mark: i'm mark crumpton with first word news. the associated press reports mark judge says he will cooperate with any law enforcement agency that investigates him constant -- confidentially that dr. ford says judge was in the room when brett kavanaugh assaulted her at a house party when they were teenagers. a statement through his lawyer, claiming he had "no memory of this alleged incident. was a dramatic development in the senate judiciary committee where lawmakers today voted to send a judge kavanaugh supreme court nomination to the polls senate with the request from arizona republican jeff flake. with ave been speaking

number of people on the other side. we have had conversations ongoing for a while with regard to making sure that we do due diligence here. properhink it would be to delay the floor vote for up to but not more than one week. continueto let the fbi -- to do an investigation limited in time and scope to the current allegations that are there. ions that are there. mark:mark: committee chair chuck grassley said he told senator flake that he would advocate for the position but i don't control it. the last republican lisa murkowski and west virginia joe supportsay they the delay. at the white house, president trump said he will defer to the senate on how to handle judge kavanaugh'sj confirmation vote. the deputy attorney general rod rosenstein has agreed to speak privately with house lawmakers.

it is not clear when the meeting will take place. republican leaders say they had asked him for a meeting and threatened to subpoena him if he refused to answer questions. rosenstein will meet next week with president trump following reports he discussed secretly recording the president. the european union is offering $46 million to the u.n. palestinian refugee agency to help educate children and provide health care in the west bank and the gaza strip. the move is intended to help fill a $217 million budget shortfall left after the u.s. effectively ended its $350 million contribution to the agency. israel accuses the organization of perpetuating the refugee crisis. meantime, the when's top -- the when's top humans rights agency's has alleged violations and crimes of war-torn human over the objections of saudi emirateshe united arab

and the government itself. the three arab nations were stunned by a report last month that said they could be responsible for war crimes. the move came despite days of negotiations to seek consensus between the group and diplomats from the arab states. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪ scarlet: from bloomberg world headquarters, this is "bloomberg markets: the close." i'm scarlet fu. caroline: we are 30 minutes from the end of the trading day. let's check on the markets. s&p 500, pretty flat. a new communication is on the downside. sectors have been rising

toward this end of quarter p we are up seven percentage points on the quarter with an the likes of health care leading the charge. i'll are, flat as well. we did see an edge lower after for showed it caused august. yields down one basis point. that on the u.s. treasury. how we will see treasuries going forward. oil up 1.2%. remains on course for the longest run in four months. scarlet: to that end, looking at the different groups, oil changed on the day p it utilities and real estate, best performers. the drags on the downside of you added up, the s&p, little change. italianthat tracks stocks off more than 3.5%. the italian populist have presented this budget deficit proposal that had italian banks stocks declining and tallying bonds selling of your seeing the weakness translate into the declines of italian stocks.

tesla, we will be talking about this later on. off by 14%. the sec filing a lawsuit against elon musk. it did not name tesla as a defendant the tesla and elon musk are one and the same in many people's minds. caroline: plenty more discuss. it is time for our top calls as we look at the biggest movers on the back of analyst recommendations. first up, evercore partners think its price target to a street high of $400 come is a 50% upside. the company is on the cusp of becoming the ai standard platform. up, raising the price target to 130 eight dollars from $110. seeing improvement in sales of earnings. closing with home depot. finally, city downgrading tesla. lowering its price target to $225 to the analysts warning about a downward confident spiral on the heels of the --

against elon musk. scarlet: let's stick with tesla for more on tesla to we are joined by jeff osborne, he currently raised tesla underperformed with a $200 price target. how do you value the company at this point? it is producing metal threes and needs to ramp that up, but you don't know whether elon musk will stay there, what will happen next. where not sure without elon musk whether the company can raise cash. certainly, it is a game of choose your own adventure as to what the outcome is. whether elon stays or not remains to be seen. it is difficult to call at this point. amy's -- and they need to raise $2 billion. in terms of valuing it, most people go out to 2020 assuming they will have a certain level of profitability. they have production issues, and investigations are running -- muddying up the waters. caroline: who is calling you? who is most worried? jeff: bondholders. that is where the near term

liquidity is. over $200 million due in november. a big chunk, $920 million at the end of march. scarlet: how might this end well, including elon musk? what is the likelihood he will settle and things can go back to the way it was? or is the genie out of the bottle and that is not possible? jeff: i guess you could go back and settle the offer he turned down. i thought there were intriguing elements to it. the two additional board members at the sec was seeking. that's a wild card people were not considering. this is not just going after him. it implies the board has culpability with the issue. again, it is a choose your own adventure outcome. in the near term, we have them running out of cash next spring if they don't figure this out. caroline: the ceo was on earlier saying he is fed up with the board and it is the board's response ability. how long have you been concerned by corporate governance? say the first

whiff of concerns started with the acquisition where there was a lot of question marks raised three months ago. caroline: his cousin who runs it. jeff: exactly. he had involvement in it. caroline: now on the board. jeff: yes. there are issues that surfaced then. it died down for a while. now, it has exploded after this $420 week. scarlet: how big of a threat are the conditional automakers, whether it is audi, general motors, ford? they have been making inroads with their own electric vehicles tesla has advantage could we have seen them closely cap quite a bit. jeff: i think the issues, the past two years, the ev's available's are going after the birkenstock wearing, latte drinking -- scarlet: that's a good crowd. jeff: the ego crowder now that you have the germans coming in and mainly driven by the lack of diesel sales, they need to hit certain co2 targets. , german mercedes

come up or coming in aggressively. it is mounting for sure. scarlet: plenty to jump and because the senator john cornyn has said senate republicans have agreed to a one-week fbi probe looking into judge kavanaugh and the allegedly assault of dr. blasey ford. republicans have agreed to a one-week kavanaugh fbi probe. the senate will hold a vote tomorrow on the kavanaugh nomination. that is after the nomination passed through committee. they will indeed have a one-week kavanaugh probe, so things have slowed down a little bit here as the republicans concede to senator flake's request. caroline: he will see plenty of drama of on capitol hill. drama when it comes to corporate's as well, we were talking about tesla with f osborn. you were talking about the competition ramp up. let's talk about the deliveries that might ramp up this weekend. we have concern over the leadership of tesla going forward. and you look at the fundamentals if we see the models getting out of the door successfully?

off: there are two elements the production side. the factory itself were less court a they may 20% of the cars in the tent. that is not normal. then there is delivering the cars to the customers pick elon has pleaded that that is the bottleneck. they are making their own car carriers. it is innovative and they certainly have -- the issue is that getting paid and delivering the cars is how they get the cash could not producing the car which was the issue a few months ago. there is still some work to be done in the months ahead. scarlet: our thanks to jeff osborne, it analyst at callan. we will keep you on standby for any further developments on this tesla story. we also need to keep you updated on what is going on in washington. senator cornyn has said the republicans have agreed to a one-week probe on judge kavanaugh be of the senate will be holding a procedural vote tomorrow on the kavanaugh nomination. we know the fbi would need the white house's request to reopen a background check. that is still forthcoming.

at least from the senate republicans perspective, they have agreed to the one-week fbi probe of judge kavanaugh. caroline: quite new developments abound. it seems as though this might ease the concerns of those republicans who are wondering whether they can push forward as even very credible, the president himself quoted, the credible testimony of dr. ford yesterday. scarlet: he will keep you posted on all the developments are new york, this is bloomberg. ♪ oomberg. ♪

caroline: time now for the bloomberg business flash. a look at the stories in the news right now. shares of intel are rising today, the world largest chipmaker. they will increase output. usel is adding $1 billion to capital budget this year. its ownwill offer version of a basic economy fare. the u.s. carrier says its success is at risk if it does not match the discounted tickets

being sold by its rivals pay the new pricing system will be rolled out next year. it will retain services like free wi-fi and a carry-on bag and items at no charge. blankfein spent his last night as ceo of goldman sachs honoring someone else's achievements. he attended a benefit celebrating john leonard, the doctor who treated him for blood cancer three years ago. that is your business flash update. scarlet: let's get you an update on the breaking news out of washington, d.c. john cornyn says republicans are agreeing to a one-week kavanaugh fbi investigation. let's bring in an adjutant who joins us from capitol hill with the latest. how would this work if the senate republicans have agreed to this one-week fbi probe, but happens next? the fbi can't open it up without any intervention from the white house, can it? president trump has said that he will depend on a recommendation from the senate judiciary committee on whether

or not to open this fbi investigation. the republican agreement to go forward with this seems to hinge on an agreement that it would be a well decided investigation and will last for sake of my week. but it would have a determined time limit. it is not clear that is what has been agreed to. it definitely seems to be the thing that is meant to lend legitimacy to the process and should judge kavanaugh still be confirmed, it would be able to clear any doubts that this was -- this allegation was thoroughly investigated. caroline: we have 20 seconds. important that mark judge will be giving evidence? anna: yes. he was the one in the room. he was one of dr. ford who said he would say whether or not this happened. his lawyer did send a letter saying he does not recall that event. that that could be a different response if he is asked by the fbi. caroline: live from washington, we thank you very much. we will be keeping a close eye on judge alison to preside in

case.sk fec a look at tesla, down 14%. it's worst day since the number 6, 2013. this is bloomberg. ♪ ♪

caroline: this is the account under the close. i'm caroline hyde. joins usjoe weisenthal to you have been keep an eye on the inflation targets. joe: it is not the most exciting day in the world, but i think it is interesting that after the fed hike, we continue to get inflation data that is kind of cool. reading, not seeing the signs of upward pressure. we also get cpi later and all that stuff. i do think we should keep an eye on any possibility that

inflation data doesn't play ball. caroline: interesting that tesla spending was not looking quite so pleasant at one point. scarlet: kind of cold a little bit. if you add it all up, not doing much for equity markets. at least today on the last trading day of the third quarter. there is a lot of motion. but it was in a narrow range. really, you have little changed for the major indexes. within the industry groups come up by better than 1%. this week we saw treasury yields get to as high as 3.11% on the 10 year. have come back in since. financials and materials are your big lacquers. -- laggards. down by 4/10 of 1% on the day. facebook. it little bit under pressure. we are just moments away from the close to we want to take a deeper dive into all the action with our markets reporters could lisa, get us started. lisa: i'm watching jetblue. you know you have to pay for everything you have.

it will start to join the trend next year offering a no-frills potential fliers saying, if you want to keep flights but you don't want to be able to change your seat or board early, check it out. you can see the shares got a pop from it. they have turned negative. basically, jetblue's president said we don't like this approach, but this is the way the world is going k.g. can see spirit airlines which is notorious for charging you for having a back on the airplane with you has done really well this year. gained less than 5% year to date. jetblue has lost 13%. it seems like investors are saying, look, get with the program. people want to be able to pay less, even if they sacrifice elements of the experience. abigail: let's take a look at facebook. the shares of the social media company, the worst drag. s&p 500 and nasdaq. lower on the day. down 2.7%. the worst day since early

september at the lows. down 3.7%. this on the news that came right thatd 1:00 before 1:00 there was a security breach involving 50 million users. this is not new. but it is big. by comparison, another security breach in 2013, 6 million users. differs in the data privacy issue but it is certainly adds to the woes of the company. take a look at this. down 9.4%. back in july, that was the big quarterly disappointment on the idea that the cost of doing this is for this company could be different. one thing they have done, they are talking about cutting. if they decide to take the security issues, that could raise the profit structure to hurt the company and the shares to investors not liking it. romaine: i am taking a look at snap. shares down getting close to what would be a record low. they had the ipo last year at $17 a share.

it has been a bust. they topped out at $20 in february. they have been below their ipo price since march. this is not the decline we are seeing today, it is not an anomaly. in july.d we have seen 12 straight weeks of gains. there have been several catalysts. a couple of big. they cut their price targets after it surveyed a bunch of high school students in long island who said they love snapchat, but they hate the ads and called them "awful." there was a note by suntrust who knocked down speculation that amazon would be interested in buying snap. there was a note by scott galloway at new york university who said -- you talked about the andine and daily users, basically said they were facing this stiff competition from facebook, instagram, whatsapp, and finally, there is this news the wall street journey -- a journal that they may be planning an ipo. they are in the workplace. there is this concern that a deep-pocketed slack could spread its wings into other people's turks. including snap.

caroline: fascinating breakdown. tech across the board. we thank you our markets team. is having its best quarter we have seen in five years. the weakest sector of the quarter are real estate come in the red, and materials. health care and industrials are the winners. there with more is sarah has like. health carey, hitting the post from technology to we have a new leader of the charge. sarah: we do have a new leader. if you look at the breakdown of the winners, you have health care, industrials, and tech and communication services are neck. when you think of health care, we have had highflying biotech companies. that is leading the charge. industrials is pretty interesting. when everything happened with trade and tariffs, everyone kept saying, if that happens, you want to get out of industrials. industrials happen to be the second-best performing sector this quarter. maybe not. joe: what are we thinking,

earnings season will be upon us before we know it, what do we see about how investors are positioning in thinking about that? sarah: if we look at the sector play out, it's interesting because if you look at consumer staples, they have had a turnaround as quarter. they are up about 4.5% this quarter. falling in the middle of the pack. if you look year to date, they are the worst performing sector. you can see as we have been getting further in the year, people are starting to position more defensively to we have been hearing calls from the likes of morgan stanley and other forces on wall street that you might want to position yourself more defensively. we have seen that in consumer staples. scarlet: especially with gains of at least 7% this quarter and for the year, and the nasdaq up 16.5%. a lot of people have made their money for the year and can afford to sit on their hands. sarah: i think it's amazing. if you had not been paying attention to the markets, i think you would probably bet we are down. everyone talking about trade and tariffs on all these negative headlines coming out of d.c. is the fact of the matter

that the s&p 500 is putting in its best quarter since 2013. it is counterintuitive. the market has been so resilient. pretty amazing to see. the s&p 500 up about 10%. caroline: real estate, left behind. sarah: real estate has not been left. i think it has to do with where we are in the cycle people know that what is the point of going to real estate right now if you can get your money out of higher growth sectors? some people are calling for value per even in there, there is no love for real estate. we continue to see real estate and materials as well get beat up. scarlet: sarah pond zach, stick with us to we will bring in tom latham a global advisors head of research as we approach the close. it sounds like we are climbing a wall. there's a lot out there to be concerned over. sincehe best quarter 2013. is that an indication that there are more games to come where we can continue rising in spite of these headwinds?

bestyesterday one, the conditions to put money to work as when there is a wall of worry. we follow on a slope of hope. going into the fourth quarter, we know that this has been a tough year for active managers care there has only been three sectors are performing the s&p. it has only happened five times since 1920. it is really rare that there is this leadership. i think there is fomo or performance chasing. that is great for stocks. joe: what happened the last time there were only three sectors outperforming the s&p 500? not good news for the following years. i think it is bullish this year because there is chasing. but narrow markets are signs of something underlying wrong. if we look at through december times thisen happened, it had more than a double-digit drawdown. caroline: are we getting any signals? is that what you are hearing? sarah: i think it is

interesting. as tom is pointing out, we are definitely seeing narrow markets. a lot of times when i speak with active managers, they point to the fact that correlations between single stocks are at their lowest levels. a stock pickers market. if you look at the numbers, look at large cap, active funds, most of them are not outperforming. tom: i think it is the worst year since 1998. even: that shows you come with stock correlations pretty low, it is hard for active managers. joe: when is that going to happen again? tom: i think it will happen next year. a free sector leading year, next year will be closer to the -- closer to six or seven. most managers will have a great year. scarlet: people are so accustomed with going to pass him funds that will they make a

switch. tom: the passive funds will blame the breath of the market. [laughter] scarlet: there you have the closing bell. we are second away here. for the quarter, big gains. at some of the best performers and worst performers for the quarter, put her is down 35%. amd is up by 106%. it has been a crazy. for -- crazy period for amd. caroline: i want to dig into the numbers today in terms of what is playing out with technology. performers the worst when it comes to technology stocks in the quarter. i want to get your take on when it comes to twitter technology. is it time to get out of them entirely? facebook is pulling back on more concern.

tom: there could be a long-term , i don't think that is the case, but for the last eight years, investors in tech have gotten confidence that monopolies are more sustainable. monopoly could mean high profit margin or slow growth. scarlet: this week, we had the new sector of communication services. that didn't really change anything. most people have positioned themselves for this. sarah: right. said thereople had were dislocations in the price action. some people are saying bloomberg example, saidor we could see some of the older telecom names like at&t, centurylink, gets a boost

because people are piling into xlc.funds like excel see -- joe: what he looking forward to watching next week? sarah: next week we get more earnings. i'm interesting to hear from constellation brands. joe: are they earnings next week? sarah: they are. this should be a fun one. not because of the numbers but on what they could say about pot stocks and what i could do to the market. joe: we're gone 10 all minutes without talking about but stocks. scarlet: i think we can bring it up now [laughter] are you long pot? tom: i'm not. i know society as long pot. i was surprised that there were big hedge funds trading as a theme. there needs to be serious research into it. scarlet: they're starting it or -- >> they are heavily involved.

we have a question coming from one of our viewers syria ands you expect to hit 900 bucks by the end of rium to hit 900 bucks by the end of the year, do you still? underperformed every single liquid token by more than two standard deviations. since the inception of the token, it has been a big rally signal. herenk it is a great risk but $900 is a stretch. you for sara, thank joining us. thank you for your perspective on the quarterly performance. i'm glad we brought up crypto with pot. joe has been writing about this

in business week on the parallels between previous bubbles and what we are seeing now. joe: i have a business week article that we will be talking about later on the comparison between cannabis and crypto. in the meantime, let's get back, specifically to the crypto chart. i have a chart on the terminal that looks at some momentum indicators for crypto if we can bring it up. maybe we don't have it. here he go. scarlet: ask and ye shall receive. the tom, when you look at big point chart, you have been while, on crypto for a we have hit this 6000 level numerous times. each time we bounced back, we keep having lower highs off of the bounce back's. chart oflook at the lower highs but the same floor, what do you see? tom: it looks like it is dying, right? just getting. a level thatl is

is more important than we realize. have this year, when you 6000 break even for bitcoin mining, that level is a roughly one-times book and that is very good news. i think there is catalyst into your end. despite the highs, i think we are reversing. scarlet: what kind of catalysts are there? tom: one, this new exchange called ice backed will be launched. it will be one of the first really good regulated exchanges. around that is a constellation of work being done by these major investment banks to build products that support it or work with it. institutions are ready to get involved. we keep hearing berkeley lost their main crypto banker this week and goldman sachs was going to get into the

space. tom: we i'm not sure goldman's statement is what is happening. i think they have their own pace of how they will move forward. i think the public has views it is way ahead or behind. that is what is being calibrated, but they are marching forward. major institutions get mode if fomo ifrison's -- get bitcoin rises. it interesting how the tilray peak point sides with bicoin's low. joe: i noticed that. yes. between this interplay pot stocks and cryptocurrencies, is this concerning? a lot of people say that there is a lot of excesses. think there is always

speculation. that is the nature of markets. i do not think it is unhealthy that there is speculation. it is a good sign because that is risk appetites. i think it shows managers in a narrow stock market one to try to find it where they can. cannabis and crypto are great emerging markets. i don't know the size of the cannabis market, but comparing it to 70 trillion for a traditional market, you can see why -- joe: overall view see signs of exuberance or is it local pockets here and there? tom: i think there is complacency. we have nine years of really good games. abel made a lot of money. the complacency today of the growth stocks have made everyone all the money. shift is that if interest rates rise, you need to position for value.

i think trade is noise and it is good for the u.s. now. scarlet: what is the least correlated asset? tom: crypto is still a low correlation asset. it is a low correlation against bonds and equities. if someone is trying to generate alpha, that is a place to find it. joe: but it still needs to go up. tom: correct, you don't want the correlation to go down cut everything is up. i think you have to stick with one's that ever-glory tori clary . -- regulatory clarity. money butnot really it is a decent exchange. joe: appreciate you coming on. calmly -- tom lee. i spoke to peter atwood on the

similar -- same topics. scarlet: that does it for the closing bell and that does it for me. romaine bostick is stepping in. more on the sec going after elon musk. this is bloomberg. ♪

caroline: live from the world headquarters in new york, i am caroline hyde. of how theapshot u.s. stocks closed today. we are flat on the quarter. joe: the question is, "what'd you miss?" caroline: facebook takes a turn

for the worse. they discovered a certain -- security breach that hit nearly 50 million account. there is of a euro crisis, italian assets come under pressure after a budget deficit target was set to threatens financial stability. sec is going after elon musk for his tweet about having funding to take the company private. must also called a stir in may with a bizarre call taunting wall street analysts in favor of different questionnaires. >> we will go to youtube. these questions are so dry. it's something we will solve within a month.

next. if people are concerned, they should not by our stock. i'm not here to convince you to buy our stock. are you guys going to let porsche be due to market with their supercharger? >> ask questions that are not boring. caroline: that was not a wall street analyst. ceo --he founder of a founder and ceo of a millennial channel. may earnings call with him is ok first sign that he wasn't with his usual balanced demeanor. it got worse to say the least. what you think of them now?

i hope he has learned from the situation. i think it's important to know nothing new has happened. this is the consequence of the tweets and they were undoubtedly a mistake. the sec's reaction appears to be a little too harsh. joe: we've seen the stock get slammed on the prospect that in the worst-case scenario, e line to be forced to leave and never be involved with a public company on this level again. in your view, is there a tesla without elon? >> there is a tesla, but it is a very different company. i'm invested into tesla because of elon musk. it's more of the betting on the jockey than the horse. tesla has assets that make it the bible company. it has a car factory in fremont and a battery factory. stores, andwork of supercharges, so i think this is really exciting even without

elon musk but having him make the different company. romaine: everything you laid out is the foundation of this company. what if they brought in a more sustained manager who does not have the dynamism he has? >> i think that's what needs to happen. they need a coo like glenn shotwell at spacex. she has done a phenomenal job. i think tesla needs someone like that. the other piece of interesting news we got today is that electric is reporting there is over 51 model threes -- 51,000 model threes. it looks like they are hitting a target. joe: according to reporting, it looks like the actual production of cars has gotten smoother. week not that the 5000 per every week, but the little more consistent. now the question is on the logistic side, getting them out of the door. more stories about

the delivery rather than the production. the end of the day, these are growing pains. they deliver three times as many cars this quarter than last quarter. they are going through growing pains now. caroline: can a $45 billion company afford to have growing pains? they have to build its own transporters. that seems start of like. i think it is a $45 billion company because it does have growing pains. this is justifying the premium valuation. i'm a growth investor and understand that it won't be perfect the hallway. i think tesla is constantly learning and improving the process. this pace sets them apart from traditional automakers. romaine: i will ask a bonehead question about that. you're talking about the company with $12 billion in debt. they have cash issues so how

deep back that -- factor that in? >> at a high-level level, tesla is early in its product roadmap and they're not at maturity or scale. that is why i don't expect them to produce a product. they are in startup mode. in the long run, this has the opportunity to be one of the most profitable automakers because their entire distribution model is different. romaine: what is the long run? i think tesla could easily raise capital. saudi arabia wanted to invest in the capital. if elon musk wanted to raise money, it would be easy. he just said he does not want to raise money. --: if you get a trench chance to ask a question on the next call, what would it be? >> i usually crowd source questions from my retail investors. i don't have anything on the top of my mind. seeline: we will have to

how you continue to crowd source and what they will be asking you to ask next. galileo, thank you for being on the show. for more, we welcome the former ,enior counsel to the sec thomas. thank you for joining us. you talked about how this complaint to the sec is disappointing. talk to us about your viewpoint. thomas: thank you for having me. centered on the nine were tweet. the rest of the 20 pages of the background and surrounding facts that do not do much to the central issue, which was what does it mean when mr. musk said i'm thinking about taking the company private, funding secured. everyone talks about funding secured, two words. they forget about the preamble. the preamble was i'm thinking

about it. that does not mean he has a done deal. the does not mean he has a stack of papers from investment bankers. i think that is getting lost in the verbiage. romaine: that is a fair point , but do you think the sec is taking issue with what he said or the medium he used to say it? thomas: i do not think they are taking issue with twitter. the company had filed the proper forms a couple of years back to be able to use twitter for this kind of communication. i think what the sec has done here is that they did a nice job of doing their investigation quickly. it usually takes a long time. i differ on their conclusion here because what they are tabletto do is drop a for a standard corporate deal on top of what mr. musk was already doing. that is not where he was at. to allege that, well he didn't

have this and this, which we usually have, is not the answer to the question. the answer to the question is did he tell the truth when he said i'm thinking about this, funding secured. have funding available from the study will fund and he has a track record of raising lots of money for this company. i do not see any problem with those words. joe: if he had put it in a press release instead of a tweet, it seems that would have been staggering to read that. in your view, the way he characterized it is fine in any format? thomas: i think the way he characterized it is not the stuff of an sec enforcement action. if they have a compliant officer for company and they ask if they should do it this way, i think no. there are better ways and safer ways to do this so you don't turn out to have the problems that you have.

is this an sec enforcement action? no. we have to keep separate the difference between good compliance and how you want to do good corporate governance, versus what you want to charge in an sec enforcement action alleging fraud. caroline: that's a great insight coming from thomas gorman. thank you. meanwhile, breaking news. susan collins is saying she backs the one week fbi probe of judge kavanaugh. the judge being put forward for nominee of the supreme court. we know lisa murkowski is the other key female republican also has been saying she backs a break for an fbi investigation. this is bloomberg. ♪

caroline: time for a bloomberg exclusive now. as tension between china and the u.s. continues, there is a possibility of permanent damage to the relationship. talked to our next guest about china's move. >> we are dealing with a different china today than a few years ago. china is now an economic competitor to the united states and the security competitor to the united states. it is using its capacities and capabilities to exert influence and long-standing spheres of the u.s. influence. china isonomic side, almost a $14 trillion economy. it has not opened up like it should.

it is untenable for china to say that the world should keep their companies chinese companies. there's a lot going on. believe this trade war does not benefit anyone. impasse, it is a serious thing. way, moree a better effective way for us to get the opening remarks and we are doing right now? saving face is very important. i don't think there is an easy way, but the best way to do it is to work with our allies to exert pressure. to exert pressure that way as opposed to tariffs. not only is it a public

competition and issue, but the other thing about tariffs are people focus on the short-term impact which is attacks on american consumers. i think we do not pay enough attention to the dangers of a long-term impact. want tos and countries do business with the united states because we have reliable stable, economic policies. the question is, is china going to start looking for new markets for which they will buy soybeans , presumably in africa. concernedoing to be that they need to protect themselves if there is another tariff war. what about the foreign companies? are they going to want the u.s. to be a supplier if they think the united states will come in and break up supply chains. as a foreign investor going to

want to build a plant in the united states if they are afraid of being in the middle of a tarot -- tariff war. there is potential riskier. ofpplaud the objectives opening up the market. past efforts have not been as , icessful as they should be worry about the long-term impact. caroline: that is hank paulson speaking with david westin. he says he says he's worried about the long-term impact. joe: at some point, there might be. romaine: but so far not. caroline: that it's -- it is the best quarter since last year? romaine: elizabeth quarter since 2013. joe: and the headlines were not good on the trade front. meanwhile, we will

talk other geopolitics. this is bloomberg. ♪ bloomberg. ♪

mark: i am mark crumpton with first word news. senate republican leaders have agreed to delay a final vote on brett kavanaugh to allow time for a net b.i. investigation into the sexual misconduct allegations against him -- an fbi investigation into the sexual misconduct allegations against him. another background is to be completed by the fbi by october 5. a senator of arizona demanded the delay. 10.committee voted 11 to >> we have to make sure we do due diligence. this committee has done a good job, that i think we can have a

short pause and make sure the fbi can investigate. the associated press is reporting mark judge said he will cooperate with any law enforcement agency that investigates confidentiality. christine blasey ford said judge was in the room when brett kavanaugh assaulted her at a house party when they were teenagers. last week, judge issued a statement claiming he had "no memory of this alleged incident." --ay, during an overall pro oval office incidents, president trump was asked about yesterday's testimony. >> i thought her testimony was compelling. she looks like a very fine woman. i thought brett's testimony was likewise really something that i have not seen before. inwas an incredible moment

history of our country. turkey is accusing the u.s. of not sticking to a deal of a syrian backed kurdish militia to withdraw from a syrian town it liberated from islamic state. the deal was struck in june to diffuse tensions and calls for the militia to leave the town and for joint turkish u.s. controls their. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. joe: "what'd you miss?" after the 2008 grass, investors embraced the gospel of boring -- crash, investors embraced the gospel of boring investing. wrote about this in the latest

issue of business week are white crypto and cannabis are the perfect post crisis bubbles. i asked him in wide some of the people are embracing marijuana legalization. , if youhole movement look from a historical perspective, has ties to period of weak social mood. there are a lot of of similarities with what we are 2018g with cannabis in that resonates and rhymes with the late 60's. you are seeing it politically, socially, economically. many of the same underlying mood issues. joe: it has been rising for a while, support for cannabis legalization, but it has taken off like a rocket. >> after the banking crisis, you end up with people angry at the banks.

there is a broader issue which is that they were angry at the establishment. companies moste successful since the banking crisis, they all have some o opposition to the establishment whether it is uber, airbnb, tesla, amazon. you put bitcoin and cannabis right at the tail end. in a very enthusiastic -- capable of thinking abstractly. joe: i didn't think of tesla as an antiestablishment. you see the believers and jellico about the company very similar to bitcoin. let's talk about the markets. we saw this incredible surge for the cannabis stocks. how do bubbles form? some of these companies have been public for a while. if you go back to months ago, a lot of these were sleepy

companies and then the next day the people cannot get enough of them. >> bubbles only happen at peaks in confidence. they are a manifestation of our ability to think abstractly. there are a couple of elements to it. i think of it like the seed and the soil. you have people excited about innovation, the future, and are thrilled to extrapolate about what could be. the up into me of that was bitcoin. thate -- the abu dhabi of itomey of that was bitcoin. cannabis is another what could be wild west scenarios. joe: we can look at the market cap of a constellation brands that is highly successful as a liquor company, it is a $40 billion company. it is not facebook or amazon territory.

even when you go to the big liquor companies, there is a limit to where your imagination can go. >> that is one of the things that severely limits the potential of the cannabis bubble versus bitcoin. comparables and no limits to what it could be. to your point, you have tobacco companies, up the hall companies, and the likely intervention of the government. if this grows, they will want to impose taxes on it like they did when they repealed prohibition. joe: it's funny you mention prohibition, that is another thing that out was illegal andughout the entire world then prohibition was only repealed in 1903. -- 1923. >> this only comes to fruition as mood falls.

not necessarily in the same antiestablishment, but devices. when mood is low, anything goes behaviorally. you start to see more vice related activity that people are not in opposition to. and, to the extent you can monetize it so much better. joe: you are talking about the bubbles being associated with a peak in confidence. one thing that characterizes the market these days is that, looking at the overall market, it is hard to argue we are in an overall bubble. areoes not seem like people buying everything hand over fist without a sense of discrimination. it feels like they are localized whether it was crypto last year, cannabis this year, what do you make of that? that they pocket up -- pop up here in there? >> it speaks to the issue of what mood do we really have.

1990's, there was an underlying, positive mood. even the most wild, crazy things, we bought. you have a fair amount of anger and hostility under the surface out there. you see it in the political environment. howink that limits enthusiastic we are going to be. what is so interesting about both between and cannabis is there is a fear element to it. i'm using cannabis for anxiety, of depression, for escape what is going on around me. i think that is an important element of the things we are attracted to, these pockets. joe: that was my conversation with peter atwater. my piece in the latest edition of bloomberg businessweek. caroline: and also read. ad.nwhile, -- awesome re

meanwhile, five star parties have agreed to budget deficit next year at 2.4%. that is higher with the eu markets have expected. let's bring in an analyst. frederico, thank you for staying up late for us. it looks like the finance minister who is this adult in the room has lost and the fiery populist one when it comes to spending -- won when it comes to spending. >> this is a major defeat but the minister. we know he's not resigning, at least not imminently at the request of the president of the republic. i think that is good news for investors, but on the other hand, he lost credibility and can no longer play the role of a moderating force in a cabinet otherwise dominated by skeptic figures. envision thatu

you going along with this program? >> i think it is unlikely. i don't think the european commission is looking for a fight at this point. i don't think anyone in brussels is trying to make an example of the government in rome. what they are looking to do is to ensure eu fiscal rules remain -- retainy credibility. debt.has a huge public brussels would like to see a decline. i think it's likely we will see some pushback from the eu and coming weeks. romaine: how much of the anxiety is about the number itself? 40 basis points ahead of the target. versus the symbolism of them

clogging the 2% in a dramatic ting the 2% in a dramatic way. federico: this is an interesting case study of the first instance of the populace, skeptic government coming to power. both parties in the ruling coalition have dropped their demands to leave the euro. they are now moving to implement spending. i think this run the risk of market conference and derailing a fragile economic recovery in italy. mistakes are high which is probably why we see a sharp reaction. romaine: markets took it in stride today. i'm curious whether the market reaction could become more severe as we were to move through the process of this.

also, is there any evidence there could be contagion beyond italy into the rest of europe and outside of europe? to answer your first question, it is likely. we will see some pushback from the commission in coming weeks, in which the government may be attempted to respond by deleveraging to bolster support domestically. we could see a more confrontational dynamic between the government and the eu. also, the government will have to compromise. neither of the parties want to have another recession, but yesterday's decision tells me they will probably only do it after more significant market pressure. pressureo see how much they need to get before the government changes course. that's will determine the

contagion going forward. caroline: thank you, federico, for staying late. thank you for breaking down the moves in italy. breaking news relating to cbs. the new yorkng state attorney general has requested information regarding the investigation into les moonves. they put out a statement saying they continue to conduct a full investigation of the allegations in a recent press report surrounding the former ceo. the company is getting a seat -- regarding-- subpoena the subject matter of the investigation. they say they also have a new york state attorney general requesting information about the matters. from new york, this is bloomberg. ♪

caroline: republicans aren't agreeing to delay brett kavanaugh's confirmation boat. i went lower a one-week investigation into claims against the nominee. sahil joins us from capitol hill. will they be able to investigate more than just the claims of dr. ford? >> they will start with those claims. that is an allegation that is overlaid this entire nomination process so far. it was a subject of the hearing yesterday. a weakness not seem like a long time, that in 1991, when there was an allegation from anita thomas,inst clarence the fbi completed that background check in three days. a week should be plenty of time to consider that. the fbi may have discretion to consider other allegations. the statement by the judiciary committee, on the republican side, specified that discretion would be limited to present

allegations credible. it did not specify which ones. that leaves room for the fbi to consider allegations from two other women that accused brett kavanaugh of sexual misconduct. joe: when judge kavanaugh was asked about the prospect of an investigation yesterday, he said the last 10 days have been the hegest days imaginable and said these were false allegations emerging during that time. over thecerns that next week, more names will come up and have an endless list of things they need to investigate? sahil: i've not heard those concerns. i have heard anxiety bordering on destination --. desperation he is leading support in public polls across the country among americans. they want to get this nominee on the supreme court before they get to a situation where his vote for comes seriously and out.

out ofnted to proceed committee tomorrow. the reason they couldn't is that the republican senator from arizona demanded an fbi investigation before he is willing to support the nomination. cornerre backed into a saying the fbi is allowed to investigate. they will do a supplementary background check to consider these new allegations and put it to rest. republicans have allowed one week for that and hope to wrap the nomination up as soon as possible. romaine: is he the only holdout or are other republicans holding out the potential vote on this? sahil: shortly after he called for the delay and an investigation, he was supported by the republican senator from alaska. after the deal was struck with the judiciary committee, a democratic center cannot out to support it -- senator cannot to report it.

susan collins also is supporting it. there is enough support to get this investigation done before they move forward. they don't have the votes without an investigation at this point. that is a significant development. that did not appear to be the case this morning. caroline: we have been discussing this with lisa hill and trump will order an fbi probe into the kavanaugh allegation. that's being reported by cnn. sahil, thank you for your reporting. ceoloping now, the tesla has asked his employees to test the full capability. this is as the sec goes after mosque. and a hall -- dana hull is in our conversation. is a positives

statement. all companies testing autonomous onving technology count hours upon hours of real-world driving under real-world conditions and computer simulations. there are not enough hours in the day to do it well unless you have drivers. also testsley technology internally before releasing it to the public. they want to do significant hours and that is a smart move. companies doing self driving has spent massive amounts of money and time and are still not really there yet with autonomous driving. tesla is much more cash constrained than they are. do they have the capacity to catch up with google, toyota, and all of these other entities? tesla's current system is a driver assisted system. tesla has a lot of miles on autopilot under its belt.

that is really valuable data back to they can use. they are not. driving yet though. -- hype around self driving they are not self driving yet though. the hype around self driving, everyone is trying to get this right. everyone needs to do a ton of testing. i see the cars around san francisco all the time. the fact that tesla feels like they have the chip capable is a positive development. they are asking employees to agree to test 300 to 400 hours by the end of next year. that is significant testing needing to be done. romaine: with everything that has been swirling around musk and the executive departures, how much of business as usual is going on at tesla in terms of production and projects underway? is business ast usual at tesla. a will be delivering a lot of model threes this weekend.

they have volunteers to help them out. the autopilot engineers are working on autopilot. all of the drama around the sec surrounding musk and his board, it is not impacting the day today operations of the company. companyame time, the has had a lot of executive departures. the investigation makes it harder to higher. this is a big hangover on the stock. it is big drama that is obscuring everything else. caroline: $6 million wiped off of their markets cap. dana hull, thank you. let's keep talking tech because facebook's wild week deepens. their engineering team discovered a security issue affecting 50 million accounts. that allowed hackers to take over a person's account. mark zuckerberg addressed in the issue on a call. >> this is a serious issue. we have already taken a number of steps to address this.

we are patched the security vulnerability to prevent this attacker or others from stealing additional access tokens. we invalidated the access tokens for the accounts of up to 50 million people affected. caroline: for more, let's bring in our bloomberg opinion columnist. first of all, with this 50 million potential threat, shares are up on the week, how much of an issue is it? >> it remains to be seen. from what we heard today, it seems like facebook did the right thing and has discovered a pretty sophisticated attacker or attackers the targeted the security vulnerabilities. we potentially had the possibility of taking over tens of millions of accounts. facebook does not know if any accounts were hijacked in this way which is disturbing. we will find out more in coming days. the issue of course is that

anytime we have any issue with facebook involving data security or data privacy, regulators get involved, investors get panicked , users wonder if they are justified trusting facebook with their personal information. it brings up all of this baggage facebook has. joe: facebook was barely up on the week and is still massively down from the highs. it is at 164. what is the core issue? >> the core issue is that investments -- investors believe facebook will not grow as fast as it has been, and it will not be as profitable as it has been. that is the issue. some of these vulnerability issues are part of that investor revisiting expectations because facebook said revenue growth will not grow as fast in part because of users changing

privacy settings. facebook is also spending a lot to secure facebook from propaganda and misinformation weighing on margins. these scandals are having a financial impact. romaine: i know growth may be slowing, but it is still a juggernaut dominating global ads, web ads. our beginning any sense they are losing market share? >> that is a fair question. no is the short answer. it is still a powerful force in advertising. which isads still work why you see the company growing so fast and advertisers devoting large portions of their budget to it. joe: we started off with the news of the departure of the instagram founders. how big is that? >> i think it is big. facebook has become very dependent on growth from instagram. instagram will not fall apart tomorrow because of the founders

-- joe: you think it will register even more now? >> they can. the possibility is that now that meddling instagram founders are out of the way, they can do whatever they want with it. the instagram founders were important internally in being also moral beacons and they were influential in product decisions. losing them is a big deal. caroline: great opinion. thank you. breaking news the kavanaugh situation on capitol hill. kavanaugh saying he will continue to cooperate. calls,ve done back on yet answered and we now know they will take a week break for an fbi investigation. we understand trump will order the fbi probe into kavanaugh allegations reported by cnn.

jay powell speaks to the national economic annual conference on tuesday. joe: and i will be watching jobless claims on thursday. romaine: and september jobs report on friday. caroline: this is bloomberg. ♪

>> i'm brad stone in san francisco. i'm in for emily chang. this is "bloomberg technology." coming up in the next hour, security breach at facebook. the media network says 50 million accounts were affected by an incursion allowing hackers to take over a member's account. the sec is suing elon musk over his tweet suggesting he will take the company private sending shares into a freefall.