Pouring in. Abigail the bulls are out today. We are looking at yet another record high, the dow on pace for a record closing high. Excuse, the s p 500 me, the s p 500 higher but not as much as the dow. Is talkingwhat shery about, they think it is about earnings from a macro perspective. Investors are looking for 1. 7 investment growth yearoveryear. Lus, tax reform hope the one risk to the rally we are seeing this year as if something does not get done by the end of the year. One sector certainly helping today, the financials. Take a look at the s p 500 banks index, up 1. 5 . It is generally acknowledged that these Companies Put up strong thirdquarter earnings. Today we have a rally in yields, the 10 year yield up about four basis points. That tells us haven bonds are selling off. On the year, it is pretty interesting what is happening with the 10 year yield. We see the 10 year yield is out of a range that it had been stuck in below 2. 3 , now trading higher perhaps back toward the highest. Institutional investors, the short level is at the highest level ever so institutional investors, professionals think the weakness for bonds will continue. Hat takes yields higher this is interesting when we take a look at it in the bloomberg relative to the s p 500 dividend. In this era of extraordinarily low rates, we may have the yield trading higher more recently but still ultra low levels. In blue, the 10 year yield. The s p 500 dividend yields about 2 . We do not give up too much and yelled to own the extra kick dust in yield to on the extra kick for stocks. The chase for yields continues. Lets look at some of the car stocks, gm hitting a record high on a strong thirdquarter report they beat earnings and sales by 18 . Since therst time Fourth Quarter of 2014, all areas are profitable. It seems like gm is doing well and that is giving a nice tailwind to Fiat Chrysler and ford. Julie as abigail has been talking about strong corporate earnings have lifted the dow to a record. It is expected to continue as u. S. Companies boost their revenue. For what is in store for the rest of the thirdquarter earnings season, lets bring ins to work warfare lets bring in stewart warther. We always see an increase in moving stocks for earning season but the disconnect is especially stark this earnings season where volatility is dead on the macro level but we are seeing it spike on the individual level. Is it really that different from what we normally see . Historically if you look at earnings season and the correlation between s p 500. Omponents and tends to decline whether you are looking at sectors or individual companies, every few months there tends to be a spike and decline. A lot of that has to do with, in this case, the sector dispersion we are seeing, particularly right ahead of earnings season. The correlation was the lowest it has been year to date, so part is the reflation trade and most of it is related to earnings. If you have an index with two stocks and one goes up 1 and one goes down 1 index does not move. Shery we keep seeing revisions higher for sales but not so much for eps changes. Is sales driving this momentum . Stewart i think you are right. The last few years we have had Earnings Growth taste on buybacks and poor sales, and i do not think the market was too happy. Earnings growth has slowed so the estimate in q3 is only 30 yearoveryear. Sales growth is actually investorso i think are seeing past the slow Earnings Growth and looking to sales because at the end of the day organic revenue growths debt better than eps growth. It also Say Something about Companies Management that they are not getting the same earnings or is it they have squeezed every drop that they can out of the growth they have been getting . Stewart i think if you look at this quarter versus potentially other quarters, ibec authorizations for s p 500 companies declined by over 50 in q3. It is unclear why companies are not doing are not announcing as many buybacks. Less does it imply confidence that their stocks will keep going up . Stewart because Dividend Growth continued to grow for the Fourth Quarter, part of the reason why that buyback deceleration occurred was for companies waiting for a tax reform or legislation from washington. It is not clear what the reason was, but traditionally buybacks have added over 1 to Earnings Growth on top of sales growth. Potentially that is why earnings are coming in weaker. The Banking Sector had a tough comp if you look at q3 versus last year. There are some reasons earnings might slow but we are able to look past it. The estimates for q4 are quite high. Shery when we look at the stock market we keep talking about how extended the rally has been. You can see for the past 15 days the 14 day rsi has been extended in overbought territory. I saw this note from morgan stanley, the last few times this happened we saw it plunged from a median 4 or so in the next 30 days. Is this acceptable given that things are very different right now . The last time this happened was 1996 but we did not have qe back then. We are gettingly out of qe but if you look at the pace of reinvestment by the fed and how quickly we exit, it does not ramp up until next year so we are still in this environment of maximum qe, low volatility. If you look at the past period of no 3 or larger downturn, it seems like we are in an environment that is rare relative to history. It is hard to look at these historical statistics and make a sense of it. Julie i think we need to leave it there. Apparently we are getting some playback of the president. And all that you have achieved, credible stories. Each of you has just a remarkable past and i think an even more remarkable future. I feel that. Does everybody feel that . I think so, especially with trump as your president. You represent a critical american industry from construction to technology to manufacturing. You all share in a common will and drive to succeed, and i salute you for that. You need that drive to be successful. Employy owned businesses 8 Million People and generate more than 1 trillion in annual economic output. The work you do and products and services you bring into this world generate new prosperity across america. For that, we are in your debt. You inspire our children to develop their talents and always chase their dreams. Proudrry on our nations legacy of innovation and breathe new life into the american spirit. A recent department of labor report showed the fewest jobless claims since 1973. Think of that, 1973. We just had a report. We have the fewest jobless claims. Wayll that because the only i will get the word out is if i say it has they will never say my administration is deeply committed to empowering minority business owners. We are looking to left government their years so you thrive and offer grow. Our stockmarket has reached the highest it has ever been in history. We have created about 5. 4 trillion in stock market value. We are very happy about it, and a lot of jobs. We have the lowest job numbers since i believe 16 to 17 years. The lowest unemployment. We are doing really well. We are doing well, which makes it better for you. As a candidate for president for president i pledged to fight ,or every community in america from the rust belt to our inner cities. And rve great cities Great Schools and access to high paying jobs. I talked a lot about the inner cities on the campaign and there is tremendous potential. Critical to creating those features is reforming our tax code. Our jobs and back rebuild americas cities and towns. It is time to take care of our country and fight for our families. At the center of our America First agenda is our commitment to ensure every child in america has a future of security and a future of hope. We are one of the highest vaccinations in the world, anywhere taxes in the world, anywhere in the world, costing us millions of jobs and trillions of dollars. Lower the taxill burden on American People and bring back if we get this passed, which i believe we will just it is going to bring back i would say 4 trillion into this country which right now cannot come back. Money that wants to come back into the United States cannot plan,ack, but under our that money will flow back in. It will be very quick and easy, and it is a lot of money. It was 2. 5 trillion a few years ago so i would say now it has got to be close to 4 trillion or maybe above. It will come back very rapidly. Than 30r plan, or million americans who own Small Businesses will get a 40 cut to their top marginal tax rate. This will be the lowest tax rate in more than 80 years. The lowest rate in more than 80 years. That is 1931, is the last time there was a rate this low. We are going to massively reduce the Corporate Tax so that Companies Stay in america, moved to america, and higher right here in america. In other words, they stay in america and do not fire their workers. About. What we are our plan can be summarized in three simple words jobs, jobs, jobs. The awardwinning Business Leaders represent the best of america and our determination to succeed and grow. Together we will ensure more american citizens can unlock their potential, of which they have tremendous potential, provide their families and live out the american dream. Congratulations to all the awardees. It is a tremendous achievement. I have Great Respect for you. God bless you and god bless america. Thank you very much. Thank you very much, everybody. That was President Trump addressing tax reform at the Minority Enterprise Development week Award Ceremony at the white house. We have breaking news, politico reporting the house is set to release a tax bill on november 1. We also heard President Trump talking about nafta, that we will have to do a new nafta if talks do not turn out. We had the fourth round of negotiations and a fifth round scheduled for the end of november. Cirilliing in kevin from washington to break down what President Trump was talking about. Thank you so much for joining us. President trump talking about the tax plan, that he would bring back 4 trillion to the u. S. Very rapidly. There has been a lot of controversy over whether or not that would happen, even conflicting messages from the White House Press secretary mnuchin against Mick Mulvaney as well come on the benefits of the tax cut and who they would benefit. Every getting any more details or clarity of what is going to happen . The senate inside where President Trump is actually going to be meeting with republican senators at their weekly caucus lunch. From the white house he is traveling across town to arrive here in what was supposed to be a discussion on tax reform, touting an ability to get tax reform done by the end of the year. Quite frankly, all talk here on capitol hill has turned between the twitter feud that has gone public between senator bob corker and President Trump. They will come face to face behind closed doors in the hallway behind me with a will be meeting in that lunch and quite frankly, that is what everybody is talking about. Julie what are they saying about it . Certainly, even before this current feud between these two interrupted to have been prior feuds that have hampered the legislative ability of the gop. Is this just seen as another obstacle to getting things done . Kevin it is a great point you are making because yes, i have spoken with several senior aides to republican members. They are befuddled, confused, and frustrated that once again what should have been coherent messaging coming from the white house and the Republican Party about lowering taxes has been clouded in controversy as a result of this twitter backandforth. Sifting through a lot of the political theater and dramatics, we have not noticed much reaction in the political volatility index. The house of representatives is likely going to vote on thursday to advance the budget bill that was voted on in the senate last week. Politico and other sources now confirming that the house of representatives is going to release that tax plan by november 1. They are keeping on message and on deadline with how they are going to get the tax plan done. Payingkets very much careful attention, but it is still unknown how they will pay for it beyond the state and local Tax Deduction which would only allow 1. 3 trillion as a source of revenue. Saying theremp would be about 4 trillion in growth as a result of this tax plan. At still comes up short of what many tax experts are saying is a 6 trillion plan. As they are going to go for how to pay for it, really is where the Financial Services industry is focusing on. Shery given the uncertain situation right now, what are the options for the gop if they cannot find a revenue raiser . With a mean temporary would that mean temporary tax cuts . Cuts isemporary tax where this fight would be headed should they not be able to have what they are going to do in order to pay for it. Quietly behind the scenes, the sources i am talking to suggest this may have to spill over into the next calendar year, to the much disappointment of republicans who are eager to return home to constituents during the holiday recess to tout some kind of political victory that has eluded them for much of this year. Julie when we are talking about situationcorker trump kevin the situation. The situation between the two, i wonder if some of senator corkers gop peers are faulting him for drawing the president into this. Is there a feeling of, can we all just get along . I am curious how it is being viewed. House Speaker Paul Ryan speaking at a press conference earlier in which he said they are trying to focus on tax reform. We just had crossing the terminal headlines from senator john cornyn of texas saying they have got to turn this talk this out. No one likes to see this type of fighting happening, at least from the republican perspective, because what had what should have been an on message meeting today on lowering the Corporate Tax rate has been dominated by this disagreement. We should note the disagreement stems from Foreign Policy and senator corker with his position in the various committees on Foreign Policy, chairman of the Foreign Relations committee, having a staunch disagreement with how the president has responded to russia and north korea, to some extent. He is defending the folks surrounding the president so that is equally interesting. If you are Senate Majority leader mitch mcconnell, what should have been an opportunity for republicans to claim unity is now all about a twitter debacle. Shery kevin cirilli, thank you so much. He is our chief washington correspondent. Lets check in on the bloomberg first word news. Mark is kevin not the best in the business . Monthsnt trumps four ban on refugees ended today. The u. S. Temporarily halted admissions on refugees from all countries with some exceptions. The administration plans to unveil new, tougher screening procedures and the president has a broader travel ban on people from other countries. Courts have blocked it repeatedly. Wolfgang shoretel is a speaker today. Wolfgang schaeuble declared a new era has begun. He told lawmakers that a respectful style would be important in the new parliament. Europeandent of the council is toting the idea that the u. K. Will stay in the uf drawl. Donald tusk in the e. U. After all. British Prime Minister theresa may had struggled with splits and her own government over how to handle brexit talks. Kenyas Supreme Court will meet tomorrow a day before the repeat residential election to decide whether thing should proceed if a credible vote cannot began teed. The court will hear a case by ee kenyans who want government crackdowns on opposition protests have left 67 people dead since the august elections. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. , with anotherhead communist Party Congress winding down it is clear the president is intent on leaving his mark on china. A report from beijing is next. This is bloomberg. This is Bloomberg Markets, i am julie hyman. Shery i am shery ahn. Julie in china the communist national Party Congress is wrapping up. Tom mackenzie reports. It is an arcane piece of chinese political theater. Suggests his influence over the party and country will extend well beyond, for decades to come. Our attentions which is due around 11 45 where we are expecting the Standing Committee to be unveiled, likely seven men who will follow the president and the premier onto the stage on the red carpet. That will give an indication of how successful president xi has been in elevating his allies. We will get a clearer idea of who will be directing his policies agenda and implementing that agenda domestically and internationally. Tom mackenzie, bloomberg, beijing. Shery it looks like president xi jinping be in power for quite some time. It is quite interesting to see the dynamics in china. You go to beijing and other cities and you see xi jinpings picture, posted on train stations, bridges. That sort of leadership we have not seen in previous president s. Now has power seems to be just rising. Julie you have lived in asia and have a lot more experience in that area. Is it a question of top down . Is he popular with the people and that has helped support his ascent . Shery yes, that definitely has. The former president s popularity i have been reading the news that chinese youngsters are not really prone to take in common is Party Propaganda as the elder people used to. 347, weekly showing you what president xi jinping has been doing, trying to deleverage the economy. New yuanso chinese loans and money supply starting to rise. We will have more markets coming on. We are seeing a rebound for u. S. Stocks. This is bloomberg. Gloomylive from a bloomberg World Headquarters in new york, im julie hyman. Shery im shery ahn. This is Bloomberg Markets. Vonnie lets get to the bloomberg first word news. Julie mark barton has more. Mark word of another plan to fix obamacare and shortterm coming from orrin hatch and brady. Anddeal would in store ensure concerned subsidies for two years including concrete reforms. One of those is the end of an individual mandate through the end of 2021. The senate is expected to approve a disaster aid bill and send it to President Trump for his signature. That is according to majority leader mitch mcconnell. Damageey will pay for caused by hurricanes that hit texas, florida, and puerto rico, and also for wildfires out west. Month after Hurricane Maria devastate puerto rico, officials there say the Tourism Industry is practically nonexistent. About a third of the hotels on the island remain shuttered. Shops are still without power and beaches are close for swimming because of possible water contamination. The high season begins incident in september and officials are luring some onitors, but that depends when power is restored and how quickly hotels and attractions can repair the massive damage. Russia has vetoed a u. S. Backed United Nations resolution for work extension for inspectors investigating that april chemical attack in syria. Moscow had tried unsuccessfully to postpone todays vote until next month to that was after a watchdog push for the reported. For the vote,sh saying it overwhelmingly supported the expected mandates. Global news powered by 2000 700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Julie alix steel sat down with David Solomon at the annual meeting to see how he was advising clients to invest in the most unlovable market. David markets are reacting pretty well the moment. We have pretty good Economic Growth all of the world. If you step back and think about 12 months ago, the expectation for growth was not as strong as what is actually come in. The u. S. Is doing well and europe doing well in japan even doing better. We are in an environment at the moment where the economy is helping to propel markets. With a significant amount of Monetary Policy still in place, thats leading people to continue to invest in ship money into markets and thats a delicate balance. Alix there are some concerns. The leader of research of Brett Goldman sachs says clients ask him all the time, when will the rally run out of steam . What your clients ask about that . David our clients are certainly interested in our perspective on markets. Theres no question that has been quite a rally, but you can look in 1997 as a data point. Alix do you want to compare yourself to 1997 . [laughter] david a lot of the sentiment that people had about markets than is similar to the sentiment today and yet the market ran for a period of time. Becauseinteresting time you have this kind of base of solid Economic Growth, but theres no question the cycle has been running for a long time. You have to be invested, but you have to invest cautiously. Alix i clients as i want to do this deal, but this worries me the fact of the fed may raise rates and we are at equity highs. What we tell them do you tell them . David it depends on what client you are looking at. If youre looking at a client looking to do something strategically, strategic transactions that are really transformative or significant for companies are made with a longterm view with a longterm processes are not affected by shortterm market activity. Big corporate to looking at something strategic and you look at broader issues. If its a Capital Raising and you are company in need of capital, i think the advice at this point in time is get it done. The markets are quite receptive. Get that stuff done because you dont know whether or not the markets are going to continue to be as receptive. Alix do you think goldman will be in a higher rate environment and a hawkish fed environment . David get that done means you have a very inviting market right now for financing activities. Theres a variety of things that can make the environment less inviting at some other point in time. With respect to the Interest Rate and going forward, theres you lookon that if forward, we are going to be an environment where this Monetary Policy that has been in place is going to unwind. The question is not if. The question is when, how, whats the process . Over time that will be a bias toward higher rates. How that happens and how it unfolds, you have to be safe. Alix how does Goldman Sachs look at the next venture . We play it as the lottery. David theyre certainly a lot of interest in who the next fed chair is going to be. A very important decision for the president to make. There are a lot of qualified candidates being considered. This fed chair is going to play an important leadership role in helping the markets deal with the unwind of this Monetary Policy has been in place for a period time. I dont know if i have a view alix you do you just dont want to tell me. [laughter] david clearly someone who is going to be in a leadership position to affect the unwind of this Monetary Policy overtime attending on what market environment we have. Clients are asking about that, but they are also focus on tax reform. They are focused on what is going on i, growth around the world. They are focused on regulation. Its part of the discussion with clients, but then again, its one of a number of topics. We will watch as everybody does to see how that plays out in the coming weeks. Alix we would get to clients and text reform and a second, but a want to take it with the fed and talk about value risk. Its the lowest since 2002. And look at capital returns your headcount, it feels like goldmans positioning for a turn in the market, maybe taking risk off the table. David bar is a reflection activity going all over the firm. Theof the things that members of our team all of the world do is talking to clients. Theyre responding to the market environment given to them. What the clients want to do . What do clients want to transact n . One of the reasons why its low is that the opportunity sets our clients are providing us with is not as robust. Alix Morgan Stanleys isnt. That makes us think you are positioning. David our bar as a reflection of the activity and interactions we are having with our clients. If you look at our franchise, the way our franchises facing clients. I cant comment on morgan stanley, but we are responding to our client needs an activity. That drives our balance sheet. Alix are you tilted more safety or risk . David more tilted toward interacting with our clients and intermediated for them. Theres no question we are operating at a lower level, but thats a reflection of what our clients want to do with us and the Market Opportunities that we see at this point in time. Shery david and solomon, Goldman Sachs copresident and coo speaking with out steel and washington. A new report surfacing of apples continued challenges rolling out the highly anticipated iphone x. What is going on behind the scenes and can the tech giant get things back on track . We will discuss. This is bloomberg. Shery this is Bloomberg Markets. Im shery ahn. Julie im julie hyman. It is time for the stock of the hour. Whirlpool is suffering its biggest decline of the year after it announced its centuryold partnership with sears is wanting them. Joining us with more is taylor riggs with the worst performing stock in s p on this report. Taylor its last biggest october 25, 2016. And its lowest price of all 2017 since last december. Earnings having a lot of different struggles. They missed on the thirdquarter earnings. They missed on their forecast guidance going forward. Ending the relationship with sears due to pressing problems. All of this waiting on the company. We talked about pressing problems and i want to look at margins. They mentioned that they are struggling together costs under control. 417. V we looked at ron material costs really being pressured and you can see the divergence here between the share price and the gross margins. Unless you make this up by volume, does not do a lot to sales. When youre struggling on the margin front, so to get back on track, they announced that they are trying to reduce expenses by 150 million. Kind of doing what they can to turn things around. Julie we have seen Aluminum Prices go higher, which i mentioned is a problem for them. On the flip side, there ending this partnership with sears under which sears appliances were sold or i should say pool appliances were sold in sears stores. This is have implications for sears investors also . Taylor shia shares were down sears shares were down 1. 5 . Tothe sears front, you have try to maintain their control as the only retailer that sells all the top brands for u. S. Appliances. Said witheven competitors like home depot, lowes, and best buy, we maintain our exclusive control over that kenmore brand that we were talking about. Recently they announced that they were going to sell that kenmore brand on amazon. Just trying to pick things up. Julie i would imagine appliances is one of the remaining reasons that people go into sears. Shery i was thinking though that i would like to buy appliances online. I was having this conversation. I would just compare online. Taylor im different. I want to touch and feel what im getting. Does it fit . Is it a double stack or double wide . Shery i spent so much money online right now. [laughter] taylor riggs, vicki so much for that. Lets talk about another product could with the release of the iphone x just around the corner, nikkei is reporting that initial shipments of the iphone x are expected to total around 20 Million Units this year. Those are big cuts from original forecasts. This is as apple struggles to support technical issues with the new face authentication feature. Alex webb covers apple and joins us from san francisco. And were the problems challenges that iphone was facing when trying to get the suppliers parts . What were the technical issues here . Alex we have been reporting on some of these problems going back a year. When we first heard that apple knew theng oled, we only person making that stuff was samsung and no one else had the capacity. That has been one constraint. We have heard reporting about the 3d sensors with the Technology Used in the face id that will be the standard for unlocking your iphone going forward. There have been big problems there. Between all the different moving parts, these are the two headline innovations of the new iphone. That created something of a bottleneck. Julie these apple shares are up about half percent today. Is that a function of the fact that there has been a lot of reporting on the supply issues already in that investors are not fundamentally concerned about demand eventually when they finally get the phones out there . Alex there are two factors here. It has been reported and quoted by analysts in asia. He has said about 45 million or maybe 30 million. Its already pushing a misdirection. Ie other big ideas that cannot speak for every apple investor, but broadly speaking apple investors are not buying the stock between how may iphones are sold. They are buying into what they call the super cycle, the lifespan of the iphone x, which could extend two years, and optimism that people will buy a lot of this particular vision of the iphone x and subsequent iterations. Its not an investment of one quarter, but a year or two. Shery the Holiday Season is coming up. Expect it is to affect the School Growth for the quarter up the growth for the fiscal quarter next year . Alex weve not seen any analyst cut their forecast for apple more broadly or for iphone sales. The fact is the expectation is that sales will carry on over to the first quarter. The way that apple has been working is to encourage preorders what they call the Iphone Upgrade Program where you pay monthly fee. That lets people into buying this phone. Preorders will start this friday. They may not get it until january. If that were the case, perhaps a lots of them and and theyre less likely to go out to buy samsung s8. Julie we have been talking about the supply issues and is the first time you talked about getting some sort of proxy for demand. Do we have an idea. . These sums and seems to be the iphone eight orders were not as strong because people are waiting for the 10. When will we actually know what the demand is . Alex there are two important dates next week november 2 and third. November the second is when apple reports earnings. In those earnings, they will give a forecast for those earnings. November 3 is when the phone will actually hit store shelves. We will get a sense of how many people there are turning out. That is not necessarily a good way of reading it because there will be preorders as well, but those two dates will be very important for apple to see where things are. Shery so far looking at the stocks, apple and apple slow suppliers seem to be gaining ground. Thee time now for Bloomberg Business flash, it look at the biggest business stories in the news right now. And a rare, Fidelity Investments chief executive officer Abigail Johnson spoke at an event in washington. Johnson highlighted the type of Work Environment that will help one of her key goals recruiting more female employees. For us to build a better future, its important that we create a culture where bad behavior is not tolerated. I wont tolerate it nor should anybody else. This is critical for our industry. Dismissed toty has Portfolio Managers on Sexual Harassment allegations in the last two months. Woman tos the first run bostonbased fidelity, which is controlled by her family. Brexit could have International Broadcasters leaving their london hub after the government tells for a quick deal that would bridge the u. K. Separation from the european union. Among these broadcasters based in london is discovery and walt disney. Possible new hubs include the netherlands and ireland. And that is your business flash update. Shery coming up on the show, facing competition on and off the field. How the Worlds Largest sports brand that veered off course and lost 22 billion in market value. We will take a look at nike next. This is bloomberg. Julie this is Bloomberg Markets. Im julie hyman. Shery im shery ahn. 50 billion blender after shares would jump by 2020 and the reality is far different. Parker will faces toughest opponent yet as ceo, his own shareholders, as nike holds another investor day at its headquarters. With brewing and Matt Townsend who has lets bring in Mount Townsend who has cover this company for quite some time. Give us a picture of the time at what it looked like for nike. Trending andas athleisure trend was hitting its peak. Adidas was struggling in the United States. So they were very bullish on themselves. They were full of confidence and said our 10 growth rates that we have been hitting the past four or five years, those will continue. 2020ll hit 50 billion by and now they will be about 10 billion short. With the way things are going now unless they turn things around. Shery no wonder their stock has taken a hit. 17 down since 2015 . Matt last year was the worst performing stock in the dow. We were talking about nike, this premium brand that everyone holds up that every industry and or should look like. Leadership look like you. There are a lot of doubts about the company and parker has been there around the deck it. He has had a nice run. He got them through the recession, but since then, they have been on fire. This is the first real big challenge to him as ceo. There are two pieceslie to this and one is the athleisure trend peaking and the other is perhaps more cup titian. We have a look at this past five years of a thesis versus nike. On top of the stock price, adidas has taken the lead now and now its starting to outpaced nike and its stock price and sales growth. The bottom chart is the purple line. When you look at these two components, talk to us about the adidas piece. It is adidas doing something right and nike not . Matt theres an issue called the cool gap and the cool factor. Nike was always seen as the cool brand. Shery youve got to have the jordan brand as well. Matt most people wear sneakers not actually play sports, but because they like the way they look. Its a fashion statement. Julie guilty. Matt nike was always the best at that. What adidas has done is they have caught up. Julie and the cool factor . Matt they have caught up in the cool factor with kanye west and other entertainers. Just the whole retro look of adidas is in style right now. Some people will say if its a fashion trend, a to go away. Nike is doubling down innovation and saying they are the brand for athletes. That is what they expect parker to say tomorrow. We are the brand that makes products for athletes. We have these cool retro things that we will do my but we are primarily about serving athletes. I think that is the way forward. Shery he is not going to scale back his ambitions here . Matt on the 50 billion, its hard to see how they dont. It would be a shock if they still think they are going to hit 50 billion because their growth has slowed substantially. There are still growing, but its a 5 growth rate compared to 10 . Sales were basically flat last quarter and a lot of that is problems in the u. S. So far come investors a lot of times take the Management Team led by parker on their words saying they have this great track record and we trust them to fix and figure things out. Tomorrow will be a big test for sure. Julie if they do end up doubling down on the athletic side of the business and most people dont merit because theyre working out, that would seem to be a problem. Matt exactly. Its one of these things that this is what got nike to where it is. This is how they became the Market Leader and this is what they know how to do. Its not that they are not going to make fashionable shoes, but they see their business as innovation with athletes and that filters down through the rest of the brand. Today, even i wrote the foot locker ceo is sort of questioning the jordan brand and saying youre tying it to michael jordan, who doesnt resonate with kids now. What are you going to do on that front . The premium brand where they make a lot of money is not seen as cool as it once was. Shery i was going to ask. Consumer tastes have changed so quickly and whether or not that was happening. We will have to keep it there. President trump on capitol hill with the Senate Majority leader mitch mcconnell. He is headed to a Senate Republican luncheon. We will see if we get more clarity on his tax plan. Lawmakers are really eager to hear more from the president. All this coming at a time when he is in an ongoing feud with senator bob corker as well. Still a lot of movement right now on capitol hill. Julie Matt Townsend, thank you so much for talking to us about nike. Show, houseon the Budget Committee chairman diane black from tennessee shows us how tax reform and more. Shery you just all President Trump headed to the capital. Do stay tuned. This is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. David it is 1 00 in washington and 1 00 a. M. In hong kong. Im david gura. Shery im shery and and this is Bloomberg Markets balance of power. David here are the top stories were watching on this tuesday, beginning with the president turning up the heat on senator bob corker as the two leaders spar over tax reform. This is as the house gop is set to release its tax bill on november 1. Congresswoman diane black joins us to share more light on the next steps on capitol hill for the keystone of President Trumps agenda. And the ceo Saudi Arabias Public Investment Fund is setting and the vicious goal. And vicious goals. More on the future Investment Initiative in riyadh coming up. David President Donald Trump just arrived on capitol hill to discuss the tax overhaul effort with republican senators. Its a meeting that bob