care, so generally more conventional, domestic growth areas. Generaly of the emerging market index is Technology Plus banks, whereas that weight is just 27 in the so you get less tech and more conventional domestic growth, and that is probably enticing investors, an upsidement in which surprises in the growth of these emergingmarket economies in 2017. Julia weve seen great performance for emerging markets in 2017. To 2016, but we saw softness in september with the dollar gaining some ground, repricing of Interest Rates as well. Where do you expect that to go . Do you think we have seen it for now in terms of dollar strengthened the repricing of rates . We think the dollar will broadly be flat. Is forecast against the euro 1. 18. As we all know, the fed pricing of the move has gone to 70 in december, so that looks to be largely priced in. To be aot expecting it strong surge in the dollar or rise in bond yields in the near term. Are negativeents for emerging markets, but we suspect the worst of that move is probably over, then the big question will be in 2018, where does the cost of capital go, what does the fed do next year . In a year where we believe the earnings story will be good, but not as strong in terms of rates of growth as in 2017. About u. S. E talk equities, were talking about rotation, value versus growth, things like that. When peoplear that talk about emerging markets. Smallcap versus large cap, do a lot of the same ideas work when applied . They do. You have seen that dramatically with the huge outperformance of technology, which is unusual when the dollar goes down. With the underperformance of energy, which is coming back nicely, so i have come off a major visit to see investors in europe a couple of weeks ago and i have never seen so much focus on sectors versus markets. Talk aboutants to markets, but sectors are in the forefront. Our researchup in that growth is being valued because of tech versus energy, and that is really unusual when the dollar goes down and markets go higher, and that has posted challenge for investors and strategist, but it is a focus we have had this year. The major reason for that is the explosive strength and technology which has seen strong Earnings Growth as well. Joining Geoffrey Dennis us from boston, thank you so much. Julia the nikkei is having a throwback moment to 1996. We will discuss, next. This is bloomberg. Two decades to late for japanese stocks come with the highest since 1996. A lot of people took notice. Trader whose bad bet on the nikkei futures brought down barings bank. He tweeted out today, nikkei 225 at highest level since 1996, robbing not far off by breakeven point. If only they had waited. Julia we talked about it in the morning meeting. Are you good . Moving on. Whatd you miss . Bank earnings season kicks off earnings season. Wells fargo managing director and head of research set down with bloomberg earlier today. Listen in. Are structurally bullish on banks at wells fargo securities. Balance sheets are the strongest they have been in a generation. You have a permanent structural risk reduction. Toulators have forced banks increase capital liquidity, and now bank can withstand to. Inancial crises having said that, it is not just the risk reduction. We think revenues are poised to break out. A combination of the headwinds from the biggest headwinds, noncredit headwinds in the history of u. S. Banking now over. In addition, a few Interest Rate hikes helps, and this is all before any big benefit from rates increases, deregulation, or reflation trade. Fire, risks returns lower, and the paradigm shift for valuations. Is that outlook distributed evenly across the sector . Is it equally beneficial . Over see one third upside three years for the bank group in general. For top recommendations, we see one half upside over three years. The big guys, this is the moment of the big guys. Was First Ever National banking, but banks did not integrate acquisitions and you have the tech bubble burst. The big banks were cleaning up from the financial crisis. 1994, the big banks can focus on being a national bank, read to operations, and not doing other bank acquisitions. This is the time of the big banks finally doing what was promised from 1994. That was the wells fargo managing director on bloomberg daybreak asia morning. Coming up, which you need to know to gear up for tomorrows trading day, next. This is bloomberg. Scarlet whatd you miss . Just another day of record highs for u. S. Stocks. Jp morgan in citigroup report results for the third quarter. Joe i will be looking for ppi tomorrow at 8 30. Cpi on friday. Julia Christine Lagarde joins Bloomberg Markets at 10 20 a. M. Eastern time tomorrow. Scarlet that does it for whatd you miss . Joe have a great evening. This is bloomberg. Alisa im Alisa Parenti from washington, and you are watching bloomberg technology. Lets start with a check of first word news. President trump is expected to try to sell his tax plan in pennsylvania. Typical American Household would get a 4000 pay raise from the planned legislation. Advisers have said this materialized would orerialize over four years on an annual basis would be closer to 500. President and mrs. Trump welcomed the canadian Prime Minister and his wife at the white house today. The meeting comes at the start of a new round of nafta talks. Threatenedrump has to withdraw from the accord unless the u. S. Gets a better deal. House Speaker Paul Ryan is taking a handsoff approach in the escalating feud between President Trump and Tennessee Republican senator bob corker. Ryan was questioned today about the war of words between the two in recent days. Speaker ryan i think its just talk it out amongst yourselves. My advice is for these two gentlemen to sit down and talk through their issues