A bowl in this market as well, as it has been for much of the year. It looks like investors are pricing in a high likelihood that the tax bill is going to get past, after some back and forth regarding senator marco rubios vote today. We learned that it sounds like concessions to what he would have happened on the tax credit is getting into the bill. The index isof touched major intraday records today. It is outpacing the gains we are seeing in the major averages today. Thats get a temperature on the high tax proxies we have been watching. Here in the white line is an index of high tax. These are the companies that are seen as benefiting more from a Corporate Tax cut. This is the russell 2000 four reference in blue and the s p 500 in yellow. It is interesting the action we have seen in the russell, because within these companies that are mostly domestically oriented, with they are also tax as benefiting from the bill, but the russell has not been performing as well, perhaps in part because it has outperformed postelection until now. It is getting a leg up with the rest over the past couple of sessions. Within the small caps in the movers we have been watching, that was on the report yesterday int might be interested acquiring the company. Analysts weighing in. Those it Deutsche Bank it feel pain could say the company say the company could be worth 50 a share, rising nearly 7 . Rising after being upgraded to hold by steeple. They are looking into going into a sports and lifestyle brand next year, particularly those in asia and europe. Fitbits downgraded, analysts saying the initial Holiday Season demand suggests it reaches a high hurdle to retain Revenue Growth and would be next year. Elsewhere in retail, a quick check on what we are seeing today. Some strength in the department stores. They have been quite volatile recently ring the beginning of the Holiday Season. Kohls, jcpenney, and best buy all rising today. Scarlet . Scarlet lets get you a check on the first word news with Mark Crumpton. Mark . Mark President Trump today addressed graduates of the fbi academy in quantico, virginia. Them for their commitment and called himself a true friend and loyal champion to police. Thever, just before leaving white house to attend that ceremony, the president told reporters he plans to, in his words, rebuild the fbi. Twolso responded to the recently released messages from fbi officials responding criticizing him during the campaign, and called them disgraceful. Rex tillerson has backed off a recent offer of unconditional talks with north korea, telling the Un Security Council that north korea must earn its way back to the table. The United States will not pyongyangregime in to hold the world hostage. We will retain you to hold our korea accountable for its reckless and threatening behavior today and in the future. To joinvery nation here us in exerting sovereignty to protect all of our people. Secretary tillerson added that the United States will, in his words, in the meantime keep our channels of communication open. President says most nations will ask the u. N. For an annulment of President Trumps recognize jerusalem as israels capital. President or to one said today that the initiative would start at the Un Security Council and would work within the general assembly. Female members of the Congressional Black Caucus want senator joey jones to join immediately. He beat judge roy moore in alabamas election tuesday, but the final tally must be certified. 20 house members made request in letters to Senate Majority leader mitch mcconnell, who says incumbent senator Luther Strange will remain in that seat until january. 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 . Julia thank you, mark. Bitcoin is grabbing attention with its giant gains this year, but it is not the only cryptocurrency on the table. At alltime high this week, a market cap of 64 billion the second largest Digital Currency behind bitcoin. Joining us now is joseph lubin, cofounder of ethereum. Of the frenzy,e excitement about bitcoin in particular, and does it help in your version . Joseph acknowledgment of our world is very exciting. We are not the norm as the , we arecryptocurrency happy to see it succeed and breakthrough. The bitcoin application is the first application on blockchain. At ad a theory him theory him have built a d central accusation decentralization platform on blockchain, and we are excited about the applications beyond bitcoin. Julia how about in english . What is the difference between effectively what you have and what you are arguing here is more superior . Joseph bitcoin is the first application built on the blockchain technology, which is a trustful infrastructure. That Bitcoin Blockchain was not sufficient and sustainable to support fully expressive he centralized application, so we built a watching system, the foundation of the decentralized world wide web, where we can have any sort of application that a developer dreams up that is not posted on sick hosted on single servers but is hosted everywhere. Scarlet and for our clients who want to get a snapshot of the cryptocurrency world, check out onasy why go vccy bloomberg here. If the theory him is a platform if ethereum is a platform, a Technology Based off of what bitcoin had offered, talk about the problemsolving specifically. Why do people need to use it . Joseph whether it is on the public blockchain or private and limitations of the technology, any sort of situation that requires a shared trustful infrastructure if you are a ifsort he him consortium, you are a public blockchain, that can be used on the public blockchain via charity to track all incoming and outgoing payments. It is not reviewable, it is configurable he configurable he transparent. Scarlet and people here to that philosophy and see a lot of these initial point offerings as well. You have been vocal about ico perhaps being not kosher, kind of fraudulent. Why is that . Joseph that is a slight mischaracterization, because some token launches are excellent and see highquality products. We have been involved in doing some of those. Issued a job insecurity to fund an independent film, we issued utility tokens that would not be characterize as the sec as securities. Those represent consumer access tokens, tokens that can be used like an Amazon Web Services credit for use of services on a platform. Julia can these two things exist Going Forward . Go forward five years, and that is light years in technology terms. Can they exist together, whether it is the blockchain that has been built and the uses being talked about right now and ethereum, your platform, which has broader uses Going Forward, and this digital token of currency and a piece of that as well. Can they exist . Joseph can both bitcoin and ethereum exist . Bitcoin is one early application of the blockchain technology. It is being picked up right now as a gold 2. 0 store of value, and has an early killer app feel to it. But either can be a more ether can be a more programmable money. We view it as a cryptofuel because it powers these things on the computer. Julia you said it is the early stage of what we see in technology. But the early stages have not died out, right . Joseph i am not saying the bitcoin is going to die out, but it is very early stages for this technology, and we will see lots pioneerrent projects, lots of new techniques. The ethereum project has been incredibly agile in its application of new technology, so it is a team that looks around. Tremendous network affect behind us and tremendous talent in this space, not just be theory him foundation the ethereum foundation, but everybody. Julia so you need more recognize nation mechanization, that is what you are saying . Him ethereum is far more secure bitcoin. It has 30 x the number of developers that the next most popular blockchain system, which is fabric, in terms of developers. When you are building an ecosystem, the only thing that matters is developers. Scarlet i want to pull it back here, because people still get confused about what bitcoin is, what ether is, and what to currencies represent. We stopped with Scott Galloway talked with Scott Galloway, and he says he thinks bitcoin is a chaos proxy, a mistrust index. Young people losing faith in institutions that oversee the central bank. That is an outsiders perspective. From an insiders point of view, is that the right way to think about it . Joseph it represents a bunch of different factions, lets call them. There is an early cryptoanarchist faction, there are currently many different wall street types being drawn into the space. There are people using bitcoin for payments. We have taken the technology in the ethereum context and enabled average Software Developers to get in there and use it to build anything they want. We are seeing supply chain, we have Advertising Technology projects, our accounting system, our Payment Systems that we are building. It will be all over the map. About something institutions can trade . We saw the launch of Bitcoin Futures this week and will see r versionaunch, thei of Bitcoin Futures as well. Are we far and away from an ether contrast . Joseph there are currencies and the legacy world, and we think of ether as a crypto fuel to andr compute operations storage operations on the world computer. It may make sense to have a future for that particular crypto commodity. The Bitcoin Futures are not rounded in the sense they are cash settled, so it would be forward or created a a future that was actually grounded and deliverable. Julia so you see value in its . Joseph i see value in deliverable and cash level. [laughter] julia i think we have our answer there. Quickly, how should this be regulated . How should this be regulated now . That is always behind the curve on this things. These things. How do you see regulations . Sticking with a lot of regulators not just in this country, but around the world. For quite a while, in this tokeny with respect to launches i feel we are well regulated by the sec. We will be able to add a leg to layer of selfregulation to the existing laws. It makes ends to follow the existing laws, and we do a tremendous amount of work to that effect. We are able to build an anchor like system or a system to intensify analysts to source the best analysis. All of the token launches are based on white papers, etc. , etc. They are accessible. We can make consumers aware of what is actually there. Scarlet i am sorry if i am important into your, but how much of your personal wealth is in ether versus u. S. Dollar cash . Joseph less than 0 . [laughter] scarlet joseph lubin, thank you so much. Coming up, do gop leaders have enough votes to ask the tax cut bill . More on where senator argo rubio stands and senator Susan Collins stands i think we know where bob corker stand. This is bloomberg. Scarlet this is Bloomberg Markets. Im scarlet fu. Im julia chatterley. Congressional republicans are revealing the final details of their tax cut bill today, but do they have the votes . They moved to meet a key demand of senator marco rubio by increasing the Child Tax Credit, but rubio says he will not glare his position until he actually sees the bill. Joining us from the hill is laura davidson. Great to have you with us. Is he in . Is he out . If he has managed to get the tax credit increased, how are they going to pay for it . Have done republicans what they can do. They made their final offer to marco rubio, and if he accepts it they will have the votes and they can move forward. If not, it will be done and it those likeo see if collins and corker have decided to vote for a . But it is about how they pay for it. They had to make lastminute tweaks to individual rates, when they, in , in and out, when they expire to get all the billions of dollars they need to make marco rubio happy. Questionhe is a big mark right now, but you have to wonder if he is ready to play spoiler. His track record indicates that he usually folds. Is he grandstanding to some extent to remind voters out there that he has a position and he will bite for them and not back down . That is widely believed among republicans, that he is trying to make a point. This is a negotiating position, and he does not want to be the one or 2 one or two republicans to sink the bill. Coming out of a meeting earlier today with republicans who were negotiating this signed off on the legislation, they said we have the votes and are confident this will get through. The messaging is positive. We will see later today if they have other people on board. Scarlet yes, it will be a lot of lastminute wheeling and dealing. Laura davidson, thank you so much. Julia [indiscernible] scarlet and of course, on a friday afternoon. Still ahead, the smart way in the etf report. It has been a big big week big, big week for etf. This is bloomberg. Scarlet it is now time for our smart beta etf report. We have seen value etfs get a lot of love, and they saw the most inflows ever this week. We need to bring in our etf chart. , and here is a here is what happened this week. This is unusual. The i watched this all time, and that is wild. If you lay in all smart beta categories, that would be double any categories ever taken in in a week. 7 billion is a lot. When you look at a huge flow into a category, you want to see etfs took an money . Isnt it one big fish or value rotation . Basically, it is like a freaking frenzy feeding frenzy, and it is small cap, emerging markets, and that is why i notice it is a value thing and not a variable kicking in. Scarlet so this is a sustainable and not an anomaly . Eric i have seen this reverse before, but value has underperformed growth by a wide margin, 11 , in fact. The widest in many years. It makes sense that everything comes back eventually, right . That plus that is why i think it is the beginning of a longerterm trend. Scarlet we spoke with wes gray, who manages a value etf that has done pretty well lately. Lets listen to what he said. As i think eric eloquently put it, we are in the uber trash bin of cheap. We use enterprise multiple as a source, you could use pe, but we are looking at the cheapest. You have 100 stocks in the universe, we will be in that top dirtocks of the uber balls. Which means we will on a lot of things people hate, but if you think about it, no pain no gain is a mantra everyone should embrace and financial markets. Scarlet to be clear, his etf is but it hasval, underperformed the the past couple of years. Eric but it is brutal, it is always it always is. He is up 10 , and a lot of value etfs are up 5 . There are three categories of value etf. The stuff that west does and and is i will buy small stocks and be happy with it. And you can use frozen juice concentrate. Add moree can, and i water to it, which means other companies will have evaluated valueweighted etf. They are trying to make this more palatable to advisors so it underperforms lesson those hard years. Scarlet so less value than the hardcore qval etfs. Eric and then there is the third level, almost beta, itv. These are the biggest ones, and they are barely value. Like someones wrinkled someone sprinkled a little value that orange threw concentrate into it so it is barely orange, and that is what people like. People do not want to have performance that deviates that much from the market. Some of these products are designed for investors, not for true value investing. Put it, as wes gray they need tesla fortitude, and he does as well. Eric, thank you so much. Julia lets get an update on where marco rubio stands on the tax overhaul. The florida senator says the gops commitment to increase the Child Tax Credit is a step in the right direction, and he tweeted about 15 minutes ago for far too long, washington has ignored the working class. Child tax credit is a solid step toward border reform, which is both progrowth and proworker. He has been given the sweetener to get him on board, but how are they going to pay for it . Pay for any of these sweeteners . We will discuss that later on this afternoon. And now, look at some of the biggest business stories in the news right now. Elliott management is reigniting with. Yearold feud they are asking the chief executive officer has to fix the company hess to fix the company or get out. They want to focus on share buybacks. Costco shares on the rise. The discount retailer reported stronger First Quarter fourthquarter earnings, and membership renewal rate remains steady. The company had previously warned of a possible drop. Costcos sales have been writing for 14 straight months. Business flash update. Still ahead, the deadline for a or Obamacare Obamacare enrollment looms. We talked to a reporter from coverage california. From new york, this is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Scarlet from bloomberg World Headquarters in midtown manhattan, this is numbered market. Im scarlet fu. Commodity markets are closing, so we need to get you started with coffee. You have expert locations of a larger harvest expectations of a larger harvest and all causing traders to belay there as for natural gas prices, they are heading for their worst annual decline since 2014, curly down desperately down 2. 6 right now as shale output its a record. They would still need a frigid winter to siphon off the fairly. Arge supply the forecast has failed to deliver, but it is pretty brisk in new york today. This is for you, julia. Aluminum rallies for the second day on the london metals and strange exchange, with falling levels in China Lending support. Lets get you a check of the headlines on first work news first word news with Mark Crumpton. That,you have to explain aluminum. Tougher is demanding security measures from countries that participate in the visa waiver program. The Program Allows citizens of 38 countries to travel to the u. S. For business or tourism for up to 90 days without having to obtain visas. The department of Homeland Security says participating countries should now fully comply with the program that uses u. S. Counterterrorism information to screen tower learners travelers. Toalso requires citizens overstay their visas to launch Public Information campaigns to educate their citizens. Donald tusk today praised british Prime Minister theresa may and eu leaders for their progress on reaching terms of a brexit divorce bill. He said the hardest part is yet to come with the focus now , and ag to trade talks final agreement heavily dependent on the u. K. Providing more clarity on its vision for the future. [inaudible] mark a spokesman from Prime Minister may said there was no plans to move the exit and in eu be votedl bill would on next week. In germany, members of the social Democratic Party have agreed to Start Coalition talks with angela merkel. That moves merkel one step closer to forming a new government. There has been three months of political stalemate since the elections in september. Vice president pence may not receive a warm reception from arab leaders when he visits the middle east next week. That is after reports he pushed President Trump to recognize as israels capital. Palestinian leaders in the pope of the Egyptian Coptic Church the canceled meetings with vice president. He says the drupal now heavily focus on smoothing things over with egypt, and out lie angered by the jerusalem declaration angered by an ally the jerusalem declaration. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Some breaking news now, the Associated Press reporting that Florida Center marco rubio will back the tax bill. Gop leaders moved to a key demand of rubio to increase the Child Tax Credit. This is a solid step forward to willer reform, and we bring you further headlines as we get them. Scarlet you have stocks near the best levels of the session as a result. Julia he is absolutely essential. Keep him on board, particularly if corker remains against. We will bring you more headlines. Forfederal deadline obamacare open enrollment is tonight, but some people have more time to sign up. Forced to operate their own can set theirtes own timelines. This includes california, which has the Largest HealthCare Exchange in the country. Speaking to us now is cover californias executive director. Great to have you with us, peter. Explain to us the difference and why you chose to delay by several days your deadline is opposed to the federal set headline, and do you tend to see a rush of people in those last few days trying to sign up next year . Couple of things different in california, we Just Announced the delay of our deadline to next friday, the 22nd, for coverage that starts january 1. But our open enrollment goes all the way through the end of january. We think by keeping it open a full three months instead of cutting it in half like the feds see we will probably 100,000, 200,000 more people signing up. Lessmeans more Health Health risks and lower premiums next year. Everything we can do to get people in the door are better for consumers and health lands participating. Scarlet the goal is to get more people signed up. We know the republicans spent most of this fall trying to repeal and replace obamacare. They ultimately failed, but vowed to take it up next year. There is a lot of uncertainty there. What kind of affect has that had on peoples behavior in whether they enroll in insurance . What kind of coverage do they seek . In they procrastinate quality of what they do . What you see . Peter number one, in california and across the nation, one thing that has been ironic is the uncertainty around federal funding has led to the 9 million or so americans that get financial help having a better deal for 2018. Premiums of what they spent up to his going down. That is why we are seeing big enrollment on the federal marketplace and in california. For people ing is california and across the nation, discussions in washington are what we call distant thunder. They are looking at kitchen stable Kitchen Table discussions on whether they can afford health care . If they can, they are signing up. Nationally, you headlines about premiums skyrocketing it is not true. In california, on average people getting subsidies are saving money compared to last year, and even those without subsidies, the premiums are going up about 10 . That is not great, but it is not huge. We are seeing generally the individual market in 2018 stable. The big question facing us now is what will happen in 2019 . There is a lot of uncertainty there. Julia you are saying some people have seen premiums rise around 10 . On average, what kind of reduction are we talking about in terms of people who have seen premiums reduced . Peter i hate to say it is the same number, but it actually is. For california, people getting subsidies are, on average, spending 10 less. What that means for lower income people, they can get a bronze plan, a high deductible plan, but they are only playing paying 45 a month. A silver plan is a rich plan, about 100 a month. The balance is being picked up by the federal subsidy. That is why im california, we are seeing bigger enrollment in this year and last year, and last year, almost what he people signed up in one day. 20,000 people signed up in one day. When it gets to deadlines, all of us procrastinate and that is happening across the nation. Now is the time people do need to sign up. California, you have an extra month. You have all of january. But the federal marketplace, 36 states, if you do not sign up now, you will not have coverage for all of 2018 unless your circumstances change. Julia to what extent is california isolated and an individual case in this . I know you ramped up spending on marketing and outreach to educate people and get them to sign up, but what we saw with the federal government, the administration slashing their Marketing Spending this year. What impact do you think that has had elsewhere versus what you are seeing in california . Im absolutely convinced that we invest a lot in marketing, but every dollar we spend in marketing lowers dollars to five seven dollars. I think it was a bad call by the administration, but there are a dozen states out there, including red states like idaho and blue states Like Washington and connecticut and massachusetts that our statebased market places, like california. They are all leaning in, doing marketing, because the formula for lowering premiums for everybody, in particular the middle class that do not get subsidies, is good risk mix. Getting everyone possibly enrolled. There are people in california saying lets do right by our consumers, which is getting more people enrolled. Scarlet we have seen how california is often ahead of the curve on many issues, whether it is social, political, cultural riot, extreme weather, demographic changes. If that is the case peter we do not like being ahead on the fires we are seeing in climate change. Scarlet but you saw droughts and floods in ways that the country saw years later. So talk about the changes in the Health Care Market over the last five years . Peter there are two paths that we see. In california as a state, we have leaned in. The dates statebased solutions, expanded medicaid, and what has that resulted in . Our uninsured rate has dropped from 70 to 6. 8 . 17 to 6. 8ide percent. And we provide better competition. The winners are all coliform hints californians, because more people that are in short, more uninsured are not showing up in hospitals. We are in many ways seeing a Market Solution in california that is approaching universal coverage. 6. 8 uninsured. Lets be clear, half of them are undocumented and not eligible for coverage, which means we have a 3. 4 eligible uninsured rate. That is lower than germany. Scarlet peter lee, thank you so much for the overview there. California, cover and this is now confirmed news. Marco rubio will vote yes on the tax bill overhaul. Rubio is in, corker is still out, collins is still a question mark. Julia who has read it yet . Scarlet i do not think anyone has. Julia disneys dealmaker, how the agreement with fox is shaking up the media industry. We will discuss. From new york, this is bloomberg. Scarlet this is Bloomberg Markets. Im scarlet fu. Julia im julia chatterley. For decades, people have wondered who will take over from rupert murdoch, and we got that answer no one. After disneys deal with fox, he is not out of the picture. He said you know me, i and a news man with a contested spirit. Are we retreating . We are not. We are pivoting at a pivotal moments. Cory johnson, great to have you with us. Pivotal at a little moment. Cory it is now just fox news. No fox entertainment. Fox on sundays is football and the simpsons and some other stuff. It is now only football, simpsons are gone. What does this mean for fox news . We do not know what that investment might look like, but this is a massively profitable business. About 2. 8g an eval of billion. This is a really great business to bn, and it will shed a lot of its debt. This will have a lot to do with what it has. Scarlet and it has to fill a lot of airtime as well. It can use the sports program, content, and the news content it creates at the fox news channel, the Business News network level, and push it out to its network. I am a big hockey fan as well, and i spend a lot of time walking watching espn and wondering why espn is doing that . But i still watch espn. Fox is not going to keep the retail sports network, but they are going to keep their news thes, which there news that seems like it wanted to be an nfl competitor. And until we figure out this new fox business, are they going to have to pay up to get sports content from espn . There are some sports contracts a few years out, but when there is new bidding for football or basketball, which is even further out in that context, will fox sports be in their . Will they be in a better position to bid for that . What about amazon or facebook . Scarlet they have the cash. Cory and the networks. And has espn been as good as they would be thought they would be . Julia what about getting you content out there, can they buy it from 21st century fox . What we see about entertainment content creation right now is it is a sellers market. Theuse you have all of networks, including fox in that, and hbo and netflix, hulu, amazon prime, you name it out there. To be aa great time content creator. The best and personal investment i have ever made, i bought a camera truck a few years ago. Scarlet you did . Cory it was a great deal, a camera truck and hollywood. It had special hooks and compartments that were things that only a camera operator would want, and if i was on the road 20 weeks out of a year, i could make a nice return. This thing was on the road about 45 weeks a year for five years. There is no more pilot season in hollywood. Things are going on 24 seven, aroundtheclock, that is what hollywood is like. Disney is doubling down on content. Fox thinks they will have a place to put that content to work, and have a lot of content creators giving them good stuff. Doubling down by rupert. Cory johnson, thank you so much. Cory johnson, our editor at large. Julia is that sustainable if you are creating that much content . I understand there are a lot of buyers right now. Cory someone is making the understanding that if it is a sellers market, i want to set myself up to be a buyer in the next market and in a financially strong way that has not been seen since the 1980s. Scarlet lets look at what is happening in the presence. Our stock of the hour is not participating in todays rally. Sirius xm is falling the most in 5. 5 years on a news that its costs are increasing. Julie hyman is checking this out. Down almost 6 . Julie this is an oldfashioned problem for a new age company. It is about royalty rates. Whatever kind of operator you are, you have to pay it to artists. The couple to write copyright royalty board is out with a new rates, and they were higher than had been estimated. It is 15. 5 of gross revenue. It begins on january 1 and lasts through the end of the year 2022. You get the stability through 2022, but for example, susquehanna, the analysts over at 13 ,re looking Bloomberg Intelligence has 12 . Scarlet everyone got it wrong. Julie this is a higher cost than we were looking for, and 12 under the Bloomberg Intelligence assumptions, they were looking at this would at 49 million of cost next year and the company would have to decrease other cash costs by 2. 3 next year in order to offset it. You were just talking about the margin and how it was attractive at some of these media companies. We have even. Margin the margin on sirius xm very high, 40 , and this is what the company has been expecting, an expanding of the margin, but this could compress that to some degree. Julia but how do they go about offsetting it . Cory they cut costs julie they cut costs and other areas, and it is unclear where they would be. In a time where we would be seeing slowing growth from serious in terms of its Revenue Growth, take a look at the bloomberg. This is the Revenue Growth line. It is still about 8 , but you see this as a slowing line. One of the reasons serious relies a lot sirius relies a lot on the car industry. The economist vehicles are cars that are packed with a lot, but penetration is that a high level. Shakier thise been year, and they have been trying to get in the used car market to install the stuff after the fact. That is successful to some extent, but they need more of a growth driver perhaps. Julia it goes back to cutting costs without being able to drive rater revenue. And lets look at the latest issue of business week. Hollywood in the age of the me too movement. How the industry is adjusting to the new reality. This is bloomberg. Scarlet this is a friday edition of Bloomberg Markets. Im scarlet fu. Julia im julia chatterley. Ever since Harvey Weinstein with taking down was taken down by allegation of sexual assault, the allegations have spread to other producers, actors, and executives. Businessweeksue of is focusing on the movie stars were acting badly. I have talked to some of my contacts in the film industry. What are studios and filmmakers doing to protect themselves or cover themselves from the fallout of any of the situations that we have seen happen and have been in the headlines recently . Andey said was that what we have been reporting is that a lot are going through their policies, the insurance policies and trying to figure out how they can cover things, and realizing there is not coverage for Something Like this. So for example, in the case of sonys all the money in the world, the getty family, when kevin spacey was dropped from the film and they chose to reshoot it, there are millions of dollars in reshoot costs they would have to absorb, and there was no real way of recovering that money. While we do not know the ins and outs, we have not been able to get that from them. They have not commented publicly. What i understand is that especially if you are financing, financing specialist are trying to get a new form of insurance, like a disgrace insurance that is more widely used in the advertising world to apply to the film world. Confirm,d we have to the allegations against kevin spacey were also mentioned years ago. Julie i think there are a lot of background i think there are a lot of background checks where insurers or completion bond providers for films who guarantee that a film will get completed or covered for that risk, like for various reasons of the film goes off course, it is so hard to cover for something that could have happened decades ago but could really put your star out of business. And that is the difference. Hollywood has always been an industry that is rife with its own issues. There are all these things that seem to,. But this is different, because it can go back in time , up. But this is different come up, but this is different because they can go back in time. Julie it is a anousha it is a cultural shift that has been ignored, and it is now considered unacceptable. People are actively looking into peoples pasts, and it is coming back to want them and put haunt them and put them out of their jobs. Julia you can read the story in the latest edition of Bloomberg Businessweek and hear more from on bloomberg television, bloomberg. Com, and the app store. Scarlet four bigger studios, this is the push they need to go into animated figures or do robots to do the jobs. The robots do not have human foibles. Julia they have the deafened disgrace policy and the morals clause. I think it will be less about the studios and more individual players taking out insurance so if they do something or something comes up, the studio can claw back some of the profits they have taken from the movie. Scarlet and every hook up they to, person they talked conversation they had and itemize it. Julia a disclosure list when you make a movie. Scarlet movies will be a lot harder to make without cory camry truck. Coreysdiscuss camera truck. We will discuss the implications of. From new york, this is bloomberg. Julia its 2 00 p. M. In new york, 12 00 p. M. In san francisco. Scarlet welcome to Bloomberg Markets on a friday. Julia were live in bloomberg World Headquarters in new york over the next hour. Here are the top stories were covering on the bloomberg and around the world. Republicans get more support for the final tax bill. We dig into the details with michael block. And investing titans on the industrys future. What top Money Managers say about the industry. The challengess and opportunities of initial corn offerings. On markets with julie hyman. Julie it looks like traders are more sanguine. We saw that today when we initially got reports that marco rubio would indeed be a yes on. He bill as ive been talking about all day, there is Something Else affecting stocks, certainly affecting the volume of the s p 500, which is running about 36 above average. Rebalancing does tend to spur increases in volume. Thats what weve seen the past several times this has happened. The last time we had quad witching and rebalancing was september 15. Eight point billion shares changed hands, about 38 above the average. 19. 7 billion worth of trade according to the s p, dow jones. They estimated that number in december 10. Just something the factor in when you look at todays trading. We have video games and things associated with video games that are doing well today. There was a note out from goldman analyst chris of her merlin, who says the recent selloff in videogame stocks has largely been due to positioning around tax reform and does not reflect any change in fundamentals for the group. Blizzarded activision to buy from neutral. Did take ea off the list, but you can see shares are up by 2 . Outside of stocks, we are s today. Reit heres a oneyear chart. Weve seen a bounce in the a briefoday, and after break from its recent uptrend, it appears to have resumed its push over the last year. It is down pretty dramatically, but i also want to talk about what is going on in the bond market because we continue to see this leverage ands, the flattening of the yield curve represented by the divergence in what is happening with yields and different maturities. The kid ofyear treasury just keeps heading straight up here in terms of its yield. You have the fiveyear to a lesser degree, and the 10year, more sideways movement. Just want to juxtapose against that decline weve been seeing in the u. S. Dollar. Scarlet thank you so much. Lets get more on the markets and the impact of the gop tax bill that seems closer to a reality now with michael block, Rhino Trading partners chief strategist. Record highs for the dow, for the s p 500, for the nasdaq. I thought we would have priced all of this and already. Michael look at what happened yesterday, this crazy little thing called little intraday selloff. Marco rubio, who we hadnt heard from since the primaries over a year ago, suddenly comes out and is going to place boiler on the tax bill. Its too perfect, the guy who got belittled by the guy who is in the white house right now has a shot to take out the tax credit and build on that. As we saw today, he wanted to get some attention for a cause he thought was right, and now hes going to go along. The language he used was interesting, too. Tax credit is an important battle we will fight in the months and years to come, meaning, ive made my point, im going to vote for the bill. Look at everyone else opposing the bill flake is going away, corker is going away. They will say they had their battle and in the months and years to come, they will continue to battle it, pass the bill, get it signed, merry christmas, game is over. Scarlet youre not convinced, though. You are positioned with a tax plan to disappoint. Michael i think a lot has been priced in in financials and transports. I am worried about transports and the industrial sector in general. No one likes the dollar here. The dollar is down on the year. Everyone keeps saying euro, euro , euro. To me, that is willful blindness. The ecb could not be more dovish, and everyone thinks europe is going higher. The data is good in europe and good in the United States as well. European inflation is nowhere to be found. I dont understand this up session with this bullishness on the euro. To me, the dollar looks like it wants to go higher. The problem with that for me in u. S. Industrials is you run into an issue with u. S. Exporters. It may be a kneejerk reaction, but a think the sector is over loved, as they say. Transports is a great rates,iary of lower tax given they had some of the higher effective tax rates in the sector, so they run up. Now what . Now what . The consensus view is the dollars going to struggle in 2018. There is so much optimism about europe right now. See growthting to pick up, unemployment coming down, and there is a catch at play as far as equities are concerned, even on a relative aces. Does that not play into the theme, particularly when you have members of the ecb talking about the fact that they want to have a second think about this if they do start to see inflation . Some of the talk amongst them is awkish . Michael i get these points, but not to talk about the less jedi, as admiral akbar what once said,a trap its a trap. I havent seen the movie yet. Everyone is talking about fiscal expansion europe. Have angelawe merkel trying to cobble together a coalition. When you have a coalition like that, its very hard to cast fiscal policy. We are dealing with a germany who is very reluctant to loosen Purse Strings anyway. I dont see it. I dont buy it. Julia how about not just having fiscal drag . That is great. Michael thats fine. We had some great data out of europe. From here, though, we have to say how much confidence is there . How can an external demand for germany, france, the rest of . Rope really grow im skeptical. Im saying it will grind along, but maybe it does not justify these moves in stocks and currency. Buying you are still health care, primarily on weakness . Michael yes. We saw mixed results for oracle. Cloud revenues maybe have come in as well as they could. A stock like that we could put on the sidelines the rest of the year and revisit in january. I think that is what will happen. When i look at value versus growth, it is false starts. It is not taking off. Some of that is financials. Financials had their run on this tax trade and everything else, and yet, i do not know where the revenues are coming from. We talked about the yield curve earlier. The yield curve is lack. Its harder for banks to make money. How are the banks making money unless goldman magically has this bitcoin unit we have not heard about yet. You heard it here first. We will see. Scarlet how to do full been the m a we are seeing . And thinking about the disney and fox acquisition. Michael its not time warner aol in that the deal makes sense and there is a unique story. Rupert is saying the world does not go on without me, sans going to say goodbye and there will be no more fox. Good luck, folks. There is a unique situation. The deal makes sense. It is not cobbling things together. But he is selling at the highs. That is part of it. Michael possibly. I think disney getting together with fox could be a very formidable competitor here. By the way, as opposed to President Trump trashing cnn, we i President Trump saying, called rupert to say congratulations on a great deal. To which i say where have you been for the last 11 months . They are going to need every advantage to get it done, and i just said that out loud, so there you have it. Julia talk about the energy sector. You said patients, but weve seen Energy Stocks lagging the recovery weve seen in oil prices themselves, so how much patients do we need to have . Michael i advise clients to did they toe into highquality e p get their toe into highquality e ps. Wti is not going to go back below 40. If you believe that, you should smallcaphigher beta u. S. Based names. Chase that. To theres too many stories going on. I also think u. S. Shale producers are going to turn the spigots on, which may Pressure Energy prices, but would be good for stocks in the near term, so im going to look at names like that. Julia i get it. Thank you. Lets go to bloomberg first word news update with Mark Crumpton. Julia mark julia, thank you. Bloomberg news has learned republican senator marco rubio will support a compromise tax overhaul package. An aide said rubio got to yes after house leaders agreed to expand the refundable portion of an expanded Child Tax Credit, effectively giving workingclass families a larger share of the benefit. Would give gop leaders and increased measure of comfort they will score a major legislative victory next week. President trump is externally have a we have a bill close to the original design. He started out wanting a 50 rate, then he went to 20. I was on your show a little while ago saying 20 is nonnegotiable, so i am a little 21 , but we were to a bigfrom 35 to 21 is movement. Mark the United NationsSecurity Council met today to discuss the situation on the korean peninsula. United nations secretarygeneral Antonio Guterres has this blunt assessment. The situation on the korean tense andis the most dangerous peace and security issue in the world today. I am deeply concerned by the risk of military confrontation, including as a result of any attempt at escalation or miscalculation. Mark a human envoy was said to be deeply dismayed about respect of and kim jonguns nuclear program. An unnamed member of the Security Council also said the north koreans do not believe the time is right for negotiations. Union leaders representing Puerto Rico Power Company workers are criticizing local and federal officials after the island missed a deadline to restore 95 of power as promised by the governor. The island is currently a 64 Power Generation almost three months after hurricane maria. Union leaders say today crews do not have the equipment or material needed to meet the governors goal. Hundreds of lebanese and Palestinian Protesters gathered today outside the yuan building in downtown beirut. Demonstrators expressed solidarity against President Trumps decision last week to recognize jerusalem as the israeli capital. Lebanon is home to 450,000 Palestinian Refugees who make up nearly 10 of the population. Global news, 24 hours a day, powered by more than 2700 in oversts and analysts 120 countries. Julia thanks so much. Coming up, what top Money Managers say about the biggest changes in the industry to come. Its the final installment in our series the future of investing. From new york, this is bloomberg. Julia this is Bloomberg Markets. Skied its time for a look at some of the biggest business stories in the news right now. Scarlet its time for a look at some of the biggest business stories in the news right now. Spacex is going green. Rocketanned falcon blasted off with a caps off onboard to make a christmas delivery to the International Space station on sunday. The manager says that company aims to reuse rockets and capsules far more than twice. Bain capital is hiring 22 people who oversaw the portfolio at harvard. The school is overhauling harvards school management, which oversees a 77 billion dollars endowment. And the Hedge Fund Industry is going hightech. A delight report says some 70 will incorporate technologies such as Artificial Intelligence and machine 47 drop. 0 in to the study, firms will still be pressure on. Egulatory risks and scrutiny that is your business flash update. Julia the investment industry facing big changes in the rising of funds and trading algorithms. In the final is common of our future of investing series, our seven giants of the industry, what changes they see coming, and how they plan to adapt. Joining us now is our head of u. S. Investment. s ceo, and heimco said something weve been talking about for a long time about how greater consolidation will continue to come in this industry. We all get that. We all understand that. Probably better for shareholders. Is it better for clients, though . i think it could be in some ways. The industry is going through a shift because of the rise of passive investment. Fund number of mutual managers, the way to survive is to consolidate. With the ceo of pimco was saying is we will see a bifurcation of the bigger firms already that are able to scoop up some of the mediumsized smaller ones that are struggling or will just be pushed out as the biggest ones rest for scales. It is really part of the way to passive. N the rush to scarlet its going to continue to be a big theme. I want to move do something i referenced in the story about hedge funds incorporating machine learning. One surprising thought from one of the Hedge Fund Managers that you guys interviewed was the idea that google and amazon could become asset managers. Peggy yes, this is something we looked at in the series as well. The ceo of japans Pension Funds that he could see google or amazon coming into the Asset Management world, and one of the things really driving the speculation around this is the fact that it is already taking place in china with alibaba. Julia i was going to say, alibaba is the classic example. Peggy what a lot of market managers are thinking is how do we position ourselves for one of the big tech firms to come in because they have access to you and me and everything we do with our phones and whatnot, so if you are buying something online from amazon, you already in some ways trust them with your money, so what if they offer you the opportunity to put your money in a bank account or trust fund or offer a suite of lowcost passive investments julia i think this is incredible. A 40 jump in the amount of funds incorporating Artificial Intelligence. You wonder if you can attract are sayingause you the right things, the Technology People actually want. Scarlet no, that is the point. Theres a Human Element you cannot discount. Right now, what the investment ld offers is niche is niches. Requiring longer lockups for investors, and we heard that with Stephen Cohen getting ready to come back into managing money for outsiders. We are hearing threeyear lockups . Julia yes, when to threeyear lockup. Threeyear lockup to peggy the Hedge Fund World is almost starting to take some of the best of the private equitys world and try to apply it to hedge funds and still call themselves hedge funds, but essentially, i think they are seeing a lot more opportunity in the private markets than in the public, something we are talking about, and the opportunitys seem to be in the niche fields, but in order to find opportunities in the niche fields and possibly more of the private markets, you need more people potentially to do the research. Scarlet and you have to trust them for three years at a time. Julia do they need rebranding to do that . There is a real fear factor. We will come back to this. I think there is a branding problem. Private equity is one thing. These macro hedge funds have had ofuble locking up in light that trouble. It is a tough call. Skied peggy collins, thank you so much. We dig into the highflying stocks in our options report. This is bloomberg. Scarlet time now for options insight. Italy were seeing stocks at a record high. E we go to chicago for todays options insight. Good to see you. For your trade today, you are looking at one of the real out performers. Boeing pretty much double this year. It seems like you think it can keep going up. Talk to us about why you see further momentum. Dan i think it can keep going. It has a really strong chart. Backlog for orders and some projection for more orders is Something Like 40,000 up until 2036 with about 72 of them, as i recall, being single aisle planes. Technicals look really strong. The outlook looks really strong. Im a bull. Julie what is the trade youre looking at here . Dan theres a number of ways we could play it, but im going really simple. Inside volatility is fairly cheap, so i like buying the calls dollars . 30. Julie as you say, a pretty straightforward call. Im curious if you know about this dustup theyve been having over barnier orders. Delta go withw airbus overpowering. Do you think that will continue to be an issue . Is a strong company. Do they have competition . Yes. Some of their competition has had trouble lately as well, and i think boeing a have the Market Positioning to take advantage of the things they need, and is plenty of room for growth throughout the whole industry. Julie we have to leave it there. We have some breaking news. Julia breaking news on capitol hill. Were learning bob corker will vote yes for the tax bill after earlier voting no. She put out a statement saying this is not perfect by any means. It does look like he is a yes here. I think that means theyve got the votes. Well be discussing from new york. This is bloomberg. Mark i am Mark Crumpton with first word news. Some americans will begin in several extra days to sign up for federal insurance plans. The obamacare Enrollment Period will officially in at midnight eastern time, but an automated message told some people to leave Contact Information and they would be able to purchase coverage in the coming days. President donald trump is republican roy moore to conceive the Alabama Senate race two democrat doug jones. Moore has refused to concede the election. Coulds late counted votes change the result. In the meantime, female members of the Congressional Black Caucus want the republican to jointo allow jones the Senate Immediately or delay votes on major legislation. Senate majority leader