Slightly lower. Now we have seen something of a turnaround. Here are some large stocks like apple that have been rising. We continue to watch the developing story of whether at t will be successful in its 85 billion acquisition of time warner. The company is ramping up preparations to fight the Justice Department in court if the agency sues to block the deal. This is according to people familiar with the matter. At t said to be unwilling to part with some of the Networks Like the nn, hbo, and wb studio. The chief Financial Officer john stevens said the timing of the deal, which was originally expected to close at the end of the year, is now uncertain. That is what triggered the selloff and time warner. Down nearly 5 . At t little changed. As a result of the elections across the country, we are watching the drug makers today. Voters in ohio defeated a Ballot Initiative to cap drug prices paid by the state at the same discounted level paid by the u. S. Department of veterans affairs. This will have been perhaps a bellwether for the industry. We are seeing drugmakers raleigh rise. Finally a check on snap. Not just the stock price but the market value. Snap came out with numbers that missed estimates. Shares plunged. They were covered somewhat today after tencent revealed a stake in the company. Than it went then it went back down again. Almost at a level on that with twitter, which is interesting because when snap was going public tried to distinguish this thing with itself separate itself from the likes of twitter. Now they are about the same size in terms of market cap. Julia now asiapacific. President trump tries to get agreements im chosen the u. S. China trade deficit. Wilbur ross announcing a 9 billion worth of deals. The apex forum kicks off in vietnam this week. Previewing his nations goals, Vladimir Putin wrote for bloomberg view. Was support the idea of forming a free trade area. Russia has put forward a number of specific initiatives and hitting unifying the Digital Economy and trade rules, harmonizing technical standards, coordinating strategies for hightech markets, and creating a uniform conceptual framework for the digital space. We will give you a moment to observe that. Lets bring in alex. He joins us from washington. Lets take a step back. For me, lets look at some of the imagery of donald trump arriving in china. A stark contrast to the trip president obama made in the final few weeks of his administration. He did not get a red carpet the same weight donald trump did. Lets talk about the differences in the relationship between the two men. Alex donald trump actually got stairs rolled up to his playing. That was fancy. He has clearly tried to foster a Good Relationship with xi despite his rhetoric against china. It seems to have worked somewhat. It is a very curious relationship between the two countries right now. We are economic rivals. Trump seems to be stoking the rivalry that he talked to his Political Base in the country. But the two men themselves get along great. I dont know what is going to come of all this. They are announcing the deals while they are in china. Maybe 250 billion worth. A lot of it will be nonbinding memorandums of understanding, not actual contracts. It does seem like trump will leave china was something to brag about. I dont know if he is going to north korea though. Is between xi jinping and President Trump whose Approval Rating has fallen to a new low and has seen his brand of politics and rebuke because of yesterdays Election Results. Talk about the kind of pressure the president is under to come out of this reading was something to show for it, especially when it comes to north korea. Alex the white house is insisting President Trump is not a weaker leader. He has got a stronger hand in this relationship as xi does. The Election Results sure seem to cast those statements of the doubt. He was trounced in the election last night, no other way to put it. He does need to come away from china with some of the economic benefits he promised in his campaign. The ones that are not yet materialized. He boasts about the stock market in gdp growth and takes credit for those things, but there is not you cannot attach those advancements to a specific policy that trump has won. The is not accomplished anything in congress yet. Julia tie the two dynamics here that you discussed between president xi and President Trump. There has been concern as far as north korea is concerned, actually the consolidation of power weve seen from president xi might make him less or more reluctant actually to give ground on the north korean issue. But we have seen from President Trump is a more president ial donald trump. Even an olive branch to north korea. We will offer you a path for a better future. If we tie the things together, the diplomacy option more on the table than it was before . Alex he continues to go back and forth on that. This morning he tweeted from china another threat to north korea. Dont try us in all caps ons twitter account. He was not using his iphone at the time. It is not clear really put the approach is to north korea. I think the are getting more cooperation from china than we did in the past, but the fact isnorth korea north koreas nukes are not pointed at china. We really dont know what his incentive is to pressure or put more pressure on north korea. I think it is notable north korea has not yet committed a provocation well trump is in asia. They have not said much about him being there. Scarlet when President Trump spoke in south korea he called on china to cut off kim. The you expect this to be something they do in front of the cameras or only when they are turned off . Alex i dont think you will see trump confront xi in person on north korea with a camera running, no. These are private conversations if they are had it all. Trump has a track record of being more confrontational with foreign leaders when he is not meeting with them. In with the meeting happens the kind of backs down. Tweeting in china. Twitter is not working. Bloomberg white house editor, thank you. Scarlet lets give you a check in the first word news with Mark Crumpton as julia wonders why she was not able to tweak. Tweet. Mark the u. S. Treasury secretary Steve Mnuchin told Michael Mckee about his support for President Trumps proposed tax cuts. Our strong preference is that the Corporate Tax rate starts next year. The longer we wait the worse it is for the economy and making companies competitive. We look forward to working with the senate as the details come out. Mark secretary mnuchin did emphasize the administrations the needeference for to start before the end of the year. There has been a gag order issued in the Paul Manafort case. Manafort and his deputy for indicted on Money Laundering and other charges from the investigation on the russian and once in last years election. The judge has barred all parties are making statements to the public. Anita hill, one of the first woman to publicly accuse a powerful man of Sexual Harassment today criticized President Trump, saying his language makes an attempt to normalize predatory behavior. That bloombergs gearhead conference, she told John Mickelthwait that Corporate Leaders can learn an important lesson from mr. Trumps dismissal of Sexual Harassment. We are now up to 90 of companies, may be over 90 have some kind of policy in play. There has been progress. If you read anything in the last few weeks you know theyr there has not been enough progress. Mark the state department announced new restrictions on travel with cuba today. 80 hotels were placed on the list of prohibiting americas from americans from doing business with them. Visitors to deal with licensed tour operators will be reinstated. The u. S. Is making changes to its export Licensing Program designed to steer Economic Activity away from the cuban government and towards the private sector. 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. Scarlet . Scarlet politico reporting the senate said it planned its tax bill relief on thursday at 11 30 a. M. We heard earlier that the senate would not be releasing its tax reform on thursday as scheduled, another now the latest is it will have an 11 30. We will bring you the details when it happens. Ahead, tencent gambles. And snapchat. What this tencent see in snap . This is bloomberg. Julia breaking news. The u. K. s cabinet minister has resigned. This is a Story Building over the last 24 hours. Concerns about secret meetings over in israel. All sorts to resign. Vince cable this outrageous. Calling this outrageous. The former labor minister saying patels behavior has been worth resigning. Secretarys cabinet got an a week for theresa may . Julia the secretary best the defense secretary stepping down and now priti patel. Theresa may continuing to have to deal with these issues, nothing to do with Critical Issues the u. K. Faces at this moment and that is the brexit talks. Another member of the cabinet bites the dust. Shares of snap over the past 24 hours. Lets look at those. Lets have a quick look at the bloomberg 5317. Snap stock plunging in afterhours trading. Disappointing thirdquarter results. Then today in premarket trading shares spiked. Tencentrise were that but a snake and snapchat. Bought a stake in snapchat. But the steam now coming out of the upward movement in the share prices. Lets talk about what happened. Joining us is an internet analyst at jefferies. A buy rating of 15. Exciting times. Lets talk about what is going on with tencent. All the optimism in the trading this morning, now its kind of filtering away. With you make of tencent . What you make of tencent . They couldve called up and said we want to invest. Yet they notified them of the growing interest. What you make of it . It does not hurt to have dominateike tencent the mobile world and asia. We think there is tremendous amount of energy they can handle in a partnership, or even just simple advice about what is happening. If you look at snaps business, they are largely untouched and asian countries. Largely a u. S. And europe focus. There is opportunity to have a relationship and potentially partner. I think some investors have speculated that could be a larger ownership down the road. Certainly a partnership of this magnitude does not hurt them. It should help them over a period of time. They did not talk about this on the earnings call. There was no mention of it in the conversations we had with the team since the quarter. Julia that is the point. You are assuming this is a friendly gesture. Why would they not have said if this was about information sharing, knowledge sharing . Tencent has had huge success. Wechat. Huge success in this space. Am i being melodramatic to be cautious about their intentions . Brent we dont know what they have said behind the scenes to each other. I think what we have been surprised that in general is snaps for communication with wall street. I have covered technology for 20 years. This company is one of the only companies that adults that does not provide public guidance. Their head of engineering left after the quarter called. They did not address that on the quarter called. I think that is really upsetting a lot of investors that we spoke with today, including a couple of the top 10 holders that said this is not this is uncalled for. I think in general there is a sense that snap can do a better think communicating and i they are in the penalty box now because not only in numbers but their ongoing communication which has been the third miss in a row to the street. All these analysts are trying to put together a thought process on where the numbers are shaking down. We are all coming in well outside the mark. Julia such an important point about you medication. Scarlet the lack of communication and the misses resulted in big takedowns of the share price. Step is followed by doubledigit percentages the day after its results. It only reported results three times since it became a public company. Brent, given that snap does not offer a quarterly or annual guidance, what can the company say about how it is changing its format . Changing the way it functions . What do you know now you did not know two days ago about how it is going to improve its operations . Brent the first thing you have to do when you have a problem is admit you have a problem. Give snap credit for coming out and saying we will have to redesign our user interface. Others have been complaining about how hard the application is the use. I was a prior developer in my earlier life. My 12yearold knows that operate this, but a 40yearold cannot figure out how to operate this system. Scarlet isnt that the point . A 40yearold should be able to operate it should not be able to operate at a younger person can . Brent it should be restricted in its demographic. Is there a bigger way as you age a better way to handle a user interface . We think the answer is yes. They have to change the u. I. Advertisers want better tools. Wall street wants better to medication from them. I think it is a pretty easy checklist that i would think they would be more open to listening to. They are clearly taking point on the u. I. Again, they addressed it. Will this create an air pocket . But if it is that much better they can attract that many more users. The user account was very disappointing. And they could attract more advertisers. This was a good step in the right direction but they have a long list of todo items. We have a pretty clear list i think they can check off. Julia lets go back to tencent. If we look at what they have achieved, they added games, news feeds, monetization opportunities. Do you think there are things that snapchat, snap itself can learn from tencent and adopt . It is not like they are doing something secretive. All that information, all the optionality has always been available to them. It seems to have been a struggle, for is it actually too late . When you look at comparative users the like of facebook has with their product. Brent snap needs all the advice they can get. They need to take as much as they can from these partnerships, potential partnerships and my from them. Facebook today in the u. S. And canada has more users than snap has globally. When you think about the lead and the engagement and what facebook has done, and thats the number one story we recommended to our investors, is that the scale will be difficult to defeat. Our view would be i think they can learn a lot from a leader in the industry. I think they should be more open. They are not communicating to us, but there is clearly a lot of synergy down the road. We just dont know enough details and they have not been public with this situation. Scarlet listen to investors, analysts and perhaps tencent. Brent, think is so much. A bloomberg exclusive michael corrbet will be joining us to talk about the banks Biggest Challenges and opportunities. From new york, this is bloomberg. This is bloomberg markets. Julia it is time for the Bloomberg Business flash, a look at some of the biggest Business News right now. Help billions of accounts were compromised under her watch. She testified at the Senate Committee hearings. To this day, as i understand it, we have not been able to identify the intrusion that led to that theft. We have received files from Law Enforcement that contained yahoo data. We verified he came from yahoo . We dont is that we understand how the act was perpetrated. Julia verizon acquired most of when Marissa Mayer step down. The Justice Department is trying to block their acquisition of time warner. Thats according to people familiar to say their regulators want at t to divest assets. They can to the merger may not close before the end of the year. Merger may not close before the end of the year. Scarlet ahead, the ceo of citigroup live fo on the year ahead summit. He will talk about some of the banks Biggest Challenges after a setback with saudi arabia. This is bloomberg. Distributed ledger technology, verification, the trust built into the code, if you will. One thing is required that wall street has been bad at, and that is standardization. How long is it going to take for the industry to standardize around the private block chain, and which one is it going to be . Because there are, as you know, a number of competing protocols. I do not think we necessarily need to standardize around the industry, but i think we have to come to common standards in terms of what we develop. We have already developed our own technology within citi. We have something we have experience minted experimented with called citi coin. It will use distributed ledger technology, managing money across the firm. As we move forward that is why i say maybe that moment comes when a government actually introduces its own Digital Currencies and forces the industry to match excess ability in and out of the currency. Meantime meantime, you can run it internally. We can. Mike the reason i ask about isndardization is finance going to a point where gets rid behind the scenes, if you will, back room costs associated with clearing the settlement and the capital you have to put up. Jpmorgan, bank of america, wells fargo, etc. , are all going to on that network. Is it the citi network . We move money, about 4 trillion a day, around the world. A lot of that is in some digital or nonphysical form. We are actually not moving piles of money. Ofay, does not roots those networks exist. Yesterday, we were at the clearinghouse getting ready to launch realtime payments, longoverdue. We all have to use the same protocols and procedures to be part of that. I would view this, as it evolves, as a natural evolution. Mike we hear a bloomberg see a real hunger for information and foryptocurrencies information about this technology. Is there yet a similarly real demand, if you will, for access to launching technology from clients or even access to crypto as an investable asset from clients . I would say it has been fairly limited and concentrated in terms of interest. I would encourage people to go and download it and try and use it. It is still pretty clunky today. When you want to go to the corner store or get a left of spread mike my corner store does not take it coin for 7,000. It you cannot be dismissive on the Underlying Technology and what it represents in terms of the next things that are coming down the pike. Mike i love this idea you introduce at the very beginning government,ts or a perhaps, like the u. S. Government, that the Treasury Department might develop a cryptocurrency of its own. In the meantime, why is it you think we have not seen regulators, whether it here, the u. K. , or europe, do with the chinese have done, which is kind of put a stop to something that does make it almost impossible with antiMoney Laundering . There is the challenge that regulation actually installs or impedes innovation. So i think it is a better question for the regulators. As an observer, i would likely say that they are intrigued by the innovation and the Underlying Technology. I think there is a future to Digital Currencies. Rather than cut it off at this point, let it run a bit. I do believe at the point it truly does become meaningful and difficult to manage around tax collection, around criminal activity, around tax evasion, Money Laundering, etc. , that governments will have something meaningful to say. Mike to close out the part about bitcoin or cryptocurrency, whichever you prefer, the magic of a Financial System is the ability for banks to create money by extinct credit, a fractional reserve system. That all comes down to the belief among all of us that every incremental dollar you create in credit is as good as the fractional dollar that is backing it up. Bitcoin creates money out of thin air, as well, still predicated on a believe system. If, in fact, governments take the kind of stuff you anticipate they will, what is the Financial System going to look like if it is no longer if it is based on the creation of digital money through technologies like the that we have discussed or is it something akin to what it is now . I think you missed an important underlying i did. Am sure premise, and that is deposit insurance. You said creating something out of thin air. Every deposit we take into the institution is insured and guaranteed by the United States government, which then says that we are going to take those andys and we go relend it, we have capital and liquidity and risk metrics, all those pieces that are there that are relatively transparent that investors, in terms of people who buy our equity and buy our bonds, can all see. And there is a transparency to that. So it is not that we are creating something out of thin air. There is a real structured process and guarantees to what it withproduct is bitcoin, it is more difficult, and that is part of the challenge in terms of, really, what it is. The honest answer is i dont know. Is it a speculative vehicle . Is it a currency . I think it is yet to be defined. Mike the beauty of the block chain and other technologies for a company like yours is the opportunity to cut costs. Any of you who is a citigroup shareholder i am sure would agree that mike has done a terful job on explosions expense control. The efficiency ratio most recently recorded with 56 , operating cost as a percentage of revenue. You inherited something with a sevenhandle on it, which is about 71 . Where else be on the blockchain you see the greatest opportunities for citi to use technology to cut costs . Today, i would describe as in a Technology Revolution with an embedded evolution occurring. What is very different, and in some ways most exciting, about this revolution is the revolution is largely being driven by a benefit of Customer Experience. Unlike where we went from physical labor thuman nishikori physical labor to machinery from steam, this hoe evolution has been driven by reducing fractions, making peoples lives easier. The beauty from my position of that technology is that, in many cases, it is also cheaper to provide her the whole movement from physical and along physical analog to digital, it is driven and pulled by the Customer Experience. Mike given you can improve Customer Experience while reducing cost, if you focus on it aast part of that, is 50 efficiency ratio that is tenable . We talked about it. And i appreciate the compliment in terms of cost cutting, but i also have to complement my company and the team because it has not been all costs here and your efficiency ratio is a combination of revenues and costs. We have done nicely in terms of growing revenues at the same time, in terms of maintaining cost discipline. There has been a balance to it. Role inhnology plays a terms of what the future looks like. About technology that is there and the way we interact, there are so many examples call centers. In the old days, you would call up and would want to know your balance or you lost your card. Now you can go on your smart device and all of that is at your fingertips. Physical versus digital direction, much cheaper to provide and you are much happier with the experience come as opposed to waiting and having to go through authentication. So you think about what that looks and feels like in terms of your ability and when i talk about the underlying evolution, so we have seen the revolution of the app and all those pieces, but there is the evolution of actually how were delivering that. I will give you an interesting case study. We recently did work around what you would consider is very natural and terms of take your walk intori, alexa, your kitchen or whatever it is and say, what is my balance . When is my payment do . All those things. Sounds good. Along the way, what we discovered is that people in an open source do not like to speak out loud about their finances, and they appreciate even less the response coming back. So what we did is we worked with facebook and launched this in singapore around the citi bot, were through your social network you can go ask those questions and not have to go to the citi app and get all that information coming back. So while this revolution is going on, there is the evolution of how we are delivering that ay that is in a w easier and better and more consistent for you to use. Mike inadvertently erased an import and, which came up yesterday. Amazon or atop an facebook or a google, which collectively have as much quality data on consumers as you ceo, from invading your space, taking the data they , and do what you doing equally well are better at a lower price . The goal is not to shop them. Amazon has been great. At what we cannot do is sit idly by and allow them to take our business, right . Mike do you see them as a real threat . To anyourse they are and industry. We cannot be dismissive about any of it. We can provide those services in a way that makes you happy and you are not going to be a looking to replace it. When you think about banking relationship, it tends to be a pretty sticky longterm relationship. That is why we are investing so heavily in terms of technology and making sure, number one, we do not give you the excuse to try sending different or leave, and second, if you are not a customer or client of ours, we want to have you Pay Attention to what we are doing and give you the excuse to try out what we are doing. Mike you mentioned earlier financial revolution. You were articulate about it. But in some respects, we are already in the midst of a number of different financial revolutions. The shift to of mobile platforms, marketplace lending. There have been revolutionary impacts. A little blue sky thinking what does the industry look like five years from now . What is different . Lets start with retail, the one that gets talked about most. One is we will continue the evolution from physical analog to digital. Less branches. Are branches going away in the next five years . No. Smaller branches and branches that have different types of services. An example go back to 1978 when citi commercialized the atm. In 1970 8, 1979, people said this is the death of branch banking, the atm. Fastforward almost 40 years and we have just started to see the curve end in terms of the number , 40 years in the u. S. Later in terms of the number of branches. When you walk into a branch today, it is different. You come into a vestibule and there are some are between two or 10 atms there. And you have to get to the back of the branch to actually find llerbody to do a te transaction. Mike five years from now, citi has 700 retail branches in the u. S. And about 2500 worldwide, so lets talk about the u. S. How many do you figure you will have five years from now, and how will the Square Footage differ from there . That 700 is down about 300 years. E last 10 to 12 the configuration of those branches has changed. We have kind of gone from a branch on every Street Corner to nde of what we call hubbing a stroking, so the big branch in a hightraffic area where you can go in and do your full range of services. And then the more subtle branch where you have a couple atms thea few people in it satellite branch. I once say today with the absolute number is, but there will be less and we will continue to push in terms of the technology and the Square Footage and what the presence of the branches look and feel like. Mike the recent citi has that Large Network is it remains the worlds most global bank. The trend hasme, been away from globalization and free trade. If it happens, given the way your bank is set up, probably cannot be good for your company. It is something we need to Pay Attention to. If we think of globalization, and we will let get into history here, but without a doubt, globalization has lifted the standard of living in many places of the world. It has taken millions and millions and millions of people out of poverty. I think it is a very tough thing to put back in the bottle. Why do i say that . And we talk about trade talk about some countries have an advantage in agriculture, some in terms of natural resources, some in terms of labor, you are not going to take a country that is a mining country and instantly turn it into an agricultural country. Threat we see is less against globalization, but i think what we are conflating is the threat of globalization versus what i would describe as protectionism. When you think of the world today and what protectionism is the hot topic, it is because we are in a world of slower growth. We are in the ninth year of recovery, and we have got a u. S. Growing in the low twos. We have a Global Economy maybe somewhere around three. And growth is tough to get. So there is this natural tendency and as i travel the world, my conversations with heads of state and finance ministers is one that has gone from being a lot about growth to being a lot more about jobs, because of the challenges of Politics Today and the politicians know they need to have an engaged employed workforce. So we have seen this protectionism emerge. But what we know, as you know, we have got a big business in mexico that when we look at and thed break it down challenges between the u. S. And mexico in terms of a trait of the set, it is largely automobiles. The rest of it is remarkably balanced. And what we see in automobiles is that it is actually largely the components of electronics that has changed since 1994. By the way, if this manufacturing jobs come back to the u. S. , they probably largely come back a couple people, a dog, and a bunch of robots that are going to assemble those cars, so it is not necessarily that bigger seismic change that comes with that form of protectionism. Mike one must question for you that relates to your point about political challenges and also the differences in wealth between countries, agriculture versus manufacturing, global industries. In,market city has been left, and recently come back to saudi arabia. Recent events in the kingdom, including the arrest of the prince on the weekend who is one of citigroups largest shareholders and chief advocates, it has cast doubts on your companys plans. What can you tell us . I could turn it back with you being in the news business, but it has been tough to discern. While we have some headlines, we do not have much below that it we have a number of people eating held under this broad title of corruption, but we do not know what the specified urges or accusations are below that. Perspective,ces longtime shareholder, and while you described him as one of our largest shareholders, he is amongst the largest individuals from an institutional perspective, which is significant list dollar. In our interaction, and would have known him for to five years, and he is been a very consistent and loyal supporter of our company, been with us and good times and bad times and hubbell a back to good times. Bad times andand hopefully back to good times. In terms of saudi, you have to be encouraged in terms of division 2030. I think it is a societal transformation. We went back into saudi arabia and said that we are glad and proud to be back, but just so you know, the person running our franchise for saudi arabia is a woman. They welcomed it. So we look at some of the progress of things happening there and are encouraged by it. Mike i have a brief announcement. We going to have a quick break momentarily. If you have not done so, i encourage you to check out the photo booth that is just outside. When we come back, we will have Mary Wittenberg and general david pichai is. Scarlet that was Erik Schatzker speaking with michael corbat, ceo of citigroup, from our year ahead summit. Bankstalking about the operations and bitcoin, saying bitcoin is still a bit clunky to use and there needs to be some common standards around blockchain. It is tough to manage it he said the government and regulators will eventually come in and kind of sort things out here it julia he got questioned by Erik Schatzker about saudi arabia and the princes arrest. It,alked to him about and he said that were watching the situation closely. You have got to be encouraged by vision 2030. Sayingcitigroup ceo theyre watching the situation in saudi arabia. This is bloomberg. Julia this is bloomberg markets. I am julia chatterley. Scarlet i am scarlet fu. Time for the Bloomberg Business flash. A neutral opened to bet on tech giants. It began trading today. It provides access to some of the stock markets best gainers of the year. Facebook, amazon, netflix, and alphabet, other Big Tech Companies include apple, twitter, alibaba, and tesla, and each member is weighted equally. The tpg capital coceo says there is a Silver Lining in the increasing number of failing u. S. Malls. He spoke today in new york. You can get upset about this. Im happy to say we own no malls, but i think this is an interesting opportunity because someone has to reprogram this real estate. Scarlet most major the promised was have shuttered stores in recent years because of the rise of online shopping. A pension plan crunch, the strictly retailer struck a deal to put 407 million into its pensions. Sears has pledged properties to the pinching that if it can Corporation Last year but cannot keep up with payments. Now it will have to raise cash or refinance with real estate. And shareholder approval for a plant merger with a german guest giant. It is to prevent tax penalties from derailing a 41 billion tie up. Investors have been largely indifferent. The first attempt to merge fall apart last year. That is your business flash update. Coming up, and election day roundup, the winners and losers and how the results impact. 3 00 p. M. In new york, 12 00 p. M. In san francisco, it 00 p. M. In london. I am julia chatterley. Scarlet and i am scarlet fu. Welcome to bloomberg markets. Julia we are alive and bloomberg World Headquarters in new york. Here are the top stories we are covering on the world. It is good night for democrats in virginia and new jersey what it means for tax reform and here018 midterm elections at u. S. Treasury secretary Steve Mnunchin speaking out in an exclusive bloomberg interview on tax reform. More of his comments just ahead. Plus, tax reform is front and center in washington. We speak with chairman jason jason furman. Lets check markets with julia hyman. Julia you will be saying tax reform a lot more in the coming days. As we look at the major averages, they are higher. Scarlet was asking earlier for new records. The us up a 500 looks to be at a record on a closing basis or could be. The dow, if it gains, would be at another record. The nasdaq not quite getting there unless we gain more steam. We are not seeing much change overall. In terms of the push and pull intradays session actually, were out of order. Looking at some companies that are out with earnings tomorrow or after the close today, square and 21st century fox are reporting after the close of trading. They are little changed. Hls so the wave of retailers reporting numbers. There is a story on the bloomberg that the socalled retail up ocalans is at the very beginning the socalled retail apocalypse is at the very beginning it so those numbers will be interesting to watch. Here is the push and pull in todays session. Some a cap tech stocks are on the rise, apple and amazon among them. They are being offset by the declines in the financials. Big banks are down. Bond yields are little changed, but they had been trending lower. Reform hiteeing tax more roadblocks as a result of the election last night or in general, that is putting pressure on the financials, as well. Lets take a look at the see the Group Performance within the s p 500 since the election last year. We have the s p 500 in yellow, up 20 . Financials is one of the bestperforming groups, but it has been hit more recently. Bond yields have turned down. Technology is the wonder, up 40 . 9 . Coms down about energy has rebounded from its lows but still only up about 1 from the election. Finally, some earnings winners and losers today. Activision, blizzard in the win column on the earnings front. Take two beating earnings estimates because of the popularity of the grand theft auto game. An i. T. Services firm beat estimates. Csra caters primarily to the u. S. Government, and its shares are down 8 . Care services from is at the bottom of the s p 500 today. Keeping you on your toes there. Scarlet u. S. State and local elections give democrats the first big win in the truck era. Races in new jersey and virginia served as potential barometers electionss impact on next year President Trump responded to republican Ed Gillespies loss in virginia. He said that ed gillespie worked hard but did not replace me are what i stand for. Joining us for an election roundup is our Bloomberg Businessweek columnist and bestselling author josh green. Did people vote for democrats or did they just vote against the trumpled Republican Party . I think they did both. When you look at exit polls, democrats, somewhat surprisingly, said they were voting for their own candidates, but i do not think anybody can assume that they wave of turnout we saw from democrats was not motivated to some large degree by antipathy for donald trump and his agenda. Can it edlar, for gillespie, who despite trumps somewhat misleading tweet he really did embrace the trump agenda, from everything from criticizing nfl players to protecting confederate statues. Gillespie ran a trumpthing campaign and got absolutely tramped. Was trying to take on some of trumps populist tone. He was endorsed by the bushes. That is right. He had a long career in washington. Hes very well known to people here in media politics. He is also very well known in the suburbs outside washington, d. C. , that is a pivotal in these statewide elections. Going into the night, there was a belief among republicans and immigrants that gillespie might be important for a different reason, and that was that he was essentially an establishment figure who was running on the trumpist agenda and appeared the worry for democrats was if gillespie wins, that is a danger to democrats. Because it means voters are willing to separate the agenda from trump. It isllespie showed impossible for republicans to separate themselves from trump, no matter how well known or how moderate they may have been in the past. Republicans are now associated with donald trump, and voters will respond accordingly julia what does it mean for the dnc chairman, tom perez . There had been grumblings that he had not been moving fast enough, even though he was only put into position in february of this year. A great question. Perez had really come under criticism from a lot of the they were thought by a lot of Bernie Sanders supporters the pit theres some money scale for Hillary Clinton in 2016. Perez has tried to move past that fight with not a lot of success. He has also struggled to raise money. I think this does too but things. It takes the media pressure off in the criticism from within his own party. Number two, i think it points the way forward for democrats. A lot of these races, if you run on an antitrump message and can manage to unify, as democrats did last night in new jersey and virginia, then what last night taught as is you can have an awful lot of success. I think that is the path forward for tom perez and the dnc. Sohink that is why perez was exultant on a call with reporters this morning. Scarlet Steve Mnuchin responded about state elections in the gops tax approach. Not at all, not concerned about that. I think there is very big support for middleincome tax cuts, which is a big part of the focus of the president , and making our business tax system competitive with the rest of the world. Scarlet basically, m mnuchin is pending the midterm elections entirely on whether they get this tax plan pastor past or not it would have we seen in terms of positioning by potential candidates for 2018 on how best to approach tax reform . Are they changing their tune . Not yet. What is interesting from a nation is that was more a vow of faith that republicans are telling each other. If you look at the popularity of the republican tax bill right now, it is quite unpopular, only about 33 of people viewing it favorably. What republicans are telling themselves, and there is an element of truth, if they cannot manage to pass a tax bill, they will have failed on every major priority. They will he will not have a case to make voters for why they want to return. The other fear that was not mentioned but that other elect did of vigils have is that the donors will cut them off and stop contributing money if they fail on tax reform. For a lot of republicans, this is an existential dilemma. But it is worth pointing out that even if they do pass a tax reform bill, that is no guarantee that republicans will hold onto the house and senate in 2018. Julia the democrats are rubbing their hands together here in looking at 2018 and comparing it to 2006. Scarlet there is a long time to go between now and 2018. Julia i know, but i am sure theyre looking at this and going hmm. Steve bannon, donald trump, and the storming of the presidency we shall see if the storming continues. Scarlet breaking news on donuts and coffee. Shares of Dunkin Brands falling on news that panera bread has snapped up another company. Panera bread is owned by jb holdings, and that firm is expanding by acquiring au bon pain bakery chain. Have you gone to any of those places . Julia no. Scarlet we know what we have to do later today. Julia i feel like such a loser now. Julia but slowly. Julia lets check headlines with Mark Crumpton. Ministertish cabinet priti patel has resigned. She stepped down after failing to inform Prime Minister theresa may or the u. K. Foreign office of her meetings with the israeli Prime Minister in august. On tuesday, it was revealed she suggested giving british aid money to an israeli army project and held additional unauthorized meetings. You are looking at her leaving number 10 downing street a few hours ago. She is the second heaven it minister to resign this week. Secretary step down in the wake of Sexual Harassment allegations. President Vladimir Putin writes at this weeks asiapacific Economic Cooperation forum in vietnam is values. G russia he continued, i am confident that acting together, we will find solutions to the challenge of supporting the study, balanced, and harmonious growth of our shared region and securing its prosperity. Expected totin is meet with several World Leaders at the apex summit. The kremlin is preparing for possible meeting between president s putin and trump. Defense secretary james mattis joins fellow nato ministers in brussels where the alliance is expanding his command structure for the First Time Since world war ii. A secretarygeneral called nato the most successful military alliance in the world because we have been able to adapt. The Alliance Takes a comprehensive approach to our security, ready at all times to respond to threats from any direction. Land, the air, and cyberspace. Mark nato allies have 4000 to enter the Alliance Stands Ready to defend borders from neighboring russia. After the annexation of the Crimean Peninsula in 2014. In 1991, andgure need a hill, telling the committee that Clarence Thomas had sexually harassed her. Thomas denied and was confirmed in remains on the high court. During an interview today with the editor in chief of , she criticize President Trump dismissing these accusations. What is troubling is not only the normalizing of predatory behavior but the sense of his entitlement to behave in a certain way. Mark phil says the has been progress in dealing with Sexual Harassment, but if you read anything in the papers in the past few weeks, you know that there has not been enough progress. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. Scarlet thanks. Coming up, at t is said to be tearing up to fight the doj if the agency blocks the megadeal with time warner. And the hiring of many lawyers. From new york, this is bloomberg. Scarlet this is bloomberg markets. I am scarlet fu. Julie i am julia chatterley. Time for the Bloomberg Business flash a look at some of the , biggest business stories in the news. Tv ratings for the nfl down another year. There was an 8 drop last year. David westin as the nfl commissioner today if the National Anthem controversy is driving the decline. I do not think there is a silver bullet. I do not think there is one thing we have focused on. We look at everything, and we do not dismiss anything. We look to see if it could be a factor, but i think the big issue is just the changing media landscape and the pace of change is so rapid. Julia he would like to see players stand but believes they are not trying to disrespect the flag. He says players are talking about improving their communities. The Justice Department has issued subpoenas for information on carl icahns role as advisor to President Trump. Investigators are looking into efforts by the billionaire to influence policy. Ofl icahn is majority owner an oil refiner and has been could aside for pushing a policy change to benefit the company. He reportedly tried to shift the burden away from pure refiners. Others in a fitted more in the sector. That is your business flash update. Scarlet at t is ready for court. At t is preparing to take on the u. S. Justice department if that agency sues to block its purchase of time warner. Joining us is gerry smith, Bloomberg Media reporter. At ts merger agreement with time warner specifies something about how far it will go to make sure the deal gets done. It is right. The deal has really taken a question mark right now. At t antiwarmer at t and time warner have said this will close by the end of the year. This morning, it was said it is uncertain. We are hearing that there may be some asset sales, some of us teachers some time best di vestitures. Scarlet they are ready to appeal to the top if need be. Our sources say at t and time warner are going to fight this and that they are preparing for a possible day in court. If, inhow does it work order to comply with regulators, they have to sell off pieces of the company, crown jewels of the company . They clearly want to get there hands on cnn. Negotiations are going on right now. Either the Justice Department would approve the deal with conditions or the justice could say you need to sell assets to make sure the combination of these companies is not hurting competition. Julia stocking up on lawyers. Goinggests negotiations on behind the scenes are perhaps challenging. Is that correct . I think so. I think the two sides are further apart than a couple days ago. Scarlet someone came on during the Trump Administration to the doj, so you would think they would be a little bit more open to the prospect of some dealmaking. But we know the president has spoken out about at t and time warner before on these big merger megadeals. What do we know about where the president stands and how that might influence the doj . President trump has not said much about this deal recently. On the campaign trail, he said he would not let a deal like this goes are in his administration. So it is a question about whether politics are getting involved in this. The Justice Department would say there is no politics involved and it is just looking at the law. Will say toe warner look at comcast and nbc, and that deal with through with conditions. There was not a big asset there was not a lot of big asset sales involved. Scarlet President Trump did not let that go either. Hes very antimedia, so the big question is how much influence he would have on this deal. Julia can we look at the shares . I think it is quite interesting. Were quite a way away from the bid pricing. Clearly some skepticism as far as getting this deal done. I dont know by looking at the movement today. Scarlet time warner is down below 89 a share. The lowest in almost a year. Julia yeah, it is going to be tough. Thank you so much, gerry smith. Still ahead, options inside looking at cisco systems, up nearly 15 year to date, on pace for its sixth straight yearly gain. From new york, this is bloomberg. Julie you are watching bloomberg markets. Joining me is Alan Knuckman of bullseye option. Lets get straight to your trade. You are looking at tech, which has been a strong performer. One name that has not been as talked about his cisco. First of all, what triggered you sort of looking for maybe overlooked names here . Cisco is an internet icon that has kind of been left behind. Up 14 year to date, which is a good performance but dwarfs when you look at the tech sector. I am looking at value. They make a lot of money from a trading standpoint, i like the technical setup, the way it has been stuck between 31 and 34, which targets 37 on the upside to julia you are not looking at a 2019 trade here, only june of next year. Alan not yet. Want a little bit of time. Volatility is still low. Options are very inexpensive, so it is a buy. June is trading at about five dollars. It has plenty of time, seven months of time. It will act like the stock. We get to 37, that option should gain about 50 . Julie it assumes we will continue to see a rally in technology more broadly. Do you believe that to be the case . Alan yes, i believe so. It has been an incredible year. But look at the last eight years. Since 2009 lows, the tech 100 has moved up 5000 points. The dow is up seven 2000 points. The is of the almost 2000 points off that extreme low. The train track trend is very much intact. I have less risk reward on something that has not already taken off. Julie thank you so much, Alan Knuckman, for joining us from the cboe. Technology has been a leader here, up about 40 since a year ago, the election last year. Julia a fantastic earnings season for the majority of these guys. Into ahead, we dig details with jason furman. That is coming up. And this is bloomberg. Senator john warner says the republican conference will be briefed on the republicans tax plan. He had the Senate Finance committee will take the lead on the proposal. Members will have a chance to engage in discussions and debate. Perhaps as early as next week we will markup that bill. Senator cornyn says he hopes to have the tax bill on President Trump desk by christmas. Tax writers are considering keeping the number of individual income tax rates at seven. In new congressional budget adds at least 259 billion to the nati