Transcripts For BLOOMBERG Whatd You Miss 20170428

This trip and get uniting a at creating a united christianmuslim front. Day, howws, 44 hours a 24 hoursrs a day per day, powered by more than 120 journalists in 100 countries. Scarlet live from bloombergs World Headquarters in new york, i am scarlet fu. Joe i am Joe Weisenthal and we are 30 minutes from the close of trading. Scarlet u. S. Stocks remain lower as we head to the close of trading. Oil at 50 per barrel. Joe the question is, what you miss . What did you miss . In a few moments, our life interview with tom steyer as he gives us his scorecard on trump when it comes to climate and energy issues. We recap the week that was. Joe lets look at where the major averages stand. Taylor riggs is standing by. Reporter we are down here. Near the lows of the session, early this morning it seemed to be an untreated day. But heading lower as we head into the close. The russellthat 2000 is down 1 today. It should benefit from the lower corporate taxes suggested earlier this week. Some of the other hopes and dreams that we were going on as President Trump was elected. We are wrapping up his first 100 days. Weyou look at my terminal g, will sit atop performer since we will see the top performers since trump was elected. Nasdaq is the top performer. What im hearing is that there was a lag leading into the election, so a lot of this is plain catch up. Of course, i will note that the s p 500 here in white, perhaps higher on deregulation. Tech and giaioned nts reporting earnings here. First is google, they are finally seeing a surge in clicks from the smartphone ads. I am joking as im walking down the street with my phone in my face, google is benefiting as you click on those ads, and amazon with 20 years of doubledigit growth. Those shares are about 1. 7 . Whatd ya miss . President trump came in with big promises about her but charging the american account about turbocharging the american economy. Bloombergs White House Reporter is with us from capitol hill. Us. Therefor joining is a lot undone in the trump agenda. Many of us can rattle off what he promised to do but didnt. After 100 days, what are some clear areas where he made his mark . It is really and what he has undone from the obama era. That is something the white house has been touting. They signed 13 of this Congressional Review Act laws. It is this littleknown, arcane law signed by bill clinton that allows this administration to undo regulations and rules put in place by the Obama Administration within a certain period fof time. This is things like workplace safety, environmental regulations, clean air, clean water regulations, even regulations on funding for planned parenthood. Things put into place by obama that trump has been able to wip e out with the swipe of a pen. Scarlet he has been very active with thes executive orders. Indicating that they will begin a review of something. There are some executive orders or executive actions that have farreaching consequences. Tell us about those. Unlike regular shoes put in place toward the end of the Obama Administration, there are other relations like the cafe standards, fuel efficiency standards for clean power. These regulations that in stone set in stone by the Obama Administration. But this is the beginning step. It doesnt get them out of the picture immediately, but they are the beginning steps of undoing those. The biggest marks are the deregulation of the government. There are a lot of people on the other side who do not think this is a good thing, but in the business community, this is some thing they have been calling for and asking for, especially around pollution, water, and air standards. While the legislative calendar has stalled or is slow that thethere is more Trump Administration canada do via the stroke of the pen and the cabinet agencies. He has not yet reached the limit of what he can undo. I think he has picked a lot islow hanging fruit, but, it hhs. They are still going through figuring out what can they undo from obamacare. Can they just not enforce it . Enforcementlot of actions that they can still take at the cabinet level. I think we get to the hard part. The stuff that you need, the other riches of government to do that you cannot do legislating alone, that is what comes next in these next 1360 days i nthis in this term. Scarlet in several interviews he noted again and again, look at the rust belt, look at the parts that he did well in. To what extent is to some thing that most president s do . Something that most president s do . Aftere try to bring it up the first 100 days . Is this something he might try to do on the 200th day . I will it other people decide if it is trite or not. He brought up this big map to show the reporters in the middle of the interview. He is someone who is numbers and metric driven. How does he define his success . Poll numbers are election victories . He always gravitates toward some number. He always talks about ratings. I think he will continue looking for numbers, ways, or metrics to show he is the greatest president , the best president , and find the pieces of information that support that case for himself. Thank you so much. Coming up, we will have an exclusive interview with tom steyer, the founder of nextgen climate. He will weigh in on trumps first 100 days and those actions to roll back those rules to protect the environment by President Trump. This is bloomberg. Scarlet whatd ya miss . A newent trump signed executive order that will open oil and gas trilling off the coast of southern california. It has raised a lot of red flags. Steyer, the tom president and founder of nextgen climate. The president signed the executive order revising that rule banning drilling. When you hear of the president like this month using executive review, howder a much do you despair . You must retain some hope that things could say the way that they are. I dont think that we despair. Try the obvious conclusion that what he is trying to do is reopen the coast of california to offshore drilling, which is owned by the people of the state of california, and which we have spent 50 years trying to make sure that this kind of thing doesnt happen. It was an oil spill off santa barbara, that brought this to the attention of californians and aericans everywhere, time when it is fairly obvious economically and environmentally that we should be moving away from the fossil fuel era, period. To see some of the studying ways to move back to yesterdays industries and ideas is disconcerting, but it is not something he can effectuate on his own. You have been doing this a while yourself. Lets go back to the campaign. You put a lot of money into it. You talked to a lot of people about environment issues. What did you learn from that . How do you get young people involved in politics . Let me give you a synopsis. Registeredfornia, we 807,000 voters. I learned that democracy works. When the people of the United States are engaged and participate in elections, that is the most just system i can think of and it gets you the best answers. From my point of view, when the American People participate and are informed, you get great answers. When they are not, you can get extreme anomalies. The last time i talked to you you are going to cal state students, i asked if you would run for office, you were going coy. Has anything changed for you since the election . Obviously a lot has changed. Thinking about my goal in this from the beginning, it has been what can i do to push the values that i take most seriously . Our organizations motto is to prevent climate disaster, promote prosperity, and protect the fundamental rights of every american. All three of those things are at grave risk, and i will do anything i can do to have as much positive impact to push for the types of values that we think of as basic american values. Could you effect more change from within . Get more people involved . We haver, this year, been working hard to make sure that the grassroots organizing that we did in 2016 continues and that we provide a voice, speaking out for what we would think of as, not just basic american values, but a more prosperous, and healthier american future than we see out of washington, d. C. Choicescareer about any i make will be to further that in the best way i can. We saw a tax plan proposal from the white house. A single piece of paper that the white house would like to achieve. We know of your engagement with the u. S. Economy. What is your sense of the direction we should be going when it comes to tax reform . That wasnt tax reform. That was a tax cut for the rich. If you look at what has happened in 1 the United States since980, working people have not got any of the benefit of the increase productivity of the american economy. What we can see and put his extreme what we could see in 2016 was the anger and uncertainty about, how am i being left out . Why am i being ignored . To see a tax cut to the richest americans and corporations, the taxcut for corporations what does that mean . The bottom line will be bigger, thosee people who own corporations or share in the bottom line will do better. The best paid employees, the top executives, and the owners. What we have seen since 1980, working people in general have not done better, but those people have done better. I look at that tax cut as a disgrace. Is it harder for you to evangelize to a young person on a College Campus or somebody in your position . A business person who has done well and thanks, this taxcut benefits me, that is a good thing. How difficult is it to make that case . I like to think that americans put country first. I know that working people are struggling. They have to be focused on todays issues, wage, health care, school, but for someone who has done really well, who has had a successful career, is not worried about his or her retirement, not to be thinking about other americans or the good of the country, not to think about the safety of our democracy is wrong. I want to talk about how you look at politics on a National Level. You have seen new york preventing the construction of a natural gas pipeline. In california, the socalled sanctuary cities. The government in washington wants to withhold funding from the citys if they dont abide by the laws in place. Do you see increasing tension between state politics and politics at the National Level . Is that inherently a bad thing . Living in california and language and policies and washington, d. C. , the divide is really dramatic. Nothing thatually this congress, this president says that we agree with. The divide is tremendous and the question will be to some extent, what happened to the short run. You were talking about an offshore drilling ban. Then there is the question about what the American People permit. The fact of the matter is, when this congress floated an idea about the Affordable Care act, about taking care away from 14 million americans, and raising seniors,for americans contacted their representatives and said no way. We are a time when information is available. Engage,ity to inform, and organize americans is multiples of what it has ever been. The administration has lost every legal battle. There is also a question of what you can do from the standpoint of the will of the American People. There will be a straightforward argument debate between two different points of view. The tax plan is a perfect example. The Affordable Care act is a perfect example. They will come out with what they have to say. It all seems to be tax cuts for rich people. The American People will get a chance to say, here is how i respond. Scarlet the last question about climate. You will be marching this weekend here in d. C. It is a way to make your voice and perspective known. Do you know who you would go to to talk about that policy . Who are you listening to that you think is directing Climate Policy, or has an open mind about Climate Policy . Is there a conduit for that communication . Absolutely not. I dont take them seriously at all when it comes to climate. Whatever they say, iwatch what they do. I watch who they appoint, i watch their executive actions. I have appointed people whose histories are to be the are presented tips of the oil and gas business. Every executive action has been to make it easier to participate for fossil fuel companies to make it better and easier to participate. Yesterday, the secretary of energy was talking about the National Security needs to force states to use coal or nuclear. When you asked me who i want to talk to, the people i want to communicate with our the American People because they are way to the smart not to see that the administration isnt just trying to pick winners and losers, they are trying to make winners out of losers. Great to talk to you again. Back to you in new york. Scarlet a reminder, bloomberg. Com has launched a new vertical dedicated to reporting and coverage of climate change. You can find it all at climatechanged. Com. We will be live from the milkens global conference with tim sloan, steve mnuchin, and Goldman Sachs coo, and david freeman, ceo of the nasdaq. Tech stocks, some are entering uncharted territory. Buy side and sell side, they are all piling in. This is bloomberg. Scarlet whatd ya miss . Technology is on a tear. Facebook, amazon, and alphabet trading at record highs. They are incredibly influential, but at what point are their shares overvalued . Here is a look at the emerging technology. The msci all country informationtechnology index. The blue line is earningspershare. That indicates valuations may be modest for the bulls looking at tech. Joe the tech stocks have done incredibly well. The estimates are also impressive. Scarlet the earnings we got seemed to justify it. Joe we have more coming next week. Summing else coming up next week, depending Something Else coming up next week, depending if you consider sunday next week or the week after. The white line is the spread between 10 year yields on french and german debt. You can see after last sundays vote there was a big collapse in that spread, indicating that french borrowing narrowed. It lines up nicely with the blue line. Le pens odds of victory also plunged after the election. Both are at a low level, but all kinds of developments going on. Some very interesting drama early in the week. Some jeers from some of the workers. Keep an eye on that spread and the betting odds. Scarlet the betting odds seem to correlate closely to the polls. They show quite a wide diversions, that is where the markets are going to keep their perspective. Scarlet will they be proven right this time . Throwingois hollande thrown his support behind macron . He is holding up. The nasdaq could get to a record high. Little change either way. The s p 500 and the dow losing about 0. 2 . From new york, this is bloomberg. Scarlet we are moments away from the closing bell. Whatd you miss . U. S. Markets closing mixed, the nasdaq to head to another record high. I am scarlet fu. Joe i am Joe Weisenthal. If you are tuning in the live on twitter, welcome to our closing bell coverage every day weekly from a 4 00 to 5 00 eastern. Scarlet on the day the indexes may have not had an exciting session, but for the week they are doing well. The dow gaining 1. 9 . Dow it is the best week this year, for the s p, the best since february. Nasdaq at a record high once again no, it just turned red. It has had its best week since february. In terms of the individual names we are focused on here, exxon mobil and chevron reported results. Of 1 ,obil gaining 1 2 outperforming all but one of the bloombergs in a survey. Chevron was a leader in the dow, up 1. 2 , beating analystss estimates. We can see alphabet closing up 3. 7 and intel dropping 3. 5 following yesterdays earning released. Joe lets look at the Government Bond market, sleepy day there as well. Twoyear yields rising modestly. 10 year yields falling modestly. Indiceswith those levels you had mentioned. Scarlet lets move on to currencies, mexican peso gaining as much as 1. 1 versus the dollar. Grow slowernomy than expected in the First Quarter while mexicos economy grew faster than expected, up 6 10 of 1 quarter on quarter, 1. 7 yearoveryear. The pound was the biggest gainer versus the dollar in the month of april. It is at its strongest level since september of 2015. Theresa may indicated she would call snap elections to give her party a larger majority before brexit negotiations begin. It will increase the likelihood of a hard brexit. Ofis probably a reflection shorts against the pound. The bloomberg dollar index. Forget the first 99 days, it does not tell the whole story about how the dollar has fared since trump came to power. 6. 5 , even as he made it clear he did not want a stronger dollar. Since the inauguration, the dollar index has fell 3. 2 . More because of policy setbacks. Front, the commodities looking at oil and gold, not a lot of action. Hughes, rig town, a bit of an uptick there. A little bit of gold buying, which fits with the treasury bond. None of these are particularly dramatic moves. Scarlet those are todays market make minutes. Dive into take a deep the bloomberg. You can find the following charts using the function at the bottom of your screen. We have to go back to the nasdaq mentioned what a great week of the nasdaq had. It is on an incredible run. Looking at it twentyyear chart of the ratio between the nasdaq and s p 500, it spiked like bubble. Ring the dotcom we are getting up there in terms of the extent to which the nasdaq, have those huge tech stocks dominating everything, so dominated by that. We are getting to levels that, outside of the narrow time in 1999 and early 2000, we have not seen anything like this. Even today with most of the indices in the red, nasdaq outperforming thanks to the amazon number yesterday. Everyone is wondering, when will the nasdaq what will get in the way of these tech juggernauts continuing to crush it . Aboutt what is different now versus ben is a lot of tech companies, not only are they profitable, they return cash to shareholders. Joe they are not the young pipeline, they are the veterans of the tech industry, really driving it. They have conservative portfolios, because of the cash returns to portfolio holders. I am taking a look at the political risks in europe and how they eased after last weekends election. The casualty is the swiss franc. It is headed for its worst month since january. This months decline and you have to go to january 2015 to see a bigger drop. More weakness can be in store for the swiss franc. Expectations it will extend that weakness. Joe it is fun looking at the different measures of anxiety about politics, when they are nervous about events and after the event passes, there is a lot going on. Whatd you miss . President trump will celebrate his 100th day in office tomorrow. And we asked the biggest names in business and politics how they would characterize his first 100 days. It has been a combination of positives. Work, work, give people jobs. It is a work in progress. Chaotic, been inconsistent, very little accomplished on the legislative side. Turbulence, difficult, as the first days always are. But a lot of promise. His Supreme Court nominee, that will have implications well beyond when he leaves 1600 pennsylvania avenue. Nerveracking and confusing. Good momentum when he works on his own, bringing clarity to u. S. Foreignpolicy. He was able to roll back roles and regulations that are 1000 times more than any previous president in the history of our nation. With theing us now highs and lows and what is ahead is kevin cirilli, our chief washington correspondent on capitol hill. Kevin, the first 100 days, maybe it is an arbitrary deadlines that does not mean anything, but is there any sign in the next 100 or 200 days, this administration will be more effective at passing legislation than it has been so far . Kevin they would hope so. At the bottom line is, we made it. We have reached day 99. Or we have always almost made it. We have spent all day and all week on capitol hill. Gop leadership are working behind the scenes to try to deliver to President Trump some kind of legislative victory on health care, tax reform, deregulatory regulatory policy. Just over a couple hours ago just over an hour ago, lawmakers passed a shortterm government funding bill to abort what would have been a political crisis for this administration on day 100. That meaning a government shutdown. They only take the can down the road about one week. But the chatter here at congress longat those week fornsions will only work one or two weeks after that. At the end of the day, the fighting in congress is not stopping anytime soon. Also, the effort to get health care back on the table, what is the latest there . There was a lastminute push by the white house to get a vote scheduled before the 100th day. Kevin mike pence is been one of the people returning from a trip that has been driving negotiations on this. The Vice President really taking to task people like speaker ryan, not just on health care, but trade policy. There were hiccups with nafta. Ally inwith trumps top house of representatives and he said many republicans have come around to the thinking they want bilateral trade agreements, even with a country like canada. I put this question to one of allies, about what he thinks about nafta. Take a listen. Over 20 years old, of course it needs adjustments and reform. That would make perfect sense. But the throw it away makes no sense. We are a stronger export nation. Stronger manufacturing jobs with canada, the u. S. , and mexico having an integrated part. In thethis is not just kratz, but ground future of the republican party. And President Trumps impact on that. Outside the u. S. Chamber of commerce, it would traditionally they would candidly echo what the chairman said on nafta. The introduction of the tax plan priorities, what is the early read on that, how has it gone over on capitol hill . Kevin they have to Pass Health Care before they can get the tax plan. I can tell you that in terms of a timeline, it will take several months in order for them to get to that. Hashouse Freedom Caucus been a thorn in the side politically a President Trump regarding health care. The sources i am talking with her telling me they are not going to take the same approach to tax reform. For whatever reason, revenue neutral. It does not seem to bother conservatives in the house as much as the Health Care Plan would cost. Also wonder what democrats have been up to the last 100 days. They tried to be a bulwark against what President Trump is doing. They did not claim much of a role in health care, it is republicans doing that. What have the democrats managed to do and what are their priorities . Kevin i was just meeting with an aide at the Democratic National committee. They are getting the strategy in terms of 2018 in line. Is someone that has been traveling the country, meeting in swing states and states like West Virginia where there are tough election battles. Their chair election was three months after the rnc had theres, theirs, so they are still organizing. Scarlet monday we will be live from the milliken global conference and have interviews , and goldmanuchin cocoo. Co. You can catch it all here monday at 10 00 eastern. This is bloomberg. I am mark crumpton, it is time for first word news. Secretary of state Rex Tillerson called on other nations today to cut diplomatic and economic ties with north korea. The ung a meeting of security council, secretary tillerson outlined a renewed u. S. Effort to compel pyongyang to give up its Nuclear Weapons and Ballistic Missile programs after decades of defiance. South koreas foreign minister also discuss the Nuclear Threat posed by the north. Theorth koreas capability, intent to use them, puts us ever so closer to the tipping point. It is no wonder some experts say the world is facing its greatest Nuclear Emergency since the cuban missile crisis. Secretary tillerson called on tougher action from china, north koreas main trading partner. Congress has given itself one more week to agree on a spending measure to fund the government through september. Houseboat was followed quickly by Unanimous Senate passage of a stopgap spending bill hours before the midnight shutdown deadline. The measure now goes to President Trump for his signature. The president speaking of the National Rifle associations meeting in atlanta, georgia to discuss the Second Amendment and reiterate his immigration stance. Mr. Trump we need a wall. We will build the wall. Dont even think about it. Dont even think about it. Dont even think about it. It is an easy one, theyre going to build the wall. President trump is the first president and 34 years to speak at the nra. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton, this is bloomberg. Scarlet whatd you miss . Gdp numbers came out earlier today. In the u. K. , they had the worst performance in a year. In the u. S. It was worst the worst in three years. Here are three charts you do not want to miss on the data. Matt, thanks for joining us. You brought us a chart i doubt we have ever looked at on this chart from on this show. Tell me what is going on here. Matt the gdp number here was disappointing, 7 10 of 1 growth. The big drag was consumer ofnding, the pce component it. One thing in the gdp report is nonprofit spending. We saw a big drag from nonprofit spending in this report. It was the second largest drag in 57 years of data. That was advocacy groups spending related to the election in november. A record high, then a completely collapsed in the First Quarter. That is why personal consumption numbers were so bad. Joe were forecasters not aware the election ended in q4 of 2016 . It shouldve of been a foreseeable drop off. Matt there were other components, as well. This chart strips out the nonprofit spending and housing and utilities, which is a noisy component, but can have a big effect. That is weatherrelated stuff. You have Consumer Spending 50 basis points better. Scarlet and that is the red line. Can see how big of an effect it has. It is unusual and should be discounted. Scarlet is this a reason to not be as concerned about the gdp data . Wrote aboutinitely it. A lot of people did highlight the fact that utilities were so bad. That you can discount because it is weatherrelated. A lot of people are expecting decent pickup in the second quarter. Scarlet a lot of high interest is wage data, right . Wage data came out through the what we learn their is different. It looks encouraging. But Consumer Spending, including by nonprofits, looks disappointing. Matt a lot of people like this consumer report. The reason we Pay Attention to it is, unlike average hourly earnings, is not affected by these, it is measuring the growth for a particular job. The yellow line shows the underlying pace of wage growth, rose in the First Quarter to the fastest pace since 2008. We are seeing a pickup. The red lines and blue lines i wanted to highlight. These are sectors where we see a pickup and wage growth, at the low end of the wage market, service jobs. You can see it is going vertical. The blue line is transportation, think truck drivers. We have heard about driver shortages, so wages are rising there. Inflation chart, we have a chart here. The survey expected inflation, consumers do not expect inflation, do they . Matt it is the last fly in the ointment for the fed. The survey breaks up Inflation Expectations into different demographics. This yellow line shows Inflation Expectations for men hit a record low. , women do notall fall as much, but we are still on precarious ground here. The red line is services inflation. We are seeing expectations are catching down to actual inflation after several years of being higher. It is what you would expect to see. Scarlet mab osler, you will be sticking with us. Coming up next week, we will sit down for a conversation with chair fed care fed wednesday. Plus, the chair decision will be that day. Check in of our special coverage, which begins at 2 00 eastern. This is bloomberg. Joe whatd you miss . The fed moves slowly toward tricking its Balance Sheet. Eventually, neither the ecb or boj seems interested in the slowing expansion of theirs. I want to bring in cameron crise, our macro strategist. And still with us, matt boesler. Cameron, and you for joining us. You have done interesting work. You have a counterintuitive theory. I was attempting to demonstrate that as long as the and boj kept buying bonds, it could put a lid on treasuries relative to where our fed policy and domestic fundamentals say they should be. What i found was quite the opposite. There is virtually no impact that centralbank Balance Sheet have on the level of 10 years. Showinghave a chart where 10 year treasuries have gone and where they would go theoretically. Cameron there is no difference. Year,ite line is the 10 where 10 year treasuries traded. The blue line is a model that does not show centralbank Balance Sheet input. At the orange line, which you includes central bank Balance Sheets. Scarlet is this surprising, this conclusion, given so many people that once the fed started winding things down you would see an impact . Matt i do not think so, what camerons work shows, the surprise impact is fairly small. We can talk about the fed will unleash these treasuries to the market and increase supply, but really it is probably not going to increase Interest Rates that much. It is swamped on the impact of their saying what they are doing with shortterm Interest Rates. If they start shrinking the Balance Sheet but also say they will hike rates at a slower pace, then you will see yields come down as opposed to going up. Taking 25 basis points out will swamp whatever smaller effect you get from the increased supply of treasury. Joe another thing you look that was the pace of change in the Balance Sheet and whether that had any impact. You want to be a little leery of regressing levels because we have talked about this before. Things go up, but a regression will show that they are closely related. You have to measure changes. Have we got the graphic here . We dont. If you look at the yearlong change versus the models, it is the same thing. Here we go. The model with and without the Balance Sheet, it is literally the same. You cannot even see the one underneath the other. That would indicate that the balance impact in g3 sheets, it has virtually no impact. Scarlet is this good news for the fed . Matt it has to be great news for the fed. The big thing everyone is saying will be so scary, maybe it wont be. A gives them more latitude. The fed is still saying, the Balance Sheet is Holding Treasury yields down by a percentage point. It is not clear the extent to which they have figured it out. Joe is leading the balance down, risk qe easing . Matt it could have been, in the sense when they announced the qe program they meant it would raise rates earlier than the announcement. Which would imply it is about the rate half. If we are disconnecting those things, it should not matter as much as it did on the way in. Scarlet cameron, you brought us an extra nerdy chart. Tell us what we are seeing here, whether we can draw any conclusions. The fed thought there would be an impact. Theyre basing it on these models. A 10 year yield is comprised of two things, a risk neutral rate and a term premium. Joe fascinating. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Time for first word news. Secretary of state Rex Tillerson warns that north korea is pushing the world closer to conflict with its nuclear tests. Tillerson chair the Un Security Council meeting. In light of the growing threat, the time is come for all of us to put new pressure on north korea to abandoned abandon this dangerous task. Iron to this council to act before north korea does. Secretary tillerson says the u. S. Does not seek regime change in north korea. President trump plans to expand offshore drilling. He has ordered the interior department to devise a fiveyear schedule for off shoring drilling rights to open more waters to offshore rigs. Ae president has asked for review of a move by the Obama Administration to put parts of the arctic and atlantic offlimits forever. A former federal rights prosecutor has been sworn in as President Trumps labor secretary. Nations 27th the labor secretary, confirmed by the senate yesterday. The president approaches his 100th day in office. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton, this is bloomberg. Scarlet lets get a recap of todays market action. We took our losses lower in the final minute of trading. The nasdaq was not able to hang onto again. Down 2 10 of500 1 . Joe whatd you miss . The nasdaq did move a little lower, they still had a monster week. Joining us to make sense of analyst for moves, bloomberg, kevin. The minor decline we saw the first round of the french election, Global Equities are frontloaded at the beginning of this week, s p was no different. Hows look at the nasdaq and it has performed compared to the dow and s p. Blue come of s p and white, the dow in yellow. We saw the dow was the gainer based on financials. We have seen tech go on a tear following the election. Joe what would the nasdaq look like without those four Big Companies . It is a good question. We look at the yeartodate performance so far. A lot of those gains were driven by the Top Five Companies, amazon, microsoft, alphabet, facebook, those types of companies. Over 40 of the gains from those companies. If you strip it out the performance average does not look nearly as good. Scarlet the bulls can say it is justified by earnings. Absolutely. People pretty bullish on infotech to begin with. They are meeting expectations, Topline Revenue growth across the sector, which is important for many of these moving forward. Scarlet lets move on to the broader market, not limited to the nasdaq and look at big caps, the s p 500. Lets look on the bloomberg. The s p 500 itself is in yellow. If you look at the top 10 that is the white line in the bottom 90 is the blue line. These are just 10 companies driving a lot of the advance. What is interesting about this chart, our colleague wrote about this a couple weeks ago, it is a positive skew. Activeit so hard for managers and equity space to beat their benchmarks longterm . The top 10 performers over the past five years have held a lot of those gains. Had you missed some names you would be underperforming in the broader market. Of the companies and s p showing around 21 . Joe everyone should read that piece, it highlight something very important. Not that so much is driven by these top 10 gainers, but the fact that many stocks do worse than treasury. Many stocks are just zeros. The penalty for missing out on that small slice of gainers is massive. It is not that you might underperform, you might lose all your money. It is huge, weighted by market cap. As those top gainers do well, they get more weight. Scarlet i was going to pull up the s p 500. I can show you and dow industrials the best performers over the last five years. Upm sure some will match with s p 500. United health, home depot, visa, disney, gaining 150 . Those of the names that get it into the top 10 . Therlot of big bellwethers e. The we were talking about difference between the nasdaq, the tech boom now, and the one in 1998 through 2000. Young everythingtech, companies, tons of enthusiasm. Into his as him giants of the field. Do not hear much about midcap and smallcap. When you pull up and s p chart you pull up the big gainers to explain the performance. They have the most effect on the broader market. 2000,ally leading up to you can say valuation is not the best shortterm predictor. If you look at where we are on the s p compared to where we com bust, you would have missed out on a lot of gains. Out the bestlled performers in the s p 500 of the past five years. Netflix, it in city a, southwest airlines, broadcom. Blistering gains. You do not buy into those there is a lot of focus on but have you predicted these Top Five Companies heading into such great performance . Joe i would not have predicted southwest. Scarlet thank you so much. Tutor thenaire industry far back. Why they are fighting over risk parity funds and volatility. This is bloomberg. Scarlet it is time for the Bloomberg Business flash, the biggest is the stories in the news right now. Above the ipo price, 15 each, raising 225 million, which will go toward working capital and general corporate purposes. They are backed by intel, which retains a more than 19 stake in the company. Shares of magazine publisher time falling today. Another group had been in the running to buy the company. Time has been struggling to adapt to a digital world. Chief executive officer of Comcast Universal was the best paid employee after signing a nude job contract to retain them from august of 2020. A 46 million pay package for 2015. Tops that given to his boss. He also had a 10 million stock option grant. Guacamole could cost you more, avocados at record highs due to a crop shortages in mexico and california. China,s are popular in europe, and the u. S. Because of their flavor and healthy fat. That is your business flash update. Joe whatd you miss . A war of words. Tradingys automated strategies will blow up the market when volatility returns. He called at risk parity funds. They responded by calling the remarks overblown. Here to sort out some of these issues and others is the founder of q macro. He has strategies for companies such as lehman brothers. Great to have you back on the show. Explain that tension, the fundstion that quants will blow up the market. In the context of things, if you look at the management, risk parity funds and in terms is not astrategy, it huge amount when you compare it to the context of market capitalization. Even for example, s p 500. It is not the case of these funds to change what is happening in the market to that extent. Scarlet do we know how much automated strategies have behind them . Some say 150 billion. If we cannot agree on it number, how do we forecast the impact it would have . You have never heard people saying it is 25 of the s p 500. Everyone is in agreement, it is a relatively small amounts. Joe the things people always point to with quants funds is the 1987 crash and the role that policy insurance theoretically had. As the market went down, it encouraged more selling. A risk, theoretically with automated strategies . That somehow there is a feedback loop when there are only sell orders and the humans have been kicked out of the industry so the computers do nothing but sell . Saeed if youre building the sort of model you want leverage constraint. You do not wanted to have infinite leverage. You have to use common sense when building these things. I would argue we had the great depression, the wall street crash in 2009. There were no computers then. Scarlet do you think the reason people are quick to blame these parity funds are because they do not understand it . I am not suggesting Paul Tudor Jones does not understand it. But you have to have details to work with. With these strategies within the markets, people are comfortable with it. Outside of the quants world, maybe there is less understanding. World isthe nonquants fairly large, as well. We have have saeed to go out and talk about what we are doing. Joe it is a common story that some funds that have been around and whymore phds now . Are a lot of people realizing this is the future . Saeed i do not know if it is throwing in the towel or being optimistic about what is happening. Peoplenot need as many to process these new forms of data. Joe we talked about wellknown algorithmic strategies. You are in town right now for a conference, see you are learning about what is at the cuttingedge of quantitative strategies. What are the new, interesting ideas people are pursuing . Saeed one big area is alternative data. One very popular one is news data. For example, bloomberg publishes its own newspaper products. Also satellite photography to identify how much oil is being stored in stock silos. There are so many different variations of this. It opens up possibilities for more prediction of the market going forward. Scarlet when you talk about bloomberg stories, scraping them for a sense of tone or edge, drawing conclusions from millions of stories nobody has time to read. Or i should say not everyone. I do not want to give the impression nobody reads our stories. Saeed i have my bloomberg come up every day and i read the news feed. But you cannot catch every single story. You are trying to do with a human does in a way. Scarlet we have any sense that Traditional Fund managers and traders are starting to adopt those practices . Saeed i would say so. A lot of the more traditional macro funds have employed quants scourdata strategist who the world for alternative sources. Joe will this be a one or the a rolehing, or is there for automated, datadriven strategies . What about the feel element a lot of traders have, can the two be merged . Saeed i think they can. I have known amazing traders that used discretion. The idea is to supplement their guts instincts with more quantitative data. Joe there is still room for humans, were not going to write some computer programs and walk away and let the computers trade . If they are, i would like to be the one. Joe we appreciate you coming on. Scarlet the u. S. Womens National Hockey team won the medal, and a big win for equal pay. This is bloomberg. Scarlet whatd you miss . The u. S. Womens National Hockey team won its eighth national championship. But the bigger battle was for fair pay. They threatened to boycott if usa hockey do not meet their demands for more equitable treatment. A deal was struck. Financial terms were not disclosed, that theyll get training outside the olympic period, improved travel and hotel arrangements, and a program for youth hockey for girls. We spoke with there were presented as. Resentatives. Ep increasednted compensation for the players, increased programming. It is a situation where the players were not just looking to earn, but work more. They wanted to play more games, olympiclarly in the non games, where they were playing only nine games a year. The second category is increased programming. The third is increased marketing and pr to raise their profile as a group. Not just for themselves but ice hockey in the United States, so that young girls could have more access to the team to see them and dream about maybe being members of those teams, as well. We have said from the beginning that raising the profile of the team really elevates ice hockey for everyone. What was the dicey as part of partegotiation diciest of the negotiation . Down the heated stretch. It had been ongoing for 15 months behind closed doors. Playerso the point as where we do not feel like we had made progress. The next step was to put the World Championship on the line. As gutwrenching as it was for us, it went to show how passionate we work. I wonder what kind of feedback you got through the process. There were different organizations offering their support actively and passively. The feedback him outreach, the support from everyone locally and through Text Messages and phone calls on social media was positively overwhelming. A ton of famous professional athletes, the nhl asas well as other players sociations. Mention hockey players across the country that stood by us through the negotiation process. Scarlet how were they investing in womens hockey versus mens hockey . With the mens program there are two points of comparison. There is the Mens National team, the team comprised of nhl players. They come together one to two weeks out of the year to compete. That is unlike the womens team. They only have the opportunity in a nonolympic year to compete in nine games, but they are required to report to various Training Camps throughout the year. Those Training Camps might be five or seven days. Obligation hindered the ty to hold down permanent jobs when you have to take those breaks, it is hard to pursue a professional career outside of hockey. Many of the players decided not to pursue advanced degrees and advanced education because it was nearly impossible to balance, whether it was a second or third job they had, to make ends meet, with having to train every day, report to camp, and compete areata clean compete periodically. Fromet have you heard prospective corporate sponsors . We have, a few have stepped up and reached out and wanted to help. They have gotten behind us and at least started the conversation. The negotiations in general raised the awareness of womens hockey in this country, which is important. It changed the mindset within usa hockey in regards to have a treat and respect and honor and invest in the women in the program. Stance you feel your has made those sponsorships more lucrative . Absolutely. I hope they keep wanting to engage in conversation even more. Any sponsors that are interested really reach out and try to get involved. I said it a few times, being a female athlete right now in the u. S. Is an incredible time period for it. Rlet joe what you need to know next week. This is bloomberg. Scarlet little change for the major u. S. In this is indexes. Tax earnings continue with apple reporting after the bell tuesday. Facebook follows up wednesday. An interview live on wednesday. Watching for the fed decision that they with special coverage at 2 00 p. M. Scarlet the u. S. Jobs report comes out friday. Joe it will be a huge week. Scarlet that does it for whatd you miss . Thank you for im Alisa Parenti and you are watching bloomberg technology. President donald trump won a court lord quarter making it easier for him to resend the clean power plan. Court order making it easier for him to rescind the clean power plan. Secretary of state Rex Tillerson plans to cut 2200 diplomats and civil servants, 9 of the agencys workforce. Familiar with the matter say most of these cuts will come from attrition. Critics say the plan will hollow out the diplomatic corps. And europe, British Police say they disrupted an act of terror plot with the raids in london and southeastern england. One woman was shot as heavily armed counterterrorism officers stormed a house on a residential street. Police say six suspects were arrested on terror related charges. Authorities say 13 potential attacks have been foiled in the last 4 years. In africa, pope francis is in cairo, where he is showing solidarity with egypts embattled christian community