Ahead of most of the earnings. Generally seen declines across the board in a pretty broadbased decline as well. The dow has been a performer recently, but its facing declines and other major averages today. As a result, if you take a look at the bloomberg, were looking for the worst single day for the dow in about seven weeks. The realm of same for the s p and especially the monastic as well. At least at the lives of the session for today. Just a. 5 decline, its been a while since weve seen a drop like this. If you look at the worst percentage decline in the dow, only one of them has directly to do with earnings. And that is boeing. The company delivered a Record Number of planes and earningspershare beat estimates, however, one of the things that holding it back is the fact that its that is been developing for the u. S. Air force has been delayed already is delayed again and cost rose 329 million, and sales also fell in boeings commercial division in boeing as of about 65 year to date. That makes it about 20 Percentage Points better than the next best performer in the dow. Its the winner for the year in the dow. The rest of them, its earnings aftermath. General electric we are seeing a decline today as it has continued to slump following its Earnings Report. Caterpillar was at a record yesterday following earnings down today. And ibm, which gained about 8 last week in the wake of earnings is down for three straight sessions, about 5 . Its been an interesting turnaround for some of these. Outsider stocks today, weve been talking a lot about bonds as well and 2. 4 , that level that was breached in the past few days as we have continued to see selling in the bond market. Fallled Jeff Gundlach can to call for an end of the bull market in bonds. This is as he also gone lower, prices go higher. It is still not breaking the longterm trend line, even with now bonds and the 10 year yield at 2. 44 . That could be something that gun lock he would be looking for as well. He called essentially for a yield of 3 . Abigail love that chart. The bull market for bonds is in place. Congressional leaders rewriting the tax code are using a playbook similar to the one that failed when they try to repeal obamacare. Republicans are trying to ram receivebill that would the economy, keeping the details shrouded in secrecy. Will he get a different result this time . Sahil kapur joins us. Ask for taking the time. Is thistion here routing in secrecy of that timeline. What are the actual mechanics of a potential tax reform plan come from republicans early november for the earliest version . Sahil no earlier than november 1 for the release of the tax bill. They want to adopt the Senate Budget in the house and complete that. So they have the vehicle before they can release the bill. Looking in early november release and the next couple of weeks, the ways and means committee, which writes the tax code in the house wants to market up and send it to the full floor and pass it by thanks giving. As the next for nearly fast timeline. Were talking about tax change that affects 100 of the economy. They want to do it quickly so the senate can get it done by christmas. And they can go home for the holidays with some legislative accomplishments. Timeline is fairly aggressive and when it comes to the mechanics of this bill, we talked about how republicans havent really learned from their mistakes like into health care. They are still doing every thing in secrecy. Is that secrecy for the sake of expediency because they need to get this done by november . They are doing it this way . Sahil i think the secrecy has two purposes. To getnt want lobbyists in on the action and start trying to be down some of the proposals they put in, specifically revenue raisers like ending the state and local tax reduction, which realtors, for instance, want to keep. There are Industry Groups that dont want to double the standard deduction because it lessens the value of itemizing. That part of it and the fact that polling has shown that a lot of their proposals are unpopular lowering the Corporate Tax rate which of a look and unanimously want to do, even have some democratic support in the obama era is extremely unpopular. They want to protect the bill from losing any political support. Abigail how was the feuding with President Trump and some of key republicans . Scarlet we are having an audio problem. Hil, President Trump making comments on janet yellen once again. Give us a sense of where he stands on this . He likes her a lot, but plenty of republicans oppose renominated her just because shes a holdover from the prior administration. Sahil its always difficult to interpret President Trump. He may feel about her one day and feel a different way by the time he makes a decision. I think the fact that the economy has done well under yellen is probably a good sign for her chances, at least more so than it would have been otherwise. Obamact that president nominated her, that probably doesnt help because psychologically, hes been trying to rid his administration in the country of most everything president obama did when he doesnt have to go to congress to do that. My colleagues reported when he met was in a republicans yesterday, who have to confirm , he asked for a show of hands. We dont know exactly the results of that, but it sounds like you still considering his options. Scarlet he says you would like to make your own market, but he says he likes janet yellen a lot. Sahil kapur joining us on capitol hill. Later this hour, we have democrats senator chris coons of delaware, weighing in on the republicans tax playbook. Lets get you a check on the bloomberg first word news this afternoon with mark crumpton. Mark President Trump says senator jeff flake did the right thing or not seeking reelection in arizona, where the president says he didnt have a chance. President trump he was against me from before you renew me. He wrote a book about me before i ever met him or heard his name. His poll numbers in arizona are so low that he couldnt win. And i dont blame them for leaving. I think you did the right thing for himself. President ial reporters he believes there is great unity in the Republican Party. U. S. Ncoming flights to the will face the screening procedures that include security interviews for both visitors and american citizens. The announcement by the transportation security at fiveistration comes after global carriers, including emirates, egyptair and lufthansa said today employees will begin conducting interviews beginning tomorrow. The new rules, the end of a 120 day deadline for airlines to meet new u. S. Regulations following the ban on laptops in airplane cabins. British Prime Minister theresa may is doubling down on her promise that parliament will vote on a final braves agreement before britain exits the block. Addressed Parliament Today just after her brexit secretary told lawmakers there was a possibility the vote could happen after the u. K. Leaves. The timetable of the lives and treaty does give time for negotiations take place, but im confident because is in the interest of both sides, not just this parliament that wants to have a vote on that, that it would be ratification by the parliaments that we will be able to achieve that negotiation in time for this parliament to have a vote. Stalled,otiation has Sticking Point included the Northern Ireland border and the size of the bill the u. K. Must pay. Israel approved construction of nearly 200 new homes in east jerusalem, the decision by jerusalem city officials followed last weeks approval to move forward with roughly 3000 new homes in the west bank. The increase in settlement activity drew condemnation from the palestinians, who said the israeli actions were part of were threatening the efforts to restart peace talks. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am mark renton. This is bloomberg. I am mark crumpton. This is bloomberg. Scarlet coming up, to pull a ofres plunge as the chain disappointing investors continues. We discussed how avocados, hurricanes, and hackers contributed to a tough quarter. From new york. This is bloomberg. Abigail this is bloomberg markets, and abigail doolittle. Scarlet im scarlet fu. A look of the biggest business stories in the news right now. American airlines has been accused of possible racial bias by the National Association for the advancement of colored people. The naacp cited for instances of potential determination against African American passengers. American spokesperson said the carrier is quote proud to serve customers of all backgrounds. Both sides have shown interest in meeting to discuss the matter. Operator bpine midstream hopes to raise as much as 893 million in an ipo today. They created the houstonbased company as a Master Limited partnership to own, acquire, and operate pipelines and related assets. Most of the income will be returned to shareholders. Favor of legalizing marijuana are at an alltime high. No pun intended. A recent poll shows 65 of the mostation in favor of the of the company men asking about the topic in 1969 when only 12 route. According to a report, the Legal Marijuana market was worth 6 billion last year and is expected to reach 50 billion by 2026. 50 billion by 2026. Abigail this weeks big earnings parade started on a high note that things have soured. Chipotle shares are plunging after the breeders shane had disappointing thirdquarter results despite the high profile debut of its case of cheese dip queso cheese dip. Thanks for taking the time. , with abill ackman greater than 10 holding in chipotle what is he hoping for here . What is he seeing that other investors arent, considering there such a high Short Interest on the shares . The stores are pretty empty and it doesnt seem as though a turnaround is underway. We had them into the bloomberg offices two weeks ago and he said this is the early part of a turnaround. They put in Management Team in place and they feel like they are heading in the right direction. Quarter was bad on a few fronts, but generally, he thinks its heading in the right direction. Some point, the arrangements reflect the. What kind of relationship is bill ackman have with chipotles board . Its pretty friendly. Scott its complete friendly. Unlike canon adp, he had a very good working relationship with them. They are working in tandem together to try to right the ship at chipotle. Scarlet to that point, how closely will they work together, bill ackman is an activist investor, do you think that it will be in trying to Institute Major changes . Scott he already has. Hes been in the stock since september 2016 and obviously, weve seen a lot of turnover in management and directional changes. Hes been a part of all about. Hes been working with the board to implement those changes. And i think that he believes that he is affecting some change. Some permanent structural changes that will improve the direction of the company. Scarlet nevertheless, he has a paper loss of 360 million. Scott deveau, thank you. Whats plaguing jim foley, operationally, we want to bring in cry jim craig g mona. O gets no love on social media. He thought it was a little underwhelming. Queso bring in customers . as of 15 of customers are ordering it and after the introduced to, sales were up 4 in the week of september. A lot of bad news and headlines are getting in the way and any time it seems like they return the corner, they recovered and the norovirus and video of a startshas been fits and and any time they turn the corners on the ashtray the corner, something bad happens. Abigail the two times that ive eaten there, theres really no energy in the food hasnt been that great. It seems as though this problems could be corrected. If we happen to the bloomberg and take a look at this map of all to foley locations, here in manhattan, you see one empty store and that a few blocks away, another empty store. What about the pizza and burgers concept . Craig there was a question during this food safety crisis, today expanded too fast . They franchised, thats a way to get out fast and expand very quickly and go big. It all companyowned and very quickly. For a long time, they could do no wrong. Sales were up and the stock was up and this happened and then there was a question of did they lose control operations . Washing handss on are wearing gloves and the indications was the food safety stuff is but a failure to follow protocols. Yesterday we did get indication they are going to slow down on new store openings and one of the things they really had is that they were going to focus on operations in the existing stores. They are taking their foot off the gas pedal and cutting back on the new stores. The question of if there are too many, they would say no. Some investors think there are. It got away from them a little bit. Abigail time will tell, but an ugly day. Thank you for taking the time. Coming up, still ahead, warnings insight. The ceo of Akamai Technologies joins us to discuss his company. This is bloomberg. Scarlet this is bloomberg markets, im scarlet fu. Abigail i know you will im abigail doolittle. Akamai technologies, a provider of content delivery and Cloud Security Services Posted earnings and revenue the top estimates, thanks in part to strong video traffic from ours customers. Tom leighton, ceo of Akamai Technologies georges and studio. Great to have you here. Traffic,of the strong is that sustainable and will that Carry Forward into the Fourth Quarter and 2018 . I think so. people are watching video online, at higher qualities, and thats the tip of the iceberg. We had 60 terabits her second last quarter. That is 12 Million People watching at reasonable quality levels. You can imagine a future world onee 100 Million People, billion people watching even high quality. Runway left. A lot of runway left. Pricet the rally boasted targets what is it about the current Industry Environment that things are coming together right now for you . Mr. Leighton in addition to media and video there is a lot of interest in cybersecurity. You look at the headlines every week of the latest disaster. Thats were we have really compelling solutions. A business for us now is . 5 billion year in revenue and growing in the high 20 . We just unveiled a latest technology to use Machine Learning to differentiate between bots and humans. Humans, when they hold a mobile phone and are tapping have a much different kind of dynamic that obama would coming in to try to steal your identity or hack into account to still your money. On the enterprise side, the old notion that you have a perimeter , the corporate firewall and the around the castle doesnt hold anymore. There is a world our zero trust. You cant trust anybody, even your employees, because they are getting infected. They take their devices and they and went behind the firewall, now it runs wild and you get these big data breaches. Scarlet one of the new products are you looking at what other new product are you looking at . Bots,ighton managing the a lot of them bad. Not all. Its a very fastgrowing product area for us. Stopping the account takeovers is important. Stopping enterprise employees from getting infected, even if they do click on a bad link. We have new products and market that i think will sustain a lot of growth for client security business. On the media side, not only is there more traffic because more people are watching, but we just unveiled a new technology where over the top is ahead of satellite. Typically, if you watched online, you would be 10 seconds to 90 seconds behind satellite. The touchdown at taken place in a minute later you are seeing it. Now we actually beat the satellite, which is very cool. Scarlet thats a Good Development from where you stand. I want to change topics, i was noticing where one of the 18 ceos who was invited to the white house this year. You also served on george w. s advisory committee. What do you see as a followthrough in modernizing and securitizing government and idea for structure . Hasnt been consistent and is there followthrough . Mr. Leighton Major Tech Companies really want government to modernize i. T. And better protect themselves. We do a lot of work in washington to help the government, and irrespective of administration, its really important to do. Sticking with this topic, executives from facebook and google and twitter will be testifying on capitol hill next week on the probe into russian intervention. What do you want to hear come out of that . Mr. Leighton obviously a very serious concern. These are very serious times we want to make sure the internet is used for good and not to do bad things. Privacy is another major issue right now. How do you balance Law Enforcement need with the need for the citizens to have privacy . Tech is right in the middle of it. Its hard for the laws to keep up, because tech is moving so fast. Shouldhould we can we consider these companies as a public utility . Mr. Leighton its very different. Is a very large, very capable, very powerful Companies Providing a lot of great services. And its just now we are in the middle of some of these issues around potentially things to do with the election being influenced by social media or manipulated news. Its really amazing what happened over the last decade. Scarlet its not going to be resolved at the meetings on november 1 and second. Tom leighton, ceo of Akamai Technologies. We speak with credit senator chris coons of delaware. What he says about tax reform and the decision by republican senators corker and flake not to seek election. Slumber. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. 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. President trump will decide against kerry cohen, economics director to lead the Federal Reserve. This is according to three people in with the matter. He has ruled out appointing gary cohn to leave the share. Of being thehance fed chair according to someone present for the remarks. This is something people have speculated on for a couple of weeks. Take does not see my that of a surprise. Cohn, it has been quite some time. Scarlet lets bring in kevin, our chief washington correspondent who broke the story. On cohnmore context being out. The relationship had been freed remarkse president s about what happened in charlottesville. Kevin President Trump does not plan to according to federal several sources. This comes after a relationship has become a bit more tense in the past several months. Networkbusiness limitedw that she had his decision on who would go on the board to two or three choices. We have carefully monitored the situation and it looks like someone like powell or john taylor, and even janet yellen, the current fed chair, still in the running. Is there a sense of who is the front runner among the group you just named . To thinkgood reason each could receive a nomination but are you hearing any inside word today today . I have learned, do not predict anything with donald trump. The competing factions surrounding donald trump are interesting in who they are pulling for. The vice chair position is also open. Last week telling fox business there could be a onetwo combination because i have spoken with several sources connected with the Vice President office and the conservative action if the death of the conservative conservative movement. They like john taylor, someone who has advocated for the taylor rule, advocating for a thesbased approach to central bank. He gave public remarks suggesting he would is off being so adamant about impacting that policy. ,omeone like aj powell or kevin more central picks. Janet yellen. Chair yellen has received compliments from President Trump within the last week. Know the president said he will make a decision soon. Likely before he leaves on his asia trip on november 3. The to gary cohn because of breaking news p what do we know about him and his longevity at the white house . Right now, he is in charge of capture form. He is tax reform. He is part of a team that is in charge of it and that is a great point. The sources i have spoken with influence, very much part of a team led also by treasury secretary steven mnuchin, traveling as we speak to saudi arabia. Gary cohn will not be on the and instead will be focused on tax reform and meeting with members of the Republican Committee next week on november 1 here on capitol hill. Definitely meeting with lawmakers here at we should note about the increasing role of people like here in congress, as representative kevin brady. Gary cohn has frequently as representative kevin brady. Advocated revenue for the tax plan. Yesterday at the economic club, the secretary of commerce said tweaks are on the table. I would note that the secretary is also part of that team as well. Folks are crafting that tax policy but intense speculation about how long gary cohn, who declined to come up for our story, will be at the white house and within the administration. Interesting to see. No question the administration is on case right now to get tax reform done by the first month of next year. Never a dull day in d. C. Thank you so much, kevin. The headlines with mark crumpton. Mark the u. K. Minute thester thinks he expects negotiations go down to the wire, the last moment before the u. K. Officially leaves in march of 2019. David spoke to lawmakers. Sometimes thereafter. Mark theressure United Kingdom must pay to settle commitments. Brazils president has been hospitalized in his office says he is suffering from neurological problems and is. Eing examined he has been involved in a fivemonth Corruption Scandal and was scheduled to vote today on whether he would stand trial before the countrys supreme court. North korea is calling on the uns purity counsel to discuss naval exercises near the korean peninsula. He previously described the drills as a prelude to war. The ambassador said yet over 16th exercise is the largest to date. Hope francis is scheduled to make his first call to space. Astronauts on the International Space station aired only the second time a pope makes a call to space. Pope and the the 16th calls the space station in 2011. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I mark crumpton. This is bloomberg. Thank you. Just a recap of our headline. The president is set to disk decide against gary cohnthe preo scarlet senators who decided kevin run for reelection is standing by with a special guest. Kevin lets start with yesterday. What do you make of all this . I have traveled and legislated oath of them and they ,re conservative republicans exactly the sort i think the country needs. They are willing to compromise when appropriate and they believe strongly in the United States having a leading role in the world. I hope in the year ahead, we will get a lot done. A lot of people want to know how this will impact tax reform. Out that would impact the fossil fuel industry. Tommy how . Bloomberg may be one of the only audiences where i can say that an folks know what im talking about. 500 million in value in the market. Elong established financing vehicle. They are taxed like a partnership a trade like an equity. It is relied upon for liquidity and investment purposes. Accessible to a lot of things that folks really want to do in the new economy. And bipartisan group, republican and democrat in the house, a conservative republican from houston, very conservative, in the house. You have got red state to see theom value of securing us for the oil and gas pipeline. A california congressman, coastal blue house and senate who see value with renewables. But you are not going to vote , no democratlan will, but will this likely get in that version of the bill . First, there is no tax plan with specifics. It is just nine pages. It is written only by republicans and does carryforwards harsher or more democrats to support aspects of a current plan, it would be hard for me to support it. Shows at bipartisan tax reform that helps increase investment in American Energy and job creation is possible. If the plan and up being something bipartisan like this will, i could support it. Quite some want to switch gears to foreign policy. You are one of the most prominent senators in terms of africa and Foreign Relations in africa. There was a briefing earlier in the morning on nigeria. Can you tell me on the latest on the investigation . Im concerned about what acrossnd the partners the region. I followed closely for a number of years. Need a strategy and more senators engaged and informed about what is going on in west africa. There continues to be destabilizing elements. You have got a flood of weapons from the former gaddafi regime. The unitedthere continues to be destabilizing elements. States in there in a more robust way than in the past. It is important we continue to our training and the partnership with the Regional Forces that want to work with us to combat terrorism in west africa. One of the criticism senator corker raised against the administration has then about the president going against some foreignpolicy advisers including people like secretary tillerson. Corker has been come home every of secretary tillerson. Do you think the poor and policy arehe situation is at it you confident in the team he has assembled around him to make the best decisions . Have a nomineen to the assistant secretary for african affairs, the position that should be filled. We do not have a nominee for secretary for east asia or ambassador for south korea. There are key decisions where it is not that they are being held up in the Foreign Relations committee. There are not even nominees yet. Im concerned that we dont have robust representation. In foreign capitals in regions where we need them, i hope President Trump rely more on his cable on National Security and or and policy team. Thank you for coming on. We appreciate it. Back to you in new york. Thank you so much, kevin, on capitol hill. Coming up, microsoft releases latest results. And outperform rating on the shares next. This is bloomberg. Scarlet microsoft is set to report is for latest latest results and the shares are on the rise outpacing the nasdaq. Microsoft focuses on a commercial Cloud Business in the acquisition of linked in. Now is an analyst at credit suisse, with outperform rating on microsoft, 84 per share. Do you think they put up a good quarter tomorrow . Michael they do i think. It might not be as large of a beat as q4. Businesss cloud accelerated revenue from q3 to q4. I do not think that will happen this quarter. We are in line with consensus and we differentiate from the street in that we think the top line will come in about 128 million higher than consensus, but that the margins will be a little lower. Line, 72 cents. Scarlet comes to the cloud offering, what is the distinction of a microsoft cloud offering versus google or amazon . What is special about what microsoft does . There is not a lot of huge differentiation but where microsoft differentiates hybridave it had a cloud offering where companys and not ready to go fully to the cloud and can put some some workloads and private keep it within the firewall as well as put some of the workloads to the public cloud. How competitive is the pricing . A year ago, there was talk about where the pricing was. Where does it stand in that rate . Pricing is competitive. You see compression over the last couple of years, it will probably continue because there are a number of large players in the market. Highlevel services that microsoft is selling differentiates them from the cloud players and allow them to keep pricing high for those services. Scarlet i think about windows and how it is tied to pc and the pc cycle. Is its still the case . How dependent is microsoft on that . Windows is much less a portion of microsofts Business Today than people think. We estimate by fiscal 19, the next fiscal year, only about 15 of microsofts revenue will come from windows. By fiscal 24, less than 10 of microsofts revenue will come from windows. So cloud has none whatsoever to the cycle . No. The windows franchise is more of a transactional business. Relative to the stock, one of the beefs for years was that it really was not doing anything relative to the rate bull market. , this take a look at this is 1727 and we see a beautiful uptrend to 2000 and then stuck in this range just recently, broke out. Do you expect another big run out of the range . What is behind that run i think is the success of my caps offs commercial out. Office 365es commercial as well as the dynamics business. That business has taken off. It theuarter, business almost doubled. This quarter, q1, we expect microsoft to break out for the first time specific revenue related to the commercial cloud. When investors see that success that they have been having, i think the stocks will continue to run. I am looking on the bloomberg here and microsoft has made a couple of recent acquisitions computing, alle linked to the cloud but the biggest one of course is linked in in june of 2016. From an investor standpoint, how much hasnt moved the needle for microsoft here . It was a sizable acquisition but only about 1 billion of revenue. Is not very large. It is strategically important around the dynamics business and the commercial Cloud Business over time, but from a numbers standpoint, it does not push the needle. What about new product moving into ai, the internet of things, are these the pieinthesky hopes or could they eat in 2019 or 2020 . Over time, i think Machine Learning and ai for my the software be a much bigger piece of the business. Still relatively small. Most of the acquisitions that you called out before were around ai and Machine Learning. Taking technology and integrating it into their products and making it easier to do digital transformation, that has been talked about quite a bit and they are on the. Orefront of that they do not call it microsoft x or google x. Moving ahead, is he performing as investors want him to . Microsoft is underperforming against software companies. Yes. It has underperformed this year as well as against other Large Software stocks above 10 billion. I think he is doing a fantastic job. In three or four years, he has turned around the business. A lot of the checks we have done is asts microsoft Different Company to do business with p or customers like buying for microsoft whereas they previously did not. Scarlet he changed the story over at microsoft. All right, michael. Of course, a guest on a David Rubenstein show, peertopeer conversations, that takes place tonight and youll catch it right here on bloomberg. Lets shift gears to the stock of the hour. Alaska air down the most in more than two years today following falling more than 10 at one point. 11 and aepened losses quarter percent because of Earnings Report that saw quarterly profit miss analyst estimates. Here with more. What happened . They missed the estimates with the quarter they came out, it seems that the main reason for the phone the stock race today is an unexpected rise in cost per available it is a key metric in the Airline Industry and they came out today and said this is going up by 1. 5 . It took a number of analysts by surprise. She had been expecting it to fall by almost 2 thinking the addition of see capacity alaska is pushing would help to bring costs down. Therehey are saying is are maintenance costs and placing the blame there. That is surprising. If you look at the chart we have , you see alaska has the youngest fleet, about eight point two years on average. It is surprising that maintenance costs would be a problem for them compared to alaska and hawaii second the second be something that is pushing them out there. A share work . X yes. They spoke about pressure today and said they are expecting it to come out and continue to the Fourth Quarter. They are expecting it to affect the whole of the industry. They had been expecting to increase it and when you do that, they are expected to have lower fares as they introduce new lines, they want to bring the airfares down, so they will review that little bit. It is also summing across the Airline Industry for the second half of the year saying pricing crashes will continue. Plus at in higher fuel costs and wage pressure as well. Getting better pay at the thent, and if you look at bloomberg terminal, i have the s p 500 airline, and you can see today, they have all fallen as we have had the results and various new comments as well. Air. D ugly day for alaska yes. They are having a bad time at the moment. We will wait to see how they do as the earnings season continues. Rough times. Thank you. Scarlet coming up, we will speak with mark, who says cash is king right now. Like 2000 cash is king or 2008 . This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Abigail im in for julia chatterley. Scarlet i am scarlet p are looking to bloomberg markets. Abigail were live over the next hour. Here are the top stories on the bloomberg and around the world. Many analysts are wondering if we are in bubble territory. Ceo of Morgan Capital management just ahead. As amazon prepares to report thirdquarter earnings, mark majorive us all on the tech giant. Plus, he says he is thinking about giving janet yellen another term. Julie hyman is here to give us enough to it and it looks like it is sort of ugly. Julie not today. We see stocks pulled back because of earnings that came out a missed estimates. The focus of the earnings season has in micro. We have seen an unusually low correlation in the s p 500. Downdraft. G take a look here, it is a little less red than earlier. Small subsectors were in the green but overall, big declines across the board. The least bad group in the s p, telecom, Energy Leading the way downward. Many of the sectors have large cap weighted stocks pulling them down. Telecoms being told pulled down by at t. With anany came out increase of 117,000 new wireless customers less quarter. It trailed what we have seen for some of its competitors. The losing customers in third third quarter. Boeing is the best performing stock in the dow this year. It also may have been hit by costs for a program it developing for the u. S. Air force. Costs are climbing in the quarter. On the plus side, we have got visa, that companys profit is and seeingimates volume on its credit and debit card falling 10 in the u. S. And europe. Maker of scientific instruments, revenue rising 14 and earnings beating estimates. In terms of index points, these are the biggest movers. Also, a good chart to show you, the progress as we go along. At the bottom, the number per day of Companies Reporting earnings. Today, we were at the 50 a busy day for earnings. The s p still up during the earnings season but just rarely here. Todays declines almost wiping out the gains we have seen thus far. It has check on nike as investor day. Scarlet was talking earlier that shares were surging after the ceo maintained a bullish outlook for the brand. He still said sales would increase to 50 billion by 2020. There had been speculation he might pull back a little bit from that. Scarlet we will wait to see how it all shakes out. Ite has its work cut out for. Stocks consolidating today for the year. The dow, record high closes in 2017. The nasdaq, 100, 62 times record highs here the founder and chief Investment Officer is here with calls this and everything bubble with room to inflate. You have noted on twitter that. Ash is king you want to build up cash to buy assets at more depressed prices later. Think we are on the cusp of a 2000 or 2008 type correction . Nothing two thousand eight before the financial crisis, we have originally coming into the year that it might be like 2000, 2001, 2002, a gardenvariety session and correction. The problem with the trump surprise, we thought maybe it 20 coordinate a bubble, and what we wrote in january is this the 2800 or theo get to dow to 28,000, it would be almost dollar for dollar the same and you have a bigger correction then. Starting to feel a little your euphoric to us. What is the trigger . That is the challenge. Usually what happens is an and his unanticipated event, a slowdown in growth or Global Economic event, it triggers a leverage unwinding. Challenge is not leverage like in the banks in 2008, but a lot of leverage in individuals, record levels of margin debt. When that starts to unwind, it can go down in a hurry. The fed has 4. 5 chilean dollars on its Balance Sheet and if you look at the move between 2008 and 2014, it was an unwind of public leverage, deleveraging the private sector and leveraging up publicsector. Is that a risk . A big risk. If you look back 10. 5 years, the United States follows japan and they had a big banking crisis and crash in 1989. Downgraded we look at japan today and say, what are they pointing to . 10. 5 years ago, the bank of japan had 26 on the Balance Sheet. The market went down almost 60 until 2012 and they went, oh my gosh, we better fix this. They have now taken the Balance Sheet to 90 of gdp. Any time you contract liquidity, it is tough for financial assets. The short run, we are done because they want say they are done, and what will happen is they will try to track liquidity, asset prices will deflate and they will be back. It is qe forever. Even as they unwind the Balance Sheet now. There is a time of uncertainty surrounding who might even next fed chair. The fact that stocks keep drifting higher, does it mean there is not a whole lot of policy difference between the different contenders . Thought an insightful and really accurate. If you look at where janet , we talk about hawks and doves. At the end of the day, you do not know what you will be until you sit in the chair and look out in a, what are my up against . No matter how hawkish you want tone, there will be dovish because you cannot allow, i dont think, i dont think the fed can allow a disrupt this asset deflation. Even as they try to fit to bring things down a bit. Steve mnuchin said it is a severe reversal if it fails. He is not the most objective commentator given that he is part of the administration trying to push it forward, but does he have a point . So ishink the last 100 or really just about tax reform. I said back in january that the no factor would happen. Deregulation and fiscal spending and taxes, i thought we would get none of it this year. Here we are in almost november and we get none of it. You dont see it happening this year or at all . I do not see it happening to her we will see. I think it is a dysfunctional process now. The challenge is what does it mean . Most companies do not pay the highest tax rate. The one area i think we do well theoretically would be Community Banks because they pay at the highest rate. Surgedblem is they have to so much in price that if we dont get it, you can have a correction. A bold call on the possibility of reform ever. Thisou are sticking with us. Lets get the headlines on bloombergs first word news with mark crumpton. CriedPresident Trump has described as said Hillary Clintons president ial Campaign Held pay for research that ultimate all believers a dossier of allegations about mr. Trumps ties to russia. President trump i understand they paid a tremendous amount of money. Hillary clinton always denied it and the democrats always denied it. And it will come out in a court case and they said yes, they did it and admitted it. Mark the president said it made up it was made up, which he called a disgrace here and he was thinking about giving janet feden another turn as chair. Speaking to fox news, he said he is balancing the desire to put his stance at the risk of changing leadership as the stock market source. President trump i am thinking about it. Youne way, i have to say like to make your own mark and you understand that here you ,ike to make your own mark maybe one of the things against her. But i think she is terrific. We had a great talk and we are obviously doing very well together if you look at the markets. Marconi looks like the head of the National Economic council very cohn is out. The president said last week oft cohn has no chance leaving the Federal Reserve are the next 20 million federal Tourism Industry is experiencing massive declines as murders in the country continue to increase. Ho cap Hotel Occupancy in cancun is down 10 while potential hotel guest have canceled 35,000 bookings for next year. Across the Baja California peninsula. Enger arrivals also the u. S. Also issued a travel warning this summer for taurus to avoid the area. The u. S. Ambassador to the u. N. Nikki haley was welcomed to south sudan today. Ambassador haley met with the south sudan president who asked the u. S. To stay engaged with the country with civil war. Than. S. Has given it more five arian dollars in humanitarian and developmental initiatives. 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. Thanks. Coming up, amazon reports thirdquarter earnings tomorrow. We will hear from of morgan creek about why he would short the company if it reaches 1000 per share. This is bloomberg. Scarlet this is bloomberg markets. Abigail it is time for a look at some of the biggest is the stories in the news now. Toman government is trying as turkey faces an unprecedented break with the west. State on ksw bank or the European Investment bank and the European Bank for reconstruction and development. The European Investment bank has called turkeys Political Developments a concern. Facing a criminal investigation of the opioid drug oxycontin, of and people familiar with the , showing concern results very for patients. In 2016. 1 billion that is your business flash up eight. Amazon will report results after the bell. Tozon web services likely repel revenue. Amazon shares have canned about for 976 year rising dollars each. It is more just the stock price goes high. It took you 17 years to go back to that price. We are still not back to that price. And amazon is a great business in Great Company but i think the shares are just overvalued. Putting aside valuation, we have the Earnings Report tomorrow and they generally do well and shares are rewarded but every now and then, they with spectacularly. We have a chart that may suggest it could be bumpy ahead. This is btv 1754. A1year chart with the buyers with unevenys trend heights of buying activity. Tells us tells they are trying to sell to ,eople buying less well typically if it breaks the downside, it is bearish and could take amazon to 17 billion. I think it is a great analyst analysis and it is dead on. I made a bet that over the next decade, walmart would outperform amazon. 4 . E that time, he is down im feeling good but we have got a long way to go for 10 years. I think 700 is a pretty likely target. Would valuation be reasonable . It wouldnt be reasonable but less unreasonable. Abigail the double negative work speed we talk about amazon. Tech namesother big that got a huge runup, whether it is alphabet or facebook . I like to say that fangs bite. It is their nature. They will eventually bite you. There is no question that running with momentum is a good strategy when momentum is running here when index funds are running and it running and a lot of money is going in, s p 500y someone buys index fund, they have got to buy a bunch of apple. Apple will rise the matter what people think. They are not thinking. It is just going into index. The challenge is when someone looks and says, what is the valuation for future growth, and there is a great chart that shows growth rates over time, they all mean revert here they started triple digits and then they go to 60 and 40 and do very little growth. It is underpriced. The cheapest of them. The other ones are for are at 40 and 50 . It will revert so the valuations are too high and i think they will go down. What about tesla . It started to come down a little bit here. Is called thek poster child for dreams of this will market. I was on a panel with jim in texas last week and i could not agree more. Tesla is a good company. The cars are fantastic. All electric cars are fun to drive it is they have a lot of torque. Equity valuation, so much debt on the company. They are not hitting production goals and the equity could fall even further. Just think it is a terrible risk reward as an equity. As a company, fine. But dont buy the equity here. I would short the bonds here but not as much as they short the at any. Because, panics tend to go beyond fair value. Start to panic and anything below 325 on tesla, people will start to panic on the equity side. Once people look at the last highyield issue they did, those people will start to panic. If i could buy the bonds at . 80, i might do that. Youre using the word panic and we had a mini tech selloff that came out of nowhere. Nobody had an explanation. It comes down to that trigger. It could possibly come before some ofof the year for the stocks you are talking about . The challenge with markets today is so many decisions are being driven by rules, by algorithms. Algorithms and machines cannot have judgment. They are programmed to act in a certain way. Parity is all designed around correlations between stocks and bonds be a negative. What if we are in a racine a regime change in Interest Rates will rise and valuations will have to decline at the same time. And thels breakdown challenge is there is a lot of leverage in terms of borrowed money in margin accounts, get a margin call, you could have dislocation. I am not saying we will have a crash yet. It sounds like we are on bubble watch. Hank you, mark yusko ahead, stock replace strategy for apple as the company gets ready to release its new iphone and its latest earnings next week. This is bloomberg. Abigail this is markets. Scarlet news timeout for options insight with julie hyman. In chicagoing me today for the options insight is the managing partner at the armor investments. We are now supposed to be saying see balance to the cbo. Nice to be here. Going seeing the selloff on today. We have not seen too many selloffs lately. Even one half of 1 drop, it is relatively unusual. What kind of activity are you seeing . Those in awo of week, we are down about 85 basis points in the s p 500. It seems that the big drop in were used to bigger ones. It is a big drop in were seeing a huge rise, over 13 on the lows. What are you seeing in terms of not just the vix but you have been the v vix as well. Is that indicating . You see more of those return to the longterm norm . Traders, the vy vix is the vix of the vix. The traders have been pricing in a big move like this all summer long. We have waited for this type of a move. We finally got one. A little clinical instability has led people to worry about a oneoff move where we saw something unexpected in the market. As you say, they have waited for it for some time and have an disappointed. The focus is very much on earnings right now. An enormous amount of single stock volatility. You are looking ahead to next thursday and apple is coming out with earnings. What is your strategy going into the Earnings Report . It is a perfect strategy. It is something where they can be little more conservative. A lot of people think of the risk your trade in that portfolio. Apple this year has had a tremendous rally. It is often the past two days but you are able to take that off and you have a big unknown event. It could rise but if it drops, i would be looking at instead of owning up stocks, i will sell and replace it by selling the november 1 50 by four dollars and collect that input. I might end at making more money by doing the trade. I will be ahead of the trade versus owning the stock. Abigail . Still ahead, more of our interview with the blackstone ceo, Steve Schwarzman p or why he says investing in saudi arabia is key for his companys future. This is bloomberg. Im done. Done with figuring it out for myself. Im done with surprises. Im done with complicated. If youre on medicare, and ready to be done with complicated, turn to unitedhealthcare and our Medicare Advantage plans. Like aarp medicarecomplete. These plans can combine your hospital and doctor coverage, with Prescription Drug coverage and more, all in one plan for a low, or even no, monthly premium. So call now. Lan for a low, or even no, monthly premium. So call now. We can answer your questions, even help you enroll. I deserve to get the most out of my plan. Well make sure your doctors are all connected, you know what your copays are. And you can save on prescriptions; plan members saved an average of over 5000 dollars last year. Medicare open enrollment ends december 7th. If youre done with complicated, if youre doso done. Complicated, so done. Call now to enroll in a plan from unitedhealthcare, like aarp medicarecomplete. [sfx mnemonic] mark it is time now for first word news. President trump says the Republican Party remains united despite the war of words with two gop senators, bob corker and jeff flake. President trump it was almost a lovefest. Maybe it was a lovefest there there is great unity. If you look at democrats with Bernie Sanders at hillary clinton, that is a mess. Mark the president was discussing his meeting with capitol hill and senate republicans. He added that senator flake to the right thing for himself by not running for reelection because the poll numbers in arizona were too low. Rex tillerson is calling on pakistan to eradicate terrorists. Secretary tillerson spoke on a visit to india. There are too many terrorist organizations that find a safe lace from in pakistan by would to conduct their attacks on other countries. He the u. S. Is concerned about terrorist groups undermining stability in pakistan. A speech in japan next