Transcripts For BLOOMBERG Bloomberg Go 20151123

Vonnie good morning david and stephanie. The city of brussels is under lockdown because of fear of an imminent terrorist attack. Schools, jobs, and the imminent subways schools, jobs, and the subway system remain close. They expect a peristyle attack with multiple attacks taking place at once. We will go to brussels for more in a moment. Francois hollande has the u. K. On board in his attempts to build a coalition to fight Islamic State he met with amy cameron today. That he met with David Cameron today. Tomorrow he meets with president obama in washington. Onn with Angela Merkel wednesday, and Vladimir Putin on thursday. Argentina has voted for a big change. Macrition leader mauricio has been elected president , setting the stage for improved relations with the u. S. He has promised to lift argentinas currency controls, cut inflation, and attract international investors. You can get these and other breaking stories 24 hours a day at the new bloomberg. Com. Matt lets look at futures. We are seeing futures negative to kick off this week. Down 15contracts are points. The reason, obviously, is that we had such a good week last week. We were up seven out of the last eight weeks. In g lco here so that you can see my Global Commodities board. They are fluctuating but mostly down. You can see gold right now, down. Heating oil is down, crude oil is down. After john williams, the fed president coming out and saying that Interest Rates should rise in december, it is more certain we will see that move, and that boosts the value of the dollar, so you can see the dollar rising against the euro, especially because mario draghi is expecting exist banding qe. That is still the case. You can see the dollar spot index right now, a third of a percent. Oil is coming down, not below the 40 level. Last week we saw a couple of earlier today it was off more than 3 . Oil has been down much lower, and gold is down as well. Because of the increase in the fact that goal does not pay interest as a payment itself, gold is finally coming off. It had a decent week last week of 1069. 90. You toie lets take brussels, where the city is on lockdown following the threat of a terror attack, paris style. Lets go with brendan greeley, just back from paris. Give us the latest. Dan the latest here is the prosecutor in brussels is going to issue a statement sometime soon. We expected anytime now. This should be an update on the raid carried out last night shortly before midnight. There was a major raid across the downtown brussels area. It was several districts. They did house searches and arrested 16 suspects. In a little bit, the prosecutor should tell us how many of those have been charged and how many have been let go. We are poised for that. In the meantime, everything stays locked down. The subways are on lockdown. Stephanie i hate to interrupt you because we have some m a news breaking right now. I want to take you to d. C. Where drew armstrong is. Pfizerallergan deal, over 160 billion. Drew . To create is going the Largest Pharmaceutical Company in the world. Will getshareholders 11. 3 pfizer shares for every share that they hold. Pfizer is moving to dublin are the only thing that is changing letters of theee name. It will be pfizer plc, not pfizer inc. It is the largest pharma deal in history by far, and one of the largest deals period. Done tohat have they maximize the chances that they will be able to take advantage of the tax inversion . Drew i will get a little wonky on tech stuff, but one of the ways that the inversion rules are done, it is made to prevent from buying apany Smaller Company and moving over. In this case it looks like allergan is big enough for pfizer to be able to dodge being penalized by the tax inversion rule. That was always one of the big role as one of the big goals. We have got to a point where a lot of the companies that have gone overseas through tax aversions are so large that they can acquire American Companies outright, or it will go like this, so pfizer can structure the deal so that allergan is buying in. Be suspect necessarily to the treasurys rule. At this point, it does appear that they are going to escape from a lot of the very punitive aspects of those tax inversion rules. Stephanie given how massive this deal sizes, jason, amgen merges allergan, even if the pfizer deal goes through but what does it mean for valeant . The cheese is standing alone. Not think they have used that metaphor. Eant to bevalle involved. It has implications but we are not sure what it is going to be at this point. This was a deal that everybody was thinking what happened. Brent saunders, as you know, who has been a guest on the show, is one of the most inquisitive ceos out there by. Stephanie when you think of Brent Saunders, he is not necessarily an operations guy. He is an m a guy. Getting thee is not top job at pfizer, so maybe he will do some more deals. I understand that bloomberg can give us a sense of how big of a deal the tax inversion is . Matt a couple of years ago and moved over to dublin. That is in white, and activist, that is when theres tax bill that that is when their tax bills dropped into negative numbers. They used to pay a pretty decent number in taxes, but now they have a negative tax rate over the last couple of years. In read you see what pfizer is paying. Obviously a lot more, 1. 6 billion. These are quarterly numbers. They pay a lot, but they will pay much less there. Allergan activists a massive allerganactivist, a massive company. I was going to say it is tiddlywinks. What is tiddly winks . Stephanie it is a board game. About what do we know David Saunders future role . Drew he is going to be chairman and ceo. That said, Brett Saunders is coming in as chief operating officer. I believe allergan will get four seats on the new board as well. Saunders is going to be in a very senior role at pfizer. That is one of the top three positions or so there. This is not mentioned in the release. But if pfizer eventually goes down this road we have been talking about, the other big thing they could do, breaking the company and have, it probably puts Brent Saunders up for a role leaving one of those companies. That will be an interesting space to watch over the next few days and weeks as we understand exactly what happened in these negotiations and exactly what the terms are for saunders, especially when pfizer does a Conference Call with investors a little bit later this morning. Twofer formay be a investment partners. Jason this is wall streets stream. Health care is one of these areas where it gets put together and he gets broken up again and they do it all over again. With the amount of activism that is going on that matt has alluded to, that do that 66 deal, now an ok sized you are talking about 160 billion. You talk about regulatory issues and the way Drug Development goes through, and you figure in, again, the elephant in the room, the cheese, whatever you want to call it. Valeant is in it as an acquirer and an inquiry. Allergan and pfizer shares at this moment are down. One could look at this and say this has obviously been priced in, and especially last week we saw this runoff. We could see some profit taking here. Clearly this is big news. What did you say, the news on the trade . Joan tate and in brussels, thank you as well. Sorry we had to take the news. And why producers are pushing for action. Vonnie welcome back to bloomberg. Walmart is doubling down on cyber monday, planning to offering deals on 2000 items. Manyfour many times as discounts as last year. Cyber monday is the first monday after thanksgiving, and it is a chance for all my retailers to kick off their Holiday Season. Has agreed to buy its german rival for 1. 9 billion, creating the biggest maker of atms and security systems. By one measure, europes economy is the strongest since 2011. An index of services and manufacturing growth has been at the highest level in four years. One point of concern, prices fell for the ninth month this year. Go. Now to global roses in saudi arabia their highest level in a month after the nations oil minister says opec is working with crude producers to stabilize the oil market. Phil, tell us how likely it is courseec will change its so they can get the price up. Hil Shell Production in the u. S. And they higher cost of production has come down, so they think they are on the right track. It is very unlikely they will change anything at the next meeting. David then how are they going to support the price . at the moment opec has not been built for a situation like this. It is mainly funded by the u. S. Shale production, and that is not a temporary thing. Shale is here to stay. For was built initially temporary shops, so if there is a financial crisis or a mideast geopolitical issue, that was opec what opec was originally built for. Is letc can do right now the market do its thing and hope that demand will come up again and the low prices will cut back producers, and that is all they can do right now. Stephanie what has bloomberg got . Right . S all about opec, but really it is all about saudi that matters. Who cares about opec . This is over the last couple of years. You can see the oil price, obviously in 2015 coming down to 40, 45 a barrel. It is also the arabia that caused that. The rest of opec is not nearly as important as saudi arabia alone. The move this morning is correlated to the fact that the saudi government will do whatever it takes, borrowing from the ecb playbook. Opec can say what ever it wants, but at the end of the day, saudi arabia is driving this. Stephanie can you comment on that . Saying that they will do whatever that takes, do they have that kind of credibility . whatever saudi arabia does or doesnt do really drives the market. Compared with the other opec members in terms of their economic wellbeing, they are very welloff. They earned a lot of money with the child with the Higher Oil Prices over the last couple of years. Their Foreign Exchange rate will be down 20 this year. We saw a buildup over the last couple of years. It is really a very good situation. Country andthe paying all the bills is the challenge right now, but they have huge reserves. They do have the reserves to go on like this for at least a year waito, and they will just it out. They expect that the market will balance itself out by itself. Stephanie thank you for giving us the latest. Bloomberg intelligences own phil chladek. When we return, we have got to talk details. We have to talk retail. We will have that next. Stephanie welcome back. You are watching bloomberg. It is the start of a very big shopping week in the u. S. , so were looking at data. Youre welcome, daniel. It is all about big data, so lets get the value out of that data. What are we seeing . We are seeing are most shoppingnd steady companion here is our smart phone. People are making purchases are researching what they are going to buy, and in those micromoments we squeeze it in. We search for the best products, the best price. Half of folks are doing that this year and doing it at all times of the season, not just on black friday. David do you have any way of knowing whether they are buying them on the smart phone or whether they are going around the store, looking them up, and then buying them at the store . Purchases thene season will be on a mobile device, a pretty big increase. 50 of folks plan to have their smart phone in a store and use it before they even get there. About 82 will be in a store and actually use it for a transaction. That is a dramatic increase. Jason how does that change not just the customers expense but the retailers experience . They are removing wifi from their stores. Jason how do you deal with that as a retailer if somebody is around, i am looking at it here . To be competitive. It is great for consumers. They get empowered to have this research right at their fingertips, and to get those best prices. Know what we have at our fingertips . David bloomberg. Bloomberg intelligence shows us that desktop is really shrinking. It is still 84 of all ecommerce sales, but mobile here in yellow, 15 and growing. You can see the difference in the trend. Stephanie the next one falls into my category with, are you kidding me with how much free time people have . Tell me about the on boxing phenomenon. Been 60there have million hours of on boxing videos heard it is people looking at mainly Consumer Electronics products toys, fashion the opportunity to see it before anyone else does. They will take it out, play around with it, show you some features. This is where people are doing research. They see these videos, they go to youtube, they will watch them, and potentially make a dishes to buy to make a decision to buy them after seeing it. Stephanie doesnt it take the romance or the excitement out of retail . Daniel you also have manufacturers getting behind these, almost planting these come on boxing the videos . Exactly. They are average people. They get a hold of these in the developing something and they are developing something. Manufacturers know this is a trend. Stephanie we do not have time for number three. We will make daniel get it to us digitally during the break. Thank you, jason. We are not letting you go anywhere. Up next, argentinas new probusiness president. We will find out how the market feels. David welcome back to bloomberg. We have jason kelly and he is reinforced white tom keene. We have vonnie quinn for the first word. Withe we will begin belgium as they expect a peristyle attack to happen imminently to brussels remains on lockdown as schools and stores are closed. Across belgium are searching for an Islamic State terror cell. Brussels has been on guard since it learned that three of the paris attackers lived in the belgian capital. David cameron wants the u. K. To join the fight against the Islamic State in syria. He met with frances president Francois Hollande in paris today. To allowthe Parliament Britain to join u. S. Airstrikes against the Islamic State. Is absolutely right to take Decisive Action to stop terrorist when they are threatening the lives of innocent citizens. The United Kingdom will do all in our power to support our friend and ally france to defeat this evil death cult. Llande cameron and ho promised to increase counterterrorism. Minister Benjamin Netanyahu says convicted spy Daniel Pollard will make it to israel. Fromy, he was released prison in north 11. He was sentenced to 30 years for spying for the israelis. For now, pollards bart chart leaving the United States. Barred from leaving United States. He can get these stories and more at bloomberg. Com. David your morning mustread will take us to china this morning. Ugly 2 00 p. M. For commodities. We have a little bit of an improvement. Overall, let us go over to mr. Gartman. This paragraph a lot, but he emphasizes going after tom keene and stephanie ruhle. Are not of the mind that believes that china is slimming into a real recession, which is the psychology of the market at the moment and which seems to be the most dominant pieces being promoted by those seemingly most popular in the print, radio, tv, and block media. Stephanie there you go. What is your take on that . Of heartman, im huge fan is one of the rare people that puts his trade recommendations every day in the back of his newsletter, which is very cool. China sureis it is a slowdown from 10 down to 7 and even lower gloom and doom. They are still growing. Double the rate that we are growing out as well. Stephanie im interested in your take on the gartman letter. But im more interested i had a spy on the afternoon site yesterday. I know that tom keene went to the movies to see the big short. Tom it was absolutely fantastic. I was prepared to be disappointed. I saw Michael Lewis last night and i told him that. Its hollywood. They going to ruin it. Heres the worst name drop. I had the privilege of shaking sir Paul Mccartneys hand and we talked about his charity. Of my kids went stellas dad . Its a great movie. You have got to watch it. It is absolutely phenomenal at capturing. I thought of mark pittman, a legendary bloomberg reported. Stephanie you know how i knew tom keene was there . The person sitting behind him in the theater texted me and said, i cannot believe how tall tom keene is. [laughter] tom this goes to mark pittman, a legendary reporter here. Along with Michael Lewis, he said wait a minute. This stuff is wrong. He sued the Federal Reserve. He unlocked a lot of actually what went on during the financial crisis and how the government actually reacted and is truly a hero in terms of unveiling a lot of secrets. Stephanie the streets thought it was wrong, but they do not take advantage of it. Tom some of that tone is amended that is a scene late in the movie where they sneak in the lehman brothers. You know its the movies and it is hollywood. But stephanie, you know this. It is on warmth coffee cups. Everything just stops all the sudden. There is no plan. My highest recognition. How did we get on this . [laughter] stephanie you are giving the morning mustread, but i knew you had a morning mustsee and you are holding back. David i want to go back to that quote. We talked a lot about what the markets think about china. What do the chinese think . That may be the most important thing. Do the people who live in china, the consumers, feel like that . Tom they are so far behind that the desperately want to prosper and take part in their form of capitalism. As mr. Gartman said, of course he exaggerates, beliefs on the 14th through the 21st century, get away from the Mandarin Hotel and hong kong. Get away from the hyatt in shanghai. Get away from the saint regis host cell hotel in beijing. Its a people desperate to get that 3 and 4 growth. David that is from the rural west living like the 14thcentury. Tom i wonder how far the rural west is outside of shanghai. Is it 200 miles . David ive been to very poor agrarian places outside of shanghai. Now we are going to go from china to argentina. Argentina voted for big change yesterday, including voting a centerright leader. He is speaking right now and when his eras life and the news conference. Katya thank you for being here. Argentina has had 12 years under the reign of the cursors. This is a very big change. Asits that big of a change expected and i did not expected to change this to radically. Dramatically. Its very difficult to see this level of change in latin america. The markets are rallying. We will continue to see markets rally. Hopefully, we will actually start to see actual concrete changes. Jason people have been watching brazil. Does this portend changes in the region . Does brazil tack right from where it has been under Dilma Rousseff . Katia the need for change is much greater in argentina than it was under brazil. Brazil may have gotten too far where its too late to change. Tom i asked of this idea that there is a will of the people and they really do not want to do capitalism. . S there a generational change katia what the population sees is that the rest the world has benefited from a commodity boom. Or they may have benefited from it, but they have nothing to show from it at this point. Theres tremendous talent there. They are building out their offices there. They have really educated people there. Those people want to take advantage now other Human Resources and start growing with the rest of emerging markets. It may be a little too late now, but at least the admission is there. Ri says he wants to make a big change, but how much can he do . He does not have the legislature behind it. Katia everyone in argentinas rule of the world. You can have that executive power. That is what Cristina Kirchner did a lot of her changes with. That is true and thats one of the questions that investors have lingering in their minds. The question is can he actually went over some of them . He might be able to move. Stephanie what does the terminal tell us . Matt it shows a possibility of change for certain. If you take a look at the onshore versus the offshore, the graymarket peso versus yellow the official pegged rate, which is nine. The graymarket is more like 15 pesos. The spread down here may be more important. Let me blow that up on my bloomberg. It has gotten bigger and bigger. If you list currency controls, all of this economy just disappears. Stephanie whoa, why . Matt right now, if you want dollars, you have to do a bluechip swap. You have to do, located Financial Engineering because no one will so you dollars for the official rate. Katia it is converging that the black market, which we cannot track on our terminal. That is the street rate of what you would pay for dollars on the street. That rate is now converging with the blackmarket rate that we saw on the street because there is usually going to be an overshoot and evaluation. That is really the rate that investors get their dollars at because they did comic in the transactions. If they think the peso is going to shoot into the evaluation, let me by now on the parallel rate. That is why you see that convergence. You normally would think it would rally. Tom is it going to be like turkey where they have to rate regimes in structures or will it in float like venezuela implode like venezuela . I want to bring up the chart. That barst thing is on the right and that little line. Twocan tell and we are standard deviations out. That is not sustainable. Where that yellow arrow is is not sustainable. How did they fix it . Katia they need to devalue. Its not official, but they have multiple exchange rates. They need to devalue saw everything converges. Where it converges . That is the question. Does it converge at where the black market is . The blackmarket has very little liquidity. Tom are you going to see distributions on monday . Stephanie i want to hit commodities before we go. Ri also promise to lift export tax. There are 18 million of storage crops that farmers are waiting to export. What could that due to the theodities slump are in . Katia the peso was so overvalued so they won to wait until he got more bang for the buck. That should be won the first things that we see because it is very important if they want to see dollars flowing in, which they need very badly. Stephanie thank you so much. Tia and tom keene could be careful on your way out because i do not when you to trip on all those names that you dropped. [laughter] check this out. Celine dion bringing the audience of the american movie tributewards with her to the victims of last weeks terror attacks in paris. Take a listen. Vonnie welcome back to bloomberg. Heres your latest Bloomberg Business flash. Pfizer and allergan have agreed to combine in a contraction that is worth 160 billion. The new company will have its operational headquarters in new york, but will maintain the domicile in ireland, which should see a lower tax boon. There is a deal to buy petco animal supplies. According to people familiar with the matter, the canadian board has agreed to by the pet supply chain for a price of 4. 7 billion. I cut was taken private back in 2006. The fourth and final installment of the hunger games franchise had a disappointing opening weekend. Part two took in the smallest amount of any film the series produced by lions gate. Stephanie we have got to turn to retailers. Retailers are ramping up to the biggest shopping week of the year. But with struggling sales at a big stores like macys and cap, what will win over shoppers this Holiday Season . Based hudson bay ceo joins us now and he oversees trancelike sex this afternoon. You are disappointed, but you have been in the retail game for over 30 years. Talk to us about how important this week is. You have been talking about this retail slump nonstop, especially since earnings are out. Can that change quickly . The first little has not really been blown. We are in the preseason. Thanksgiving is still to come. It is still over a month until christmas. It is way too early to be calling this thing. Having said that, i think theres some misinterpretation of the results that have come out. It is definite that a peril has been slow. It is also definite that it has been the warmest fall on record. Im not one that buys that excuse. Stephanie neither. Jerry not for a longterm performance. But if it snows, no one goes up. If it is hot, you do not buy coats. What he gets cold again, they do. In the shortterm, things like that can effectively in the long, its not a great excuse for not performing. It has clearly affected apparel sales this fall. Code sales were down 30 depending on who you talk to. Stephanie wheres the disconnect . With oil prices down, people said we be rushing to the mall. What is the disconnect . Jerry its not that retail has been that across the board. The happened good stories. Stephanie foot locker. Jerry i look at offprice retailers. Tj maxx and ross good results. This is why we are growing so rapidly and we have added a new concept at laurel taylor. Discount stores did pretty well. Target reported pretty decent numbers. Walmart was better than expected. The home stores did well. I do not want to put too much weight on the weather hypothesis, but when it is one, you can do home things. There has been a lot of spending other on restaurants and things like that. Its not that the consumers arent there. When we get to thanksgiving and monday,iday and cyber all the saturdays in december and supersensitive, the consumers are going to shop. Stephanie those are the sales that consumers are addicted to. What you are saying is that sales and off price Discount Stores. If this is great, why are people going to go to the original . Jerry i look at it more as a prospecting tool. When you look at these concepts fifth, their pitch to a younger audience and people who may not feel as comfortable walking into a saks fifth avenue. They can go to the stores and get comfortable and get a credit card and get associated with the brand and the loyalty program. We will see them migrate over to the full line. We see that constantly. I believe that expands the brand. Here we had danced ebert daniel stever in here and he was talking about people using mobile devices to shop. How can use that to predict the actual behavior you havent in stores . Jerry we love it. We recorded a 30 increase in our digital stores. That was faster than amazon. The difference between the brickandmortar guys being obsolete that is nonsense. Jason you launch target. Com. What is the secret . Jerry the internet is a transformational tool for retailing. It does not replace everything else. The coronation of the internet and brickandmortar is by far the strongest offering that you can have your when you do the research and talk to them, they do not think internet versus stored. They think brand. They think of the brand of the item they are buying. They want to do business with you however she chooses. Very often that means looking at online first. And then you go to the store to buy. You want that Immediate Gratification of going to the store and getting it right away. David with reduction in the price of oil, ive seen estimates as much as a 100 billion tax cut. You say that retail is doing pretty well. Why is it not doing spectacular . Where is that money going . Our people saving it or spending at some place else . We wait untilt christmas before we decide its not going to come . Ive been in retail and long time and christmas always comes. Sometimes its later. Every time it was a little bit. Feed off thanks giving and then they go to Christmas Shopping mode. Its on a friday instead of a thursday. T retailer for a lot of day for a lot of retailers is a 5 jump in sales. David are you looking for a really Big Christmas . Jerry that remains to be seen what exactly will happen. Thirdquarter numbers at macys and nordstrom or whatever you know when the Third Quarter starts . In august. That is in the numbers that we just saw. Stephanie i was back to school shopping. What does the terminal tell us . Matt i had to go to hudsons bay in toronto to buy my blanket. A lot of people are buying them online at a discount. As a result, Department Stores are falling. Not all the brands that jerry overseas, but this is sales over the last 15 years normalized. In orange, Department Stores. In white, the Discount Stores. I question is why would Department Stores be emulating Discount Store strategy . All of them are just coming down over the last 15 years as far sales are concerned. Jerry im not sure what is in those numbers entirely because the Internet Sales of Department Stores and Internet Sales of Discount Stores have an burgeoning. For most of the stores that i have seen and ive worked for for the last 15 years, this has been true. What you see is a transfer for the internet and away from bricks and mortar, but within the same brand. They have been growing faster on the internet with 10 or 20 every quarter of the stores are hanging flat. The total can still grow in a healthy fashion. Stephanie how do you manage your best brands from becoming a competition . When you see stores like nike town or kate stayed doing so well and opening up their own retail experiences, how do you keep that business at your store . Jerry it is good for us because it builds the brand even greater. Nike is a phenomenal brand and it will sell no matter what. They keep growing faster than you could ever come everyone. In other cases, we have our own brands. One of the big focus is in retailing this days is their own label. We are very heavily focused on that. You mentioned are hudson bay point blankets. We are a Global Department store company. We on the largest Department Store in canada. We on the largest Department Store in germany. We have the ability to develop our own products. 20 of our products sold in germany are our own label. Stephanie that was part of the 3 billion deal. Jerry 3 billion euros. Its about a third of our company. Scoop give us the inside on what you are doing from a macro corporate level more acquisitions . Other prizes to be taken there as you expand . First and foremost, we run great retail banners like sex fifth avenue, but beyond that, we have to be very active in m a. We define that as part of our strategy. I promise that we are not done. Thirdly, we are leaders. Stephanie hold on. Is there a specific vertical that you find most interesting . Jerry Department Stores and offers. You always stay true to who you are and to your court. Upone it on top type could be in acquisition project . Jerry we are primarily in the luxury Department Stores. Stephanie like neiman marcus. Jerry there lots of opportunities. All my private equity friends called up and said how did you find that . We are very active in that space. The other area which is the third leg of our business is that we are premier in the real estate area. The founder of our Company Comes from a real state back on. He is a genius in real estate. What we have done with real ourte and setting up ar joint ventures has enabled us to really make transparent rvalue in real estate in a way that no retail as done and its a model that a lot of people are focused on as it looked at how you captured the real state. Jason this goes back to what stephanie was talking about in terms of the whole experience that people are increasingly looking for. Lululemon launched last week element. Big experiment is that what you want to feel . Jerry one of the reasons that we are driven to consolidate is that scale is vital. Scale is vital because we must continue to invest in our ability. We are going to spend over 250 million on the saks fifth Avenue Flagship store not too far from where we sit today to not going makes her thats most valuable piece of real estate world, but the best retail operator on the planet. Stephanie just down the street, one thing you did there before you are ceo, it was the one Department Store that started to keep on trying. Was that a mistake . Jerry i dont think so. The customer wants value and you can give it in multiple ways. You can have the value at saks off fifth. We do that through offprice. Overnight delay for the customer at that level requires coupons and discounts. We are more than happy to do that. Stephanie jerry storch from hudson bay and jason kelly. Thank you for spending the hour with us. We will be back with more bloomberg. David big pharmas big deal. Pfizer and allergan will merge in a record transaction that will reset the drug industry. Making band safer. Is the Federal Reserve doing the job . We will talk with dan tarullo. Step aside, france. The u. S. Is now be worlds consumer of wine. Well talk with one of the bestknown names in the business and that is michael mondavi. David welcome to the second hour of bloomberg. Im david westin. Stephanie im stephanie ruhle. We covered a lot in the last hour. In the next 30 minutes, we have a very special guest. David that is dan tarullo, governor of the fed. We will start with vonnie quinn. Vonnie in belgium, police have arrested five more terror across the rates country. Within 20 suspects are being helped in the belgian government has one that in Islamic State terror cell is plenty at hairstyle attack in brussels. The belgian capital is under the third day of a lockout. Schools, stores, and the subway close today. Mr. David cameron has promised to help france in the battle against the islamic sacred cameron met in paris today with Francois Hollande. Cameron says he asked farmland to allow britain to join u. S. Led airstrikes against the Islamic State in syria. A long meeting president obama and washington and Angela Merkel on thursday. Argentina has voted to end 12 years of leftist populism. Macri has been elected president. That sets the stage for economic liberalization and improved relations with the United States. He has promised to lift argentinas currency controls and attract international investors. You can get more these another breaking stories 24 hours a day at the new bloomberg. Com. Heres matt miller on the markets. Matt take a look at futures. We are down across the board. We have come back substantially from where we were one hour ago. S p futures now down less than one point. Dow jones mini contracts unchanged. Take a look at w. A. R. P. This is a screen on the bloomberg that shows you the futures market betting on the probability of a fed rate hike in december to right now, were looking at a 72 chance as opposed to a 66 chance we saw on thursday or friday. You can see here how the chances have increased. A continued to climb higher and higher, especially as the effects on the market are pronounced as mario draghi is expected even more now to expand his qe program. Take a look at the two year yield right now. We have seen a lot of movement here. You can see 0. 93 . People are selling bonds right now. That is pushing the yield up. Some of that money may be going into futures and stocks. We may indeed have a positive open today. Seven of the last weeks have been positive by the way for the s p. Oil has really been the story of the morning. We were down almost 4 at one point because venezuela was saying that we could see oil going down to 20 a barrel. The saudis came out and said no jose, probably literally. Oil is up to 40 a barrel. The saudis have jumped it up all the way back from a 4 drop. David we want to turn now to our special guest for the half hour, daniel tarullo. He has been on the fed now since 2009. Stephanie an easy time. David yes and on the faculty of harvard and georgetown. He was senior economic adviser in the clinton administration, including assistant to the president for international economics. Welcome once again to bloomberg. As stephanie just that, a lot in happened, an particular in terms of banking regulation, and your tenure. Where are we in that process and where do we have to go . Dan you have to distinguish from regulation for the largest institutions and regulation for the regional banks and certainly the community banks. With respect to the latter, there is the regional and community banks. I think we have done everything that we probably should do. We probably need to take a look to see if theres some way to simple but some of the regulation that is in place. Simple five regulation that is in place. While we want to keep track of common exposures to things like subprime mortgages, we certainly do not need to have the level and intensity of regulation that we do for the largest institutions. Stephanie is that in response to those community and regional banks simply saying that we are getting strangled with these regulatory costs . Were going to get a price that market. Only jpmorgan can afford these. Daniel certainly we have listened to them. Ive always been an advocate of what i called the kids approach to regulation. I never quite understood, even when i was teaching banking, why it was that we have the same regulations applying to halfbillion dollar bank in the midwest as applied to jpmorgan. Stephanie jpmorgan has better lobbyists. Daniel in those days, i think it is actually just the language that people thought about banking precrisis. With respect to those largest institutions though, i think we now see, and the banks can see, the outlines of the framework that will be in place. That framework is not fully implement it. We still have to do the resolution planning process, making sure the banks can be resolvable. We still have some liquidity regulations in the form of an unstable funding ratio to get out. Implemente going to the higher capital charges that are applicable to those largest banks. Although it is not all yet implemented, i think we can see the outlines of the framework. That now is just a matter of getting them in place and making those banks safer and center. David is there a danger or do you consider a possible danger of overregulation or overshooting the mark . What would be the downside of that . Daniel certainly with respect to the banks that i was mentioning a moment ago that provide credit to american households and businesses, the committee banks, the regionals, i think there is such a danger. That is why we have been mindful of it. The course of the next couple of years that we will be able to further simplify some of the already applicable regulation. I think with respect to the largest banks, we do have the theful of the fact that financial crisis and the Great Recession cost this country trillions and trillions of dollars. The estimates vary, but they go up to essentially an entire years gdp of the country. Incumbent on us to make sure the vulnerability that could lead to widespread financial distress are addressed. Those vulnerabilities rest into principal places. One the very largest institutions, who stressed or failure could bring down the entire Financial System. And two, modes of operating within the Financial System such as the widespread use of shortterm wholesale financing, which can lead to a domino effect themselves. I think there is where we want to concentrate our efforts. Stephanie risktaking isnt leaving the system. It is been transferred. We have seen shadow banking grow exponentially larger in the last five years. At the end of the day, when the market crash, somebody is left holding the bag. Even if it is not the hands of jpmorgan, let us say it is in blackstone or kkr, the investors of those kinds of firms are big Pension Funds and teacher retirement funds. To be the oneng getting the short end of the stick. Daniel it is true that in some parts of the world of the shadow Banking System has been growing exponentially since the crisis, but not in the United States. The increase here has actually been pretty modest. Iod ofas after a per declined. I certainly agree with you that we need to keep our eye on forms of intermediation outside of the system that have a lot of leverage or a lot of funding hole or abilities. I do not think we want to regulate just because there are people outside the regulated system. , risksare indicating should be taken. People shout the opportunity to gain or lose based on the assessment of risks. It is where the vulnerabilities exist in the system that we need to step in. Stephanie do you think there is more regulation on the horizon for pe firms and hedge funds . Funds for private equity and hedge funds, i think right and focus, at least we in the fed do not have any authority to regulate key funds or hedge funds as such. With respect to those institutions, i think we are more at transactions and systems , for example, security transactions are taking place. I think that is an argument for applying regulation to everyone matter who they are to get that funding stable. Talk aboutus specific regulations on the horizon required by doddfrank. There is a new regulation for tailing loans to individual and institutions as opposed to it broad based on. Daniel counterparty credit . David some people refer to it as aig. There is a new regulation coming out of that. Daniel it might be more efficient if we took down a few of them where they will be coming up. Counterparty credit limit and incentive compensation are two areas in which doddfrank calls for regulation. We have had proposals and ideas out there that regulations are not yet final. I will say though that a lot of work has already been done to the supervisory process. The incentive compensation systems at our large institutions are like night and day compared to what they were precrisis. So to through the stress test havether mechanisms we been paying attention to counterparty exposure. I think that when those regulations become final that they are not going to require dramatic shifts and what banks are doing. The banks have already adjusted. David do you have a time horizon roughly . Daniel both of those are in the early part makes you. David what about physical commodities . Commodities are not required by doddfrank as such. And what has been accomplished just by talking about regulation. The banks have pulled back or dispose some of their commodities operations. We want to be partly careful with commodities because a lot of the nonfinancial users of put commodity business comments in and said, make sure you do not stop them from doing things that are helpful to us. Stephanie since regulation is night and day from precrisis to today, there are Many Organizations that really do not want to become categorized. It that metlife is considered a systematically Important Financial Institution and Berkshire Hathaway is not . Daniel i do not want to get into specifics, although i will a metlife because of stock has made a decision and it is on the public record. There i think the emphasis as always is on the characteristics when itirm, which could is in distressed mean problems for the entire Financial System. Been, the emphasis has with respect to metlife and credential and aig the extent of their business, whether derivatives or some of their products, which create funding risk runs, that the fstop placed them in that a system. , although adgment very well documented judgment, about the participation of these rms in activities that are not traditional insurance activities but activities that connect them with the rest of the system. Everyone watching rooms of what happened with aig in 2007 and 2008. David talk to us about the stress test. Daniel i think the stress test has been the most important and limitation to come out of the crisis in several decades. We started our stress test the mineral of the crisis on the run in 2009. Now other Central Banks around the world are conducting rigorous stress test. The European Central bank and the bank of england are prominent among them. After five years, we thought it was a Good Opportunity to step ay where can we further improve the stress test . Where can we make it easier for both the supervisors and the banks who have to go through it every year . But also, david, importantly, how do we make sure were not missing something in the stress test . The best and most rigorous scenarios can only capture so much. I think one thing that we heard rather widespread consultations from academics and analyst and people from other governments and our own government was that we need to think further of enhancing the macro credential element of the stress test, not just impact of the bank on a particular loss but of the Financial System. Although we have not decided exactly how to do that, i think theres a pretty good chance and fact, i think its more than a good chance that at the end of the day that whether through the incorporation of some or all of the capital surcharge as opposed to the minimum or through other mechanisms such as the one that you were alluding to earlier of your emphasis on shared counterparties that there will be some net increase in the post stress minimum capital requirements. Stephanie how embedded in the Financial System is doddfrank at this point . We have seen presence of candidates like Hillary Clinton calling for doubling down on doddfrank and others like trump saying he would repeal it if you were president. Daniel doddfrank has become a bit of a symbol for regulation more generally. David was asking a moment ago about commodities, which im not really mentioned it doddfrank. 2010we did on capital in was not exquisitely called for by doddfrank. Specifywe all have to where the regulation we think needs some ways to go and where perhaps we would like to modify it and oftentimes that is within the province of the banking regulators. And where people think it is just about right. David thanks very much. Youre going to stay with us im happy to say. When we come back come we will talk about the future of financial regulations and what we will be facing next. We will be asking daniel tarullo. Stay here on bloomberg. Matt time now for futures and focus. Oil prices moving all over the place this morning. They are paring losses of more than 3 after saudi arabia said a prepared to work with opec and other producers to stabilize global oil markets. Joining me now to discuss were is headed next is talk todd coleman. We came back shortly into positive territory. It is amazing what three words can do to the oil market and that is we will cooperate. Those looking for some 30 oil have been anticipating that the saudis will not be participating in any sort of production pullback. It looks not that they will. Oil should stabilize. Spike in that came off of those expecting oil prices to below 30. You are starting to see the short stick out. You will see us try to reach back to that 40 six dollars level, which is kind of a midpoint of the october high through fridays low. That will stabilize oil going into your end. Beyond that, it will all depend on what happens at this meeting next week and how iran comes back on the table and perhaps, perhaps if off ability comes back to the fracking side of oilproducing. Matt until now, it looks like the richest of oilproducing nations saudi arabia has a most 4 billion in reserves was at the odds of the poorest oilproducing nations. Venezuela said they could see oil at 20 a barrel and have been calling for cuts. Why did the poor nations want to cut production while the rich nations continue to produce . D the rich nations have and try to squeeze out the competitors. They can withstand Lower Oil Prices for a longer time. When you look at the percentage they cannot withstand this type of mood. They want high prices to get back online. The saudis want Higher Oil Prices dont get me wrong. They want to make sure that the u. S. Trucking industry does not pick up steam. You want to make sure that alternative energy does not pick up steam and they want to stay king of the energy sector. Matt thanks very much. Bloomberg coming up right now. Stephanie welcome back. Youre watching bloomberg. Markets reacted strongly last week and some might say they went berserk when minutes of the latest set meeting seemed to reveal enough confidence in the u. S. Economy for a december rate hike. It is a very small one. Let us get back to our very special guest for the half hour, Federal Reserve or governor daniel tarullo. It seems like were going to get this rate hike in december. Where has it been . We have gotten so much positive data for such a long time. Doesnt it seem at this point like let us get this over with already . We are getting more and more information and conflicting news from different members of the fed. Enough already. By saying, me begin as you said and sort of embodied, there has been an awful lot of talk about specific months over the last year. I think probably a little too inh talk to the as useful conveying the views of the fed to markets. Having said that, i think i can say a few things about how iss overhanges in the outlook the course of the last couple months. When we came out of the september meeting, as you will of course recall, there was an enormous amount of uncertainty in the global economy. Charting ane market artist, it was unclear, i think, to everybody whether that was a more or less transitory event or re were one more to shoes or to shoes remaining to drop. There is a question on the u. S. Economy and on her own inflationary environment. In the intervening months, things have obviously not devolved in the way that some might have feared at the time. Has shown,. Economy by the latest jobs report, to still be chugging along with modestly above trend growth. Some of the fears that many people held in the august and iod have notber per been realized. Having said that, i think it is a mixed picture. We have seen continued improvement in the labor market, but the environment for inflation is still one where there is a lot of uncertainty. Notously, we are still meeting the inflation target. We are not meeting the feds own stated invasion target. That is a school thinking inflation on the dollar and from oil prices is more or less transitory. Dissipate, there will be a push up in inflation as the output gap narrows. There will be a push up in inflation. Others, myself included, have be betterat it might to wait for some more tangible evidence that we are going in that direction. Stephanie what about the fears around unintended consequences of rates being so low for so long . Daniel you want to watch to see whether some of those unintended consequences are being realized , there can be unintended consequences if you have failure to take policy action. The analysis that we and the fed collectively and individually have been doing for the last several years are whether the risks to financials ability Financial Stability and growth are roughly much. Balance. , want to get back and say that as i noted at the outset, there is probably too much attention being paid to particular months and meetings and not enough attention paid to what is going to be the trajectory of rates only did begin to raise rates. I would say with respect to inflation in particular, when we do raise rates, i think it will important tor watch for the effect on the inflation. Weather expectations on inflation rising back to 2 are being met were not being met. David talk about that pathway be on whatever happens in december. If you are to look out i understand this is asking a lot where would you expect rates to be an inflation to the . Be . Daniel im not going to give a personal prediction because i do not have to until the december sep. To point you to the September Sep from all the members of the fomc. When you look there, you will see that norm was for three or four incremental hikes over the course of the year. For inflation, it is still not back to 2 by the end of 2016, in fact not close to 2 . David you have not seen anything in the data from september until now that would change that sort of the . View . Daniel in september, there was some sense that all that could be slow down even further. , as we have seen since then i noted, is not the realization is some of the fears that exist in september. I still think there is a fair amount of balance and the data goes both ways. It is hard to overlook the fact that both marketbased measures of inflation compensation and survey ace measures of Inflation Expectations are sort of near historic lows. I think as you look at that trajectory, it will be important for us to keep our i am both of those countermeasures. David i want to ask a question stephanie and i have talked with various people. It seems like various members of the fed have given it a lot of speeches going in various directions. We wonder whether that is very helpful to the marketplace. Is it getting more clarity . Is more information making us more informed . Daniel is important for the fed to share their economic outlooks so that Market Participants cant can assess the outlooks against their own outlooks. Heres the look of the economy and the circumstances with which we expect to provide less or more accommodation. Markets can say, we think those guys are wrong and we are wrong and were going to grow faster a less faster as i said earlier, i think where we probably all the profit would be a little less focused on moves in particular months as opposed to outlooks introducto and trajectories. Stephanie some people could make the argument that since the fed has held the rates so low for so long that as long as the fed is doing whatever it takes, there is a safety net around us. You can keep going long the market. Isnt that a very big risk . Daniel certainly one of the things that we have been monitoring very carefully for time some time now is what is happening with assets and leverages of assets. Over the last several years, you have seen some surges in assets, sometimes with more or less leverage. That has calm down a little bit because of supervisory guidance and sometimes not. Obviously that is the risk associated with low for long. I think there has been a lot of attention paid to Financial Stability considerations, which themselves have a big potential effect on employment inflation. David you have been there for six years now. You are a scholar. Yet studied this issue before. From what you have learned, are the things that we should think about what the very structure of the fed . Daniel i think the fed like Central Banks around the world is an artifact of our political system and our political history. I think right now what we all want to do is the job that congress has given us and to do that as wellesley campus as wellesle as we can. Stephanie that is daniel tarullo. We will be back with more bloomberg. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Stephanie welcome back. Youre watching bloomberg. We just had a conversation about that policy with governor dan trueblue. Ery interesting now we need to take you overseas to brussels where the city is still on lockdown. Five more terror suspects were arrested this morning. Our own bureau chief joins us now. What is the latest . In the last couple of hours we have had the announcement of these five new suspects who were detained in this this morning and brings to 21 the number of suspects who have been brought into custody as a result of the sweep of the Belgian Police and military are doing to try to implicated inct the paris bombings who then fled to belgian, it is assumed. He is still at large. They are still looking for him. . I heard that nato has shut down apart from essential personnel. Will this came into tomorrow if they have not found the suspect . The National Security to bel is supposed meeting a volatile. After 5 00 we are supposed to get a readout on what the reassessment of the threat as of today is. That true that natos nonessential personnel should work from home. The European Commission also said the same thing. And lots of openings have done the same. They have let the people work from home. It is a pain trying to get into the center of brussels when the subway is not running. You can see from a Business Interview that is the thing to do. Stephanie could there be real Economic Impact . That is one of the things that we are trying to ss. Obviously the businesses, there are not as many people around. This is even more dramatic over the weekend usually downtown brussels is teeming with people. Eveningurday and sunday there were two people in the restaurant. There were very few people in the downtown area because of the terror threat, because of the alerts. People choose to stay home previous some of the restaurants closed because of the threat, others decided to stay open. But their business was not so good. Handlejoined to get a on the Economic Impact as we go forward. Very much. U lets go to vonnie quinn for the first word. Thank you. The random waves of violence will be the secretary of states top priority when he lands tomorrow. He is now in his second month. An israeli woman and three palestinians were killed yesterday. In new orleans last night gunfire erupted at a playground where a music video was being filmed. The shooting was gain related gangrelated with according to the latest bloomberg polls, they are as excited about the caucuses as they are about the star wars movie. You can get more on these stories 24 hours a day at the new bloomberg. Com. Lets go now to the morning meeting where we hear what he banks are looking at this morning. A transport analyst at bank of America Merrill lynch joins us as we get ready for black friday. The most important shopping season of the entire year. You notice that a lot of key data points have been week. Rail shipments have been very weak. Deliveries have been week. What does this tell you about black friday . That we will not have the inventory that we should . All season long you have seen a buildup of inventory. Black friday is something we look forward to because this turned away from the data and now everything is focused on ups and fedex as we move into big season. But youre right, the data has been week in railcar loading down 5 . Port volume down 3 . Have usth, it does not bush is a start for the Holiday Season. But with ecommerce buying patterns you will see more compression thing. That will be a positive signal. Tracking data down, port stated down. I want to follow the money. I look at investors over the last three months that have gotten shares of ups and fedex in the area of 10 . Investors positive on these stocks with the data looks so dismal . When you think about what is driving railcar data, it tends to be industrial freight and when you think about what is going to drive the Holiday Season, more retail oriented and presumably with the prices down, they have more pages fan. The anticipation and the stocks are up because the consumer has more money to spend and you will see a more compressed peak season. We could breast season fedex and ups have to be the ones to deliver it. There is hope that is where you will see the consumer driving those sales as we move into this season starting this weekend moving through middecember. Matt we were talking earlier about by the rumors so news. Is all the growth were going to black friday, Small Business saturday, cyber monday elton built in . Serviceas had some issues. Two years ago they were overwhelmed by the amount of freight. His went from 135 of noble ily volumes to 175 . They could not handle that huge spike in volume. Last year they overspent by 200 Million Dollars to prepare. And they were definitely prepared but they spend a lot of money. So the economics did not work out for them. The hope is as we move to the season that they are prepared on the cost side, they get the volumes they are preparing for, and that they are to control that to the control tower. They have focused on causing cutting cost down. They hope to get the volumes through ecommerce. In thet will probably be mid teens to upper teens in terms of growth while gnp is still in the low single digits. Matt thank you. Have a great morning. Talking about the transports. Back to you. Thehanie in todays whats big deal, we have to be looking at pfizer and allergan. 160 billion merger. Tax deal inbiggest history. Joining us to break it down is our panel. This is what i love about this deal, we have spent so much time in the last year complaining, aftering, going back conversion, and now the biggest deal. Ive zero faith that politicians and d. C. Are going to do anything. Nothing is going to happen between now and 2016, and nothing will happen after 2060 it does not matter who wins. If the democrats were to win the house, the senate, and the presidency, ticket perhaps do something but that is not going to happen. Pfizer was always determined. They were public about the fact they wanted to do it. They try to astrazeneca convey trident with clerks go, and now they have the deal they wanted for a couple of years. What are they going to do about it . Htephanie they are doing w shareholders want them to do. At exactly. Hey are doing things that are operationally logistic and we knew couldnt go from lowering a tax rate from 25 down to the 8 , that goes to the bottom line. It makes it a very attractive deal. Arehis reason i feel you right is as i understand that you cannot have a simple fix for this. You would have to restructure Corporate Taxation in the way we tracks corporations in this country. The u. S. Treasury came out with some minor tweaks, but it is not going to impact this deal. The treasury has been very clear they cannot do anything without actual legislation coming from the house and the senate. Stephanie it is not even in jack lews jurisdiction. Even though they make a big deal of it, it is uneven there top five parody. Elseuestion is will anyone chase or do what pfizer is doing now . Johnson johnson, amgen, there are a lot of people in the Health Care Space who will want to lower the tax rates. What does the word have to contribute . Matt theres a great function on the terminal. Pendingsearch through legislation. Here is where we have House Resolution for 15. The industry is impacted. Metal medical devices and farmer are impacted. The likelihood of passage is extremely low. You can see a lot about legislation coming in and of congress on bloomberg. Interesting that they will try to discourage tax inversions by outlawing them, or regulating existence. Rather than just lowering the Corporate Tax rate to be competitive of the countries in the below. Stephanie pfizer has come out and saying they will make a decision on the split by the end of 2018. Does that come as a surprise . They have always said they want to look at splitting this company. Can they get the right kind of type ofo get to these Siamese Twins it will get into viable and sustaining units . You see other spinoffs like this that have amazing value created in theasparagus has been cards for a well. With this deal coming through you can see this happening but you need to digest it first rays of the companies are saying they will wait a little while to do this. Although valuable, it is not valuable enough and self to justify the price of this deal. They have to do something else. Whether it is splitting up the company or fighting operational efficiencies or something else. There will be a lot of people who world unfortunately leave their jobs. The will probably sell generic business. Into years when theyre looking to get one of you will have a mylan or someone be around looking to the out of pfizer. It is not as exciting. But they generate the cash. Very steady, they do not go away. It is a very regular and consistent business. Stephanie what does it mean for the current Ugly Duckling of valium . [laughter] it is going to be in hot water. It, they areok at the Companies Making the headlines. Now they have to take it back seat because who is going to fund that company . The next stage of m a that the Company Needs to do . They need to take a step back and reevaluate how to do business. Stephanie the deal with microsoft meaning as ceo . Mike pearson remaining as ceo . They would like to be doing m a and cannot because they are frozen. So we will see. Thank you for being with us. Phanie both david and i [indiscernible] we talk we week about the business of wine. Stephanie welcome back to bloomberg. After saudi arabia repeated it is prepared to work with opec and other Oil Producers to stabilize global markets. Earlier the day oil was down almost 4 . Up for cybermping monday. They plan to offer deals on more than 2000 items. Four times as many discounts as it had last year. They will begin Cyber Monday Deals the day before. They are the first monday after thanksgiving editors time to cook off the Holiday Season thanksgiving, and it is time to kick off the Holiday Season. A chinese billionaire just spent 170 million on this painting. He will be putting it on his amex. He is the invitation only black card. Stephanie that is amazing. What does he get for that, and now. You go. Stephanie im going to guess that he does not fly commercial. Turning from American Express to the United States and its wine consumption, im now told we are drinking more wine than anyone else in the world, and the popular domestic wind is at an alltime high. Many of you are likely to be buying a bottle of wine during the holidays is an you want to take a look at the business of wine and we are looking at the founder of wine and part of importer. Thank you for joining us. Good morning. Wine is not just for breakfast anymore. [laughter] is it because we are drinking more order World History class . A combination. We have been growing wine for decades and now continue over 314 million cases of wine a year. Just the last two years we have suppressed france and italy in that consumption. Their consumption is dropping a bit. Adult at 3. 14 gallons per per person. But in france and italy they are around 10 or 11 gallons per person. They are coming down, we are going out. We are very optimistic about the american fine wine market. Stephanie who specifically is drinking the fine wine market . It was the demographic about because over the last few years we see luxury getting more expensive and midtier getting less expensive. The people drinking today, 93 million americans are drinking from imports and domestic. 75 of the wind that they drink is domestic wind. 25 import. Themillennials are 41 of consumption. I am sorry, the millennials are 29 , the baby boomers or 41 . It is split evenly between men and women, which is a very strong thing of the wine market. At beer or spirits, they are skewed very male oriented. We think it is a very healthy position to have equal consumption of men and women. Stephanie what is your most marketable price point . Andmost is stalled sold between six and nine dollars a bottle. At is only growing at 11 is growing at 17 until you get to 20. And 20 is growing at about 6 anally because it is restrict it by supply. There is more demand than supply about 20 a bottle. 7525 oneou look at the between domestic and imported to it, just imported tend to be more expensive . Not necessarily. In the last seven or eight years wines from australia, argentina, and others have been relatively inexpensive. It is pretty wellbalanced now between california wines in the imported wines as far as price categories. Stephanie take it to us from the terminal. At the fineooking wine index. It is interesting to see that it has not really taken off. The fine line indexes and white. It comes down here to the s p in yellow. 100 most soft after winds sought after wine. To see what look like, the chinese gdp picture, because i hear a lot that asian buyers about wealthy asian buyers have been a huge part of wine price movement. I wonder if the reason that the live fine wine index has not come up with the us and he here in the u. S. Is the chinese gdp has been bumping down lower at lower in the last few years. That is true, but the problem of the veryupply expensive california wines, the , havehold in china nothing to do with the statistics of American Wine sales. Or foury did three years ago before the Anticorruption Campaign in china, they were literally sucking up all of the very expensive burgundies and indeaux wine produced france. With the Anticorruption Campaign that light switch turned off. Now more of those fine french wines are coming to the u. S. Market. Stephanie what does the u. S. Economy look like from your perspective as you plan for 2016 . We have to plan for about five years out, because of the crops of the aging. We are very optimistic on the particular millennials and baby boomers. There are discovering wines. They like flavor. Theyre willing to spend dollars toom nine 20 on a regular basis on a bottle of wine. Mixed,t that we are about half of the consumers are women at half of the consumers are men puts us in a very strong position as a beverage industry. Stephanie what about the impact of the California Drought . It has been more of a cost impact than a supply impact. Impact due to additional cost for irrigation. Whether it is buying the water, or the electricity, or the energy needed to move the water to the field. What are the Fastest Growing areas in the country . Is growing fastest, california, new york, michigan . Michigan is a little slower, unfortunately. But the coast, really. California, new york, new jersey florida, that area is growing dramatically. The middle part of the countrys growing but at a much more moderate rates. One of the Fastest Growing times . Particularly in the last four years for a sack has been growing dramatically. Mid20 rate. What it has done is it has created a new interest for all wine whether it be great champagnes from france, domesticr it be california champagnes. Percent ago has open peoples eyes that sparkling wine is not just for a celebration. He could enjoy it with food as well. Stephanie thanksgiving ais here. What do we need to buy . I like to start with a beautiful french champagne like charles hides a good or a domestic california champagne. For the turkey, i like a lighter on zone like a no caps on reserve. It is beautiful wine made from sanjiv az greg. It is a more delicate great. , whereove the day after you have the turkey sandwiches, a nice crisp glass of chardonnay. It is wonderful with a turkey sandwich. Stephanie i love all of the obeabove. I am ready. Thank you for being with us. Wine is not just for breakfast anymore. [laughter] how about a little bit of news for you. We talked about this on friday. Adele released her new album 25 on friday. In its first day, itunes sold more than 900,000 copies. Music does not sell anymore, are wrong. It is on track to sell 2. 5 million copies which would set a record. Video, sheral showed up in full disguise as an adult impersonator with nose and chin prosthetics to compete against other fans. No one had any idea it was her until she began singing. That is incredible. But some of these little saturday night live. Is a great marketer. Stephanie and he just need to have great music. Only ahead, the one, the chief Market Strategist at jefferies joins us from our just for the hour. And 23e now 30 minutes seconds from the opening bell. Welcome to bloomberg. Stephanie aaron joined not by his king of candidate, but our own correspondent back from france. Welcome home. Is amazing, i think they are still in shock. Stephanie we are to have you home. That our chiefd Market Strategist is in the house. We have a lot to cover. 21 more impressed with connection arrested with connection to the error syntax. The terrorists attacks. The two gunmen carried out attack last friday on a hotel in mali. Statement identified the gunmen were killed in the scene. Somewhat misses and officials said they were up to 10 gunmen. Drivers have something to be thankful for. The price of gas is . 70 lower than it was a year ago. The average is down . 11 in the last two weeks at 2. 14 a gallon. You can get more on these and other store of stories on bloomberg. Com. Now to futures with matt. Matt you are back down to where we started at the beginning of go at 7 00 a. M. S p futures down, dow futures down. Take a look in my terminal. You can see on bloomberg, this picture of the s p many contracts. We put down when it started the show. Give back up because of saudi arabia. Whatever it takes to bring up oil and s p futures as well. We are slipping back down right now. Lco, a globalt g commodity stream. Energyivided into sectors, which has turned early to green. Oil came up to positive territory. 40l not down before the level we saw last week. And finally, the other metals, gold down, copper down, a sixyear low, you cannot get much lower than 2009. Futures, one of its main uses industrially is in solar you seeo be problems with solar city because they do not have as much protection as they previously had, you will see only one day in the month of november when the price of silver rose. Not good if you are long on silver. I am long on gold. Im invested in no commodities. Stephanie carl icahn is at it again. Remember a statement, october 2018 came out aggressively after aig. Peter Kevin Harvick on october call for cost cutting potentially separating company. He was saying he was not doing enough. Carl icahn is back again, simply saying that the cto is not doing seem tobut not want to be playing ball. And karl does not like it. He wants to take it to the shareholders. He is chair ramping it up. Need toe he says they accelerate costcutting and separated into three separate companies. He could be looking for board of days just a couple after he came over that letter on the 20th 20 was a restructuring of the company there is no way a company of that size would ever restructure it just a few days after carl icahn. The works. Have been it may have been accelerated because of the letter. But it is just not enough according to his letter. It will continue to follow this and see how the stock reacts. Of course were still about 20 minutes flat. We know that the market is still absorbing and we have the ability to move markets. Want to someday be so importantt i can release a statement on the markets move. [laughter] my statement right now it is time for the stories that matter. Pfizer and allergan have agreed a merger. 160 billion, the largest m a deal of her in the pharmaceutical move it dismissed. They will have their operational headquarters in new york, but will maintain a domicile in ireland which will lead to a lower tax share. Was not nearly as high as was anticipated on friday. Nowets headed to 380, it is 363. You have to treat it that not investing, but to trading. If you are long on investors, i know you are going to dig into this more in the hour, but let me get you to number two. A deepening slump in commodities has put an end to a fiveday rally of Global Stock Markets and drives down currencies of raw material producing nations and they are at the cheapest price since 2009. Soybeans lose to a secure loan. Crude oil is down below 42 a barrel leaving the Commodity Index at the lowest level since 1999. We have to talk about this. Just last week we sat down with dickens. He says it will be there in june. It is very hard to see a ammodity price rally in dollar bullish scenario. The fed is about to raise rates, ecb is about to cut rates, most of the rest of the world is theggling to we are leading way out of this recession. The dollar is going to lead the other conservancies currencies. That is not a great time for. Ommodities an if they are moving separately, you have supplied dynamics, but if they are moving together they key thing is dollar weakening. I think people focus too much on supply. We talk too much on this on the show in the last three years. The dollar, the euro, the big three currencies in the world, we took their growth. They use a lot more money different harder than we do and they use them a lot less sufficiently. So when growth transferred as it has done in the last five or six this q a process, that is what happens. Commodity prices go down. It was the same in the 90s you saw a lot of this, in the late 90s. This should not be surprising to anyone that emergency Market Growth is sputtering. We are actually doing well because hard evaluation strategy and commodities are weak. Talk about supply and demand all you like. These commodities are priced in dollars. Emergency Commodity Prices fall. The Dollar Strength has just been the trend is unmissable. The week visiting commodities. Regardless of if it is a lack of demand and i forget station about five or times a week. Lets turn to some good news. In sicily had not expected. Two or three years ago people such right of euro it would not to write off europe because it would not work. But now we have with price pressers and are positive index rose to the highest reading it since may 2011. The survey voice to continued growth in the 19 nation euro area. Things are like really good in germany. If they are good in germany they go well for the entire euro zone s are not as bad as everyone had feared. Demand from abroad is not as bad. By far the most pressing numbers in that survey are the french numbers which are already starting to show decline in restaurant and hotels sense the attack. Stephani eu qe is working . Home run. It is working just like it worked in the u. S. It affects the strongest part of the years on the fastest of the earliest, and in the biggest way. Where did it hit the u. S. , his San Francisco and new york first. Right to germany, took place that is not needed lisbon,s leaving rome, and athens behind. Stephanie this one is on the other hand euros on. Subzero debt has increased to than 2 trillion. This after the European Central Bank Resident said he will do what is necessary to rapidly accelerate inflation, one third of the eurozone securities now yields you less than zero. 2 trillion . Fullrry mcauliffe incentivize are. We have in five people without zero rates by printing a lot of of thed alluding value dollar, which spoke to did at beginning of our qe. Mario draghi has stepped it up. He showed people have negative race can work. All of this is a supercharged qe. Qe3 and forcing the pedal to the metal would voluntarily happen. Will come back to that later in this hour. In europe is not seeing pmi numbers, something we are worried about. Argentina,hakeup in the country was voting for deep changes on sunday. They voted a pro business president. Plan to list currency controls, cut taxes, as of stage for economic liberalization. There were high Commodity Prices, as long as you could do then that kind of shenanigans works. Even people who observed country closely would not have predict this result. A great result. A big turnaround. Fund returnshedge continued strong based on the back of that. It has been the bright spot for hedge funds this year. I think it is great news for the world. It is great news that a regime that has stayed out of the markets and thumb to the nose that capitalism is finally coming around. In his say it is a victory. Now the hard work starts. Those of the stories that matter right now. Stephanie guess what is happening in new york city tonight . We might not have president ial candidates dancing, but if the museum of modern art they will be hosting a private screening of a film, and annotation of Michael Lewis is sure. It is generating major oscar buzz. Thing onay the biggest the street today, people are dying to see this because when a andwho is a very one while nonwall street guy is portrayed by ryan gosling gives perhaps the best thing that will happen to them in his life. [laughter] stephanie welcome back. Heres your latest Bloomberg Business flash. Slumping ticket prices caused by supply haverent been hurting profits. Availablewill be online at 8 00 p. M. The night before. The program was started in may for plays only. Anyone eligible may take College Courses online, or any campus. That is the latest flash. Matt some stocks right now that are on the move. Of us the cdc came out and said this problem with e. Coli is not just into states, it is an six. 45 people in 6, 16 people hospitalized. Says the friday selloff was overdone so it was not down too much. They had great earnings, and the house backet out. Mocking j films had , brought in 100 million. It was a massively popular book. Matt did you see the movies . It got worse and worse. The first one was ok, was not that great. The up, we will break down Tax Implications of the allergan pfizer deal. Pfizer and allergan are combining in a record 160 million deal. Their tax headquarters will be in ireland, not the United States. For more on taxes locations lets bring in cynthia. We have been talking about the texans version quite a bit. One thing that strikes me is ironically with the treasury trying to change at rules it may have given them a safe harbor. The treasurys move last week did not do anything to derail this move at all. The treasure even said they were very clear, anything his stock conversions, it could be done by congress. That was laid out last week. The steel was pretty much well and done and they pushed it out to get it done ahead of the holiday will which is what we had expected. It looks as though treasury did not get in the way of anything. Stephanie what is your take . David they came up with the basic storyline that i have with all of these trade it seems like were spending a lot of figuring outergy how to avoid taxes and deal with Financial Issues and a lot less divinities on making things that they were meant to do, solve our biotech issues that are out there. That congress is going to see some backlash from this and i would imagine there is going to be some regulatory changes coming all of this. I do nothing you can see this Many Companies just moving their headquarters offshore and basically outsourcing all of their productivity gains and all of the income gains and all of the intellectual repartee, and have no repercussions. Stephanie do you follow them for doing it . When you hear bank ceos over and over again say just tell us what the regulation is, they want to know the regulation is because they want to know the rules and work to get around them. David absolutely. And what weve seen is a continuous covered by regulators to try and stop that maybe get more and more draconian overtime and look at what happened to our commercial banking industry. It is almost impossible to make loans in many ways, shapes, it forms. That has been many things to the shadow industry. I think it is becoming much more transparent what people are doing. It will be harder to avoid it. Look at switzerland and monaco that have been tax avoidance capitals for years and decades. Theyre going after these guys. The governments will continue to go after them. Youre the guy the reduced the tax rate, all you have to do is say we will not tax you on worldwide income. Until thee to dance music stops. We can change the two in washington. Everybody agrees on what we need to do. We need to cut the tax expenditures. Corporate expenditures are vehicle for tax specters. I am bewildered. [laughter] thank you very much. He is warming back up to u. S. Equities. We will talk about lovers and haters. Stephanie welcome back, you are watching bloomberg. With us. Avid zerbos you are talking about your longlost love, u. S. Equities. Are they back in vogue . I am getting warmer. I want to get this fed rate hike out of the way so im in the right ballpark. I think the market will react positive which is a controversial view but somewhat redeemed in the last few months. I think we are getting to the place where the uncertainty around liftoff is going away and thats a big weight off the shoulders of the market. I look forward to a world where we have a very shallow path for this rate rise which i think will be good for multiples in equities and i worry about the stronger dollar and earnings but i think the multiple side will outweigh the earnings. Stephanie do you think we will have a hiccup before we get there . Equities and height yields are tied together. Given what we have seen in credit, not everyone is so bullish about credit. As crazy as 1994, credit markets stopped functioning completely. You could not get bids on government bonds in japan or bids on peripheral european bonds for weeks at a time. U. S. Treasury market in the highyield market, every credit market, the mortgage market, all blew their brains out. The equity market went down at its worst. 7 on a yeartodate basis. That was not that terrible. I think weve got a different situation the 1994 because this is more anticipated. Sam fisher told us this past week that this market should be well prepared for a rate hike. I dont think february of 1994 or any of the following rate rises were as anticipated as this rate rises. I think the market has had its gyration. Int was what what we saw august and september in the market should be in a better with better position. Do you anticipate the threshold for making this decision . I think the fed has told you that if it went down to 65 or into the 50s, they would probably still do it. It would take a lot to change the fed here. You would have to have a train wreck on payroll data or some significant market move, maybe another chinese storyline. I think it would take something significant, very significant. We have a question coming out from a viewer how much can you was equities rise from here with elevated valuations and rising rates . Again, i think the valuation stories misleading in the u. S. If you go back and think about a rate atere the clearing the top of the cycle is 100200 basis points lower than before, thats your riskfree alternative to equities and that changes the entire multiple associated with castro with cash flow from a good rated equity. People have not traded that since the 1990s. Everybody trading today is for earnings. My guess is they are missing out on the idea that multiples could expand quite a lot in the u. S. Markets in particular given how low Interest Rates are going to peak in this next cycle. There was a somewhat different view about where equities were. Westocks on the measures like to look at, we look at many but the most famous is the p e. Youadjusted goback a it bounces around. Than ninere expensive out of 10 times throughout history. It looks cheap versus the technology bubble. It looks reasonable. I use this in my life, the Rodney Dangerfield comment, if you want to look thin, stands next to fat people. That works for me. The tech bubble does that for stocks today. If you look back in history, not good. David thats a slightly different view. I think many people have that different view. We have been brought up in a world with a much different level of rate structure than we are about to witness in this cycle. Because of that, we have to adjust the multiples accordingly. I worry that earnings are an issue with the stronger dollar. Stephanie where is it going to come from . I have spent this whole year abandoning the u. S. Equity trade after five years of being a ball and moved to the european trade. We have been embraced in the european trade this year and its only now that i am warming back up to the u. S. Only because im getting rid of the miscommunication risks and the problems associated with liftoff we anticipated earlier in the year. It was purely about fed problems that was keeping us on the sidelines. Your view of the world, there are lovers and haters. One of your haters is from the bundesbank. To see things in a binary way that there are central bankers who view qe as something to be avoided at all cost. They worry about longterm side effects and they worry about the problems. I think time can heal the wounds. What we have seen in europe is five years of time causing more wounds. Other of the central bankers and our policymaking are in our policymaking circles. If these guys were in charge, we would have had deeper cuts, deeper recession, much nastier outcomes. Those that embrace this were the doctors that embrace the medical treatment which is risky but paid off very handsomely. Brendan the question is how long. I was in germany for the dueling speeches last week. That has been the case with qe in the west, the longview hold onto it, the less effective it is. Thats true. We did qe 1 and that was not enough and then we did 2, and we did operation twist and it was not enough and we did qe 3. It was a question of dosage. He would have had you set there with a allens sheet and driving of youth Unemployment Rate to 70 . I dont need that guy in monetary policy. The guy that takes risks like ben bernanke he or janet yellen who can risk the Balance Sheet ,nd understands how qe works they can go early with a strong approach to qe and get that reflationary force. I will bring you david lover of the week. Thats my lover of the week. Eric has been steadfast in his views and has been firmly in the camp of chairpersons of janet and ben. He is highlighting the fact that the u6 rate has fallen from 17 in 2010. U6 is the widest measure of unemployment in our economy. We have an Unemployment Rate but then we have something that encompasses parttimers who want to work fulltime, its underemployment. Its a very wideranging statistic. I think matt has a chart of it. Stephanie there you go. I like that. 9. 8 . Matt no matter how many people are worried about the economy, its not bad and that is interesting. This is a different charge. You talk about qe and what its done for inflation. Here you see the first qe and the second and the third and then inflation is this line. It worked, it worked, not so much. It is definitely not as effective as it once was if you do it over and over and over again. It may work for the wealth effect in new york but the effect on inflation is not as pronounced. As you get closer to full employment, as you get closer to an economy that is robustly growing which is where we are at the end of qe3, those big inflation spikes were when the Unemployment Rate was at 9 and rate was at 10 or 15 . When you dont have slack, you need to be careful. I think the fed tapered it and was very careful in how they ended qe because they knew we were getting closer to full employment and they did not get a big spike in inflation. If we got that near full employment, the market would be screaming we are behind the curve and you have the haters on the other side of the equation. So its time to find out the u. S. Equities you love, we are coming up on nine minutes into the trading day. Has been upp 500 seven out of the last eight weeks so we have had a good run since august. Live before your very ours, its changing but not changed on the s p 500 and the dow is down about 21 points and the nasdaq is up. Futures were down big and oil came up and pulled up the futures with them. The saudis said we will do whatever it takes. This shows you a breakdown of whats moving as far as industry groups. Telecoms are the big losers today so far. Consumer staples are the big winners. You can see the list from worst to best. Oil is really the story of this market morning. Overnight andout seneca go to 20 per barrel if you dont do something. The saudis said we will do whatever it takes. And you see the spike in oil is trading at 41 . 51 per barrel. Other commodities are still in the doldrums. We continue to be at a six year low for copper and silver and gold is at a five year low. Its hard to get below six years because that was 2008, 2009. Silver is down every single day this month except one. Its used in solar panels and people are buying those now. Forer is buying allergan 100 62 and that will make it look like allergan bought pfizer in a reverse merger to bring into ireland and take the tax thandown from 25 to less zero. Lets go to Abigail Doolittle live from the nasdaq where she is the latest on panera bread. Thank you, with shares of panera bread popping at the nasdaq after the maxim group upgraded the stock to a buy from a hold. One analyst says he sees a narrow than a fitting and taking share from chipotle after that restaurant had issues with e. Coli. He sees the return to mars expansion in the second half of 2016 arising samestore sales and lower commodity costs. The new price target of 2. 10 suggests the stock could rise and panera shareholders would welcome. It has been a volatile growth sideways but has done little for the stock. It is basically flat on the year. Brendan thank you. Our Value Proposition is next, fighting the last war on leveraged loan markets. Vonnie welcome back. A pension Investment Board and cbc are buying patco over 4. 7 billion. The supply chain was taken over in 2006. Lufthansa flight attendants are experiencing more walkouts this week. Venezuelas is the price of a barrel of oil could fall as low as mid 20. The oil Ministry Says opec needs to do something. Its trading at around 40 right now. It is time for todays Value Proposition where we zero in on controversial issues. Investors have been laid to the game in the leverage loan market. Lisa bromwich is with us. This is an 800 billion dollar market and regulars are looking into it. They are playing a fun game called wheres the risk . They are doubling down on their examinations of lending standards at some of the biggest banks and they have gone back to banks like credits wheeze and Deutsche Bank and j. P. Morgan and others and said we have looked at your lending standards and were not satisfied. So we will audit you guys again. They will continue doing this and accelerating their probe into leveraged lending standards. The problem is they are too late. The market has turned and investors are already rebelling against some of the looser lending standards and not buying this stuff. You start seeing deals get pulled off the market because investors are not there to buy them. That banks will be punished, they will be punished by the market more than anyone else. If they cannot get billions of financeof deals done to mergers and acquisitions that have already been committed to, they will have pain on their books in the next couple of months. I playi have a friend tennis with and he spent the whole time on his cell phone because he had a big deal and they committed to the financing and the investors were running for the hills. Stephanie exactly. David its not pretty. Stephanie what do you make of this . The market has been on fire for five years and the fed is raising rates so it doesnt surprise me that people are little nervous about making cycle isn the business moving toward the stage were defaults are likely to rise. Defaults are likely to rise in energy and mining and other areas. We loaned a lot of my to a lot of people and thats what qe does, it puts money into the system and there will be people who cannot pay it back. Stephanie theres somebody who should be scooping up these deals and one would think it would be his firm. Indications of a more there is such a thing as an overleveraged company and these things are all healthy. The riskiest thing in the world is the belief in the risk and thats not on thats better. He pointed to the fact that markets are sober and investors are demanding higher premiums for that risk. There is more selfregulating so where is the risk mining migrating to . Where is it building and frankly, you have 300 trillion Interest Rate swap contracts outstanding tied to global Interest Rate contracts getting cleared through central clearinghouses . It has not been tested through a crisis and that could pose a problem. You have dislocations in pretty crucial markets that set the rates for everything whether it is inverted interestrate swap spreads or dislocations. Could this suppose a systemic threat . The jury is still out and people are not sure. If this is a systemic threat, even if the investors who are while up at institutional buyers made a decision to go long on securities to buy this debt and why shouldnt they go there . Because the fed kept Interest Rates low. They were punishing savers who could not make anything on government bonds so they went over to the credit markets. Whose fault is that . You are 100 right. The question remains is there another longterm Capital Management out there . Is there an overleveraged investor . Is there an investor the government cannot allow to fail . If you have a pension plan stephanie but thats why people invest in hedge funds. Pensions, retirement groups, they invest in hedge funds. That will cause a moral hazard for the government. Can they allow Pension Plans and Insurance Companies to write down . Stephanie they also have to except that securities and free markets have the right to go up as well as down. It sounds like there is her coming to somebody. The oddsa system of a Systemic Risk are so low. The 2008 crisis was built on leverage that was a giant margin call. Were talking about the movie earlier that was about one giant margin call. Most of levers built into the fixed income market is not built on a margin call leverage. The securities themselves have the embedded leverage in them. There is no forced seller. There is a buying strike and that could cause someone to be unable to refinance so we can have a wall of maturities that come due and those guys cannot get a renewal on their loan but who putsee someone either 50 million in the account now are we sell your securities, that does not happen. The forced selling like we had in a Mortgage Business for guys were repossessing trillions of dollars of housing debt nonstop. I do worry about the buying strike. Prices will get cheaper for sure. Brendan there you have it, thank you. Us because with next, well take a look at some of the top moments from todays broadcast on bloomberg. David lets take a look at todays highlights. The first whistle, had it been blown, we are in the preseason. Stephanie is there a specific vertical you find most interesting . Department stores is what were focused on. Stay true to your core and i look at offprice retailers who sell apparel. Goodxx and ross have results, the idea that there is separation between the internet only guys and the brickandmortar guys. That is is nonsense. The regionalth banks, we have done everything we should probably do and if anything, we probably need to look to see if there is some way to simplify some of the regulation thats in place. These are not the institutions that are posing a risk to the Financial System. In some parts of the world, the shadow Banking System has been growing exponentially since the crisis but not in the United States. The increase here has been modest. Durings after decline the stress and crisis. Period. We have been brought up in a world with a much different rate of death level of rate structure than we are about to witness. Because of that, we have to adjust for multiples accordingly. Its only now that i am warming back up to the u. S. Because i am getting rid of the miscommunication risks and the problems associated with liftoff that we anticipated earlier in the year. Shocking, warming on the u. S. If theres one reason you have turned, what is that . We have the greatest entrepreneurial culture in the world. We produce the highest returns on Investment Capital in the world. If there is one country that is innovative, entrepreneurial, its going to generate the next technological advance, its the u. S. Now im not worried about the fed. We live in a pick and choose world. Love or like . Naughty or nice . Calm or bright . But at bedtime. Why settle for this . Enter sleep number. Dont miss the ultimate sleep number week going on now Sleepiq Technology tells you how you slept and what adjustments you can make. She likes the bed soft. Hes more hardcore. So your sleep goes from good to great to wow give the gift of amazing sleep, only at a sleep number store. This week only, save 50 on the ultimate limited edition bed. Hurry, sale ends monday. Know better sleep with sleep number. Erik just 10 00 a. M. In the ark city and welcome to a quote bloomberg markets. From bloomberg World Headquarters in new york, good morning. Here is what we are watching brussels remains closed while the government there warns of an eminent terror attack in Police Arrested more than 20 people but the prime suspect that theres a taxes still at large. Gettingies are crushed and they have not been low since 1999. Argentina elected a probusiness candidate as the new president. Some Economic Data existing home sales julie hyman has more. Julie we are seeing a decline in existing home sales larger than economists are addicted which is a