Its weakness too. Alicia i want to point out the dollar has been moving lower the last eight weeks, telling you it is on its way down to a softening, making emerging markets actually kind of interesting. The fed has blasted it today. Romaine lets dive deeper into all the action right now with our markets reporters. Abigail, what are you watching . Abigail i have my eye on volatility once again. The vix and speculative vix sports. Might not have stocks moving much. But some who have been selling volatility this year are starting to change their mind. In white, speculative vix shorts. In blue is the fear index. When the whole theme that you was complacency, the vix shorts, superhigh. The beginning of 2018, the vix spiked at the beginning of the year as the trade war kicked off. Into the Fourth Quarter after climbing, the vix shorts came back off. This year vix shorts have been climbing all year as many investors and speculative investors have been selling. But right now it is starting to come off a little as the vix creeps higher. We are keeping and i in this period of less than 1 for the s p 500. When that changes that could be big volatility. Taylor i wanted to tag onto a point you made earlier coming back to the small caps. If you look at the chart i am showing we are looking at the racial performance of small caps relative to the s p 500. Near what has been a three year low. We are starting in white two inch up higher after four strategists expect small caps to outperform in 2020. Looking at a 7 gain in the 7 gain in the russell 2000. Starting to pick up a little momentum as trade optimism goes on come help in the economy restore some appetite for smallcap stocks. Highly dependent on manufacturing. Pmi numbers can also turnaround. Renita i am taking a look at gold and its extended gains after the fed chose to keep rates the same and signal it would do the same for the year 2020. Look at the intraday action. It also earlier advanced after the contained apace of u. S. Inflation data reinforced the case for that very fed action. Yearill more than 12 this for the year, and trade uncertainty has cap kept gold in the back pocket of investors seeking to find a safe haven for the assets. They are still eyeing this december 15 u. S. China trade deadline, and thursdays u. K. Election. Scarlet thank you for all that context. Still with us is alicia levine, as well as Bloomberg News across asset reporter luke kawa. I am glad you brought up the eem rising 1. 5 , outperforming. Semiconductors also did better. Chip stocks up to put 1 . With the fed now clearly making its stance known, it will tilt dovish and not do anything in 2020, does this give all cyclical sectors the green light . Alicia this is a great moment to go back into cyclical sectors. The market has been telling you the last two months the Global Economy stabilizing. Perhaps upward and growth. We think in the u. S. Growth will be higher than most estimates have for next year. Classest, other asset are way underpriced compared to the u. S. Market. So the u. S. Is the best house in a really bad neighborhood, and it is now time to look at other asset classes, whether stocks or dollar, a fed on hold. Other markets are cheaper. Ise what is interesting nonus assets is the big story today. When we were talking about rotations and markets it was all one trade. Yield throughout the world versus u. S. And growth of value proponents are moving together. Today you have the rest of the world outperforming, but in the u. S. , Growth Stocks still outperforming. And that is the yield down factor. I think this speaks to the role of the dollar in taking control of that reaction, yields taking control of more of the factors. Joe so they are related but there is a distinct dollar effect versus cyclical effect. Not about some big growth pickup or say, it is pickup per say. Currency markets as a result of powell. Luke for now. For now will be a big caveat. It could turn into something that would have more fundamental lack. In the u. S. , eurozone and china now all positive for the First Time Since march of 2018. Scarlet we have earnings out from lululemon. The yogawear maker, although it has expanded its line to men. Boosted its fullyear earningspershare view. 478. Es for 75 to by the way, that range is higher than the average analyst estimate which was . 75. Quarter, etfird was . 96 versus . 71 yearoveryear. It also tops the average analyst estimate by 0. 03. Total revenue in the third quarter, excluding the effects of currency, it rose 17 , better than what analysts were looking for, which was 14. 2 . But the stock is down about 7. 5 in afterhours trading. Maybe people wanted to hear more in terms of the midpoint. More than just a midpoint view beating consensus estimate. Romaine lets stay on that broader theme of earnings. Are we expecting going into are you expecting any kind of meaningful upside surprises to earnings in aggregate . Alicia in a funny way we already have the upside surprise. Here we are the middle of december, and by now earnings estimates for 2020 should have been cut by 2 or 3 from october 1, which is where the cutting cycle really starts historically on wall street. We are still hanging out at 9 to 10 Earnings Growth for 2020. We have not gotten that cut we should have gotten by now. We have already gone the earnings upside surprise for next year, which i actually find really interesting. I thought we would see it about 7 for next year. We are not. What are you seeing in terms of earnings and how people are feeling about next year . Luke the interesting thing for a while is destabilization you have for the s p 500, but you look lower to the midcaps and small caps, and those are places where profit outlook has been deteriorating and brutal for a while. You have seen that turnaround for the past month. Forward for the midcaps or small caps, those are now starting to turn a little higher, and that kind of fits with the theme of a more resilient u. S. Economy. Then on the other hand i think the earnings picture could be flatter if this dollar trends that we have seen recently continues to go on. The flipside of that is it could make it a little more challenging to get those unhedged for inflows into the u. S. Corporate bond markets, so it could be a stocks versus bonds story for 2020. Scarlet Something Else we will look ahead to. Something else this week is the u. K. Election tomorrow. Felicia, is that changing the way that you view investors pricing risk . Alicia we are actually very positive on the u. K. So, absent some Hung Parliament, which is possible, i think any resolution of this at all is positive. There have been massive outflows from u. K. Equities since june of 2016. We think the u. K. Looks interesting. The economy has slowed because of the lack of investment, particularly in the last year as brexit kept getting pushed out. You cannot invest with this uncertainty. This will put an end to that and we really like the u. K. Actually. Romaine i want to get your thoughts on the ecb tomorrow. What are you expecting, and how does that play into the global dynamic of rate differentials . Alicia Christine Lagarde has a delicate balancing act because she has the germans on the one side screaming about negative rates, and the rest of europe on the other that needs to support the economy. I think we will see more accommodation. I think we are going to start hearing a press towards fiscal policy. The ecb has come to the end of the brick road. It cannot go any further with negative rates. It needs fiscal policy. I think Christine Lagarde is in a really interesting position here as someone with a credible voice. Scarlet she will be flexing her political skills in her new job. Alicia levine, thank you so much, along with luke kawa. That does it for the closing bell and for me. Would you miss is next, where we will be looking at the u. K. Election tomorrow. This is bloomberg. S is bloomberg. Romaine im romaine bostick. Joe and im joe weisenthal. Romaine heres a snapshot of how u. S. Stocks closed today. Hitting pause. The Federal Reserve leaves rates unchanged, signaling to keep them as it is through the new year. And johnson versus corbin. U. K. Voters heading to the polls tomorrow to decide who will be heading 10 downing street. And bank of japan Officials Say they have seen a sizable impact from the government stimulus last week, signaling a possible forecast raise. Reserve decided to leave Interest Rates unchanged as expected. Fed chairman Jerome Powell weighing in on the decision. Take a listen. Without decisions through the course of the past year we believe Monetary Policy is wellpositioned to serve the American People by supporting continued economic growth, a strong job market, and inflation near our symmetric 2 goal. While low and stable inflation is certainly a good thing, inflation that runs below our objective can lead to a unhealthy than amick which leads to dripping down, pulling actual inflation lower. Looking ahead we will monitor the effects of our recent policy actions along with other information as we assess the appropriate path of the target. Of course if development emerge that cause immaterial reassessment of our outlook, we would respond accordingly. Policy is not on a preset course. Discussning us now to the fed decision and chairman powells comments is ubs chief u. S. Economist seth carpenter, who previously worked for the board of governors of the Federal Reserve from 1999 through 2014. Thank you very much for joining us. The fed says the fed did not hike. Everyone rbc expected it. The fact there is nothing more expected next year is well expected. What about the press conference . Theit this rise you did dovishness surprise you . Seth the question comes where peoples expectations were. The dovishness came through when he started talking about the Unemployment Rate coming down. Good thing to basically see how far he can run. That feels like a dovish side of things. What i thought was interesting was last time in october he said in response to a question, what would it take to hike rates next, he said it would take a really substantial sustained increase. This time they have it leveling out at 2 . Nevertheless by 2022, they all think they will hike. That kind of consistency in talking about inflation, that for me is the tough part about following these. Romaine they are basically saying 2. 1 , and they would be ready to hike again. They seemed to be some expectation we were going to get more of a rethink by the fed of their mandate, or at least how they would try to achieve that mandate. It doesnt seem like we got that. Seth i completely agree, we did not get that. They funny because in 2018 were willing to write down in their forecast an overshoot of inflation of their own forecast. Now they are not willing to write that down and yet they are still hiking. To me that cause into question where they are. Romaine but then do we interpret this as dovish . It seems like that almost contradicts the dovishness. Seth for me that is the real issue. Have thee tries to unpleasant conversation. But it is not a real consistent, coherent message. Joe does that make the case for getting rid of the you hear a lot of people say people dont understand what they are. If we cannot even make sense of how the dots square with the spoken words of the fed chair, or when the fed governor speaks, seth there is a strong argument for that. I was working at the fed when the dots were created. They are like a rorschach test. Everyone can see in them whenever what was already in their mind. One person could write down a bunch of hikes and 2 inflation and say we have to hike, and the other person would say to percent inflation, there is no reason to hike. It all comes down to interpretation. I think they mislead as often as they inform. Romaine i was always under the impression powell was not a fan of the dots. He continues to stick by it, i dont know if it is him or the committee pushing on him. When you look at the economic forecasts out there, do you think the Economic Data we have is in line with what is being communicated by the fed with regard to their potential policy . Seth i think that is hard. Powell pointed to the reassurance part, job creation. If you just stick with the numbers are looks good, and Consumer Spending is hair holding up solidly. But investment spending is negative. We she we see factory shipment going negative. Taking how he phrased it, Consumer Spending is holding up, yeah, i think it is consistent. We are quite worried about how the next several months plays out as the tariffs that already went in in june in september continue to filter their way through. Ishink what powell is saying given the information we are on hold, but if things change, we will change our minds. Joe one of the key answers for me was at the end it when he was asked to say whether he would characterize the labor market is hot. He said no because wage growth is still not impressive. I was also struck because he talked about the benefits of some of these fed listening tours. What is the state of your world right now . I am curious whether you think the fact that powell is not an academic economist, he comes from a business background, is perhaps a source of flexibility in his ability to say maybe the models say we should be hiking or that inflation is around the corner, but maybe he is showing a willingness to look at the world and listen to people and say maybe that is not much of an issue. Seth being an academic economist can be a doubleedged sword. We did see the fed start to raise Interest Rates in 2015 with inflation below their target, and it was all predicated on this belief that low and falling Unemployment Rate would inexorably lead to increased inflation. But absolute kudos for him to be intellectually flexible in that regard and thinking maybe we dont know quite as much as we thought. Romaine do you think the fed will respond if the trade issues become a little more of a Sticking Point for the economy . Do you think the fed will respond specifically to the trade issue . Seth my sense right now as they will be on heightened alert but they will probably have to see it in the data. Soap additional falling in investment spending, pullback in hiring, some fallen consumption spending. Romaine our thanks to ubs chief economist seth carpenter. We want to bring you some breaking news on continental resources. Harold hamm is apparently rely cushing his role as ceo of continental resources. Joe William Barry in a press release has been appointed ceo. Romaine this is bloomberg. Romaine breaking news on lululemon, shares moving lower after hours after the Company Reported earnings. 3q came in above estimates but the company give a Fourth Quarter eps estimate of 213 a share, basically in line to slightly below what they were looking for and it appears to be what is pushing down shares. They gave a full year outlook that was higher than estimates. But again, they are expecting more. Joe and more breaking news out of brazil. Seems the fed is not the only central bank with a dovish posture. Brazil cutting its benchmark lending rates from 5 to 4. 5 . A 50 basis point cut. They see gradual economic recovery. And the central bank recommending caution in Monetary Policy. Romaine lets turn to billionaire ken griffin. Does he have another money machine to rival pitch has found . They areecurities, much more lucrative than you might think. I am not sure anyone i dont know anyone who has dismissed citadel securities, but i guess a lot of folks may not give it its due. They are two separate entities. Everyone knows ken griffin as the Big Hedge Fund manager. Eight years ago and they really started to try to get into traditional Investment Banking functions it did not really work out for them. Romaine that is still the same company . Sonali yes. Now the marketmaking has been more successful for them. Than manyt bigger people realized . Joe so what collect. In the beginning it didnt work. They had a number of false starts. What finally collect click for them where they were finally a serious player . Sonali they benefited from banks not being liquidity providers in markets and they have entered options trading markets flopped and equity markets and big ways come. Is made a lot of wealth by exploiting those types of opportunities. And he has gotten very wealthy over the past year primarily because of this. Sonali 10 billion on the bloomberg billionaire index. The other part of his empire expands by another 5 million. His hedge fund is also doing really well. Maine hedge funds wellington, tactical trading, each up more than 50 . He is having a great time on both sides of his empire. Citadel securities handled a lot this year. Uber, slack. Joe lets talk more about the regulations that were put in place postcrisis that enabled citadel to become such a big markets player, and how much of those regulations are frustrating. Sonali very much. I keep on saying to people joking around it wall streets biggest enemy is itself. You have this big war between the cell and the buy side because they are getting into each others business. Especially as the trade inflow is being captured by people like citadel. Romaine but this will continue . Unless you get loosening of regulations, which i guess is possible, but not necessarily a slamdunk. Sonali even if they turn back the wheel on a lot of this it will be a difficult thing to do. A lot of the banks contend that some things paul volcker took away is not going to come back. They cannot pay these traders like they used to. And also it is really hard for banks with the capital constraints they have to be what they were preprices. Joe now, a quick check of the latest business flash headlines. Growing signs of confidence of u. S. Steel. They have raise prices for some products. That is the third increase in less than two months. Prices are steel futures on the you on the New York Mercantile Exchange have rebounded 14 from a three year low in early november. Che