As we can see the renewed theme of rotation, rotation out of technology and into financials and industrials, for example, evidence in the dow. S p 500 in the middle, up. 5 , so benefiting by the surge we have seen in stocks related to the tax cuts passed over the weekend. Another way to look at the weakness we have seen with technology in this chart, looking at the percentage of members of Different Industries with 14 day relative strength index above 70. In other words, are we seeing them overbought at these levels . Look at the s p 500 in blue, the percentage going up even as techs have been going down. Indicator forum this group relative to the broader market, that it has been weakening versus the broader market. On the subject of rotation, if you look at some of the weakest names today, they are in the top 10 performers in the s p 500 this year. Align technology, maker of the invisible line braces alternative, we have ma icron, and we also have lam, Semiconductor Makers that have done well this year, but pulling back along with this rotation, however long it lasts, adept technology. The s p 500 gainers this year have been giving back about a. 5 over the past week, so that movement 8. 5 over the past week, so that movement continues. Retail doing better today. According to jpmorgan, they expect rotation out of internet rigid detail in into brick and mortar. He comes back to taxes. That these are Domestic Companies that have high effective tax rates and it is one of the groups that has been doing well, and it does not hurt it is the Holiday Season and is some of the numbers we have gotten broadly for retail have been strongly than estimated. Digging more into the tax effect when we talk about the stock of the hour in a few minutes. I want to tell you what it is right now. Julia we are sticking with markets. Jeremy siegel is joining us, professor of finance at the wharton school. He joined us a month ago and he correctly predicted the dow topping 24,000 by the end of the year. Now that we have reached that milestone, what about 25,000 . What do you think. How long to get the 25,000 . Percentsnly a couple away. We could get there. I think we probably will get there, we are very close, but after that i think that the market will struggle for the next year. We have had a superb market this year. We have had the bull market all the way since 2009. I think we are due for a pause. I think we are fully valued. I think the fed will be raising interest rates. I think political winds are drifting that will be more worrisome for the republicans. So i think the market deserves a breather and i think that is what it will get. Scarlet you point out these good reasons, you could say they are applicable right now, but to what extent do you think what we are seeing at the moment is window dressing of some sort . How do yearend adjustments typically look like a when we have a year when major indexes are up around 20 . Jeremy first of all, what i think we have now is a positive reaction to the tax cut. It is a big deal. The Corporate Tax cut is a very good thing, positive. And then i think the news is out, nobody wanted to sell before the tax cut came through because everybody said it will go up during men. Sure, there will be then. Sure, there will be profit taking, although the tax rates did not change a lot like years ago when the low Capital Gains tax expired in we had higher taxes under obama, so i do not see a lot of reasons, certainly the new tax law, to do a lot of shifting in terms of Capital Gains. I think it will really be evaluation question a valuation caution going into 2018. We had good Earnings Growth and i do not think we can keep getting 12 growth into the future, even if the economy accelerates the 3 , which is what the republicans hope their policies can do. Scarlet doesnt matter that the rally that we are seeing does it matter that the rally that we are seeing is happening without tech, the best performer of the year . Jeremy we talked about rotation, i think that is very interesting. I think that sometimes does show a top that we have this rotation. I think value has suffered too long. I think it is going to be positive into 2018. I am not saying that tech got crazy at all, but certainly it has been such a strong performer, it does not surprise me that we will see rotation and i think will continue into the next year. Julia just of the clear, you are saying it would be a shortterm correction and people could see this going higher. Jeremy you know, there is always the short term of the market is so hard to predict. We will have 50 20 gains this year, 15 20 gains this that is not sustainable for the market. 7 as 7 a year i think year is going to be the longterm normal equity gain. I think sometimes it will be 17 or more, and sometimes it will be negative, but 7 return for equity is much better than bonds. It looks to me like a normal return and i think that that is the type of return i am looking forward to in 2018. Julia you mentioned political headwinds as a possible pullback region for investors. Why would it matter, why would politics matter in 2018 more than it has mattered or not mattered in 2017 for investors . We well, when we have certainly could not the tax reform we had without three branches being in one hand. There is certainly a fear that one of the houses of Congress Might turn democratic next year. We are still 11 months away, but we had rumblings in the last off year election that the democrats are making some gains. There are thin margins of the republicans. So this tax cut, again which i think is on the whole looking particularly like the Corporate Tax cut, could be the last piece of major legislation that gets passed. Then we have to look at earnings and past returns and what the future brings, and there would not be as many net positive developments next year. Scarlet it is now or never. I want to get your thoughts on bitcoin. The cboe will begin trading futures next week, and it will allow investors to short the cryptocurrency. What will you look at to determine if it is the next big short . Jeremy it is interesting, im glad you brought it up because a lot of the press has said that people are going to buy, they can buy on margin and they are only thinking of the positive end, not the negative end. It is just as easy to short futures as it is to long, and it is a speculative vehicle. I believe it is in a bubble. Does that mean it is at the top . 20,000, go to 15,000, we know they go longer than we expect. But i fiercely believe that the cryptocurrencies are alternatives to the regular currencies. Dollar, look at the becoming ever more popular, inflation has remained very low, purchasing power is stable, and i mean we are not in hyperinflation where we have to alternate cryptocurrencies. Years out we 23 will be looking at that just thae way that we look at the earlym bubble we did in 2000. Julia where does that put going where does that put the coin . Bitcoin . Jeremy at 1000 or even lower. When that happens, i have no idea. Even though i am longterm bearish, am i going short bitcoin . I would not. It is fascinating to watch, but i do not think it has the Intrinsic Value to sustain these levels. Scarlet it may look like nasdaq from 2000. Thank you so much. Lets get a check on the bloomberg first word news at this hour with Mark Crumpton. Mark thank you. The kremlin is downplaying the importance of talks between President Trumps former National Security adviser and the then Russian Ambassador to the u. S. Russian Officials Say that Michael Flynns talks did not influence president Vladimir Putins response to sanctions imposed by the obama administration. Mike flynn has pleaded guilty to lying to the fbi about those discussions. The president says his plan to scale back two National Monuments in utah is an important move for states rights, as well as for the people of utah. He commented today as he left the white house in route to salek city where he was outlining his intention to and thehe bears years granite stairs national monument. They spend millions of acres and are among 27 National Monuments that the president ordered the interior secretary, ryan zinke, to review earlier this year. Germanys foreign minister says yemen is experiencing the worst humanitarian catastrophe in the world, and is calling for access for aid to the country. The Coalition Fighting in the ongoing civil war imposed a full blockade on yemen after a missile attack on the saudi capital last month. The statement came hours after rebels announced they had killed the former ally the former president of the country. The nfls new york giants have a fired the head coach and general manager. That is according to a report from nfl network. The giants have gone to10 so far this season after making the playoffs in mcadoos first year as head coach. The general manager had been there since 2007 and had presided over to super bowl winning teams. It is the First Time Since 1976 the giants have a fired a head coach midseason. 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. Julia thank you. Coming up, our stock of the hour is Union Pacific. The Company Heading an hittin g an alltime high. What is behind the surge, coming up. This is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Julia im julia chatterley. Scarlet our stock of the hour is one trading at a record, Union Pacific looking to be getting a boost from the tax plan. Julie hyman has the details. I realize that transport Companies Might not get a big boost might get a big boost from the tax plan. Mark generally this julie generally this is not a cup conversation until they are going to change. So we have a high effective tax rate. We see companies that game the system in various ways to get the tax rate down, but apparently it is [indiscernible] mark not as easy to do for those transportation companies. Julie for yen pacific it is not us for Union Pacific it is not just today, it has been rising recently. Said there was perception of risk to Union Pacific from a switch in the type of fracking sand being used, that it would mainly be transported by tracks. But that risk was overstated and it could beginning in a marginal lift. You are talking about a company that pays an effective tax rate of 37 . If you take a look at the bloomberg, we have a chart. It has gone up quite a bit over the last year. It sounds like that have to do with an increase in the state of illinois, the Corporate Tax rate, and taxes overall for the company have been considerably higher. It looks like a big gain, a couple of percentage points. Nonetheless, still a big gain. Scarlet not just Union Pacific among the others as well. Dan curtis and our team took a look at individual transportation companies, avis budget within the s p 500, within the dow jones it transports, is the highest among them, 41. 5 is the tax rate. United continental, 40 . Alaska air, American Airlines come all these companies have 38 40 and you can see some of them there. If you compare them with the other groups, they have the highest effective tax rate. Also consider many of these companies, not all of them, not the airlines, but others are domestically oriented, especially the railroad companies, so the effective tax retail, whichweer we were talking about in the first block, getting a boost because of the holidays and also the tax rate. Also telecom and food retail, the walmart of the world rounding out the top tax rates. Julia i was looking at the numbers, you have just outlined the highest taxed companies, interesting. Scarlet 20 would be half. That is significant. Julie much more upside for these companies. Scarlet thank you. Coming up on walk the talk, female ceos in the crosshairs. We tell you about research that indicates active investors more frugally target female ceos frequently target female ceos. This is bloomberg. Female ceos are more likely than male counterparts to the target by activist shareholders, according to new research in the journal of applied psychology. In walk the talk him are ongoing conversation about diversity in the workforce, i sat down with a researcher at the university of alabama, and asked what is behind this. One of the first things people say is, isnt there kind of laws preventing people from against women . But most social norms target overt indicators. You look at over indicators, that is no difference between female and male compensation. The problem is at the covert level, which is in the daily monitoring of ceos, activists are more likely to be against female ceos. To be honest, it is possible they do not even realize it. Scarlet what does targeting mean, what forms does it take and what are the objections that investors are making when it comes to companies that are run by female ceos . So if you think about the interaction between the ceo and activist en the with the commission, what they are saying is the manager is not managing the fund well, we are going to tell them how to manage it, ok . These what we look at is findings from activists, and what we find is activists, more activists are likely to find these problems when there is a female ceo, which tells you the problem on the issue is is that the female ceo needs counseling advised the guidance more than male ceos. Scarlet some activist investors will say that is a coincidence and the extra scrutiny that they apply to the ceos could or should be advantageous, as long as the ceos play ball, because they add to the stock price, create shareholder value, is in the argument flawed . There are two issues you are bringing up, if it is a coincidence and if the activist adds value. If the research is done well, there are no coincidences, because you have looked at every possible factor that could lead to the results. That is the first issue. Do activists add value . We do not get into that. But somehow they think that they have more if it is a female compared to a male ceo. I think that is a problem called because it isblem like saying they need somebody from the outside is how the female ceo have to do it. Scarlet what has the reaction been to the study . Hachette female ceos apply and interpret the findings . There implications for female ceos and activist investors. Think about the female ceos,here is a lot of meat for them for helping them become leaders. Among need to do is these ceos where they target bias, which may not be male intended, but they exist. So how the female ceos interact with that. And they need to be aware that many times when the activists target female ceos, it may not be informed, strategic targeting, it could be biasedes plane bias playing into the equation. And [indiscernible] toy need to be coached harness their bias. Most like saying that this can affect their decisionmaking. Scarlet as a result, they spend a lot of time being distracted and defending off these targeted efforts from activists investors when they could be using that time to improve their companies. , we believe that women ceos at some point, you know will be like this is too much and given meg whitmans retirement, i may, it is her decision to leave, but how much of it is because of all get. E the ceos scarlet that was my conversation with a professor of the university of alabama. Julia President Trump is speaking and telik city. He has said that orrin hatch is a true fighter and he hopes he will continue in the senate for a long time. He is in you talk to undue the monument designations from president obama, the Grand Staircase in focus. We will continue to bring you headlines. He has also mentioned the tax Reform Efforts and he has described senator orrin hatch as a true fighter. Scarlet he was thinking about perhaps not running for reelection and mitt romney was looking to fill the seat. We know there is tension there between mitt romney and President Trump, so perhaps this will put a Monkey Wrench into the works. Julia still ahead, the Murdoch Family empire and more on the revised talks between the house of mouse and fox. From new york, this is bloomberg. From bloomberg World Headquarters, this is bloomberg markets. Scarlet im scarlet fu. Commodity markets are closing so lets get started with oil. Falling even after the epic deal, you have john told off saying that the steady increase in shale production continues to eat away at opecs hopes to balance the market. There was a servant also found that north American Energy explorers will likely boost to spending by a fifth of 20 next year, crude oil down 1. 6 on the session. Golda declining today, hitting its lowest level since early november, 12. 78. The passage of the tax overhaul hurting gold as the dollar gets a boost. If you come inside the bloomberg you will see it has been a volatile stretch for the metal, driven mostly by washington events. On friday, you can see that gold had a big spike when michael flynn, when the news of his guilty plea came out. Then we saw this a lower when they passed the tax reform later that day. A lot of gyrations as we monitor the different drivers in the capital markets. Julia headlines out of d. C. , but what about from the world. Two big deals in the works for m a. Cvs buying that none, a blockbuster agreement that could reshape the Health Care Industry landscape. And a deal that could reshape the entertainment sector too, disney renewing talks about buying a major part of 20 for century fox media assets. And i am the same assets. The people familiar with the matter, they say that they would prefer disney to be the buyer. For more on the media landscape we are joined by john, the managing partner at capital advisors, he advises Media Companies on m a, including disney. Great to have you. Lets look at it from disneys perspective, just announcing this year that they are going to te to consumers right are going directly to consumers, stepping away from netflix. This could be interesting for them. John they are great assets and in an environment where you are competitive, your competitive set is coming like facebook, google growing at a rapid rates, fox brings attractive programming assets, programming scalet assets, and global in india and asia and other parts of the world where disney wants to have faster growth. And there are four letters, h ulu. Scarlet talk about that. What is disney hoping to unlock by buying assets from fox . They our own to 30 age by disney, fox, comcast and of the last 10 by turner, time warner. I think the thinking at the moment is if you are traditional media asset you will need to have, in a forwardlooking environment, is very strong consumer facing asset, and not controlling one is a bad thing, controlling one is a good thing and at the current moment, hulu would be the right platform for them to do that. A piece of no bought the backend of these kind of assets. Putting these altogether certainly seems to be one of the attractive attributes here. Julia and you are facing many of the same pressures with these Tech Companies in terms of distribution and content they are spending money on at this stage, for those purposes this is a way to cash out fast . John i think that mr. Murdock and his family have built a fantastic business and he has been looking forward in the market and figure out figuring out where to be positioned. If you are a company, facing disney as 17 or 18 and facebook is on its way to 35, you wake up and you look at the way the world works and you have to decide, can we be as effective as we need to be . Julia competitive. Scarlet the report shows that the talks do not include the fox news and the Fox Broadcast Network and fox sports, would he sell these at the right price . John you know as much as i do. It strikes me that those employees been outside of what is being rumored, which suggests he and his perhaps family want to retain control over domestic, u. S. Domestic news and sports assets. Makes them smaller, but a business that they know very well. Scarlet whatever assets they do decide to sell, if they do, is this an admission that we are at peak valuation and things can only go down from here . John the tactics are interesting, because somebody is talking to the press about this a lot and people want to have a quiet conversation, this is not a quiet conversation. Somebody is making it known that they are in motion and it seems to me that the murdochs are making it known that they are ready to do something and whether it is comcast or disney, they are inviting them to come forward and they think this is the appropriate moment to do it. One should remember, i think under the agreement that comcast struck when they got the Nbc Universal deal approved, their control over hulu was suspended for an amount of time. You put all those pieces together and im not sure it is value driven, maybe it is personality driven, who knows. All these are in motion. Julia you have an amount of skepticism, what is it about, the players involved or the environment which is made tougher by the challenge we see with the at t and time warner deal . John it brings up the complicated set of regulatory Justice Department risks. On the one hand you have this remarkable power, remarkable power that facebook and google have amassed in their environment, some might even say quality monolithic, but there is no framework in which they are restrained. In the media environment everything they touch is restrained. Now you have a Justice Department making it clear that a directv acquisition of turner networks, which does not have one of the big four networks, if that transaction is getting challenged you certainly have to step back and say, well other ones get through and what is the risk of completion . My skepticism is really that when people tend to talk about things probably as much as this is being talked about, it strikes me that there is a lot of noise. Maybe, there are a lot of pieces that make sense and you want to see it happen, but who knows. Scarlet talk about the internet giants, you mentioned google, facebook my amazon, of those three who posted the biggest threat to the Media Companies . Netflix has maybe 1 million of cash flow and 80 billion of market cap. Disney, i do not have the number, but 185 alien dollars of market cap. So there is a disparity between these enterprises that reflects their massive global scale and growth, and it is remarkable. Companies in my mind represent real competitive threat, and amazon is the last, which is not in the list here. If you add up the amount of money being spent on amazon and netflix and facebook to acquire or create content, it is an awesome amount of money, a remarkable amount of money. So traditional content producers, who have what we call the legacy old media apparatus, are having to look at that and a say over the coming few years we will be spent into oblivion by these guys. Difficult time. Scarlet who poses the most immediate threat, is it netflix . John good question. I do not know how i would handicap the because facebook is so profitable, to me companies that are that profitable and have a global footprint of scale are a pretty, they are pretty dangerous for traditional companies. Netflix is a formidable company, but it is still small from the standpoint of profitability compared to these Media Companies. Julia you post a question in your notes, the disney board, does that have sandberg sitting on the board . John i would not write that. [laughter] julia it is right there. Think she is a strong printer bitter strong contributor. It has been made clear that at some point in the future that he has been around for some time and i think the board will try to convince him to stay julia it is that sharing of information and to the transition of what we have talked about as a legacy media company, is there something in the direction they are going . John i think it will become an issued not just for Media Companies but Many Industries where the interlocking nature of the board and who is there, and you are bringing them on with the thesis that they have a great deal of knowledge about how to play, but if mrs. Sandberg is the number two person, and every time you turn around facebook is bidding for rights, whether they are digital only or digital and is Something Else for content, certainly some junction in the future that will pose interesting questions. Scarlet maybe conflict. Ok, thank you so much. Thank you for having me. Scarlet now i check of headlines with Mark Crumpton. Mark thank you. Despite multiple allegations of Sexual Misconduct against roy moore, President Trump today endorsed the Alabama Republican Senate nominee. In a tweet, the judge said that the president called him to offer his full support, including the message go, get them, roy, and he says he looks forward to fighting to make America Great again. He has denied the central allegations. Rexdefense secretary tillerson is in islam about defense secretary is in islamabad, urging pakistan to more aggressively go after insurgents moving back and forth against across the border with afghanistan. The premise or his countries committed to the war on terror and shares the same common objectives as the United States. And it is a sign that america is cleaning up its electric grid. For the first time in 40 years, power plants are not the biggest source of Greenhouse Gas pollution in the u. S. According to the u. S. Energy information administration, cars, trucks and other forms of transportation are the biggest polluters. They have not gotten dirtier, the power is being now generated by cleaner sources. The u. S. Supreme Court Justices indicated that they may let new jersey and potentially other states legalize singlegame sports a scant sports gambling. Doubtrity of them showed on a federal law that would bar gambling in the states. They have been fighting to appeal on the grounds that the federal law violates a states rights. 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. Julia thank you. Justnd, President Trump wrapping up his speech in utah after a weekend tweeting and a fundraising. He is in salek city to announce he is reversing the roles on monuments and continuing his busy week for the gop. We will discuss later on in the show. This is bloomberg. Scarlet this is bloomberg markets. Scarlet im scarlet fu. Julia im julia chatterly. President trump wrapping up his remarks at the utah state capital, as i mentioned before the break. His comments come after a weekend of reveling in the prospect of his first legislative victory and depression off a federal probe and brushing off a federal probe. Our White House Reporter joins us in new york. Great to have you. Talk to us about the tax bill that we managed to see a vote on over the weekend, although donald trump threw a wrench into the works. Talking about 22 Corporate Tax rate in stead the 20 most of us believe they had settled on. Tell us more. The president is open to negotiation. He originally said it was a red line. He originally said 15 , then 20 , now looking at maybe 22 , the idea that they could use about 22 billion extra dollars with not so much focus on the corporations and the wealthy. Julia when you say he is looking at, who else is looking at this . It is really hard to know what is on the president s mind, a lot of times he says rings that have not been thoroughly vetted or are very different from what others are saying. Maybe he now decided he wanted to float it out there and maybe they will end up at 20 instead of 22 . It is hard to tell whether he is looking at this as a serious policy idea or floating things out there and see what the reaction is. Scarlet there is a lot more negotiation to go and it will not be something with a house simply adopts with the senate passed. Yes, if you listen to the House Speaker he has pushed for the Conference Committee because he wants to have negotiating power, not just saying what the senate passed, but looking at ways to incorporate half ideas. They wanted to merge these different plans together and make sure that both sides are ok. On the house to have a bigger margin, about 18 people that you can lose before the vote goes down whereas on the senate you can only lose to republicans. The has a some ideas they want to make sure that they get in. Theysaid that the 20 , have said anything above 1 is a nonstarter. So there is negotiation, but i think there is a lot of confidence that this will eventually passed before the end of the year. Scarlet aside from the 20 or 22 , what else are they looking to insert to put their stamp on the bill . In the senate you have these various individual tax breaks that are going to expire after seven or eight years. The house has them going all the way through for eternity, so scarlet permanent. Within a 10 year window, definitely not an expiration date. The estate tax, the house has completely repealed. The alternative minimum tax that the senate changed to keep some of that, the has repealed that entirely, so there are areas that are much more conservative on the house side, because they have the bigger majority and they will be fighting to make it as conservative as possible. Julia what about shutdown potential . We have to finance the government beyond december 8 and it looks like it will be a two part, taking it to december 22 and beyond. Some say they do not want to do that without degree of knowledge about what the spending bill effectively is going to contain. Right now their strategy is to try to figure out how to get to the end of the year, just to get to christmas with maybe a two week is spending deal, maybe another shortterm deal to get them into january, because they have so many things on their plate, including the tax bill that they are trying to complete before christmas. I think that they want to get through this process with a shortterm extension before they really have the drag out fight with democrats to decide with a true spending levels will be for the rest of the year. Right now they are trying to negotiate and get to the end of the year so they can have a real negotiation. Julia so probability that the president does a deal with nancy pelosi. Scarlet i think there is a that is high. At scarlet ok. Thank you so much. Good to see you. Coming up, former u. S. Treasury secretary Larry Summers explained why he believes a repeal of the Obamacare Mandate in the text will will have dangerous consequences. We have highlights, coming up. This is bloomberg. Julia this is bloomberg markets. Julia im julia chatterly. Scarlet im scarlet fu. The new bill has zero democratic support former treasury secretary Larry Summers sat down with david westin to explain his fears about the gop tax bill. Larry my guess is we should be spending more on votes. You look at what is happening in the middle east and north korea and how rapidly the defense spending of potential adversaries is growing for my think one big cost of the tax bill is inevitably by bloating the deficit it is going to mean a reduction in defense spending over the next couple decades. I think we need that spinning for National Security. I also a spending for National Security. I also think that the potholes on the roads, costing americans with gasoline taxes, looking at the way in which funding for cancer cures has been cut any moment when science is bursting at the seams, looking at the fact that we may regret it, thewe cannot change fact that we have a population that is aging with more needs for public support of various kinds, i think we need more domestic spending and we need more military spending. Taking a large amount of Government Resources and allocating it to the top 1 of the population seems to me to be a rather perverse priority. If i could take one more minute, here is what i think your viewers should think about. , ultimately to my disappointment and others, we was not that successful with the bull simpson process where we brought a Bipartisan Group together and we tried to get the countrys finances under long run control. Liberals, not flaky the director of morgan stanley, we had a prominent republican senator, there anything but big government, flaky liberals. Their conclusion and that of their commission, which included a number of republican congressman and senators, was that what we needed to do was stabilize things with 21 of gdp gdp innue and 21 of spending for the foreseeable future. So the Revenue Target was 21 of gdp. This tax bill will leave us target,0 behind that by setting a target of 4 of gdp, about 700 billion a year bowles and simpson, conservative bipartisan effort at deficit reduction. You cannot keep a great nation on a shoestring. That is unfortunately what this bill risks condemning us to try to do. Scarlet that was Larry Summers speaking with david westin. Julia time for the Bloomberg Business flash and a look at some of the biggest stories in the news. Soul cycle is betting highfashion will get you spending. At new york fashion week, they debuted a highend clothing lines along with public school. Items included a 185 leggings and 655 bomber jacket. The reflects the growing interest in athletic leisure wear as a lifestyle rather than a trend for millennials. Discovery is boosting their ownership of the Oprah Winfrey network and they have paid 70 million for an additional 24. 5 stake. The move raises their ownership to over 70 . Oprah winfrey will continue as a chief executive officer. Her extensive ticket to the network will go through 2025. That is your Bloomberg Business flash update. Do you spend spin . Scarlet i hated. No. No spinning. Up next [laughter] julia coming closer to making the tax overhaul a reality, we will discuss. Julia its 2 p. M. In new york, 12 00 p. M. In san francisco, and 8 p. M. In london. Scarlet welcome to bloomberg markets. Julia we are live and World Headquarters in new york over the next hour. The top stories we are covering around the world. Jampacked week for the gop we speak with the House Freedom caucus miller about tax overhaul and avoiding a government shutdown. Twoine a world where these Asset Managers call our list shots. Brexit. Reakthrough on why london and brussels failed to clinch a long fought field. And after the close of trading, lets check on markets for julie hyman. Been talkingve about, it is a function at least in part of the tax plan reaction. They certainly dont have as much to gain from this. We are continuing to see rotation out of some of the best performers of the year. Many of them Technology Stocks and into some of the underperformers, we also have the russell 2000 appear. And isnt doing much of anything today. Also because the gains already outpaced those of the broader averages. Perhaps a little more priced in then into the other groups. Take a look at the bloomberg hearing to get a better idea of what is up and what is down. Technology is down in a big way. That group is clearly doing the worst. Real estate is also underperforming in todays session. We have telecoms that are up, financials, and discretionary materials. We are also watching, of course, the little bit of a longerterm movement in these groups. We pretty clearly see the. Ivergence the putting a fine point on rotation idea and this divergence we are seeing which is pretty stark. It you can slice it in a number of different ways. We also have some moves to talk about in todays session. Disney is said to have renewed interest in assets of 21st century fox according to people familiar with the plans. 12 First Century fox is said to favor disney as the bitter for those assets. Health health deal, cbs agreeing to buy that number. 207 a share. There are questions about Regulatory Approval and that is depressing those shares. And aetna as we get these news. And on an index point basis, bank of america representing the financial. Comcast along with disney seeing some games some gains. There is speculation about further consolidation within media. And on the downside, we have the tech stocks. Microsoft, according to the bloomberg, phase his effective tax rate of under 18 so would not stand to benefit from a Corporate Tax rate cut. And amazon likewise is declining along with other tech stocks. Think you so much. Its moved to washington. Another busy week on capitol hill. Taxes, spending, and the russia probe. Joining us is republican congressman dave brat of virginia that sits on the budget committee. Angie so much for speaking with us. You, isegin by asking there any appetite in the house to adopt the Senate Tax Bill . I dont think so. We have a few things that we have to work on. They are getting rid of the individual repeal. ,ne of the most important reagan back in 1982 delayed the tax rate, phase to them in. And the expansion didnt come to 83. The most important thing economist will tell you is you have to lower the rate significantly and and ask them immediately. You are reading off the market highs. The market goes down at senators down the hall sneeze. I think you are putting the economy in harms way as well as the market and wage rights for the people back home. Thats one of the things i think is worth fighting it out over. A few promises that the American People will get sick of. Treating huge budget votes on health care policy. In the not smart policy swamp can do better than that. The president flirted with the possibility of a 22 Corporate Tax rate over the weekend. With that be acceptable to you if you needed to buy more financial space . Weve been hearing that number over and over. Its not optimal policy. Exchange and horse trade on some of the exemptions and deductions, but the rate low is the number one driver. This is not a huge tax cut already. The president more than anything else wants to see economic growth. Its already coming. I think in the washington post, they said to beware of too much economic growth. He scared we might overheat the economy and that would be great to see. My emphasis would be on getting the rates down and in place right away. What does the tax bill mean for entitlements like medica and Social Security. A lot of people wonder if the goal is to start looking for savings in these entitlement programs. Know, they are two separate issues. Budget committee and we havent touched those in 30 years. So now there will be some drastic moves needed. Democrats are playing politics with some of this stuff. Any ofn the history of these big moves on a tax policy has the sequestration kicked in. They forget to tell you that little detail that matters. And im being a little sarcastic there. Even if there was, its a 25 billion medicare peace and we have 320 billion to deal with that problem. Theres no way a senior will be affected by this. The senate did do some good lifting on the medicare provision. News. That is good we are listening to americans and trying to get the business side right. Was with my kindergartners a few weeks ago. They are in a class of 2030. College 2034. That is the year medicare and Social Security are insolvent. These arent theoretical issues. You will get a guaranteed haircut in law. A 100 trillion unfunded problem on the backs of the kids. We know that. You will have a guaranteed fiscal crisis. Go read the medicare and Social Security board of trustees papers themselves. 2034 is the year that they implode. That needs to be bipartisan. We put these things in place, they were actuarially sound when the average death age was 65. Now the average death pages 83. That is good news but it is fiscally bankrupting us because we havent made modifications for 30 years. In addition to the work on tax reform, there is work needed job forwo week patch up spending two aboard a government shutdown. I know youve already made it clear you are not satisfied at this stage. What information do you need to be satisfied about the twopart solution that they are coming up with here . It would be great to have everybody involved. Thing i ask for is a plan on paper. Is imploding, the rates are up to 39,000 for insurance, and average family of four. We need a plan to fix it. And on the budget, we need a democrat plant. It was called the progressive budget. That was the plan i got the most by 10nd raised taxes trillion. It raised spending by 11 trillion. I dont know if thats a realistic plan. Weve got to be aiming at those kids, right . The future of the kids so that they are not underwater. I applaud working together, but you have to be aiming toward reducing spending. On cant run a government this small shoestring. The small shoestring is goldplated. Anybody back home that wants to increase the size of the swamp. Everybody i know wants to send the money back out scarlet to stay local. Scarlet when it comes down to preventing a government shutdown, you will need to Work Together somehow. What specific democrat points would you be able to take to keep the governmentfunded . If they want to balance the budget, thats phenomenal. I havent heard that for 10 years. Lets see their plan to balance the budget. The deficit right now is 6 billion. We need a plan to reduce and get rid of it. They have to come up with proposals for you to agree to . Thats how it usually works and law. We have a down on paper and every detail goes out to the whole world. We have to live under that gun. They need to live under that same discipline and propose a plan, show us what would you do for the giveandtake . Compromise and reduce the size of the deficit. First. Someone has to go we are all in. Julia thank you for joining us. Thats check it headlines with Mark Crumpton. Mark President Trump today signed proclamations to formally scaledback two sprawling National Monuments in utah. The Grand Staircase escalon tape. The president traveled as a lake city to make the announcement and is supported by utahs Top Republican officials but opposed by native american tribes and environmental groups. The president said his action means that public lands will once again be for public use. Ande leader Nancy Pelosi Senate minority leader Chuck Schumer hope the president will keep an open mind when he meets with them thursday. The Top Democrats said they accepted an invitation from the president to a white house summit for ways to avoid a government shutdown. Money for agencies expires midnight friday. President mocked them on twitter. The case of a colorado baker who refuses to make cakes for samesex weddings. The landmark argument is the first fullscale test of gay rights since the court legalized samesex marriage as nationwide in 2015. Supporters claim the case turns to undercut the equal dignity the court promised samesex couples in that 2015 decision. Colorado officials are trying to force him to violate his faith, he says. Lawyers for former catalan president and forced separatist allies say a judge will decide whether they can be extradited from belgium to spain. A week before a key election which he is leaving his proindependence party hot campaign. Partys campaign. Hes facing embezzlement charges that can be punished with decades in prison under madrids criminal laws. Global news 24 hours a day powered by more than 2700 journalists and in over 120 countries. Mark. This is bloomberg. Scarlet trillion dollar players. It why vanguard and blackrock appear to be unstoppable in the future of investing. From new york, this is bloomberg. Scarlet this is bloomberg markets. Julia it is now time for the Bloomberg Business flash, a look at some of the biggest stories in the news right now. Trying to woo millennial investors with a new Digital Investment platform. 5,000 to invest the services will be built around uts and charged a small fee. From baby boomers to millennials over the next few decades as much as 30 trillion. An initial Coin Offering promising full profits and under a month has been halted by the securities and exchange commission. Against dominic lacrosse and his company was granted in federal court, accused of failing to disclose 15 million with an online product. On new cyber unit focuses the scam. We were just talking about that wednesday last week. Try to decide which ipos you need to invest in. Scarlet we are ahead of the curve. Imagine a world in which the wealth of the top Asset Managers exceeds the current u. S. Gdp. It is a lot closer than you think. Like rock and a vanguard could be managing 20 trillion in less than a decade. According to a bloomberg calculation. It considers the future of investing. Where are blackrock and vanguard renault would you look at their assets . We have blackrock at almost 6 trillion of assets and vanguard about point about 4. 7 trillion. We could see that rocket higher. The vanguard could get to trend 10 trillion and blackrock could reach that figure by 2025. Julia what are you doing to get that kind of growth . We look at the annual growth rate over the last five years. Putting money into funds, we have this boom which we have seen as largely responsible for that. Scarlet liquidity biggest liquidity. The founder of vanguard, we do they stand on their expansions and growth . Talking about , they talk about it as an oligopoly. He doesnt say necessarily that this was good or bad. Perhaps there are not more people in the index. It for these guys, they need to prepare for the fact that they will have a significant number more assets than management in coming years. Scarlet investors make up half of all owners. Julia at what point do they become effective in the market . Some fascinating stats in there as well. Talk about the impact it has on Smaller Companies willingness to ipo in the end as well. Reticence of the number of Companies Going public, but plays into this. There is the prevalence of indexing these days. It is driving money into funds that are in those indexes. We need to actually be in the benchmark. Companies are looking at doing an initial Public Offering and they want to be sure they are going in an index and if they will be funds investing in that. Maybe they dont expect liquidity or have that sufficient size. It makes a harder argument for it to go public. To come back to your point is well, you have concerns about ownership concentration. You have the impact of the companies perhaps looking to ipo. What about the regulators . I know they will say, look, things are going to change. Of the last five years will not be the markets of the next five years. Our regulators making enough noise is it just stage . It is a little bit unsure as to where this administration is going to come down. Come out and expressed some concern. She made some remarks back in february asking if concentration of ownership does, indeed, impact competitiveness. To see if the new team really puts it into priority. Theres is the issue of Corporate Governance as well. They own a lot of the shares. They own a lot of the voting rights. Are they pressing for changes to increase total turns . Its a very interesting one. Companies were criticized for not using their voting rights. We see them step up the pace. We saw vanguard, for example, vary in favor of proposals. We see them gain more and more share in the market. How they kind of use the clout, the it for good or for bad. Out this quite startling statistic comparing japan and this asset in the United States as they actively managed to go back to the idea of to what extent that it is a point where regulators need to be assessing the role here, the specific funds here and their ownership. This is a statistic bank of america put out earlier this year and pointed out 37 of. Funds are passively managed. Its must less than japan where funds japanese focused are managed. It suggests there could be Significant Growth before we see any implication. Scarlet people say we are in a japanification of the market. Vogel, founder and former ceo of the Vanguard Group will be joining this wednesday on bloomberg at 12 30 p. M. This is bloomberg. Julie joining us for todays options insight is jim, think you for taking the time. Recordown the s p 500 at highs, the nasdaq is lower. Tech lagging, stocks down 10 from the alltime highs. But there is one stock you like. We are looking at this and trying to pull out some names we like. One is micron technologies. Number one, there is a catalyst out there. By 18 . L help us it just over the last week or so. Valuation, 2018 consensus. We have a nice valuation backdrop. Thisn structure trade into weakness that exploits that valuation, exploits the fact that implied volatility is already elevated. Go out to january and sele put spread. A fivepoint put spread, we turn around and buy 46 strike calls. Theapture the risk on downside was stock that is down 18 , unlimited upside. You do the whole package for about . 40. And we dont want to go willynilly into Technology Buying everything. We think a nice set up to be a buyer into this weakness. Doesnt mean you think tech is going to recover from the recent selling adco ideas. And very idiosyncratic. Still ahead, staying the course. We speak with joe davis about why investors should stick to their guns on the market. From new york, this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Or a little internet machine . [ phone rings ] 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. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Mark im Mark Crumpton with first word news. The spite multiple allegations of Sexual Misconduct, President Trump endorsed Alabama Republican Senate nominee roy moore in next weeks special election. Judge moore said the president called him to offer his full support and included the message roy. Them, he looks forward to make America Great again. Florida lawmakers are making considerable changes. A House Committee is meeting today to discuss a series of recommendations including extending a major toll road to help with the evacuations as well as creating gasoline fuel farms. Is waiting for at least 70 deaths. A push to launch free trade negotiations between china and canada fell flat today. Signaled oneu Sticking Point was canadas rollingce first progressive packs and the countrys only wanted to launch formal talks if they were more confident a deal could be reached