Negotiations. Mark he pushed back at the suggestion that he should release cash now. Make thee will not demonstration point. The syrian foreign minister today accused the coalition of wreaking discretion distraction while sparing the islamic state. Washington aims to destroy syrias economy and drag the were out. He said he would like to focus on a political settlement in syria. Rick snyder is standing by his the when in congress he learned of a fatal out rick despite a new disclosure by a senior aide who says weeks earlier the when he learned of a fatal out nearls before them including 12 deaths when the city was using the flint river water in 2014 and 2015. A spokesman said the governor was under oath and stands by what he says. I am Mark Crumpton. This is bloomberg. I am julie shapley. I am joe weisenthal. A touch softer. Joe the question is, what did you miss . Quite the claims it will be a huge tax windfall. New normal of weak inflation. Policymakers expressing concern, leading to a close call to support another rate hike this year. The fourth round of nafta negotiations begins in washington. And Bloombergs National political reporter and they both join us from washington. It is a fact factfinding mission. From that point of view, things look good. Are you going to stay in nafta or arent you . It is a little bit of a step back from yesterday. Joe there are a number of priorities of the Trump Administration in these talks and canada and mexico may regard as being employees until real deal breakers regarding origin role, it seems like that. We see the head of u. S. Chamber of commerce said yesterday, it could be a poison pill. It from theke start. Another content being raised, even from the u. S. These are the details President Trumps team will be working on and they will be hashing out with canadian counterparts. Take a look at the bigger picture. Wanting to talk to the bank and flees his base. Economic war against china, or tax cuts or immigration. How big is it . It is a high priority because it is an essential feature of the Campaign Platform back when he was a candidate. His entire thesis was one of the big job cuts out of the United States is nafta. That is a reason it is going overseas to canada and new mexico and china is a separate issue. He has other things to blame for that. But how you get there is a different issue. I do not quite think it is Campaign Stops to the tradeoff, all the job losses that would occur in the United States. In 20 for lot less pulling out of nafta. I spoke to a republican member of the ways and Means Committee who oversees in trade which oversees trade, that met with justin judo earlier today and basically, the canadian Prime Minister gave a smooth and eloquent defense of nafta and its importance. He also worked with members on capitol hill. It is mindboggling the u. S. Trade minister is saying we do not know whether we will get the conclusions. That is the problem here. The timing is also a critical element here. Not that is moving at lightspeed or any kind ofs deed. It has stalled, quite frankly. Yet been laying out the different negotiating positions here in the challenges once again in getting the vote. Talk through that. We have seen this nine page mostly a sketch of the policies they are aiming toward. In the house, the single Biggest Issue is getting a few dozen members who are concerned about the local tax production on their district if it is eliminated. , upper middle cut it income families will be hit hard by the framework as it passes in some way, shape, or form, to what is reflected here the senate, it is a different issue. Much wipedave pretty out republicans in states like california, new york, and new jersey. What they are concerned about, it is the same problem that bedeviled them on how on health care. 52 senators on board for a farreaching and sweeping plan when you have got all sorts of competing demands compete no new deficits than rand paul saying no tax hike on anybody and brought tax cuts on everybody. I do not know how you reconcile things. Cosan murkowski, seeing as eating on the more liberal end of the things. Senate. What are the sticking points for them . Have not said much. I asked them before and after what she thinks of it. The response was it is still a work in progress. We know she has voted against the repeal of the state tax in the past. We know income in the multimillions is something that republicans are not enthusiastic about. A more interesting figure in some ways, her record on taxes is more in line with the rest of her party. She is an independent minded senator. 2010 afterlection in. Osing the primary she does not feel like she owes her party anything. She was one of the key senators who killed the repeal of the Affordable Care act. She will be one what one to watch. And you have got roy sarah, let me end with you. There is now tension between the white house and the imf, which decided not to include any from tax reform in its assessment of the economy. Yes. Year, beginning of the the imf had included in its estimates for u. S. Growth the assumption that tax cut would go through this year. June, it removed those assumptions and lower the forecast largely because of that. Now it has bumped up the u. S. Forecast slightly but still has not added back in the assumptions of tax cuts. We heard from the treasury today saying, it is not something you guys should be weighing in on. We say we will get them done, and they will get done. Likewise, theguys imf said in a separate report that shifting some tax to the highest earnings can help with any quality. And again, the u. S. Kind of swiped back at that and said the plan for tax cuts for the middleclass is the way to go. The white house not appreciating the imf framing. Economicer for u. S. Policy and the Bloomberg International reporter, thank you for joining us from washington. Coming up, we will go over the latest fomc minutes aired what will they expect for the rest of the year in 2018. This is bloomberg. Growing concern that low inflation is more than just a passing fancy. Policy said another rate hike would depend on the strength of Economic Data coming out in the next few months. Analysis, chief u. S. Economist for bloomberg intelligence. Karl, thank you for joining us. Interesting comments from the fed. Did not seem to move any shortterm expectations but these ongoing concerns about inflation and what causes it seems to be a real issue. Transitory and video cinch idiosyncratic. It means theyre hinging on the decision to hike by yearend on the next couple of economics the next couple of months of Economic Data. Hurricanesnowledge will muddle those reports. They are in a complicated position. Roster,ok at the voting we have wellknown hawks. As with the roster of who will be at that meeting, it is about four or five. I am not sure chair yellen will have the vote count. Joe you do not think it is a lock yet. I deftly dote dont. Suspect if we see some stumbling in the data, that we could potentially see repricing of that. Hopefully, all systems go. Data,see weakness in the that will be we have the cpi coming up on friday. You have big spikes in certain price categories. Gas prices and anything related to hurricane rebuilding and whatnot. It could seal out the oxygen from the room. You could see more broadbased weakness as people really devote funds toward hurricane rebuilding. Do you think this probability will be downe, 77 a little bit . In the past, it is something they have been careful of. Heardterms of the tone we absolutely. They are happy with market expectations. It is a turn from what we have seen in the last rate hike. They really talked it up. If the data are not cooperating, the fed will back off of that. Not say itt i would is a firm conviction. Dry. Nk is not what would convince them . Lets say we haves. Nflation where we go and those a strange noise. We know inflations inflation is a lagging indicator p are policymakers, though they are focused on the inflation side of things, they need to see evidence that the economy is on sound footing. If the economy is growing at a sound case, you should have confidence and inflation will eventually turn up. We will have to watch activitybased indicators. When you watch things like the nonmanufacturing eyes m and whatnot, it is telling you we are growing at a healthy clip. Do they hike at this stage . . 80 might be overstating things. There will potentially be downdraft between now and yearend. If they are rushing to get in that hike by yearend, there may be a buyers remorse and that could the is slower pace for hiking next year. I saw someone tweeting that cpi data is the new jobs i think it is. But both are noisy. We are hitting the feds target for full employment. The question is really on the inflation mandate. You could say cpi is the new jobs data or even core pce in the monthly income and spending data. Paul krugman yesterday, he chair. In on the fed while, it was kind of, the Prediction Markets were thinking that the most likely pick was the former fed governor who has a lot of things to say about him, but one thing is, he has been quite consistent and wrong about everything. He has picked on the phd economist. They are punching back. He has come out on the more hawkish side of things. He is saying we are essentially and theiris demanded focused on Financial Stability concerns are they are valid concerns. I give a little more weight to the fact we are not hitting the fed inflation target. They want to say they really have a symmetric target of 2 . You miss that for eight years running and you continue to normalize policy and you may never hit the 2 . On the dovish side. We wanted him to throw something at the wall. Great to have you want p are chief u. S. Economist at bloomberg intelligence. Thank. Imf managing director Christine Lagarde joins bloombergs bloomberg television. 3 00 15 p. M. London time. Amazon is giving an allowance to go shopping or stream their favorite shows. Well give you the details and you can work it outamazon is ne. This is bloomberg. \ time for a look at some of the biggest business stories in the news right now. Is projecting a loss of 10 to 20 million in ad sales. This is according to people familiar. Eight 75 , the network 400 million for rides to the 2018 and 2022 world cup. 2018 apart its u. S. Businesses according to people familiar with the matter. Aroundurance giant sold 20 , including a stake proceeds from the ipo such as health and commercial property. Amazon is allowing teams and they canance stream content with parent approved tax. They also have access to the benefits such as gaming by twitch. Amazon found a way with the next generation of consumers. That is your Bloomberg Business flash. This. M shaking my head at i am not a parent, but this is shocking. I got emails from amazon think someone on my account purchased this is by the creators of captain underpants. Wow. Zed of course i run a tight ship at home. [laughter] lets get to the stock of the hour. Julie hyman is here. Surgeon more than 20 today. What would they do . You do not know . The company in which they own a majority stake might ring a bell. A lot of attention for offering a deal. You get a credit card and you can go to as many movies in the Movie Theater as you want over the course of the month. They bought a majority stake in the company. The former cofounder of netflix and ceo of a talks. The 20 understates from about two dollars to 33. All they own is an act, something called trend it, son words, 6. 7 million in revenue. Retail investors sounding the alarm bell. Julie hyman, thank you for the stock of the hour. Modest gains for the dow and the s p and nasdaq. Whatd you miss . , the dollarcords weaker postfed minutes. I am joe weisenthal. Whatd you miss . You forto welcome closing bell coverage of every weekday from 4 00 p. M. To 5 00 p. M. We begin with market minutes. Another day of gains. Even when we pull back, they go back up again. Joe did we have the down way . Day . Scarlet we did. It feels like that, modest increases, the melt up. It mightllying after sell its Convenient Store business, up 1. 2 . Dicks Sporting Goods off by 7 , despite having forecasts. Coaches changing its corporate too broad intry sh its image. It is no longer just coach. Investors not responding positively. Walmart up 2 , selling bonds to refinance debt. About walmarts prediction yesterday about ecommerce sales and its plan to buy back shares. That rally extending. Joe lets look at the Government Bond market. In the u. S. , fed minutes, not 8iron of action, no change in the twoyear yields, implying no one sees the minutes moving the needle much in terms of the shortterm rate path, most affected by the eminent mood. Little bitlds down a come perhaps uncertainty about inflation weighing on rates. 10 year yields in spain coming down. Declarings independence or not. Investors liking that. Mexican longterm rates had been up, now down. In the spotlight with those that thees, concerns deal might get blown up at some point due to poison pills from the Trump Administration, but 30 year yields lower on the day. Im going to hit the same themes, the dollar declining for a fourth straight day. The dollar index sevenday move to give you a sense of the last few days. Malaise, earnings season coming up, a lack of strong, fresh drivers. Have the fed telling reporters too soon to decide on december rate hike. ,ets take a look at the euro the only other thing to watch, the spanish Prime Minister mooting the possibility of suspending the catalonian government and asking for clarity on the declaration of independence. Touch on the other team, mexico. Ats look in the bloomberg 9386. We had speculation the populist candidate becoming the front runner in the july 2018 election concerns about the nafta renegotiations and the timing sensitivity here. What youre looking at is implied volatility. You can see that soaring if you look at the white line. That is nine months volatility, so huge swings expected in ninemonth contracts. Line is the one month, the white line is the ninemonth. You can see that concern in high yields. Joe on the commodities front starting with oil gaining again. There has been optimism about supply cuts. The low 50sn the for a while, so not a ton of action lately. A little bit, just shy of 1300 an ounce. Copper futures gaining 1 , often seen as a global bellwether. The latium having a nice day. It has been on a surge lately come antipollution, high tech uses, so doing nice and extending gains come up nearly 3 . Those are todays market minutes. Scarlet a key tactical level for smallcap stocks. That is raising a flag. Newton,us from massachusetts, our guest is with us. Im looking at the relative strength index for the russell the red78, well above line, which would indicate something is ripe for selling. The stage being set for some big rotations this quarter. One of the things we have seen this year and the last 12 ,onths, the postelection rally the vast majority took place in the first four months. Movesthen, the real big has been in the right groups of the right time and avoid the ones going down. The first half of the year, you did not want to be in energy and bank stocks. That is starting to shift. Technology is one you probably still want to be in, but we are looking at key moves in markets that could be showing a trend change. Now. E pulling back right the dollar has rallied nicely and starting to pull back. That is ok. Same thing with Interest Rates. If they move up one more time, the long bond yields 2. 4 was the key resistance level. The dollar index got to its 94 level, key resistance. Take another leg higher, which i think they will, that could he a big shift for the marketplace. Equity groupsrent are dependent on what happens in these two markets. At a chart that demonstrates these shifts, the ratio of the russell 2000 two the s p 500 shooting up after the election, then grinding lower into midaugust, shooting up since then, down lately. We can probably overlaid the 10 year yield and it would look similar. It, taxes,ind something totally different, and could the fate of this ratio to some extent be tied to what happens in the United States . A lot of what we see going on is goingtax proposals to help Domestic Company earnings, whether a lower tax rate down to 20 or the repatriation move for international companies. It will help companies over all. For the russell 2000, they are highly dependent on what might happen for small businesses. The problem is the president keeps tweeting and having some problems, whether senator corker or others, it gives me a big concern we will not get anything this year, and even well into next year. That is one of the growing concerns with the russell 2000 on its rsiabove chart. Wateredsee if this is way down or not come at all. Julia tie this together for us. You think the dollar and the rates will push higher. How much upside in the dollar endrates adding to the back of this year in the final quarter of this year and what will be the spillover of fax to a emerging markets . Or spillover fx to emerging markets . There are a key levels on the dollar and the 10 year yield, the ones i mentioned earlier,. 4 on the 10 year yield above that, i think it will be a quick move to 2. 6 . Whether we get to that level by the end of the year is questionable, but could get close. The dollar,ng with 94. If you break above that, you dont have much resistance to 96. You look at emerging markets, the correlation between the dollar and emerging markets has been strong for quite some time, so if we see a breakout in the dollar, emerging markets have been one of the best performers this year and will probably see weakness. It rallied as the dollar sold off strongly, but they are doing better than they were last year, so i dont think it will be a major crash, but will hurt that airy and people will want to rotate out of emerging markets into the energy sector, then of course with Interest Rates, people made a lot of money buying utilities stocks. If rates move higher, that will be a problem for that group, but positive for banks stocks. The bank stocks have done poorly most of this year and have