Transcripts For BLOOMBERG Whatd You Miss 20170525

With the u. S. Is at its deepest and it is a great partnership. The partnership is built on trust and knowing intelligence can be shared confidently, and i will be making clear to President Trump today that intelligence that is shared between your enforcement agencies must remain secure. She made her comments while attending nato summit in brussels. In other news, former greek Prime Minister, lucas, was injured in his car in athens after reportedly opening an envelope that contained an explosive device. That was according to a great political books woman. The driver and a third person, believed to be sitting next to him, also thought to have been injured. The injuries are not like not lifethreatening. Asserved as Prime Minister six months and is a former Deputy Governor of the European Central bank. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. Im growth im mark crumpton. This is bloomberg. With 30 minutes from the close of trading in the u. S. Julia u. S. Stocks adding to records. The question is, what did you miss . Isrlet President Trump issuing tough news for nato, can his lack of public support get anything done . On capitol hill, republicans are considering a rewrite that would push up the robotic care repeal til 2020. Care act repealed till 2020. Was to go to the major averages in with a state as we head toward the close. Abigail doolittle is standing by. Handshave records on our for the major averages that we see the s p 500 and nasdaq with solid gains for all three major averages. Are on pace to close at record highs. The have put in alltime highs. A bullish day. It has been a bullish stretch. A sixth day of game. The longest stretch since february. We know that one of the big stories is oil. We have oil down 5. 3 . Its worst day since march of this year. On pace for its worst day of february of last year. Speaking of last year, we have the correlation of stocks and oil. Have record highs for stocks and oil going down. David over it capital, told me to things are going on. Opec is addressing the production side of things. Oil is no longer saying and economic growth. Oil gluts wall and the oil is stuck in a range between 45 and 55 which is where the divergence comes from. As with the selloff, Bloomberg Intelligence strategist say that it is just price in an expected. We are seeing the weakness going into the stocks. These are some of the worst Energy Performance in the s p 500. , andocean and halliburton some of the emp companies. Bloomberg energy refers to this is the energy web. On days that oil goes down, they are the most extreme in terms of the decline. As far as oil, lets take a look at the technical. This is g btv 6637. The point to be made is the 50 Day Moving Average is one penny above the 200 Day Moving Average. Waslast time this happened back in 2014. See the huge slide. There was one before thats where it led to more trading. Perhaps that happens, but either way, it is something to keep an eye on. It could be a bearish moment for oil and what is next. Julia thank you, abigail. With spring and adam who joins us on the phone from washington. For is an Analyst International studies. Adam, great to have you here. It looks like a case of by the room and so the facts to the markets. Somewhere out there to deepen cuts. I think that the opec meeting was disappointing in the sense that they didnt come up with those deeper cuts that you mentioned. They have extended it out to the First Quarter of next year and that is probably enough time to pull stocks down enough that keep prices flat. How much is u. S. Oil production going to go up, is the question, and how much oil is the president going to sell out of the Petroleum Reserve . I was just going to ask you those question. What are your estimates for that . Adam u. S. Production is climbing. Initialthat is the wells that were drilled, but not completed, that could come back in quickly. They could come back into higherpriced markets and the rigs are being very efficient. Once again further out, six months, one year, i suspect it opec willdown and have an advantage again. Reservesegic petroleum , also on peoples minds, itll be a while before we get around to doing that. I think Congress Might have different thoughts on how much of that oil they really want to selloff. Scarlet a lot of supply the pipeline there. Excuse the pun. One thing i would like to ask you about is the level of compliance. Julie and i were speaking to berkeley i sedate barclays yesterday and they say that last cut was him is 100 but it was easy to that for the winter. It will be harder to do that during the summer months when they have a lot higher demand at home. He is figuring the compliance will be upwards of 70 and 80 . What do you think . Adam a lot depends on exporting. Rather than what is produced. The export numbers are going to be relatively flat. Iran and their production is not going to go up much more. There slowing down little bit. The russians seem to be the boot to help the saudis out. Themselves, will be using up more of their own oil of the summer to make electricity, i think they can make it out into the winter and they will have that winter advantage again. Did what the nigerian minister said was that a 50 flaw would apply here opec members comply. Do you believe we have a floor here at 50 when you come in with all the things we talk about the supply and demand . Adam anybody that has ever tried to forecast oil prices has been burned. They are trying to say there is a floor at when you dont know what is happening in to the or how quickly places like nigeria or libya can a hardroduction, is statement to make. On the other hand, we could lose venezuela, 2 million a day, almost anytime. Towardsld go a long way getting it toward 60 rather than preserve 50 floor. Prices they can keep oil in a 50, 2 55 range. There will be upwards and downward movement in that. I want to go back something you said thats something you go back to something that you said earlier. There were Unfinished Projects from when the oil market collapsed a while back, and after those projects are done, we will get a slowing of the faith. To what extent do you think the dynamic is appreciated by the market, and to what extent do think people are over extrapolating currently on what we can produce in the future . Thingshere is to that the market isnt taking into consideration. One is the drills and uncompleted wells and how thats will slow down, and the second is the efficiency of which the workers, the rigs, and Everything Associated with drilling goes forward. Ie second big thing that think you have to think about is that the further out we go, six up to nine months, and the lack oilnvestment of crude production, 70 billion barrels of that around the world could declines inw up in conventional production. I think shale will be needed to fill in that gap. It is kind of a race. I think this is what the saudis understand is that they have to hang this together. As for the next six months and nine months or nine months and they have a good chance of making it through 2018. Julia brilliant to get your insight. Cs i. S. , thank you. We talked to an m. I. T. Aboutsor Jonathan Gruber what it will take to save obamacare and the h aca and what it could look like. He with his thoughts on the architecture of the health care systems, Jonathan Gruber helped craft obamacare. He is currently an economic professor at m. I. T. And he joins us now from cambridge. Professor gruber, thank you so much. I want to start with the h aca warning that 1 6 of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020. Explain this for us and how the adh ca could destabilize so much of the markets. News ands so much bad it is hard to know where to start. I think you are serving with the single most important part of the group. Maybemost, and for them, it works well. If they get sick, their price doesnt go up. I realize, before obamacare, that wasnt the case for people that didnt get interest from their employer. If you got insurance, they could raise the price to the roof or deny interest altogether. That ended on january 2014. This bill would reintroduce that discrimination Insurance Market and allow states to do it. Six of the population would reintroduce discrimination to Insurance Market. It is really tried it tragic. Torlet its similar how make him any claims with carter insurance families they will raise her claims. Back, axel merk years x number of years when you think of obamacare. . Jonathan it played out well. In terms of cost control, it played out well. Dont talk enough about Health Care Costs and how they have increased at a historical rate. Of people are subsidized and they dont pay the premiums a way. We are talking about 2 Million People who talk about the premiums in the exchanges and i think they have gotten more than we have liked but not tragically so. Since obamacare was introduced, printers went up 7 a year. It hasnt been a disaster, and it was turning possibly, and it suchrump is causing uncertainty that he is causing it to do a lot worse. A growing number of people around the country dont have much options on the exchange. We can see the percentage of. Eople who have one insurer in some places, they may not be any, deftly architectural issues with these exchanges. Julia we were focused on the cbo report, but i want to look at the health and Human Services department report. I will read it. Said that the average premium in the individual market in increased 105 since 2013 the 39 states were Obamacare Exchange is federally run. That translates to 3000 more a year for the average family. That doesnt sound like an Affordable Care act to me. Jonathan going back to the math, having one insurer is not the problem. It is not like people have one plan. They have a variety of plans to choose from for that one sure. Having zero is a problem. Before trump given, there was no where in touches your insurance. When you point of the premium increase, 113 fact is wrong. Actuallook at the premiums, since obamacare has been passed, it has gone up about 25 total over three years. The weighted might have gotten the number is by finding the health of these people could benefit from that kicked sick people out. For the berries Healthy People that for the very healthiest people, premiums have gone up a lot because they were benefiting from discrimination and they no longer get to. Julia the 3000 of a family is a lot for many. There are many middleclass families that are saying that they have suffered under obamacare. That is absolutely wrong. Lets be clear. The vast majority of americans were not affected by obamacare. If you had employersponsored insurance, it didnt affect you, same with government. If you bought in the exchanges, and had government tax credit, it didnt affect you. Most people affected was 2 Million People. For those people, if they were previously healthy and young, their premiums much of gone up a lot because they were benefiting from a discriminatory market. If we feel we are ok with that , then that is a debate we can have. I dont agree, but that is a debate we can have. Whats we cant do is pretend that you can have it both ways. We can pretend we can lower the rates of the Young Healthy without raising the old sick. Scarlet what do you think of one alternative proposed. A hybrid pan like singapore plan like singapore. A high deductible or individuals needing to watch their cost and avoid unnecessary expenses, and you also have a single pay system for catastrophically large medical expenses. Do you think there is any kind of Health Care Plan that could contain elements of this model . Theres a lot of alternatives we can consider. Heres the simple fact. There is nothing more conservative than the Affordable Care act. It does not either cover a lot less people or cost a lot more. Whatever alternative you look at, you have to recognize that any alternative that republicans a lotndorse, will create more insureds or cost a lot more money. If you want to save money, without creating more insureds, you have to move to the left to Something Like single very. If you would to the right, you create a lot more uninsured or have a cost more money. What about when Hillary Clinton had won the election and had a large support in congress, there was a discussion going on about how obamacare might be strengthened. What would you propose . Jonathan the main way would be to implement it as it was written. It leaves sick individuals and health care poll. Another thing done would be to honor the reinsurance payments that were promised to insurers. They were supposed to get 8 billion of First Quarter payments. Thats republicans refused to make the payments and that is why a lot of insurers lost money. First, implement the laws written, and if that is not enough, put enough money into the law. There is a small amount of money , much less than what the republicans are talking about, maybe 100 billion over 10 years, we did do a lot to stabilize lower premiums. Jonathan gruber, obamacare architect, really appreciate you coming on. Excellent perspective. Coming up, we have the jobs report. In the meantime, we have labor data out today. It looks good. Well show you what it is. Scarlet it is your favorite metric. It is my favorite measure. This is bloomberg. Fu, all the scarlet debate over hard and soft data in the United States is no longer such a big deal. It is europes turn to see the big gap tween those status. At least when you look at pmi gdp. The green indicate gdp. If you go to the end, theres a gap growing there between the start hard and soft data. If you look your, same idea. To meet gdpdown which was admittedly very weak in the First Quarter. Does that mean the u. S. Stock markets and their gains are built on a more Solid Foundation . Investors seem to favor european stocks at expense of the u. S. Stocks at the moment. If this gap widens further, maybe the u. S. Market looks a little more attractive relative to europe. We could we continue to keep an eye on all of this. Julia everyone still keeps pushing inflows into it. I am bringing you to the night night i am bringing you to the United States. I love this chart. It tells a story. All this conversation that we have been having with economists on whether or not the market gets surprised by downdraft, expectations are heading there. You can see the reflation trade that we saw in september of last year. We peaked around march of 2017. Since then, look at inflation expectations. It is all supportive arguably of the stock market story. Just keep an eye on inflation expectations. Definitely not going in the feds direction. Longtime viewers will recognize this chart on the previous 30 or 40 times ive shown it. It is always remarkables i it up every once in a while. Initial job claims smoothed out in the blue line ticking the 52 week moving average. These are nonseasonally adjusted claims which is why they spiked. We hit another post prices low today. This number keeps improving. It is remarkable. One day, i will stop showing the chart because it wont be as interesting then. There is no data that shows such steady improvement over time. Spare capacityf in the market, as we learned earlier this week. There is so way to go. The idea goes back to that the fed is overly pessimistic. Scarlet when it comes to replacing, that is not happening. Julia i like it. Goldilocks and the markets. They can still fall and inflation is not a problem here. We take a look at the s p, and as i can record high and dow adding 77 points. I believe it is the sixth straight gain. From new york, this is bloomberg. Stocks rise for a sixth straight day, the longest winning streak this century, the nasdaq at record highs. I am julia chatterley. Julie items to we want to welcome you the closing bell coverage every weekday from 4 00 to 5 00 p. M. Eastern scarlet lets begin with market minutes. The sixth consecutive day for gains of the s p 500, gaining 0. 4 , rounding off the longest winning streak. The nasdaq and all closing at five. Showing jobs, the labor market is very robust. Jobless claims for the most part coming in where economists had anticipated, but smoothing it out, the story is not very many looking for unemployment benefits. And the vix is going scarlet here is the s p 500. It is an 24 groups to give you more detail. A lot of green on the screen. The best reporters for transportation and retailers and insurers. Transportation, Railroad Companies and airlines. Retailers is notable because surprising results from specialty retailers we will get on to later on. Insurance companies as well. On the downside, sectors that declined, energy off 1. 8 as a group, this after opec extended production cuts as extended by nine my months. Some thought they should make deeper cuts to the extension, but it might be rumors as julia has been saying. Lets talk about individual retailers, best buy at a record high. I cant believe it, up 21 , the biggest since 2001. They beat analyst estimates, and there is more confidence the company can beat its forecast for the year. Sears was off, the First Quarterly profit since 2015. If you back out the one time item, it is a net loss, so it is a big albeit for the company. And some real estate doing well because of pods of retail headlines. 0. 7 after it reported results. Ad record highs, nasdaq had record high. Shouldnt be surprising the big names have given alltime highs. Microsoft, amazon, alphabet, netflix not quite at 1000 per amp the netflix and element. But getting close. Joe on the Government Bond market, nothing going on, lets move on. And a similar story for the dollar index. It is weaker later on in the session. So a long weekend this week, they are stretching over the next couple of days. That is a quick look at commodity. Seeis off 5. 4 , you will pressure on commodity currencies. That is what is going on here. I have a chart i want to show you. Just when you thought it was safe, if it is a commodity or a currency, it surprises you. I will show you that chart. Today. Oned this earlier until the second week of april, third week of april, they were trading in gold, then came the back end of april and it skyrocketed. They ditched the currency gained 22 . 2000 1200. Look at that acceleration. A favorite. You cant see it, which is probably a good thing. Joe speaking of commodities, there has been a mention of crude oil, the fact that opec production cuts not as deep as maybe or people saw the news, a more simple explanation. Nymex crude down over 5 , and gold, which is kind of straddled depending on who you are talking to doesnt move quite as crazily these days, up 0. 2 . Those are the market minute. Whatd you miss . Despite the fed minutes, they are not concerned of june rate hike is inevitable. Lets bring in the bloomberg reporter and stocks reporter. Vince, i want to start with you. You brought us a chart showing u. S. 10 year versus fiveyear inflation spot, sort of consistent with what julia showed. It is deteriorating. The inflation is not going in the feds direction. Why do you like this chart . I like seeing where people are five years from now. 10year yield seems to marry with that trend. So officials have been raising rates where we see inflation. I dont, fixed income doesnt, and i question where it will go. Scarlet is that your question they will go in june . I dont think so. I think the statement in the minutes where they referred to the fact they wanted to make sure the First Quarter drop in is ah was not transitory statement they want to see itselfsubstantiate before they go again. Scarlet this fed does not like to surprise. Reporter i dont think they will surprise in a real sense. We are surprising ourselves. This is a fed that does want to raise, but the timing doesnt have to be june. The first opportunity to see gdp is july 20. Not think they were concerned about Market Pricing despite the price we would already be hearing from fed speakers going, oh, you know, we are more cautious . Surely given the big to do with the markets, if the markets get ahead of themselves, the try to step in. They could, they may. I think they will actually announce some sort of Balance Sheet reduction in june and hold the height until september. That will satisfy the hawks and the market and keep the stability and on we go. I got great stuff. Great stuff. Rate stuff. We have talked about the diff on profits, meeting with a Portfolio Manager earlier today, surprises comee from the fed, maybe not hiking at the rate people expect or what the futures indicate, you will have ripples in the market. I will bring up a chart that we looked up before, but i have added some things. The top panel, the barclays, but aggregate return, that is the ticker. As it strengthens, we see the correlation. There we go. The second panel, this is correlation for utilities. The degree to which it is always positive and so strong to where they mimic the deal includes is interesting. There is correlation it is based on the percent value change of the day. We are looking at what happens in bonds and stocks. Second panel, the broader scope, looking at the volatility bonds. These come back and focus if you have any degree of surprises from the fed. What we have seen with the rate and what investors want to pay for the high valuation. Picture, and i love the correlations, they tell the story. Bigger picture, they dont care about any of this. The fed will hike, the fed will not hike, whatever. With the stock market conversation being focused on the fed has changed. When you read notes and talk with traders and investors, that is not the top of the mind. Top of the mind is earnings, the factorbased investing, they get off your stop like low volatility. The fed can make changes. You have Consumer Discretionary stocks and others doing well, it will be the top of the conversation. Julia so if they hike in june everyone will be like woohoo. Joe what will the reaction be if your call turns out to be right . The dollar will get hit hard. We can see it down 0. 2. Scarlet we seek for investors are returning to u. S. Stocks. This is your chart, b 8886. [speaking simultaneously] scarlet lets pull it up. This is on my terminal, but what we are looking at here in the blue line, the dollar index, the white line, that is from the treasury, so take it from a grain of salt. This is the net foreign investment. We got back into positive territory. There is a lot of stuff about valuation but ultimately the dollar is an important part of this as well. I think you see a certain inverse relationship where the dollar gets strong, you are in the market where it equity is a harder injury point. But most investors with a invest dont hedge straight away because it takes from their return. If they are positive the dollar will stay firm, that will keep their returns strong, that it will come into u. S. Assets. Joe great conversation, fx reporter vince, and oliver renick. Julia some headlines from the nato secretary general jen stoltenberg, he is speaking to reporters. Donald trump was there for the the s and the long is blunt is the optimal word. He has been clear in his commitment to nato. Previously donald trump suggested nato was obsolete, so we are referring to his commitment. President trump sends a signal that they could develop annual Spending Plans on the criticisms from donald trump. Only five out of 28 nato members provide the incentive for gdp right now. This is important. We are waiting for stoltenberg, they wontll engage in combat, but they have agreed to expand to the antii. S. Coalition. So those are live actors from the briefing in brussels. This is bloomberg. Mark home searches in the city of manchester and the u. K. Are revealing clues in the fastmoving investigation in the concert bombing that killed 22 people according to manchesters police chief who said eight arrests are significant. U. S. Foreign intelligence may have to guarantee there will be no more leaks to the media after photos detailing the bond and the name of the suspect were First Published in the u. S. Donald trump has asked for a complete review. Three montana newspapers have with drawn their support of a candidate after he was charged with misdemeanor assault and allegedly body slamming a reporter for the guardian newspaper. A fox news tv crew in the room said the man allegedly grabbed the reporter by the neck with both hands and slammed him into the ground. Paul ryan had this reaction. There is no time were a physical altercation should occur with the press or between human beings. So that is wrong and should not have happened. Should the gentleman apologize . Yes. As the statement saying man was giving a separate interview, the guardians bens suddenlyiewed got in, but the recorder in his face and badgering him. The montana people go to the polls tonight. Attacks on health care facilities, workers, and patients took place in more than 20 countries last year including syria, yemen, and afghanistan. Speaking at the meeting, he said they attack the Geneva Convention and basic humanity. That theoted resolution to protect Health Care Workers made little impact. He has called for greater investment to address the roots of conflicts. A connecticut senator has withdrawn from consideration for director of the fbi. He works at the same law firm as another lawyer donald trump retained this week as a private attorney representing him in the russian investigation. In a letter, he said i believe it would be best to avoid any appearance of conflict of interest. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julia thank you so much. President trump has been in brussels to pretend attend his new nato meeting. He will now be going to g7 tomorrow, but we have the press conference from the nato secretarygeneral, pretty bold statements today. He said donald trump talked about burden sharing. He was also blunt in expectations the what he has done is be clear in his commitment to nato which is crucial. Underscoring a point, nato have decided to become a member of the antii. S. Coalition. They will expand support to the coalition but wont engage in combat as part of it. A lot of headlines to make sense of your with perspective is that wadhams nick wadhams. Lets start with the one about nato to become a member of the antiislamic state coalition. What does it mean, and how would it work . We see much more information sharing and involvement in the militaries of other nato countries, whether it be airstrikes or intelligence sharing, things of that nature. There are contours that have not been determined. But this is a reflection that other countries in nato are vowing to what the u. S. Sees as a primary threat to u. S. National security and global security, the fight against terrorism. This is at the heart of and the otherss why are the french and germans and italians so reluctant to see nato become a fall full Alliance Member of the coalition . What you are saying with intelligence gatherings, how does it play out in light of the situation with the israelis and the u. K. Government over the manchester farming . Bombing . Nick you have this relationship between the u. S. And u. K. Coming under increased tension over an issue like intelligence sharing with the possibility the u. K. Cannot trust the u. S. To receive its intelligence and a handle it carefully. This is something that will have to play out in the next few months. When it comes to nato, what you are seeing is a general agreement that we need to get on board with this. This is a primary u. S. Demand, and there is no political side to going against it. The Manchester Bombing and other attacks underscore how terrorism remains a threat, perhaps even greater in europe than the United States. There is a need to respond. Joe beyond the isis threat, there has been a lot, a big gap historically between what donald trump talks about an previous president s, the existing leaders of the European Countries. How big is that gap now with the role the alliance can play in securing the certain order . Nick it depends on what you want to focus on. s administered Trumps Administration have said repeatedly the u. S. Cherishes the Nato Alliance and sees it as hugely important to u. S. Relations across the atlantic. And you have trump making much tougher statements, calling it obsolete during the campaign and pressuring this issue of budget commitments. There is a question of who you want to believe or if it is a negotiating tactic. Officials have made clear they will not turn their backs on this alliance. When you hear trump saying Something Like that, it doesnt table alliance will weaken. Trump wants increased spending. Scarlet what his reaction to that leverage trumps polling . Nick there is growing impatience among European Countries because they agreed to meet this 2 spending commitment by 2024. You saw some comments from german chancellor angela merkel. Xpressing frustration we have heard this a lot, we know you want to do it. We will do so, just give us time. And that is what the European Union has been looking for since the financial crisis areas our National Security reporter joining us from washington. At thelets take a look movements in nato, Donald Trumps handshake with Emmanuel Macron. Scarlet maybe Emmanuel Macron handshake with it is going on for a long time. [laughter] joe you see trump fingers fingers flapping. Scarlet usually he holds on for much longer. Julia he then. This was a wellprepared Emmanuel Macron. Joe the entire fate of the world decided because of something during the handshake. Note, u. K. From security will join us on bloomberg surveillance at work 30 a. M. Eastern time. People talk about the u. K. Standoff with the u. S. Over the manchester leak. This is bloomberg. Scarlet costco coming out with the fiscal thirdquarter numbers. Revenue misses, but on a 5 parable sales basis, up im looking again for 4 . Then beating the highest estimate, it is up 1. 7 . Joe i am looking at shares of ulta, the chain of beauty companies, it is rallying after ofrs, well above estimates the highest end of the range. Versus sales are up 4. 3 11. 1 . March 2009, this was six dollars. It is one of the most extraordinary charts, continuing to rally after hours. Julia and gamestop, very much a focus with the nintendo switch, and best buy, reporting their first sales increase in five , earningspershare. They came in at three . 63. Down 3. 5 . Tions were crazy,hings go down like now down 6 . We are talking about this later on in the show, so we will see the numbers with what is going on. Here is the move of an afterhours trade on the numbers, then the crash, giving up the gains immediately, the stock down. Julia we will get into details later. Scarlet why investors should be looking at the number of equities that advance versus those that decline to gauge our kids. This is bloomberg. Mark it is time for the first word news. As we have been reporting, nato said it will become a full member of the antiislamic eight coalition but will not engage in combat. Those words from john stoltenberg, the secretary general. This after the Trump Administration that it would be helpful if they joined the coalition. He told reporters President Trump was blunt in his message on burden sharing, saying Alliance Members should make the commitment of 2 gdp. The president is pledging to get to the bottom of leaks of information. In a written statement, he called the recent leaks deeply troubling and is asking the Justice Department and other agencies to review the matter. The comments, at anger from over Intelligence Leaks and decision by Manchester Police to withhold information from the u. S. About the investigation into the deadly suicide bombing. Queen elizabeth told the children that the incident was dreadful and wicked. She visited the royal manchester childrens hospital, visiting with medical staff and families. Children under 16 were hospitalized following the attack at manchester arena. As juliet was mentioning, Emmanuel Macron and trump engaging in handtohand combat in brussels, ahead of the summit. It seemed like an eternity before donald trump pulled away. The cron held on longer Emmanuel Macron has held on longer. Barack obama received a rockstar welcome in berlin today. He appeared with angela merkel. It was his first speaking event since leaving the white house. Tens of thousands gathered at the Brandenburg Gate to mark the 500th anniversary of the protestant reformation. Mr. Obama called for International Engagement saying we cannot hide behind a wall. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Scarlet lets get a recap of the Market Action thomas sixth straight day of gains for the s p 500, the best winning streak, nasdaq and that closing high. Energy shy shares declining after opec decided to extend by nine months, but not deep in the cut. Retailers did pretty well on the back of decent results from the likes of best buy. Joe investors are increasingly concerned a few stocks are driving the returns in the s p 500, but they determined the health of the market, maybe there is another approach. One says brent is the barometer we should be paying attention to. I want to bring in ben carlson. About market breadth. Stocks weere are the talk about all the time that are driving refuge share of the overall gains, but fuel is the preponderance of stocks, and most are going up. If you look at the Big Companies like amazon and apple and facebook, all are up 30 this year. They are huge stocks and have a huge weight in the s p. A third of theor gains come as a people get worried about what it means, what if they fall back to earth . It is standard to see that. Going tok data back 1994, looking at annual returns in the s p 500. If you take the top 10 names in any given year, they account for 40 of the gain. It is normal to see this. So what something to look at that is more help all is market breadth, and it is an indicator when you look at the number of advancing stocks versus declining stocks to see the underlying index. Here,e have two charts one of the late 90s market, the other today. So lets do it on the screen for a few moments. The basic idea, the late 90s, we see the advanced decliners peaked several years before the markets. Even before the stocks started turning down, we call the breadth start to decline. Now the current chart, the same line, wevanced decline see nothing like that. There is no subterranean erosion in the market. Most equities are participating. Scarlet i love that, subterranean erosion. So does that mean this market breadth is a reliable line for where the market is heading for it has peaked . Or where it has peaked . Ben it is another arrow in the quiver. It served in 2007 and the late 1990s. Not do and 2012 it did well, but the advanced decline line for showing the advanced stocks falling and rising. There was a huge cancel of stocks going up, mostly tech at the time. At 2010, 2012look , those fall back a lot. We know, indicates all the time, but if we fastforward to 2017 and are you the pattern of the past several years with centralbank action, what is the catalyst in 2017 for pullback if not brent . Ben i guess the thing you can worry about is everything on the market. It is hard to say. I dont really have what that trigger will be. There have been a million things that have happened that you could have said the markets should roll over here. If we look at the substance, small caps are at alltime highs, equal weight stocks are at alltime highs, the s p and the advanced decline line. Alltime high seems scary because eventually we will fall. When things are looking healthy underneath the markets and going well, it is not a bad thing. Momentum is a strong force in the markets. Joe you cited some Interesting Research showing it is not that unusual for a small handful of stocks to be contributing outside wait to the overall market. But part of the reason there is anxiety about this, the concentration of the sector. It is not that a few companies are doing fantastic but this cultural idea that all of the Economic Activity is being sucked in by a few Companies Based on the west coast. Is that unusual from a historical perspective, the industry concentration . Ben i think it is comparing apples to oranges to look at now in the 1990s. It is like the euphoria was like woodstock versus today it is more like generals fire pit. So the top 10 stocks in technology these days account for Something Like 5 more earnings event in the 90s, and they are more diverse these days. It is hard to make that comparison. So it is not really apples to oranges, but i think things in the late 1990s are crazy to make the comparison. , and i doan happen not think we were where we were back then. Julia what do you give more weight to . You said they have been topping companies five times higher, but looking at the ratio between today and 1999, you say 600 times earning. Now it is 30 times. To . Do you give the way weight to . Ben it is crazy. If you look at it being registered to diverge in 1999 through november to march 2000, the nasdaq was up 70 . The s p was 3 , the dow was down 6 . You saw the huge divergence in the number of stocks and also performance areas the nasdaq has been outperforming the s p 500, it is nowhere near the level of separation. Things are more diverse these days, but it doesnt mean that things cant happen. They probably can and will. I dont think these are is concentrated in terms of Companies Based on the dream where these days there are businesses behind the companys that are making money. Ben carlson of bloomberg profits and wrinkles fund management. Really interesting stuff. Scarlet lets talk about gamestop shares falling now, down 6 , contrasting with the record high from best buy today. We will tell you what is going on and look at the trends in videogames affecting the companies. This is bloomberg. Scarlet we saw earnings from gamestop with gme, and best buy got a boost as well. Nintendo switch helping them with unexpected sales gains. Lets begin cory johnson, the editor at large, who joins us from san francisco. When you see Something Like the nintendo catalyzing both companies and their stock price, do we presume the effect will be limited to one quarter of two quarters, then things go back . With nintendo that would normally be the case. Nintendo tends to be very close to all the games and counsel units or the games made by nintendo. The tale of game sales into a successful consul was not so great with a nintendo device. But the switch has opened up to lots of developers. There were rumors that blizzard will move call of duty onto the platform. They have allowed for sharing of content on the nintendo network. The veryf highlights successful new platform that will also have longer term results with software on the systems. You saw in the gamestop results that software results were not ,ood, down 8 yearoveryear because the other consuls have been going down, xbox and playstation. But the others were up 21st percent 25 yearoveryear. It might be good for gamestop going forward. The sales number did not seem to budge. He did nothing to budge from where it had been. Joe you made the argument that this time it is different for nintendo, that they might be building a platform with sustainability. What about best buy . We saw the stoxx surge on the surge on thecks result. Is there something good for this retailer . I think when retail, it has been a disaster across the entire spectrum. We have seen numbers for a lot of retailers, and best buy in this. You see the optimist look at best buy, saying it is making a lot of changes, putting themselves in a position where they want to have success, finally got a hit. The guidance was also pretty strong, suggesting they gave sales in this recent quarter will continue into the correct quarter and beyond. This isnt a onehit wonder, there may be some very specific stuff from the nintendo switch. Back toet me take you gamestop and ask you about the wireless business. We have got the nintendo bump for the software and business with the expectations. There are challenges in the business, keeping phones longer. What is going on . This business is new to gamestop. The longterm change in that business would have a different effect on gamestop in particular. You are right to highlight that change. When you look at what happened at gamestop and best buy, they are bona fide benefiting, taking over the circuit city stores. Thought theyy all would survive, but you have a lowcost, negative competitor out of the markets. Gamestop and best buy getting a shortterm benefit. That might continue for most of the next year. Julia that is a great point. Joe and a moving away from the retail part, videogames and investment, it has been pretty breathtaking. We have seen it whether looking at ea or nvidia, we talk about the big tech, apple, amazon, but these companies, it is a massive juggernauts. I covered videogames for a while. The current environment in terms of household plays jesus and xbox is really unusual because they have a much slower tale in terms of growth and software and the lying that, the sales of the consuls themselves. Ins has been a rapid ramp terms of the proliferation of the devices of the home. Gamers have not waited. They rushed to get these things. 1, 2, 3 yearse is beyond. It has been interesting, and the game people hope it is a criminal development. Permanent development. Lots of people will upgrade and do so quickly. That is why software came in strong because of the platforms being strong and fast. Scarlet bloomberg editor at large, thank you. Favorite videogame. Joe red dead. [laughter] [speaking simultaneously] julia i thought you would say super mario. Scarlet tetris. Misty lifting, that was the one. The current trend for wells fargo. Scarlet it is time for the business flash, a look at the biggest stories in the news now. General motors is facing a clash action lawsuit Class Action Lawsuit for cheating on diesel emissions. According to a complaint, g. M. Rigged its trucks to pass inspection on fueling emissions to to five times more than the legal limit. The European Union sugar industry could see the following production when the output is going out of the market. That is according to the secondbiggest producer, which says layers will drop from 25 to a dozen. Capital production in the e. U. Ends september 20. Like rock has reached its first funds to make Infrastructure Investments in columbia. Statementto a company put out today. The fund raised 280 million for public and private partnerships. Wells fargo separating itself from competitors with a new plan to pay signon bonuses to brokers. This as banks will reduce investment. Unitells Fargo Advisors offers pay packages to those who oversee the business. This is all familiar according to someone familiar with the matter. They focus on attracting more height. That is your business flash update. ,ulia for more on wells fargo i want to bring in laura keller. Great to have you. Clearly this is an opportunity. It is a pr problem as well. Wells fargo is joining on but the other way around. Wire houses,big wells fargo is one of them, and if we want to end this bidding advisorsStar Financial , wells fargo taking the other side and saying we will increase signon bonuses. You can see them rebuilding their franchise. Scarlet is there a shortage of Financial Investors . Advisers . Not really. Wire houses, going to smaller firms or creating their own shop. A poll to find them here. Julia you said wells fargo is hemorrhaging itself. They have had difficult challenges on the pr front recently. Business about getting people back . They are fighting some challenges. That is why they are taking the other track. It is nuanced. There is marrow and Morgan Stanley, because they will pay some circumstances of Star Financial advisors. Joe what is the industry rationale for what the wire houses are deciding . It is the cost. Sometimes it is the structured loans, it is complicated. They are paying three times over what revenue is generated in the last year. The wire houses are saying, if we stop paying them, we all did it, none of us will come up with the great big costs. Scarlet what does it say about the opportunities . This is a valuable client to pursue, but are they being hired into asia versus europe . I dont know if there is specific geography. There are ranges for all of these advisors, but it is an opportunity for the banks to pull in revenue. They are flagging on Community Banking and getting greater growth from wealth management. It is not something Everyone Wants to go out to. If we can get individual, we can also get their ipo. Julia great to get your perspective, bloomberg banking on wall street. You have one bank on the opposing side, you will always have someone willing to pay up. The Morgan Stanley and others will have to say [speaking simultaneously] joe what you need to know to gear up for tomorrows trading day. This is bloomberg. You have the st. Louis fed president speaking in tokyo at 9 45 tonight. Joe and we will be watching q1 gdp and more. Julia dont miss this, donald trump speaking to g7 members in sicily. It will be interesting. Scarlet that does it for bloomberg this is bloomberg. Im Alisa Parenti from washington. This check with the what some of the check with your first world news. Nato is stepping up the fight. Spoke afterneral annika meeting in brussels. And he said nato will expand the global Collision Coalition but will not engage in combat. President ronald thats President Trump President Trump finished nato and is headed out. Stop headed to the final overseas. Barringutive order euros entry will remain on hold. A federal repeals appeals the legality is being weighed. Joe lieberman is withdrawn. Lieberman works at the same buffer as a lawyer retained by President Trump. Former president barack obama is appearing side aside angela merkel. This is first speaking event since leaving the white house. Thousands of