10 points off the record high we saw last week. Things get more interesting if we go into the individual movers, particularly when it comes to mna. Startoking at shggp to trading at speculation rumors. Some analysts saying it might be worth more like 28 a share. Ggp getting a little boost today. Qualcomm trading higher. It formally rejected broadcoms offer this morning at 70 a share. They said if that were to get to offer, you might see shareholders a little more excited about this deal. That is what is going on over in land. Let us look at square and twitter. Square, it raised to 44 a share over 38 a share. That stock of more than 1 . Twitter has been getting a lot of the headlines, but it is square that has been the big driver when it comes to growth this year. Come into my terminal. Were looking at the market cap square just surpassed that of twitter last week. You know how square was over 15 billion . In blue, we have twitter here at about 14. 8 billion. Jack dorseys stake in square is now over 2. 5 billion after tripling last year. Abigail that is interesting. I would not have guessed that square has a bigger market cap than twitter. Ge is getting smaller. Quarterlying its dividend and half at . 12 a share, saving 4 million a year. It plans to exit businesses and reduce the size of its core to 12 members. A Senior Analyst for bloomberg intelligence. Rick, i want to start with you. This stock is plunging, on t4 is worst day since 2009 around the time of the financial crisis. What happens during the day what happened during the day that investors are reacting to what has been announced . Rick there was a lot of bad news today. The dividend was cut. Talk was a lot of frank about the challenges they are facing in a number of markets. I think what you are seeing in the stock is not so much the bad news announced today but what was not announced. I think investors wanted more changes. Some of these problems had become clear over the past few weeks or months. Investors really want something big, some big changes that are going to get ge back on track soon. Scarlet part of the changes ge is telegraphing if they will focus on three core units. Are these the right three businesses . What is the linkage between them . Karen that is the question. There is not linkage at all. They are market leaders when the businesses are good. Power is a mess but they have a lot of good to do. It will save the digital tie but there really is not one. Scarlet theyre sticking with ofk walshs initial premise going with the companies that are the first or second in their industry . Karen i am not sure about that. Theyre looking at once where they think they can leverage their leadership and lower their cost structure and get it back to these profitable businesses. Go ahead. Abigail please finish. Would agree it was not enough. 20 billion in assets, two of the assets they targeted we already knew. Transportation is the only one. Ne around to prubw and take other Small Businesses add. That is 20 of their assets. That will not materially change the company. Abigail investors are looking for more than what was announced today. As you mentioned, we already knew a lot of this, what do investors want now . What is your sense . Look at they do to try to steer the ship around perception in some ways . Rick the big steps would be to break up the company. I think that is off the table for right now, given John Flannery announced the changes to. Day. I think investors want this to happen a lot quicker, even if they dont take these bigger steps. They want to see improvement soon. It will be tough because not all of it is in ges control. They have power market that will be back for a couple of years probably. It is going to be really tough for john flynn return back Investor Trust like quickly. Scarlet which is part of the reason why they are changing the dynamics of the board. Karen, is this just the first wave of activist investors to target ge . To focus on the shortterm boost rather than figuring out a longterm strategy . Karen i think they can put a lot of pressure. There will be a fire under them for sure. There will be more pressure. This is phase one and he needs to execute and do more. Abigail why isnt he getting more of a pass . Why is John Flannery who has been on the job for three months what is seen why is he not getting more of a pass . It feels a little like more of the same. We take another billion dollars of cost. We are ge. Were going to do it better. It is not a big enough change. Day. D get a pass for one the stock was up 3. 5 and the nfl. The other and then it fell. They announced earnings will not be any better next year. Cash flow will be a little bit better. Sub has worse problems than we knew. The problems seem a little bit bigger and to say we will cut your costs felt a little bit like that. Scarlet i do bring up finance. The flow is in the mix. It is not wrong even though the size is more diminished. Rick they really focused capital in recent years. Was a big sprawling enterprise in a lot of different areas. Now, theyre focused on financing that type of equipment they make so their buyers can buy it from them. This has been pretty successful. Investors did like that strategy. There has been question lately about whether they might want to sell their jet leasing business. That is one of their letter businesses. I do not see that happening in the near term, but that is something that has been discussed in the rumor mill. Scarlet everything is being looked at carefully. Thank you. Let us get you some breaking news. Credit suisse will be paying 135 million to settle a new probe. Pro to resolve some executives encouraged traders to front run these client orders in order to manipulate prices. This is a settlement they announced today. E willgain, credit sioss be paying 135 million to settle this probe. Let us get you a check on the bloomberg first word news. Thank you. The Republican Party is being forced to choose sides in the Alabama Senate race. Some gop lawmakers say roy moore should drop out in the wake of accusations that while in his 30s, he initiated sexual contact with a 14 euro girl. Reporter or teenyearold girl. Reporters asked Mitch Mcconnell about moore s candidacy. Do you believe these allegations to be true . I believe the women, yes. Mark responded on twitter the the person who should step aside is Mitch Mcconnell. He has failed conservatives and must be replaced. President trump made his choice for the next secretary of health and human services. President the former of the u. S. Division. Will replace tom price. Ricos governors asking the federal government for 94 billion at the island struggles to recover from hurricane maria. Much of puerto rico remains without power and thousands are homeless. He also wants congress to adopt a tax overhaul plan that addresses puerto ricos specific needs to avoid an exodus of companies that currently generate nearly half of the islands gdp. Families of the victims of frances terror attacks set alongside the president to honor the 130 People Killed two years ago today. But one of the attackers was killed. A counterterrorism prosecutor is weighing they are still looking for suspects involved and that zones of mystery remain about the attacks. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. Crumpton, this is bloomberg. Scarlet . Scarlet coming up, we will stick with the capital markets. Talking about the big gains in the Top Tech Companies this year. We talking about the increase in their market c cap. This is bloomberg. Abigail this is bloomberg markets. It is time for the Bloomberg Business flash, a look at the biggest business stories in the news. Google is under investigation by the state of missouri. The probe will examine whether google prioritized its own products in search results and whether they got information from competitive sport benefit. Accusing a letter google of violating a government agreement. Alibaba is looking to raise 5. 7 billion. Jpmorgan and Morgan Stanley have been hired for the offering. The system follow that 8 million bond offering in 2014. Had aast weekend, alibaba record 25. 3 billion in sa les. That is your business flash update. Scarlet turning us now with more insight is mark mahaney. Theres a price target of 220. Abigail gave us the numbers for alibabas single day. What was different about this years single day . What are they learning to do better now than previous years . Mark im not sure much is different except that it gets bigger and better every year. That number implies around 40 yearoveryear growth given the scale at which the company is operating. That is very impressive. Is a lot of interesting entertainment discounting, promotional efforts around it, but they have done that in the past. Maybe they got amped up a little more this year. The size of the business is hard to come in. One cannot complain about the numbers. That puts it around the size to be two times the size of amazon. Scarlet you cannot compare it to prime or black friday anymore. Piece saying a theres not much correlation between single day an actual revenue to the company. They do not really move along the same trajectory. Really, when it comes down to it, this is more about advertising and making sure chinese in tumors who are buying the consumers who are buying stuff are seeing and clicking on different advertisements. Would you agree single stage is an advertising bonanza more than anything . Mark the Business Model has been more commission or asertising based than it has a. Ecommerce business. One thing, there was that was interesting. Thatximately 95 of all of activity occurred off of mobile devices. That has to be one of the most mobileforward data points. If you look at other internet platforms, they are still doing well, over 70 of activity off of mobile. But that 90 plus figure from alibaba shows you how much the internet has shifted globally in the last five years. That number would not have been anywhere close to five years ago. Scarlet and how alibaba is in a position to capitalize on that, as well. Abigail was telling us about plansa plans alibabas to tap the debt market. This follows on the heels of a massive singles day. What you make of this timing wise . I woulddo not know if make a lot about the timing, but i think the market is there for them. I think they have shown an really they have shown three things. Dramatic scale, very consistent Revenue Growth, high levels of profit. The scale, growth, and profitability and consistency for those three things. I would think for those looking for a not a guaranteed return dependable return, thecan get out of th name alibaba. I work on the equity side of the business, but i can see why debt investors would be interest. Did interested. Abigail alibaba is up more than 100 . That is incredible appreciation on the year. Up in acks are big way. We have a great chart in the terminal that puts this into perspective. This is the market cap appreciation of the fang. We see a has risen above the germany dax index. In fact, around how much pimco manages to put it into context is it justified, will it last . Mark we think it largely is justified. Theres always this trick with the calendar, which is at the end of last year, fang stocks sold off in the trump trade for about two or three months. The market was looking to favor industrial names. Some consumer Package Goods names for a two or three months period. There were some accounting issues in the press about alibaba, so it was a little bit depressed. These names put alibaba at alltime highs. Is it over for them . I do not think so. Their trends are extremely consist it. Consistent. Google has been able to maintain 20 less Revenue Growth for 32 straight quarters. Eight years in a row. Amazon has been doing it for 10 years. My guess is alibaba will have the same track record as a Public Company. They are good executing stories, and management teams. You can count on these. Some of the valuations are highly reasonable. There are prominent investors out there saying we are looking at double cut valuations. So you have no qualms around where these are trading right now . Mark the two most aggressively and i stocks are amazon think that is highly intriguing versus general consumer Package Goods companies. Netflix is a real stretch valuation. You have to believe in growth in the future. Take facebook and google. You can buy these that 23 times to 25 times dapper earnings. What you are doing is getting high growth. Live call internet utilities what i call internet utilities are internet tables. They deliver staples. They deliver premium growth. It is worth more of a premium then they are currently trading at. Pe thatfind premium give you growth. This is giving you something for her five times greater than that. Google is that eight years in a row with topline growth. That is a rare combination if you can find that. It is worth it. Abigail great perspective. Thank you so much for your time. Still ahead, we are going around the world with Stephen Roach, former chairman of Morgan Stanley. President trump continues to tour. This is bloomberg. Scarlet President Trump wrapping up his big tour through asia. The critical stop was china, where president xi and President Trump offered dueling visions for the Global Economy. Joining us is Stephen Roach. He is now a senior fellow at yale university. Great to speak with you. Thank you so much. You talk about this divergence between the u. S. And china. One looking outward, one looking inward. Is there any room for overlap between these two views . There is a lot of room. The question is whether or not it is going to happen. I think china is pretty firmly to change they structure of its economy. You just had a whole segment on singles day and alibaba, and that is a visible manifestation of the emergence of a services consumerled economy. The u. S. Is stuck in its ways. We want to keep consuming but we do not have any saving. We rely a lot on chinas supports or growth model. China is turning the other way. There is a fundamental divergence between the two economies. If we were able to better address our own economic strength in the united days, we would be in a better place to forge a more compatible relationship and resolve some of these divergences. Scarlet is President Trump focusing on the wrong metrics when he looks at the trade deficit with china and presses on the need to reduce that . Stephen yeah. The idea that you can fix our fundamental problems by singling out one deficit really misses the point i just alluded to. Want to grow, you have import surplus ravings savings from abroad and run massive deficits with many countries we have a multilateral countries. We have a multilateral trade imbalance with over 100 countries china is the biggest but by no means the only one. We are not going to solve our problems with these big budget deficits the Trump Administration is proposing by coming down on china. Abigail great stuff. Stephen roach will be staying with us. Ahead, central bankers take the spotlight this week. This is bloomberg. Abigail from bloomberg World Headquarters in midtown manhattan, this is bloomberg market. Commodity closes are closing in new york. Let us look at the global commodity function. We are going to see the mixed action here. Energy on top mainly trading lower. Not a lot of action relative to the buyers. The metals, there is a bit of a bid. We have silver higher by more than 1 along with copper. Take a look at the grain. We are seeing some weakness as domestic demand is a little less. Crude up awe see little bit all over the map. This after opec boosted projections for demand next year. Group top officials signaled producers can continue to curb output but not enough to keep Oil Trading Higher on the day at this point. Just about unchanged at this time. Scarlet thank you so much great we will continue that conversation with even roach and focus with Stephen Roach and focus on china. The countrys plan to limit Financial Firms drew praise. One person described the move as a positive development. Stephen the fact that it is considering to remove at least partially those barriers and to move above the threshold of 50 and gradually to eliminate those thresholds, that is an indication of two things. Better strength and confidence in their own system. Scarlet still with us is Stephen Roach, former nonexecutive chairman of Morgan Stanley. Of that the idea goes back to the idea of what the uniteding about states looking internally. With regards to this announcement to open up fo security firms and banks to normer ownership foreig ownership, Different Companies need to have a bigger holes in china . Hold in china . Who spent 35body years in Financial Services and an important part of that in china, i am delighted by the action. This is really the tip of the iceberg. Who needs whom more . We both need each other, but i think the u. S. Is struggling more with Economic Growth than china is. We need access to their markets, not just in finance, but in a broad array of other goods and services ranging from health many manufacturing erro areas. We need a bilateral investment treaty, which would allow both to have open access to controlled businesses to capitalize on Growth Opportunities in their respective countries. We have been dancing around on negotiating this type of treaty for i would say seven or eight years. We have a president who is great at making deals. Let us do a deal on a bilateral investment treaty. Abigail you are the former nonexecutive chairman of Morgan Stanley asia. What do you think your clients, if you are still in that position, would be asking you . Their biggest concerns after this trip, especially as it relates to investment activities. Has the landscape changed after this trip . Was long on trip theatrics but short on substance. It did not really tackle any of the tough issues between the nations. Brought annt entourage of hungry businessmen with him to sign deals, most that have largely been agreed upon prior to the trip. Thebig issues i think for clients that i use to address is what type of environment can they expect in china with respect to market access, their strategic development, and the industri that they want to focus one and the strategy theyre putting in place to enable to get to what xi has probably call this new era. Those are extraordinary opportunities for investors and clients that i used to deal with in my former capacity. Tough topic as north korea sounds like not much progress came up during this trip. Went to those discussions take place, and what is the effect there . I think it is very disappointing, at least on the surface, the President Trump does not push hard for china to exercise much greater leverage on north korea. Dependencynows the that north korea has on china for imports of fuel and food. Actually stepped up its exports and trade in north korea, and that had the effect of buffering or cushioning the serious sanctions that have been imposed on north korea by the west. I think the president needed to be very firm and resolute and putting pressure on china to address this problem. I think that was a missed opportunity. Abigail a missed opportunity. Investors were looking for some there. Little. Hift gears a we have a bunch of central bankers meeting this week. Scarlet there is a conference. Goldman sachs found that policy decisions tend to lead to outside moves in key asset prices around the event. I want to get from you a sense of how you would grade each of the Central Banks in their communication and how they communicated postfinancial crisis as they try to shift away from emergency mode towards something more familiar, more normal. Stephen i think normalization is absolutely vital right now. Migrates i have a repeat reputation of being a fair greater at tyale. I would give the Central Banks, the bank of japan, maybe c pluses, which would be disturbing to students at yal e here, because theyre going too slow at normalizing. They should proceed at a fairly predictable, study, and i think rapid rate. We need to have policy better prepared to address future crises. The glacial pace of normalization underway is reminiscent of the same exact prior toht wat was made the last crisis. Do think the Global Economy can handle normalization . And we have several if we have several major banks hiking at the same time, the growth we are seeing will continue . To be at a point of organic Economic Growth as opposed to helping out the economy . Stephen abigail this is bloomberg. Scarlet you are looking at a live shot of a conference. The new York Palace Hotel in midtown manhattan. She is with another women who has come forward to accuse republican roy moore of sexually assaulting her when she was a minor. We will continue to monitor this News Conference and bring you other headlines. This will be in addition to the women who have already accused roy moore of sexually assaulting them when they were younger. We will keep you posted on this. Meantime, we have corporate news. Abigail switching gears toward growth strategies. Dealmakers are targeting Smaller Companies. The cohead of advancing banking is leading the effort, looking into industry areas and customers for the renewed attention. Joining us with the story is bloomberg financials reporter michael moore. What is the strategy in terms of going after all of these smaller deals as opposed to the elephant that goldman is known for going after . May have been winning those larger deals for the last number of years. They are looking for more revenue. They came out last month with a strategy for boosting their revenue 5 billion. Even if Market Conditions dont improve. They are going after companies that historically they have ignored on the advisory front. Through the came up business of Investment Banking services, which is the relationship bankers at goldman. He knows about client coverage and is looking to expand back. Scarlet if theyre building on this relationship with middle companies, who are they taking market share from . You have a couple of players in that world. The regional banks have an Investment Banking arm, typically a smaller one that can provide the Capital Raising services. Then you have some larger banks with the corporate or commercial bank like j. P. Morgan that no these companies by being their lender. As big ins not been the lending they havent had these relationships historically, thats what they are trying to catch up on. Scarlet is there another possibility that goldman is such a strong selling machine, that they meet with companies and convince them that they need to do advisory work that perhaps is it necessary to drum up business . Or will they be creating new business that is not been there before . Hope,part, thats the they would say that all these deals are strategically necessary or helpful to these companies. I think historically, goldman has gone off after the larger companies, not only do you get more fees from a larger deal, those companies tend to do an mna acquisition and then turn and do finance with debt and swap that debt and do a number of activities that goldman can be involved in. The Smaller Companies have not done in kind of follow on a deals. They think some of these Companies Might be more open to that going forward. Scarlet sounds like a big shift from what goldman is known for, its trading prowess. Tradingnot a big frenzy revenue, its focusing on the bread and butter of middle companies in Middle America and encouraging them to look at other acquisitions or be considered for acquisitions. If you go back to the history, this is what they were known for in the longerterm. Lates really in that 1980s to 2007 point when trading exploded. Historically, they have had this in their dna, but it may also signal perhaps a repairing of their brand that has become a little healthier and they think that is thankme to do it scarlet you so much. He is a scene where here at bloomberg. More than 40 of the session, making it our stock of the hour. It has come back a little bit 32 . At a whopping the best move since november 9. And the chandra is here with more. This is no longer earnings, is it . Emma november 9 was when they came out with earnings. That is when we saw the stock of over 50 . Take a look at the bloomberg terminal. The stock is up 130 since the end of last week. Abigail really . Yes. It only went public back in september. By thelly was kicked off Public Company revenue. By the way, this made the ceo and founder a billionaire. Bloombergthe billionaires index. The game continued today, not just because of earnings but because of a couple of deals they announced. Black fridaye deals. If you buy a roku advice, you will get a month free of at t s directv. They also announced a licensing deal, and they will begin shipping rokuenabled smart dbs under the sprint. Is brands. Abigail i have to imagine some of the move was a short squeeze. What were they bearish on, and why are they perhaps holding . Emma there are some people who are a little bit concerned with any new company in this particular area. How many people will cut the cord and how many people will go over the top for television. What is interesting is if you ,ook at the revenue for roku you can see they have always devices,sed on their and they are also now focusing on their platform. They really are what you are seeing is two revenue streams. Scarlet thank you so much. From new york, this is bloomberg. Isrlet Angel Investor betting on women, literally. He decided he would only Fund Companies with one or more female founders what has he learned . It is all in his book, better together. Sat down with jonathan and asked him what prompted that decision. There was an abysmal statistic, which then all the companies in tech, only 2. 13 , are backed or led by women. I think that is terrible. We cannot believe the only 2. 13 of women have good ideas, so something is terribly wrong there. I wanted to make a difference in womens favor. The other one is i know there are great resources we need to talk about more, which is how the mill ceos and leaders outperform their ma maleerpartsle thh counterpart longterm. Scarlet is this a golden rule in the way you invest . No exceptions, only femalefounded companies . The short answer is yes. Im not investing in your company because you are a woman. You also have to have a great idea that i know you can execute and that you are a great entrepreneur. In general, i believe this is a great way to draw attention to the subject and to have my own investment portfolio perhaps outperform the average. I believe that it will overtime. Scarlet and you will get what . About 100 companies a year looking for funding. What has your track record been . Jonathan it is still little early. You have to wait a few years before things can out. I would say maybe another couple of years some have gone on to do very well. A couple are still struggling along, but i would say my ideal pipeline is there are a ton of supersmart women entrepreneurs, founders, ceos who have been frustrated in the past that they could not have gotten funding and now they have more with. Ht to work i am just one person, but drawing attention to the subject is important for our industry. Scarlet how much bigger or smaller is the pool of companies under consideration that you look at because of this investing guideline . Jonathan i would say it is a pretty big pool. There is no shortage of smart female ceos and founders who have great ideas and trying to get traction. I think men need to take a harder look. I call it was an louder, that is actually one of the things i talk about in my book. We need to listen louder to a lot of great ideas that women have. Scarlet when you talk about how these investments will eventually pay off, obviously were looking at exit opportunities. Do women of roast exit opportunities approach exit opportunities differently than male founders . Jonathan i do not think that is what actually happens. I think what happens is there is a perception that men are somehow more ambitious. They tend to [no audio] they tend to shoot for the stars where as women have the perception that they are more realistic. Therefore, there is a misperception that they are less ambitious. Conversation with that, they do not sound different than any companies i would have invested in in the past. Scarlet that was my conversation with jonathan sposato. But as they you updated on glorias News Conference. She has come forward to accuse moore of misconduct. Nelson says she was assaulted when she was 15 and 16. Its 3 p. M. In new york. Abigail im Abigail Doolittle and for joy charlie. Scarlet welcome to bloomberg markets. Abigail live from bloomberg headquarters in new york. Here are some of the top stories we are covering. Senate tax writers begin to hammer out details of an overall bill. The house version is headed toward a vote. We had to capitol hill for the latest. 24,000 reasons to be in the market. Equities will head even higher. Plus, take a hike. A rate rise next month. We will have more of his exclusive interview just ahead. We are one hour from the close of trading. Slightly barriers to slightly bullish. All three major averages are at the highs of the session. Their only off about a 10th of 1 across the board. Investors Pay Attention to the tax reform debate. End ofome to the earnings season, take a look at the push and pull in the market. A little change that we have overall. On the downside, we have energy and industrials. Industrials the biggest drag on the s p today. On the plus side, utilities, staples. Materials and real estate rounding out the top four. Within utilities, typically when you see a gain of that size, it has to do with rates going down. That is not the case today. We are seeing an upsurge in utilities. There is a catalyst. Aes was upgraded. The companies Asset Program and its cost cuts are seen as comparable to Energy Strategy which then could lead to a success for aes. On the industrial side, the big drag is general electric. They continue to go lower and lower throughout the session. Down by about 8 after announcing a series of the best teachers. Dividend cuts. Even though investors has been calling for change, some were termsg for even more in of divestitures. I will put that dividend cut in perspective. The difference between ges dividend yield and the 10 year. They lost their rented. Vantage. Ost their ge1 was the last time that yielded less than treasuries. It is not quite there yet, but it is close to zero after this latest cut. That is one of the reasons you are seeing the stock down today. Not as many people will hold it who were holding it. Scarlet you might get a change in the Investor Base for ge. Politics, the Senate Starts marking up its version of tax reform. The house may vote on its bill as early as thursday. These two bills have huge differences. Bloomberg chief washington correspondent kevin. In the senate, you have three senators who have said that they would would not be on board with a bill that expands the deficit. They dont like the deficit. It has really reignited some of the more ideologies that weve seen in terms of the Republican Party. The Senate Version eliminates the state and local tax deduction. The more muddied version is in the house. Secondly, the number of tax brackets. The Senate Version would have seven, the house has four. The white house originally called for three. And then the lowering of the Corporate Tax rate. The Senate Version would apply in calendar to 25 year 2019. The house version would have that immediately at 2018. There is nothing within the senate that is being discussed that is a deal breaker. They fully anticipate all of this, when it goes to conference , that they will be able to get a deal. Scarlet you can see a live shot there of the senate working. Earlier that was the finance Committee President moran has. President orin hatch. Is there any chance they can get something done by thanksgiving . tick, the clock is on. On thursday, that is the earliest they could get the vote on. The sources that i am talking with, all of these republican lawmakers feel very optimistics that they should be able to advance it. That keeps them on the timetable of getting something done by the end of the year. Republicans are all in on this. To get thisey need done in order to maintain majorities in the house and senate for 2018. A lot of democrats are saying not so fast. That even ifpular they do pass it, that is something they can run on next year. Abigail thank you so much. Sticking with tax overhaul, it will require a herculean effort. Up next. Einhardt it appears that you are bullish to the end of the year. You think their trajectory is up. Barbara tax reform certainly affects it. Thats why youve seen some of the weakness over the last few days. We think that equities are going to be able to grind higher into the end of the year. Earnings are going to be much better than expected. Even though we have had a decent run at earnings so far, you have a lot of tailwind to go. Especially for the easy fourth quarter. They should be a 10 for the rest of the year. Second piece is what the fixed income market is telling us. The yield curve is a big sign there is going to be a recession , that is not an issue. 70 basis points. The equity market does not peak until you get an inverted yield curve. We do not expect that any time until 2019. Like clockwork, every time we get an inversion, you do recession. But you dont see that accelerating anytime soon . We think so. A lot will depend what happens tomorrow and wednesday. Scarlet the cpi data. Barbara the equity market has been able to enjoy a very nice benefit of not having to worry about the fed moving too fast because inflation has been quite low. Starting to that anniversary until the First Quarter of 2018. Abigail as the head of allocation, what do you make of bitcoin over the last few days . Is this a beginning of a repricing of risk and will that see that we dont see a grind higher . On i willll not not comment on bitcoin. We do not invest in it. You make a good point about junk bond yields. Crediteen a widening in spreads. We attributed that there wasnt overpricing within the highyield market over the past couple of weeks. It probably lets off a little bit of steam, but the underlying elementals are Strong Enough that we should not worry. Its very benign over the next 12 months. Scarlet so for the u. S. , you see a grind higher. If you want to get some outlaw, you can look for that somewhere else. Particularly overseas. Were looking at markets in japan. Barbara emerging markets are pretty much most of the course of this year, we initiated a position in japan during the Third Quarter and update again in the fourth quarter. We see japan is having strong earning. We think the reappointment was decisive in terms of him being able to push through his agenda. It has been strong through the entire year. Some positioning for it. A lot of people caught on to what we were thinking. We think that japan will grind higher through the end of the year. But we are hedging the currency back into u. S. Dollars. Abigail what about commodity . Seem, unless the yield curve in birds, you think commodities will trade higher to meet equities . What would cause equities go the way of commodities . Barbara they dont have to go handinhand. They are a very nice hedge in our retirement portfolios against inflation. They are a hard asset. We find them relatively attractive. Involved ande linked to geopolitics. Some of the things going on in saudi arabia will keep oil relatively well bid. Want to watch is dr. Copper. Dr. Copper never fails us. Enough demand is to meet supply for Energy Prices over the course of at least the next 12 months. Scarlet im glad you mentioned dr. Copper. At the end of the day it is about the trajectory of the economy. I want to bring up the federal reserve. Right now they intend to raise Interest Rates in december. Unless the data coming up really surprises us. Are we going to see the 10 year or maybeisit that 2. 48 2. 5 level . There is two things youre talking about. The hike for december is relatively in the price. An opportunity to raise Interest Rates. The community is pointing to, and the fed is pointing to that. They have to watch inflation and they have to watch employment. The u. S. Is at full employment at this point. They are likely to respond to that. Thinks 4. 7 , we are well below that. There are also a lot of changes on the committee. It is difficult to say how many hikes there will be next year. Three,a tells us, likely but it will take the contours of who will be underneath powell once the committee gets reestablished. Barbara reinhardt, boy of management. Lets get your check of headlines. Scarlet, thank you. Another woman has come forward to accuse more and more of Sexual Misconduct very you are looking at a live press conference. She is holding a News Conference here in new york city today with attorney loreal red. Called it a witch kind. Nelson said that if i thought i was his only victim, i would have taken this to my grave. She is coming forward to know that he no longer has any power over her. To mitcho responded mcconnell who called on him to drop out of the special election. The person set who should step aside is Mitch Mcconnell. Today hecconnell said believes the women who have accused more of inappropriate sexual content. Has been a bond over the dislike of former president obama. That is according to a do tear take spokesperson. Sympathetic when the president discussed his war on drugs. A said he had a gratian great relationship with duterte. The first meeting since negotiators abandoned President Trumps previous deadline and extent talks until march. For now they are expected to put off some contention issues. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton, this is bloomberg. Scarlet thanks so much, mark. Coming up, more of his interview with the Philadelphia Fed president. From new york, this is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Abigail and im Abigail Doolittle. Grace latz will pay 135 million to federal allegations to pad its own profit. Executives have been excused of front running foreignexchange orders. The firm will hire it outside monitor to resolve the allegations are it. Egypt air. People familiar to it, an announcement could come as early as tuesday. This comes weeks after there was a partner with airbus. The Largest Pension Fund in the u. S. Made more than double its bond allocation. The fixed income target may boost from 19 to 44 . That is to lock in stock profits for them the nineyear long bull market run. Thats your business flash update. Lets turn to monetary policy. Bloomberg has been speaking exclusively with patrick harker. We asked what was flattening the yield curve this year. I think there are a lot of likely suspects there. That other banks, the european, bank of japan, and others continue to be highly accommodative. I am concerned about that and that is why the pace of removal of accommodation has to be gradual. Pace has to be gradual. If it is, do you think we will not see any inversion of the curve . I wouldlike to in like to avoid any inversion of the curve. I would like to remove accommodation in the way that we do not run the risk of diverting. Does it concern you to see the yield curve this flat. Typically thats a sign that the economy is turning down. We are starting to see really tight labor markets. We are seeing unemployment at 4. 1 . That we will get below 4 before we come back up. We are seeing tightness in labor markets. Other growth, limitations in the economy, but that is it. The expansion has been remarkable for how long it has gone on and the continued steady pace of job growth in the u. S. Fort has been remarkable those reasons, and also what we have seen in the stock market for the six. Stocks go up. Are you confident that we wont see that correlation maintained as the balance shrinks . At least for our Balance Sheet, we are trying to do this in a way that is as boring as watching paint dry. We want to make this slow, steady, on autopilot. We want to use changes in the rate toin the fed Fund Increase or decrease. I dont see us playing with how we are doing the Balance Sheet normalization. Clear, to keep it easy, concise, and communicate clearly what we are doing. Scarlet that was Philadelphia Fed patrick harker. Abigail still ahead options insight. How to play tapestry. 15 stock is up more than ytd. This is bloomberg. Abigail this is bloomberg markets. Im Abigail Doolittle. Scarlet and im scarlet fu. Joining me today is options inside. Were going to go back and look at a trade that you recommended earlier. The trade that you recommended last week on tapestry, which is now the parent of coach and kate spade. It was an earnings related trade. Talk to me about what happened. Opportunity to go through the trading cycle around earnings. We talked about this last week. Tbr was center. Thought it would be a messy quarter. They were going to change how they report cops. It would be the first full quarter of giving guidance with kate spade looked in. There could have been some noise there. We wanted to hedge that. Spread. A december put it did when it was supposed to do. Stock traded down about 4 closed earnings. Our concern was it could have been deeper than that. But the head has effectively paid for itself. Now, with earnings past and our fundamental view going forward, we want to circle back and look at long directional exposure. Do you also do it with the not all investors and traders are on the same page so it could be rocky . Jim thats a nice way to ask brexit. Capital. Utting up you are still along that stock. You want to add additional convexity. Stock rallies through the Holiday Season and into the next earnings. Early february that we expect. It is embedded in the options structure. So what does it look like . Jim we want to sell in february. 32 put spread. Your macs loss is capped at those five points. , in february you are buying a 44 strike call. Right now you can do that for just about even. Youre not putting up any capital for this trait. This is something we think this nicely. Generally in retail, it has winner and loser season. Although mostly a loser season. Do you think that will change going through the Holiday Season and are you looking at Something Like xrt or mostly focusing on individual stocks . Jim there will be a lot of noise and other retailers. We have scarlet amazon, according to not used state licenses to sell prescription drugs. There was fear that that would cvs. D news for walgreens up by almost 4 as well. We will bring you more details as we get them here it from new york, this is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Im mark crumpton. Its time for first word news. The Republican Party is being forced to choose sides in the Alabama Senate race. Members say that roy moore should drop out. Contact with a 14yearold girl. This afternoon in new york city, another woman came forward to accuse more of sexually assaulting her when she was 16. Mr. Moore attacked me when i was a child. I did nothing to deserve this sexual attack. I was frightened by his position and his power and im coming i wantday to let mr. Moore to know that he no longer has any power over me. Nelson statement follows a hehington post report that attacked other young people before. Government