The decision marks a longterm fix to overcome the discovery of high lead levels in the citys water system. Under that deal, flint would be responsible for replacing lead and galvanized steel lines that bring water into homes. The cost could be as high as 97 billion with federal and state governments roughly splitting the bill. The British Government is standing by its initial statement that now is not the time for a scottish referendum. The may administration repeated they will be no negotiations on the matter and the focus now is on brexit talks with the European Union. Scottish lawmakers voted today on a new referendum on independence to be held within the next two years. The Scottish Parliament voted 6950 92 back the first 6959 two back the call to back to the call. This is bloomberg. Minutes from the close of trading in the u. S. Scarlet stocks are as financial shares rebound. Joe but the question is whatd you miss . Scarlet the sector would have the most to lose as the white house moves on to the topic of border adjustment taxes. The trade of the decade. We will hear from one investment strategist who says now is the time to be in emerging markets. On the eve of article 50 we will hear from the vp of the leading party in greece and lessons we can learn from brexit. Meanwhile, the dow is set to snap its a day losing streak. The index near session high. Green across the board. Really impressive moves today after some nervousness yesterday. Bloombergs julie hyman is standing by with some charts. Is one of the many groups that is benefiting today. It is benefiting in part from the perception that a border tax may be more difficult to do following the failure of Health Care Reform to pass. Here is a threeday chart of the s p 500 retail. If finished up off the lows. Day gain. Today has been the strongest day of the three. I also took a look back at how retail has done since the election. You really have to break it down. The purple line is the s p 500 retail index. Weighted towards retailers like amazon but netflix and priceline. It is not all the retails you traditionally think of as being adjusted by the taxpayer if you get more granular, max margins in yellow. Specialty apparel is down 10 . The apartment stores are down 14 . Part of that is due to concerns about a border tax. Part of it also due to a tough Holiday Season for many retailers. But we talk about retailers they are very reliant on imports. I was speaking to an apparel analyst for Bloomberg Intelligence and she says 90 of what is sold in the u. S. Apparelwise is not made it not made here. This is cotton imports. This does not even include synthetic closing. Clothing. China on the top. Then you have vietnam in aqua and mexico in yellow. Anyway you slice it, you talk about you yes this is where they are getting the goods from. Particularly when youre talking about apparel. If there were to be a border adjustment tax it would definitely hit these guys pretty hard. Scarlet thank you for setting the scene. For more on retail want to bring in steve said off steve sadove. He levied retail federation. Today he is the Founding Partner of an advising firm. He is quite accomplished. Great to see you. Take you for coming in. Julie was setting the scene with retailers and how against the border adjustment tax they are. Is it safe to say it is unequivocally bad for the Retail Industry and theres nothing to be gained from it . Steve absolutely. I think in all the time i have been in the Retail Industry this is probably the most existential threat we have seen. Just about the profitability. I think it is a job killer. We talking about job creation. You are seeing Stores Closing already. Were only seeing the tip of the iceberg if were going to destroy the profitability of these businesses. Joe as the Retail Industry makes its case, what defined to make the most compelling argument . The job killing, that costs will rise to the consumer . Steve i think it is a job killer, it is very regressive, and i think you have a very thin margin industry to begin with. Set aside the border tax, you have an industry in peril today. Sector onment store the decline. Lots of things going on. This is just one more nail in what is a very difficult environment. Joe there is a view out there that ultimately it would not matter that much. Current seat would offset. The tax goes in but the dollar goes up so the imports that companies by would not change prices. You dont find that compelling . Steve it is a very theoretical discussion and it might take years. What you have is a retail that is bleeding. They would go from 1 billion in profit the 2 billion in losses. Thats how big a difference it makes. Scarlet hypothetically are there any pockets of the Retail Industry would have the ability to pass on the cost to their customers . That it isproblem is such a competitive environment and retail is so tough, you had very few of them. Maybe the highend retailers capacity on but it is very difficult for them to pass on the pricing. Scarlet julie talked about the Department Stores a bit. There is now speculation at hudsons bay will look to buy Neiman Marcus. Do you see a way to hudsons buying the Company Without taking on the debt . Richard baker is a creative guy and he may very well be able to find a way of taking it without the debt. I think it will be difficult but it can be done. It really depends upon the credit agreements that Neiman Marcuss debtholders half and whether or not they could take part on the dollar lesson 100 . Whether or not he could separate it. Time will tell and we will see whether he is the only bidder. But i think you have a difficult situation because the company is not worth anywhere near what was bought for by aries. The debt is very large. 4. 9 billion level. The business is probably earning about 450 million a year. Apply a multiple to whatever you want to use come up most of the industry is probably trading in the six thomas seven times multiples. It will be hard to support the debt. Im sure he is good to have to do it without assuming the debt. Marcus one thing neiman does not have on its side is a lot of real estate. Our departments or change just another real estate thing at this point . Steve it is a real estate play but at the end you have to run a retail business, and that is the problem. You have a lot of real estate go back to federated, where he sold the real estate or put it into another joint venture. In the end you have to direct. If the retail side of the business cannot pay rent, then you will end up in bankruptcy. That is the problem with a lot of these lbos. It is great if you have a growing business. It does not work if the business is declining. Joe we have seen all these brands be taken over by private equity. What has been the net effect on how they run the industry . Have they run them well, has accelerated or declined . Positive or negative . Steve i dont think it is positive or negative. A wellrun company in a private equity environment that is growing can do extremely well. There are a lot of exit a lot of Success Stories out there. He problem is the margin for error is slim. If you get into a declining environment, whether Neiman Marcus or j. Crew or the container store, i can give you an entire series of them. Youget into trouble because have levered the thing up enormously and if youre not getting Earnings Growth it is hard to make the numbers work. Scarlet a lot of people worry ehat retailers backed by p could be the next ground zero for a credit crisis. Are those concerns justified . Steve it is an individual company by company situation. You are going to have companies if you look at the creditworthiness of some of the lbo retailers it is as tough as times in the 2008l, 2009 frame. It has to do with which ones are not performing and have been levied up. As far as i can see it is not an industrywide issue. A chartlier we had showing that highyield retail debt is some of the worst reform worstperforming debt this year. Not surprising given the troubles of the industry. Here is the chart right here. You are talking about taking these companies on a casebycase basis. What would you look for amid the wreckage, so to speak, for a company whether it is because of the Balance Sheet or their business can make it out of this environment . Steve i think it goes back to the fundamentals can you get the business growing again . If even markets can grow earnings, you have a great turnaround story. I think all of them have to do with, can you get growth, can you great value for the consumer . There are retailers performing exceptionally well. Burlington industries, ross, there is whole series of valuefocused retailers doing well. Amazon is doing exceptionally well. You have to find a way to differentiate the product, value for the consumer, and to be built to compete with the amazons. If you are selling the same stuff that ever else is coming will go to the lowest common denominator, which is price. Scarlet all of that depends on who is leading the effort. Are there enough people in the industry who have that know how or do you have to import people from outside retail . Steve thats a great question. The Retail Industry is going to one of the toughest times it is ever seen. It needs to change quickly. Were talking about major sea change in terms of how people are just the issues. It is not business as usual and not incremental. I think there is talent within the industry but also outside thinking that could bring some new thinking to the party. You do have to be creative. At peopleps looking from the Digital Industry to try to come up with new strategies . Steve could be from the digital from the could consumer industry. I do not think it is from anyone industry. You cannot retread the thing retread the same thinking and when. Scarlet can you think of one retail chain that is winning, doing everything right and has a hold on his future . Steve tjx and amazon are heading it out of the park. Scarlet amazon definitely not your traditional retailer. Steve absolutely not. Joe thank you very much. Fromxt, we will hear cyprus ministers of finance and energy in the investment in the island country. This is bloomberg. Scarlet breaking news. Venezuelas state oil company is preparing for its president to leave his post by july. This is according to people familiar with the plan. The oil minister announcing martinez would take over and he would keep both titles. According to bloomberg reporting. They are said to be preparing of the exit of its president. Joe whatd you miss . Cyprian ministers were in new york attending among those in attendance were the minister of finance and minister of Energy Commerce and industry and tourism. Both join me for a conversation on investment. It is quite good, actually. The lasten difficult two years with this type of economy has achieved a remarkable recovery. A growth rate of 3 gdp. We operate with a balanced budget for the last two years. Things have improved significantly. The Banking Sector also has healed to a significant extent. We are good. Joe what would you characterize as a key drivers . There are other eurozone countries that continue to perform quite poorly economically after their bailout. What has made it work for cyprus . First of all we have some strong promising sectors like , businessd shipping services which have performed strongly. Also were very determined and focused on establishing and maintaining a probusiness economic environment. We have not been raising taxes. We have been lowering taxes and offering incentives to business. This has worked. It has delivered a strong rebound in the economy. Joe lets talk about energy. There is ongoing business for ongoing resources. What can you tell us about the latest round of bidding . We have concluded a third licensing round. We have managed to attract some of the biggest names of the industry. We have been able to award a block to exxon. Had to call from france total from france. This shows the potential of the cyprus economics him. Say ral i would dare it is fast becoming an alternative source of supply for the European Union. Just to give you a number to put that into perspective, so far we have had about 2000 billion cubic meters of discoveries. The eu in 2015 consumed about 415 bcm. You can see that while we have just started the discoveries, it could soon become an alternative source of supply and routes to the European Union. Joe one potential source of anxiety for anyone thinking of investing in cyprus is the ongoing the failed or stalled peace talks. How is that affecting business . There was hope on peace talks going into this year. They have since stalled. Where do things stand now and you see in them an Economic Impact from that . Were able to find a solution and to unify cyprus, obviously this would offer a huge boost to economic activity. Shows thatord finding good Investment Opportunities and ensuring an economy which is functioning and performing strongly is not dependent upon reunification. Still engaged are in an effort to achieve a , we has shown that the economy can achieve very good growth rates even without the solution. That is the main scenario. Be another, it will post. Joe that was part of my conversation with the cyprus minister of finance and the mr. Of energy, commerce, industry and tourism. Scarlet it is time for the Bloomberg Business flash. Well get some of the basis saudi arabia has last outputple in cruise aftertax income by 300 along for higher tax returns to shareholders and even the company a potential market value 1. 5e neighborhood of trillion. Theyre willing to offer 5 in what could be a record ipo. General motors rebuffed the proposal for a second class common stock. The rejection could set the stage for a potential adult with the money manager. They believethe it would boost shareholder value. His firm proposed gm introduced stock which would be entitled to the 152 is share dividend they paid annually. The board voted unanimously against the pitch. Tesla got a vote of confidence from china after the chinese internet giant acquired a 5 stake in the carmaker. Tencent is not johns fifth biggest shareholder. They got more than 8 million shares. And that is your business flash update. Programming reminder. On wednesday starting at 4 00 p. M. The whatd you miss . Team will take a deeper look at how the rise of populism is well speak with experts on naturalism from the room from around the world. You dont want to miss our special hour of programming. 4 00 on wednesday. Scarlet whatd you miss . Turns out consumers and drivers may not be getting the booth in gasoline prices they are accustomed to seeing. This is a chart of gasoline prices. Unlike in years past gas prices in 2017 are down. 2017 is the blue line which is truncated. The other lines show how gas prices performed in previous years. Typically there is a rise from january to april. This boxed in area. You do not see that seasonal trend this year. Committed to extending their output cut. Oil prices have fallen, u. S. Recounts have grown as well. We are looking for that to continue. People point out there have not been as many refinery kinks. Plenty of gasoline supplies. Inventory is stable. Demand has not been off the charts. , memorialngs work out day weekend you could be bank not too much for your guests. Joe i love your title. It says it all. I am looking at volatility. We awesome we often talk about the vix. This time im talking about realized volatility. In the last few days it seems like there is a lot of anxiety on the policy stuff going on. The market is not buying it. This bourdais measure of realized volatility is literally at its lowest level in 10 years. This chart goes back 10 years. Volatility during this time realized has never been lower. We have seen a couple vix jumps, market selloff a little, but actual volatility is not happening. We get between what people are talking about, the trump trade collapsing and reflation and concerns about policy, it is really not reflecting in the markets. As much as we tried to find a story. Scarlet it just goes to show the narratives are taking hold of the price action more than the price action dictating the narrative. Joe its just a lot of talk. Scarlet take a look at how stocks are performing right now. We less informative to go before the close you have a bit of a rally. Stocks have been zooming higher through most of the session. Within the dow i think there is only one the kleiner, johnson johnson. The s p 500 also getting. The nasdaq the laggard of the bunch. Market closes next. This is bloomberg. Scarlet we are moments away from the closing bell. Whatd you miss . The than ever. At joe if youre joining us live on twitter, we want to welcome you to our closing coverage every weekday at 4 00 p. M. Scarlet we begin with the market minutes, the rally. It is not like we have seen a lot of these days where there are solid gains across the board. Fromdefinitely a reversal yesterday, where we were talking about the trump trade, trouble. Scarlet absolutely. Come inside the bloomberg. All 11 groups are higher now. Utilities, the laggard here. They were negative earlier in the session. Bonds falling today. It goes in mind that utilities would falter as well. Financials, you can see the clear out performers up on the day. Appleshare is doing very well today. Reaching the intraday high in trading. Lets take a look at whether it closed at an actual high today. It appears apple did close at a record high today, getting as 2. 25 , the highest as far back as i did it goes. Darden also at a record high. It topped earnings estimates and selling cheddars kitchen. Carnival lifting its forecast. Tesla getting a boost after a stake. Basically part of the last fundraising effort, but nonetheless of both of confidence. Governmentk look at bond markets looking at the tenure across the board. Pretty significant moves over the last five days. Shooting up to 2. 41 today. You know this range just keeps oscillating. We hit the lower end of the range yesterday, and we keep bouncing up. Scarlet in terms of currencies, the dollar edging higher today. There is the index over the past five days. You see that s