Transcripts For BLOOMBERG Whatd You Miss 20171107

Air force did not report about Devin Patrick kelley, who assaulted his thenwife and stepson while serving as an arab and. Defense secretary jim mattis as directed the Inspector General to review the circumstances of the kelly case. Election day could test the political influence of President Trump. Showrginia, polls democratic Lieutenant Governor edge overs a slight and gillespie, an adviser to former president bush. In new jersey, the democratic challenger to Lieutenant Governor kim kuan by all is expected to win large margin. In london, british lawmakers will be allowed to see Brexit Impact studies within three weeks. Last week, it was called on that the Government Research be showed to members of the brexit committee. 24 hours a day, powered by more than 27 hundred journalists and analysts in over 120, over 120 countries. Julie live from bloomberg World Headquarters in new york, im julie hyman come in for julia chatterley. Scarlet im scarlet fu. Joe im joe weisenthal. Have turnedstocks lower. The 10 year yield is down. Joe the question is, whatd you miss . President trump has dow back his rhetoric, saying that north korean dictator kim jong uncould kim jongi should come to the table, and make a deal. Troubles take the spotlight with thirdquarter results as shares of the company are trading below the ipo price. Is there more pain to calm . Pain to come . Today and soul President Trump struck a different tone from previous fiery critic on north korea. Heres more from seoul, south korea. Donald trump said it is time to stopith urgency north Koreas Nuclear and missile program. He called north korea worldwide problem many said it makes sense for pyongyang to come to the table and make a deal. That being said, trump said the united dates stands ready to use the full range of military options if needed. Trump says it south korea will order billions of dollars worth of equipment from the United States which he said could help trade deficit it has with seoul, the doubled over the past five years since the koreau. S. Free trade agreement in 2012. On china, which is Donald Trumps next stop on this 12 asian tour, he says we will find out soon, how helpful the chinese president has been and will be, on north korea. Stephen engle, Bloomberg News, seoul. Lets look at the administrations options when it comes to north korea. Is the seniorr director of the korea society. Stephen, great to see you. Heard a softer, kind of donald trump. You think it will have any effect when it comes to defusing tensions . Struck the right know, especially with the South Koreans who were concerned about unilateral action. It is certainly a softer approach and it is one that will play very well with his asian partners. Is there a scenario in this world, in which we have direct talks with north korea . Stephen there is a scenario and saying come to the negotiating table and we will bargain away. Will north korea do that . It seems to most analysts that north korea will give that up. But it seems that kim jongil and is building up his arsenal so that when he gets to the bargaining table he will have maximum action. The progress is not so much been in terms of a new tact, but more attitude and relationship wise. Trump seems to be listening to the South Koreans more. That is something that the South Koreans wanted. He came off the line in tokyo where he stood with Prime Minister shinzo abe ended take a harder line. Now we will see about china and whether the president commits more cooperation remains to be seen. Trump has backed off the threat agreementso the seems to be in little better standing. Joe trumps trip to asia, overall, so far. What is your take on it . So far he has been more restrained. He has acted more president ial. He has not much done more he has not done much more than proffered u. S. Arms sales. He is not standing strong on the trade issue but he is calibrating. Hes listening to his advisers. He seems to be taking a gentler tone and seems to be not making it a personal message against kim jongil and read and that is probably pretty good advice to ratchet back tensions that are high in the region. We need to scale is back. But remember there is three carrier groups in the pacific right now. That is unprecedented and it is a show of force that stands behind those diplomatic words. Scarlet is that the reason why unhavent seen kim jongi fire any test missiles . Stephen yes but thats not to say they want to test again. We are concerned about preparations for more tests. He may wait until trump is outside the region. He may test when proposition the region. There is still a long part of the trip ahead. When we talk about his meetings with fairies leaders, we dont talk much about public sentiment behind of those leaders. Im curious, i guess it is less relevant in china, what public sentiment is like. But when youre talking about japan and south korea, what has public sentiment been like . Relationship the sentiment and japan is strong because of the strength of the relationship. South korea has been different. There are those who support the United States, and the alliance is strong, but there are those those whoid have said no more, no trump. And those are and there are also concerns about going bilateral. Joe what do you expect, substantively, to be the highlight of the next leg of the trip . Stephen the white house has already said china has complied in terms of sanctions against north korea. However, most of what happens in beijing will be a show of lights. The president will try to charm trump. Charm seems to work on trump and he seems to have a soft spot for the president of china. Scarlet we know where we stand on north korea, where at least things are not getting worse. When it comes to trade, what is his most valuable leverage with china, japan and south korea . Interesting, is incremental. In china, we will see. Willie take the trade message take the will he trade message stronger . Stronger tradeed with the u. S. But it doesnt seem he has walked away from tokyo or soul with any dramatic improvements on that front. Coming away from this trip, it is early still but can you foresee what the big accomplishment will be, or is it just Relationship Building . Stephen a lot of it will be Relationship Building, and there will be critics who say that he didnt come back with a lot of deals, but he is setting a tone that is different. Theyre talking about indopacific unity and that stands in opposition to china. He could also cite the United States as an alternative to china. He passed on that both in japan and so far, and south korea. He does have that deference to is coming up the Party Conference looking stronger and trump understands that. He is a transactional president. Stephen, thank you so much. Coming up, before he became the most prominent target in saudi anticorruption crackdown, we have comments from the crown prince. This is bloomberg. Scarlet whatd you miss . Saudi arabias corruption crackdown is widening. The Monetary Authority ordered banks in the kingdom to freeze the accounts of dozens of are not undero arrest. The central bank has put 33 billion in wealth at risk for the richest detainees. The Group Includes prince allah wid. Eric, you met with the prince in the desert . With the prince on a couple of occasions. I had dinner with a month tuesday night on thursday night, the difference being that on tuesday night it was in riyadh and on thursday night we were in the desert week as all will waleed has a desert camp in saudi arabia. And it is not just a dinner. You are often witnessed a traditional saudi customs and ceremonies, and i was once again. A long line of bedouins came to the prince to pay their respects and ask them charity. Among his favorite topics as u. S. Tall u. S. Politics, and he loves to talk about tech stocks, as well. He is an investor in twitter. T. Talked about lyf , did he give any sign that he was only days later about to be arrested in this widening anticorruption probe . And the answer is, no. No sign whatsoever. Scarlet were his interests aligned with the crown prince . Eric it sure seems that way. Most recently, saudi arabia announced it would allow women to drive. This is something that al walid and supported. And also, he lent his support very publicly to the crown princes Economic Vision which saudies reducing dependence on oil revenue, closing the budget gap and attracting more Foreign Investment. So yes, superficially. There was Something Else going on. The charges against him, according to a saudi official who spoke with number, our money laundering, bribery and extortion. Pretty general. We dont have any of the details. All the other people arrested are charged with similar charges as well. Number ofe are a different charges. We have yet to see whether there is due process in saudi arabia, whether he gets a fair trial, whether he gets adequate representation. It is not the american justice system, that is certain. Joe when of the details in your piece that stood out was that the prince was a vegetarian, which you thought was interesting enough to include in your piece. Including those experiences, in terms of dining with him, what other things might surprise people about him . Eric this year a month of food when you dine with him. There are always for cuisines from which you can choose. Saudi, lebanese, western, which is effectively french and italian, and diet. He is a test with his calorie want and always lowcalorie food. He ichiro heard, he eats fruit, he needs almost nothing in the way of desert. He insists on exercise every iy, and these things picked up while visiting with him on a number of occasions in saudi arabia, traveling with him on a number of occasions in england. Not that think you would find out, in your first meeting. Harvested, intentionally and unintentionally, the details over a span of years. You had a said farreaching a kate a farreaching discussion during this most recent visit, did you talk about saudi politics . Eric no. It was the day that amazon and google reported and we were, in fact, watching Bloomberg Television and talking largely about tech stocks. The conversation drifted to u. S. Politics, brexit, and populism, and he has a constructive you of donald trump and he has ever since trump was elected. That is something i covered with him in an interview yuriko. But beyond that, no, we didnt delve deeply into saudi politics. Everything i have picked up from him, verbally and otherwise, nogested no disagreement, dissent, if you will. The big thing in saudi arabia these days, big thing doesnt quite come close to describing it, but it is Free Expression and dissent. The countrys modernizing its economy to break free of the and it isf oil, trying to attract Foreign Investment and technological expertise. Scarlet thats what the big conference was all about. Eric and it is liberalizing some social norms to allow women to function more along the lines of what they are able to do elsewhere in the world. The what isnt on the menu is Free Expression. And that perhaps is the dividing line between al waleed and the crown. He is a nephew of the king. The late king abdullah, who was succeeded by king salman on in 2013, was also prince al waleeds uncle. Was a favorite of prince abdullah. He does not have that kind of connection to this king. King managedthat the network of royalty the way previous kings had. There were a number of Different Power Centers and stability was achieved by allowing them to compete amongst each other, like warring tribes. But the result was to calm the waters. But this king is taking a totally different approach. It is all about the consolidation of power in the crown princes hands and as a result it creates conditions whereby he might feel more other camps of influence, if you will, within saudi society, than the previous king and his children might have. Schatzker,ik interesting perspective from his years of reporting on the saudi royal family. Starting tomorrow, we begin a here onshow bloomberg and i will be anchoring it. 12 30 p. M. Morrow at new york time and this is hiq. Erg etf Oil Production will grow much faster than expected over the next four years. We break it down. Rum new york, this is bloomberg. Julie whatd you miss . The World Outlook report released this morning forecasts that Oil Shale Production will surge ahead. If youre break it all down with us is my colleague alix steel, our resident shale expert. They had to raise their forecast 56 from shale Oil Production. Alex it was a real interesting take because they finally believed the productivity we have seen in the shale sector is temporary. And not if you look at the your to your chart, it is u. S. Oil versus production growth. Aroundte line septemberdecember of 2016, you had a decline in opec production and you ended up having an increase in u. S. Shale production. Julie production growth, just to be clear. Lix it puts opec in a bind because the more they cut, the more shale is going to grow. And this is their admission of it julie or it julie so, they are controlling what they cant, which is their own production. So far, the market seems to like what theyre doing and their commitment, the adherence to it. If you look at the shape of the oil curve, it is encouraging, right . The is the brent kurt and white line shows have brent crude has gotten much more expensive. The white line is what is happening at the moment. The blue line is a month ago. So things have changed very quickly here. It is a lot less extreme than what we are seeing right now. X thats a really interesting chart for me, inause you have devaluation the front months because of expectations that you are going to cut Oil Production from opec. But it is flat. It has not really moved at the backend. If the two dollars a barrel, and thats because you went up having u. S. Shale producers hedging read opec cannot afford to get that back end of the curve up. Hedging,mentioned getting into my chart here. What does this mean . Lix this is basically merchant short positions at the end of the day. It puts pressure on the forward oil price. You can see how it nicely peaked there a few months ago, and now we are seeing a little bit of a rebound. , 80 90 hedged for next year. They will press can go to 20 and they are still selling it at whatever they hedge to that, i am guessing at around 50. Neutral exploration isnt hedged at all and neither is continental because they want to take advantage of any monster oil rally. But those who are hedging, they are in the money. Two companies that hedge aggressively have a pattern of always hedging aggressively, and other Companies Want to ride the wave . Lix continental got beaten up for not hedging in 2014, and he doesnt care. Moreer has always been conservative and once they got rid of their debt they really want to protect their cash flow and production, so it is a really interesting point to make. Scarlet you pick your strategy and stick with it, essentially. Alix 70 come i think is what he is looking out for oil. A reminder to join alex on thursday on an hourlong special about the rise of shale how it has changed the u. S. Economy. Thats a 9 00 on thursday. The s p and nasdaq are moving modestly lower. York, this is bloomberg. Scarlet whatd you miss . Star littleton, and the 10 year yield down for the fifth straight day come on track for its longest losing streak. Im julie hyman in for juliette casserley. Joe we want to welcome you to our closing bell coverage every weekday from 4 00 to 5 00 p. M. Eastern. Scarlet lets get you started with our market minutes. A little dip inequities. Dow finishing with little change. Julie it is a record. Scarlet there you go. For now. Before it settles, it looks like it is in the plus column for the dow. Little changed lower for the s p 500 and nasdaq. A lot of talk in deals, and it continues today. Ggp possibly taking it private. Ggpting a nicep lift lift. G a nic ggp getting a nice trip advisor down by 23 . Disappointing forecast their. There. Avis lowering the high end of its forecast for profit and sales because of hurricanes, citing the hurricanes that some thought would help instead of hurt the business. I feel like the hurricanes have been this allpurpose excuse for companies. Joe lets take a look at the Government Bond market starting with the twoyear and 10 year. We see the shortterm of the market, the twoyear yield up a little to 1. 63, while the 10 year yield is down a little bit. My next chart looks at the broader 210 spread, and we are getting flatter and flatter here. The lowest since 2007. Of course, historically, if we were to invert those frequently signs efres depression recession signs. I have never seen it perfectly clear as to what is going on, but this is starting to get a lot of peoples attention. 8 Straight Days of flattening, we are seeing. It might explain some of the financial stocks. Julie yes. Most definitely. I want to take a look at what is going on in the currency market. Seeing some strength in the dollar against the euro, the yen, and the pound. Across the board, not seeing huge swings in currencies today. I want to look at a longerterm chart of the south korean won versus the japanese yen. This is one of the ways to measure the risk aversion or Risk Appetite surrounding the Korean Peninsula since presumably if tensions heat up there, that can affect currencies. Is risinghat the won versus the yen, it seems to indicate that at least right now, the read is relatively benign. President trumps comments were not the fiery type he illustrated. Scarlet really toned it down. Julie yes. Joe finally, lets take a look at commodities. Red across the board today. Not a lot of action. Oil, just a little bit of a breather today, but still above 57 a barrel. Gold selling off a touch. I bring up copper because it is economically sensitive, and it was an ugly day for the metals overall. Copper futures down 2 . Those are todays market minutes. Scarlet whatd you miss . We are awaiting circle to results from snap, a Parent Company of snapchat. Lets bring in our reporter who has been covering the changes. The shares have fallen by doubledigit percentages each time. Yeah. This is a case of maybe disappointed investors so many times that they will not be able to disappoint them this time. We have seen expectations go down pretty steadily over the course of the year. If you remember back in the beginning of the year, people were really excited about this as a Technology Story and a stock. Themuch has changed about business, but concerns about facebook, competition have really kept investors not super excited about it. Public, asnap came lot of the discussions surrounding it seemed to be, yes, this phenomenon, a lot of people are using it, but can they monetize . Is that still it, or can they monetize and be growing . Max both of those things. I think the jury is still out whether they can monetize the same way facebook can. What snap will say in their defense is this is a new product. People are still figuring out the creative aspects of it. On the other side of it, what investors did not appreciate , what no one really appreciated was how quickly facebook was going to be able to make a snapchatlike product that by some measures is bigger than snapchat. One interesting thing here is depending on how you look at the numbers, is like a rorschach test on how you feel about facebook because what snapchat says and what they will probably say today or hint at today is facebook has been engaging in growth hacking or tactics to push their number worldwide, that topline 2 billion monthly user number that you hear Mark Zuckerberg talk about. Snapchat will feel like that is not the most important number. The important number is time spent in the app and users in countries they can actually make money on. By somes that measure, their audience is comparable to facebook if you squint at it sideways. Maybe start seeing user numbers that are getting close. The truth is they have taken a different strategy, which is that they are focusing really on markets with money. They are not trying to build a huge user base in india or in parts of the developing world or Eastern Europe or whatever. Scarlet we are talking about the dancing hotdog earlier. We were talking about the dancing hotdog earlier. You make money on the dancing hot the . Dog . Max the dominoes dancing pizza man thing. Is one thing facebook has yet to knock off yet. They are very good at this. They have a lot of engineers. No disrespect to snap, but it cannot be that hard to create a dancing hot doglike thing. They see this as a potential area of growth advertising for revenue stream. Scarlet you talk about the numbers they tried to use to illustrate the engagement with their product. What do we know about the hard numbers, especially when compared with Something Like Instagram Stories . Do we know that they are pulling users away . What can we tell about migration . Max it is hard to know. It looks like snapchat it is not as if Instagram Stories have taken users out of snapchat, but it does seem possible based on the growth of Instagram Stories that snapchat is not growing as quickly as they would have liked to. They are adding users, but not in these huge numbers. The consensus of expectation is 181 million daily active, which is a big number. Instagram talks about 250 million. Joe other very important social networking scarlet especially in your world. Joe twitter has rolled out 280 character tweets. Very controversial. They tested it about a month ago. Scarlet with some users. Joe i have never seen a positive thing people have said about it. Not one. I never made it through 280 characters. I dont have the attention span. Wait. T this is often where you can tweet with as many as 280 characters . Joe you are not forced to. Scarlet maybe that will be a movement on those who refuse more than 140 characters. Joe i also vowed to block and mute anyone. Scarlet wow. Strong where from joe weisenthal, mr. Twitter himself. This rollout includes all images except japanese, korean, and chinese. To us it does like we just can many iny twice as fewer characters. Julie is this something that is going to help twitter for that matter when we see these various services throwing out measures like this . Max the 280 character thing . Julie yes. Knock on twitter is they have not able to innovate and improve their product at the pace that users would like. People have been talking for years about, why can you not edit tweets. . If you misspell something, it would be nice to fix it. On the other hand, i dont know. It seems maybe a little desperate or a little scattered as well. Joe looking at this story, thinking about twitter and snapchat, one of the main sources of anxiety for this entire space is facebook is just so powerful. Social networking is such a network effect, trending to monopolymode business. There is not much room for a number two in this space. You have one dominant player, and everybody fighting for the scraps. And it is not clear that these scraps are enough to live on. Snap has looked concerned that it is in the same boat as twitter. Max twitter looms over snap because people thought twitter as a legitimate threat to facebook, and now, that was like it will not happen. Two cautions around facebook. They have huge reputational risks right now. The congressional hearings that we saw last week, i think those can be viewed as embarrassing to facebook. That may not resolve itself immediately. The other thing is that Network Effects work in both directions. It is true that once you have a big network, you are very powerful and everything. Hand, oncer something stops being cool, users can be pulled away from it very quickly. I think Mark Zuckerberg knows this, and is why he has been so aggressive in terms of buying competitors. They just bought this tiny app that was big with kids called tbh. You look back at the whatsapp acquisition, the attempted snapchat acquisition. Facebook itself is not still cool, is it . I am on facebook. Talking a year ago about how teenagers did not want to use facebook anymore. You are saying they bought the stuff that is cool. Max yes. They have been aggressive in terms of buying the next cool thing. Everybody thought they overpay for instagram. In retrospect, that was a great deal for them. I think that if you are trying to make a case for why you might be a little more skeptical of facebook than people on madison avenue, who are very bullish on this platform, you would say it is not cool anymore and that the kids are not as into it. Numbers,at snapchats especially with 1318 or 13 to 24. 18 or 13 to 24. They look pretty good. Scarlet max cover twitter, snap, and we are still awaiting snaps results. In the meantime, we did get numbers crossing for zillow. Thirdquarter revenue beat the highest analyst estimates. Share price up almost 8 in extended trading right now. Etf for the Third Quarter on an adjusted basis with . 19, two pennies better than expected. It raised the revenue profitability as well. Zillow coming in with a beat and raised here. That stock rising by 7. 6 . Julie coming up, chairman of the house ways and means subcommittee on tax policy and illinois congressman peter roskam will join us to talk about the latest in tax reform. Also, we will have these not earnings when they do come out the snap earnings when they come out, or the snap results. Scarlet no money being made there. Mark im mark clinton with first word news. President trump is calling for greater collective pressure on north korea. Speaking in seoul on a press , President Trump expressed solidarity with south korea. As the southmp Korean People know so well, it is time to act with urgency and with great determination. All nations must increment Un Security Council implement councilrity recommendations. Mark President Trump said he looks forward to negotiations with president moon on deals that are mutually beneficial. Prince saids crown today that the Ballistic Missile launched at the kingdom by rebels was indirect aggression by the iranian regime. In response, the Saudi Led Coalition grounded all humanitarian flights to yemen. In brussels, the former catalan president addressed a group of visiting mayors from catalonia. He says that next month, he will be at the ballot box what he calls these finishers repressions of catalonias wishes for independence. To brussels after the Spanish Government dismissed the Regional Government in catalonia and the parliament as well because of their attempts to secede from spain. Madrid says it is upholding the law, but he claims he and his separatist allies are being persecuted. Chairent trumps fed nominee may have to wait until after thanksgiving for his Senate Confirmation hearing. According to Panel Chairman , he will most likely testify in front of the Senate Banking committee after november 23, but hopes are to move quickly, meaning in a matter of weeks. He voted against powell when he was reappointed to the Central Banks board in 2014. 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. All right. We have snap results out. It was a loss for the company. Adjusted loss per share, . 14. That is more narrow than what they had anticipated, but on the revenue side, this is a big miss here. 2. 79 million was the reported revenue number. Estimates ranged from 212 to 225 million. Snap coming in with a sales number that is lower than analysts had anticipated. The daily average user for the quarter, 178 million. Analysts were looking for 180. 5 million. Joe pretty bleak number. Ad numbers declined. There is a strong likelihood the redesign of the application will be disruptive to the business. That a combination investors typically do not like to see. It is not good, and it is the same story that has been playing out for this year. Joe the stock down 18. 5 , getting worse. Th which is what we have seen the last two quarters they have reported. Part of what they are trying to do is get more programmatic ad buying, the engine that drives facebook and googles revenue. When you have an auction market, you need a lot of buyers, and without a lot of buyers, the prices start going down. And was not cap is hoping that as people start to embrace it what snapchat is hoping is that people start to embrace it. On the user on, it is the same story, which is really fierce competition from facebook. Facebook is knowing everything it can at this company. And it is pretty remarkable what was said here that joel was just talking about, that it is doing a redesign because one of the complaints is the app is too difficult to use. Not only are they already coming in lower than estimated in terms of users, but he is essentially saying that that could continue to happen because as they do this change, are we going to see users further leave the app because they liked the hard part of using it . Joe one of the interesting things max one of the things about snap was the book feature about easeofuse. Kids liked it because their parents did not understand it. Parents are customers, too. Parents by stuff buy stuff and everything. You get into this push and pull of, is it cool, does it bring revenue . For snap, it feels like the cool factor is not quite as hot and as it was and the revenue has not caught up yet. Joe what a relief for me not having wasted time learning. I never got into snap, or at least i did not spend the time. Max they rolled out this amazing cool feature, the map feature, which allows you to explore what is happening. I am a sophisticated user of social media apps. I had to google how to get to the map. It is so complicated. Is snapped a social Media Company . You cannot like other peoples posts. You cannot share it. That is part of the appeal of facebook or twitter or other social media companies. Max that is 100 true. You can make a strong argument they are not a social Media Company. They would argue that is a good thing and they are more like a traditional Media Company. They would point to the success of some of the shows. They have this side of the business that looks more like basically a cable tv platform or something. Like youtube. Themax they are commissioning original programming. It is hard to know what to make of them. It is hard to know, does the daily audience of 10 million how much should that matter for a particular show . Thank you so much. Those snap shares continued their downward trajectory in the afterhours session. When we were previewing it, it is hard to see with the expectation so low. How can they miss again . They have gone and done it, apparently. We will see what he says on the call. Thank you so much, max, who covers the company for us. Whatd you miss . Today, the house taxwriting committee is entering its second day of work to hammer out the details of the gop taxcut program. Here to talk about the latest negotiations is the chairman of the house ways and means tax policy subcommittee peter roskam. Congressman, thank you for joining us here. Give us the latest on the progress of this tax bill and what is most significant to you that has happened over the course of the day. Rep. Roskam so what is most significant, i think, is you are having a robust dynamic good debate in public. A lot of feedback and a lot of input all the way around. Yesterday, the ways and Means Committee took up this bill. Is known as a markup process. The bottom line is it is slow and deliberate in. Deliberative. This is the nature of this process. What is important is the process is moving forward, and this is the first time you have seen something this significant in a few decades of this magnitude as it relates to tax policy, so it is on track to try to get the tax plans and tax relief in place by the end of the year. Kam, aongressman ros couple weeks ago, we were pointing to the ceo of the National Association of homebuilders, who is talking about fighting tooth and the other against this bill. You talk about, we have members in every district of the country who will be hammering congressmen on this. Have you heard from that industry in your district . Have you talked to them about your concerns . Rep. Roskam they have concerns. I have heard from a wide range of people who were in favor of it and cautious of it. We know the status quo is not working for us. The Home Builders in particular have a concern in terms of mortgage interest reduction. We are doubling the standard reduction for most americans. Our theory is, it is not really a theory. We will give people money and they will decide what to do with it. Here is what yo we kno. If you track home prices over the last several decades going to track closely with an expanding economy. As things grow, home prices go up and so forth. Thiswe are designing, ultimate package is to drive real Economic Growth, and we everybody,h benefits and we think when push comes to shove, most of these folks will be satisfied with a net product that we come out with. This bill will add 1. 5 trillion or somewhere in the neighborhood to the National Debt over a 10 year period. Why is it something that fiscal hawks why is it something to be comfortable with . Rep. Roskam to your point, there is no level of comfort when it comes to taking on debt, but we do take on debt in our personal lives, and businesses take on debt, and we look at debt as a tool to be used within and game. End game. We have set we will take on this said we will take on this debt, but here is what we get for this debt. We get an economy that is robust again and a tax code that is transformational. We are convinced, and you look at the tax foundation, a lot of other folks that have evaluated this, and they said the type of Economic Growth we can see coming out as a result of this can be really transformational, so i accept the premise that it is taking on debt, but it is debt with a purpose and not into perpetuity. Look, lets is say, stick with the status quo and rub our hands and moan and groan , that will not get us out of where we are. We need growth to deal with the debt question. Debt is related not only to the amount of tax revenues we are contemplating, but ultimately it is a spending question. This is a revenue discussion. By transforming our tax code, making u. S. One of the most imperative Tax Jurisdictions in the world, getting the corporate right down to 20 , moving to a territorial system so the money is repatriated and so forth, dealing with business income on passthroughs at a lower rate for the first time ever, and getting the business income rate down to world war ii levels, that is really worth chasing. At the same time we are talking about this 20 Corporate Tax rate, at the same time, there is something called an atomic bomb in the draft legislation, which is a new 20 tax on offshore affiliates of u. S. Based companies, something that could affect the Biggest Companies in america and something they are not too happy about. Rep. Roskam ok. I heard a lot of hyperbole over the past of of weeks. Of taliban, i mean, god bless mean, godomic bomb, i bless them. If you move to a torrent oil system and do not do the territorial tax, we have to come up with some remedy that will give companies from putting their intellectual property offshore to a low Tax Jurisdiction and not pay any taxes. You would actually exacerbate the erosion problem. What we proposed is a remedy. My view is we will continue to get feedback on it. If people do not like the proposal, it is incumbent upon opponents of a territorial system to come and say, here is how we fix the base erosion problem. Most folks are really interested, i think, but the notion of things will is moved to a territorial system is not good enough. Congressman peter roskam of illinois, thank you so much with your time. Snap is tumbling. It is down 17 at the moment as in missed on revenue and active user estimates. Next, we will dig more into the numbers. From new york, 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. M im mark rk i am mark clinton with first word news. At issue, whether he obtained information on Hillary Clinton during his june 2016 meeting with russian lawyer with a russian lawyer. According to the panels top democrat, in the committee must deal with other individuals who were at the meeting. They have already interviewed Jared Kushner and paul manafort. A houston tv station had a kelleyreport that showed threatened his air force superiors. Done toed what can be prevent such incidents, House Speaker paul ryan told reporters existing gun laws should be enforced. This man should not have gotten a gun. He was a domestic abuser. We have laws in the post that says if youre are a domestic abuser, youre not supposed to own a gun. He was a domestic abuser. That is why we have all of these questions with the air force right now. How did this slip through the crack . Mark the shooter served in the military, but the air force failed to report his Domestic Violence conviction to the federal database that is used to conduct background checks. Has known for at least two decades about failures of giving criminal history information to the fbi. According to the associated press, that includes information the air force did not report kelley, whopatrck assaulted his wife and stepson while serving as an enlisted airman. Jim mattis said today that he directed the pentagon Inspector General to review circumstances of the kelley case. British lawmakers will be allowed to city budget impact studies within three weeks. Last week, the house of commons approved a motion calling for the Government Research to be shown to members of the brexit committee. Brexit minister steve baker downplayed expectations of what these studies will show. 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. Thank you, mark. Snap results just out this hour. The Company Still is not meeting much lower projections for growth. Lets get more insight from sarah frier of Bloomberg News from san francisco. Thank you for joining us. So the numbers that really stand out are the user numbers, which came in weaker than estimated, and the revenue numbers. What is snap activating this miss to, if they are commenting specifically on it . Sarah i read some of the prepared remarks. A couple of interesting things here. Revenues oft missed at least because the company has been transitioning to its optionbased model as opposed to selling the space piece by piece. They are making it easy for people to sell it so the prices have gone way down, down 60 . Although snap has a lot more advertisers that it is catering to now, they are not paying the high prices they used to pay when this was an experiment for them. The second thing that is really important to note here is the company is disappointed about its user growth, and they are taking a dramatic step to take. Snap is a hard to use application. That will redesign it so he can appeal to a broader audience. Does that mean they are giving up on the young demographic that has been driving the growth of the company so far . Snaps argument all along is these are sticky customers and was really valuable. Sarah they are not giving up on the democratic. They are hoping they can build something that will appeal to them and reach to people beyond the demographic. What is interesting is this could be disruptive. This redesign could be disruptive to their future growth in the shortterm, and they are also going to include a component in their redesign that looks very similar to Facebooks Newsfeed if i am reading it correctly. It will have a personalized feed of the stories that they think might be most relevant to you. Sounds familiar. Yes it does. It want to be on the same service as a grandparent or mother. Joe that is always an issue. What is your take on that . Do they risk losing the coolness factor . Sarah snap has always wanted to have a limited group of people engaging very frequently. In matters more to them, not how many users they have, but how engrossed those users are, sending messages to each other. They do not see themselves as a social network. They see themselves as a messaging platform that happens to have a content arm. But now they are starting to face that the contents can also include they mentioned content from social famous creators like influencers on snap. They will start to make it more hospitable to people like that, and they are going to try to get the content more in front of its users than they have before. We dont know exactly what that is going to look like, but they are going to do it in such a way that preserves the integrity of what they built so far. Not sure what that means, but we will see. I just want to mention we keep seeing the stock price flip to unchanged from seeing a steep drop. If you want to take a look at the bloomberg here, i am showing the stock in the afterhours, and it looks like some bids have been coming in at the Closing Price today interestingly enough. A series of bits in were the stock closed today at 16. 12. That in caseo note you are wondering why it keeps showing periodically that the stock is unchanged. Scarlet or down 18 . You can catch more coverage of snaps results at 5 00 p. M. On bloomberg technology. Whatd you miss . How the Hotel Industry is being redirected by shifting geopolitical wins. The latest disruption came in saudi arabias surprised corruption crackdown led to the arrest of a saudi prince, alwaleed bin talal. Company, kingdom holdings, is the coowner of before Season Hotels and the plaz new york plaza hote. We want to bring in our guest. This is a story you were editing. How did you come up with this . There are a lot of examples around the world, but how did you come to put it under the umbrella of shifting geopolitical winds . Our reporter was on top of it and basically looked into the has ownedthe prince by a decade now with bill gatess company and the founder and just want to look at the hotel. He has been affected. His ownership. China has been making huge investments in hotels in the u. S. The last couple of years. , the president of this country is a hotel owner and has been affected by geopolitical shifts also. Joe what are we seeing about the actual performance of hotel chains . Obviously, hotels in the crosshairs. A lot of interesting geopolitical things happening right now. For the actual business in terms of how much money they are making an room prices and all of that, how is that being affected . Daniel largely, hotels are affected by the economy. When business is doing well and people are booking conferences and doing Business Travel hotels do well. When people have more money in their pockets and are able to take trips for pleasure, hotels do well. Hotels themselves are not necessarily as affected. The exception would probably be trumps hotels. By. Hotels have been helped trump staying at his hotel. On the other end of the spectrum are people that are not a fan of trumps policies and have been avoiding his hotels. What kind of commentary to we do we get from these companies about geopolitical risks . Have we heard from four seasons about what happened in any affect . Daniel they say they have had no impact. Business as usual there. Thatott said last week trumps presidency has pushed people to hold events at Canadian Hotels instead. If you are not a fan of trumps s policies and canada, you might do that trumps policies and you are between, u. S. And canada, you might do that. Joe politically powerful people around the world. Daniel they are wellknown assets. They have big names. The people who invest in them stay in them. Offices and apartments and other assets can be a little more opaque. It is easy to understand. You can see how they are doing by being a visitor there yourself. In the case of our president , you can put your name on them. Thanks. Appreciate it. Coming up, it is election day in america. Virginians are among those picking the next governor in a race that has got the National Attention as a possible weathervane for the president. Tomorrow, you will hear more on tax reform at 11 30 a. M. New york time. We will be talking to Steve Mnuchin on bloomberg markets. From new york, this is bloomberg. Whatd you miss . It has been one year since President Trumps surprise victory, and today, americans are heading back to the polls. While the president himself is not on the ballot, his agenda certainly is. The virginia Gubernatorial Race is getting National Attention as a weathervane for the white house. Democrats are desperate for any win while republicans are struggling to find their footing with an establishment candidate in the age of trump. For more, we are joined by Greg Sullivan of Bloomberg News in washington. Joe thank you very much for joining us. What is the number one thing people are going to be turning on cable news tonight to see the returns come in . What is the number one thing early on they should be watching for to see, to pick up lessons from this election . Well, obviously, they will be watching for the Virginia Election results. There are a few races going on tonight, but the only one i can be a bellwether is the Virginia Governor race. I dont know about early on, but since we expect the results to come in pretty late tonight, it will be a tight race. We probably will not know until later tonight, but that is the one race to watch to see can a republican win in the age of trump . Or are democrats going to continue to struggle . What has the republican strategy been . There has been a lot of talk about how he has not frequently invoked the president , but although the president endorsed him, including on twitter, i believe he made some comments today, that gillespie has kept his distance. Greg it is interesting because yes, trump has not appeared in virginia with gillespie. Obama appeared with the democrat. Trump has not made a personal appearance aside from a couple of tweaks. Tweets. However, gillespie is running on a very trumplike ad platform. He is learning about crime and mentioning the nfl protests. Crime and immigration. He is seeing if you can run on these trump themes while still keeping a distance from the president himself. Joe is it fair to say that gillespie has changed since his advisor to george w. Bush . Greg he is definitely running very different. He used to run very differently are issues like immigration. He is an establishment type of republican. He was the head of the rnc. He worked for george w. Bush. He was softer on immigration earlier. He has been running this whole campaign very differently than he ran his previous campaigns. I think it is fair to say he has themes forhe trump seem this campaign. He has drawn the support of my parents and george w. Bush and President Trump. Mike pence and george w. Bush and President Trump. Sort of an establishment candidate, is not. I want to draw your attention to new jersey. What can you tell us about who is in the running there . Greg we have two candidates. The Democrat Murphy has never Held Elected Office before, and he is running ahead of the republican by double digits. Of course, the republican is the current Lieutenant Governor. She is being played by Chris Christies unfavorable polling. She just has not managed to gain traction. It is actually interesting because she recently has taken a similar term like a trying to embrace the trumpian themes on immigration, and it does not look like it is working in the polls as it has for gillespie. The reason we are not seeing new jersey as quite be bellwether race is even though Chris Christie says the election is not about him, it is kind of. About Chris Christie kind of about Chris Christie. Greg that is fair. It usually is. Joe constitutional things, constitutional convention. Greg i would not expect too many surprises out of new york. The real race to watch is virginia. Joe big picture are virginia, democrats in theory should be able to win it because hillary won virginia pretty easily. I do not even think it was that close. Trumps Approval Rating is very low. The backlash, midterms, the out of power party typically does well. Does it suggest something deeply bleak about their prospect of taking back the house or winning the white house i 2020 if they dont win . Greg there is more to read in this if democrats lose than if they win. They have everything in their favor. Polls. E ahead in the they hope will senate seats and the governorship right now. Hillary won by 25 . This is their race to lose. If they win and within a 3 margin, it does not tell us much. If they lose, it tells us a lot. Thanks. He will be burning the midnight oil tonight watching the election results. Are you going to vote today . It is a long story, but yes, i voted. Joe . Joe it is a long story. [laughter] i am actually going to go vote. I think the polls are open until 9 00 p. M. I have to read up on the constitutional convention. Joe you have plenty of time. Different endorsements and opinions on the constitution or what some people call the con con. Rat coming up next, equity Group Investor says the Corporate Tax rate is detrimental to the u. S. We will hear his thoughts on tax reform. From new york, this is bloomberg. Whatd you miss . As it makes its way through congress, the tax reform looks take it will affect different parts of the economy, including investors. Sam spoke with bloomberg about how the proposed changes could affect his business. As it stands right now, not vary significantly. Very significantly. There are a lot of tweaks. There is an obvious attempt to lower the Corporate Tax rate, which i think is very detrimental to the United States, having the third highest Corporate Tax rate in the world. That just does not make sense. I think that is, from my perspective, the most significant change that we should all be encouraging. Do you pay a fair amount of Corporate Taxes through your companys . Will you make more money if the Corporate Tax rate is reduced to 20 . Sam some, but you know, three of my companies are passed through vehicles. One of them is a full taxpayer who plays a lot of tax. I think that puts it in a negative Competitive Position with its competitors around the world. What about the Interest Deduction if it is limited to 30 of your income . Sam hard to say. I think that is likely to be a minor problem. Carriedu talk about the interest provision, which i understand the amendment would extend the amount of time you have to hold the interest in order to take the beneficial tax Capital Gains tax treatmen. Why is this a surprise . It was a surprise they kept it in the bill because the president campaigned against it. Does not raise a lot money for the treasury so they could get rid of it, but obviously, with people who take advantage of it have lobbied hard to keep it, the change they made will still be there, but you have to hold onto an investment for three years before you can claim the benefit. How do you feel about that . Sam i think this is all a tempest in a teapot. Nobody understands. We are talking about his carry interest or interests and sponsors of funds. There are very few funds that begin and end in one year. There arer of fact, very few that begin and end in three years. I did a couple of major funds in the 1990s. One was nine years. One was 10 years. The fact that i was a tenure investor in my own fun suggestsd fund suggests a Capital Gains treatment is effective. This is cosmetic. It is symbolic because it became an issue for the president in railing against the wealthy. Sam is the perfect guy to have on here because he is involved in so many different businesses. It to a lot of different businesses in different ways. You have real estate investments. Real estate is going to do very well because of the 30 cap on Interest Payments does not apply to real estate developments. Real Estate Developers also get to keep their state and local tax breaks, which other people will lose, so there are a lot of benefits here and pass throughs. Great treatment for passthrough businesses, but if you are in private equity, the cap uninterested options hurts you. There are many different moving parts to this that will make it hard not only for sam zell, but for a lot of people to figure out how they come out of this. Sam in a line of cases, people will restructure the way they do transactions as they always have since the beginning of time, to accommodate whatever the government doesnt taxes. Tha does on taxes. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Whatd you miss . U. S. Stocks basically finished little changed for all intents and purposes, so it all goes back to earnings. Snap declining in afterhours trading. Joe one of the big losers today perhaps on the combination of tax reform stuff. Do not miss this. President trump to beijing, where he will meet with president shootinping. Itll be interesting to see if they discuss north korea and what kind of pressure the president tries to bring. Joe i will be looking for earnings out tomorrow for 20th century fox and square, the payment company. They report their earnings after the bell. We will be covering that for you here on whatd you miss . Bloomberg etf iq debuts tomorrow. This is the only show focused solely on etf. Joe that is going to be fun. Cannot wait. That does it for whatd you miss . Bloomberg technology his up next. Is up next. Have a great evening. 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] i am in washington, and you are watching bloomberg technology. Lets start with a check of your first word news. President trump joined south koreas president in calling for greater collective pressure on north korea. The southtrump as Korean People know so well, it is time to act with urgency and with great determination. Implement unust Security Council regulations and cease trade and business entirely with north korea. It is election day for some in the u. S. As virginia chooses between a democrat and a republican for governor. In new jersey, republican Lieutenant Governor is challenging a former democrat to replace the outgoing governor, Chris Christie. In new york, bill de blasio is up against a republican challenger. The pentagon has been aware for at least two decades about failures to