3 today, and that is one of the most beatendown sectors in the entire world. Whenever it was, they liked the latest turn. Scarlet investors in u. S. Financials liked it even better. Energy at 3. 4 . Three sectors closing better than 3 on the week, materials, energy, and financials. I guess those were your rally stocks. Caroline good old fossil 2000, russell 2000, that, oo. What are you watching . This was a big week for the russell 2000, up percent on the week up 5 on the week. It is the exam performance and smallcap vs. Large since the president ial election. If you take a look at this chart, the ishares smallcap fund, it tracks the russell 2000. Investors have added 4 billion to this fund this month and it is the largest inflows since 2016. What investors say now is we will have to see continued outperformance were smallcap for this to true remarkable turnaround point. Abigail . Abigail perfect segue to the sport. This is the value etf, taking a look at the big inflows, the most in many, many months. Up 6. 4 . Tied into the rotation. The momentum etf down 2. 4 . Earlier this week, the chief Technical Analyst at oppenheimer had interesting take on this. He said it is not necessarily rotation. The move in value is bullish for the market overall. In yellow, lowmomentum stocks. Last few years they have been tracking some levels of high momentum has been going better than low momentum. There is the surgeon low momentum. Surge in low momentum. Up ins more of a move lowmomentum stocks and he would ever recommend cyclical lowmomentum stocks. Taylor for me it is all about the big treasury selloff we are seeing. It is the rate at which we got year. The fact that we have been doing it for 8 straight sessions allowed going back on the 10year, up 12 basis points on the year. You know have the 10year finally starting to flirt back up with the 2 yield. Quickly we have gotten to these levels, both of those are key Technical Levels that we will be watching. What is interesting is if you come to my terminal at gtd go, jgb go, american amount upon thatws on one etf that tax , in longerduration bond fund. We had a record amount of shares outstanding. We have come off of that a little bit today but very close to record. This highlights the divergence we are seeing. Clearly not a classic riskoff trade, but flows into equities out of bonds. You are seeing a little bit of the matter that. A little bit of difference we are seeing in the market. Joe thank you, taylor and the markets team. Still with us is our Bloomberg Opinion columns as well as the Portfolio Manager of the equity etf. We have of the rotation seen and the data that has been slightly better than expected and in light of the march up in bond yields, did jay powells job next week get harder or easier . On one hand things are looking better. On the other hand maybe what was an obvious move weeks ago is a little more dicey. How is he thinking about his job right now . I agree, i think it has gotten harder. Investors want to see two things. First, a rate cut. But the thing worth paying attention to is the language of the press conference and the blue dots to come out with a forecast. People want to hear news that more rate cuts will be coming. Im not so sure that is going to happen. Look at the core cpi data over the last seven years. Fke the four strongest months or core cpi, the last three have been in the top four. G difficultybi for cal because that is what fed chairmen do, they look out for inflation. We are getting this contradiction between the desire for more rate cuts and what the data is pointing towards. Scarlet you know what has been a nice change, we dont spend as much time talking about how President Trumps tweets about low Interest Rates affect the market. Brian the thing i wrote about in my column is he is less focusing on this idea that we need more rate cuts because the economy is weak and instead saying we need more rate cuts because the u. S. Should be able to borrow at a cheaper level, which is a strange thing for him to be saying scarlet unless you are thinking like a real estate developer. Brian exactly, and that is where he is coming from. Yields have fallen so far on the long end of the borrowing costs for our country have not changed that much. As for the fed, the interesting because they have talked about how financial conditions have these because markets think the fed is going to cut. It is this weird circular argument. The fed is going to cut, therefore things are better. It will be very interesting to see how they play that. Rate cuts are far from certain. Caroline interesting that companies have been dining out on the Lower Borrowing costs. Talking about a real estate i amoper can thinking about a Real Estate Company that looks at itself as a technology company. We are looking at cloud fair doing pretty well. Wework story, which is pretty unusual. I do think into is attendance in general there is a tendency to take the ipo market it is overplayed how much it is a barometer for the entire market. There are good ideas and bad ipos. You can tell when the market gets frothy with a lot of names that should not be going public going public. I do not draw too much inference from the state of the ipo market. Joe what else are you watching . We talked about powell. Is traded the other thing that could send this market into one direction or another . Eddy absolutely. There was a Research Report that set for q3 earnings, companies that are trade sensitive, they do a good deal of their business outside the u. S. , they could see doubledigit earnings declines for q3. What i find ironic is what we are seeing lately is an abbreviated version of the trump trade that we saw after the and the beginning of 2017. Speaking of trends, i want to go back to a theme that was head of one several times. Out of the cyclical and into defensives. When we talk about value and we talk about momentum, how do you define it . It seems to change if anyone who we are talking to and what you are looking at. Eddy overly technical point, but one of the things the financial crisis, that has worked a lot of the book value of financial news. The financial indexes have been corrupted as all of these financial stocks have been swept into the value index. It gives us i dont think it gives us an exact look the way it should be is how much the market is going to take on risk. What we have seen lately is much defensive, cyclical and you can see that by looking at the s p 500 industrials. Is more ofme that it the cyclical story and that it looks like it is a moment in value story. Caroline interesting with technicals on equities. The 10year yield searched the most since 2016, brian. You are bracing for the fed but boe. For the boj what do you think the music for Central Banks the mood music for Central Banks is going to be . Brian it is a question of what Central Banks can do. They want to ease because they have seen easing as a way to keep the economys going. That weaw with the ecb need help from the fiscal side and that will be a major theme you hear throughout the centralbanking world can we have done all we can come we are in this long expansion, and if we want to keep it going, we need some help. Joe speaking of the fiscal side, 1 trillion in deficits through the first however many months of the year we are doing our part. We are doing our part there. Brian defends what kind of deficits are good vs. What kind of deficits are not productive deficits. Infrastructure is the one people think could improve productivity for the entire country. Scarlet we feel it every time we leave the office and make our way home. Thank you so much. Portfolio manager of the equity etf, we thank you as well. That does it for the closing bell and for me. Romaine bostick stepping in for whatd you miss. Wework insists on pushing ahead with its ipo. This is bloomberg. We are live from bloomberg World Headquarters in new york. I am caroline hyde. Romaine im romaine bostick. Joe im joe weisenthal. Caroline lackluster on the equity market. Romaine but the question is, whatd you miss . Caroline u. S. 10year yield hitting a high on stronger than expected data. Gaining ground, the s p rises for the Third Straight week. Pushing ahead wework changes its Corporate Governance structure to calm investor concerns ahead of the ipo. Some say the move does not address the problems. All that and so much more coming up. Romaine all right, lets get into probably what is the talk of the week beyond what is going on in bonds, and that is what is going on in the ipo space. Star trek record predicting winners and losers among technology ipoa strong track record predicting winners and losers among technology ipos. A lot of winners and losers. Lets start with i guess they are a loser, they have not come into market yet. That is wework. They are obviously trying to appease investors here. Is that going to be enough to get out the door . We use wework as an example of what we know about winners and losers. There are three things you can point to that when combined are really dangerous, and wework is a poster child for all of them. First is losses. When you are losing billions of dollars, that is problematic. The second is lack of transparency. When you are really opaque and people cannot figure out why you are losing money so much and it doesnt give you the answers, that is worrisome. Lastly, arrogance. Investors really dont like that. It is a trust thing when you hand over billions of dollars to accompany that is not been public before. Public investors have a hard job figuring out the right price for these things. It makes the job really hard. Or can you quantify that, the opacity question . Your work does a lot with a scoring system and factoring in these other things. How do you think about quantify arrogance or the level of clarity that the Company Gives you . Arrogance in general is hard to quantify but we do qualify the opacity. We talk about the of the station index. Obfuscation index. Overtime those locations become profitable. Untangling the mess is not easy to do if they dont provide the right numbers. No numbers at the unit level at all. When you are asking for 4 billion for a company that loses 2 billion a year. Caroline perhaps some of the rather more eyebrowraising parts of Corporate Governance, fact that his wife was perhaps able to nominate the next executive, that has been struck. Do you think that getting this overzealous confidence in the way that the founder controls the business and the family might is being changed enough to use those concerns . Ease those concerns . Rett what i would say is they were so far of the scalable for that they found themselves back to normal outage caroline why hasnt softbank and the like said this is really unusual . Rett its a really good question, because there are a lot of capable, experienced, knowledgeable, smart people around the table. As far as all the people in the document this morning, changing the governance structure, making it on the way to a real board but not quite, uber did all this housekeeping way before they attempted an ipo. These guys have put themselves in a position where theyre kind of doing some of it now but only when forced, which makes it hard for investors to trust them. You have to trust them because it could be that given the type of business this is, the equity is worth nothing. When youre losing 2 billion a year. On theden of proof is scene to explain why the equity has value 20 votes per share versus 10 votes per share. Romaine lets not have wework suck up all the energy rett thank you. Stories,two different saldivar club, and cloudflare, which did well. Rett it is the normal market. The crowdstrikes of the world have all done fine. Some of them have losses but they dont have the three strikes of opacity and arrogance. Romaine and they have legitimate growth stories, identifiable growth stories. Rett wework does well but they dont spend two dollars for every dollar of revenue growth. That is why opacity is a problem for these guys. It is bifurcated. Investors separated into its own category. Dogs s, data joe what do you make of the awful debut for smell direct club . Didnt seem like there were any indications of lack of concern and that of total bomb and then a total bomb. Rett i hope it rekindles discussion of what happened with uber. This is the same but more. How do you close the book at one price and have a trade 20 below that price the next day . It is like a management issue as opposed to anything that has to do with clear plastic braces or whatever it is. Caroline is this something that ipo bankers are grappling with, something that price providers are grappling with . Or isa citadel problem, it jpmorgan and Goldman Sachs . Rett it is all of their problem, and when you are not transparent and it makes the job of raising these things that much more difficult, and it is already an intrinsically very difficult thing to do. When things, along like beyond at nobody can explain why the Company Trades the way it trades once the narrative goes away on wework, it makes it difficult for any participants to know what to do, which is why softbank is stepping in and will buy a quarter of the deal at 750 million because that is the signaling that helps people anchoring for something that israel. That is real. Caroline go long. Joe great stuff. Coming up, the s p ending three days of gains. More analysis on the market next. This is bloomberg. Joe treasury is extending the september tumble. With the benchmark 10 year yield surging the most since 2016 amid strongerthanexpected u. S. Economic data. Joining us for more Economic Analysis is mike regan of bloomberg news. If you only follow the stock market headlines, no one would know what a crazy week this was. Mike absolutely, especially if you look at the indexes joe you are just a guy who checks the dow. Mike right, right. What is fascinating to me about this whole week we talk about this factor rotation if you took a trader who are taking the last 20 years off and you asked what happened to this week, this vocabulary has taken over our lives. And oldtimer would say people moved out of the fences in cyclicals. I hate to call real estate defensive, proxy stocks. The bond market is clearly just pushing and pulling the stock market in each direction. The class signal from that would be economically bullish. People are getting back into the cyclical stocks and value being the proxy for the cyclicals commodities, financial, that sort of thing and out of that defensive yield proxy stocks that had been the momentum trade in the vocabulary. Wouldk the oldtimers take that as a bullish signal. Im not sure. Romaine ok, but it is not the oldtimers running the show now. It is the young guns. We have seen the correlation between what was going on with bonds and rates market and what was going on with stocks. When you start to see the 10year back and the 30year and twoyear also drift up, what is the threshold where that starts to take a bite . A huge part of the equity rally that we had back in july and writer that was because of the drop in yields. Michael i think you are seeing part of it today. People are still selling those defensive yield proxy, what had become the momentum trade still smelling that are not buying as much of the financials, commodities, and we have the flat to down market right now. The question is what is really in yields, partly it is that we had this insane august bond rally, biggest role in treasuries since the financial crisis. The Economic Data is improving a little bit. Not that much. Trade tensions are improving. But that is a slippery slope right there. The one thing not a lot of people are talking about visavis the move in treasuries this week is the huge amount of Corporate Bond issuance. The Corporate Bond market reopened after labor day and it was off to the races, because there had been this bottleneck in issuance because it is August Caroline oxygen or what . Michael theres a little bit more yield in ig. All of the ig supply it is over 100 billion so far. 40some billion this year alone. Necessarily appear economic im Mark Crumpton with bloombergs first word news. The European Commission president will meet with Boris Johnson on monday for brexit talks. The European Commission said today that they will have a working lunch in luxembourg. He said from the very beginning that he was looking forward to working constructively with Prime Minister johnson. The reason the lunch is taking place in luxembourg is because the president has to go straight to Charles Burke afterwards. Mr. Johnson agreed to come to. Uxembourg to facilitate Prime Minister johnsons envoy has been holding talks in brussels, but no breakthrough is made. Prime minister johnson wants the irish border provision removed from a legally binding Brexit Agreement sealed by his predecessor, theresa may. Venezuelas foreign minister says that with or without john bolton the Trump Administration has a mechanism for war with venezuela. Bolton pressed for president maduro to step down so that the u. S. Backed Opposition Leader could assume power. Yesterday, trump tweeted that bolton was holding me back on venezuela. Continued, i am sure that the people of the United States sooner or later will govern in a real democracy, not a plutocracy of two impossible parties. Felicity huffman has been sentenced to two weeks in prison for rigging her daughters sat scores in the College Admissions scandal. Huffman is the first parent to be sentenced in the case that sparked a debate over privilege and class. Paying 15,000d to have her daughters sat score boosted. Others chose not to seek plea deals and are fighting the indictment. Eddie money, who left behind a career as a cop to become o one of the topselling rock stars, has died. Money died this morning in los angeles. The singer had recently announced that he had advanced cancer. Nypdrved two years as an officer before moving to california to pursue a career in music. Eddie money was 70 years old. Global news, 24 hours a day, onair and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Mark Crumpton. This is bloomberg. Caroline thank you. All the front runners in the democratic president ial race shared one stage in houston. The field shrinking to 10. Joe biden and Elizabeth Warren came facetoface at last. Even the former Vice President largely in the same place as he started. I know that the senator says she is for bernie. Well i am for barack. I think the obamacare worked. People who love their premiums . Yes, we are going to take your ar15s, ak47s. Obviously he has been tweeting up the ammunition. If we dont set the rules, we are going to find ourselves with china setting the rules. Caroline here to take us through the last night of debate is lanhee chen. He works on highprofile political campaigns. Where is the division . Where is the separation . It seems that weve come down to basically health care. Lanhee health care was a topic of division. But some of the fireworks we saw were not between the people we thought the fireworks would be between. There was a personal attack it seems to me between secretary castro and Vice President biden. The conflicts we were expecting between Elizabeth Warren and joe biden, between Bernie Sanders and Elizabeth Warren, never really materialized. Health care remains a topic of division. This is going to be a big topic of conversation next fall. Curious based on your experience. At this stage, do candidates worry about taking positions that may become more difficult to defend in a general election . Or is it, ive got to get the nomination first . Lanhee the general election is always in the back of your mind if you think you are a credible candidate. Back in 2012 when i was working with mitt romney, we were aware of the fact that he was likely to come out of that primary field. We were thinking about how what we were doing might impact the general election. But if you dont win that primary, you are not going to be anywhere near against a competition against the other partys nominee. What you are seeing in this primary with the democrats is folks moving to the left. That is the obvious dynamic they have to counteract next year. Romaine how much to the left are they moving . Theres sort of this issue, trying to differentiate themselves from each other. We had questions about the economy and trade policy which the candidates didnt differentiate themselves much from the current republican administration. Not a single one of them said they would roll back the trade war that trump has led us down. Lanhee the challenge for last night was that the disagreements were on style, not substance. Who may haveidate had some substantive differentiation with the president was joe biden. He didnt get to talk about the trade relationship with china. That is the candidate that might provide some differentiation. We didnt hear a lot about the economy generally last night. To the polls,t they tend to vote on the economy. These are topics i expect will be explored in the next debate. Certainly the differentiation on china was not there. It tone how risky is tear into each other and previous administrations on your own side to a certain extent . Is it simply when you talk about the personal attacks . I assume you are referring to the age and memory element of this. Does that backfire . Lanhee it could. Particularly when you are talking about going up against donald trump, someone who could use this as ammunition. In terms of the attacks on obama, last night you saw the field, around two loving president obama again. In the previous debate, you had people assailing the obama agenda. Last night you saw them come back around to embracing president obama. President obama is very popular in that field still. So there is a danger in attacking president obama and there is a danger in attacking on personal attributes. I think they have to watch that dynamic a little bit. Sometimes these things can spin out of control and you attack because you think it will give you an advantage. Joe back to what you were saying about tariffs. I was struck by that question. I didnt hear any of the candidates say they would totally reverse the tariffs. Which is kind of surprising to me. Setting aside the electoral aspect, what do you think it says about this moment right now that no one is running on the good oldfashioned freetrade is a good thing argument . Lanhee the argument for free trade hasnt been forcefully and articulately made for some time. This is a trend that reflects in the electorate some feelings of anxiety about the impacts of freetrade on certain elements of the electorate. I dont think republicans or democrats have been thoughtful enough about what the impacts have been. There is this element of it being less popular. China, i dont see a lot of people defending china, because it is not particularly popular to defend the chinese and xi jinping. So you are going to have the aggressive posture against china. All these candidates are going to outdo themselves on that. It is difficult if they agree with what trump is doing. Romaine i want to turn quickly to the republican side. You have a couple challengers to President Trump. They probably have zero chance of getting the nomination. But do you think having those folks in this race against trump , that that could do any sort of damage to his standing with voters on the republican side . Lanhee i dont see any of the three declared candidates aside from President Trump that is joe walsh, mark sanford, bill weld, i dont see any of them giving any difficulty to the president. In,here are others who jump lets say jeff flake, john kasich, if they jump in, it is possible that the president could be wounded. But i dont see the current field being much trouble for the president. Much, lanheeu very chen of the hoover institution. As we wereg of ipos earlier, made well, the genes company, they are going public. I think we did a segment on them. Apparently millennials like them. A lot of denim ipos. Coming up, President Trump vowing to crack down on vaping. We will see the Portfolio Manager who invests in the industry and talk about the potential impact. This is bloomberg. Caroline it seems to be the only area that continues to carry j. Crew. Made well is filing for an ipo. Interestingly, also known as chinos holdings. Apparently the only guy on the there,o actually shops they dont just do denim. Romaine the whole nine yards. I dont know. Is it a Retail Company or a tech company . Joe im sure it is a tech company in some way. All right, outrage over vaping has been intensifying as President Trump vows to ratchet oversight of the troubled industry. We are looking at vaping very strongly. It is very dangerous. Children have died. People have died. We are going to have strong rules and regulations and some very Important Information very shortly. Joe here to discuss the industry and other things is the founder of navy capital. He manages a portfolio that is focused on the cannabis sector. Thank you very much for joining us. Is anw that vaping increasingly popular way, especially in places where it is legal, to consume marijuana. How concerned should the industry be if there is a regulatory crackdown or just people are concerned when they read headlines . The industry has been screaming and yelling for more regulation for some time now. What you have is illegal products, counterfeit products, penetrating the supply. In states where there is no legal regulation, you have health risks. Romaine the headlines sort of consume people. Consumers see those headlines and it scares them away. What progress have we made . At the beginning of the year, there was a push. We havent seen the black market being enforced the way we were hoping. Cannabisrnia, 80 of sales are illegal. Decriminalized almost in every state, there is not an incentive by Law Enforcement to regulate the industry. We hope this is a call to action, when you have people dying from a legal product. This is similar to prohibition in the 1920s when bathtub gin was killing people. Caroline what sort of regulation do you want to see . We want to see sales tracking for cannabis. For ecigarettes, you want to see more testing. A lot of what is going on on the nicotine side, you dont have testing on the end product. You need to know what is going into somebodys lungs. On the cannabis side, we dont believe the issues being raised now are related to legal tested products. Joe vaping hasnt been around that long. No one totally knows what the effect is on your health from consuming chemicals in this way. Could you see some other delivery mechanism taking its place, edibles or beverages or smoking . You are seeing that now. You are seeing a down tick in sales in california. People are afraid. We think people are going to move to beverages, topicals, edibles, and different things. Romaine some of the companies you are investing in, how are they protecting their intellectual property, the concoctions they devise, and make sure they are not being knocked off or they dont get tainted . It starts at the plant, with the genetics. Every cannabis plant has its own set of cannabinoids. Raw garden is gaining the most market share. A lot of it is due to their genetic profile. Time, monsanton will come knocking. Caroline will they have to Start Marketing to ever the crisis perception that is building . I think that the more people go out and say, we have a safe, tested product, the more the consumer says, i dont want to buy an illegal product. California, not that much conversion to the legal market. Multiple we are seeing illegal dispensaries open. Joe why do people still participate in the illegal market in places where you can just walk in like an apple store . You are not seeing a big crackdown on illegal stores and products. Municipalities are not allowing illegal dispensaries. If convenience is the factor and cost, you are not seeing the conversion. Illegally, it it is a significant discount and often more convenient. Caroline we will see how the regulators respond. Great to get your expertise. Quick check on the headlines. Health officials in the u. S. And carcinogen was found in the drugs. Zantac is made by sanofi. Forever 21 is set to close at least 100 stores as part of a plan to bankruptcy. The apparel chain is working on a deal to get 75 million for its restructuring. Forever 21 operates about 800 stores in the u. S. And latin america. And the Wealth Management unit raised globalse equities to overweight. Suisse says equity markets will benefit from the new prospects of the u. S. China trade deal. Coming up, this falls best movies seem to share a common theme, how class warfare storylines have taken over the most prominent movies of the year. This is bloomberg. Caroline time for a look at what stories are trending. The hedge fund started by former Deutsche Bank traders getting hit with a fresh round of investor redemption. Inets had already slumped 2014. Bloomberg. Com has a story on the salmon which is here to challenge free range do not. The salmon from new zealand is a fatty fish with marbled meat and a sumptuous texture. The cost is at least twice the price of atlantic farm salmon. Meanwhile, tictoc on twitter is is thriving. Director Quentin Tarantino transports filmgoers to a Fairytale Land 1960s. [indiscernible] follow all those stories on your terminal, on bloomberg. Com, and on tictoc on twitter. Romaine staying with the big screen, hollywood movies have always demanded a villain and the man with the money has been the easy target. Offerings at this years Toronto Film Festival are highlighting class struggle like never before. Sakoui us now is anousha from los angeles. Before we get to what is the movie of the week, hustlers, i want to start with another movie you mentioned, this movie i believe out of south korea, that seems to kind of focus on praying on the rich. Right. It is by the director who is very well known in hollywood and among some sinner files, having , and the filmokja snow peers sir, and he has this , and it is very much a film that is being talked up a lot. That about a poor family lives downhill from a rich one and they try to incorporate themselves into that rich family and try to con them, i guess. But it is getting a lot of praise. It will be great to see when that is released in the u. S. Joe i understand why filmmakers and critics like the idea of a movie about scamming rich people. Do people think this is a good theme at the box office . I was thinking about this before. We are looking at hustlers. Theres joker as well, which people have said is a manifesto for incels. He gets beaten up and hes a loner and turns on people. But as you know, people are kind of looking for the unusual with stories. It is very topical in the wake of the financial crisis, the disparity between different groups. Filmmakers are looking into how everyone survives that and telling different stories. Caroline joker, this is an interesting reprisal. Really fascinating. It won the top prize at venice. Mainstreama kind of adaptation for warner bros. That is going to be released soon and warner bros. Have gone a way of expanding the d. C. Comics by taking more unique looks. That is what this joker is, darker. Caroline meanwhile, frozen waye d. C. 2, which im sure will be an aggravation to every parent out there. Meanwhile, dont miss this. Boris johnson will have his first facetoface with Jeanclaude Juncker on monday. Joe the fed announces its decision. Romaine and that is all for whatd you miss . Have a good evening. This is bloomberg. Im taylor riggs in san francisco. This is bloomberg technology. Space up, the Office Rental companys initial Public Offering conditions, is it enough to calm investors nerves . Flare. Uch fan in jumps in its trading debut