More than three years. They will be focused on north korea sending a delegation tonight months olympic and south korea. At the same time, south korea will try to keep from undermining the u. S. s hardline against the north. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Julia live from bloombergs World Headquarters in new york. I am julia chatterly. Scarlet i am scarlet fu. Joe and i am joe weisenthal. The s p extending its winning streak for a fifth straight day. Hojoe the question is, what you miss . Do they also point to inflated prices. Farmers are hoping to reap the benefits of their support for President Trump, who is said to address the American FarmBureau Federations annual convention in nashville in about 30 minutes. Will bring you his remarks. Too much of a good thing could be hurting apple. Arebig shareholders concerns about children becoming addicted to the iphone and they want apple to do something about it. Julia whatd you miss . Goldman sachs financial conditions the easiest condition since 2000 after a big runup in u. S. Stocks. Now, fed officials are starting to wonder if they will need to address asset prices in order to avoid overinflated Consumer Prices at some point in the future. Joining us is matt vogler. Great to have you on. We have talked about this endlessly. That the conditions continue to ease in the face of Federal Reserve rate hikes. Go, theyoint do they need to do something here are respective of inflation . Matt it is a really interesting debate because you can go all to the question of what asset prices seem they get too high, what is the right level and what should the response be . Fed, at leastthe nowadays, is trying to sidestep that question and say regardless of whether asset prices are too high or too low, let us focus on the likely impact they will have on growth and how that will affect our full employment and stable prices goals. Really goes to the question of what does it mean for the inflation outlook, and theres so much uncertainty surrounding at the moment that it does not become operative at the moment but it could become something in place later this year. Joe i thought it was interesting President Trump tweedy the weekend that the stock market is roaring and it will lead to more jobs. Some people might dismiss it but it is not that ridiculous. Neil was saying the same thing. If you have higher stock prices, you can be more credit worthy and it could create jobs is that the mechanism create jobs. Is that the mechanism they were talking about . Matt yes. Brought a great chart and it raises the question of correlation versus causation. When you look at, historically what were looking at is the yellow line showing Goldman Sachs financial conditions index. That is that a 17 year high. Very good financial conditions. The blue line shows the yearoveryear change in the Unemployment Rate, that that is flipped upside down. Typically when financial conditions are better, the Unemployment Rate declined faster, and vice versa. The interesting thing is if you look at the end of the previous two expansions on the start, you could see the correlation kind of flips. , we had improving financial conditions with a yellow line we did not get that same sort of acceleration in the decline in Unemployment Rate. Theres a question of which i is causing the other. Sometimes they say financial conditions are so good because of the economy and fundamentals. It is a question of whether the employment rate is causing financial conditions to be good or a financial conditions being good are going to cause the Unemployment Rate to fall further great there is probably. Eedback in both directions scarlet this is a philosophical debate. What will lead to a tighter financial conditions . We have seen five Interest Rate increases thus far in the cycle and that hasnt done much for it. Is a going to be a reduction of those Balance Sheets, for instance . Question. Is a great one of the things that goes into those financial conditions is when you talk about market volatility, a lot of that is a whispering for general uncertainty. To the extent that they sort of divorce the Balance Sheet stuff from the Interest Rate outlook, you have less uncertainty about the path of Interest Rates. So it should augur for less volatility. It does become a question of, you want to be clear about what you are doing and all of the signaling in communications the fed does, but on the other hand, if you also want tighter conditions may be cannot couple. Julia and the conundrum they have with rising stock prices and bonds. Keeping the back end of the curve down. Were not happy about volatility, just low bond yields here. Were not getting what we would normally see in terms of tightening when you get tightening at the front end of the curve. Matt that is absolutely right. Shortterm Interest Rates have been going up quickly. Longterm Interest Rates have not budged. I think that is giving them some concern. Part of the recent longterm Interest Rates have not gone up is because the inflation risk premium is low. They are kind of looking at this and thinking if we keep hiking, we probably want to see those longterm rates go up soon. Joe specifically, as we approach this year and the debates that the fed will have about rate hikes, tell us what you are looking at us ethically and how it will affect the base we will see. The important thing to watch will be the inflation data so we get the Consumer Price index on friday. If that starts a turnaround over the next four or five months, the financial conditions thing will be the thing to shift to. If we do not get the pickup in the ruby a lot of hammering about financial conditions but not a lot of fed response to it. Is the question yellen posed. They cannot explain why we saw the deceleration. They said we can explain it for the year before. If they cannot answer that question, or do they need to answer that question before they can start tackling the impact of financial conditions . Making adjustments to the rate forecast. Matt i think it is right. Talking about philosophical and existential. The link is between financial conditions in the Unemployment Rate. If you are not sure about the link, then you cannot be too concerned about incentives to the Unemployment Rate to inflation. Scarlet go back to the drawing board. Back to square one. Thank you so much for an enlightening conversation. Coming up, the Security Issues affecting intel chips was cybersecurity researchers months before the big revelation. This is bloomberg. Scarlet whatd you miss . It has been a week since intel review revealed all of its modern processors and the tax by meltdown inspector. The chapter techniques can impose crucial data to password than encryption keys. The revelation did not come as a surprise for some people, as researchers have been looking at the security holes months earlier. Joining us now to discuss from San Francisco is boomer technologys Ian King Bloomberg technologys ian king. Thank you for joining us. Your story really take this in detail what researchers have been looking for and indicates this is a potential vulnerability that people had known about for a long time. What changed in the past week . Wedded to become so urgent all of a sudden . Why did it become so urgent all of a sudden . Became urgent because someone found out about it and went public with it. The Standard Practice is to find a weakness or exploit and then you try to fix it and say we found this problem but do not worry because we sorted out. What happened in this case, which made it more dramatic, was that word got out. Julia was quite fascinating in your story is that you talk about researchers that found these vulnerabilities and they thought they were so glaring that the chipmakers would have already addressed them in taken mitigation steps. How did they get caught offguard so obviously by this . Raises questions about other vulnerabilities. Ian that is a good question. The backdrop to this is for years, since microsoft had all of those, problems with the software chipmakers have another thing trust us, put it on a trip, it is hardwired, much harder to crack. There will be in the safe areas of the may come along and have to say actually, no, this is something that we have been doing to speed up and it works for years but creates a back way into it. As researchers, we had them swearing in disbelief. They thought a company like intel would never in a million years loss of thing like this to happen. Joe as you said, the exploit comes from the fundamental nature of the chip, anticipating what you are going to do next. That sort of thing. How serious is the risk that when all of this is patched, everything will run a lot slower . Ian that is a big concern. We saw the Large Technology companies, including intel, say look, we will catch it and it will be safe. The problem that might cause is by taking away, some of the things that speed up chips, we slowdowns. We do not know yet because a lot of those patches have not been implemented. If you have been updated or apple products, updating your apple products over the weekend you see the security taking place, is it slowing things down . We do not know. The key thing is what it will do in the data center, where the bleeding Edge Performance is needed. That is what we will have to see. Julia from this article, perhaps they were more focused on performance here than they should have been on security. They were distracted, in some way. Do think there is a risk that these companies knew of these vulnerabilities and did not do enough to address them . Or do you think they were caught offguard here . Ian i think you just have to take them at their own words. They say they were focused on security. This is a separate effort designed to speed up chips, something going on for more than a decade. They didnt think this would be a possibility. The researchers did not think it would be a possibility but turns out it was. Scarlet were finding out a lot about what could be. We know these computer scientists have been working into these potential hacks for more than a year. Is there a possibility that we have been hacked, people, companies that we are not aware of it yet . Ian what they said so far is no known exploits or examples of this. To go back to where we started off at this conversation, the minute you put out that there is akness or exploit, the bad guys crack open their laptops and create code and take advantage of this, so you better be flipping sure you have that mitigation in place to stop them. If you dont, we will find out about that pretty soon. Scarlet ok so beware. Ian king joining us from San Francisco. Thank you so much. We want to turn out to gopro. The camera maker is rebuffing the ports. Sale came after the Company Announced it would cut more than 20 of its workforce and exit the drone business. Oflier, we had selena Wong Bloomberg technology catching up with ceo nick woodman. Innick i can confirm jpmorgan nick i can confirm jpmorgan is our banker but we have not engaged them to help us sell the company. There were an, if opportunity for gopro to partner up with a Larger Organization that can help us scale our company, brand, and reached a consumers, that is something we would consider. It is not of the we are actively engaged in at the moment. Do you think you will want to actively engage in this . Other catalysts are there catalysts you see coming . Have people reached out . Nick would we engage in Something Like this . This is something we explore from time to time , as it is our job to grow the business and the most strategic way possible, and that definitely is one way to do it. ,t is not a new topic echo pro but i cannot share any more information than that. Selena youre the founder of the company. From herperspective, how are you evaluating the different options that hands . This is not a new topic. Is there something that is changing now . Nick the worlds voice changing in our job is to align gopro with consumer behavior. Sometimes, that is easier if it is done with a partner or acquiring company. The same time, we have to build gopro as though we intended to run it independently forever because that is how you build a strong business. I cannot share any more information about other than we are building a strong business. Already great selling hero wereack is not 399, so expecting is now 300 99, so were expecting great things there. 399, so were expecting great things there. Woodman. That was nick shares down as much as 33 , currently now off about 13 . Speaking of stocks this week making big moves, but is get a shares of dave and busters for our stock of the hour. Its worst day for the Company Since it went public in 2014. This comes after dave and busters cut its fourthquarter revenue outlook. Abigail doolittle here with us for more details. This is much more than an ordinary chain. Abigail this is what theyre calling an entertainment complex. I have not been but joe said you were there, and you have the experience of going there as well. The mixture of winning joe the results. Abigail chuck e. Cheese for adults. Joe except without the animatronics, mechanical animals. Abigail in any case, they missed in terms of revenues. Theyre bringing down the guidance. They alluded to this on the Third Quarter call saying november and december were getting off to a weak start and this happens. They will be speaking at the icr conference tomorrow. Scarlet what was the likely problem here for dave and busters . Abigail the holiday is season because everyone is talking about the fact that this is the best holiday in a decade, so consumers may be shopping on gifts as opposed to experiences. Interestingly, analysts are positive. If we happen to the bloomberg. Jump into the gd function to see the overall landscape of what is happening, first of all, here is the plunge down 22 . Truly underperforming. The volume is above the 20 day volume. This is what i really want to point out. There are not a lot of analysts out there, but perhaps they are getting a bit of the past with the idea that the holiday season, and set of consumers spending on dave and busters joe everyone knew christmas is coming up so. Abigail i agree with you on that. Joe i am not even an analyst. Abigail if it was such a strong holiday season, perhaps there is extra funds that went away from entertainment. We will know more tomorrow at icr. That could be one reason why some are bullish. Julia forgive me. We talked a little bit about this but this is a new one on me. Abigail me too. This is very new. Julia actually goes . Who is the Customer Base and can you please that forward to about look is . Abigail i reach up to some of my colleagues and it turns out millennials like dave and busters. You can go and play games and drink and eat. Answer. One also families. I know scarlet, you were saying you brought your son. However, there are some on wall street who do not like dave and busters. About 175 since the ipo was finding this. Julia basically big kids. I have images now. [laughter] scarlet forget the women and children. Julia move. My game. [laughter] julia we did not predict that forward. Meltdown, the market is already obliterating. Analysts in 2018 targets. We have the charts you cannot miss next. This is bloomberg. Loomberg. Joe whatd you miss . Whatd you miss . The u. S. Equity multiple is making a total joke of the 2018 estimates. Days,like four or five the blue line, the bottom, or the teal line, that was your end of year outlook. Nonetheless, we smashed through that. Line, some other analysts. We are there. The purple line at 2800, that is what is left of city. Even the strategists have to become bearish soon or revise and say it came out different than i expected. It does speak to have intense this rally is. The popup they could make ends of your forecast and were already there. Scarlet four Business Days in. Joe take the rest of the year off. I want to talk to you about about theant to talk focus we have had not only in the United States but over in china. Do not missine is that at some of the Old Industrial shifts we are seeing, a. Rticularly in china goo white line is the runup we have. Een this is normalized from december 2016. They added 101 billion in market cap over the last 12 months and it has held its own versus the likes of 10 trends and Alibaba Group there. These are all mutual points. They are attributing investments on Online Services and rising demand as the middle class expands. The messages do not look at the new tech stocks, with the old ones that are adapting. Quickly, i will show you another chart that i have on the valuation. It is trading at a valuation of 17 times reported earnings and it is tha at third. Interesting comparison there. Very whatd you miss . I think. Scarlet theres your opportunity because most people missed that one. Im looking at commodities. They have been on a bit of a role. The bloomberg commodities index is the blue line and it made an 11yourlast week. 11monthhigh, sorry. The big winner 2017. Joe talked about it a lot. So what is not gaining here and commodities world . Stocks commodities. Look at the white line down there. We shaded it in red. Little changes since december and they are being held back by too much global supply. Coco is near a sixyear low in london.