The bank did not give any and says theion but rt bank is reviewing the decision. The kremlin stated that moscow would respond in a practical manner. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Scarlet we are 30 minutes away from the close of trading in the u. S. Live from bloomberg headquarters in new york, and scarlet fu. Julie im matt miller. Matt i am matt miller. Scarlet a rally in energy companies. Joe but the question is, what you miss . Scarlet investors are driving into passive products. We were here on this topic. And it is a showdown in sin city. President ial nominees donald trump and Hillary Clinton faceoff for the third and final debate in las vegas. We will take you down with a preview. And one of clintons biggest supporters, billionaire a little steve case, joins us live from aol founder steve case, joins us from the vanity fair summit. We will ask about Lessons Learned from the tech bubble. Matt take a look at where the major averages stand. Been most of the day nasdaq not moving much at all. Hovering around flatlined. S p, one third of a percent. Dow jones 67 points. Off the session highs but still showing gains. Abigail doolittle is standing by. Have had the nasdaq around even all day. Fluctuating between small gains and losses. Slightly higher all afternoon. This largely reflects what is going on within the largest sector, technology. It comprises about half of the stocks here at the nasdaq. I will plug war between winners and losers. A real tugofwar between winners and losers. Facebook, alphabet, and netflix trading hybrid yahoo also trading higher. The company beat thirdquarter earnings estimates by as much as 43 . As for the losers, the hardware and chip stocks. Beat earningslogy estimates nicely for the Second Quarter revenue guide was flat so investors are somewhat disappointed. The big story here today for the nasdaq, intel. Shares are sharply lower. On pace for the worst drop since the middle of january. Missing street estimates that caught the street off guard. Demands like weakening behind the week guide. This is not the first time this year that this has happened. They also went down in january when the stocks had a roughly 9 drop on the day. Worst drop since today. We do have analysts defending these shows but very, very lumpy business. Matt is there any reason if you look at the chart of intel, you can see the lumpiness in the stock price. Any reason to think the underlying business should show a boost . Cany really have it they pivot to cloud . Ntel,il we look at i 35. 92. The moves in a more pronounced manner, the stock is stuck in a range. For recently the stock has been trying to push above the top of the range as investors were becoming excited about the possibility of the cloud business. But the stocks dropped right back down into the range, suggesting more weakness could be ahead. Hard to say whether or not there is some sort of recovery. More lumpiness in the business is ahead for intel. Abigail doolittle joining us from the Nasdaq Market site in midtown manhattan. Traders are stepping up its that Central Banks will cut borrowing costs for the first time in four years. Policy will meet tonight and investors are present in a reduction from a quarter to half a percentage point. A meaningful cut in brazil is a prerequisite for investing in the country. Our guest joins us now. Two of the 58 alice that analysts that bloomberg surveys expect the rate cut tonight. if you look at the factors they cited, food inflation coming down, progress on the fiscal austerity front, which we have gone through congress. The third factor is meaningful deceleration in services that has been slow to come down in brazil, despite the severe economic recession the country is going through. I could be a reason they point to. At this matt a reason they point to if they dont cut. Gabriela right, meaning we want more meaningful deceleration in that sticky point. The other factor and especially the fact around the deceleration just in Inflation Expectations can really 20 two the rate cut today. That is a global phenomenon, right . Breakevens dont look so week. Gabriela the issue in brazil and a lot of latin american countries is bucking that trend. While the world has dealt with deflation, they have dealt with stagflation. Hi, sticky inflation levels. Inflation, while they say it has come down, still quite high and above the midpoint target of 4. 5. Scarlet this is a huge turning point for brazil and yet it is only part of the prescription. The other partys fiscal reform. What is your confidence that the Economic Dream Team can deliver . The expectations on that front are pretty high. They there are very are very high and that is the explanation for the rally. It is all about expectations from expectations of policy change, especially when it comes to fiscal austerity. We are seeing the first signs that the michelle; made first that the temer government may push to reform. Aboutxt step, 2017, all pension reform. That is going to be huge in terms of reining in fiscal spending but also in terms of the Political Capital that will inspire. Matt problems here as well. Pension problems here, massive pension problems in the u k and europe as well. These seem to be global issues. I dont know if you solve the story from gadfly today, story about how much investors are holding in cash. Do you think that is part of the difficulty in brazil as well . Our people hoarding cash there, too . Gabriela no, and the brazilian investor. I wouldnt say they are taking on a lot of risk but there used to fixed income. Whether sovereign bonds, Corporate Bonds, i do think there is investing taking place. It is in fixed income. If we start seeing some rate cuts, maybe that could encourage risktaking. Maybe going into equities. We see how that has worked in other countries. Gabriela i think we are still far from that in brazil with rates at 14. 25 . [laughter] matt good point. Scarlet exactly. I wanted to bring everyone to this chart on bloomberg. Emergingmarket investors are the most bullish and corporate eurobonds relative to sovereign notes. Here is the yield spread. Way down. It has been narrowing. What is it about sovereign debt in these emerging nations right now that is not proving to be quite as attractive as it had been previously . Gabriela i think the first of all the rally in emergingmarket bonds was that first step. We saw actual sovereign bonds, there was still a bit of trepidation into wading into the corporate pool. Using brazil as an example, resilient spreads on the sovereign side game down for Corporate Bonds are quite attractive. It is a shift from saying maybe we have narrowed spreads too much on the sovereign side and it is time to go to cheaper Corporate Bonds. Fascinating matt fascinating, as saudi arabia puts out the biggest emerging bond issue of all time but we saw argentina, with 16. 5 billion. Gabriela there is still appetite for emergingmarket debt. Pretty much a fixture for the next couple of years even in the u. S. Scarlet the u. S. Federal reserve throws everyone for a loop and raises Interest Rate or doesnt raise Interest Rates, surprise inng to december, when does that mean for emerging markets . Gabriela not so much about the fed raising 25 basis points, but what happens to the u. S. Dollar . When the dollar was rallying 20 against a whole basket of currencies, for us the question is what is the feds rate hike mean for the dollar . What they are indicating to us is it is still gradual and to such a low resting point, it is good news for emerging markets. Scarlet thank you, Gabriela Santos of j. P. Morgan asset management. , the ceo of the second Largest Public Pension Fund tells us about californias new disclosure laws. This is bloomberg. Matt whatd you miss . California governor jerry brown signed legislation applying a disclosure law that applies to fees on Pension Funds and Retirement Systems into private equity venture funds or hedge funds their investing in. It will affect americas second Largest Public Pension Fund, of course, calstrs. Jason kelly flew out to california and sat down with cio chris ailman. It goes into effect january 1 and we are already making the steps and it will be disclosure fees and carried interest on private equity and hedge fund in january Going Forward. We are setting up the webpage and getting ready to record that. Any fees and not going to accrue for several months or probably a couple of years. Carried interest will take longer. The information will be out there for the public to look at. What is driving this desire and his push from governments to disclose more on the part of private equity and hedge funds . I think there is been constant interest for more disclosure an understanding of the cost of investment management. We have disclosed out direct cost of fees we pay out to a money manager. We are not disclosing the fees netted out of the return. Kind of like a mutual fund. They now have the cost and you dont report that. What we are doing now with the boards encouragement is recording the cost annually of real estate, private equity, infrastructure, hedge funds, any private investment. We show that at the asset class level of what are repaying in management fees, featuring, profit sharing, which we would call carried interest. And anything we are paying and portfolio monitoring fees so they know what has been netted out of the returns. Payingmately you are fees for the returns. How do you feel about the returns you are getting from private equity act of from private equity . Well, that is the key. We have to have profit to share in it. We are seeing returns come down. Seea surprise because you veterans and a lot of Asset Classes continue to compress. Prices for portfolio committees are very high. That is not a period where you see outsized returns. We still believe in the process and think they can add value over we can get in other investments like public equity. Heard people like David Rubenstein talk about a secular change in terms of the returns private equity can deliver. Not 20 or more but down into the middle teens. What are your expectations for private equity Going Forward, numberswise . We look at it as the spread over public markets. We used to expect 500 basis points. Now we expect only 300 basis points above that net overall the cost. If you look at the last 20 years you see the fact that the industry went from very small, very amount of capital, to large amounts of capital and it is now a full industry. We are not surprised there has been a compression of those return advantages. More transactions are going to an option. They are not being negotiated so you and i seen the discounted prices used. You said, i believe on the go, you are not expecting to meet this 7. 5 bogey you have to hit. How are you feeling now as we get closer to the end of the year . For us that is the halfway mark. Our year end is june 30. We still have to get through october. That is a mother that worries everybody when it comes to u. S. Stocks i month that worries everybody when it comes to u. S. Stocks. Going to be a tough year. Quarterlying into earnings season and we are really going to have to see how the earnings come through in equities. Expected, it is going to be a tough year to make money. Roughly 9 at allocation to private equity at this point, i believe. Your target is up to 13 . How do you get there and how soon can you do it . It is not a matter of choosing a particular target. We are investors. We have plans the next couple of years to keep investing could part on the challenge of private equities you can commit money but the gps have for years to invest. It is not like you are going out and buying the stock and increasing allocation. We are looking at secondary ,arket options, coinvestments looking at ways to expand the portfolio. The 13 target is our longterm consistent target. We were about that in the early part of this decade, and we are going to be lower now simply because the investment cycle. When you think across Asset Classes even beyond private equity, what do you like Going Forward over the next two to three years . Two to three years is going to be a challenge because you have the brexit during that time period. Private assets have a better chance of making money. But it is still going to be an thatesting challenge nothing cheaper right now in the world with the exception, i would say, of emerging markets, and not every emerging market. It is a whole bunch of individual markets. People have to look at their portfolios. Diversification is going to be critical. Having a nice spread in the portfolio of equity, a little bit of debt, and if you can come alternative investments to generate returns. Matt that was chris ailman, cio of calstrs, with jason kelly out of our San Francisco office. Scarlet time for the biggest business stories in the news right now. We begin with st. Jude medical, facing allegations from muddy waters. The short seller says the pacemakers and defibrillators can be easily hacked and turned against patients relying on them. The firm released a video that covers what it says are the polar abilities. St. Judes says it stands behind the safety and security of its devices. Credit suisse is reducing jobs at its cash equity business according to a person with knowledge of the matter. The swiss bank is extending cuts to an area it previously earmarked for growth. Credit suisse eliminated 20 jobs in cash equities. And please in london, dubai, and south africa among those employees in london, dubai, and south africa among those affected. Starbucks is pushing ahead with expansion into china. Starbucks has about the dean dozen stores in the u. S. 13,000 stores in the u. S. In brazil, the man who spearheaded the ouster of former president Dilma Rousseff has been arrested as part of a sprawling probe into corruption at petrobras. He has been accused of taking millions of dollars in bribes. He denies the accusation. He resigned as a of the lower in september. Ess that is your update. Matt we just heard from the cio of calstrs. In the next hour, marc levine, chairman of the Illinois State board of investment, which oversees a 16 billion defined pension benefit plan, on why that board has converted its plan to and all index fund lineup. This is bloomberg. Scarlet i am scarlet fu. Whatd you miss . Todays big Economic Data point was new home sales, or i should say Housing Starts, excuse me. It showed a big crop off in the construction of multifamily homes, which are the purple bars here. Down 38 to an annual rate of 264,000. The last time we saw 264,000 come in was about three years ago. The 38 drop is the steepest decline since the recession. That helped you drag down the headline number of Housing Starts. The headline number is the white line. According to the Bloomberg Intelligence economics team, housings contribution to gdp will be less this year than it was last year. They also say the drop off in multifamily Housing Starts may not last because the cpi report we got yesterday indicated that rents are rising fairly quickly, meaning that the multifamily housing start drop may reverse itself because people may want to add was applied to the market. Matt Housing Starts make up 3 of gdp. It is a massive drop, 9 , but in multifamily housing, which has been on a tear the last few years. Scarlet good context. Matt singlefamily Housing Starts were up 5 . Scarlet it did draghi headline number down, though. Matt for sure, because it is so much of Housing Starts. But singlefamily Housing Starts may be on the mend. Scarlet good point. Matt im taking a look at dominos pizza, not because im hungry, unless i was hungry for a return, then i would be in luck, had i bought this into any time in 2010. Im sorry, 2004. Dominoes and google, or im sorry, now called alphabet, ipod in the same year. If you bought dominoes instead, you would be on top. Return. Use of total it is mostly because of dividends. About half of this 2167 return you got from dominos since the ipo comes from dividends. Google, of course, doesnt pay a dividend. Is alsodominos crushing its competition. Pizza hut decline in sales this quarter. Real winnera not only a monk pizza chains but restaurants and Silicon Valley firms pit we will talk to the ceo patrick ball tomorrow at 2 00 p. M. Eastern. Scarlet that was set up so nicely. Matt thank you. Scarlet the market closes coming up next. We want to mention quickly that American Express and ebay will be announcing results after the bell. Both gaining more than 2 in todays session and late trading at the moment. Before we head to the close, if you look at amex, best day since august, and for ebay, biggest oneday gain and still. Also look at the major indexes. With less than four minutes before the modest gains but gains nonetheless as little surprise plus 52 barrel. We are moments away from the closing bell, whatd you miss . S p with its biggest gain of the month. Oil shot up to a oneyear high, corporate earnings with signs of profitability at the close. I am scarlet fu. And i am matt miller. We welcome our viewers worldwide who are viewing into twitter. You can watch our closing bell coverage on twitter from 4 00 to 5 00 p. M. Eastern. Scarlet we begin with market minutes, closing higher on the s p 500, led by energy. Wti approaching 52. Up to a leveleen that it had not seen in 15 or 16 months. We saw 51. 80 for a little while today. And 51. 40. Energy stocks, the biggest winners. It financials doing well today after Morgan Stanley came out earningnced expectations