And the nasdaq closed at a record high. Russell, a lot of big movers were in that cap space. Grubhub, Weight Watchers, club our you are getting more brass. We want to Mention Volume picked up dramatically in the dow. Up 47 . The nasdaq up 20 as well. Let us check in with our report just to see what they were monitoring. Abigail, what are you watching . A stick with the theme that investors, traders too optimistic given the current context of the tensions in the middle east. Evaluationp 500 self and the technical stretched this is a one year chart. What we have is the s p 500 climbing relative to the 200 Day Moving Average went it went above. It consolidates down toward the 200 Day Moving Average. 9 above the average. Not every day that we have alltime highs. Missile attacks in the middle east but that is the case. Highs in their. Stretch conditions may consolidate a bit. Taylor. I am taking a look at the similar thing p. A multiple basis. If you take a look at the chart Bleakley Advisory Group is look at the ratio between the s p 500 value which is debt plus cash plus market value equal to the ratio looking for and showing no room for error. That is when the internet driven bubble in stock burst. Checking 14. 1. Showing no room for error this time around. Renita. I am taking a look at alliances which are down after the company saw shares lower than expected. Net income also took a dive compared to the year earlier. Pharmacy sales in the u. S. Are struggling as digital and other rivals try to gain the market share. Pharmacy reimbursement pressures weed out profit margin. Walgreens a from the 2020 guidance for flattered and flat earnings. Romaine still with us at the desk, bloomberg news, sarah ponczek, and deepak. Seen some interesting weakness over the past couple of months. We are weaker than we were a fuse ago i am sorry, stronger. But weaker than we were three or four years ago. People think the rally that we had is going to be dependent on the direction of the dollar. Deepak i still believe the dollar is in the laundry bag. It is often said that yes there are flaws within the dollar. It camouflages a lot of weakness, structural weakness we may have. Hasexample the debt that come over the last 10 years. But i do feel for the time being the dollar is still the place where most Global Investors want to buy assets and keep reserves. I dont see a fundamental shift in that. May more this year considering it is an Election Year. President trump would rather have a weaker currency. He mentioned that many times. With that in place, maybe there is a little bit of push. I feel like the inflation number with the oil price if it was to be sustained we could see numbers go up. Some of the emerging markets in asia might have a weakening currency. The dollar might strengthen markets being weaker because of the oil price. Energy is the only sector to finish and will read in red. Anyone thinking about looking at the sector or will it be a trap . Sarah there are people saying there is time to look at the sector. Data Check Research sent out a note this week. What they said is that you cannot be underway anymore. That means that in your portfolio your allocation to energy is less than the waiting in the benchmark. So your benchmark to the s p 500 only 4 is energy. If you are underweight energy, less than 4 of your portfolio is Energy Companies. What they say is that energy is in such a like holding 4 of your purple is there is not a big risk. You may as well catch up to the benchmark at this point. Less than 4 is hardly anything. Add, energy could complex is a deep play. It is starting to look attractive to us. 3. 4 evident yield. You have to be really pessimistic on the complex to not pick up on that yield offer. Second, deck of the day, the Energy Companies were really driven by your ability to explore and get reserves. Nowadays that is not with the big Energy Companies are being priced at. Their ability to be more efficient in their Business Model is what should drive the next leg of the Energy Company site. I think it is an interesting plan. Something we are watching. We are still monitoring the latest headlines out of baghdad. Tensions in the middle east and 2020 wouldthey be to trade headlines were to 2019 . We can theoretically rally but it is a permanent thing that gives us angst in the market. Romaine not romaine deepak in my view. I dont think that given the Election Year with the popular vote is in the u. S. And President Trump wants to be engaged. It has been disengagement with the middle east. I cannot imagine a protest to go in. For me ther hand, uncertainty in the market has moved from recession which was the number one uncertainty in 2019 to Political Uncertainty for 2020. This is one of Many Political uncertainties i am concerned about. We have u. S. Elections later this year. There is going to be a lot of Political Risk in the market. Not just middle east politics. Romaine for a market that is driven by liquidity, we have Earnings Seasons coming up. Do people still care . Given what was a . Oft season here we are at record highs. Sarah people to care. You look at the best stock in the s p 500 is walgreens. I am so sorry. The worst is walgreens. If you look at realized correlations across the s p 500, they are very low at the current moment. You do see stocks moving together in a sense. But when it comes to the earnings season, do people even care . People are trading off the macro issues. Earnings matter is a window into the macro issues. Yes it is fourthquarter earnings. We expect to see a decline in 1. 2 and profit for the s p 500 companies. But the question is whether or not we will get that midsingle digit growth in 2020 the s p is pressing in now . Withstood start getting guidance from companies as it pertains to the year. That will be important to Pay Attention to. Scarlet one earnings season begins, what groups of companies are likely to surprise us the most . Deepak i think the financials. Scarlet to the upside . Deepak yes. I think the liquidity injection or expansion that started in september has given us new life to the financial sector. You should see a long growth. The nba Mortgage Application this morning up 13. 5 . That should help. When you look at the full calendar year, energy again is supposed to be from an earnings perspective the best upside. Surprises. Be some scarlet watch energy and financials. Ponczek. Ri and sarah that does it for the closing bell. What you miss is up next. This is blumberg. Live from bloomberg in new york i am romaine bostick. I am scarlet. And i am joe. , s p, andhe dow nasdaq moving higher. Explosions heard in baghdad zone. President trump says iran is standing down after overnight strikes. He offers the country a diplomatic opening. Hq are is lashing up to 10 of the workforce worldwide after a poor performance luster. Carlos ghosn takes the stage for two hours. He condemns the judicial system. Scarlet lets get to our top stars. Alarms went off at the u. S. Iraq embassy after several rockets at the green zone. No casualties reported. This is according to reports. Earlier today the president said it wrong plans to be or appears to be standing down. After an attack on two basis housing use test u. S. Troops resulted in zero casualties. The move still has repercussions. The United States will immediately impose economic sanctions on the iranian regime. These powerful sanctions will remain until the wrong changes its behavior. Scarlet despite sanctions, there appears to be a clear deescalation of the situation. To help break it down we are joined by ryan bohl who joins us. Tell us how you fit in the latest headlines about the attack in the green zone . Thedoes this fit in with consensus that appears to be taking hold in markets that there is a deescalation of tension . It is a little early to say what happened. Here is what we can say. There is a deescalation path between the United States and iran. The government conflict is on a deescalation path. What is not on a deescalation path is the iranian proxies within iraq. Somewhat revenge for the killing of soleimani who was a hero. One of their primary leaders was killed in the same strike. The retaliation against the United States has been forthcoming. They were signaling they would be doing that. That may be attached to what is going on in the greens appeared. Romaine we dont want to speculate much. What we have seen of the last day or so, it has an air of choreography. Joe the need for a rent to show that they did something. Trump can say no one was killed. The u. S. Can back off. Could it be that simple . That would be nice that everyone gets their side and move on. Has it worked that way . Ryan this is a letter signaling to avoid a major disaster. A war between the United States and iran would cost both significantly. Toy are trying to find ways haphazardly pressure one another. Causing unexpected reactions. Trying to see if they can break the resolve of the other. The United States responded in retaliation to the missile strikes and that was more sanctions. From that point, the iranians are back to square one. The missile strikes were designed to turn up the tension. They were supposed to ease off sanctions and that has not worked. They are trying to avoid an over regional war. The conflict between them, diplomatic, economic, and political is going to be continuing throughout the year. Romaine all of this unfolded because of the issues surrounding Irans Nuclear program and whether they were still participating in that deal. What do we know . Or expect to Irans Nuclear ambitions . Ryan the iranians have moved away from the formal commitments of the jcpoa. They are enriching be the limits they promised. There are caveats to that. They have not kicked out the international inspectors. They are going for a breakout in Nuclear Weapons test. As long as those inspectors are in town, it is hard for the iranians to for a bomb. They are trying to develop technology which are dual use. Civilian purposes into military once. That is the way of creating a backup plan. The iranian goal is to not get an atomic weapon deployed and have in the arsenal. The goal of the Nuclear Program is to have a civilian Energy Sector they can rely on and potentially develop the deterrent if they feel the need. They know that if they move to close on the deterrent level, to close to an atomic weapon, the risk a straight a strike by the United States or israel. Scarlet i am fascinated by the semblance of general soleimani. Iransgacy is fighting were through proxy. Is there a successor . Is there a power vacuum that resulted were someone will step in . Ryan there is also a replacement. But there is no replace for the legend. His career was long, his achievements were largerthanlife. He was largerthanlife including within the washington, d. C. National security stand. The Iranian Revolutionary guard puts forth that they have seen this coming. They are used to having assassinations and redundancies in leadership. As a symbol, he is euro placeable. That is why we are seeing such outrage. Joe thank you for giving us the update. Romaine Bed Bath Beyond missing the comp sales estimates. Pulling forecast. They got a new ceo from target back in october. This appears to be a little bit of kitchen sinking. They will announce plans for a new Strategic Vision sometime in 2020. For right now, the comp sales down a. 3 . The estimate was for a decline of 4. 9 . It is been well over two years since we saw sales increase at bed, bath beyond. Joe now for brighter news. Cosco is a big wholesale club. December sales were ahead of expectation. Estimates of 7. 3 . A little bit of a rise for the stock after hours. It had a good day during the normal trade day. They are on a roll. Coming up. While a qr capital is lying often percent of the global workforce. We will discuss that from new york. This is bloomberg. Aqr Capital Management is letting go 10 of the workforce. I will break this down. What was the performance last year and on the job because we are seeing tied to that performance . Romaine the job concern not only the cost is rising as well. Performance does not help. A lot of management have had trouble. Struggledow they have because their work has to do with quantitative value plus momentum. Have notthe strategies been worked for a decade. The same factors that worked in the past that is a critique. Do they work in the future . Especially tied to momentum and value. One of the bigger funds is the alternative fund and lost a. 2 last year. Their benchmark is the threemonth treasury bill. They were underperforming relative to the benchmark. They do have bright sides in performance. These are big deals for a qr and their investors. Scarlet theyve been cutting cost for a while. Spaceere looking to fill in greenwich, connecticut. They did cut a single digit percentage of the workforce last year. Now almost 10 . The headcount was more than 1000 people. Now it is going to be 100 less. Romaine have we heard from cliff . He left twitter. He is frustrated. Scarlet what did he say . He was frustrated. Joe he used to get in fights with people. Most of it was political. It was not necessarily about investing. He said that he would stick like grim death disbelief. He really believed in the model he created. That said, he said we do not have a strategy problem but an intuition problem. Scarlet interesting. Who else are we looking at in terms of these funds that may be in a certain situation . For the situation everyone forgets that amg has a huge stake in aqr. General are we at peak quant . Everyone employs them. It is all over the place. Joe not the hot new thing. It is a huge part of the market. Goodne when you have a quantitative strategy, it is great until everyone else figures out the strategy. Exactly. People are worried about crowding. One of the things that is working about aqr and floating into other Asset Managers is quant of income. Everyone has quant now. You have to. It is not a unanimously bad strategy. Scarlet thank you so much. With one of the most read stories on bloomberg. Here is another story that caught attention. Spotify developing daily sports shows. A big part of the music streaming giants push into podcasts and music. It really feels like they are figuring out how they can do their own netflix. Scarlet their own content. Joe it does not seem like they want to do music. They dont want bands available on one plan form. Podcastsoks like arent availability. Romaine havent we reached peak podcast . You have a podcast. [laughter] scarlet it is legitimate. Romaine we have a podcast. Am i on . I have to start looking into this. Joe you are on it. Romaine spotify is playing a lot. They are putting a lot of resource and talent. Theo big acquisitions one thing you can build a franchise around. Romaine if you create that kind of content and dipped and it keeps people tethered that is all you need. Scarlet they have to make sure there is a reason for people to continue to pay for premium. I will listen to it. Joe we have to move on. We will get a Market Outlook from Pacific Life Fund. Is on cruise control. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Lets get the first repaired President Trump says iran looks to be standing down and no americans or iraqis were harmed in the missile strike onto iraqi basis. The United States will immediately impose additional sanctions on the iranian regime. These powerful sanctions will remain until around changes its behavior. Until iran changes its behavior. He said that as long as he is president , iran will never be allowed to have a nuclear weapon. Had no comment on it. Cleanup in puerto rico after strong earthquakes. Hundreds of people are staying in government shelters. The latest earthquake was 6. 4 and killed at least one person. Injured nine others. More than half a Million People are without electricity. The United States is imposing sanctions on the Vice President in south sudan. Human rights abuses. The Treasury Department says that he has been involved in the disappearance and death of civilians. It asserts he has acted to divide the armed opposition in south sudan. Extending the fiveyear civil war. Rate has fallen by the most on record. Advances in treatment, has helped prolong patient lives. Thehe latest available, death rate from cancer declined 2. 2 . Drop overaged 1. 5 the previous decade. Global news 24 hours a day on air and on quick take by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. I am marie gupta. This is bloomberg. Joe lets get a Market Outlook. We saw solid gains across the board. They did pair a little bit by the end of the day. Not a major reaction as of yet. Still monitoring. Not seeing a ton of action after hours. For a Market Outlook we will talk to max gokhman at Pacific Life Fund advisors. Joining us from irvine, california. Thank you for joining us. Lets talk about what you made up today. And the brazilians that just of the comeback last night all year. A market that seems very hard to shake. Market does have a lot of hope embedded in it. Areoes seem like investors driving with cruise control. They have one hand hanging out the door, one on the Steering Wheel, turning the radio up, trying to listen to only positive music. Not a lot of grunge. [laughter] i think that when we get a new geoPolitical Risk like what happened at the beginning of the year with around, the Immediate Reaction was muted. Yesterday there was a flurry of uncertainty. We are trying to figure out if there were u. S. Casualties. When the news came out there were no casualties, not only that, there were in the iranian casualties. Iran actually seem to be aiming for a shot across the bow. That reignited the hope. After gripping the Steering Wheel pretty tightly investors got right back to cruising. Scarlet you paint a really interesting picture. It looks like everything is going as it should. People fairly optimistic about the market. If you are in the u. S. Market, where do you want to be . Tech has had blistering returns. Do you stay with big tech and the ones that had led us to this point . Do you cope for more valued place . Max i think that will be a question that will come up throughout the year. One of the reasons we have had such historic earth on performance is that this has been an expansion marked by low economic growth. Typically an expansion you have a lot of growth. Estors gopher cheaper investors go for cheaper. As we look at 2020 we do not see elective catalysts that are igniting animal spirit which would call for more cyclical plays. We could seeance or negative developments. That could benefit value as well. We would go from her defensive value. With all of that being said, our allocation is much more neutral. Believe that if everything stays according to plan, growth will likely continue to outperform. If there is a positive or negative development that wakes up the animal spirits, that value could start a rebound. Romaine when we talk about relative value between what is happening in the u. S. And what we see in assets overseas, a lot of people have made the argument this rally can continue as long as the rest of the world does not catch up in regards to Earnings Growth and the attractiveness of valuation. Do you buy into that argument . At least on a relative basis, there is no other place to be in u. S. Market. Max i would agree with that. It is fair to say that on a forward earnings basis u. S. Equity was expensive. My advice for investors is the same i give myself when i go shopping for a birthday present. Stay away from the bargain bin and splurging quality. You will be happier later. U. S. Stocks are expensive but expensive for a recent. For a reason. You also mentioned that larger firms have more cash and access to equity. They have a central bank among the developed world. It is one of the few that has additional room to ease. All of that means that paying a premium for u. S. Quality make sense. Joe speaking of avoiding the bargain bin does that apply to buying treasury . I dont think we will see quite as big a rally as we have seen over the last year. There seems to be a floor to the yield. We dont make explicit forecasts for the 10 year. My neighbors across the street have a difficult time with that. We do think that while you will could see why you will see continued support in treasury, you will not see them rally. We prefer to be in the riskier part of credit. Especially highyield. Scarlet good stuff. Max gokhman of Pacific Life Fund advisors. Thank you so much. Has hadp, elon musk plenty to dance about in recent months. There is that accordance. Romaine does not think it is dancing. I do. Romaine its movement. [laughter] scarlet what it will take to further cash in. Romaine time now for a look at what stories are trending across the bloomberg university. Billionaire investor christer home who ledtopher to a gain in 2019. That return marks the Children Investment fund best annual performance in six years. On bloomberg. Com they have a story on cash past. It takes users take classes across multiple studios engines. Intoasing memberships hundred 85 million. They will use funds to continue expansion and that funding marks the entry into the unicorn club of startup. Quick take by bloomberg reported that be meet and mcdonalds will expand plantbased burger test. 52 restaurants in toronto will serve the plt. The test started in 2019 with 28 stores. Has dennys, talk about, and mcdonalds. 14,000 locations would be a win for the company. We will follow on this on the journal terminal. Joe member elon musks packet . It does not seem as crazy as it used to be. Payouts closer to the and what is an unprecedented Compensation Plan. For more on how much he can make we are joined by dana hull. In 2018, they came out with that pay package for elon musk. What was it and what is he close to getting echo shareholders approved this otherworldly pay package in 2018. At the time tesla was trading at 315 a share. The company was having a hard time producing the model three. The idea the company would hit 100 billion seemed crazy. Shareholders approved it and fastforward. At 88closing the day billion. It is no longer crazy. Scarlet what is interesting about the payout is he does not get a salary. He does not get bonuses. It is unprecedented that it is all or nothing. Unprecedented that an executive compensation is all about the valuation of the company. It is not about how many cars they make or sell. Not about if they are profitable but market value. The first payout is 100 billion. It is not a onetime event. It has to hit the sixmonth trailing average. Romaine when this was announced, there was criticism from some of the proxy advisory firms. Saying there was no way you could justify this type of pay package. Given the performance of the share, and if he gets this money investors are also going to be getting a lot of money, do you think you will start to see a little more change in tune with the criticism . I think the criticism from the proxy firm is valid. It centers on the corporate governance. The desire to see more transparency and a more diverse board. There were a lot of concerns about the pay package when it was approved. You are right and that musk is the largest shareholder. Up, his stock goes personal wealth goes up. The sort of feeling they want him to stick around. A lot of brent company is intertwined with him. When the stock is up it is seen as a winwin. When it was negative for the beginning of 2019 not so much. Joe you hit on something important. They want him to stick around. How much is this pay package it is not he has a lot of interest. Another day he has a good idea for how we can build tunnels on mars. It is a pretty big deal to them that he has a lot of competition for staying at tesla. Tesla is notknow, his only company. He is the ceo of spacex. They have an incredible year ahead. They will fly astronauts to the space station for nasa. When he tried to make the Company Private he made it clear there is a lot about running a Public Company he does not like. There is speculation that at some point he would step down as ceo in be the chief product architect but remain chairman of the board. He is not the chairman of the board still on the board. I think this Compensation Plan ensures he will remain heavily involved in tesla. Romaine our thanks to dana hull. Check on theuick business flash headlines. Diet company ww how to its best are in eight years. The company set to Oprah Winfrey and they work with investors. Formally known as Weight Watchers rose as much as 12 today. Of the biggest shareholders. Shes been counted on to attract new subscribers. Spotify is developing several sports shows. Bloomberg learned it is part of a music streaming push into original podcasts. They are considering a number of options. One of them is audio programming tailored to fans of specific sports teams. Walmart recruiting robots in the Online Grocery fight with amazon. The biggest grocery has announced the alpha bought. It is a warehouse in new hampshire. They quickly retrieve items. Some analysts say it is the most Promising Technology hit food retail. That is your business flash update. Scarlet lets get to smart charts with abigail doolittle. Charts taking a look at that suggest the rally is set to continue. To do that with me is stephen suttmeier. Thank you for joining us. Today. Etty remarkable the s p 500 was down dramatically and then closing at an alltime high. It seems like all risk is not out of the market. But we have this reaction. Your view of the s p is pretty bullish. Stephen it seems like they only come out at night. [laughter] chart basically shows a daily chart moving average. We did achieve the triangle 3220 which is what we talked about. I like when things work. Ist will keep things working if we can say about the 3200 level. Level in hold that think it stays intact, and the s p can plan. Abigail we are a bit above the 50 day. We are about 10 above the 200 Day Moving Average. When that has happened in the past we see consolidation. What you think about that possibility . Stephen i look at the chart we show on the show a lot. Sincebeen overbought december. As long as it is overbought and above 20 we grind higher. If you hold 3200 we could see 3300. Maybe even by the end of the month. I am bullish above 3200. Abigail not surprisingly that with this chart volatility very low. Very suppressed. There is complacency. You think volatility suggests morehead. While the victim index vichowing while the index is showing i am nervous. The trend of this chart we are getting less complacent. Beer the surface there may something going on. Be like a 2018 event . Earlyis it going to be in 2017 . We had divergence back then. I think it will be like 2017. Range. E out above the if you take the breakout from the range we are in, everyone was so nervous about it. It looks like a continuation. If that breakout the target we could see 3850 on the s p, over time. Abigail is there any chance that is a false initial reaction . Do you think it is good to go . Stephen when i look at the past cycles if we hope the breakout point around 3000, we are good to go. Abigail lets take a look at the highyield. The highyield market in the investmentgrade market are very important. I use these a lot. We talk about this. We are not getting the diversion we saw. Even coming into the corrective phase. We have new highs on the highyield index which is this line. In the ig index up there. What that tells me is there is no stress on the market. Dips should be limited. I get more worried when you start to see buildup in the market saying highyield blows up. The treasury blows out. They are going to new lows. Abigail i remember you made the point around the 2018 head of the highyield are restarted to philip. We are not seeing that now. Maybe a little consolidation. Stephen suttmeier, thank you for joining us. And sharing your view on stocks. Joe carlos ghosn goes on the offensive. Why claims made by him that a former employer plotted against him. We will discuss those next. From new york, this is bloomberg. Bed, bath beyond is moving lower. They had sales in the most recent quarter declining 3. 8 . They have had a drop in sales. It was a much bigger drop than they analyzed. The company went to the outlook. They have a new ceo who came in in october. This is his first full quarter since being ceo. Youre getting a kitchen sink affect. He is saying he will provide a much broader strategic update for the Company Later this year. Lets move to the situation with carlos ghosn. Earlier at a highly expected press conference in beirut. He fled their last route last week. Joining us as chester dawson. We were waiting to hear from him. He did not disappoint. He gave us 2. 5 hours of the best he could give. Did we learn anything new . This is going gohsn in his element. Multimedia throwing questions out. We did not learn a whole lot more. He did name some names. Hearing it from him was interesting. He named his successor. The former ceo and a few others. No government officials. Joe i am curious. Everyone including him is going to tell a history itself lettering. As a car industry observer, what did you make of his claims that essentially he had proposed his successor, the board approved it, in the went downhill after he left. Does that fit with the accepted narrative people have . That there was something major that happened after he handed off control . There is some revisionism there. Things started to head down for nissan even when he was serving as chairman. That things were starting to fall apart a bit more under the guy he picked to succeed him. Since he was thrown into the clink and had these allegations lodged against him, nissan has fared very poorly. That is unquestionable. Surely he gilded the lily. He did bring nissan back from the brink but probably overstated his tenure. I think you heard him Say Something along those lines today. Ahead, we getng that carlos cannot go back to japan because he is a want to future for wanted fugitive. What is he going to be spending his time doing . He wants to preserve his legacy in some way. Will he pursue other ventures . Chester he certainly left the door wide open for that. He said for the time he will be focused on reacquainting himself with his family, getting to know his new environs. When he was asked about whether he may have any ambitions in industry he did not rule that out. It is probably too soon. There is big roadblocks there. His subtle cement his settlement with the sec means he cannot run a business in the United States. Books orwants to write oversee. Movies about his escape. Scarlet that would be interesting. Chester, thank you so much. That does it for whatd you miss. Joe have a great evening. This is bloomberg. R. I. M taylor riggs and this is bloomberg technology. Coming up, the threat you cant see. Present trump speaks after u. S. Missile strikes. We will discuss my come next. Big one. Toc poses a we