I want to make sure we have that time, because we have to have that time period available. We cannot go to close to the end of the year. It does not matter if we are passed by a week or so but we wanted by the end of october. Mark david davis pushed back against the october deadline. He wants the deal finalized over the last three months of the year. The you will have no say during the transition period. Four months after Hurricane Maria struck puerto rico Officials Say thousands more are still living in hotels. Reimbursements from feeema have begun to run out, and many say they cannot afford temporary housing without assistance. Maria completely destroyed more than 70,000 homes and damaged 300,000 more. The agency says the program will end march 20. In galveston, texas, Officials Say nearly 800 families remain in hotels five months after Hurricane Harvey destroyed or damaged their homes. Floodwaters that have reached a peak in paris are threatening towns downstream along the seine river. Heavy rain has swollen the river and its tributaries, forcing road closures and causing damage in more than 200 pounds. Water levels are expect twowns. Water levels are expected to stay high for days or even weeks. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. Crumpton, this is bloomberg. Julia live from bloombergs World Headquarters in new york, i am julia chatterly. Scarlet i am scarlet fu. Joe and i am joe weisenthal. Julia equities are lower, bond yields are higher. Joe the question is, whatd you miss . Scarlet the 10 year treasury getting out so quickly because i am so excited. How did the market hit the Tipping Point . Investors drink it up. Peppersnapple, creating a beverage giant. Extend the plunge after allegations that steve when sexually harassed women. Posting the worst session since 2009. Julia whatd you miss . U. S. Treasuries extending their selloffs taking yields to a threeyear high all coming ahead of the major week of data and policy announcements this week. We are here with the chief u. S. Rate strategist for Bloomberg Intelligence. He joins us from princeton air. Great to have you with us. Point at a tipping number of big Bond Investors and a number of big Bond Investors have been saying yes. What do you think of it . Technically speaking, there is not a lot of lines on charts that show there is anywhere to stop. I think what is more interesting about this than just the 270 on the 10year yield is the fact that the curves continue to steepen. We have not really done anything today. This is not because we have expectations of the fed continuing to hike, it is more technical than that of people getting out of risk and using the 10year treasury and related products to do that. Julia makes sense. Joe you have been mentioning the fact there are no lines on chartier that would necessarily support treasuries. When you look forward charts that would necessarily support treasuries. When you look forward, what is more important . That we are breaking trends are the fundamental catalyst that may be causing people to sell expectations about the economy, the fed, inflation, and so on . Ira ultimately, the fundamentals won the ruling and part of the reason is a little bit of optimism on the economy itself in the idea that the fed will not necessarily destroy the economy. Lessre pricing out a little odds of the policy mistake by the fed, which is a reason why you see the curve steepening. I think some of this is technical. The consensus has been we will flatten the two cents curve and get to zero at some point, and that is not happening. Scarlet good things to keep in mind. Speaking of the fed, the meeting this wednesday is supposed to be a nonevent. That is what most people have been anticipating. Yet, Goldman Sachs and others have mentioned it could be slightly hawkish or there could be slightly hawkish rewording of language when regards with regards to the inflation assessment. Had you see this playing out on the treasury market . How do you see this playing out on the treasury market . Ira i think if it is hawkish, you will likely see the curve flattening. There are a lot of reasons to think the fed will be a little more hawkish. The data has been good, Inflation Expectations you look at market breakevens, so the amount of inflation the markets are expecting over the next 10 years and i will win a lot to the last meeting. A lot of optimism the fed 10. 2. Julia were talking about the optimism in the fed. Julia over what time horizon are read talking about seeing a 3 rate . Over what time horizon are we seeing a 3 rate . 25 we just rose in yields or 30 basis points in the last two months. I think a repeat of is not completely out of the question. Julia yeah. Joe in terms of the Economic Data, we got pretty solid data this morning on personal income and spending. What do you make of it in terms of what you are watching next and particularly the jobs report and what about that will you be paying attention to . Joe it is not even the ira it is not even the headline numbers unless it comes out super weak. If you get a 200 number, that is fine. It is really the wage numbers. Do we see the wage growth and Income Growth that we need to get the Service Sector inflation continuing to move higher . That has been what is missing from the recovery. Service sector prices. Wages being the largest component of the Service Sector are very important for that. You have seen those starting to climb, but it has been incremental and slow. Scarlet Bloomberg Intelligences chief strategist i richardra jersey. Some news from bloomberg crossing the terminal. We have michael dell ready to bring all the pieces of his tech empire under one publiclytraded roof. Alex and san francisco. News that you had michael dell and another group were considering an ipo for the company. Now, you have more information about the Strategic Options dell has been considering. Alex that is right. They were considering taking the company the company public. According to people familiar with the matter, dell is also considering a reverse merger wear. He anm it would get it under one roof. It would cause dell it was taken private back in 2013 and they bought emc. Emc also owns a majority stake in the Publiclytraded Company. Thatdell acquired emc, was made into a tracking stock that trades under the ticker ddmt. That is another piece that became very important. He wants to get under oneroof as a publicly traded company one roof as a Publiclytraded Company. Also, he wants to take the tracking stock inhouse. Member, that is a 15 billion market cap. I am saying those shares moving right now as our headlines across the terminal. Joe from a Financial Engineering standpoint, what would be the advantage for dell to go public via the reverse merger . Alex it would combine all of these pieces. If you think about it, if you did a classic ipo, that stake as a corporate, they are still out there trading. It seems there is potentially some operational synergy in terms of bringing all of these different parts under one roof. When you think about the other counterparties involved, silver in more than 2 billion in equity total. Right now, my sources are telling me the sponsor is not looking for an exit, but if it were to get public, they would get a past exit. Silver lake does not have many options in terms of privatizing its stake. Dell is coming in saying let us round all of this up and see if it moves forward and a more strategic fashion that makes sense. Julia do we assume it will be ware stock . Th vm will there be changes to management . Or will it be with joe just called it, Financial Engineering . Alex there is some benefits to the current structure in terms of how this deal would get financed. The stock will probably be what much of this acquisition, is financed with. Dell through the acquisition controls 90 of the Voting Rights of that stock. Thingof a convenient there for michael dell. In terms of management structure, even though this would be an offense a takeover of dellmware, it would be an operating business under the umbrella. Very well,ormed eve and i am told even better than dell has been performing. Scarlet thank you so much for joining us. Re shares plunging today on these reports, off by almost 60 . Coming up, whether equity rally 16 . Coming up, why the equity rally is not getting the appreciation it deserves. This is bloomberg. Joe whatd you miss . Learning to love the rally. U. S. Stocks continuing tissue higher, although not today. Is the market being fully appreciated for what it is doing . According to my next guest, it is not being fully appreciated. We know the stock market has been on an incredible rally. You always hear people say a few things. One is, yeah, but the stock market is not the economy. You argue it is more the economy than people realize. Yeah, i think that is a red herring. Would you prefer an environment where the stock market is not going up . Would you think a stoc falling stock market says about the economy . It is ridiculous. I think there are certain sectors in the data that matter more for socks. Things like exports and durable goods spending, houses. I think this is an important boo important input. Joe one thing you wrote about is there is a clearly between stock market prices and investment in key areas. What is the area and also what explains the link . Neil i think it is across a wide range of things like industrial equipment, the Energy Sector you are seeing it as well. A lot of the weakness in Business Investment in the United States and win Financial Condition started tightening started when Financial Conditions started tightening. And we had a very weak period. Prices rise, the equity cost goes down. Companies can look at the equity market as a macro risk aggregator. When the markets are going up, macro risk is lower. They may feel better about investments. Directly, it means i have more collateral against which to borrow. If youre a loan officer, you are looking at that and saying they have better credit to standards and they invest more. Are so rising stock prices a reason to be optimistic and something mechanical allowing you to have greater flex ability to make decisions. Neil this is the theory behind the token q. Investment. That works. Token q theory of investment. That works. Rising since the market turned early 2016. I think it is more of a signal than it is for firms, in terms of macro uncertainty. Look at what is going on with households too. They have more savings. A lot of that is attributed to the rise in wealth. Joe let us talk about the household side. The other thing people are saying is, yeah, stock markets rallying, but Stock Ownership is narrow. It perpetuates a new quality because some people have access to stocks and others arent invested. Is there a downside there . Neil i think it is overblown. Would you prefer an environment where the stock market is declining . What does that say about the economy . Probably that it is not doing well. Joe in theory could say stop focusing so much on the stock market. Neil look, if i am someone that does not own stocks, but i know the stock market is going up, theres a reason why the nightly news runs with that information, right . You do not hear what is going on in fixed income markets at 6 30 on the nightly news. Joe them he would have to explain how when one neil right. To me, you can think of the stock market as a growth momentum barometer. To me, the stock market going up, that is going to help everyone. Maybe some more so than others but i still believe in this idea that a rising tide looks good. Joe when President Trump tweets about the markets breaking records all the time and people criticize him, he may not be completely off base . Neil i think his comments on the dollar he probably should take a cue from them and not talk about it so much. Generally speaking, i think it is a good thing, not a bad thing. Joe head of u. S. Economics at Renaissance Macro research. Thank you very much. Scarlet it is time for the stock of the hour. Mcdonalds standout considering the chain reports earnings tomorrow before the bell. Littleooking at shares, changes on the day. Abigail doolittle has a preview. Abigail investors will probably be looking less about the december quarter and more ahead. Can they keep the sales growth growing . If we look at the Bloomberg Intelligence function, we will see over the last three years the company has turned things around. They are in turnaround mode. We see step back in the First Quarter of 2015. Negative. Climbing, climbing, climbing climbing, climbing, climbing. The upcoming quarter is expected to be 5 down but the focus will be on 2018. Investors will want to go back to the 6 or even higher. Franchisees are talking about the dollar menu doing very well, better than they expected. All signs are that mcdonalds is likely to you very well. Julia this is all about the ceos efforts to turn the company around and diversify the company in terms of what you kenny when you go in there. Aboutl you are right that. 2015. K over as ceo in and has a lot to do with competitive pricing plus technology. Not only do they have a more diverse menu but they have the selforder kiosks, mobile apps, delivery. Im dating myself, but it is not had when i waswe a kid. It is an elaborate system at this point. Scarlet thank you so much. Coming up, while american consumption continues to power the economy, there is a cautionary signal. The savings rate is declining. The charts that you cannot miss, next. This is bloomberg. Scarlet whatd you miss . Americans are saving the least in 12 years. The bottom line from this mornings data is americans are spending but they are not saving. The savings rate in december taking down to 2. 4 . It was 2. 5 of prior month. Were at the lowest going back to september 2005. The drop matters because consumers make up 70 of the economy and they can only push savings down so far before they cannot spend as much. That will slow down u. S. Growth. Christian from Oppenheimer Funds was with us last week and he said people will have to take on a lot more debt. What it shows is wages are not going up as much as spending and risinge savings rate was in the aftermath of the financial crisis in 2008 and 2009, there was a cushion. He says we are eating through the question pretty quickly. Tom lee takes it a step further and says part of the push higher is the rotation of negative Interest Rate bonds. Massive savings low of 700 million a year that was not going into equities before but is starting to make its way over. Julia very important points there. Why does that translate to the polls . Trump . Ident donald we will continue to affect question. Save my charts and something just popped up. This is my chart. Just looking at what were the pullback onon bond deals. What extent and if we get to the 3 level. Were looking at the movement of 10year yields. On the right, you can see it tracking up in 2018 quite significantly higher toward the 3 level. Of course you have analysts out there looking at the fundamental reasons behind why we should and could see higher bond yields. There was always a risk here. The reversal you seen, the bond fares buckle because that is what happened in the past. If we go back to 2013 to the areas i am showing you here, we saw yields about point hitting 3 after we saw the Federal Reserve move. 10year yields the nextg over few months. We suburb reverberation over other areas. What were looking at here is the s p 500 dividend yield spread to 10year treasuries. If you look down below, the yellow line here, im looking at the spread between 10year treasury yields and u. S. Junkbond. That also shifted by some 200 basis points. Think you for that, thank you for that, joe. I still need to learn more about the options. What was oncey one a compelling argument to buy equities. There saying look at the spreads becoming less compelling all the time. Let us talk about the data. Heres something really compelling. When you look at the real world, things look pretty good from an Economic Data standpoint. I put two lines on this chart. It is can a messy. The teal one is the manufacturing index. Soaring to its highest level in a long time. And we have an update to the atlanta feds gdt tracking index as one of the regional ideas that tracks every data point to try to get a sense of where the economy is headed. That is that ever 4. 1 right now. As you see, it is noisy. In the last quarter, i want when it fell. The bottom line is things are looking pretty good. We will see what the last quarter revises to ultimately. Julia you were warning with your chart. Joe why bother to say in th is market . Scarlet you wonder how the fed will put this together on wednesday when they come up with their inflation and their outlook for the economy. The market close is next. We have the major indexes pulling back just a hair. The dow off by 100 basis points. Good for 0. 5 decline. This is bloomberg. Julia whatd you miss . Stocks under a bit of pressure at the beginning of a busy week for corporate earnings and Economic Data. The 10year yields just below 2. 7 . Im julia chatterly. Scarlet i am scarlet fu. Joe i am joe weisenthal. If you are tuning in live on twitter, we want to welcome you to our closing bell coverage every day from 4 00 to 5 00 p. M. Eastern. Scarlet we begin with market minutes. I think we can call this a genuine selloff. It has declined at least 0. 7 for the dow and s p. For the dow and s p, the biggest decline since september 2017. It has been a while. Joe it counts. Scarlet a big mover here was treasuries. The treasury yield on the 10year moves up. We saw stocks decline. W