Are not seeing a bigger reaction . Julie there was a bigger reaction when he opened, but it has since abated. It seems like nothing will stop the engine of this rally or small moves on a daily basis. That is what we are seeing today. Stocks are bouncing up a lows of the session. If you look at the groups in the s p 500, we have got about half even between green and red on the screen. Even the declines are now updating to some extent. Telecom stocks leading. Health care continuing its run in a particular group. We have Consumer Staples tech and energy in the red, for not having as much of an influence. Financials are on the unchanged line. Financials were earlier in one of the worst performing spots. One of the things tied up in the financials has been the bond market. We have seen steep selling earlier in the day. Buying in the bond market. Bonds earlier saw a drop in field of his as much as five basis points. It is now three basis points. Earnings are a big topic of conversation and trading impetus as well today. Here are some of the winners. Verizon coming in with a bigger increase in estimated in his monthly subscribers. Adobe systems numbers beating estimates and the forecast for 2018 is about analysts estimates. Providing support for the dental industry. Winnebago, the companys acquisition of a towable rv company. We have ual, the airline falling steeply after that Company Projected it will not have much Pricing Power in the fourth quarter. Genuine parts parts retailers missing estimates. Hewlettpackard enterprises, some say the growth is field more by fax and costcutting. They want to see more Revenue Growth which hewlettpackard is not predicting much of. Dover corporation, that company beat is by taxes. They are not some all right misses, the analysts want better quality earnings. Thank you very much for that. The most divisive fights in congress are set to converge in december. A potential government shutdown. The growing battle risks leaving republicans with no major legislative accomplishments in president Donald Trumps first year. We will cover kevin cirilli, our government correspondent we are joined by vonna mcdaniel. Thank you for having me. You guys have another recordsetting month for republican fundraising numbers. If you guys dont pass Tax Reform Health Care reform, what is the good of all that money echo that money . This money is being put on the ground in those states that President Trump one that have democratic in comments democratic incumbents. Im still optimistic about and taxhealth care cuts, but with the 52 vote margin, it is hard to get major item agendas done. We need to expand the margin, and that is what the rnc is focused on. This record fundraising is putting us in a good place. Said taxwatching, you cuts, not tax reform. Are you backing off from getting comprehensive tax reform done . To say taxortant cuts, because the centerpiece of President Trumps push seems to be the middle class. Their wages have been stagnant, they havent seen relief. They are looking for washington to give them some more money to take home and help their families. Say taxwhy we need to cuts, so the middle class knows that republicans are fighting for them. Can the Republican Party keep all three branches of government if tax reform is not completed by the midterms . It is tough. What is the alternative, kevin . Are we going to go to Bernie Sanders singlepayer health care monstrosity that is going to decimate our economy and Health Care System . Look at what the democrats are putting on the table. Republicans are at least trying to get things done for the american people. Kevin they havent gotten anything done. This is our best senate map weve had in seven years. I want to get those things done, but this is not the time to walk away. This is the time to reengage. We have to provide this president a better majority in the senate and house so we can accomplish what we ran on. We want to get it done this year, but if we cant, we have to run in the midterms. Kevin someone else who tried to hold onto that strategy was steve steve bannon. He said he would be backing any republican who does not support Mitch Mcconnell as leader. Is that helpful to you, hurtful . Thing about the rnc is we stayed neutral and primaries for this very reason. When you have divisive primaries, and it is competitive and tempers or emotions flare, we need to bring people together after the primary and let our purpose unite us. I do get concerned about too many primaries depleting resources and taking resources from the general, so well see what happens, but we are focused on keeping those seats and expanding our majority. Kevin you think Mitch Mcconnell should continue to be majority leader . I think hes done a great job , i really do, under the circumstances. Ive sat in Senate Policy meetings and watched him talk to senators that we need to get Health Care Repeal and replacements, tax cuts put forward. Hes had three senators who arent willing to budge. He needs a better majority. Im not going to throw any of our republicans under the bus. Kevin whats your message on steve bannon . Steve,o message to except that he has done a great job for the president. He is engaged, emotional about these races. Of course he is, everybody should. Same as mine, the and that we need to get a better majority for the president going into 2018. Kevin theres another famous , marshall masters, or eminem. Marshall mathers. Releasing the rap video against President Trump. Think im not going to take any advice from eminem on how to treat women or behave. I think this is an opportunistic artist trying to sell records, and it is pretty shameful. Kevin what you make of everything going on with the Harvey Weinstein allegations . At think its interesting that the dnc has still not pledged to return that money that they raised from Harvey Weinstein, close to 300,000. Youve seen a lot of democrats step lowered. Step forward. To return money who obviously was a sexual predator, committed assault on many women. Emma kratz across the board have returned the money, called on the dnc to return that money. I dont know why they are not returning it. If they are a party that is going to stand for women, this would be a good time to return money from somebody who clearly abused women. Coming onnks for bloomberg. One day, you will join us in the studio, i know. Thank you for coming on. Thank you, kevin. Lets get your check on the bloomberg first word news this afternoon with mark crumpton. With President Trump met the puerto rican governor today four weeks after Hurricane Maria struck the island. He shared his thoughts on u. S. Support. The shortterm and weerm packages that will need resources. There isal response, some rebuilding to go through, so that is why we are thankful to the president for supporting these petitions to congress, so we can get the resources. Are already saying he sidestepped the question on how he would rate the federal effort. The president says his administration deserves a perfect 10 for the hurricane response. Will meet with President Trump at the white house tomorrow. One item on the agenda, the reform of the 193 member organization. The president has been calling for that. And President Trump met at the white house in april, and had talks on the sidelines at the you when General Assembly last month, but this will be their first extended meeting. Russianley describes interference in the 2016 election as an act of war during a Conference Today hosted by the george w. Bush institute. She criticized russian efforts to so chaos in the election. The possibility of collusion with the trump campaign. The Labor Party Leader of u. K. , met with the European Unions chief brexit negotiator. Since the6 months brexit referendum, and there is no progress in the negotiations. They also discussed britains financial obligations to the block as the u. K. Prepares to leave. We have to pay what we are required to pay. We have to make sure we do fairly deal with the eu. We been members for all this time. Need to negotiate those also dismissed the idea of a second brexit referendum. Global news, 24 hours a day. Powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Scarlet coming up shares of apple dropping on signs that demands for the iphone 8 are not as strong as anticipated. Weve already seen worries in the supply chain. Staying on technology, two top executives, the ceo of mastercard and former ceo of ibm are teaming up on the fight against cyber hacking. A conversation with both of them this half hour. Julia this is bloomberg im julia chatterley. Scarlet its been a little more than a month since apple ceo tim cook took the stage to usher in the new era for the iphone. Shares of apple dropped ahead of the highly anticipated summer launch september launch event. The shares took another big hit on reports that the tech giant cut orders to the iphone 8. Bloomberg reporter bloomberg tech reporter joins us. The reports are out of taiwan, that apple cut parts linked to the iphone 8 by more than 50 . How reliable are these reports that apples asian partners arent necessarily reliable echo apple sources from a number of different companies, not relying on just one or two. Its staggering. T speaks to this skittishness this is one report from one newspaper in taiwan citing one source. You put this in a big context. On healthcomments care from carrier executives saying demand for the iphone 8 is anemic. The other issue, if it is a 50 cut in production, if that is true and the market is anemic , it speaks to the fact that people are waiting for the next one, and they will be selling more of them. Good point. Ts a nevertheless, there was a kneejerk reaction in the markets. Im looking at the supply chain for apple in the bloomberg terminal. This is ac go oneday price change percentage. On the right side, apples customers, a lot of telecom companies. Both of you, in fact, when one loses out, others might gain. If youre sticking with the iphone 7 or anticipating the iphone x. Securities analysts were saying that showed an even production mixed at this stage between the iphone 8 models and the iphone 10. That could shift up to 60 or 70 , and more beyond by march. If, indeed, they are seeing slowing demand or less demand than they were anticipating for the 8, how quickly can they shift production to make sure they have the production for the iphone 10 . Or is there going to be a delay in terms of what they can produce and how quickly. Notave seen reports that they are reliable, but more concerted, i suppose. More numerous reports about to iphone 10 production. Increasingly, the analysis coming out of agencies have suggested maybe they managed to iron out some problems, and if they havent done it quite in time to meet demand entirely, they will perhaps be able to do so into the new year. The interesting numbers said thatfrom at t the upgrade rates for their existing customers are not hundred thousand fewer upgrades than in the year before. Ists interesting about that it suggests people are waiting for the iphone 10. If it was a problem with the iphone 8, people might go to samsung or another competitors phone. The fact that they didnt upgrade in the most recent rter, so much sensitivity. Thank you. Scarlet we have to come back to the stock market rally. Up 42 , for much of this year over the over optimism for the new super cycle. Julia cant wait for the iphone 10, that is perhaps the point. Bank analysts saying, look, we are overestimating, chillout. Ahead, on the 30th anniversary of black monday, we ask one billionaire investor what hell members from that day and the lessons hes learned. From new york, this is bloomberg. Scarlet this is bloomberg markets. Julia after months of market meltup with selloffs it happens to be the 30th anniversary of black monday, where the dow dropped 23 . We talked to an investor who remembers that day all too well. Jason kelly sat down with home depot founder at the robin hood conference in new york. Jason asked him to recall that landmark day. I was at my day, desk doing business. I remember the crash, i remember being in part confused. You look back, and see where Interest Rates were at alternatives for investments, and you realize that investors then had viable choices. Thes why i think comparison with today is invalid. Compared to where Interest Rates are now. I think a great recipe for losing money is to buy because rates are likely to go up. So i was in my office. I wasntshock necessarily worried. Two reasons. I knew the companies i had invested in, i knew they were in good shape. I also knew they had good businesses. , i have a healthy respect for not having lenders as my partner. Because that is when you lose control of the decisions you make. Financialstand engineering, how it works and how it is applicable in some cases. In my case and you held pat there. I a matter of fact added the ban and i still have it. To it, and investment in north carolina, a textile company. I had buying power and i started as an opportunity and i saw it as an opportunity. The fault multiple times throughout the night, trying to watch this contagion go around the world. I was on the phone multiple times. You had a lot of loose ends. The iran contra scandal, all kinds of issues there. A time to hold. What is the legacy, 30 years on . How did it change business . I think, hopefully, it gave people a healthy respect for the bankers leverage. I think, also, you have to look at investments as alternatives. In other words, at the end of the day, i dont care who you are or what you are, the ultimate reason you buy a stock or bond is to get a check every once in a while as a return on your investment. I think im like most people for one reason in a calendar year, there are eight trading days when the stock will give you most of its performance for the whole year. Im not smart enough to know those eight days. Is to beay to get them there when they happen, before they happen. That is my belief. The other thing i do is spend an awful lot of time trying to understand whats going on in the economy, with sales, manufacturing, competitive pressures. I kind of like to get to the numbersbefore those result in numbers that wall street looks at. Julia that was jason kelly with can with ken langone. Scarlet it is time for the Bloomberg Business flash. Lyft getting around funding that values the right hailing service at 11 million. Leading the investment solidifying ties between lyft and alphabets self driving vehicle verizon posted Wireless Subscriber growth for the second straight quarter. Expected. E than verizon sales beat analyst estimates, and are focusing on businessthat is your flash update. Still ahead, between hacks and equifax, and russian involvement in the u. S. Election, cybersecurity has never been more front and ask front and center. This is bloomberg. Julia from bloomberg World Headquarters in midtown, manhattan, this is bloomberg markets. Commodity markets are closing in new york. Lets take a look at oil dropping today after four days of gains. Reports offits after u. S. Fuel inventories showing a rise in gasoline and easel supplies. Opec is sending its strongest annal yet that there will be extension of production cuts until the end of 2018. In a bloomberg exclusive, says that opec is taking its cues from russia. Been a leading proponent of the restoration of stability to the market, together with saudi arabia. We look forward to continuing to provide this leadership in 2018 and beyond. Market rallying as investors continue to wait the political crisis in catalonia and other geopolitical risks. Onliner a rise in attacks this year, there has been a growing flight to cyber safety. From a is still reeling breach in which the personal and Financial Data of more than 146 million americans were compromised. Shery ahn is standing by. Thank you. I am joined by ajay banga of the Cyber Readiness Institute and palmisano you launched this institute in july. You rushed over here. Inc. You very much. Have you set your priorities . All on president obamas commission on cybersecurity. I saw the secretary of commerce under president obama, realizing the Biggest Issue small the Biggest Issues, midsized companies, their capabilities and vulnerabilities. We decided now, as a nonprofit, independent initiative, to kick off this what basic, simple things we could give them, tools for management systems, cyber hygiene, and i. T. Support to get them started and be better prepared. You kept insisting before we started this interview, very important. Ajay i think if you look at the structure of commerce built in many countries, Small Business is the core. While the Big Companies can spend money to solve their cyber problems, and i would say even they have challenges, where you have to be able to raise the water in the river to make the whole Defense System better for all the businesses. We are all connected to them. They are our vendors, partners, they are in our value chain. Mastercard works with merchant banks, consumers merchants, banks, and consumers. You have to do a lot of things. Build infrastructure capability to protect your company, help your clients and partners as well. Youre not going to prevent everything. But when you do get attacked, you can find a way to detect them and recover from them, and practice to respond to what will happen to most companies at some point in time. Thats the story. Spoke to you, sam, was in hong kong, talking about value chains. The risks stemming here from third parties being all over the world . The points exactly and the opportunity for us, for the services we are trying to provide. We will be global in scale. We have folks from egypt, denmark. Global by definition. We are trying to expand this global footprint, so your company, whether mastercard Jp Morgan Chase or citibank or american express, fundamentally, your value chain extends throughout the globe. We can help these skills and enhance the Small Companies that support you and distribute your products. Come up with standard, common production common approaches that are uniform, so everyone can address the concern. High profile Security Breaches recently, we are hearing highly classified information from the nsa was leaked by these third party contractors. How vulnerable are these large corporations now . The if you look at most of peopleies of the dont change their passwords, those sorts of things, or a thing called phishing. Or 90 ofke 80 everything that occurs. Equifax was as much about processing controls as it was about technology breach. The point is, we are going to try to help these contractors and thirdparty companies in addition to that, if you are a you certify can them within your value chain, that they are using modern techniques for cyber hygiene . Equifax, credit card information was also stolen in that attack. What has mastercard learned from those incidents so far it echo so far . Ajay banga the 140 million plus beta was about identities ajay there have been prior instances of credit card attacks. A smallthings merchants terminal, they take the data of the car that was used and reuse it later, either by creating a new card or using it online. There are things we can do. Chip cards make it hard for you to recreate the card, which is why it has been rolled out across the world. Youve got to create tokens. The card never goes to the merchant, the cryptogram withcted code, along another code, effectively, if you were able to breach the terminal and take the number, it would be useless to you. The way to do this is to make the data at useless and raise the standard by doing that. My belief is that you cannot put the owners of cybersecurity to be the weakest link of the chain. Youve got to make it easier for everyone to raise the banner of cybersecurity. As sam mentioned, you are talking about these tools that people use. What happens with humans making errors . The largest breaches are password breaches, probably because if you ask people to member passwords, they are member simple ones like password or 1234567. All of which are very common. Of doinghe onus this from the individual and provide security by design. Technology is wonderful, it is democratizing everything. Productivity, access to health, information. The one thing that can hold us back is if we dont pay enough attention to raising the level of water and security. And i are sam interested in Small Businesses and caring about how to help them raise the level of cybersecurity. Given that you are talking about the benefits of these new improvements and changes, i have to mention that this week, our team for bloomberg our theme for bloomberg has been automation and Artificial Intelligence, changing the job market and how people are impacted by that. Where do you see growth and jobs being hit . Sam i think you can get ajay i think you can get major opportunities out of the sector. Inc. Of the number of people we need to put into the system. The cyber commissioner has estimated we will have 100,000 people tomorrow morning in the industry with cyber needs. If they were available, we would hire them. Huge number of jobs available. Like a million open jobs in the world for cyber. Economic growth or employment growth as people build up these capabilities the problems that go in, we are only at the beginning of this thing. If you look at the Network Speed that all this is going to be happening, the problem gets more complicated, and there is more opportunity for skills to solve these issues. What about jobs that would get lost . Sam there arent that many people and cyber that are skilled. I think it will create jobs versus impacting jobs. Ai, for example. If you have things happening on Network Speeds, the only way to monitor what is going on Artificial Intelligence and Machine Learning is the only way. No person can see within nanoseconds what is happening. I know for a fact that you are heading the center for global enterprise, so we know that is a board member there, a close friend of years. He is in the running for a pretty job, of the fed chair. How suited as he . , and heis an old friend helped me get ct started. I think he is wellsuited. He has a balance of monetary and fiscal policy. He understands rates, markets, and has a stimulative environment from the Federal Reserve. He understands all of that. He has a strong distal background as far as tax policy. We are that given where today, with a combination of the need for economic stimulus and tax reform, plus how you make the transition from low Interest Rate environments to more modest Interest Rate environments, i think kevin has the right background. He is an academic, has been teaching dealing with the crisis the president is ultimately going to decide. Of all the people ive seen on the list, i think he has the best ground. Mastercard is also sensitive to Interest Rates. Are you keeping an eye on the next fed chair . Ajay we are not that interested. What about the regulation of ajay the chair of the fed impacts everybody who operates in or around the financial industry. Im watching, but i dont have a point of view. Sam has clearly got a vote there. Policy by the Federal Reserve bank is important for all of our industries. Its also other regulators. We get involved with technology and data. Cochairs of the Cyber Readiness Institute, thank you very sending it back to you, scarlet. Scarlet we are going to stick with that conversation, because this headline just crossed. President trump is meeting with hast yellen his meeting concluded, and he is prepared to make a decision on the new fed chair in the coming days. This is bloomberg markets. Im julia chatterley. Scarlet Health Care Shares rising for a Third Straight day. Julie hyman is focused on the industry xlv, lets look at the the healthcare sector spider etf. It is up 20 in outperformance of the market, and trading at a record today. This group is rising even as the overall market is faltering to some extent. It is also up for three straight sessions as the debate continues on whether there will be some solution on the Health Care Subsidies issue in washington. Driving uper things the numbers. We had earnings from , a company that provides equipment to the dental industry among others, and on the strength of its earnings, which beat estimates, we are seeing it lift labcorp and and waters. A Company Called envision health care, those shares are soaring. They took a leg up sharply this morning. Thats when we learned that jeff smith was going to be taking a stake in the company and also recommending it as a possible attractive takeover target. He made the comments at the capitalize for kids inventors contest investors contest a vision of a beautiful cash flow business, someone familiar with the firms investments. It would still make it one of the top 10 shareholders and the company. And vision, by the way, has Urgent Care Centers envision has Urgent Care Centers. It is in the process of selling its ambulance business. Scarlet what to the financials show . Julie he is talking about its as well. Take a look at the bloomberg. Smith is saying that if the company is valued at a multiple of 12. 4 times the other, because he is talking about cash flow, it would equate to 70. What you are looking at here is the margin in orange, falling, when looks like theres room for improvement. And the price to it here, which according to bloomberg intelligence, is relatively high versus pierce here, even though it is still at 5. 5. Of more than 12, and a potential takeout of this business it is not out of the question, but it is perhaps rich versus some of its peers. Julia saying that if you look at it the toll. 4 times, it is similar to , what blackstone bought. I should mention that it, like the other hospital or outpatient providers, has been hit this year. There have been declined patient , though it concern hasnt materialized, if there are cuts to medicaid or other types of changes to the aca. It could affect amber smit rates they could affect reimbursement rates. Nice, julie. Thank you for that. Its time for a look at some of the biggest business stories in the news right now. Takeover bid, but wanted to do better. In the middle of a bidding war between atlantia and in spanish hands. Compared tong atlantias 19 billion. Controlled by the benetton family says made up of the banks Wealth Management and Retail Operations is worth far more than the entire group, according to people briefed on the plan, which values the potential union at 64 billion. The banks majority stakeholder opposed a breakup proposes a breakup. Coming up his corporate more. Ive cracking down Workforce Diversity in the wake of the Harvey Weinstein behavior scandals. From new york, this is bloomberg. Julia this is bloomberg markets. Scarlet this week, several companies caked veteran investors off after he published a racist comment at a racist comment in his Harvey Weinstein was terminated from his Namesake Company after allegations of sexual assault. Are setting and enforcing standards of decent behavior. In todays walk the talk, part of bloombergs ongoing conversation about work waste adversity, we want to bring in short home and who has bring in jordan it used to be that the bad behavior was there, but they would turn away and hope it would go away. One thing that is adding to the shift in social media. Twitter users can go to a site and voice their disapproval, and these users are potential customers or potential investors. So Companies Want to respond pretty quickly. Scarlet especially if you are a consumer facing company. Jefflso wrote about metzger, his bonus was cut because of an embarrassing incident that didnt even happen in the office. Directors,board of ceos, executives have a Company Name Associated with them, they want to be careful not to give liability and Bad Reputation based on the person who works for the company. Ourlet to what extent boards and forcing standards because they have no choice . Have the social media, where people learn more about it. But when things come to light, there is the public outcry to really make a stand and either get the person out of their company or to cut their salary. Most of the instances weve just described are in the United States, Harvey Weinstein, for instance, jeff metzger. To what extent are we seeing instances of sexism and racism and bad behavior from Corporate Leaders outside of the United States . Is going to be the keynote speaker at a conference in singapore. When we reached out to the conference organizers, they said while his statements may have been racist, they didnt feel like that disqualified him from sharing his opinions on economics. With there seeing shift is largely in north america. Scarlet thats interesting. What does the data show on the number of ceos fired in north america . I know you have checked a couple studies on this. The number of ceos fired at the has doubled over the past five years. Boards putting not just members and executives on notice, it is putting the ceos and people who run the companies on notice, that you can also be fired for bad behavior. Wendys ceos are fired, there is kind of a blowback for the company and its reputation. Ofat first, the process reputation, and getting people to know that while this one person may have done something, thats not what we stand for. Scarlet do boards want to be using their voice on issues like this . They have so many other things to focus on. Question,tricky because a lot of the time, they ask because the public they act because the public has found out. Theres the question of when does the board actually know is reallyhappened, it news reports and people finding out and pushing for them to make a stand and Say Something that makes them act out. Scarlet the story youve written with jeff green is one of the most widely read on the bloomberg. What kind of feedback did you get from readers, executives, people who deal with boards . Theres been a trickledown effect since news of weinstein happened, more people recognizing the magnitude of Sexual Harassment and the work place, or statements that are racist being thrown around in companies we are familiar with. Uber was a popular example earlier this year. Notle are recognizing its just in hollywood, wall street. All companies have to be aware that this could be happening. Scarlet sector agnostic, industry agnostic, and politics agnostic. Thank you so much. Jordan covers diversity and inclusion. The search for the fed chair is in full swing. Janet yellen has concluded her meeting at the white house as the president whittled down his short list for fed chair. Who is in the running, what it means for global policy. From new york, this is bloomberg. Julia 3 p. M. In new york, 00 p. M. In san francisco, and it 00 p. M. In london. Scarlet welcome to bloomberg markets. Julia we are live in bloomberg World Headquarters in new york over the next hour. Here are the top stories we are covering on the bloomberg and around the world. In u. S. Markets, stocks are in the red, but they are paring earlier losses. A meeting at the white house today between janet yellen and President Trump fueling speculation about when we will hear and who will be the new leader. Challenges and scrutiny this year from fake news to regulations. We will take you behind the scenes. We are one hour from the close of trading. Lets get a check on markets. Amazing that we had seen this today. A roundtrip for u. S. Stocks, falling initially in the wake of selloff in hong kong and also as folks remember and talk about the anniversary of black monday on october 1997 1987. Mention, techlia stocks are the underperformers. There was an interesting note from oppenheimer and company, which has drawn parallels from now and 1987. As stocks have made new highs, it has been a Healthy Breath of gains, as well. A lot of stocks are participating in this. We have the s p 500 in white, which is slightly below its record. Theee a bounce in percentage of stocks above their 50 day moving average. You see it through august and into the fall. We have the cumulative advance decline line of the white st, thats something that the folks at opcodes pointed to. Seeing somee are areas of weakness. Apple is not participating in gains, that set the reports overnight in an asian newspaper that they are cutting orders for novemberdecember for iphone eight. There are still questions about whether it means folks are waiting to buy on iphone x or if theres a general drop in demand for iphones and apple products. We are seeing pain in tech as a result of that. On the rainy side, winners and on the earning side, winners and losers. Dolby up at a record after seeing estimates. Verizon one of the areas of strength as its subscribers rose more than estimated. Philip morrisnumbers are disappointing. Ual, a very steep drop for the airline after its predictions for a lack of Pricing Power in the final quarter of the year. If youg season look at the stocks that are still set to report, a little bit of a decline for each rates and paypal. Scarlet i want to jump in with some headlines. Barclays has been sued by the hedge fund red kite for Copper Market abuse. Rekaibi alleges their losses of alleges red kite their locked of at least 800 million. These are claims made in a london court filing. Barclays has denied these red kite claims. Kite alleges estimated losses of 850 million at least in its lawsuit against Barclays Barclays is suing let me start over. The red kite hedge fund is suing barclays for mishandling confidential information on trade. We will keep you posted on any further developments. Economy. The macro the white house confirming in the last hour that President Trump and janet yellen did me today as trump inches closer to making a final decision. In a bloomberg school, house conservatives urged the president not to reappoint yellen. To kelly at to get the white house. John kelly is speaking right now. Lets listen in. Wrap them up in whatever pieces of shroud, puts them on a helicopter, and send them home. The first stop along the way is when they are packed in ice, typically at the air had. Then they are flown to europe, where they are packed in ice again, and flown to Dover Air Force base. Dover takes cure of the remains, them,nes them embalms dresses them in their uniform, the emblems of their service, and puts them on another airplane linked up with a cast officer escort that takes him home. A very good movie to watch is taking chance, where this is done in a movie. Chance phelps was killed under my command right next to me, its worth seeing that. Thats the process. Happening, a casualty officer goes to the home early in the morning and waits for the first lights to come on, then he knocks on the door, typically the mom and dad will answer. If there is a wife, this is happening in two different places. If the parents are divorced, three different places. Casualty officer proceeds to break the hard news to a family member, and stays with that family until for a long long time. Thats what happens. Who are these young men and women . They are the best 1 this country produces. Most of you, as americans, dont know them. Many of you dont know anyone who knows anyone of them. They are the very best this country produces. They volunteer to protect our country when theres nothing in our country anymore that seems to suggest that self service to the nation is not only appropriate, but required. Thats all right. Who writes letters to the families . Commander,he company in my case, battalion commander, division commander, secretary of defense, typically the service chief, and the president. Typically, the only phone calls a family receives the most important phone calls they can imagine. My son was killed, his friends were calling us from afghanistan, telling us what a great guy he was. Those are the only ones that really matter. Degree,ers count to a but theres not much that really can take the edge off for the family members. Some president s have elected to call, all president s have elected to send letters. Call a familyo like this, its about the most difficult thing you can imagine. Theres a perfect way to make that phone call theres no perfect way to make that phone call. When i took this job and talked to President Trump about how to do it, my first recommendation was he not do it. Call thathe phone family members are looking forward to. He asked me about previous president s, i said i can tell you that president obama, who was my commander in chief when i was on active duty, did not call my family. Thatwas not a criticism, was simply to say i dont believe president obama called. Thats not a negative thing. I dont believe president bush called in all cases. Believe any president , particularly when the casualty rates are very high, the president s call. I believe they all write. When i gave that explanation three days ago to the president , he elected to make phone calls in the cases of four young men we lost at the earlier part of this month in niger. Many said hadi you make these calls then he said how do you make these calls . If youve never worn the uniform, never been in combat, you cant even imagine how to make that call. He very bravely does make those calls. Question that he made yesterday, a day before yesterday, were to four family members. Theres a next of kin designated by the individual, if hes not married, its typically the parents, unless the parents are divorced. If he didnt get along with his parents, he will select a sibling. The point is, the phone call is only ifthe next of kin they agree to take a phone call, sometimes they dont. And they are made, asked if they will accept the call. Typically they all do. He called for people the other day and expressed his condolences in the best way he could. He asked what do i say . I said to them theres nothing you can do to light in the burden on these families. Let me tell you what i told him let me tell you what i tell them. Me. My best friend told he was doing exactly what he wanted to do when he was killed. He knew what he was getting into by joining that 1 . He knew what the possibilities were, because we are at war. Four casesd, in the we are talking about, when he died he was surrounded by the best man on this earth, his best friends. Thats what the president tried to say to the families the other day. When i came to work yesterday morning, and brokenhearted, at what i saw congress doing. Remember congress, who listed in on phone listened in on phone calls. In his way, President Trump try to express that opinion is a brave man, a fallen hero. He knew what he was getting into, he enlisted. He was where he wanted to be, exactly where he wanted to be, and exactly the people he wanted to be with when his life was taken. That was the message, that was the message that was transmitted. It stuns me that a member of congress would have listened in on that conversation. Absolutely stuns me. I thought at least that was sacred. As a kid growing up, a lot of things were sacred in our country. And lookedsacred, upon with great honor, thats obviously not the case anymore as we see previous cases. The dignity of life was cases, thats gone. Religion, that seems to be gone, as well. Calls to our families. I just thought that selfless devotion that brings a man and woman to die in a battlefield, i thought that might be sacred. When i listen to to this woman and what she was saying, the only thing i could do to collect my thoughts was to go and walk among the finest women on this earth. You can always find them, they are Arlington National cemetery. I walked among the stones, some of them i put their, because they were doing what i told them to do when they were killed. This. Nd with end with in 2015, i went to the dedication of the new fbi guild office in Miami Field Office in miami. Two men whoated to were killed in a firefight in miami against drug traffickers in 1986. Retired, i think the other one was less than a year on the job. They had a gunfight and were killed. Killed. Ther three other agents were there and wounded, now retired. We get down, jim comey gave a brilliant memorial speech to those men, and all of the men and women of the fbi who serve our country so well. There were family members there, some of the children that were there were only 34 years old when their data were killed their dads were killed. Three of the men that survived the fight were there. A congresswoman stood up and in a long tradition of empty barrels making the most noise, stood up during all of that and, talked about how she was instrumental in getting the funding for the building, and how she took care of her constituents because she got the money. On the phone call with president obama he gave the money to build a building. And she sat down. We were stunned. It. Ned that she had done even for someone that is that mda barrel that empty a barrel. None of us stood up and were appalled, we just said ok, fine. I still hope as you write your americaand i appeal to lets not let this be the last thing that held sacred in our society. A young man, young woman coming out and giving his or her life for our country. Lets try to keep that sacred. Yesterdaya great deal by the selfish behavior of the member of congress. Im willing to take a question or two on this topic. Have a parentre or sibling that is a gold star . You get the question. That was white house chief of staff john kelly speaking at the white house conference. He was talking about how the military notifies families of fallen conference. President s phone call to the widow of a fallen soldier, in which he said he knew what he signed up for. That blew up into a controversy this week. Julia the wife was saying that he called him and didnt know the name. General kelly alluding to the congresswoman who was listening in. A lot of criticism ties into this. Also talking about his own son, the marine who died in afghanistan in 2010. That is also blown up as a result of this, whether or not president obama, or president at the time called genera kelly, he didnt. Ofe again, the process congress and the things they are trying to achieve are difficult and obviously very emotional. He said theres no good way. Scarlet theres no good way to do this, the way he but ended up was to say the president did it the best he could. His was his best approach, way of expressing condolences. Lets return to another big topic in washington, the search for the next fed chair. Bloomberg intelligence chief u. S. Economist carrick is still with us. Lets come to you, we saw President Trump interviewing janet yellen today. Do we have any glimmers of information as to what that talk, interview with mike went like . It was a long meeting and wrapped up not long ago. Based on what we heard from President Trump about janet yellen in the past, we can indicate what he may have spoken to her about. He said he respects janet yellen, he has kept she has kept Interest Rates low, different from what he said during the campaign, where he said he believed some of the Monetary Policy she was pursuing was political and aimed at helping president obama. We have seen him shift away from that rhetoric and speak highly of her. You can expect they talked about whether or not the president wants to keep her in the job or that rhetoric and speak highly of her. Another for another four years. We have a other president s say heard him say that he does respect her. Difficult to be predict whether hes going to keep her, especially given the latest reporting about the conservative push to not have her reappointed, even people within the white house and director Mick Mulvaney who said on Bloomberg News a couple of days ago that janet yellen would not be at the top of his short list. Meaner to be chosen would the president is going against some of his advisers, as well as the conservatives backed him during the campaign. Scarlet the president had a great conversation with john taylor and kevin warsh, two other contenders. Do you think Janet Yellens interview was just a courtesy . I dont think that was the case. She has a strong track record, there are some headlines suggesting theres a conservative campaign against her. Not particularly surprising, given the partisanship in washington and that shes a democrat. She has a very solid track record behind her, that significantly improves her odds in the standing. Julia the conversation at some point is going to arrive with an announcement of who actually is going to be the next chair. What we will be watching are the potential tweets coming from President Trump, certainly the press conferences over the next few days. As well as chair yellen, whos giving a speech on Monetary Policy since the financial crisis tomorrow evening in washington, d. C. 7 30 p. M. Tomorrow. In terms of when the announcement comes, watch for the market reaction. Its not just the stock market, i think particularly, i will be watching the shape of the treasury curve. That will tell you the interpretations of the debates whether john taylor is a hop or not, kevin warsh. We know that howell and yellen are on the dovish side of things. The further flattening of the yield curve would mean that the market is feeling warsh or Taylor Kennedy as being hawkish candidacy as being hawkish. Fourtime and memorial. If you have that flattening of the yield curve, it tends to not be supportive. Question. Uick we are talking about what would happen to markets depending on whether the president appoints or nominate a hawk. How is he going to do this . Finalists to the city and would tell them who would get the nod . You can expect drama, you can expect this reality show type of environment to continue, even when it comes to Monetary Policy, which is not necessarily seen as an entertaining part of the presidency. You can expect them to drag it revealedake sure its with a lot of drama like you did with the Supreme Court nomination. Stay tuned, you can expect a very dramatic unveiling of the name. Julia we will stay tuned. Thank you for that. Scarlet lets get you to todays options insight, we are going to check in with julie hyman. Julie with me today for the options insight is cheap option strategist at interactive brokers. Like many folks on wall street, you are feeling nostalgic. Its not necessarily positively nostalgic, looking back to october 1987, black monday. We have gotten reflections from a lot of people as to how things have changed, how markets look now. You are in the options market, what is your Big Reflection looking back . When i look back at it, that was one of the formative moments of my career. When i look back, i think it was the test of portfolio insurance trading. Terized the idea that you can buy stocks and the computer would tell you when to sell futures. That unraveled because there was no bit in the futures. All of these great ideas tend to have a moment of reckoning. I wonder what that is for us now, i suspect the way that retail is treating volatility as an asset class in a way they never have had. That may be the sort of reckoning that we have. All of these things in the volatility aspect of things that had their day of reckoning, thats on the horizon that scares me. Julie had their day of fascinating, i know you read the oral history of that day that we have on bloomberg. Com. It surprisingly reminds you that it did change a lot of systems, but performance was actually ok through year and after that day. You had the big drop, and things stabilized quickly. You had this huge spike up, people talk about the relentless move we have now, its nothing compared to what we had been. It was so sudden, the intervention was so massive that it really did put a floor on two things. It was the first time we think the plunge protection team, that instance of a coordinated intervention protecting the stock market and reflecting its way to other related classes. Instance now, were in the midst of earnings season. I want to get to a trade that you are potentially looking at. It has to do with earnings in the banking sector. We have gotten rid of most of the big bank earnings, now we are turning to the regional banks. Inwhat im looking for here, the last segment they talked about the flattening yield curve, Smaller Banks in the kra index are more exposed to the yield curve. What im looking at here is. Re haveld threat, k not been able to break out of this threat. What we are doing is selling a call spread, roughly a 5050 option. If you think the odds are greater, the trade pays off. Its basically selling out of the money cost which have a higher volatility and protecting yourself with out of the money calls that have lower volatility. Looks at the situation with netjets income, if you are going to see net interest income. What we see with the bigger banks is even when the results are good, the performance has been lackluster. Today which i good numbers, but the stock wasnt doing anything. This trade is a way to say this is perpetuating. You have high volumes for earnings, they have a lackluster results afterwards, you can make money. Julie thank you so much, good to talk to you as always. Julia i want to give you a big check of the dow. There was a moment when it turned positive in light of what we saw earlier. Stay with us. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Its time for first word news. Former president george w. Bush addressed a farm in new york city on free markets and security. He said its time for first word bigotry and White Supremacy in any form is blasphemy against the american creed. Weve seen nationalism destroyed to the nativism. Immigration is always brought to america. We see confidence in the value of free markets and international trade, forgetting that conflict, instability, and poverty fall away from protectionism. Mark what we see as a veiled reference to President Trump he said bullying and prejudice sends a national tom. Secretary of state Rex Tillerson heads to the militaries, he will focus on conflicts in iraq and syria and on increasing iranian influence in the region. In riyadh, he will explore ways of improving relations with saudi arabia and iraq by participating in the first meeting of the countries