3 today, and that is one of the most beatendown sectors in the entire world. Whenever it was, they liked the latest turn. Scarlet investors in u. S. Financials liked it even better. Energy at 3. 4 . Three sectors closing better than 3 on the week, materials, energy, and financials. I guess those were your rally stocks. Caroline good old fossil 2000, russell 2000, that, oo. What are you watching . This was a big week for the russell 2000, up percent on the week up 5 on the week. It is the exam performance and smallcap vs. Large since the president ial election. If you take a look at this chart, the ishares smallcap fund, it tracks the russell 2000. Investors have added 4 billion to this fund this month and it is the largest inflows since 2016. What investors say now is we will have to see continued outperformance were smallcap for this to true remarkable turnaround point. Abigail . Abigail perfect segue to the sport. This is the value etf, taking a look at the big inflows, the most in many, many months. Up 6. 4 . Tied into the rotation. The momentum etf down 2. 4 . Earlier this week, the chief Technical Analyst at oppenheimer had interesting take on this. He said it is not necessarily rotation. The move in value is bullish for the market overall. In yellow, lowmomentum stocks. Last few years they have been tracking some levels of high momentum has been going better than low momentum. There is the surgeon low momentum. Surge in low momentum. Up ins more of a move lowmomentum stocks and he would ever recommend cyclical lowmomentum stocks. Taylor for me it is all about the big treasury selloff we are seeing. It is the rate at which we got year. The fact that we have been doing it for 8 straight sessions allowed going back on the 10year, up 12 basis points on the year. You know have the 10year finally starting to flirt back up with the 2 yield. Quickly we have gotten to these levels, both of those are key Technical Levels that we will be watching. What is interesting is if you come to my terminal at gtd go, jgb go, american amount upon thatws on one etf that tax , in longerduration bond fund. We had a record amount of shares outstanding. We have come off of that a little bit today but very close to record. This highlights the divergence we are seeing. Clearly not a classic riskoff trade, but flows into equities out of bonds. You are seeing a little bit of the matter that. A little bit of difference we are seeing in the market. Joe thank you, taylor and the markets team. Still with us is our Bloomberg Opinion columns as well as the Portfolio Manager of the equity etf. We have of the rotation seen and the data that has been slightly better than expected and in light of the march up in bond yields, did jay powells job next week get harder or easier . On one hand things are looking better. On the other hand maybe what was an obvious move weeks ago is a little more dicey. How is he thinking about his job right now . I agree, i think it has gotten harder. Investors want to see two things. First, a rate cut. But the thing worth paying attention to is the language of the press conference and the blue dots to come out with a forecast. People want to hear news that more rate cuts will be coming. Im not so sure that is going to happen. Look at the core cpi data over the last seven years. Fke the four strongest months or core cpi, the last three have been in the top four. G difficultybi for cal because that is what fed chairmen do, they look out for inflation. We are getting this contradiction between the desire for more rate cuts and what the data is pointing towards. Scarlet you know what has been a nice change, we dont spend as much time talking about how President Trumps tweets about low Interest Rates affect the market. Brian the thing i wrote about in my column is he is less focusing on this idea that we need more rate cuts because the economy is weak and instead saying we need more rate cuts because the u. S. Should be able to borrow at a cheaper level, which is a strange thing for him to be saying scarlet unless you are thinking like a real estate developer. Brian exactly, and that is where he is coming from. Yields have fallen so far on the long end of the borrowing costs for our country have not changed that much. As for the fed, the interesting because they have talked about how financial conditions have these because markets think the fed is going to cut. It is this weird circular argument. The fed is going to cut, therefore things are better. It will be very interesting to see how they play that. Rate cuts are far from certain. Caroline interesting that companies have been dining out on the Lower Borrowing costs. Talking about a real estate i amoper can thinking about a Real Estate Company that looks at itself as a technology company. We are looking at cloud fair doing pretty well. Wework story, which is pretty unusual. I do think into is attendance in general there is a tendency to take the ipo market it is overplayed how much it is a barometer for the entire market. There are good ideas and bad ipos. You can tell when the market gets frothy with a lot of names that should not be going public going public. I do not draw too much inference from the state of the ipo market. Joe what else are you watching . We talked about powell. Is traded the other thing that could send this market into one direction or another . Eddy absolutely. There was a Research Report that set for q3 earnings, companies that are trade sensitive, they do a good deal of their business outside the u. S. , they could see doubledigit earnings declines for q3. What i find ironic is what we are seeing lately is an abbreviated version of the trump trade that we saw after the and the beginning of 2017. Speaking of trends, i want to go back to a theme that was head of one several times. Out of the cyclical and into defensives. When we talk about value and we talk about momentum, how do you define it . It seems to change if anyone who we are talking to and what you are looking at. Eddy overly technical point, but one of the things the financial crisis, that has worked a lot of the book value of financial news. The financial indexes have been corrupted as all of these financial stocks have been swept into the value index. It gives us i dont think it gives us an exact look the way it should be is how much the market is going to take on risk. What we have seen lately is much defensive, cyclical and you can see that by looking at the s p 500 industrials. Is more ofme that it the cyclical story and that it looks like it is a moment in value story. Caroline interesting with technicals on equities. The 10year yield searched the most since 2016, brian. You are bracing for the fed but boe. For the boj what do you think the music for Central Banks the mood music for Central Banks is going to be . Brian it is a question of what Central Banks can do. They want to ease because they have seen easing as a way to keep the economys going. That weaw with the ecb need help from the fiscal side and that will be a major theme you hear throughout the centralbanking world can we have done all we can come we are in this long expansion, and if we want to keep it going, we need some help. Joe speaking of the fiscal side, 1 trillion in deficits through the first however many months of the year we are doing our part. We are doing our part there. Brian defends what kind of deficits are good vs. What kind of deficits are not productive deficits. Infrastructure is the one people think could improve productivity for the entire country. Scarlet we feel it every time we leave the office and make our way home. Thank you so much. Portfolio manager of the equity etf, we thank you as well. That does it for the closing bell and for me. Romaine bostick stepping in for whatd you miss. Wework insists on pushing ahead with its ipo. This is bloomberg. We are live from bloomberg World Headquarters in new york. I am caroline hyde. Romaine im romaine bostick. Joe im joe weisenthal. Caroline lackluster on the equity market. Romaine but the question is, whatd you miss . Caroline u. S. 10year yield hitting a high on stronger than expected data. Gaining ground, the s p rises for the Third Straight week. Pushing ahead wework changes its Corporate Governance structure to calm investor concerns ahead of the ipo. Some say the move does not address the problems. All that and so much more coming up. Romaine all right, lets get into probably what is the talk of the week beyond what is going on in bonds, and that is what is going on in the ipo space. Star trek record predicting winners and losers among technology ipoa strong track record predicting winners and losers among technology ipos. A lot of winners and losers. Lets start with i guess they are a loser, they have not come into market yet. That is wework. They are obviously trying to appease investors here. Is that going to be enough to get out the door . We use wework as an example of what we know about winners and losers. There are three things you can point to that when combined are really dangerous, and wework is a poster child for all of them. First is losses. When you are losing billions of dollars, that is problematic. The second is lack of transparency. When you are really opaque and people cannot figure out why you are losing money so much and it doesnt give you the answers, that is worrisome. Lastly, arrogance. Investors really dont like that. It is a trust thing when you hand over billions of dollars to accompany that is not been public before. Public investors have a hard job figuring out the right price for these things. It makes the job really hard. Or can you quantify that, the opacity question . Your work does a lot with a scoring system and factoring in these other things. How do you think about quantify arrogance or the level of clarity that the Company Gives you . Arrogance in general is hard to quantify but we do qualify the opacity. We talk about the of the station index. Obfuscation index. Overtime those locations become profitable. Untangling the mess is not easy to do if they dont provide the right numbers. No numbers at the unit level at all. When you are asking for 4 billion for a company that loses 2 billion a year. Caroline perhaps some of the rather more eyebrowraising parts of Corporate Governance, fact that his wife was perhaps able to nominate the next executive, that has been struck. Do you think that getting this overzealous confidence in the way that the founder controls the business and the family might is being changed enough to use those concerns . Ease those concerns . Rett what i would say is they were so far of the scalable for that they found themselves back to normal outage caroline why hasnt softbank and the like said this is really unusual . Rett its a really good question, because there are a lot of capable, experienced, knowledgeable, smart people around the table. As far as all the people in the document this morning, changing the governance structure, making it on the way to a real board but not quite, uber did all this housekeeping way before they attempted an ipo. These guys have put themselves in a position where theyre kind of doing some of it now but only when forced, which makes it hard for investors to trust them. You have to trust them because it could be that given the type of business this is, the equity is worth nothing. When youre losing 2 billion a year. On theden of proof is scene to explain why the equity has value 20 votes per share versus 10 votes per share. Romaine lets not have wework suck up all the energy rett thank you. Stories,two different saldivar club, and cloudflare, which did well. Rett it is the normal market. The crowdstrikes of the world have all done fine. Some of them have losses but they dont have the three strikes of opacity and arrogance. Romaine and they have legitimate growth stories, identifiable growth stories. Rett wework does well but they dont spend two dollars for every dollar of revenue growth. That is why opacity is a problem for these guys. It is bifurcated. Investors separated into its own category. Dogs s, data joe what do you make of the awful debut for smell direct club . Didnt seem like there were any indications of lack of concern and that of total bomb and then a total bomb. Rett i hope it rekindles discussion of what happened with uber. This is the same but more. How do you close the book at one price and have a trade 20 below that price the next day . It is like a management issue as opposed to anything that has to do with clear plastic braces or whatever it is. Caroline is this something that ipo bankers are grappling with, something that price providers are grappling with . Or isa citadel problem, it jpmorgan and Goldman Sachs . Rett it is all of their problem, and when you are not transparent and it makes the job of raising these things that much more difficult, and it is already an intrinsically very difficult thing to do. When things, along like beyond at nobody can explain why the Company Trades the way it trades once the narrative goes away on wework, it makes it difficult for any participants to know what to do, which is why softbank is stepping in and will buy a quarter of the deal at 750 million because that is the signaling that helps people anchoring for something that israel. That is real. Caroline go long. Joe great stuff. Coming up, the s p ending three days of gains. More analysis on the market next. This is bloomberg. Joe treasury is extending the september tumble. With the benchmark 10 year yield surging the most since 2016 amid strongerthanexpected u. S. Economic data. Joining us for more Economic Analysis is mike regan of bloomberg news. If you only follow the stock market headlines, no one would know what a crazy week this was. Mike absolutely, especially if you look at the indexes joe you are just a guy who checks the dow. Mike right, right. What is fascinating to me about this whole week we talk about this factor rotation if you took a trader who are taking the last 20 years off and you asked what happened to this week, this vocabulary has taken over our lives. And oldtimer would say people moved out of the fences in cyclicals. I hate to call real estate defensive, proxy stocks. The bond market is clearly just pushing and pulling the stock market in each direction. The class signal from that would be economically bullish. People are getting back into the cyclical stocks and value being the proxy for the cyclicals commodities, financial, that sort of thing and out of that defensive yield proxy stocks that had been the momentum trade in the vocabulary. Wouldk the oldtimers take that as a bullish signal. Im not sure. Romaine ok, but it is not the oldtimers running the show now. It is the young guns. We have seen the correlation between what was going on with bonds and rates market and what was going on with stocks. When you start to see the 10year back and the 30year and twoyear also drift up, what is the threshold where that starts to take a bite . A huge part of the equity rally that we had back in july and writer that was because of the drop in yields. Michael i think you are seeing part of it today. People are still selling those defensive yield proxy, what had become the momentum trade still smelling that are not buying as much of the financials, commodities, and we have the flat to down market right now. The question is what is really in yields, partly it is that we had this insane august bond rally, biggest role in treasuries since the financial crisis. The Economic Data is improving a little bit. Not that much. Trade tensions are improving. But that is a slippery slope right there. The one thing not a lot of people are talking about visavis the move in treasuries this week is the huge amount of Corporate Bond issuance. The Corporate Bond market reopened after labor day and it was off to the races, because there had been this bottleneck in issuance because it is August Caroline oxygen or what . Michael theres a little bit more yield in ig. All of the ig supply it is over 100 billion so far. 40some billion this year alone. Necessarily appear economic im Mark Crumpton with bloombergs first word news. The European Commission president will meet with Boris Johnson on monday for brexit talks. The European Commission said today that they will have a working lunch in luxembourg. He said from the very beginning that he was looking forward to working constructively with Prime Minister johnson. The reason the lunch is taking place in luxembourg is because the president has to go straight to Charles Burke afterwards. Mr. Johnson agreed to come to. Uxembourg to facilitate Prime Minister johnsons envoy has been holding talks in brussels, but no breakthrough is made. Prime minister johnson wants the irish border provision removed from a legally binding Brexit Agreement sealed by his predecessor, theresa may. Venezuelas foreign minister says that with or without john bolton the Trump Administration has a mechanism for war with venezuela. Bolton pressed for president maduro to step down so that the u. S. Backed Opposition Leader could assume power. Yesterday, trump tweeted that bolton was holding me back on venezuela. Continued, i am sure that the people of the United States sooner or later will govern in a real democracy, not a plutocracy of two impossible parties. Felicity huffman has been sentenced to two weeks in prison for rigging her daughters sat scores in the College Admissions scandal. Huffman is the first parent to be sentenced in the case that sparked a debate over privilege and class. Paying 15,000d to have her daughters sat score boosted. Others chose not to seek plea deals and are fighting the indictment. Eddie money, who left beh