Above 21 thousand, up 1. 2 , its best day since march. We have the big risk on rally around the french president ial election. For the dow, the best day since the election last year. 7. 5 after a few and 5 . 100 mcdonald, as scarlet was just mentioning, they beat earnings, too. It looks like the big mac makeover is the strength for mcdonalds. We have another milestone here, the nasdaq. Analysisof technical at reinhold, he says this is an indication that future gains it may happen, but nonetheless, you do have the nasdaq above 6000. The also have netflix, analysts say the reason they think netflix is up so much, is the fact they are entering into the china market. He thinks that is partially why we have a strength for netflix, and then i agenda on a very nice top and bottom line rally. Musclethe companys Rare Disease Drugs produced three times estimates and could be a blockbuster going forward. They are looking for new ways of growth in the future. Indexes,e under lots of strength for the s p 500 and the russell 2000. Sometimes this is a leading index or a leading index or a. L. , some people like to see it theivergent with a othe other indexes. They did miss our, and also the stocks are down. Talking is weaker than expected. The vix down once again. Lets take a look at the vix. This is g btv 8025. We were so surprised that support had been holding and then later in the day, as stocks began to rally, that showed support. We did have the vix cap down, and when we take this chart out to a fiveyear deal and then we take a look at another level of support, it may suggest that the vix is holding on. We see it right down here holding on to support back in 2014. So, if the vix can hold these levels, there may be some volatility and uncertainty ahead. Oliver i love it. President trump is getting ready to round off his first 100 days in office. He has honed in on health care, trade and tax reform. If all of a sudden we can repatriate cash, then you have a lot more flexibility when it comes to buy back, dividend am a those earthly sort of things you can do. Some politicians think that is an evil thing, it is a way of putting money into the system. Nafta is not going to get ripped up, maybe some updated terms, it is a pretty old the truth is trade is not going to stop between mexico and the u. S. Bad, government regulations can affect our business. It may be part to now, and how that may affect Insurance Markets in the u. S. Cirilli, chief washington correspondent joins us again from capitol hill. Kevin, i just want to jump straight to headlines. If you want to talk ta taxes, another one is talking ivankas headlines talking about childcare. How likely doesnt look right now . Kevin this was her proposal first proposed by the first daughter during the campaign season, and it was announced with a lot of dan dare. It was essentially done to bring in a lot of fanfare. It was to bring in a lot more folks. This clearly i think is an illustration of why and how ivanka trump is influencing this president , and is something that is seen as a bipartisan pitch to win over more center folks. That said, this is the least controversial aspect of what is sure to be a controversial tax battle. Democrats will be united against this, while republicans it is unclear are still going to be sorting through the specifics on a host of controversial issues. Theyll as whether or not will be able to unify themselves to get this through. I want to combine worlds here, you are politics guide, i am a stocks guy. How do they combine . What im looking at is the chart, you can see this big jump up here. This is what is happening right after the election. You can see all the upper there about the tax plan. This has calmed down, down, down. The markets are watching this very closely. Are washing markets carefully, and of course ceos have to make a spending and hiring decision as well. What do we know about how much detail, how much specifics we are going to get tomorrow when the white house unveils its tax plan . Kevin you are absolutely right. There are not that many details here to according to reports, President Trump is going to call for a 15 Corporate Tax break. And thats why the chart oliver pointed out is so important. Even if the taxes dont get passed out of washington, could affect the markets. There is another set of that is going to get underway, and that is on the senate house committee. There will be a series of hearings on ways to deregulate doddfrank. And so, juxtaposed with the current conversation underway regarding tax reform, scarlet we need to break in right now. We have wilbur ross speaking right now. Treesoss they are taking down. In the u. S. , it is all open market, it is all market base prices. Provinces subsidize the cutting down of lender, the technical term being stumpage. That lets them charge a subsidized low price when the product hits the u. S. Border. We have determined preliminari ly that those problems, while they vary from one to another, are sometimes as high as 25 and are on average around 20 percent. They are quite material items. What the preliminary decision that was put out yesterday imposes those countervailing duties on softwood lumber from canada. Those duties will be collected starting today, and they will be collected on a retroactive basis , because it0 days was 90 days ago the canadians were put on notice about this being an inappropriate process. What it amounts to is the following, there is roughly 15 softwood lumber used in houses in this country, 31. 5 of that comes from the canadians. Is roughly 5 billion per year, 20 tariff on that is essentially 1 billion per year. The retrospective ninetyday feature adds another 250 million do that on a onetime basis. Two that on a onetime basis. Softwood lumber is fundamentally used in singlefamily houses. We do not think that the price of lumber will go up by anything like the 20 , but there may be some small increase in the price of lumber for the house. Do you see prices of being increased in the United States due to that action . Sec. Ross not necessarily. You are talking about a small amount. The biggest thing and a home price is the land value, not the lumber value. Lumber price is a small percentage of the total cost of a house. There hasmentioned, been a longrunning dispute between the u. S. And canadian is this part of a milk dispute with the canadian government over that . Sec. Ross this investigation had been underway before andhing came up about milk, on a statutory basis, the last day we could have released the findings would have been today. So, the only thing we did do is accelerate it one day. It is not related at all to the milk dispute, do you see it that during an factoring in to. Ross everything relates everything else. I cannot say there is no impact, but what we tried to do is clear the air and get this dispute out of the way before the big nafta talks went on. Tot was not possible achieve, and that is why we went ahead and released the findings. [indiscernible] are you comfortable with how this worked out in what it means in the overall relationship between our two countries . A close andhey are important ally, that doesnt mean that they dont have to play by the rules. What do you mean by generally a Good Neighbor . This, is things like dont regard as a Good Neighbor as dumping lumber. And in the dairy industry, they were a little bit abrupt in the week before. [indiscernible] case was brought to an international court, canada one its case. What do you answer to that . Do. Ross i had nothing to with the prior cases. I am confident that this case is a good case. And a problem with dairy is . Sec. Ross the problem with dairy isnt that they are dumping Dairy Products in the u. S. , the problem is the reverse, they are preventing producers from selling their products in canada. As a practical matter we are looking into measures we can do to try to correct that. Have you heard from anybody in the canadian government, or has the Prime Minister reached out to President Trump to try to convince you to change your policy or approach . Sec. Ross i havent heard of anybody asking us to try to change the approach. You have seen public statements that the canadians put out. As far as i know, that is their position. Tell us whether the softwood lumber dispute or the milk dispute leads to the renegotiation of nafta sooner than later. Does. Oss i think it if nafta were functioning properly, you wouldnt have these kinds of prickly, unfortunate developments back to back. Nafta has not worked as well as it should. [indiscernible] that is covered by nafta . Sec. Ross that is one of the problems. Why not try to resolve this in a not so public fashion . You are trying to flex the muscles of this administration. What would you say to the layman out there who say why is President Trump messing with the canadians now . Sec. Ross it is not a matter of President Trump messing with the canadians. We believe the canadians a correct practice. Just like steel dumping from china, or any other trade and fraction. You are trying to make a point, publicly. Sec. Ross we make it publicly all the time. There has been so much Public Interest in gendered by the two, dairy and lumber, we felt it was good to clarify. During the president ial campaign, people finding candidate trump, we were focusing on mexico, now all the sudden we are hearing issues in canada. Can you tell us why they shift up north . Sec. Ross we had no way to know that the canadian dairy people would take the action that they did, nor did we have any way to know that the lumber dispute wouldnt have been resolved or negotiations. Resolved by negotiations. They tried. We went ahead with the statutory proceeding. [indiscernible] is the administration contemplating additional trade actions against canada . Sec. Ross as far as i know, there is nothing immediate contemplated. The substance of what you did is very fashion business has been done before, the preliminary countervailing, but what they said was irregular was the way you communicated it. Is this something you are trying to do as sort of a pr thing . How should we read your very aggressive statement . Sec. Ross it is not routine and that 1 billion for countervailing duties does not happen every single day. At has happened before. It is not unprecedented. Sec. Ross no. We made the release the way we made the release. Why did you make it that way . Sec. Ross it seems appropriate. Nder the circumstances here india was the largest trade partner under and now we have a new nistration and [indiscernible] what is the future between the india . D free trade with sec. Ross the trade relations are governed by the wto rules. There is nothing in the actions we have taken that changes that. Following up on what jim you tellugh, what do the average consumer and the United States if their prices are going up . They didnt bargain for that. And ross im sure nobody the United States bargained for people dumping product. It is no different if you dump steel, aluminum, cars, or lumber, or anything else. Antidumping intrinsically two different things. Sec. Ross it is countervailing duties. Timelinee a specific when the president will announce the renegotiation of nafta, and could this complicate his efforts to get a good deal . What has been stalled is getting the trade Promotion Authority, the socalled fasttrack authority approved by. He congress now, bob blight highs are being confirmed out of the committee lighthouserb being confirmed out of the committee today, that should allay some of the concerns they have. Now, the catch 20 22 that was the catch 20 22 that is it is a circular thing. In any event, that seems to be in the process of being corrected. Will that affect getting a good deal . Of backs Everything Everything else. It is not a brandnew issue. It has been around for quite a while. The next upcoming meeting of the g7 is about one month away, and the u. S. Is in the middle of or talks with china about trying to create are you comfortable that the north korea calculus has not hamstrung your ability to negotiate with china . China meantons with to signal to our other eastern partners [indiscernible] as you know, in the maralago meetings, we agreed on a 100 a program. E are going 100day program we are going backandforth with china on the 100day program. Actions with lumber and derry for canada, it really has no bearing on the chinese relationship at all. 25 b25 percent is the tariff on lumber coming out of , has the administration done a study on how Many American jobs will be saved due to this terra . Terr tariff. Sec. Ross lumber sells for about 27 per foot. Part of the reason, i do not see pricehere would be a huge differential coming in, is this 31. 5 of that output. American producers remain the same. This is suddenly not prices will 50 . That is silly. Will beany jobs created, or jobs will be saved as a result of stopping the an exact i dont have total, but i can tell you it has been quite a few states, the northern perimeter going all the way down to louisiana. This affects quite a number of people, and quite a number of businesses. Report onbipartisan soft lumber [indiscernible] whatever you take on the dairy industry as well you appear to be laying groundwork that you would like to renegotiate nafta. Are we correct and reading it that way . President well, the announced a couple of months ago that he wanted to renegotiate and as i say, it has been stalled in the congress, because to do it effectively, you really need to use the trade Promotion Authority. I think you are aware of the benefits that gives, which is when it comes to the floor for votes, it is an up or down vote. Amend the deal. That is the practical significance of it. Public actions you are taking, is that paving the way for promoting that authority . Sec. Ross we hope to get as soon as possible, the trade Promotion Authority granted. Only congress can do that. We have been consulting with the staff i dont know how many times, both with ways and means, and with the Senate Finance committee tiere. Impediment will be removed. I couldnt hear you. Tradethere a free agreement with india . Sec. Ross any pending events with india . Is that the question . Free trade. Thereoss i dont think have been any serious discussions with india of late on the topic of a free trade agreement. Inherent negative attitude on our part relating to that [indiscernible] similarl do something with aluminum as you did with steel last week. Could you talk a little bit about that . Sec. Ross i think the right time to talk about executive orders is once they have been issued. This is a high profile action, there is precedent for similar action in the past. Could this provoke retaliation on the part of the canadians . Could there be a trade war between the United States and canada . Sec. Ross we do not think that is going to happen. This affects dairy and softwood and sec. Ross we think so, and we hope so. We look forward to constructive discussions with the canadians as we get into nafta. [indiscernible] sec. Ross it is totally canadas decision what they do. I dont know what they could do that would be a legitimate action. What about the border adjustment tax . Sec. Ross there will be some word on the tax reform package from the people working on it, so it be better to address that question to them. [laughter] 3 gdp growth, is that a Fair Assessment . Sec. Ross i hope the growth over time could get to be utter than that. President obama a better than that. President obama was really only one who didnt have at least one year with 3 growth. With everything we are doing, regulatory reform, trade reform, tax reform hopefully, and no reasonere is we shouldnt be able to hit that or beat it. [indiscernible] ac. Ross i just use that as figure of speech. Who is dumping cars to the United States . Sec. Ross i said it was a figure of speech. President trump said he would only be tweaking the relationship, what changed . Sec. Ross first of all, this is not a president ial decision to do the softwood lumber, this arose from a trade case that was underway. So, it was a normal decision. I dont think it has anything to do with the personal relationship between mr. Trudeau and the president. [indiscernible] wto is a whole different subject matter. We do have some questions and concerns about it. There will be a wto meeting coming up in the next several weeks. What will come out of that will come out of that. Thank you. In your view, should the u. S. Stay in the agreement or withdraw from it ye . Sec. Ross now you are really getting out of [applause] it is really outside my area. I am having enough difficulty dealing with the trade issues rather than encroaching on other peoples territory. Are you concerned about the [indiscernible] the First Anniversary of the south korean arrangement comes up on may 4 or may 5, Something Like that. That would be a logical time to think through whether there was something to be done or not. Think the softwood lumber story will get Michael Flynns name off the front pages . Sec. Ross is Michael Flynn a trade issue . I wasnt aware. Here is one way out of the box for you. Sec. Ross thank you for that. Howard the French Election of that [indiscernible] that is such a hypothetical question. I find it very difficult to what about the macron . Sec. Ross lets see who is elected, lets see what actions they take, and then they will be we will be in a position to answer that question. Scarlet that was wilbur ross making a surprise appearance at the Daily White House press briefing. You can watch sean spicer conduct his rating on bloomberg at tv. Of headlines generated by wilbur ross. A couple that suck out to me is this was not a president ial decision. Of course, President Trump and Justin Trudeau had met earlier. Was not as said it president ial decision, it is a normal decision that has nothing to do with the personal relationship between the two men. He also said that lumber and dairy contentions show that nafta is not working as it should. I feel like we have heard needone before, that they to retool nafta and what it means for the u. S. I think the idea that there was a good meeting im going to take a different angletrudeau ae ostensibly a good meeting. Trudeau came through with a different approach after they had been at odds on many different topics. This is where trump goes to begin his assessment of trade. Interesting place to start, to say the least. Think it would start with canada and lumber. Alanet lets bring in bjerga who covers agriculture for bloomberg. He joins us from washington. Talk about how lumber wilbur ross mentioned this, has been a longstanding dispute between the u. S. And canada, yet something happened this week that prompted the u. S. To take action. What was the catalyst . Alan a lot of people think it was the meeting with premier trudeau. There has not been an incredible difference in the state of the lumbar economy this month as opposed to a few months ago. As you noted, canada is really getting the target of a lot of u. S. Trade ire. This seems to be in preparation forward to be in preparation for nude action before the wto or positioning before a nafta renegotiation. Wilbur ross very much distance this from the president and any nafta organization. He said this was just a matter of course, not a personal president ial decision. We want to get this out of the way before nafta. This is a 30 yearold dispute. Careers have been made covering this canadian lumber dispute. This is the latest chapter but comes at a key time, definitely. Oliver i have to catch up on my lumber knowledge i guess. At, onomberg is looking the white line, the Producer Price index for softwood lumber. The blue line adjacent to it is the futures price for lumber. What is interesting, if you look at the Producer Price, it has been pretty much stagnant, but if you look at the spread between the two, we are at the highest since 2013. It does raise questions as to what is driving the price higher. Potentially tariff change the supply and demand dynamic of what is coming across the border . Part of what is driving that chart is exactly what happened today, the scenario of trade disputes between the u. S. And canada has been roiling lumber markets. You have an anticipation that there could be some differences in supply and demand. We are signed to see the come true today. You also look at the stronger economy, there may be more homebuilding, so you anticipate a pickup in demand for this. Lumbar country, the places in minnesota, wisconsin, washington state, were my parents live, 3500 people lost their jobs in logging in part because canada had become so dominant. You look at what has happened with the way that provincial authorities may be owning lumber companies, donald trump accusing canada of subsidizing low prices, essentially lumber dumping. Canada has a different perspective on this. The u. S. Does not have breaks for its own industry as well, but this has been roiling for some time. When you look at the anticipatory moves, what youre looking at is potentially a more expensive home market, something homebuilders dont want to see, but when donald trump was elected president , you knew there would be a more aggressive trade policy. The fruit is starting to be bored come in all places, canada. A lot of people thought it would be mexico. Scarlet that was one of the questions posed at the press briefing. One thing secretary ross said is hat one thing fx everything else. How has the canadian milk policy changed, how open has canada been to our dairy exports . Known as one of the most protected commodities in the world. As Justin Trudeau pointed out, they have a 400 million surplus with dairy. This has to do with ultrafiltered milk. Whats interesting, this product didnt exist in 1993 when nafta made this provision. There is this new product not covered under nafta, so this is a way to get our milk into canada. This affects about 75 farms in wisconsin, some in upstate new york, they tend to be bigger producers, but it is shutting them out of that market and forcing more supply into the u. S. Market. You are seeing a lot of pressure in this continuing resolution to do something to help u. S. Dairy producers. But canada will come back and say this is a protected market helpy, we are just try to out our own folks, just like america with its America First policy, is trying to do with their producers. Scarlet alan bjerga, thank you for the perspective. Oliver lets continue to talk about what is happening here with bruce, the former u. S. Ambassador to canada. His term ended january 20 of this year. He joins us now from our detroit bureau. Thanks for joining us. Questionisit the first that scarlet brought up, which is an important one, from your experience in relationships between these two countries, how did this come to this point where a tariff gets slapped on . Lets start with the fact that there is no country more important to the u. S. And canada and i mean that because it is one of our largest trading partners, and the trade we have with canada is 630 5 billion in goods and services in 2016. It is balanced. The u. S. Has a bit of a trade surplus right now. We have a very balanced trade. In addition to that, canada is the Largest Energy supplier to the United States, energy that we dont produce ourselves. By the way, we dont make enough energy within the United States to supply all of our energy needs. The oil sandsn and in hydro, solar, other ways, provides energy. Norad, together in nato, we share this amazing 5000plus mile border and we have such an interconnected relationship. I think people need to eadthstand the depth and br of the relationship before we get into these microissues. When you get into an issue this large you will have differences at different times. Softwood lumber has been one that has existed over many decades, and we have been able to find solutions and resolutions to that. Unfortunately, our team who worked on this during the last administration i worked both in the harper government and trudeau government we were not able to resolve the softwood lumber situation, such that the agreement expired. Just so everyone understands, this is a claim by industry that Commerce Department is executing upon. This is an industry claim, and very different in terms of the claims in the negotiations that take place in nafta. This is outside of nafta. I think they are conflating the two, which is unfortunate. Scarlet an important distinction to make, this is the industrys claim and the government is just passing this along, in effect. You mentioned the negotiations took place as you are ambassador. What were the biggest sticking points, what was it that did not allow the u. S. And canada to come to an agreement on lumber . We gotyman when together, our industry has the perspective that in the United States, canada should have a certain market share. The canadians were looking for other means to actually solve that problem. We ended up having a gap between what the canadians would like to see in terms of solutions, and the industry. The Obama Administration was effectively acting as a gobetween. What has to have it here is once an agreement is reached, there has to be an agreement with the industry so they dont sue. The industry has to come along with this. The u. S. Industry feels very , they thought the canadians had an unfair advantage during the last agreement, and wanted to revise that. Oliver what does this mean in terms of perhaps what we can read through about how Trumps Administration will work with his peers across country borderlines . It seems like this was a meeting that, at least on the surface, went well. Then you have this coming front and center. What does this tell us about the negotiation style, the priorities of the Current Administration . Amb. Heyman being very involved in a trade negotiations previously and watching what is unfolding here, there are two distinct approaches. You can do trade negotiations behind closed doors around a table, where multiple countries, as we did with tpp, can sit down and talk about desires, benefits, concerns, the give and take of that set of negotiations. I would say trade negotiations are the most complex that take place, not only in detail, but the political ramifications. What is happening now, the president and the white house, are using communications and going public with what they considered to be irritants, things they want to resolve, before we actually sit down and negotiate in the room across the table from each other, which makes it very challenging, i think, whether it is canada or any other country. One has to expect, the Prime Minister of any country, when poked at by another country will defend themselves. Accusation onhis one side, response on the other side, and then you end up having to respond to the response. It is unfortunate because it is a distraction from working together. I think what we need to do with canada in particular, up until recently was our largest trading partner, now number two to china. We create millions of jobs in the United States as a result of our relationship with canada. 35 states, their number one export market is canada. We are so closely tied together, supply chains Work Together. Yes, there are areas where we have differences, canadians with us, we with them, but that is best, i think, for behind closed doors to solve the issues. Scarlet you make a good case for that but that is not this administrations style. If this is an opening gambit for the negotiation style in public, we know canada has said it will vigorously defend its softwood industry lumber interests, including litigation. How will they respond, through lawsuits . Amb. Heyman it will be up to the canadians to see how much they either desire to dial it up at this stage, or appropriately respond without dialing it up too much, but making sure the canadians feel their Prime Minister and government is best representing them in this environment. The United States cannot count on Anyone Around the world more than we can count on, historically, our relationship with canada at every level. We have ways in which we can Work Together with canada. We have done it for several hundred years and it has worked out to the benefit of our country. Is just a huge mistake to take your best friend, nextdoor neighbor, and start poking at them really hard. I dont think americans would think about taking your best friend and start poking at them, even if you have differences of opinion. That is when you take your best friend and you say, come on, we are new in this administration, lets sit through these issues and five have to success. In my relationship working with the canadians, they are very willing to find those path to success. I think the new administration will find a very willing partner. You for your timely insight, former u. S. Ambassador to canada. Sean spicer Still Holding his Daily Briefing following the remarks by wilbur ross. Will saying the president meet with australias Prime Minister next week. He will also speak about the uss intrepid here in new york city next week. You can catch the entire briefing on the bloomberg at tv. Oliver this is bloomberg markets. Im oliver renick. Scarlet im scarlet fu. It is time for our sectors by the report with abigail doolittle. Abigail we are looking at the material sector spider etf. The best sector for the s p 500 today. Pace forhan 1. 5 , on its best day since march 15, hitting a record high. He hide some of the strength we are looking at dupont, freeport mack brown. Dupont put out a big top and bottom line report. Strength was driven by the companys feed business along with the auto plastics business. Rbc is saying this bodes well oneone of the companies of the few companies that dupont is forming a merger with, dow chemical. 5 ,lso have freeport up they missed on revenues from but investors like the fact that an indonesian mine is open so exports are flowing out. Take a look at lumber, the big story on the day, tumbling by its 10 limit, on pace for its worst day since last year on the news the u. S. Is imposing duties. N canadian softwood lumber on this, oliver, we also have some of the fourth Product Companies lower. It will be interesting to see how all of this plays out. 76 canada softwood lumber goes to the u. S. , so a pretty big relationship. Oliver indeed. Abigail doolittle, thanks so much. Disney is hoping the new avatar and star wars attractions will attract visitors. Carol massar and i spoke to Devin Leonard about a critic the magic kingdom. The magic kingdoms on both coasts, they are super successful, the most successful theme parks in the world. Then there are a bunch of ancillary parts, the ones where they had to do some tweaking. They did that to california adventure with cars land which opened in 2012, and now they are doing that to Animal Kingdom in orlando, and then the star wars aimed land not just in disneyland, but disneyland hollywood. A theme park world maintenance program. You write a lot about how they are adapting avatar for the disney parks. Im trying to get my head around that you that is not an easy undertaking. No, and they did that right after universal opened up the first world of harry potter in orlando, which kind of blew the roof off of the whole business, kind of redefined the creation of a theme park attraction. Carol i have been there, you feel like you are walking through the harry potter movie, its incredible. Thinkore that, i didnt it would be all that challenging, but when they did that, it changed the game. The process of rebooting a bunch of these individual parks, they jumped on avatar. The incredible thing about it is, that world is all cg. They have to replicate that in the physical world, so that is a crazy process. They are just getting around to finishing up. It opens up on may 27. About thewant to talk attractions and the people behind it but overall there is an important point here that is corporate and Company Specific to disney, which is they make it to a point where they are starting to rely more on the Revenue Streams from these kinds of parks. Is that why it is important to figure this out . The companys revenue and profit mix is shifting. For the longest time it was the Cable Division led by espn, they were generating the bulk of the profits, but that is beginning to falter. Meanwhile, the parks are stronger than ever. But they have to keep on being stronger than ever to keep up. That is why disney stocks were covered, investors saw that in the movie division. That is why stocks were covered, investors feel more comfortable with the company. Parks have always been very important but they have never been more important than now. Oliver a lot of money riding on fun for disney. You can hear more from the magazines reporters every saturday and sunday on Bloomberg Radio with carol massar and i. Episode nine of star wars will be in theaters in 2019. Scarlet so where is that in the continuum . Oliver we are way beyond that. We need to look at where this goes. Scarlet how a big mac makeover is helping mcdonalds over, a restaurant slump. This is bloomberg. Oliver this is bloomberg markets. Im oliver renick. Scarlet im scarlet fu. Mcdonalds chairs are having our best day since 2015 things to the big mac and one dollar and two dollar drinks. Joining us is michael who covers a for bloomberg intelligence. Meneep crediting this big neck makeover for better results. What kind of makeover was it, was it that, or was it the cheaper drinks . Wouldi had to guess, i guess the drinks were the biggest factor. It is a real traffic driver. Then people at on to it. They look at the dollar coffee and then they will take another egg mcmuffin. Oliver i saw that in action the other day. Looking at the prices on the menu, it feels different now. It has been a process. In addition to what has gone on this quarter, the different big mac sizes, the one dollar drinks, they credited the expansion of the allday breakfast. Its really an accumulation of smart moves over two years. Running better restaurants, refrain to rise in stores. ,oving to allday breakfast different sales initiatives. Even some of the things that have not come to fruition yet, fresh beef in the quarter pounder, coming to cage free eggs by 2020, has created a positive halo around the brand, given some new customers to the brand. Scarlet you talk about the initiatives, it takes a couple of years to roll out. Will customers be patient . It is building a halo effect but they cannot see the results right away. Small changes are building two big changes and small store sales are accelerating. They outperformed the rest of qsr by 10 basis points. Scarlet to the other half of my dietary staple, chipotle. This was a company that was a favorite among investors. It has taken a hit with all of the health stuff. They are trying to retool, what is the most important thing . The pace of sales and traffic recovery. Everyone expects samestore sales to be in the midteens, high teens, low 20s would be great. Anything less than 15 would be a major disappointment. Third party data provider came out a month ago and said chipotle is likely going to beat samestore estimates, and the stock is up 20 since then. Pretty strong expectations baked into the stock price now. Scarlet how about on the pr front, how is it doing . It will just take time. They definitely dropped the ball during the year. They thought people would come back because they were chipotle, right . They were a little slow to move but they definitely have a much stronger sense of urgency now. We will see how it pans out. Scarlet chipotle will be reporting tonight after the close. The move in shares tomorrow will be important to investors, thank you, michael. Oliver coming up, Goldman Sachs hatziuss joins jan joins us to talk about the potential tax impact in washington. This is bloomberg. Hey youve gotta see this. Cmon. No. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Family time is awesome show me the radio disney music awards. Just say it and see it with the x1 voice remote. And you can catch up on all the rdma buzz. With artist interviews. Past performances. And more available now on xfinity on demand. Xfinity the future of awesome. And to find out how to catch exclusive videos featuring rdma host jordan fisher. And the ardy goes to. Watch Disney Channel presents the 2017 rdmas. April 30th on Disney Channel. Oliver it is 3 00 in london. Im oliver renick. Scarlet im scarlet fu. Welcome to bloomberg markets. In bloomberge live World Headquarters in new york. We are covering stories at washington, paris, and china. Top stories. Stocks are in full on rally mode for a second day while treasuries are selling off. Equities point to a gain of more than 1 , especially in dow stocks as dollar and oil trade close to flat. Alls well that ends well for wells fargos board. All members reelected despite a meeting post the phony account scandal. Have executives gotten the message here is an intraday chart of the nasdaq above 6000. Pretty remarkable, 5000 last july. There has not even been a full year. The question, can these gains last . Not long ago we were talking about the reflation trade reversing. Ise work suggesting that true around some asset classes, clearly not stocks. ,f we look at the bloomberg this is a threeyour chart of roughly the nasdaq in relation to its 200Day Moving Average in yellow. But inainly sloping up a 2014, when the nasdaq was well extended above its 200 Day Moving Average on very exciting trading, that led to a pretty big decline. It was a correction for the nasdaq, near bear market at the beginning of 2016. Here we are having a series of well above that 200 Day Moving Average, right now by 11 . It will be interesting to see how long this rally lasts. Point some of the big boosts for all major averages, caterpillar, mcdonalds for the dow and s p 500. Citing strength in china. Mcdonalds Beat Estimates by 10 . It looks like the big mac has gotten a makeover and that is helping shares. Biogen helping the s p 500 and the nasdaq. They had any earnings beat on the top and bottom line. What investors really liked, a rare muscle disease drug came in well above estimates. This is one of those biotech giants looking for more opportunities for growth. Investors are cheering that beat. Perhaps that will give biogen. Investors are liking it very much today. Scarlet thank you, abigail doolittle. After a rocky meeting in florida, all 15 Board Members in wells fargo barely survived a vote to stay in. Joining us now is our banks reporter laura keller attended the meeting. Give us a sense of how raucous it was. This was not your typical shareholder meeting. Laura at some points, it was quite contentious. It was almost three hours long. The first interruption we had was a gentleman by the name of bruce who leads an organization that works with mortgage homeowners. Standing up he is and saying im not going to sit down. I want to hear from the Board Members on what they knew about the scandal and when. We are here right now, we have a lot of time. Please turn around and tell us shareholders what is going on. He kicks it off, and then from there we had four different individuals who interrupted the meeting along the same lines. We saw the chairman of the board, mr. Sanger, just trying to get people to remain in order and get heard, but heard at the time that he had planned for the meeting. Reporter usually dread sitting on his Conference Calls. When you look at the stock, it initially shot up. It remains at the highs of the day, at about 2. 5 . It seems at least the street is somewhat satisfied with the outcome. Perspective,rting did the questions you have get answered . Laura not really, we are still wondering what the board can do. Some of them got such low votes of confidence. Four of them did not even make it out of the 60 threshold. Only three got above 90 . That is really low. We had the opportunity to talk with mr. Sanger and the ceo after the meeting to ask them, what do you plan to do, how do you look at this . They said we have a lot of things to work on. We have talked with our shareholders and they want to hear more from us, they want to do certain things, we have a plan that we will execute on. There is still a lot more about what the board can do, also board refreshment. Maybe we will see that process speed up. You talked about how bruce marks began shouting at the start of the meeting. What about some of the other investors, were you able to talk with them about how they would follow up with this dissatisfaction . Laura we didnt have much chance to talk with the investors who were there. Just thinking about the meeting, so many people just seem to want to come and hear what was going to go on. Throughout the twohour mark, we saw a lot of people exiting, they had their fill. In terms of what is happening afterwards, we have been hearing from shareholders what they want to continue working with the board. Does that mean they want to see people voted out, do they want to see Management Changes . Right now we are not sure. Scarlet we got reaction from washington, d. C. As well. Tell us what senator Sherrod Brown said. He is a powerful democrat on the Senate Banking committee. He put out a statement that said wellpaid Board Members should earn their keep. They should not be listening to whatever management is saying, so kind of on the idea that they bear some responsibility and should hold themselves more accountable than just blaming in the board report that they had with this investigative law firm , they were not told by management that this woman who was running the Community Bank, was not sharing, her deputies were not sharing information at the board needed to know. Skirting the issue a little bit but certainly Sherrod Brown pointing out that Board Members should have done more to earn their pay. Oliver i was going to ask you about the fundamentals of the company but it occurs to me this is all tied together in one, the scandal and the fundamentals of the company. Is this now trying to figure out how it affects their bottom line, is this about figuring out the aftermath . Laura even that is really tied together because you are thinking about growth, and that is where we need to go from here. Analyst were asking tim sloan about this on the Conference Call with earnings. That is because the Community Bank at wells fargo is such a big part of its profits. If it is a problem there, as we have seen the last quarter, then you have to wonder how the company will be doing going forward, whether that is growth putting on more revenue, or alternatively, making sure the company is more efficient and bringing the cost down. Wells fargo is having trouble on both of those. Scarlett, you may have interviewed john a few weeks back, and he was talking about, we have higher expenses, and those will remain elevated. Scarlet that is a good point. Laura keller, our banks reporter joining us from florida following the wells fargo annual shareholder meeting. Lets get some more headlines with mark crumpton. Mark House OversightCommittee Jason chaffetz says former National Security adviser Michael Flynn could be criminally prosecuted for failing to clear and report payments received from a russian organizations. Personally, i see no data to support the notion that general plan complied with the law. He was supposed to seek permission and receive permission from both the secretary of state and the secretary of the army prior to traveling to russia to not only except the payment but to engage in that activity. I see no evidence that he did that. Flynns Attorney Says his client told a Defense Intelligence agency that he would be traveling to moscow and answered any questions asked. Two weeks after sean spicer cause an uproar after forgetting weaponss used chemical on the jews, President Trump spoke out against antisemitism today at the u. S. Holocaust Museum National day of remembrance. We will confront antisemitism. [applause] [applause] without prejudice, we will condemn hatred, we will bear witness, and we will act. Mark the president also accused holocaust and buyers of being accomplices to this horrible evil. The u. S. And north korea are flexing their military muscles today. The submarine uss michigan has arrived in south korea for what it calls part of a routine patrol. South korea says there are no plans for drills with its naval forces. At the same time, north korea reportedly celebrated the 85th anniversary of the founding of its army with its largest ever live fire exercise. Former new york yankee great derek jeter, former governor and jeb bush, and their prospective ownership group, have won the option to purchase the Miami Marlins baseball team. Others to winout the auction. They are selling due to expectations that he will be named ambassador to france. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Kkrs henryng up, mcveigh is positive on europe but things one country is being ignored by the markets. Hear which one it is, next. This is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Oliver im oliver renick. It is time for the Bloomberg Business flash. At the closer u. S. Trading we get results from 18 Trading Companies in the s p 500 including at t, chipotle, and wynn resorts. Analyst estimates earnings per share of . 74. At t is in a bidding war for Straight Path to medications with verizon after verizon revealed itself as the mystery bidder to top at ts takeover deal for the spectrum license holder. The bid values Straight Path at 1. 8 billion and shares jump to the highest price ever. At t has five days to match or exceed the bid. Market valuations have become increasingly divorced from reality as the likelihood of policy changes to drive earnings continues to slip and that is the view seen by David Einhorn of greenlight capital. They say the prospects of tax reform continues to dim enthusiasm. That is your Bloomberg Business flash update. Of assetkkrs head allocation henry mcvey thinks europe is an attractive place to invest. Here he is speaking with Erik Schatzker on why he is so positive on europe. We do a lot of quantitative models, on the ground research. Just the Monetary Policy. When you look at the ecb with zero interest rates, that has a huge stimulus affect on the economy. A very similar picture in the u. S. A couple years ago where Monetary Policy was moving forward but there was no cyclical ignition to drive growth, until housing picked up. That happened in the u. S. In europe right now we are seeing house prices go up, but we are not seeing a lot of Consumer Lending activities. The transition investors should look for is from Monetary Policy to the cyclical parts of the economy, including housing. Right now, Monetary Policy is still dominating but if the cyclical components but our view is the cyclical components will go up. Erik so is it safe to say europe is two years behind the u. S. Recovery . Henry that is fair to say. One thing we have seen also around the world is this trend of consumption over trade, and within consumption, a real focus on experiences. We have invested a fair amount of capital behind those ideas. Henry experiences like . Travel,avel henry health care, wellness. Using the internet more effectively. We have a company that allows you to buy your train tickets online versus having to go to the station and printed out. Simple things to make it easier for the consumer to have a better experience. Erik what about fiscal policy and structural change . We live through good rock in america at a time of extraordinary monetary stimulus. Are the european doing a better job of governing that america . Erik im glad you asked the question henry im glad you asked the question. In 2012, fiscal austerity was a 150 basis point drag on european growth. European growth will never be 4 , 5 . Today we are estimating a 20 point addition to growth. In the near term is a tailwind. As europe starts to further mature and the political rhetoric settles down, they will have to go back and address a huge and debt loads at that part of the world faces. I dont think that is todays business. Erik how long can the surprisingly good growth in given the challenges of the Monetary Union which have not gone away, and persistent tensions over issues like immigration . Henry i think immigration is a secular issue. Erik with a long tail. Henry i dont think that is going away. The monetary stimulus in the nearterm will dwarf almost any headwind, barring a Major Company like france leaving the eu, which we dont think will happen right now. , as that cyclical part of the economy picks up, the monetary stimulus will pull back. I think that will also have implications for the currency, which means the currency will go up. It has been a favorable tailwind. Longerterm, i worry about two things, one, immigration from the middle east as well as from africa, which i think is sometimes not spoken about enough. Second is, i believe there is a widening divergence within europe between germany and italy. Third look at germanys year record surplus, unemployment, 5. 9 , italy growing slower than japan, unemployment at 12 or 13, youth unemployment at 27. You have a diverging within europe. People talk about it as one story and france has gotten a lot of the headlines, but if you look at the under the hood, that is where i would look. Is europe doomed to a northsouth divide of creditor states and debtor states . Henry i think italy is aware of the issue you raise. One of the ecb leaders was speaking at a breakfast and he defined it, we know we are halfway across the river, which was an interesting way to frame it, and we have to make changes to get to the other side. Even though the european project has been going on for 60plus years. There will to be some editions and subtractions to make it work. Given that divergence. Scarlet that was kkrs henry mcvey. We have some headlines from President Trump. At a meeting with farmers. Oliver he says he loves canada, obviously in relation to what we were talking about with tariff. I love canada but they have outsmarted our politicians. He says we want to make life better for our farmers and ranchers. Again, trump says i love canada but they have outsmarted our politicians. As he issues an executive order on rural areas. Slapping tariffs on canadian softwood lumber. Questions about how open candidate is to u. S. Dairy. Said that we had politicians that have been outsmarted, talked about the trade, and now we are seeing how that is enacted in policy. Scarlet this is bloomberg. Oliver this is bloomberg markets. Im oliver renick. Scarlet im scarlet fu. It is time for options inside with abigail doolittle. Abigail joining me is kevin kelly. Thanks so much for taking the time. Two weeks ago, everyone is talking about the idea that the reflation trade could be reversing. You have this risk on rally for stocks. What is going on . You could start to look at the underpinnings of what is happening in the options market, not only in the vix but also the volatility of volatility. We have seen it compressed down to the 75 level. Averages 86. So when the vix comes down to where it is, about 10. 5, and for you see vvix bottom out the lower end of the range, that shows you that the vix is complacent and may actually revert back to its normal averages. During this year we have been trading between 10 and 12, so it may only go up to 12, but that would be a 50 rise. Crash 20 friday to monday. Abigail we were looking at a chart of the vix before and the inverses gapping higher. Her hence it will gap back up. Sector wise, what is happening beneath the surface . Abigail people are still focused on earnings. If you look at consumer discretionary, that is coming up, including amazon. We are starting to see the 12. Tility there around we saw a big contract for they may 5 expertly, the 90 call. 17 times the amount of calls being treated versus puts. People arent as amazon to lead it higher. Abigail does that ever set up from a contrarian standpoint, when most evil are bullish, the possibility of a negative surprise . Kevin i think because volatility is so low here. The vix in consumer discretionary, this is a cheap way to get outside without the minimus downside risk. Abigail lets get to your trade on amazon which is bullish. Kevin this is directly for earnings. Amazon around the 905 level, 800 90 put and use that to finance a call spread. You anything. St you can participate to the upside. If you were to just buy the stock, you would have to spend about 505 on this. This will not cost you anything and protects you down to the 800 range. Its a great way to participate in the upside while negating your downside risk. Many things in life that dont cost anything, so you have to like that. Thank you. President trump speaking at a meeting with farmers, he says he is not worried about a trade war with canada. He also adds the border wall will be built. He signed an executive order on rural areas. We will give you headlines as they cross. Following through on some of those campaign promises. Oliver how some of the more ambiguous ones are taking shape on trade, as well as the ball along the mexican border. This is bloomberg. The United States will not make changes to its inflight ban on Electronics Devices at this time. Thats according to the transportation security administration. The current ban on 10 middle Eastern Countries to affect march 21 and prohibits Electronic Devices bigger than a cell phone in cabins on u. S. City bound flights. On april 5 department of Homeland Security said more airports could be added to the ban. A tsa spokesperson says the agency will make future necessary changes, quote, to keep travelers safe. Antonio guterres says International Donors at a geneva aid conference have pledged 1. 1 billion to help wartorn yemen this year. The funding target was 2. 1 billion. We have been able to achieve more than half that amount. Take into account we are only in april. It represents a very encouraging signal that we will be able to achieve our target. Mark the war in yemen has killed over 10,000 civilians