november 2. i am here alongside alix steel. the markets are basically based on the tightening polls in the united states. ,he dow futures down 41 pounds s&p 500 futures down three points. we are starting off with the mexican peso. it is falling against the dollar and this is a surrogate indicator of the likelihood of donald trump becoming president. we have to japanese yen strengthening as we have a flight to security. bonds for rushing to safety, and gold is up, a safety move. alix: central-bank watch, the fomc is expected to hold rates steady at the conclusion of its two day meeting at 2:00 p.m. eastern. alibaba and time warner both

reporting in just moments. bell, facebook and 21st century fox a reporting over 76% of s&p 500 come needs have beat estimates -- companies have beat estimates this year. a bloomberg paul, hillary clinton narrowly -- a bloomberg poll, hillary clinton narrowly beating donald trump. david: time warner is out with its earnings and it is a significant heat. -- beat. werernings per share $1.83. revenue was $7.2 billion as opposed to $6.9 billion. it was predicted they would be strong on warner bros. because squad, bute suicide turner is up. be abouthe call will

what happens with the at&t deal. premarket is not moving particularly. alix: taking a look at alibaba, those earnings just crossing as well. they made a time of money in the last quarter. they made almost 35 billion yuan. up over 30%. digging deeper into the numbers, this is a good proxy for chinese consumer spending. monthly active users on their mobile phones, 450 million users. annual active buyers increasing to 439 million. it is not just that core cloudce up i-40 1%, but computing up 137% year on year. alibaba is a beast, it is huge. a good reflection of the chinese consumer. david: there is a lot more to

talk about with alibaba as well as time warner. we want to get big to the touch back to the big story. the fomc decision will be announced at 2:00 p.m. but this -- people are paying more attention to the presidential election. alex just told you about the new bloomberg politics poll but other polls are moving this morning. the abc washington post showing a one point difference between hillary clinton and donald trump, with trump in the lead. real clear politics which is a conglomeration of other polls they take together the average, shows clinton with a narrow lead , 2.2% with clinton in the lead. 538 similar is about a three and a half percent lead. there are polls all over the place but it is a narrowing race. alix: we are seeing a rush into

safety and volatility finally picking up. this is looking at the spread between one month and five volatility and realized volatility for the s&p 500. the last time we saw this spike was right around brexit and the time before that was right around the u.n. evaluation in 2015. joining us is david kotok. i put that question to you. david k.: it is nice to be here. we saw the spike and we actually did a buying round yesterday and we may do more because when you , you contractthat -- brexit is fresh in everybody's memory and it is affecting markets. alix: what happens if it continues? you are right we saw the spike

around brexit and the yuan devaluation -- yuan devaluation. anid k.: there is intertemporal effect. when we get a spike like this and in asymmetry and market-based pricing it is telling you we are reaching into the extreme. if you think the world is not going to end, you take advantage of the extreme because you know it cannot last. you just talked about the peso as an indicator of a political outcome in the u.s. this is a bizarre election. we now do not know about the senate, we are not sure about a sweep. we do not know about the composition, six days to go. high uncertainty means volatility spikes. take it vantage unless you think the world is going to come to an end. david: markets do not like uncertainty so that really rattles them, as opposed to a different substantive outcome

with a downer comp -- donald trump presidency. how many people are thinking he might be the president? david k.: if you say there is a 30% chance, 30% is a reasonable number to worry about. uncertainty, arcus do not want it. seven days from now we probably will have certainty and markets will know the outcome. they might not like it but they will go up even if they do not. alix: where do you see the buying? world,ity up around the u.s. volatility, u.k., europe seeing the biggest spike. japan volatility not far behind at that redline. u.s. volatility is the white line. david k.: we know most of the world is zero bound in interest rates. we know the fed is likely to hike a quarter point in

december. i hope they do it and if they do not there is trouble. we can predict interest rates. you just reported three quarters of the stocks are beating earnings estimates. last time i checked, stock prices in the longer run, run about earnings. that number is probably more important than the poll results for the moment. what are you guys going to do a week from now -- alix: so you are talking about u.s. stock buying? david k.: i like the u.s. and japan. orchids are cheap zero interest rates -- markets are cheap at zero interest rates. david: going back to the policies of these two candidates. if mr. trump cuts taxes like he intends, what does that do to your business, especially communities -- andrew witty's? david k.: -- annuities. fund everyhey

county, state, school board, airport in the country so the tax arbitrage communities, if it is attacked by one side it works against the municipal bond market. if it widens it affects them and use up all bond market. i am not talking about credit levels, i am talking about tax arbitrage. alix: david kotok is sticking with us. broadcom, the semiconductor is buying brocade for 5.9 billion dollars at $12.75 a share. this comes on the heels of qualcomm buying and xe semiconductors so there is consolidation moving in that semi-space. broadcom not trading it in the market. let's get an update on what is making headlines outside of the business world. emma: in des moines, iowa, two

police officers were shot to death and what a turn -- authorities call ambush style attacks. no word on any suspects. iraqi troops are holding their positions outside the city of but military officials say it could take months to recapture the city from islamic state. advancing was little more than two weeks before they lost an offensive. it is winner take all tonight in the world series. cubs have a 9-3 win over the cleveland indians. it is three games apiece. the cubs have not one the world series in 100 eight years and for the indians it has been a 68 year drought. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. seeing some

follow-through selling in the u.s. equity market pre-open. time warner is out with earnings of two and have -- up to one half percent. , 7.1ue crushing estimates 7 billion and earnings per share crushing estimates as well. it is a different story overseas if you look at european banks, they are four of the five against losers. really led by monte paschi, briefly stopped trading. the minister withdrew its offer to shore up the company is the italian bank did not want to open up their books, all adding to the malaise. that is the longest losing streak since october 2014. we have some earnings in europe we wanted to highlight. the world's largest container line is down by 9%. its full-year earnings will fall

under $1 billion. they do not have the pricing power and there is too much supply on the market. taking a look at allergan, shares moving slightly higher. it did cut its full-year earnings forecast but that is ok because it issued its first ever dividend and added to $10 billion in share buybacks. david: coming up, the fed wraps up its two day meeting. how strong will the signals for december be? strategyad of ethics is here to tell us why his bank rates will be on hold until 2017. ♪

david: this is bloomberg, i'm david wein. the federal reserve rate decision is at 2:00 p.m. eastern time and if you look at feds funds futures, probability of a rate hike is 68%. us.d kotok is still with me about this it seems to be the best kept secret in the world that they are not going to do anything. matt: we want to see how interested they are in cycling -- in signaling a move in december. last year at this time this meeting before the december meeting, market probabilities were quite a bit lower. around, it is more of an open question because the probability is already sell high, so do they need to be as forceful this time? david: but sending a signal, do

they back themselves into a corner? david k.: they have been sending a signal. you have had more and more fed speak suggesting there has to be a rate hike and it looks like we get it in november -- december. yourself, this time around we have a set up that if they do not hike in december, surprise markets and affect economic outcomes? ,he world is adjusting yields counting on that quarter point in december. if you take forward rates, libor rates, all of the interest rates in the font end of the curve, they say go a quarter, it is about time. i think they go in december and now they keep the hamlets off because of the election. chartednk of america where we were last year and where we are this year. if you have that chart we can pull it up. it shows how much the market has related. that zero line is where we are during the october november

meeting of last year -- in 2015 when the fed raised rates in december. the market probability before that meeting was 40% and now it is up to about 70%. is there anything they can do to increase that more or is this about forecasting 2017 because december is taken care of? matt: i think the habit right with a want it. we have two more jobs reports -- i think they have it right where they want it. have two more jobs reports this year. to say there is a 70% chance in the market just means that yields have adjusted 70%, so the rate hike has already happened in that sense. they just want to make sure the big data points between now and then confirm their outlook that the economy is still on track. matt k.: the key point

just made is the jobs. a are creating 2 million jobs year in the united states. it is not 3 million but it is steady. we are getting what you would expect out of the u.s. economy, and it will be confirmed at the next meeting. i think matt is right on the mark, it gives the fed everything they need to hike a quarter of a point in december. jobs which i0 think is the consensus is a pretty high number, and we are not getting the degree of wage inflation we expected. is that a surprise? david k.: not to us. you get asset inflation first. first, you solve the liquidity crisis, then you get asset prices. grains are in the air building buildings everywhere, stock prices, look how much they are up. then he start to get the effect and they show up in wages in the

very early stages maybe, and we see it in some prices and we see little upward trends in various inflation measures. the question is, will they accelerate? i think they will. alix: is this what we saw in the bond market? this is a ten-year term premium and it has rebounded from an all-time low. is that what we had seen, a fed rate hike already been priced into the market? matt: this is a fascinating chart because it gets to the idea of what is the expectation for fed policy and what is the risk premium in markets. the risk premium has come up a lot. when it was negative that means investors saw a lot of risk in the world. now that is coming up so it is not clear, is that mean they see a more benign outlook? in that case it is a good thing. david k.: that red circle that

you put on the chart is the brexit downdraft of yields worldwide. it accelerated a whole year of falling yields into two weeks, middle of july. i think it probably marked the 35 year low in that series. 1.30, 1.32 on the 10 year. where are we now, 1.80? we may have marked with brexit the low for 35 years. alix: that was a moment. thanks very much guys. matt boesler and david kotok. always a pleasure. the latest fed rate decision at 2:00 p.m. eastern live on bloomberg television and radio. time warner spiking on earnings, increasing its full-year outlook. we will dig deeper.

stress and the market. higher for a fifth day as the u.s. presidential rate heads for the home stretch. daragh maher will join us. this is bloomberg. ♪

david: this is bloomberg. i am david westin. time warner out with the earnings, topping estimates as it benefited from higher pay tv feeds. we are joined by pulsea he is going to take a deeper into the numbers. things look pretty good. paul: i am sure they are pretty happy. i think we saw some pretty good strength across the three main businesses for them, the cable networks, hbo, and the warner bros. studios. i think this bodes well for the rest of the year. they took their guidance up a little bit for profitability. david: analysts said they

expected warner brothers do well because of "the suicide squad." and they always expect hbo to do well but turner was a more of a question mark. paul: we see cord cutting. we had discovery communications come out a day or so ago and talk about losing subscribers. if you think about the cable network business which had always been so strong for big media companies because affiliate fees were growing, advertising was growing. now you are a little bit scared about the affiliate fees story if you are seeing cord cutting, which generally the industry is seeing, but time warner has seemed to power through it. they have some pretty good affiliate feed growth in their numbers. david: cnn is part of turner and this election is probably not hurting cnn. paul: this has been great for

all the cable networks, especially cnn. whenever there is a big event, an election or a major news event, people turn to cnn, their revenue spikes. the real question for the cnn's ann fox news channels of the world, to what extent can they keep their audiences after the election? i know cnn is very happy with what they have done. david: your comparables may be difficult. paul: exactly. alix: alibaba reporting blowout earnings. their revenue is up 55%, the .tock up 3% premarket can you quantify how big and powerful it is? paul: alibaba is an extraordinary story. if you think about amazon, ebay, and google, if you put all of those together that is what alibaba is doing in the chinese market with a dominant position on the e-commerce site.

despite condition -- concern the market is slowing, alibaba is doing very well. what is driving them is their cloud computing business, up over 100% this quarter. alibaba really powers some near-term results. alix: core commerce was up 41% but it was the active buyers in the china retail marketplace, 439 million, up 14%. the cloud computing revenue up 130% year on year. what is next? paul: i think you could talk to jack ma. he talks about expanding outside of china in a very aggressive way that he expects to get half of their revenue from outside china going forward in the next few years. a big growth expansion for them. the consumer spending in china is growing dramatically.

alibaba is a great beneficiary but they are putting money to work around the world in terms of e-commerce and media businesses. david: is there a chinese wall? it is a bad time. -- pun. paul: i think there is a lot of runway in china and investors are comfortable for them to play out the consumer growth and spending and e-commerce in china. jack ma is not satisfied. he knows he can have a major platform around the world. alix: paul swinney for bloomberg intelligence. a group of economists are warning against the trump presidency, saying things could get worse. this is bloomberg. ♪

emma: this is bloomberg daybreak. it is 7:30 a.m. on wall street and 11:30 a.m. in london. central-bank watch, the fomc is

expected to hold rates steady at the conclusion of its two day meeting at 2:00 p.m. eastern. another big day of third-quarter earnings. alibaba and time warner both reported and after the bell, facebook and 20th century fox both report. over 50% of s&p 500 companies have beat estimates so far. a bloomberg call has hillary clinton narrowly beating donald trump among independent voters, 39% to 35%. this poll was after the revelation that the fbi discovered new e-mails and independents say it will not affect their vote. alix: two hours ahead of the open in the u.s.. the risk off is tearing some of those losses. you have s&p futures relatively flat. you were also seeing equity indices in europe paring losses

as well. it is still a risk on feel. take a look at some other asset classes, that will illustrate it. money moving into the yen. money moving out of the mexican peso as donald trump gains in the polls. buying happening at the long end of the curve 10 year treasury notes coming down about four basis points. gold is up eight dollars, nearing $1300 an ounce. david: let's talk about the election, six days ahead of us and 370 economists have signed an open letter warning of donald trump's economic policies. they have stayed away from endorsing hillary clinton but the rhetoric is strong when it comes to mr. trump. dangerous,mp is a distractive course -- choice for the country. he promotes willful delusion over engagement with reality."

joining us is peter navarro. he is joining us by television. i suspect you do not quite agree .ith these economists peter: in september there were economists that basically denounced the plans of hillary clinton and this is their response. thing. the first of all, that rhetoric you just read, they are way out of their lanes. that has nothing to do with economics and that is sheer opinion. he did not need a phd in economics to know that trumps plan to cut taxes is going to increase growth in this country. the economists who signed this letter for the first past -- -- and past 15 years

stagnating incomes over the last 15 years. i look at my own profession and kind of shake my head because the biggest failure i think in economics right now is coming to grips with the textbook theory that says trade is going to be good for everybody, and the reality of trade for american workers and american companies in the american economy which shows that people in michigan, florida,th carolina, california, these folks have not gained from trade which is supposed to be the thing. you mentioned nobel laureates. i favorite story is robert solow , one of the great theorists on productivity theory. he made the worst and most embarrassing mistake on april 25, 2000 when he let bill clinton bring him on a stage and basically tell the people that

china's entry into the world trade organization was going to be a great thing for the american economy. 15 years later he should be sending his nobel prize back. weid: when i practiced law used to have an expression that i seize upon. we can argue about it or we can look at up. side, 370ists on one on another, but the markets seem to be voting. how do you respond to the markets who seem to be saying they think it is risky if donald trump as president? peter: i would say dow 25,000 in four years with a trump presidency because if you look at it, what you have stock prices responding to the expectation of a future strain of corporate earnings. we know what we get from hillary clinton, higher taxes, lower regulations, and big trade deficits.

that is not a recipe for growth. that is a recipe for the kind of paper bull market we are in right now. all this money in the bond market which is earning nothing, is going over to stocks. that thatboth know day of reckoning is coming. donald trump is an agent of change. he is going to usher in a whole new regime which will change the growth rate in this country and globally. that is going to be good for the market, and people have to sort that out. if donald trump wins, i am long on the market and if clinton wins i'm short. david: what is the flaw in the markets that is causing them to underestimate that future flow of earnings if donald trump's president? peter: who knows what the markets do. you could just as easily argue they think clinton is going to win and she will be in for two

years and we will have gridlock. as the macro forecast, have a very good track record. if you get more growth and more earnings under donald trump's land you get higher stock prices. if you get less growth and less earnings under hillary clinton, the trend is going to be down and you will have a bear market. .t is as simple as that whatever is out there as far as day-to-day volatility, im looking at the trajectory of the trend. we will have a bull trend if trump is in, a bearish trend if clinton is in. thank you very much. alix: we are taking a look at euro-peso. david bloom of hsbc says this is the one he wants to be looking at. ,harting one week, one month

and three month volatility all picking up after the abc poll saying truck is in the dutch trump is in the lead. joining us is daragh maher. daragh: the mexican peso for a long while has been the trump thermometer. as his possibility -- probability has risen, we see the truck -- the mexican peso weakening. you are seeing that the association the market has with the dollar is -- as a rising trump probability is a because itar, av reduces the chances of a fed hike because of uncertainty. key one to look at. alix: the dollar is on a three-week low but if you get a aump presidency there is

chance for stimulus and repatriation into the u.s. do you see that playing out? peter: ordinarily -- daragh: ordinarily you say we have this event and we want to be hedged against it but it is not clear what the outcome is. there is no consensus whether trump will be bullish dollar or bearish dollar. it could be a trade war with china and mexico, a policy that restricts growth. i suspect it will come down to sequencing and the dr. -- the market will be worried about the dollar. if you think in terms of sequencing, i think the dollar weakness will come first. david: if he becomes president and is able to deliver on the trade deficit, doesn't that strengthen the dollar in and of itself? daragh: i think a lot of people

would argue that is a race to the bottom because it would assume nobody else is responding in kind which i think would be the probable strategy. you bring in more inflation and run the risk of perhaps a recession. does the occurrence count because the test become the focus for the dollar? it has not for a while. i am not sure that would necessarily be the point of focus for the market. i think it would be more about the destabilizing potential for a global trade war. alix: we cannot talk about the dollar without talking about the fed. this is a bank of america chart. hsbc is one of two primary dealers that do not see a rate hike in december. any layout that case? daragh: hsbc has been at the dovish and of the spectrum. -- dovish end of the spectrum. wage growth still is not coming

through with the kind of potency we would like. business investment is still pretty weak and you are back to this idea, is it nailed on for this test for december? , a long way from having it in the bag. there is a lot of ground to be covered before december and i think the market is already a little bit too far toward the certainty. alix: 2017 market expectations are incredibly low. it is a theory that the dollar cannot go any lower because there is nothing else that can be priced out of the market next year. what do you think? daragh: i think the dollar is trumped by the fed. if they will go to her three times next year, you buy the dollar but as it strengthens, it reduces the case for the fed increases thet

amount for tightening. because we are already in such a douglas position the dollar is trapped on the downside. in such a downside position the dollar is trapped on the downside. take a look at the bloomberg and this chart of the dollar index versus u.s. financial conditions. financial conditions are the white cars and the dollar is the blue bar. financial conditions have tightened. we are right around the area we were around brexit. david: i wonder if that chart might suggest the fed wants to be trapped with the dollar. they do not want it to tighten too much. daragh: i was asked a question yesterday, surely the u.s. would not mind having a stronger dollar. the fed wants to normalize rates

and it may suggest they want to raise so they can cut at some point, but if you get the dollar itng the tightening for you, is not helpful for those who want to do the whole normalization. i think the rhetoric from the fed around the dollar will try and keep it capped and broadly stable. david: it is not healthy for the economy. we have to worry about people getting jobs, making money, buying and selling things. daragh: if you look at somewhere like the u.k. or they are getting plenty of help from the sterling decline. currencies are always complicated in terms of the ramifications for the market. alix: the next four days, what is the pear you are looking at? daragh: it is interesting what has happened to dollar-yen because there is a consensus it would drive ever higher. we thought 95 for year and i'm still comfortable with that.

derogative are her. -- derogative maher. -- derogative -- ♪

emma: this is "bloomberg daybreak." i am evan chandra. i's chief financials went -- chief financial officer reveals how a trump presidency would affect the market. david: this, i am david westin. according to a bloomberg politics poll, hillary clinton

holds a slim advantage among independent voters, 39% to trumps 35%. conducted after the revelation the fbi discovered a new batch of clinton e-mails. 47% said the renewed scrutiny would not impact their vote. we are joined by shawn golhar. shawn: i think before the investigation she had a clear lead but since the announcement by the fbi it has tightened and i think it will continue to tighten. david: these are national polls and that is not how we elect a president. it matters which states are which so we should go through the so-called firewall that hillary clinton has in the electoral college.

we have a graph to show which states she is widely expect that expected to win. -- expected to win. she is not -- she is spending time in michigan which suggests she is not sure about it. 2008 president obama one over mitt romney and it shows how important it is for clinton to win. florida, ohio, pennsylvania, north carolina, trump needs those states to win the election. there are other paths he can do to get there but those states 13. -- those states are key. david: here are the ones trump is likely to win. north carolina, georgia, and missouri. and if he wins he will be in good shape, pennsylvania, ohio, and florida.

shawn: i think pennsylvania is really key. a huge impact from fracking. ohio, every president in history has one ohio and florida is our perennial swing state. a very diverse state. david: i think it is fair to say donald trump has an uphill battle in the electoral college that he could win. shawn: absolutely. avid: if clinton does when much will this fbi investigation overhang her presidency? at our research department we have across asset class to look at the markets. a lot of clients now are beginning to look at this. her policy agenda going forward, if she is elected will be in jeopardy given this fbi investigation. until this is cleared up i see

it very difficult for her to get anything past. alix: which is key because even after the election, the uncertainty remains. this is what we have seen in the last few days, normalized volatility. you have the move index, the blue line. the purple line is fx volatility and the white line is the bank of america market risk index. that has picked up steam as well . is this our life until we get clarity about the fbi investigation and election? shawn: if she wins there will be a lot of uncertainty and volatility going forward. you may see nothing happening in washington, a lot of gridlock until this is resolved. the number of variables or extraordinary so i do not want to opine on the possibilities. result is the house

could remain republican. shawn: given the fbi announcement on friday, they will investigate this issue. a republican house will look at this quite a bit. david: when you talk about tail and risk, there were two, trump winning the presidency and the sweep. would you really rate goes? shawn: the possibility of a trump presidency has fattened. the idea that the democrats could sweep, i think that is incredibly difficult for them to do. david: time now for other stories making headlines at this hour. here is emma chandra. emma: broadcom has agreed to buy brocade. the price is $5.9 billion acluding debt, representing 47% premium on brocades closing price.

broadcom makes integrated circuits. botox will start paying a dividend and has boosted its share buyback. they will begin a quarterly dividend of $.70 a share. $10 billionadding to a buyback program announced in may. they posted third-quarter earnings that missed estimates. in london a former blackrock invest -- executive pleaded guilty to insider trading. blackrock says his trades were carried out for his own personal gain, and he will be sentenced december 21. that is your bloomberg business flash. among the topk performers in the nasdaq 100 for this year but has the bar been set to high? we have a preview in off the charts. this is bloomberg. ♪

alix: this is "bloomberg daybreak." facebook out that the earnings. here are three charts you cannot miss. the first is examining the behemoth that is facebook. it wants to be a video company and have video mobile ads, and this is the layout now the orange bars are daily active users -- the yellow our daily active users, orange is mobile monthly active users, and the blue is total monthly active users. total monthly active users are at 1.7 billion individuals, huge numbers for facebook. the issue becomes, how do you monetize it? in theory facebook does not have a problem. it is all about mobile, video, and video ad sales.

this is the marketers estimate for facebook ad sales over the next few years. 2016 coming in at about $4 billion. in7 that jumps to $6 billion 2018, to $7 billion. we learned last month that facebook overestimated the average viewing time for video andover the past two years that could affect ad sales because a lot of money flows to google and facebook. those numbers are key for determining the money that is distributed toward the company. the other issue is how do they monetize the assets they have? estimatesin marketers for instagram revenues over the next few years, not that much of a game changer for facebook. come 2017 you are looking at about $3 billion and that jumps to almost $6 billion in 2018.

monetizing these and getting money out of them will be key for facebook going forward. a huge company, big numbers. david: i think all of us are stunned by what they have done with mobile advertising. when i came out with their public offering a lot of people were skeptical but they did a magnificent job. userseport daily active and you know who does not? twitter. coming up in the next hour, we will talk about what a trump presidency could mean for markets around the world. bloomberg. ♪

♪ alix: welcome to bloomberg

daybreak. westin.ngside david an hour and a half before the opening of trading. dow and s&p futures are relatively flat. same story over in europe, with the euro stocks and ftse. in the currency market, it is still a flight to safety. we have the yen moving higher. the peso continues to grind lower on the fact that donald trump is gaining in the polls. yields coming down in the 10 year. gold continuing to grind higher. there is what you need to know at this hour. central bank watch, the fomc expected to hold rates steady,

this month. it is another big day of third-quarter earnings. alibaba and time warner both report, this morning and after the bell, facebook and 21st century fox, both report. a brand-new bloomberg poll has hillary clinton narrowly beating donald trump among independent voters, 39% to 35%. the poll was conducted after friday's revelation that they were investigating a new batch of e-mails. that is what you need to know. the evidence he decision is just a few hours away, but the markets are paying more attention to the election, next tuesday. a range of polls point toward growing uncertainty about who will win. we just mentioned the new poll of independent voters, but there are other national polls moving the markets.

abc news has donald trump ahead by one point. nuclear politics has clinton at .7.5% to that trumps 45.2% they are not themselves polls, they are surveys of other polls. alix: the catalyst, yesterday was that abc poll. see it reflected itself in volatility across all asset classes. this is treasury volatility. this is over a 14 year time trade. you can really see the pickup in volatility that we have seen. joining us now is bloomberg's executive editor for global economics. will this be our life over the next four days?

dan: probably. what we are seeing now is the race tightening in the direction of an outcome that most market participants have not anticipated. i know some of the comparisons make to brexit are overdone, but the phenomenon of while, is there a potential surprise lurking and should i do something? i don't want to overstate it, but there is an air of it. we are joined now from irvine, california, talking about the risk in the treasury market, the volatility picking back up. how do you hedge short and long-term when the safest trade is now more volatile? to deciders need whether they are more worried about the long-term health of their portfolio or wanting to manage short-term volatility,

things that are really did -- that are related to the -- one potential trade is what we call go along the valley, that means to go by seven year or 10 the longerry with traded bonds, and there is unexpected volatility, it is likely that the flight to quality will benefit the 10 year bond well the long-term risk will be reflected in the bond. that is the short-term trade, something to think about. concernedrs are more about the long-term health of their portfolio, then it is more of a question of asset allocation, or strategic positioning. one of the easiest things an investor could do is when they receive their coupon payment or principal payment from the bond portfolio, it is to reinvest in

the shorter dated bond, and that means what they are doing is .educing their integration risk thed: if you go shorter on duration, you have more flexibility to respond to policy decisions. if there really is an increased chance of donald trump coming term,ffice, in the longer what investment decisions do you make differently besides keeping flexible? >> one of the things that we we see aght about is brexit like situation, meaning that what was previously thought of as unexpected, happened. either way, the path is to word policy incrementalism. -- toward policy incrementalism.

-- until things settle in the longer term, because we don't know specifically what the policy impact of a donald trump presidency would be. one thing investors can start thinking about is both candidates have talked about infrastructure spending, so to think about companies that will benefit from that spending. that brings us to what economists say about donald trump. president, elected there would be a lot of damage to the country. they wrote donald trump is a dangerous, destructive choice for the country. he misinformed of the electorate with conspiracy theories and promotes willful delusion over engagement with reality. it does not seem like a short-term risk on a trial presidency -- on a trump presidency.

two things jump out at me. one, they are attacking the conspiracy theory being pushed about the bureau of labor statistics. servants,career civil they operate under a congressional mandate that is signed off by both parties. the other thing that is not spoken about, manufacturing share of the economy's share of the unemployment has been in long-term decline. no person in the white house is going to reverse that. david: what is your reaction to these economists coming out and decrying donald trump in terms of his economic policy? are we looking at a different kind of presidency under donald trump? there are two things we are

talking about. one is the actual policy and the impact on the fundamentals, which will play out over a longer term. the second is market reaction, which is much more immediate and day to day. is thing that we think about how will the market react in a situation that has not and priced in. the market hates uncertainty, so given that there has been little in the way of actual plans in terms of economic planning and also fiscal policy, under the trump presidency, it is difficult to gauge what will happen and how the economy will be impacted. market participants should be wary about trying to forecast specifically to events, and be ready for belts of volatility. -- bouts of volatility. let's get an update on

what is making headlines outside of the business world. m: -- emma: two officers in iowa were ambushed and shot to death. there is no word yet on any suspects. a transit strike in philadelphia has ended its second day. it shut down buses, trains and trolleys that provide 900,000 rides a day. the transportation authority says the two sides are making progress toward a new deal. brazil says it has collected almost $16 billion in taxes and fines as part of an amnesty law for assets held overseas. it is part of a plan to close the budget deficit in the midst of the country's worst recession ever. global news 24 hours a day

powered by more than 2600 journalists in more than 120 countries. alix: u.s. equity futures are relatively flat. let's take a deeper into some earnings that trickled down, this morning. time warner and alibaba both up in premarket. time warner raised its full-year guidance. they beat on the top and bottom line. alibaba revenue rose 35%. its core consumer revenue shopping business with about 45% higher and the revenue from cloud computing, 130% higher. a waya is touting that as to offset its dependency on its sales division. looking at broadcom -- the world index, we will start with. this tells the story of the flight to safety we have seen over the last 48 hours. this is the seventh consecutive loss.

perspective,nto the bloomberg world market cap index fell about $728 million since the close in october. that is the size of brazil's market cap which is the 14th biggest in the world. it puts into perspective, the flight to quality we have seen as the risk of a donald trump presidency continues to rise. david: it does not hurt those developing markets. coming up, the fed in focus. howove is expected, but strong will be december signaled the? the vix writing its longest winning streak since 2013. this is bloomberg. ♪

david: this is bloomberg. the federal reserve's key rate decision comes at 2:00 eastern, today. there is a 68% chance of a rate hike in december. andl with us is dan moss, ampco's sector specialist for long short. i think it has been six weeks. what has happened in the real world in terms of gdp growth and information that might inform what the fed is looking at. dan: the view of the economy is more or less intact. employment growth has held up, wages are moving in the right direction. a slight worry with gdp. of secured some falling away of the consumer component. ever since the expansion has

been going, since 2009, the consumer has been the bedrock, nothing to really worry about, but they would have noticed it. david: the consumer numbers were a bit soft. business investment continues to be soft on the gdp numbers. only concerned about the underlying economy -- are we concerned about the underlying economy? >> this is the situation for what we would call a dovish tightening. things are ok, they are nothing to write home about, but it is growing. the u.s. economy is growing, especially compared to other developed economies in the world. it is one of the few that is showing positive growth. point that the consumer, which has been the bedrock is a little bit less than optimistic. alix: breaking news, adp employment coming in for october, 140 7000 jobs, lower than the estimate, but september

was revised higher, to 200-2000 jobs. it seems like we are where we are already at. we are not seeing that much of a reaction. nasdaq futures lifting modestly higher. we used to say in church, the lord giveth and the lord taketh away. this is consistent with what dan said. the fed view of the economy is pretty much intact. what are we looking for in terms of a december move? dan: look at the third paragraph in today's statement. that is where they tend to set something up. last time they said the case for an increase has strengthened, that we are not quite there yet. choose to strengthen that language today, or with december expectations so entrenched, do they say we do not really need to go there? at this point, it would take a

lot to him knocked them off december -- a lot to knock them off december. alix: we are seeing a rush into safety, we take a look at the bloomberg and this is the 10 year term premium, rebounding from that all-time low. this,s the fallout from when it comes to investment grade and it comes to issuance? >> in the long-term, if things continue to move in this direction, meaning energy prices continue to increase and we continue to see an increase in yield, it is not necessarily a bad thing for the corporate sector and high-yield. what is important is what is the driver of that increase in yield? it seems the move of the bank of japan in terms of what they choose to buy, that is an

impact, a technical rather than a fundamental factor. inflation and inflation expectations is the second. not necessarily bad. we might see yield increase by either a steady spread or a slight tightening in spread for the investment-grade. alix: tightening and spread even though term agreements wind up being higher. you alluded to technical tapering over the boj and a potential rate hike. can the market with stand actual diversions? >> the fed has been concerned about this, speaking of statements. if you read between the lines, this is not officially in their mandate, to care about what the market thinks. they do care about the market, perhaps a little too much sometimes, as to move according to moves they don't think we'll spook the market, for better or

worse. place forere is a central-bank diversions, but keep in mind the fed seems to be taking the best care to communicate their moves to the market ahead of time. alix: if you take a look at why we are looking at bank divergence, is there a level of inflation were the high-yield market will seize up? >> at some point, it depends on what the reason of the inflation is. the concern is that we will see fallout in the corporate bond hight if that inflation is and not necessarily accompanied by growth. what seems to be the best case for many investors in the market, including myself, is we are going to see what i would lukewarmgoldilocks economy. there is not enough to get things going, however wage

inflation in the past, which is problematic in the mind of a lot of economist, being the real issue, it does not seem to be quite in the cards. if you see where wages have been, there are signs of things heating up. however, recent data has shown that job growth -- as job growth increases, we also see new entrants and new participants. come back to seek for jobs and that has a dampening effect on wage growth. alix: job growth coming out, this week. tune into our coverage of the fed decision at 2:00 p.m. eastern, led by tom keene and scarlet fu. coming up, time warner jumping on revenue -- earnings. we will discuss what the results mean for their deal with at&t.

check out some of the big earnings winners ahead of the u.s. open. ♪

alix: a market mover of the day, gold futures clamming about $1300 an ounce, it is the highest number in a month. it is that fear trade filtering into the market. david: turning back to time warner who had its earnings out earlier today, topping its earnings and raising its outlook. joining us now for more on the analyst atm nolan, macquarie capital who downgraded his rating to neutral with a price target of $105 in the wake of the company's announced sale to at&t. thank you for coming with us. take us through these earnings. they beat what people estimated. tim: i think the surprise was

just the all-around beat. all three divisions did very well on revenues and earnings. even excluding a tax benefit which made it even stronger beat. the real driver was the affiliates he growth. i think it was a lot of it higher -- a little bit higher. withple of big films sully, tarzan and suicide squad. just good, strong growth, all-around. david: so what is wrong with those sub fees? there are contracts negotiated out years ahead. tim: every time you see a nice big number, and it was about a point higher than we were estimating. we know that the contracts are

in place, and we know what it should look like. they mention the release that there was some decline but no number given. we know from discovery that there was about a 2% decline, in the quarter. it should not come as a real surprise, but it is nice to see a nice, chunky number like that on the pricing. david: the real elephant in the corner is the at&t deal. how are you discounting the probability that will get through and with what kind of restrictions? tim: we were surprised that the stock traded down post the friday close on the rumors of the announcement. the deal was struck at 100 750. the stock is trading in the high 80's. aroundre lots of issues and it is a large transaction with large companies getting together. questions around possible preferential treatment on

network deals in the future, possible questions around streaming capabilities and that there might be getting cap's are caps --ight be data all data caps or not. david: thank you so much for joining us, on the phone. that is tim nolan, an analyst at macquarie capital. alistair darling discusses the impact of post-brexit uncertainty. we will hear what he had to say, next. seeing is believing, and that's why

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expected to hold rates steady at the conclusion of its two day meeting. the decision is at 2:00 p.m. eastern. alibaba and time warner both reporting, this morning. after the bell, we hear from 21st century fox and facebook. more than 76% of s&p companies have beaten estimates so far, this quarter. a brand-new bloomberg poll has hillary clinton beating donald trump among independent voters, 39% to 35%. the poll was conducted after friday's revelation that the fbi discovered a new batch of clinton e-mails. that is what you need to know. alix: we are one hour away from the open on trade in the u.s.. here is where we stand. the s&p and dow futures flat. the ftse off by about 1/10 of 1%.

the safety trade, the fear trade still pervasive in the commodity market. take a look at dollar-yen, the yen continuing to grind higher. the mexican peso continuing to get hit, although off the lows of the session. the 10 year yield off by four basis points. gold over $1300 an ounce. almost lost in the drama of the u.s. elections and that is the big market effect of the early summer brexit, but brexit remains in the global agenda. alistair darling as someone who firmly opposed brexit spoke on bloomberg earlier, today. alistair: even if the u.k. government believes it is important to stay in the single market, which i agree with, you have to face the fact we don't

know their position. what i think is urgently required is a statement from the u.k. government as to where it stands, which ought to be debated in the house of commons, but i think the second thing we need to have is -- i know there is an eel -- and ill feeling where we were taken aback, but we need to have a grown-up conversation between the united kingdom and with the european union and with other member states as to how we resolve this. how do we take account of what thereitish voted for, but was an awful lot in our relationship that needs to be preserved and built upon because millions of jobs depend on it. david: that is a former checker. he spoke with tom keene and we are happy to have tom keene with us, now will stop it strikes the -- now. it strikes me that there is a lot that alistair darling is pointing to.

tom: let's frame what we have. minister may, the conservative party, and alistair darling is a tony blair, gordon brown labour right, think democrats, and he clearly wants to have the debate in parliament because that is what you do if you are the minority party. we heard throughout the entire interview is an understanding that england has to say this is what we believe in, and engage the debate with what ever europe is going to bring them. david: i was speaking with a senior government official in a european government that said they have taken this calling, theresa may because of an apparent -- why is she not coming forth and saying -- i thought francine lacqua was brilliant on the story of birmingham and the meeting of the party, but the idea that the conservative government in power

is not in any way on the same page, maybe a lot like u.s. politics and the clarion call and manycellor darling across politics is get a message and get going, and we are clearly not there, going in. is largely an issue of politics within the conservative party in the sense that theresa may is from a different wing than her presidents -- predecessor. tom: this is the -- this is not the united states. we talk about tom trump and clinton and the gridlock, it is very difficult -- it is radically different in lure darlings parliament -- lord darling's parliament. ok, you won, let's go, and that is what is not happening. it is very different from washington. david: once they get that story out about their position, they have a very cumbersome effort,

negotiating with 27 other countries. scotland, andned the discussion as well, but it is two things you brought up. one is the distinction of a parliamentary system and the other one is almost the game theory. the theory of too many countable units, and i would think that lord darling could agree with prime minister may, that they fewero find who those european groups are and we are nowhere near that. i asked about federalism in brussels and no one knows where that debate is. david: there is another side which is where is the eu and the reform within. im: the real side of it is need sterling weaker for the suitcase. i need a $115 sterling, right

now. david: thank you very much, tom keene from surveillance radio. alix? alix: coming up, the face-off between the bulls and the bears. is the index poised to break below a key level? tobias levkovich will join us, next. ♪

emma: this is bloomberg daybreak. coming up, tvs head of global rate strategy joins us to talk central banks, interest rates and the economy.

alix: a fed decision due at 2:00 eastern today is unlikely to cause a rate hike. a 60%ists price it at chance of a rate hike in december. krasner spoke on bloomberg markets asia about what he is anticipating from the fed. move.is likely they will something could happen between now and then, but the economic data has been can visit with the's forecast and i think they are likely to move, particularly the retreat two cents. dissentis sent -- the -- some sort ofd be shocked that comes out of the u.s. markets or internationally, something could cause them to delay, but i think they are pretty much on track. >> if you take a look at the dot plot in the september statement,

it suggested that we will see one hike this year, two hikes next year. is that too slow? sides.icisms on both some say the fed should not be say theother people unemployment rate is below 5%, we have to get moving because pressure is going to come in. a reasonablehave balance, but we will have to see how the data evil things -- eve all was -- evolves things. >> could they be too data dependent? hopefully what they mean by data dependent is not just backward looking data, but things like inflation expectations and other forward-looking measures. right now, inflation expectations are low and that is

why there is not a lot of pressure to move from that, but it is rise to move -- it is wise to move now, rather than later because the -- because of the potential for inflation and price dislocation. >> janet yellen says she is willing to run a hot economy. define that for us. issue moving to cope with 2.5% inflation? >> it has not been clearly defined. that she isests is willing to say there is more room to run, to try to increase jobs and she is willing to get closer to the 10%. i don't think -- 2%, and i don't think she is willing to go beyond 2%. unlike the bank of japan and mark carney. she said probability is high in december for a rate hike. my guess is as the data comes out over the next seven weeks, it is likely to suggest that the

probability is even higher, so i think they are largely ready, both in the u.s. and worldwide. tune into our coverage of the fed decision today at 2:00 p.m. eastern, led by tom keene, scarlet fu and joe weisenthal. time for your business flash. agreed to buy has netflix equipment provider. premium.esents a 47% they make semiconductors and integrate -- qualcomm makes semiconductors and integrated circuits. kkr has dropped out of the bidding for the troubled japanese airbag maker, takata. representatives from the private equity firm were not present last week when automakers met with hitters for takata. safety systems is among

those still seeking to buy the company which is blamed for the largest auto recall in history. alibaba posted higher-than-expected quarterly revenue and earnings. china's biggest e-commerce company is capturing more of the consumer shift to shopping on mobile. revenue from cloud computing services more than doubled. next week is alibaba's single day event, the world's biggest 24 hour shopping promotion. this is bloomberg. up, how does a potential donald trump presidency affect the market? ashave the victim jumping up volatility increases -- we have the vic jumping up as volatility increases. tobias levkovich will be raising his opinion. ♪

alix: the u.s. election is just

days away, market volatility has increased. this is that bottom panel, that purple line, the vic is measuring volatility. levkovich, tobias how much of this volatility pick up in the next 40 days -- four days? you had this issue around the markets kind of calming down. we have been watching the election data and it shows interesting things. if you were looking at a democrat sweep, both the house and senate, when that happened, the market was selling off. that is another concern the market has, it is not just if donald trump wins.

witharket is not happy either a full sweep on democrats , or if donald trump wins because of the uncertainty factor. david: there are two tail risks with donald trump becoming president. another is a wave election where both houses go democrat. it appears that one of those is going up and one is going down. how are the equity markets reacting? tobias: the donald trump site has been picking up. the differential is about six percentage points, now it is more like 2% and change. that is where markets are getting some concern. what actually happened in the electronic markets was the chances of a wave election and

has picked up the potential for the republicans holding both houses. the most recent poll data was 51-49 republicans in the senate. this is so fluid, and is changing day to day. you wonder what could hit over the weekend. alix: the market does seem pretty clear. equity futures as well as european stocks. in the cross asset classes, you have gold up near $1300 announce, a high on the end, continuing to grind higher. the peso gets hit. you have a rush in the treasury. tobias: day today, we are getting these significant swings , we are getting these significant swings. you get a more expected outcome, truly play out, i think people

are probably overemphasizing the potential. i think they will worry about something else like the italian referendum or the fed in december. it is more about the worries in markets. they just pull off a shelf of worries based on the headlines. david: let's worry about the fed in december. we could talk about it, today but most people don't think it is going to happen. how will the fed move in december? is that fully priced in? tobias: nothing is fully priced in, anymore, until it hits market. we love showing a chart of this to investors, the market has become unbelievably reactive over the past 20 years. the market does not predict things in advance, a more. and reacts to the news as it occurs. -- it reacts to the news as it occurs. i can literally prove to people that the markets do not discount the future, anymore and this is not something that just happened.

it has been going on for 20 years. in that sense, the market does not fully priced in, anything. is there playbook going to ask this question? there is a inconsistency in pattern because whenever fundamental developments are occurring, like the tech bubble, people just kept buying tech stocks and it had nothing to do with what the interest rate pattern was. the closest thing we can find our energy stocks td to do better in environments when the fed is lifting rates, and especially after the second rate hike. that is the most consistent and even -- and it isn't even consistent. leads to margin weakness, because labor costs are rising. talk us through how you would explain that narrative. usually, it is a series of fed rate hikes. it is like four or five that

start to have an impact on the markets. the fed might even be willing to let inflation move higher because they know how to deal with deflation -- inflation, deflation is a much more worrisome risk. the fed is going to be moving that 2% target. it is an interesting discussion. true, we have more upside on the rate hikes and they are willing to let it go to that point before they have to be aggressive. of thesecond issue margin weakness -- one of the things we watched carefully -- we watch carefully is not gdp,ng at percentages or we look at s&p 500, which is what i am buying.

if you look at s&p 500 operating profit margins at energy, they have been pretty flat for the last two years. all weakness has been in the energy sector. what is actually starting to change is energy earnings are sorting to turn the quarter -- turned the corner in the fourth quarter. if you look at things like capital spending, x energy, it is up and everyone thinks it is a horrible factor. alix: i'm glad you brought up earnings. tobias: buybacks are intriguing to about half a percent to earnings growth, not 4% or 5%. it is much weaker than people think. with the buybacks, we are shrinking the estimates by the rebuttal. most companies still have outstanding share growth. alix: this is a function on the

terminal that sums up how the earnings expectations. the average sales of beat and the bottom is the average earnings beat. it is almost hitting 5%. what is your big take away from earnings season? tobias: earnings are beating lowered expectations. companies have been very smart. if you look at the earnings growth, it sort of this and slips as you get closer to the earnings actual reports, and then they beat that lowered number. you want to say are they beating the numbers that are existing three years ago -- three months ago and the answer is they are not. it is danger looking at that versus the expected of the date that they report. thise about to see inflection on earnings. the biggest question is what does 2017 look like and most

companies can provide guidance. 90% of our clients face in a survey we did in late september, they do not believe those numbers, they are betting in their own minds more like 4% earnings growth, not 11%. david: the on the earnings growth is the top line and how much we are growing the economy, overall. being more efficient, cutting costs, laying off people, how much of this has been real? tobias: it is not really where it is that, if you look again, giving into it, which a lot of people do not do, energy and materials, the two sectors that were the most acted that are now bust, they are down on revenue trends, similar to where they were in the great financial crisis period.

similarly 40% declines in revenue. if you look at traditional growth areas, consumer discretionary growth, they will probably have been growing about 8% if it were not for the fact that you have a -- the negative currency translation affect. underneath the surface, you can see where most of the revenue weaknesses. the rest of the economy is not doing great. are not really celebrating -- accelerating, but we are not doing as poorly as some people perceive. alix: what is the one that to you hold the most pretense? tobias: the one about margin pressures and the sluggishness. -- this is something we track closely is the national federation of important survey is looking like it has rolled over. small business is by far the biggest driver of new job growth and historically, it has led employment rates. possibilitythat the

of a 6.5% unemployment rate is not off the charts a year from now, and that is a significant difference. alix: it is great to see you. citigroup managing director and chief u.s. equity strategist. coming up in the next hour, td's head of global rate strategy gives us her outlook for the u.s. treasuries and the fed. we have selling picking up on the 10 year. the yield down by one basis point. ♪

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"bloombergme to daybreak." i am alix steel, alongside david westin. jonathan ferro is off today. s&p futures are off. we have a little bit of selling over in europe. the ftse 100 up by .4%. in other asset classes, it is still the story of safe haven buying. the yen moving higher. the peso continuing to get hit against the dollar. the 10-year yield up -- off by one basis point. less buying in the market. crude accelerating the selling. you need tois what know at this hour. central bank watch -- the fomc is expected to hold rates steady at the conclusion of its two-day meeting at 2:00 p.m. eastern time today. another big day of third-quarter earnings.

alibaba and time warner reported this morning. after the bow, facebook and 21st century fox report. and, a brand-new bloomberg poll has hillary clinton narrowly beating donald trump among independent voters. the poll was conducted after the fbi isvelation investigating a new batch of e-mails from secretary clinton's server. voters say the renewed scrutiny will not change their vote. that is what you need to know. alix: movers this morning -- #trickled out before the opening bell. .5%.warner up by it was up by more earlier in the session. it beat on the top and bottom line. it also raises full-year earnings forecast. alibaba grinding higher, up over 3%.

cloud revenue was up triple digits. it also had revenue of 41%. the steel reported after closing bell. we will speak to the ceo of the company later in the hour. herbalife off by 2%. management reshuffling -- the thewill be the new ceo, and old ceo becomes the executive chairman. the real issue is fourth-quarter guidance was below consensus, saying china sales were softer. bloomberg politics poll shows hillary clinton holding a slim lead over donald trump among independent voters, as this race tightens with less than a week to go. markets are showing increased volatility. there is been a downturn in the yield on the treasuries. people are moving toward safety. is oliver renick

and priya misra. how are stocks reacting? oliver: a couple weeks ago there was a big break emerging with clinton taking the lead in polls substantially, which i think we have talked about before, markets consider to be a more protectable outcome. when you see polls get tighter, you have to start thinking about what if this trump presidency becomes a reality -- where will the impact markets, and are we ready for that? it looks like what was happening with brexit polls, it is not quite apples to apples. alix: that was the theme -- by long-term treasuries. now we see less buying. does that mean the global bond selloff is intact despite the short term blip? have bank of england tomorrow. i think the bank of england is not going to be that hawkish.

the ecb is telling us they will not taper that fast. our view is the bond selloff is largely over. what we are seeing right now -- to oliver's point, the repricing around the election risk. the uncertainty. having analyzed elections, rates, the economy -- normally i would say elections do not matter. business cycles matter -- fed policy matters. a different picture today for two reasons. monetary policy is constrained untilo bond rates, qe infinity. if a downturn happens, there is little monetary policy could do. we may have to look at fiscal policy, where the elections matter. a second important issue is that candidates are different on an economic standpoint -- when it comes to fed policy, fiscal policy, they are so different the market has to price it in. i would say markets always struggle to price in political risk. we saw it during brexit. i think the rates market and the

equity market is a little complacent here. we are pricing in the status quo -- the fed to hike in december, slow growth -- that means we are obama, essentially a clinton presidency and a divided government. alix: this is the vix on the treasury index. you cannot look at where the volatility has been. it picked up substantially, but nowhere near the past three years we have seen spikes. it is there, but not heightened yet. david: that leads to my question -- how much of what we see in the bond market is because of uncertainty -- we're not sure what is going to happen? how much is looking through to an increased chance donald trump will be president, and his policies would lead to inflation, for example? ms. misra: it is a combination of both. to this and we have this binary event tuesday -- hopefully by the end, we will know who has

won. the market has two pricing uncertainty. it is also what congress makeup will look like. i think the market is looking ahead. we have widened. there is inflation priced in. the entire freeze in rates has been on the long-and. there is the idea that fiscal will addor inflation to the market looking beyond to say do both candidates have to ease fiscal policy, which is what rates should be higher, break-even's should be wider. i think what we had seen in the last week is as the race is is noting, the market pricing in 50/50. i expect volatility until the election to only increase. moving tover, equities, 300 economists came out with a letter yesterday saying donald trump's policies, economically, would be dangerous. we had peter navarro on, and he

is a senior advisor to donald trump your yet a bold production for the s&p. 25,000 ino: i say dow four years with a trump presidency, because if you simply look at it, david, what you have in stock prices responding to expectations of a future strain of corporate earnings per do we know what we get from hillary clinton -- higher taxes, more regulation, shutting down reliable fuel industries, and big trade deficits. that is not a recipe for growth. that is a recipe for the paper bowl market we are in right now. donald trump wins on long the market, clinton wins on short. on the dow -- there is a difference between what the markets are pointing to and what if the navarro sees coming. 25% -- 25,000ly, is roughly a 50% increase from where we are. you have economists talking about this catastrophic situation if trump becomes

president, which is probably -- it is hard to know, right? in terms of logically, and what he would do, it is a hard statement to justify -- 25,000 on the dow. especially if we look at what has been happening so far with markets. if you look at the top 100 companies right now that has been the most reactive to polling in terms of coalition -- correlations, apart from financials, most of the higher correlations are tied to clinton numbers, which tells me the markets are having a much easier time assessing what her policies are going to be and what her outlook in the actual -- actual, indexable changes that she will make will be. that is no projection about her policies. here, the companies have strong correlation to clinton numbers, not trump, probably because they are more interpreted on her side, and also because she is had more strength in the polls. alix: the same question for stocks -- you take a look of the

bloomberg. one-month implied volatility versus realized volatility for the s&p. it has a higher. it is around brexit levels. it is around evaluation levels we saw in august, 2013. from this point of view, oliver, are equities reflecting this kind of uncertainty? think there is no question. you look at the 30-day realized volatility. it is about 20% higher. if we are roughly 20 vix right now, historically speaking, if we hit the average of what we do, we should get up to 24 vix throughout the month of november. i do not think -- unless there is a trump victory, there could be a spike in vix, the higher general volatility, i do not think it is terribly surprising. part of it is the anxiety overall. even if clinton does win, as my boss said, it is not just

closing the door on volatility and unknowns. there will be people trying to figure out what exactly she is going to do. david: exactly, oliver, and the situation was made more complicated when we learned about the new fbi investigation because it raises the prospect that if hillary clinton is elected president she will have a hard time getting her policies to use that markets are not good at pricing in political risk and are they taking this into account -- a clinton presidency th might not be able to get anything done? i think what happens, a constitutional crisis -- what are we dealing with here? this is hard. it is uncharted territory. we've never had his come out this close to election day. i think the market is starting to price this in. there is hope that whoever is in power will do what is right for the economy. i think the market is pricing in a high risk premium. typically struggle, it is hard to see how bonds can keep selling off. treasuries will see the safe haven demand comes in. david: great -- alix: recep, thank you.

priya misra, sticking with us. oliver renick, thank you. authorities in des moines, iowa, say two police officers were sitting in their cars when they were shot and killed ambush-style. the shootings took place two miles and 20 minutes apart. police say they are still in doubt -- developing information on a suspect. des moines officers are working in pairs for their safety. anyone else's has come up with conclusions about the final moment of the malaysian airline flight that went missing more than two years ago. australia's transport safety board says the boeing triple seven might have fallen at 27 feet a minute at the end of the fight, and a look at debris says the plane was not configured to land when it hit the water, we can -- weakening speculation someone was at control until the end. there was an agreement to

postpone the congressional trial of president nicolas maduro. hammered bys been triple digit inflation and a shortage of isaac food and medicine. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. david: thanks. itsng up, oil falling to lowest level in over a month as data shows rising supplies. will opec finalize its planned production freeze at the end of the month? and the fomc will release its latest decision later today. will it provide further hints on a december hike? that is all ahead. this is bloomberg. ♪

alix: today we are putting

gasoline as the other future in focus -- the colonial pipeline shutdown -- 1.6 million barrels of product that cannot make it to the southeast. this chart tells the story -- the price difference between gulf coast gasoline prices and east coast prices. you can see the spike right here is a colonial pipeline shut down. at issue, you have the supplying the gulf coast that needs to get out. that is why you saw prices wind up spiking. how does the gasoline get out -- rails, trucks, ships? our costs cheap enough to get ito this cheap enough to get -- cheap enough to get it to the east coast? we will be tracking it closely as we go. now the trade of the day and that has to do with gold, breaching $1300 an ounce. we are joined by -- how much more juice do we have in the last four days as we head to the election? accepting gold.

strapped together a nice winning streak. flight to quality is all over. global equities are continuing to selloff hard. with election results coming in a way, we will see gold prices push up to 1350 -- get in the range of consolidation. there is a move ahead in the gold market. markets hate uncertainty. we saw the volatility index spike quite a bit. we know the fed will most likely not do anything here. it is all the focus on the election, uncertainty, policies to come. me, howip it around for much of the recent buying is sticky? meaning, what is the recent downside? mr. streible: once we pushed through 1300, if we can hold that, i would anticipate that is the key level support. if we see something that we have seen before in the election, those types of policies continue forward, we will probably see

gold prices continue to selloff. the fed will raise the rates in december. gold prices will go down, 1250, 1200. as we build momentum higher, if someone is long in the gold market, they may want to hedge themselves with the options. you always want to buy the looking at.e is i think the path of least resistance right now on the gold market is to the upside. alix: phil, great stuff. appreciate it. coming up, the probability of a november rate hike is only 16% right now, but will the fed and janet yellen surprise us? we will discuss the key things to watch in the fed statement as we found the drug toward december -- drum -- pound the drum toward december. this is bloomberg. ♪

david: this is bloomberg. i am david westin. we have breaking news out of ford motor company -- importing auto sales for the last month, down 11.9%. the estimate was 11%. you see they are trading the premarket, down .5%. fiat/chrysler was down earlier, more than the estimate. ,m was down, but only 1.7% against an estimate that was significantly larger, up north of 6%. this is the overall trend -- a flattening out of the growth in auto sales in united states. we see what they were predicting, seeing where it is coming in. alix: replacing cycles. uncertainty surrounding the u.s. election has overshadowed other key events at the fomc november meeting today and the bme meeting tomorrow. pyramid is a agrees with most economists that we will see a hike in december. she joins us now. what we have seen now, in the

boe meeting and the fed meeting speaking to this -- the rise in the 10-year premium. if you look to bloomberg, you can see what happened the last few weeks. the premium is negative, but it is inching toward zero as global bond selloff. what is your clinician for this? ms. misra: i think this is the ofket pricing in the end monetary policy -- accommodation, and the movement of fiscal policy. i am not so sure about the fiscal policy side, but what is clear is central banks are not chomping at the bit to do more. talk about tapering from the ecb, the boe, there is a chance they taper tomorrow, but likely they will keep rates unchanged. the fed is talking about hiking. chart, all at the the dips in the premium or when the federer of the fed or other central banks were doing more qe. as if that way, you see this right. a chart of inflation expectations shows a similar thing.

as the move heaven from monetary to physical, you can see inflation expectations rise as well. it is consistent price action. david: you mentioned fiscal policy, and you weren't so sure about that. we know monetary policy has supported asset prices. ms. misra: right. david: what happens if they do not make the handoff smoothly? ms. misra: i am more concerned about risky assets in that situation -- the support to risk has come from monetary accommodation, then fiscal policy growth. if you do not get the fiscal handoff, i think growth struggles. we are barely growing at 1.5% gdp. acting growth stays here or potentially -- i think growth stays here will potentially decelerate. unless there is concern about rates, treasury would be a great buy in the situation. that is where the uncertainty is. that is where the election plays in. you get a democratic sweep or public sweep, there is --

republican sweep, it is much more likely to get a consensus. alix: what happens to the term premium? ms. misra: it will rise to a point. i think rate investors are thinking what if we do get significant treasury issuance? what if the deficit is significantly higher? here? buying treasuries if growth expectations do not rise, i think a lot of overseas investors that are struggling with a domestic bond curve being below zero, they will find treasuries at 1.85 very cheap. it will then start rising, and then come back all the way down. might be forced to jump back in, or at least slow down the pace of hikes. there is financial bound, and that is my taper tantrum was a perfect example. we realize as much as the fed wanted to taper fast, the

economy did not lead it because you did not have the handoff. it is a difficult question facing, i would say the global economy, but certainly rate investors --what point do i jump in and say rates are high enough? do i think there is not enough fiscal policy, and that is why i think the election is critical in that question. david: where does leadership -- global economic leadership come from in this new world? the fed has been a dominant player. ms. misra: david: is it --ms. misra: right. david: where does leadership come from? ms. misra: if you look at the economies and where the potential is to make a difference, you can make the case for europe, make the case for the u.s. do we have a political structure to get us there? you have the italian referendum, the french elections -- it is had to see politically how you can get that done. our hope is it would come from the u.s.. that you with you some leadership that we have to work

together on something like fiscal stimulus, spending on a construction. there is consent. let's not bogged down by reteach -- repatriation, tax reform. let's get that down. i'm hoping that is where leadership is coming from. also japan, we have stable leadership, let's get something on the physical front. alix: you mentioned yield attracting investors because they need the yield. japan is a great example -- yield curves moving higher, a huge moving the guild market. german bonds are backing up there. do those yields become just as attractive? why does the money flow in that? ms. misra: it's global bond yields are higher, the money does not come into treasuries at 1.75. basisman bonds are at 50 points, maybe treasuries look more attractive at 2.10. our view is a lot of the german bund back up has not been about fiscal policy. there is no hope about near-term

fiscal policy. it is about ecb taper. that is why mario draghi was clear he does not want a significant backup. it will be a slow taper. december ecb meeting is important. that is when he can tell the market it is a slow taper. it will stop the backup. i could argue german bonds will rally. tomorrow, the boe could do the same. banks havecentral calm the markets -- we are not doing more, but nowhere, we are not tightening. i think that will stop the bond backup and treasuries will see that demand. alix: fascinating. priya misra, head of global right strategies at td securities. we are moments with the open of trade in the u.s.. s&p futures down ♪

alix: this -- david: this is bloomberg. i am david westin. you can see the dow is down 34 points.

the s&p futures are down just two. both are coming down after a protracted down days -- the most in three months. nasdaq futures are actually up half of a point. switching over, we look at the pace of. the pace of against the u.s. dollar is down significantly. this is off of the polls coming up that indicate donald trump may be the next president. the race is tightening their. the 10-year is down one basis point. finally, gold is back under 1300. there has been a basic flight toward safe assets. what is going on with the markets as they are trading? alix: seconds into the trade, we see a little bit of selloff as the global selloff permeated early trading. the s&p off by 31 points. yes and p off by three. the nasdaq off by seven. it could be worse. we have paired losses into the open of trading, however in the individual markets, the story

truly is all about gold. you have the dollar around the lows of the day. dollar-yen seeing its biggest rally in about six weeks. that story is about the potential of a trump presidency. gold up $10, bleeding into gold miners, including barrett, newmont, and goldcorp. you have the stronger gold moving filtering through two stocks. of theless, the theme day is still going to be about the safe haven trade, david, as we are just days away from the election. david: indeed. we will turn back to the earnings -- alibaba sales came out today, beating estimates as cloud revenue more than doubled for china's biggest operator of online shopping malls. profits also topped estimates, just a week before singles day -- a big event where they sell a lot of stuff on alibaba. we now go to bloomberg's global tech reporter, selina wang. welcome. they did a bead on global

revenue and earnings per share, but it looked like they did better on the earnings and the revenue. selina: they did. they did not report growth merchandise, however. they decided they want this to be an annual metric because i think a big story about alibaba earnings was that we are just an e-commerce company. the other earnings we have -- we want to pat attention to digital media, other initiatives. david: talk about cloud computing -- that is one of the headlines -- how they may have gotten --it is a little like amazon. selina: it is still far behind amazon web services, but it is growing quickly. you see triple digit growth. it is a small portion of the business, but they are really investing in this part of the company. rate of like given this growth and the narrowing losses, it could reach profitability next quarter, even. david: where are they in the core business of merchandising?

selina: it is very strong. they have really strong margins. global monetization is increasing. they are honing in technology, targeting ads toward users. we see huge growth on the social app, alive-streaming app, i place to construe -- a place to consume content. david: for their competitors -- is we chat becoming a competitor? selina: they are trying to combine social commerce with shopping. sent.is alibaba, 10 they compete with a lot of -- in a lot of ways. in terms of e-commerce, alibaba is still very much the behemoth, far ahead of competitors in china. david: what is growth coming from? talk about cloud computing, but if you are jack ma, what are you counting of the next quarter, the next year, the next three years? selina: they are looking at a

10-year view. e-commerce continue to be strong. it has the market share. they want to grow that. they put huge investment digital entertainment is this. they formed a new media group. a $1.5 billion fund for this. jack ma invested into steven spielberg's production company. they are all over the place. they see themselves as more than just an amazon or ebay of china. david: it is not too bad being jack ma today. thank you so much to selina wang of britain is. -- of bloomberg news. is set to report earnings after the bell today, and mark zuckerberg said he wants facebook to be a video-first company. let's take into facebook in today's "the numbers don't lie." the facebook nation is huge -- as you can see from this breakdown over the last three years. you have daily active users --the yellow bar.

the monthly active users are the orange bars. the total users are the blue bars. pettus is reaching 1.7 billion users. mobile users are very critical. facebook is 84% of advertising revenue from handheld devices. the company really has morphed from the world's largest social network to the owner of popular mobile apps ranging from facebook to whatsapp, messenger as well. each has more than one billion users, except instagram, which has half of a billion users. you can see the growth in all of their bases, including whatsapp as well as messenger. capitalizing the eyeballs is key for facebook. average revenue per user rose 33% in the second quarter. a huge directory since 2011. jumpedfor north america 54%, while europe grew 30%.

facebook is not immune from controversy. here are the video ad sales and growth. the estimated growth is coming in at $2 billion, but the company said it overestimated viewing time and that matters because big brands are pouring at dollars like crazy into online. almost half the spending is going to google and facebook alone. what specific area attracting money is instagram. this is potential instagram global ad revenue growth. that growth could be over $5 billion. really a huge surge in the next two years. another potential revenue driver is whatsapp. the number of people using messaging services globally may top $2 billion by 2018. steady growth over the last four years. facebook has yet to monetize a different messaging platforms, but if it is able to crack the

code on them, it stands to garner the largest share of revenue in the world. pps andistinct a potential streams of money allawi roundup of investments in futuristic -- delisle a -- allow a ramp-up of investments in futuristic programs. for more on what to expect from facebook, eric sheridan joins us from their offices in new york. i laid out a lot of different metrics we need to watch today when facebook reports. what is the most important one for you? mr. sheridan: it comes to advertising revenue growth. as he went through the court, we see upside potential on ad revenues versus the way the street has the model now. that'll be driven by instagram, video, as well as e-commerce, something you did not talk about as much. as of the big three drivers -- upside on ad revenue, as well as

how they talk, quantitatively or qualitatively about that is going to be the big impact. alix: what will be the risk? the numbers they report are huge. the numbers they report continue to grow. where will the cracks be? mr. sheridan: with large cap internet names it comes to investments. the companies are ambitious. they have 10-year agendas. portfolios are getting bigger every year. 20 look investments, vr, internet activity -- they talk about initiatives in the enterprise space with respect to data centers -- those investments and how they are absorbed by investors broadly, in terms of how they flow through the margin numbers, are always a risk with these names. that as yourikes me watch facebook and google -- growing- google is

mobile advertising dollars, and there is not mover --mobile advertising dollars left for anyone else. at one point -- at what point does that become a problem? are the two: they largest, and there is a battle meetings to long-term about where ad dollars go. we have seen more growth than we expected through the first two quarters. google surprise to the upside last week. think facebook will do the same. that battle gets pushed out to 2017, 2018. you are right to highlight that is the key debate investors face unsustainability of growth estimates his compound. alix: you have a buy rate on the stock -- $155. how do you value it? what metric? mr. sheridan: we look at it as you talk to cash flow.

facebook has gotten cheaper, especially against the growth it produces. on one-year forward numbers, you are talking about a 20's pe multiple. that is pretty healthy growth multiple.20's pe the multiple has compressed over worries about it is, worries about sustainability of growth. the longer facebook can beat those expectations and its ecosystem continues to poke in moread dollars -- pool in ad dollars, we think that will move higher. david: eric sheridan, thank you so much. internet analyst at ubs. coming up, what is it like for a company that depends heavily on government trade enforcement for its business? we will speak with the ceo of u.s. feel and how the elections could affect his business. bloomberg. ♪

emma: this is bloomberg daybreak. later on bloomberg, special coverage of the said decision with tom keene, scarlet fu, and joe weisenthal. ♪ alix: we are about 13 minutes into the close of trading on this wednesday, and overall equities are negative -- utilities, financials leading the s&p lower. it is the seventh straight day the s&p is falling, the longest losing streak since november, 2011. the nasdaq far off, but not the worst of the bunch -- off by about three point. for more, abigail doolittle joins us from the nasdaq. wegail: good morning, alix have.

--alix. let's take a look at a couple of winners on the open -- shares of the networking and storage company are higher on that is broadcom will be buying brocade. discipline broadcom more from in the cloud -- this will put radcom more firmly in the cloud space. another winner on the open -- electronic arts, this on a quarter, beating earnings by about 23%. they also raise the full-year review. you also have their raising the -- there raising the tie -- price target, suggesting the stock could move up by more than 10% at current levels. the panic, the strength is all about the company's flagship game titles. alix: think so much, abigail doolittle. overall, dr. relatively soft.

evening, a special interview with warren buffett, the berkshire hathaway ceo. he will sit down with david rubenstein. he spoke about his growth in the u.s. r.: you think it is possible to grow between 2% and 5% in this economy? mr. buffett: it will be possible, but 2% growth -- 25 years, a generation, we will add maybe 18, 19,000 dollars of gdp per capita -- a family of 4, 70 5000. we are just beginning. alix: that was warren buffett speaking with david rubenstein. you can catch the full episode airing at 8:00 p.m. in new york. just the of growth for warren buffett it always optimistic. david: he does love this country -- it is nice to talk to him. uplifting.

six days away from the election -- talk about uplifting, according to a new bloomberg politics poll, hillary clinton holds a slim lead over donald trump, with independence, in a poll conducted after the news of the fbi probe. these are national polls that tend to show things tightening -- the abc/washington post poll at 1%. nationally, it looks to be tightening. possibly, it is the electoral college. which states are you focused on right now? steve: there are five big states right now that clinton needs to win that trump would need to win if he has a path to the presidency, and they are florida, ohio, north carolina. those are the big three. after that, there are some other groupings of states that could get him there. iowa, nevada -- pretty important. we have seen him going to the midwest a lot more the last couple of days, that he thinks

those are states he might be wisconsinke off, let -- like wisconsin and michigan. david: we saw hillary clinton will be spending money in michigan, which we -- she was not planning on doing. let's talk about ohio and florida. steve: swing states -- no different this year. early voting has been started. mixed news for hillary clinton -- early voting is hard to decipher what we can read out of it. both sides cherry pick numbers and say they are winning. a few things we do know -- in florida, the hispanic vote is off the charts. already, more hispanics have voted in florida than the entire 2012 election in florida. that is indigo for hillary clinton. a lot of those voters -- a big deal for hillary clinton. a lot of those voters are turning out for her. that is good news for her. in ohio, they had a smaller early voting window -- the time

you could show up in the polls, register, and vote on the same day. that shortened the window by five days. democrats use that well. we see that impacting numbers. numbers are down. there are questions about whether african-american votes in particular will turn out in ohio. david: since last friday, 1:00 p.m. eastern time, the news has been about the fbi and the discovered e-mails on anthony weiner's computer. do we have any indications about whether voters have been swayed by this developer in florida and ohio -- this development in florida and ohio. steve: we do not have clear information. the race had been tightening a few days before that as well. we have been seen as the final days come together, the race was starting to poll closer. i think we continue to see that.

whether it is because of the fbi, or people are finally making up their mind and choosing who they are going to vote for, is another question. we have not seen huge swings in the polls that suggest is doing detrimental damage. i think more of what we are seeing when we look at all the polls is that people are choosing their sides. publicans are going home. democrats are going home. this is turning out to be a more traditional election. democrats may swing these key, competitive states. point, doesis selector house of representatives going democrat is often table? yes, i think at this point democrats will admit they lost momentum in the final days. they needed a huge wave of support in order for the house. the senate is still in question. the house, i think we can say is off the table. david: steve, thank you for being here. at the top of the next hour, bloomberg markets -- vonnie quinn, what we looking forward

to from you today? vonnie quinn: we will be speaking about politics, and the letter that 300 economists wrote senator donnelly trump presidency would be a disaster for the world economy. simon johnson of m.i.t. will tell us how the trade channels will be impacted, and how it donald trump does indeed become president we will see a recession in europe quickly because of trade and wobbles in emerging markets as well. we will also speak with vincent reinhart about the fomc decision that will come out later today. of course nobody is expecting anything major, but we can see a change in language, or some kind of signaling and messaging. the market, at the very least will give us a surging. we will also look at south africa, because our developers there as well. david: thank you very much. we will be watching. we will be back shortly. this is bloomberg. ♪

alix: this is bloomberg daybreak. we have some key events today. after the bell, earnings from

whole foods, 21st century fox, aig, and facebook. plus the fomc two-day meeting ends today. tune in to bloomberg at 2:00 p.m. for live coverage of the latest physician, and pounding the drum for the boe tomorrow and jobs friday. david: can't wait, and then any election on tuesday. quite a lineup. time warner working out with earnings earlier today, topping estimates and raising its outlook as the turner division benefited from higher cable these people we are joined by paul sweeney. welcome back. do you think there might be sellers remorse -- maybe he should have held on given these numbers? paul: we got off the conference call. they felt good about their results, and feel good about handing out the company to at&t in good shape. across the three main businesses, they saw pretty

solid results for this quarter and their outlook for the fourth quarter, which allow them to raise guidance for profitability. good: maybe at&t feels about the price they paid as well. paul: as we wrote, they paid a full price relative to other transactions. they are getting some of the best media assets in the market. david: talk about the year you mentioned until they can close the deal if they are lucky. what sort of restrictions might the justice department put on at&t? paul: the justice department will look at the transaction, obviously. the question is whether the fcc will also look at the transaction. that is unknown at the moment. the department of justice is going to do a similar review of what they did with comcast when it bought nbc universal several years ago. that is to primarily make sure at&t will make the content available from time warner to all district it is -- all players, and not disseminate. that is the basis for the comcast/nbc universal purchase.

alix: will any other readers come in? -- bidders come in? paul: people think a technology company could come into play -- apple or google. just bewkes try to play down any speculation on the call. it appears not. full value -- it makes strategic sense for both sides. it looks at the stocks are trading fairly well. it does not appear, but again, some people are thinking in the back of their mind might the apple or someone like that that might come in. david: you mentioned verizon's of the world saying they want access to time warner content. what about the reverse? program providers that want to make sure they get distributed and not disadvantaged? paul: at&t is a major distributor of programming going forward, if in fact the world is really going to contact -- content dealership on wireless. if that is the weight is going to be, you can bet the department of justice that at&t,

across its dissolution platforms makes all content available to consumers on even playing field. avid: it is probably not coincidence that disney said we hope regulars take a good look at this. alix: i am sure it is not. paul sweeney, bloomberg intelligence. we 25 minutes into the session --let's get a check in the markets. it is lower on the day, modestly lower, recovering from the global selloff we saw earlier in the session. however, this is the second straight day of down days for the s&p. if that continues, it is the longest streak since 2011. in other asset classes, the dollar around the lows of the session. the dollar-yen climbing higher. ♪\

>> a.m. in new york, and 10:00 p.m. in hong kong. on vonnie quinn. nejra.m welcome to "bloomberg markets."

vonnie: we are going to take you and washington to london cover stories out of austria, germany, and china in a next hour. a new bloomberg politics. as hillary clinton holding a slim advantage with independent voters. with less than a week to go before the election, she adds more campaign stops. trump rallies today in miami. nejra: the race for the next u.s. president titans. stock markets around the world author. european shares falling for an eighth day. vonnie: still a big day for the federal reserve. why the meeting is likely to pass with little fanfare. we will be watching closely for rhetoric whether december will be in play.