tv Bloomberg Markets Americas Bloomberg October 9, 2017 2:00pm-3:30pm EDT
♪ in bloomberg world headquarters in new york over the next hour. exclusive comments from billionaire investor bill ackman. then you have the likes of three big banks all reporting earnings this week. how the lack of progress on tax reform could impact their bottom line. weinstein is out at his own company after allegations of sexual harassment. let us get you caught up on where markets stand. at sin, we are looking trading. abigail:.
small declines at this point. the dow and nasdaq slightly higher. declines. the big banks are reporting earnings this week. third-quarter earnings season kicks off officially. this is a chart going back to 2014. see quarter after quarter, earnings have been revised down. back in early 2016, we had back -- that era of macro risk.
investors are anticipating this earnings season may be beatable. growth targets are earning for the third quarter and could act as a tailwind. companies are likely to meet those forecasts. one stock not doing so well is ge. down 26%. its worst year since 2008. its worst day since july. three executives have left. board.s are joining the -- new members are joining the board. it appears something has to be done. maybe changes will help. julia: thank you. scarlet: it is a big week for
u.s. banks. third-quarter results have been reported this week. forecasts have been revised upwards. there are signs loans may be lacking -- lagging. let us bring in bloombergs michael moore, who covers u.s. finance. ath the economy growing 2-3%, lending is not taking off. : you expect it to be better than it has been. it was pretty strong for a couple of years. it was expected to drop below 2%. there are a few things going on. -- there arehese
these legislative agendas that corporations are waiting on. that has caused them to pods on taking out loans. and a lot of them have been going into the bond market for further maturity and using that money to pay off the bank loan. scarlet: banks don't have the certainty they want. is that the excuse right now? companies don't need to borrow more money given things are are pretty much the way they were. michael: clients have been waiting to they are waiting on -- clients have been waiting. they are waiting on tax and infrastructure policy. if you think something is going to get done, you might as well wait. julia: what about the trading
side iago -- what about the tra ding side? a tough quarter in terms of the numbers we have seen. michael: you of heard from jpmorgan. julia: bank of america. goldman didn't put a number, but they said it has been challenging. banks talked about it not being volatile enough with not enough client activity to take advantage. you had progress in the second half of last year, analysts are expecting another top quarter. the likes of jamie dimon have said we need some action have saidime diamond
we need some action here. michael: the banks are saying, we are doing all we can, we have cut costs. it comes down to what the economy does. moves, that may give them a little bit of boost. certainly something they are watching for. at one point do the banks finalize how much they are spending? trading companies were not going very far. once you get to nine months, you have an idea of what circumstances will look like. will looke four-year like. we will see how the fourth quarter has started for them.
the last we heard was early september, which was still in the summer slump. it may be more optimistic for the traders. julia: expectations are measured. great to have you on. check onlet us get a the bloomberg first word news with mark crumpton. mark: theresa may is optimistic about securing a deal that works for britain and the eu after brexit. this is despite reports about cabinet infighting. the process will not always be smooth. can go about these negotiations in a constructive way in the spirit of cooperation, and with our sites set on the future. mark: may also reasserted her
brexit commitment under a two-year timeline. speaking in kentucky today, said heid -- pruitt will withdraw the plan to curb greenhouse gas emissions. officials for catalonia continue to push for independence after a referendum. spain's government called it illegal. sunday, thousands marched in barcelona, demanding it remain a part of spain. a newly disclosed email on the 2016 meeting between donald trump jr. supported lawyer's claims in the washington post.
documents said that trump jr. knew the meeting would provide damaging information on hillary clinton. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. up, the coming tonstein company's battle repair its reputation after harvey weinstein is fired over sexual harassment allegations. this is bloomberg. ♪
julia: this is "bloomberg markets." the continued fallout from harvey weinstein's sexual harassment admissions continue to reverberate throughout hollywood. othersr of actresses and were subjected to his advances. in light of new information about misconduct, the directors of the weinstein company have informed harvey weinstein his employment is terminated immediately. let us bring in bloomberg's reporter from los angeles. what we think happened over the last few days? people thought he would take a leave of absence and he would be reintroduced in the coming
months. firstly, there was some suggestion the company didn't have that much time this story was coming. reports have been going on for decades. all those executives weren't aware. behavior thatthe has been a legend is a bit more is a bit-- alleged more gruesome than initially thought when the "times" story ran this week. one account from a college and reporter is pretty learned. -- from a television reporter is pretty lurid. the board reacted by terminating
him. maker, the one that is known for making and breaking careers. this is the conversation taking place in hollywood. there have been few people willing to speak up against him. saturday night live didn't feature any skit making fun of him. late-night talk shows have tackled this. but there are few people pulling to stand up publicly -- willing to stand up publicly. anousha: people are starting to, after pressure. people have said, everyone knew. i don't know everyone knew the degree of his behavior.
i spoke with dealmakers in hollywood this morning. not asnstein company is relevant as it once was. he is still an important figure films,s of oscar-winning the best quality films that hollywood produces. a very toughle, dealmaker. he doesn't have fans everywhere. point, you can cross the line when it comes to workplace misconduct. he was more powerful them the people speaking against him for a long time. people powerful than the speaking against him. if you come out against this kind of behavior in the movie industry, this can affect you for the rest of your career.
we have seen this in other areas of media and business. julia: why now? if this has been going on for decades, is it because box office receipts have been a bit softer? acclaim.d critical but the finances of his production company have not always been there. that why these women have decided to come forward, because he is not as financially powerful? >> in a probability. but he has denied some of the allegations. he has said some this is unfair reporting. but this company is less relevant. people aren't spending the
amount of money they used to happy movies. vies.ey used to at the mogv there is also a lot of competition from digital players, which weren't around when weinstein was making his name. powerful. it is a question we can't answer. there is definitely an acceleration that is happened. it feels like it is in the timing. thank you so much. leaders inee top walk the talk this hour, weighing in on section -- on how silicon valley is addressing its own workplace culture issues. julia: the bloomberg business
flash. an's company is going to replace three of its longest-tenured directors. the billionaire investor says the company is not reaching its potential. mh posting strong third-quarter sales. the company benefited from rebounding demand in asia and its online sales. france's mostcame valuable company by market cap in may. that is your business flash update. scarlet: much more on comments from bill ackman this hour. he says one of his hardest jobs is predicting what college kids will be disrupting next. this is bloomberg. ♪
scarlet: this is "bloomberg markets." trump's wereent affords with a senate republican make, locate the tax reform efforts. the tax reformte efforts. i think the real channel is the corporate side. cuts in the corporate rate will increase investment and productivity. the tax cuts won't pay for itself. owth will pay for part of it. not all of it. sides are talking past each other. centers of the debate are growth and wages. lower corporate tax and higher wages. be the case that
corporations are waiting for tax cuts to make that investment? when they be investing now? -- wouldn't they be investing now? >> companies are concerned about the future states of growth in the economy. if you can tell me about growth, i can tell you everything. thenesses are afraid economy is stuck in slow growth mode. this can change that investment inside the united states as well as abroad. but one that demand come from people spending money -- but won't that demand come from people spending money than tax cuts> ? >> personal tax reform is a very
good idea. that effect is going to be there. paypay forms -- how do you for cuts and marginal raise? that is where i'm afraid the disagreement is. the effective tax breaks for most industries is 21.2% on average. energies and consumer staples have a higher tax rate. why do we even need it? the incremental investment is at the marginal tax rate. the average tax rate is what drives business decisions. shouldn't have different
industries facing different tax treatments. why the business community has been pretty united on the prospect of tax reform. can those smaller and medium-sized enterprises really move the dollar on the productivity story in the u.s. economy? smaller businesses would benefit from the cut to individual marginal rates. they would help the productivity needle move through dynamism. the key to tax reform is the business tax reform. politics have gotten a little bit out of sorts. demographics and productivity has to be the story to get growth.
the message in washington is that we can get up to 2.9% over 10 years. when do you think of gdp can get -- when you think gdp can get to a sustainable level? >> it would require more than tax reform. in 2006 forecasted only a modest decline in labor force participation over the next decade. better public policy can fix that. that is about more than this tax bill. >> the need to pay for this. i would be wildly optimistic on capitol hill -- i wouldn't be wildly optimistic on capitol
hill. if you had to choose between tax cuts and not going with the tax code, what would you pick? >> it is important for this bill to be paid for. the nation can't keep adding debt. the components of tax cuts matter. congress needs to do something smaller to make everything fit. >> that was the dean of columbia business school. lingeringd, oil is $50 a barrel. the commodities close is next.
more needs to be done according chief, who says extraordinary measures may need to be taken to restore stability going forward. start, more than 90% of oil production was halted because of the hurricanes. gas may quickly rebound. , up by 8/10 of 1%. the dogmatic standoff between u.s. and turkey escalated. trump is saying only one thing work after years of diplomacy. when asked what that meant, he
said, you will see. the battle with adp is front and center. mandated?re the board would have to have a serious change of heart to make a settlement. the board would have to have a serious change ofas it standsm for compromise. bill ackman usually has something to announce. 28% percent of the stock is held by retail investors. webcasts holding this
at 7 p.m., great for our d eadlines. he wants people to go home, have dinner, get on this call and ask questions. this is designed for retail investors. julia: what has been the push back from current investors? out.liant stands a $4 billion loss. saying, that is not coming up. adp.are concerned about could this company the run better -- be run better? scarlet: when it comes to other phize on whatso else is going on. what does he say about disruption? he thought inflation was
going to be hindered by technological advancement. uber has allowed people to work from 2-7 p.m. it is going to have a dramatic impact on the broader economy. he says kevin warsh. will be the federal reserve chair. julia: he thinks it is the right pick? >> apparently. scarlet: let us talk about proctor and gamble. you are monitoring this company as well. e board seat. julia: the opposite tactic. scarlet: what is going on? owns three $.5 billion
worth of proctor and gamble stock. the company has performed well. more deceits are more difficult seatsrd seats -- four are more difficult. one is less of an ask. julia: the board is not going to lose someone if he joins? that is giving them an awkward situation to push back against. anousha: they have pushed -- >> they have pushed back. they say he lacks the necessary experience. he doesn't have the technological background, which they think is important. sm and bigall ask --
small asked and big push back. scarlet: but the company has adopted. you can't say it hasn't had an impact. >> these boards have dug their hells in -- heels in, and quietly implemented all of these things suggested. scarlet: thank you so much. let's get the headlines on bloomberg first word news with mark crumpton. mark: the white house is finalizing an executive order that would expand health plans to allow individuals to buy insurance outside their states. that is according to a senior trump administration official. the president is expected to sign the order this week. asserted that selling insurance across state lines would bring out
competition. dianne feinstein is running for reelection. to sayk to social media she is running for a fifth term. she is the oldest sitting u.s. senator, at age 84. governor says she has her doubts about the trump administration. her party of hope is challenging abe's ruling party in the general election, scheduled october 22. sure whether the trump administration is stable. there are dynamic personal changes in the main white house. people, ithe american want to look carefully to see what kind of administration this will be. must decide if she will run against prime minister abe.
there will be extensive analysis on october 20. a piece of loading equipment caught fire in hong kong. that plane was set to fly to los angeles. the flight was canceled. the operator of the loading appointment was treated for injuries. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. we were talking about "blade runner." scarlet: the sequel. julia: i haven't been to the cinema this year. movie,didn't see this that might be part of the problem. on the tracking down box office. -- the dragging down box office.
expecting. the box office is still underwhelming. this is the revival of the 1982 film that became a cult classic. amc's stock has been hit the worst, but all the theater stocks are down. it really surprised analysts. it had opened to good reviews. everyone thought it would be a faithful reinterpretation. of the things, it is a long movie. two hours and 43 minutes. box sets are a whole different thing.
that is what we're seeing is the problem. scarlet: you can't show the movie as many times. julia: it does mark the end of the summer blockbuster season. >> there seems to be fatigue. well.r woman," did pretty we havea a chart which shows how much was taken in the box office. $3.8 billion. it has been consistently above $4 billion since 2010. when they posted earnings in august, they said 30 theird -- third and fourth quarter could be tough. julia: there is still time. president trump is removing --
renewing calls for a border wall in exchange for protections for young, undocumented immigrants. we have the new york democratic representative here. thank you for joining us. >> this is a very harsh proposal. away the little bit of hope for dreamers. the dreamers may be safe, but the parents could be reported. do you see president trump's demands as an opening bid to start negotiations? i think very dark forces in
the country are trying to push this agenda. punishing sanctuary cities like new york. children should be able to go to school without fear of being deported. unaccompanied minors. he says we have to deport ms-13, but he says he wants to send unaccompanied minors back to those countries. their lives would be in danger. this is a very harsh proposal. he has come out with a pretty hard line. immigration reform does need to
happen. >> i overstayed my visa and now i am a member of congress. randparent cannot petition for her grandparent or son or daughter. had this been in place in 1964, i wouldn't be here talking to you as a congressman. julia: by overstaying your visa, did you break the law? i was nine years old. i came here with parents who were trying to make better for our family. and making a country a better place for all of us to live. they may die if they go back to
central america. send them back with ms-13? the president is not making headway. scarlet: how do you want to see nancy pelosi and chuck schumer move this conversation? rep. espaillat: they said this is unacceptable. this is not what they spoke about. ball was not part of the -- the wall was not part of the discussion. it doesn't make any sense to deport the parents. negotiators. but they came out of the shadows. 10,000 new agents to
deport their parents. julia: do think this is betraying the dreamers? rep. espaillat: this is certainly a wrench. if not betrayal. we wanted to discuss the dream act on the house floor from the very beginning. 200 members of congress are co-sponsors. linda sanchez, the number five democrats in the house, says it is time for nancy pelosi to pass the torch. what do you think? rep. espaillat: we are at a critical juncture in american politics. there are very radical ideas being discussed from both sides. you need someone at the helm that has experience. we have to go with someone that will be able to understand the
details of negotiations. is there any part of this you would be willing to accept if you were trying to find a compromise? rep. espaillat: we have never said we didn't want any straight at the border. border.gth at the security at airports is very weak and antiquated. airports need to have state-of-the-art facilities that allow for all kinds of supervision. we are supportive of that. a lot of the illegal weapons and weapons and drugs comes through those ports. scarlet: thank you to the new york democratic representative. coming up, the sexual harassment storm in hollywood and silicon
markets." scarlet: allegations of sexual harassment are ramping up, whether it is hollywood or silicon valley. that is putting pressure on companies. talk, bloomberg's talk about diversity in the workforce, i got perspective. i spoke -- i interviewed women leaders at the sooner than you think conference. have thepen to
thatity of partners -- are women. 50% of the investors are women. female ceo,e a engineering teams are often more diverse. when you have more diversity at every level, it corrects itself. efforts people are doing are critical in terms of the pipeline. diversity the gets diversity -- begets diversity. is all aboutpital recognizing patterns.
you were having a problem if you are only recognizing your own pattern. the tech industry has moved beyond that. absolutely. at cornell tech, if you expose students to the power of diverse absolutely. teams, they prefer to work in more diverse teams. that is diversity across the type of programs students are in. inter-sciences would rather work separately. it is harder to figure out how they can collaborate. when they see how powerful it is to have a team of people with different experience and background, when you get that kind of a team to work together,
you get unbelievably high performance that has a much better outcome than the team that has a lone genius. the more we can give those , that those experiences is where the power comes from. we need those teams in the industry that have those diverse backgrounds in terms of training and world experience. it used to be the world's greatest challenges were solved mostly through nonprofits and government. people are turning to technology. leverages want to technology. when you are tackling the world's greatest challenges, you
need to be more stable. that is why we think it is so critical. i know that you -- >> i know that you believe in technology as well. does this solve the problem? >> this does not. think we are to the change makers when we talk about technology. change be driven on many different levels. change should be the social and political impact. art and media -- all of these places where we see people doing work is important to solving problems. i wanted to point out the
industry looks at diversity through a gender lens. diversity and inclusion is intersectional. if you only look at diversity by adding more women, you are missing the mark. until we look at this in a more broad context in understand why institution audi matters, we won't see the changes -- why i t stitutionality matters, we won't see changes. up, an interview with the los angeles clippers owner.
julia: we are live in bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and around the world. we will have an interview with the former microsoft ceo in a few moments. his take on tax or farm, immigration, and why he wants quicker action. are we getting closer to a new fed chair? the white house is set to be looking for leaders willing to roll back, and knowledge of how to run a big organization. an adviser to the fed gives us his take this hour. this year's nobel prize in economics, a look at his remarkable work and its impact on economic policy this hour. we are one hour from the close of trading. let's get a check on markets with abigail doolittle.
we have shifted a little bit to the downside. this is -- we have had to decline, they may be small, but breaking a bit of a winning streak. the s&p 500 was actually down friday for a second in a row. weeks of gains, small decline. even so, both the dow and nasdaq have managed to put in all-time highs. declines could reflect the fact that supply of trading for the columbus day holiday. we are approaching earnings season, investors not having much of conviction going into this. the worst sector on the day is health care. we are looking at some of the managed-care names, especially humana, down 2.7%. downgraded at j.p. morgan to neutral. there is no repeal and replace that could have added 20%
humana's earnings. we also have weakness for th news that president trump may sign an order to loosen obamacare. that maybe something that creates uncertainty. one name benefiting up a percent is health insurance innovation. the factd be based on that a reversal rule on short-term insurance could benefit the company. health care down today. the second worst sector the financials. goldman sachs cut to a neutral, plus some of these banks report some investors may be wondering what is ahead when we see some of the fixed income trading issues that we saw in the previous quarter. earnings overall have been revised down to the financial sector. #btv take a look at g 1961, this is since the beginning of july. right as the overall financial sector earnings provisions, down
1.4%. the composition of it is awaited for insurance and purple. they are actually expected to be revised up 1% and diversified down a little bit. this picture is an interesting one, telling us that the financial earnings have been revised. that is something that some say make make it me to pull and even beatable. scarlet: lower the bar, and you can beat it. technology's emily chang at sign down with an exclusive interview with los angeles clippers owner steve ballmer. from launched our platform the government about the government, no fake news, no alternative facts, we lost on texted. we keep the interest -- tax day. we keep the information current. the thing we are doing, we are trying to help citizens really run through topics of the day. we have a walk-through that will
walk you through the president's budget in the context of what has happened historically. what does the gdp look like, what does tax revenue look like, the deficit, how does all of that --compare? we make sure people can walk through and look at these government proposals in the context of the past. and then be able to say does this make sense to me are not? we have a video that goes with it that will explain to citizens this is the set of data and the way to think about how you think about something like the budget proposal? >> i know you now know these facts better than almost anyone, taxur lawmakers talk about reform and health care, do you have any advice? >> in a way i do. these things are holistic issues. we look at tax reform, the budgets, health care. when you look at the economics of these three things, they are
just like this. what does it mean to have a budget without tax reform? i'm not condemning in but -- anybody, you have to have a tax plan in order to have a budget. it just doesn't make sense. one of the biggest pieces of expenses is health care. how do these -- understanding how these things meshed together would be a key piece of advice that i would give decision-makers, legislators, and executive. >> this is an age of misinformation, of fake news, how big a problem is that and what's the responsibility of these platforms? >> i think this notion of people being able to be fed whatever is going to make them feel good that's what people are doing,. they want to feed whatever the instincts are. the goal has to be to say this is how it looks. you can see it anyway how you want to, but you have to come
and be able to take a look at stuff objectively. that's not facebook job, they are not in the news business, they pass along other people's news. thingspart of the issue, can look authentic. oll, peoplect p said i find my information most often on social media and trusted the least. >> do think facebook and twitter should be policing the smart or that's not their job,? cant's not their job, they -- they can't. there needs to be something equivalent of authenticated news on twitter where you get the little bullet that says you are who you say you are. it would be nice to have authenticated sources so that people could say i really want to see not just what the crowd is saying, but i want to hear from authentic. sources. >> what if that information isn't coming from the crowd?
is the problem , president the one spreading misinformation? >> we elected the president, he is our president and chief. i know there are people who have problems with that, and people who are supportive, when he speaks, at least he's speaking authentically for himself. in a sense, that is a set of facts. when a policy leader speaks, you can say it's true, it's not, you like it, you don't like it, it's what he's thinking. every voter probably benefits by having the ability to hear it directly, just as we hear directly from other people. i get a chance to speak directly on the internet, lebron james gets a chance, not everybody wants to hear what people say to one another. they don't always agree, certainly we've seen that with lebron and the president.
>> there are some who say the president is taking it to another level, perhaps even citing nuclear war on twitter. should he be kicked off of twitter? should he be allowed to make these statements on twitter? >> everybody has the right to speak for themselves. that includes the president of the united states. everybody has the right to speak for themselves, that's in the fundamental nature of this country, it's an important one. the citizens have an obligation to elect the people who they think will best represent their interests. that gets a chance to get battle tested every two years, every four years. people have to constantly prove themselves, and if people are doing things that are not valued, that will come across. if people are doing things that are valued. the way our system works, it doesn't take 100% to win, it takes logically 51% to win.
people have a right to hear directly in their as they cast their ballot. >> you ran microsoft for many years, do you have any concerns about the stance of the president on things like daca? >> i think immigration is an important thing, my dad was an immigrant, my grandparents on the other side were immigrants. i value the fact that immigrants come into this country. i think it is hugely important, it's not something just important 100 years ago, it remains important. in terms of high-tech workers coming in, it remains important in terms of people moving back and forth across our southern border. there are complicated issues, there are issues to national security, there are also issues of economy and fundamental humanity. i do think it's important to
look at all of those things, including humanity, as we address the plight of the daca issues. >> you are a big investor in twitter, do you have your entire stake? >> i continue to have a decent sized steak. >> what is your take on how they are running the company and dealing with these issues? >> they are driving forward, like anything that i been involved with, faster is always good. i would love to see more better faster. >> more better of what? >> more better product, earnings, revenue, improvements in cost structure. that's not a specific criticism, it's a general view that things need to move even faster. they are doing things the right way, they are headed the right direction. i'm in as an investor. the other issues are interesting. far, they are very
difficult, they are controversial, they need to be dealt with in conjunction with legislators and other people who are shining a light on the social media issues. >> what about the hate and online abuse? should they be taking a harder line? >> i think there is stuff that is wholly inappropriate. i believe in free speech, but there is a point in which that becomes unreasonable. whether it's twitter, facebook, or any other form of expression, there is a line that once crossed, you need to make sure that you are appropriately moving that out of the public sphere. julia: that was bloomberg's emily change in seattle with steve ballmer. checkup with the headlines on the bloomberg first word news with mark crumpton. moving its way across the u.s. is closed today,
dumping heavy rains and bringing powerful wind is a tropical depression. hurricane nate brought a burst of the flooding and power outages to the gulf coast. as the first hurricane to make landfall in mississippi since katrina in 2005. turkish president traveled to kia for talks with the president at a news conference following their meeting, president poroshenko said human rights violations have deteriorated in the region. russians comply to you when resolutions. turkeynt erewhon said would not recognize russia's adaptation of crimea, but would continue to support ukraine's sovereignty and territorial integrity. nato does not want a new cold war with russia, despite members concerns about the russian buildup. secretary-general jen stoltenberg spoke at the end of a four-day nato parliamentary -- parliamentary assembly. he said nato is concerned about russia's "lack of transparency
when it comes to military exercises." special prosecutor says he will land a charge of involuntary manslaughter against michigan's chief medical executive in a criminal investigation of the flint water crisis. dr. e wells would be the sixth person to face manslaughter charges tied to an outbreak of the legionnaires disease in the area in 2014 and 2015. the attorney general's office says key officials knew about a spike of legionnaires, but would not tell the public until january of 2016. dallas owner jerry jones said in the nfl can't leave the impression that it tolerates layers disrespecting the flag, any cowboys making such displays won't play. elt whenoys and jones kn they played at arizona two weeks ago after president trump criticized layers -- players all of them stood during the anthem with arms still locked.
vice president pence abruptly left the game at indianapolis yesterday when some players took a knee during the national anthem. global news 24 hours a day powered by over 2700 journalists and analysts in over 120 countries. i'm mark crumpton this is bloomberg,. scarlet: still ahead, the university of chicago visit as one the economic -- the nobel prize in economics. he wrote the book on making sense of market best behavior -- misbehavior. this is bloomberg. ♪
♪ this is bloomberg markets, i'm scarlet fu. julia: i'm julia chatterley. this is time for the bloomberg business flash, a look at the biggest business stories. gaining support in their unionizing joins american airlines in offering aid to the in the crisis that is caused 20,000 flight cancellations over four weeks. michael vick he will also announce he will leave. google has found evidence that russia's agents but thousands of dollars to interfere with the election. a spokesperson said the investigation is ongoing and more russia link acts could service -- surface.
the best performing hedge funds this year have human stock tickers. strategies are far behind, according to hedge fund research, the average equity was about up 9% for the year. funds generally do better when markets are volatile. that's your business flash update. scarlet: this year's prize -- nobel prize in economics went to richard baylor, the university of chicago business professor is renowned for shedding light on how human weaknesses can ultimately affect markets. he co-authored the two dozen abe essilor "-- bestseller knowledge. by four and the consequences of limited rationality, social preferences, and lack of health control, he has shown how these human traits systematically affect individual decisions as well as market outcomes." he spoke with bloomberg
television last year about finding opportunities by predicting. >> we don't try to forecast the earnings of some firm. we try to forecast the errors in other people's forecasts. we're -- if we try to forecast earnings, we will make the same mistake as everybody else. it's like watching a baseball game, and there's a picture who pitchetr you can predict the batter is going to throw -- had a lot of ground balls. we can predict the kinds of mistakes that other investors will make, then find good opportunities. scarlet: that was richard baylor, university of chicago business professor and this year's recipient of the nobel prize in economics. reading his book, when i was struck by was the idea of the basis of his thinking that people are not perfectly
rational. as soon as you depart from rational behavior, that could have huge outcomes. julia: many people think this is not the first time that he is not the human -- brought the human to -- human element. people aren't rational, they are had a veryhe has important policy impact on how you incentivize people to act better for their own benefit. coming up on "would you miss," the men who predicted he would will get his prize thoughts. scarlet: he is a fan. julia: still ahead, auctions insight, today's trade is taking a look at how jpmorgan into their earnings. the bank reports on. thursday, 10%. we will be discussing. from new york, this is bloomberg.
this is "bloomberg markets." scarlet: it's time now for options insight with abigail doolittle. today'sjoining me for options insight is kevin kelly, managing partner at kelly and company. today is a bit of an anomaly, we have the three major averages down in a simultaneous fashion, the first time in about two weeks. what you think this has to do with investors on pause ahead of the earnings season, or tax reform issues, plus the vix is back above 10. >> it's pretty interesting that we see all three finally down. we actually haven't seen a down market 5% for the longest time ever. we have to go -- we have to actually go back to june of 2016 to see when we were down 5%. nobody has really sold any
stocks, that's because earnings drive stocks going forward. this earnings season is anticipated to do well, earnings revisions have come down, there should be some easy beats. as we start to look at the underpinnings of the market, we're seeing global growth has done very well, the dollar has been weaker, that bodes very well for s&p 500 companies. if you start to think about what the market can do going forward, it is actually higher. abigal: i want to bring something, going to the end of the year, earnings season is going to set the tone for fourth-quarter performance and the events out of watching tim, d.c. q4's are thought to be strong, years ending in seven, going back to 1897, only 20 those fourth quarters have reduced gains. are. we about -- produced gains are we about to see a decline heading into seven? or are we going to see one of those outsider years.
no, one of the reasons is that all of the years that ended with seven never had quantitative easing happening. if you think about it, those markets were more free than the markets we had before. we have had central banks across the globe inject stimulus into the market, over 12 -- $12 trillion worth. that's why we've had an expansion longer than ever. people don't know where we are, are we in the middle, towards the end? we can tell. abigal: you think the rally will continue? >> i do think so. abigal: jpmorgan does report on thursday, where you expecting? >> i expect jpmorgan to do well, they are going to guide higher, because what they did is to down some of their guidance. they saw loan growth go from 10% to 8%, they actually said the revenues grown next year 6%. leadership.ing
the financials are the second largest sector in the s&p 500. in order for it to go higher, you need financial to take that leadership. they took it from technology. you can see there's a lot of tailwind, especially when we get a fed rate hike. when you want to do is buy a call spread, it costs $.85, you make two dollars and $.15. abigal: kevin kelly of kelly and company. and 11, still ahead, dartmouth college professor of economics who is actually a federal reserve economist. he advised janet yellen. this is bloomberg. ♪ is this a phone?
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