All that to come. Julie hyman is with us. We are halfway into the trading day. Julie we earlier saw all three major averages touch records, but the s p and nasdaq have come down, a pause after this run we have seen for u. S. Stocks, with each of the five sessions last week recordsetting for the major averages. Whats dragging them down today . You can probably guess from the nasdaqs underperformance, it is the big cap tech stocks. He socalled fang fangs. There were some comments by the french finance minister about a tax on internet companies. It could just be a pullback after the recent gains we have seen from these companies. They are heavily weighted, so it has an effect. We are watching media companies. There was a story in the Washington Post that the government is going to be drastically cutting spending on advertising for healthcare. Gov, related to the aca, and that that could have an effect on tv advertising budgets. , and 21st century fox are in focus after the New York Times reported there was a 32 million settlement paid out to a bill oreilly sexualharassment accuser and that he was kept on at the network after that occurred. So, the back and forth over that continues as those shares fall by 2 . Outside of stocks, we continue to watch the bond market, where we have been seeing some jockeying of yields based on all of this Federal Reserve chair speculation. What we are seeing speculationwise as well is that there is a lot of shorting now against fiveyear treasury futures. We talked earlier in the day about the u. S. Dollar, that shorts have fallen, but not so for the fiveyear note. Between what the feds track is already right now, in terms of the expectations that its going to raise rates in december and on into next year, and also this speculation about who could be the next to head the central bank, this is the action we are seeing and the speculation we are seeing that yields are going to push higher. Vonnie julie hyman, thank you for that. A major week in earnings here in the u. S. The euro slipping on tensions in spain. And a victory for Prime Minister abe in japan. For more on all these Global Market movements, lets bring in dennis debusschere, head of portfolio strategy for evercore isi. Place in the world that looks most at risk right now for equity . The place we are most at risk, to be candid, i dont think there is a ton of risk out there. Vonnie place in the world that looks most at risk right now for equity . Really . Dennis one of the things weve been writing about is that conditions very much matter. As long as we are in a low rate, low inflation and low economic volatility regime and people believe the next recession will be never whatever the kids say these days as long as people believe that, economic volatility is likely to be very low. Volatility across Asset Classes is likely to be low. The risk associated with future expected cash returns is significantly more attractive in stocks relative to bonds. If those conditions shift, then everything unravels quickly and all Asset Classes are overvalued, not unlike the housing bubble. Vonnie we all know that can happen on a dime. Dennis it shocking that no one seems to be pricing any of that in, but i cannot shout into the wind all day long that you should be. There is no risk out there as long as people believe there is no risk out there. A shock could happen at any time. Nm not a next her at not a expert on the north korean military, but if one of those missiles manages to make it to japan, thats it does not seem like recession is imminent. It does not seem like we have a large inflation risk. So, what would change the mindset . What would change the behavior . Its hard for me to be negative, other than to say that people are not priced for a shock risk. Vonnie take a look at this on the bloomberg. We are not seeing traders see the same number of Interest Rate increases as the fed sees right now. If anything, we are not going to get a more dovish fed chair. It will be equally dovish or less dovish. Dennis the biggest risk is someone like taylor coming on board and, i guess, cutting out that theyif you will, will be hypersensitive to any of the asset prices. Taylor may not actually evolve that way, but people seem to think he will. If that happens, that would kind of undercut the whatever it takes backdrop and start to change this frequent put forever. In which case, risk premiums should be higher, definitely. Vonnie what about if the ecb does finally make a move, which it will on thursday . That in itself may not cause any kind of tantrums, but what about when we get out six months to nine months . Dennis until we see inflation, im not sure its going to cause a tantrum. They will be reducing the Balance Sheet tapering, but we will not be raising rates for another two years. So, you know, i just dont see why that should be a sock shock to the system. Vonnie what about asia and japan . Abe was clearly reelected with great ferocity over the weekend. Is japan a potential place for a bit of a pullback . Dennis if Economic Growth is so strong within japan that they cant continue that yield control policy, then that would be a risk, but it doesnt appear thats going to be the case. Economic growth is strong. Inflation is low. The yen is likely headed lower. Therefore japan risk assets should probably be headed higher. Vonnie what are your clients calling you out up about . Dennis when is the bubble going to burst . And im saying, until the conditions change, its not going to happen. Vonnie where will we start seeing it first . Dennis inflation. A shock higher in the yield curve. The first instances of inflation will be very feel very euphoric, in a sense. The deflation monster has been conquered, but once it becomes more sticky, then federal banks will be constrained and arrest ing asset price declines. It is not significantly imminent right now. Clientsare you telling its fine to be in risk your portfolios . In riskier portfolios . Dennis my message to clients is to be numeral. Nimble. Vonnie whats nimble thats not shortterm treasuries . Dennis shortterm stocks. Vonnie it sounds on the one hand like you are terrified and the other like you are completely calm. Dennis thats probably a good way to describe it. Vonnie thank you very much for your insight, dennis debusschere, head of portfolio strategy for evercore isi. Lets check in on bloombergs first word news. Mark c. president duterte has been criticized for a bloody crackdown on drug dealers. He threatened to cut ties with the u. S. And u. N. And European Union when their ambassadors complained. Dalia warns it would be a mistake for the fed to focus on average statistics dalio warns it would be a mistake for the fed to focus on average statistics. It could lead to dangerous miscalculations by policymakers. In the u k, Prime Minister theresa may now wants an all in one brexit package. The Prime Minister would like to bundle talks into trade negotiations. Businesses want to know as soon as possible that Current Business rules will stay unchanged for two years after brexit day in 2019. Japanese Prime Minister shinzo abe down gambled on calling early elections and won. They have retained their 2 3 majority in the lower hostile house. That boost his chances of remaining as leader of the liberal party, which could make him japans longest serving leader. The nikkei 225 rose for a record 15th day in a row. The white house said President Trump spoke iphone yesterday spoke by phone yesterday with Prime Minister abe. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Vonnie . Vonnie coming up, tax reform momentum continues to gather pace. We will bring you the latest of elements. This is bloomberg. Latest developments. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. President trump took to twitter, dispelling reports that the republican tax reform plan would change how people could save for retirement. The president tweeted, there will be no change to your 401 k . This has always been a great and popular middleclass tax break that works, and it stays. Joining us is a bloomberg reporter. Another wrinkle in the plan, justin, for quicks tax reform quick tax reform . Justin the problem or come but problem republicans are running into, while they are abl cuttingral support for taxes, paying for it is different. Earlier in the month, we heard a lot about the state and local taxes, but that has garnered big resistance from places like new york connecticut, and new jersey. Now there is a report in the New York Times that the amount that workers would be able to put in their 401 k s could be limited down to 2400 per year from the 18,000 they currently can. We heard the president should that down today. The president shoot that down today. Republicans need to find a way to pay for these tax cuts, but there is nothing that is politically popular that they can turn to. Vonnie exactly. State and local deductions, also part of this sticking point, a group of sticking points. Who emerges to make a deal here . The president can only advise. He cannot say yes or no. But this is his plan, right . Republicans on capitol hill are the ones tasked with writing out what these deals are going to be. The good news for the president is these are people who are used to negotiating with lawmakers, used to making the sorts of tradeoffs they need to get things across the finish line. Republicans dont have the best history with that. They were blocked on their attempts to repeal and replace obamacare. This is going to be a real test of the leadership of both the house and senate. One thing republicans have been consistently united on is tax reform. So, it will be a real test to see whether they can do that this time. Vonnie the House Freedom caucus seems to be gung ho about this. They dont seem to mind how much the debt ceiling gets raised. But there are republicans who are vehemently opposed to it. Will they end up killing it . Justin if they dont kill it, what we might see is a kind of scaledback version. Rather than a sweeping overhaul of the tax code, we could see more targeted, small cuts of the Corporate Tax rate, even smaller tweaks to the individual rate. , if republicans particularly in the senate do drive a hard line on having something that doesnt explode the deficit, i would expect maybe a smaller package to emerge. How politically viable that will be is a question we wont know until we see the details. Vonnie who are the republicans to watch when it comes to things like pay for . Justin bob corker has been really vocal about this. He is somebody who is retiring, certainly has been openly critical of President Trump before, so does not feel an allegiance to him. Watch him. Watch people like john mccain, who, although they are loyal republicans, are not necessarily lockstep with the white house and could play a big role here. Vonnie if there were to be changes to the 401 k retirement plan, what would that mean in terms of additional revenue . If it did go down from the 18,000 to something in the region of 2500, what would that end up fighting . Justin end up providing . Justin would we see people invest less toward their retirement account because they are not getting that tax break, or with people maintain their current levels . We could see hundreds of millions of dollars that would go toward the federal government. Its a real push and pull. There are also a lot of questions about the individual tax rate. They are working through that right now, whether these tax cuts would affect all income or just income under 1 million. Thats a big controversy that is playing out in these tax rating committees. They are trying to figure out how to strike the balance so that it doesnt explode the deficit. Pave the way to get tax reform legislation. I want to talk about a story you reported about. The president will meet with the perhapsne president and russian president Vladimir Putin during a 12day trip to asia and hawaii in november. Why meet officially with Rodrigo Duterte . Justin the president is attending a summit in the philippines, and it is customary for the u. S. President to meet with the host nation in a bilateral summit, but this is a really complicated relationship. There has been a lot of controversy over the extrajudicial killings as part of the drug war going on in the philippines. President obama, when we were in asia last year, ended up canceling his planned meeting with duterte, citing some of the more outrageous comments the filipino president had made, including calling him a pretty vicious epithet. President trump also likes to be a little contradictory, likes to go places where president obama refused to. We know from a leaked phone conversation that was in the Washington Post between du terte and trump that trump has praised his efforts to combat drugs and drug violence in the philippines, so he may not be as committed to those Human Rights Concerns as past administrations. Vonnie our thanks to justin sink, doing some great reporting for us. I want to point out that, right now, the president is meeting with the Prime Minister of singapore. He is talking about signing contracts for boeing planes. He also says he is very close on a fed chair decision. We will tell you more about that as it comes. Time now for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. The hartford will buy aetnas group life and disability. 1. 5 billion is the price. Shares fell by the most in more than a year earlier today. Verizon is selling nearly 5 billion of notes in euro and sterling to refinance old debt, according to a person familiar with the matter. That sale includes maturities as long as 20 years. U. S. Corporate euro bond sales are nearing a record pace as central bank easing holds down borrowing costs. Maybe the grinch does steal christmas. The eus overhaul of Financial Services rules takes effect january, leading for late nights to late nights for workers. The head of currency trading at deutsche Asset Management warns it could ruin some peoples christmases. Thats your latest. Once again, i want to point out the president is meeting with the Prime Minister of singapore right now. He had some comments for example, saying, for that he is very close on a fed chair decision. Before we get to pictures of that event, lets update you on markets. Not too much movement, at least on the face of things. The Dow Jones Industrial average up about nine points. The s p 500 is down 1. 5 points. The nasdaq is down 0. 2 . Its a big week for earnings, especially technology earnings, which will come towards the end of the week. Let me tell you about some currencies. Dollarmexican peso is back above 19. A weaker mexican peso by about 0. 5 . That is impacting currencies like the yen, which is weaker at 113. 67. Does have something to do with that as well. The 10 year yield at 2. 36 here in the u. S. Back with more. This is bloomberg. Mark President Trump meeting with the singapore Prime Minister right now. Vonnie President Trump meeting with the singapore Prime Minister right now. He says he is close to a fed chair decision. He says singapore will sign a contract for boeing planes. Announcing something a little business noteworthy there. Trump says singapore will sign a contract for boeing planes and that he is very close on a fed chair decision. All right. Has loomedof default over venezuela since the collapse of oil prices in mid2014. The government run oil and Natural Gas Company owns a payment of 985 million at the end of this week and another 1. 2 billion six days after that. President maduro is determined to meet all foreign bond payments, but its proving a logistical nightmare for the nation increasingly isolated by u. S. Sanctions. We are joined by a Bloomberg News reporter. Are we really just days away from actual default, where creditors get zero on the dollar . We could be. Im if they would get zero on the dollar, but if they decided to accelerate because of a technical default, lets be clear, what would happen most likely is that the government would trip a wire. They have no grace period. It could essentially trip the wire for triggering cds. Vonnie lets go to the president of the United States. President trump one of the things we will be doing in a signingriod of time is together a very large contract where singapore is buying billions of dollars worth of airplanes from boeing that will be made in our country, so thats jobs, and you are also buying the best plane, by the way, so thats very good. I want to thank Prime Minister lee. Thank you very much. Prime minister lee thank you very much. Happy to be here at a time when our relations are prospering. We look forward to taking them deeper and strengthening them in years to come, starting with this administration. President trump thats very good. I think it will never be stronger. I will be going over to that part of the world in two weeks, stopping in numerous countries including japan, south korea, china, vietnam, and probably the philippines also, so it will be a very busy 10 or 11 days. A veryinister lee important trip. We look forward to meeting you and hearing your message. President trump thank you, everybody. Thank you. Thank you very much. Thank you. Vonnie that was the president of the United States there in a meeting with singapores Prime Minister. They ar