Halfway into the day. The dow is the underperformer of the day. I am looking, johnson johnson, dupont, mac and expressed, Procter Gamble the underperformers. Andalls a quarter of 1 overall little changed after major averages closed at record yesterday and he nasdaq is still trading at a record today with any gain for major averages would be another closing high. There is a lot going on and one of the things we are watching in the last hour is sterner, shares surging after a report that the ceo of Amazon Cloud Services plans to announce a deal with cerner to help Health Care Providers better use data to use predictions about data population. Citing unidentified people with the matter and cerner is not commenting. Amazon web services has a lot of clients. It is unclear what the significance of this particular deal would be. Cerner is reacting and its rivals are down today. Holidays,ers into the some strength across the retailers. Goldman sachs out with an interesting note talking about the increasing reliance of the Retail Industry on the holiday season. This year they could get a larger proportion of their revenue from the holiday season, said specifically that in recent years and predict volatility. Looking for volatility. We are watching the dollar. The comments by janet yellen late yesterday that there has been a hint expectations for inflation future inflation may be lower. The dollar has been drifting lower over the past week, down 7 10 of 1 . A flattening of the yield curve. The dollar has moved today. Taking a look at the bloomberg as we watch the dollar, we also watched rates when talking about the yield curve. The target rate from the fed is the blue line. The 10 year treasury yield is in yellow and the twoyear treasury yield in white. Twoyear treasury soaring. As you mentioned, we may get more details and insight into the fed thinking when we get the minutes later today. Vonnie that is at 2 00 p. M. Eastern. Facebook stock a little bit lower but they will show which a requestganda from senators that address manipulation and meddling during the president ial election of last year. Facebook says they will have a tool by the end of the year and you can go in and download it and figure out if you followed any russia propaganda efforts. Shery lets turn to the fed. Janet yellen spoke to former boe governor last night and here is what she had to say about her tenure at the fed. One of the most important things i learned as chair is that is is important in making good policy is to keep an open mind. And not to simply assume that history is repeating itself. Shery this is ahead of Jerome Powells nomination hearings next week. Matthew. Ined by. Elcome to the Program Janet yellen also talking about inflation and how raising rates could quickly put it below their 2 inflation target. Does this change the feds rate hike path for next year . I do not think it does. Talking about hitting 2 inflation, 64 months and counting with not to present quite 2 inflation. They have given examples of why inflation is lower, telecom and drug prices dropping. A laggingis always indicator that tells you what happened, not what will happen. Usually lagging 18, 24 months. Inflation now is showing the slow down and we expect it to be accelerate next year. Shery look at this chart, does do her comments race stakes ray stakes for next year desk raise stakes for next year ray stakes for next year . Inflation t look it is lagging. Model is the believe that as unemployment continues to go down, they have to pay more to get people to work and that will lead to inflation. It is called the phillips curve and they believe in it and it will reassert itself and inflation will increase next year and it will be on a path to hike rates two times 24 times to four times. When you dig beneath the data, do not look at averages, the higherend, wages are increasing. I talked to Business Owners and they are having trouble finding highly qualified, skilled workers and are increasing wages at the higher rate. That will continue next year. Vonnie you are saying they will increase the wages for higher skilled workers which looks regal down trickledown . We think inflation prices will rise and we are seeing it earlier because employers are paying higher wages for skilled workers and we will we think that will keep going. We expect inflation to drop below 4 in the coming quarters and with that level of lack of slack in the employment market, we expect Wage Inflation to increase next year and will be a positive for the economy. Shery the confirmation hearing next week and the fomc will look different in the next few months. Could this affect policy . Another important point. In terms of the transition of the fed, it is unprecedented. Four open seats with janet yellen announcing she will step down. We also have a president of the new york fed stepping down and four opening opening spots. In total, we now could have six out of 12 voting members of the fomc the new voting members. It is a wildcard and something to watch out for. Shery where art vonnie where are yields going . 10year, we are at the bottom of the range and they will continue to rise. We should not expect it to be much higher rates. ,e have been saying all along you have to look at rates in a global context. 235 in 18 year may seem low yield to us, if the alternative is a german bunds and you are in germany, and japan, at zero basis points, a highyielding bond. We think rates will continue to rise. The curve will flatten and the race right will be muted. Relative. Rything is thank you. Vonnie lets take you to the first word news. President trump is continuing his war of words with basketball father lavar ball. President trump called him ungrateful and ball has downplayed the role of his sons release from china after being accused of shoplifting. President trump said it was not the white house, the state department, not the fathers people on the grounds that got his son out of a longterm prison sentence, it was me. The first full day in 37 years zimbabwe is not being led by e. Bert mcgarvey mugab he resigned under pressure. The former Vice President will be the interim president and the ruling partys candidate in the election next year. United nations envoy for syria urging the opposition groups in the country to form a unified front ahead of upcoming talks in geneva. At a meeting in the saudi differentpoke about delegations and the groups are divided on the syrian president s future role and the length of a transition and the constitutional changes that will see the country move toward elections. In the u. K. , theresa mays government admits Economic Outlook is getting worse. Philip hammond gave his budget speech in Parliament Today and cap the forecast for economic and theext year to 1. 4 government is setting aside and next are 4 billion to prepare for and all possible brexit outcomes. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. This is bloomberg. Vonnie thank you. On the breaking news on facebook, facebook is now going to employ a tool which will allow people to have a look which russian propaganda accounts base all or like before and during the president ial Campaign Last year in response to a request from senators to address manipulation and meddling in the 2016 president ial election. We know that 150 Million People were reached. People probably do not know whether they were one or not and this is an attempt to address that. And to appease congress. Facebook down about one dollar. More on this in the next few minutes. This is bloomberg. This is bloomberg markets. I am shery ahn. Vonnie i am vonnie quinn. Facebook will show people with russia propaganda pages or accounts they followed or like on their facebook accounts. Featuring the president ial campaign and election in response to a request from u. S. Senators to address manipulation and meddling during that time. Our Technology Reporter broke the story who is on the phone from houston. How will this work . Something you have to download or turn on on facebook . No, by the end of the year it should show you and their help center whether you like or followed in the of these pages. It will give you a list of the names of the pages. Unfortunately, you cannot see the actual content of the pages. They are leaving it up to congress to decide whether to release the posts. Shery what is facebook trying to achieve . They want to respond to senators and representatives who question them. Why shouldnt it be just like a data breach where an organizations informed people if they were exposed. You tell your users if you have information about people who may have been targeted . Why wouldnt you tell them that they were . The company had a deadline to respond and said they are working on it. Whether it will give people insight into how they were affected, it does not account for pages and postings they may have seen in the newsfeed. Say a friend of yours liked it and it went viral and ended up in your newsfeed. You will not know you were exposed. This is only if you followed or might the pages. Pages. D the vonnie cant they just blocking the pages and not you would be not following them anymore . Seems like you just give more data to facebook and whoever is doing this. The pages are already deleted. The company linked to a kremlin russiapropaganda firm in , they have presented this information to congress to help them paint a full a picture of how exactly the agency tried to manipulate the u. S. Public ahead of the election, and even in the months following. Those pages are already gone. What Congress Wants is for facebook to have more transparency with its users about how they may have been manipulated on the network. And on instagram. 150 Million People saw these posts, a much smaller amount of light liked pages. They want to tell you if you were duped. You click on it and saw it. You decide what to do with the information. Shery facebook is extremity with a Fact Checking tool in some regions. What else are they doing to avoid these situations in the future . It is a difficult problem for them to solve. Ive reported on how the Fact Checking operation is only scratching the surface in terms of misinformation on the platform. Meanwhile, this is an international problem. Facebook will try to experiment and figure out what exactly it will take. Is it a Machine Learning fix where they can look at the patterns and figure out how to stop these things earlier in their life cycles . Will it take more collaboration with u. S. Intelligence agencies and intelligence agencies around the world . And society has to grapple with the question of how much do we want facebook to be in charge of preventing us from seeing certain information . And affecting our what we like and share and comment on . There are so many gray areas becoming will have to tackle over the next year. Vonnie do we read anything into peter thiel getting rid of another three quarters of his remaining stake . He has been selling Facebook Stock for quite some time which may be good for the company. He needs liquidity to invest in other ventures and he has been a controversial board member as of late. Vonnie wonderful stuff, thank you. Shery coming up, what could ,top netflixs stellar growth and even treatment from Internet Service providers . We will look at the service rep ramifications of ending Net Neutrality. This is bloomberg. Vonnie this is bloomberg markets, i am vonnie quinn. Shery i am shery ahn. Vonnie netflix has had a strong year with the stock price up more than 60 but the plans to stop Net Neutrality threaten the business . Lets bring an analyst who joins us from san francisco. Well this had any impact on the on netflixs ability to grow if it passes . Probably not, their biggest cost items are content and marketing. You think about the broadband distribution costs the company faces, that is a single digit percentage of their costs. It is swamped by the amount of money they spend on content, which is about 40 of all their revenue goes to buying the content. Original and licensed content and maybe an additional 20 goes to marketing. It is a small cost items. It could have been material five years ago, maybe, no more the case. I think this is an immaterial event for a name like netflix. It probably stymies the creation of new competitors. It does not impact amazon but if there were a new, new netflix, this could cause that kind of company to have a harder time scaling up. Vonnie moore the Bigger Picture when it comes to rolling back Net Neutrality. What are the other ramifications and does it get rolled back . I do not know. I think it probably stymies innovation. You are increasing cost of business and cost of business is small for the already wellestablished players. It could be prohibitive for some of the small upstart companies. That is what i worry about. Small, they are have no political constituency and they are too small to matter to most consumers and you are talking about the lost opportunities of companies that would, ive years, 10 years five years, tenures from now that would come through. We saw the Justice Department lawsuit to block the at t purchase of time warner and people say those types of antitrust laws will keep the internet open and free. Do you agree . That is a very hard thing to interpret. One point from the netflix stocks perspective, something that would stop the consolidation of major media entities, major studios, that is probably a good thing for netflix given how big their content expenses and they would prefer a diverse Supplier Base rather than it concentrated one and blocking a major media merger is probably beneficial for netflix. , will that inhibit facebook and google and amazon from doing large acquisitions, i do not know if there are Game Changing acquisitions any of those three Companies Need to do right now. There are small acquisitions they look at, even whole foods, 15 billion, relative to their market cap and overall revenue, that is a small acquisition. It will not be that material for largecap internet stocks. Vonnie is there a term coming from the fang stocks . , threethere challenges challenges for the major fang internet platform stocks, first is competition and become Police Increasingly swim in each others lanes. Amazon getting more into advertised advertising and google spending time in cloud computing. And there is maturity. Astonishingly consistent growth. It cannot be sustained. When you get maturity kicking in and growth rates accelerate, a second concern. Third is revelatory government and google is probably the most exposed for good reasons to that at risk. It has not impacted p l yet but it could happen in the next two years, three years. Shery netflix have a recent price hike, will it have an impact on their bottom line . They should have a positive impact. We like the stock and put out a detailed report this morning based on his visit survey work. On potential earnings power of the company. We think they have Pricing Power and they proved it in the past. So far, we have not seen consumer pushback yet. If they execute well on the price increase better than the last one, and they got through beneficial from a revenue perspective. Vonnie thank you for your time. , j. P. Morgan chairman and ceo set to take the stage at the Economic Club of chicago and we will bring you the in review at 1 00 p. M. New york time and 6 00 p. M. London time. Etf iq is next. This is bloomberg. Scarlet this is etf iq. Scarlet dealmaking his back and a big way. Why are etfs fighting the love . We speak with black rocks matt tucker blackrocks matt tucker
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