Thatwould be julie would be one of the many superlatives we have had. The s p 500 earlier touched 2600 and it is nearly at that level. What is curious and interesting is that once again, these gains are coming on no particular catalyst. We have a holiday shortened trading week. We have got this big surge in stocks, technology in particular doing well. This is evidenced by the upsurge in the nasdaq. We also have some earnings reports to chew on. We have got two food related earnings, going in decidedly opposite directions. Hormel foods out with sales that beat analyst estimates, but on the flipside is campbell soup, a decline of more than 7 , the most in a single day in nine years. A cut their annual profit forecast. It is hurt by an ongoing dispute with walmart. Basically, walmart is saying it has been cutting its inventory of campbells. That is taking a toll on the company. I mentioned Technology Shares doing well today. We have some analysts and other types of commentary. Marvell Technology Rising after the company said it was buying cavium for about 60 billion. Workplace upgraded the Stock Barclays upgraded the stock. Estimates and shares are higher. Bitcoin, after an earlier drop from a theft related to a rival cryptocurrency, that coin is on the rise, nearing 8,300. Mike novogratz was on bloomberg earlier and he has been a big investor. As we talk about technology and in particular some of the semiconductor stocks, take a look at the bloomberg. It is trading at a record on a closing basis and is very close to surpassing the intraday record we saw in the bubble of. Ate 1999, early 2000 once again, this long rally has brought us back to those levels. Shery julie hyman, thank you. Vonnie joining us with more insight into the markets, mike wilson from morgan stanley. He joins us from morgan offices in new york. It is getting time to where we start looking back at the year that was in the year coming. Are you looking to see more gains next year from this bull run or should we anticipate a pause . Mike there is no doubt the 2017 has been a spectacular year. Our view is that would probably run into 2018. Our price target of 2700 was always our first target and we are making progress. Beyond 2700, 2750, it may be hard to get much above that. 2018 should be fine economically. We are not looking at a recession, however the rate of chains on Earnings Growth will peek at some point, and financial concert conditions are likely to tighten, whereas this year they have been stimulative. The missing ingredient that has to happen to make a cycle top is we still have not yet seen Retail Investors come in, in any meaningful, sustained way and i suspect we will see that. Can shery we say the correction we are looking for is over with the recent pullback . Mike back in october we felt like the market has surged a little bit too much into earning so we were looking for corrective activity. We got it in international markets. The banks came down about 5 for 6 and the more cyclical areas came down, but the s p never came down more than 1 . I am not sure we are totally out of the woods, that the market does not have one more trick up its sleeve, however it is one more correction. Wait out theu correction in some other asset orss or in no asset class, do you stay and look for places you might rotate into . Mike we have stayed fully invested throughout the entire 2017. We have not advised people to trade any nearterm collection correction. We told them in october, this is a point where you take a be a bit of a breather and wait a little bit to accelerate the dollar cost averaging. The bull market is very much intact. The things we are looking forward to this year are playing spades, and those are conditions for a bull market. That is what we are having. Shery what about dividends and buybacks . This rally andof now we are seeing capital return slow little bit. Is this a concern . Mike we wrote a note this week about capital return and how things have played out in an era of quantitative easing, there is no doubt that share buybacks, cost of the foss funds are so cheap, have played out. Companies have reacted very rationally with low cost of financing, but now they have to find a way to grow. We are seeing cash redirected toward Capital Expenditures in an effort to increase productivity, reduce costs, or produce more organic growth. That ultimately will lead to margin pressure at some point next year, right now it is actually a positive for Economic Growth. Vonnie how much depends on where the yield curve goes from here, what the fed decides to do because of that, and whether we get any fiscal sending spending . Mike the yield curve is part of the financial conditions index. Stocks hasreasons done so good is because financial conditions have loosened further. The ecb has been continuing to buy. As we go into next year, the feds Balance Sheet is being reduced. The ecb will taper. The yield curve will flatten. Credit spreads are in area we have seen more deterioration, and i suspect that is not a dip you want to buy. Credit you want to fade and that is usually an early precursor to the end of the cycle. Yield curve flattening being one aspect, is something we are looking for as part of the cocktail that will mark the end of this cyclical bull market. Shery yield curve flattening or inverted next year . Mike i think at some point our call is for it to be basically completely flat by the end of next year. Could it overshoot and invert . Possible. A curve of zero is definitely a precursor to slowing Economic Growth in 2019. Mike wilson, chief u. S. Equity strategist at morgan stanley. Vonnie lets check in on the bloomberg first word news. Mark there is a report that longtime congressman john conyers settle the Sexual Harassment case two years ago. According to buzzfeed, a former employee complained she was fired after rejecting sexual advances. Michigan democrats said he has not settled any sexualharassment complaints with any staff members. Paul ryan called the report troubling, and said reforms to the system are being considered. 1965rs entered congress in and is the longest serving member of the house. The worlds longest serving leader has resigned. Zimbabwes president has resigned after 37 years in office. Lawmakers were planning to vote on a impeachment. The president has been under house arrest since the military took control of the country. More than a dozen lawsuits have been filed by victims of the las vegas shooting. The gunman shot people attending a Country Music festival from the 32nd floor of the mandalay bay resort october 1. The latest tide of litigation targets the Entertainment Company that put on the show, and the hotel, alleging they acted negligently in the runup to the mass shooting. Are saidrewrite nafta to be sputtering. The fifth round wraps up today in mexico city. Mexico and canada are pretraining key u. S. Demands as unworkable. The u. S. Is frustrated the two companies will not come up with counterproposals on issues such as regional content pools for cars. 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. Shery coming up, we will talk to maya macguineas, president of the committee for responsible federal budget. She will tell as why the gop tax plan is not good for u. S. Fiscal health. This is bloomberg. Shery this is Bloomberg Markets, i am shery ahn. Vonnie i am vonnie quinn. The Second Senate finance committee released the republican tax bill, where it will head for a vote next week. One point of contention how much the bill would add to the u. S. Debt. Maya macguineas joins us from washington. Why are senators concerned . ,nce the tax cuts are enshrined will senators and congressmen be reform look at welfare and fix the problems that way . Problem we aree facing fiscally in this country is really quite huge, the debt relative the economy is the highest since world war ii. Deficits are approaching 1 trillion. The way to improve that is not a get and then try to make it better. The tax cut, which is structured to help grow the economy, is far less effective in either growing the economy or improving the fiscal situation because so much of it is based on borrowing. There are a lot of gimmicks in this tax cut, many things that will phase in slowly or suddenly expire, or pay for that are set to come in late in the game but probably will not. The tax bill will add over 2 trillion to the debt, so no, i do not think the argument that we can add that and come back and fix it later hold any credibility. Do tax reform where the costs are all set now in a way that would grow the economy and not worsen the debt, and talk about spending cuts, entitlement reforms. They were not even included in the budget that was just past. Shery Economic Growth is expected, and right now Tax Foundation is saying lower taxes could expand the economy by 3. 7 over the next decade. Way offsetat in some the tax cuts . Maya i think these two issues of Economic Growth and paying for them self get conflated, because tax reform will grow the economy. Even if it is deficit financed it will grow the economy, but if deficits are too large it could weaken growth. Negative effects from debt can outweigh the positive effects from tax reform. Perhaps slightly positive, but not nearly enough to close the gap in borrowing. Opportunity,wasted his tax reform comes around once in a generation. Do,e are things we need to certainly modernizing our Corporate Income tax as well as getting getting away from the tax tax cuts we have now. Vonnie why are we so worried about having such a huge debt and deficit . We are a rich nation. People buy u. S. Treasurys all the time and it is not likely to stop, so why do we care . If it is good for the country, why not let it alone . Balloon . Maya i wish borrowing our ways we have seen we keep having purchases of u. S. Treasuries from abroad, but that means the gains from that growth, the increases in the standard of living are exported out. Interest rates have stayed so low, but we have had a really ,nique time in Monetary Policy and with the end of quantitative easing, now is not the time to say Interest Rates will not go up, borrow, because the climate will change dramatically. Being prepared for emergencies, the next recession. , debtst recession relative to the economy was half of what it is today. , ourmuch higher debt loads hands will be tied behind our backs. I do not know what we want to test out being so unprepared for things that will come along. Howy in congress, confident are you that deficit hawks will stand their ground . Maya i wish i was more confident, because i know they care a lot. There are a lot who care about the effects of deficit and debt, but there is a lot of political professor political pressure to get this done. We need more time to get tax reform done but improve the bill so it will not explode the debt, and leadership is not leaving space for improvement which is where we could compromise and come up with the best bill. Theie what is happening to ideals of the libertarians and the tea party . Where are all these fiscal hawks . They will emerge when it comes to welfare reform debate. Maya what is happening, indeed . These are a lot of people who for years and years ran in their elections, saying, im going to washington to balance the budget, cut the deck, reform entitlements. They just passed a buzz it budget that does none of those. The budget passed by the gop allows 47 trillion in new spending and aspires out of that to save 1 billion. It is as if for a number of people and this appears more true in the house and senate you dangle some tax cuts and politically easy choices, the commitment to improving the political situation falls by the wayside. It is not unusual that the majoritypolicy party is not willing to do all the work, but this is a dramatic change and it bodes poorly for the health of the people. People who cared about the debt will not benefit from the policies. Vonnie thank you. Shery time now for the Bloomberg Business flash, look at some of the biggest business stories in the news. There is a report that apples iphone x was being built with High School Students illegally working overtime. To the financial times, foxconn had the teenagers working 11 hours a day to catch up with demand. Foxconn says it has taken action. An Indonesian Court has ordered Goldman Sachs to pay 24 million in damages to the founder of hansen international, claiming goldman bought shares in the Property Developer through a illegal transaction. They must return shares to the founder, goldman plans on appealing. A 2014 federal civil lawsuit alleges harvard intentionally discriminates against asianamericans by limiting the number of asian students who are admitted. The law firm representing harvard declined comment on the matter. That is your business flash update. Vonnie nestle could be going shopping in the organic aisle for its next acquisition. They are said to be eyeing hain celestial, but others may also be interested. That is next in our deals report. This is bloomberg. Shery this is Bloomberg Vonnie this is Bloomberg Markets, i am vonnie quinn. Shery i am shery ahn. Nestle could be going shopping, said to expand into healthier heinigth an expansion of hain celestial. Ed hammond has the details. Ed they have some assets and businesses but also some not good businesses. Issue with the second thing, if they try and do that as well hain be interested because you will not sell off your crown jewels and be left with a less good company. You could see a Strategic Company team up with a priority company to take over the whole of the business. Vonnie where has private equity been . Activist whoan owns just about 10 percent of the stock who has been pushing for sale of the company. , it isrivate equity still fairly expensive, even though we look at hain, trade at a high multiple. It is a slightly lower quality business, so it would be expensive to buy the whole company. Vonnie there are brands here like avalon organics and earth best, but the garden of the . Shery i have to confess, i have not even tried them. I know they are supposed to be healthier. Fits right in the sweet spot of this, if you like this trend toward health and wellness. That was a great example of that. Consumers are moving away from eating chocolate bars. Shery no, they havent. Ed they are supposed to have. We are supposed to be thinking more helpfully, and thats healthily, and this fits into that trend. Vonnie who starts making the decisions around here . Ed i think we are seeing like in every other industry, we are seeing haves and havenots, Big Companies going out and doing significant acquisitions. This would be a relatively small deal for equity for nestle, but still significant, to clearly in the u. S. Vonnie who else might emerge as a potential bidder . Ed you have to look at all the major Food Companies as possibly being interested. You might have to exclude campbell from that list because they obviously have had a herald day. Rrible i think Food Companies would look at it. Potentially private equity would be interested in parts of this business as well. Shery more consolidation to come. Ed hammond, thank you. Up, mikeoming novogratz is betting big on bitcoin. His year and target has the digital planning. This is bloomberg. Live from bloomberg World Headquarters in new york, i am vonnie quinn. And i am shery ahn. Deterred by a shorter holiday week. The s p 500 one point surpassing 2600, close to. 6. Most sectors in the green. Lagging a little and the dow jones up. 7 and the nasdaq at a record high. Later today, keep an eye out because janet yellen speaks at nyu and we have the fomc minutes tomorrow. To firstedness get word. Here is mark crumpton. Spokerussias president to President Trump today about the situation in syria. The white house says north korea, iran, and ukraine were part of the phone call. President putin had a surprise saudi arabias leader. The civil syrias leader. Administration plans to announce additional sanctions on north korea today. Yesterday, President Trump added north koreas regime to part of networks sponsoring terrorism as an effort to drop the new your Weapons Program their nuclear Weapons Program. People are dead after a bombing at a mosque in northeastern nigeria. Teenage aged statement detonated explosives as people gathered for prayers. Boko haram are suspected in the attack. Chancellor Angela Merkel appears unfazed after Coalition Government talks broke down. The chancellor signaled she will run in any new election, telling germany that she is a woman who has responsibility and is ready to continue taking responsibility. She added that her free election commitment to serving another four years stands. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Vonnie thank you. Bitcoin has garnered investor enthusiasm and criticism. Many skeptics share their concerns. I could care less what bitcoin traits for, how, why and who trades it. If you are stupid enough to buy it, you will pay the price one day. The only value of bitcoin is what the other guy will pay for it. I think it is a scam for criminals around the world. I think it has no credibility and if you have no electricity and wifi, you have no value. Do not spend long the Block Chain Technology is interesting but the cryptocurrency is irrelevant. The interest is in the chain, not in bitcoin. It is fair to say that bitcoin is valued in a bubble ruby, but we do not know very well what are the Market Drivers behind this rice this price . We are very keen to invest in the technology. Bitcoin show you how much of the wrist or Money Laundering in the world. That is all it is. [applause] it is an index of Money Laundering. Managersame fund Software Different view. He was one of the First Investors and started a hedge fund to invest in cryptocurrencies. He reacted to bitcoin naysayers earlier today on bloomberg. You might have noticed all of those guys are over 60 and im not. [laughter] and there is some truth to that. It is very difficult for someone who did not grow up in a Digital World to start understanding how we can move into a Digital World. Bitcoin can be digital gold. Gold is a precious metal, it could have been copper and lots of things on the periodic table, but way back, people chose goal to have value, solely because people say it does. Bitcoin is built on amazing technology. There is a limited supply of it. People are trusting. This revolution cannot of a breakdown in trust and the financial crisis, where people say, we no longer trust financial institutions, governments. In parts of the world, still, it is hard to trust the central bank. Revolution,alized which bitcoin is the poster child of, is a response to the breakdown of trust. Investment orn trade because overnight, there was a cryptocurrency and never heard of called tether and there was some stuff to that that throw bitcoin down and it seems to be an awful lot about these cryptocurrencies. Michael we are in the second inning or third inning, all young experiments. Each of these coins are individual ecosystems. They are their own use case. Bitcoin, the largest, is a decentralized system of money and way to store wealth that there are a thousand different coins and decent market cap coins that have their own system because prices have moved so far , like in anything, people are nervous. When you have made a lot of money and there is news, you want to book your profits. Fair, people lost millions they will not get back, how does that not fit the model in question . Mike the market is about one quarter trillion dollars, so it gets people nervous. We spent a lot of time thinking about security of our coins and how to keep them safe. You know, two years ago when i had a smaller amount invested, i spent less time. Just take a look at the chart. David this is market share of the different cryptocurrencies. Bitcoin at the top and white. Ethereum in orange. That is market share. It looks like orange has taken some but now receded. Ethereum hadhile, an amazing run, from one dollar to two years ago up to 400. And bitcoin stayed on the sidelines during that move. And then bitcoin had a big move. For firsttimers that are entering the market, bitcoin is the name they have heard. That is driving that. In the last few days, ethereum started to move. There is a lot of positive things happening in their ecosystem. Alix what is the new high . What is your bitcoin called the 2018 . 1000 i think weekend at and close to 500 in your theory of. Alix how much and ethereum. Alix how much of you raised . Mike im not allowed to talk about it or get in trouble. Alix better or worse . Mike interestingly, people have intercepted have been receptive. Alix have you been betting on icos . Mike sure. Alix which one . Mike , which is coming up try to a token that will decentralized the market, or skins, which are clothing shields, swords, helmets that gamers buy to make their avatars look prettier. Alix wow. You will have to explain that. That was over my head. David a new world. Mike how about this . Therefore more people who buy and sell digital clothing then there are that buy and sell bitcoin in all of the cryptocurrencies combined. Alix what . Mike a giant market. Vonnie of course. That was mike novogratz. Sherry i debate whether or not to buy bitcoin when it is at 5000 and now 10,000 is coming. Give me your money. Vonnie and do not worry about it. Sherry coming up, a race betweenalexa and siri between alexa and siri. Is it too little too late . This is bloomberg. Sherry this is Bloomberg Markets. I am shery ahn. Vonnie i am vonnie quinn. The worst performer in the s p 500 today, as the index goes above 2600 for the first time, that worst performer, their shares are plunging. Joining us to break it down is abigail doolittle. Why the big drop . Segment what a drop for signet. Behind this, they Beat Estimates for the Third Quarter but slashed fiscal year 2018, cutting it as much as 18 . Their ranges 14 . The range is below estimated by 13 , so a huge mess. This puts them on pace for decline growth for a second year in a row. Ugly, ugly, ugly. A few reasons, if we look at the revenue breakdown, a few of kays, an breakdowns, lot of them in the malls, kays is 40 and then zale another chunk. Relative to those, but comps was a miss, down 5 , missing the estimate but take a look at kay down 7. 2 . A second reason, competition from department stores, trying to cut jewelry prices and third, as ecommerce eats in, independent stores are closing and they have a credit portfolio and they have started to outsource that over 2 million accounts and there was poor execution, so creating problems. Pretty ugly for signet. Sherry they should go to asia. The chinese, the indians, every time there is a holiday, there is a huge grade about that. Abigail the indian weddings. Sherry yes. Any bright spots . Abigail not really. It is that bad. Sherry they should take my vice. Abigail they should. And the u. K. E u. S. Abigail there might be more international exposure. There is a high bearish interest of 26 . It is a surprise to some investors. If we look at the terminal charts, g btv 1937, we overall, see, the bears have been all over this but that congestion in orange is a bullish pattern. It started to confirm and it appears the stock is setting that perhaps stored 100 but now at this gap down, it is a big surprise to some investors who had been making a bullish bet. Just stock not going away. Vonnie they are all under the same signet. Abigail lots of brands. Vonnie thank you of the stock of the hour. Sherry we had this ongoing voiceactivated assistance, and apple may be losing to amazon in more ways than one. The home pod is set to debut next year. More than three years after the launch of the amazon echo, but it isnt just about timing. Device makes echo such a hit. We are joined from los angeles. What is this homepod lacking . The difference is simple. The homepod is an accessory to the iphone and ipad,a or as the where as the echo is Cloud Connected and has its own app ecosystem. You can order dinner, groceries, uber, where as the apple home andis music focused applications are a complete afterthought. Vonnie what is to stop apple from adding all those things in once a gets the launch out of the way . Nothing is stopping them. They have an entire ecosystem. One of the sources we spoke to put it this way, apple has made some of the best hardware for three decades. They have had itunes, the biggest music collection for a decades for a couple decades, and then they had siri, the three main components they need to build a highend speaker like the homepod and echo, but they are coming out within three years after amazon, after they had all the components. That is the issue at heart. Apple missed out on the category they should have been winning. Vonnie didnt we say that before with apple about almost everything . And then they took over . They took over, but they are coming out here with this time not the leapfrog. Apple was not first to the smartphone but the iphone was the best on the market in terms of functionality and what it could do. The ipad was not the first tablet but apple also but they all brought something new, and it leapfrogged competition, whereas the homepod is late and it has less functionality. Sherry tell us about the home cost . Ow much my the what can we expect . It was originally supposed to come out for 350 in december. Time went on and people asked, there is no update on the announcement so apple came out with a statement and reported, saying it would be released in early 2018. That means the first four months of the year, so any time between january and april. Qualitywhat about sound because you have to wonder what inhouse, is it extra in the way of making the sound quality better that may be would sway some people it from amazon or did apple that stamp of approval . Here is a known secret about beats. Beats didbought it, not have a good internal team coming up with technologies. Beats prior to apple outsource their manufacturing but the acquisition brought people who understood the sound of music and what makes music sound well, like bringing in dr. Dre, luke words, and others from the beats organization when they acquired them in 2014. Apples acoustic team came out the division that worked on speakers for mac laptops and desktops. In our story, there is a bit in there about how apple thought about making it the beats product at one points im sure there is influenced there somewhere. Sherry thank you, mark gurman. It is time now for our latest Bloomberg Business flash. At selling off more Vegetable Seeds product line to win approval for their acquisition of santos. They are trying to figure out how much of the unit to part with to speed up the antitrust investigation. Bayer already agreed to sell a part of their business. Sales of previously owned homes in the u. S. Rose to an alltime high in october after being hurt by two hurricanes in q3. The inventory of available home stories fell in the last year. As for median sale price, it was a five and 5 and came in 247,000. Global sales of electric vehicles surged to a record in q3 of 63 last year. The total number almost 300,000, more than half the sales in china, where the government has pushed a electric cars. That is your latest Bloomberg Business flash. Sherry coming up, macys has a plan to survive their retail apocalypse just in time for the Holiday Shopping season, but its new playbook gets rid of some of its original sale strategies. Details, next. This is bloomberg. This is Bloomberg Markets. I am vonnie quinn. Sherry i am shery ahn. Vonnie macys has been on a downward spiral with sales in stores declining, almost plunging and the market value down about two thirds but the involves playbook doing away with longstanding practices. We are joined now by a bloomberg reporter. It is a whole different model. They are trying to change it and updated. The changes are things that a lot of retailers have argued done, so they might be clothingnding, underperforming locations, trying to be customer friendly, but they need to make some big changes and they need to try anything they can and they found themselves in this position because they made a lot of acquisitions. They are this behemoth created out of Regional Department stores, five pounds ago. It is huge. It has more than 700 stores and their closing 100 but that is a small number of stores they need to close. That alone is part of changing your model. Sherry they have a convoluted history. They started as a dry goods emporium or Something Like that. Lindsay the original one was a dry goods store in the macys federatedhe may and department stores, they merged, there took their name macys and nowadays what it is, but there cfo said at a conference recently if they could start over again, they would be 245 locations. Guide is a big difference than the 730. That is a big difference. They are trying to be focused on fashion and figure out who the customer is. But being in the middle, not highend and offprice is a great place to be but they are certainly try not price trying off price aggressively in 2018. Will that work or cannibalize stores . It is up to them to prove that model works. Vonnie it is the testing grounds of the new retail on who can survive amazon and how . Lets look at the chart in the bloomberg chart library, 7326. This shows you the dichotomy because amazon is the yellow line and you have the retailing index in the teal and in purple, s p 500. There is still believe there that people are shopping and there is confidence in the u. S. But look at it compared to amazon. Lindsay when you can get something in todays, it is hard to argue with that. Macys says, we would to you what is on trend and we will make sure you look good at a great price and you can get it in one place for a fun experience. But they realized their experience has not been that great severe editing 30 of their sort meant out of stores to make it less crowded. They are trying to give you an idea of what items look at of offering 15d similar styled black dresses. Here telling you, look at this one, you have to have this one. Is that what the macys shopper is looking for . They say yes and i think that remains to be seen. As long as they are trying something new, that is what investors look for but they are looking for results and quickly. The big question is real estate. Macys has a big real estate portfolio and they had that Herald Square store, estimated at 4 billion. At what point do they monetize that store and the rest of their fleet . They are taking small steps toward doing that. I think that investors would like to see more steps. Sherry their commitment to bricks being tested here. Vonnie thanks to lindsey rupp, who by the way, who beat out and about on thanksgiving and black friday to see the sales. Do not miss an interview with macys ceo 24,eaking to us november 9 30 new york, 2 30 london time. Sherry we will talk to jim for renacci ofio jim ohio to talk about the tax code. Vonnie this is bloomberg. Sherry it is 1 00 in washington, 6 00 in london and 2 00 a. M. In hong kong. From new york, im shery ahn. Kevin i am Kevin Cirilli in washington. Welcome to Bloomberg Markets balance of power. Sherry curator top stories at this hour, a risky case for the Justice Department, the u. S. Lawsuit to stop at t and time warner has sparked accusations they are pursuing a case it is bound to lose. Plus, we speak with house ways and means subcommittee member representative jim and ac on the latest jim renacci see. And the sec chief proposes a rollback of Net Neutrality rules. What this means for consumers and Internet Consumer providers. Kevin the Justice Department filed a lawsuit to block the at t takeover of time warner, sparking accusations of meddling from the trunk administration