♪ >> i am jenna dagenhart. president trump says he has a the fbi probesas allegations of sexual misconduct against his supreme court kavanagh.udge the president says he is still hopeful that judge kavanagh will be confirmed by the senate and he had this not want to discuss -- and that he does not want to discuss alternative nominees. the u.s. supreme court began its new term today under a cloud of uncertainty over judge kavanagh's nomination. the justices will hear 42 cases doing their nine-month term. most of them are low-profile but early next year, the court will

likely revisit the issue of gerrymandering. the justices might also consider whether president trump can resume deportation protections for young, undocumented immigrants. defense officials say that secretary james mattis has drafted land to visit china amid rising tensions between beijing and washington. mattis plans to visit beijing next month for talks with his chinese counterpart as well as secretary of state might -- secretary of state mike pompeo and his chinese counterpart. the brexit talks are stuck on how to avoid custom checks on the irish border. bloomberg has learned the united kingdom would back down on its opposition to a new checks on goods moving between the british mainland and northern ireland in return, the entire united kingdom with stay in this eu customs regime. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

dagenhart. this is bloomberg. ♪ scarlett: from bloomberg roth headquarters in new york, this is bloomberg markets the close. i am scarlet fu. carolyn: and i am caroline hyde. we had a rally coming up on the market, up .25% on the s&p 500's, industrials, energy and others up. beenof the markets have shot for holiday in asia, but japan has had a great day. europe also in the green. the msci all country world index is also up as well. the pound is coming off its high come up went 7% of one point as the ukip prime minister is said to be preparing to make a

significant new brexit offer to the eu. we are hitting a new high in terms of yields. investors are really worried about the potential friction between the italian populist government and the eu over budget deficits. scarlet: we saw the etf track that best etf that track canadian stocks, and mexican stocks. gone up 4%, now it is only up to about half a percentage. ge stocks have also rallied for the most in a nine years following the ousting of its ceo and replacement with larry culp. lookyn: time now for our at the big movements on the back of analyst recommendations. ups, the price target remains $128, still further to go. next, berkeley cut intel's

rating to underweight, saying that market tailwinds are likely to reverse. the price target has been cut to an extreme low, $38, from $53. then, highflying valuations, rice target has been set to $400, it is currently $440. new nafta. mexico, canada and the u.s. have reached a new trade agreement. scarlet: after more than a year off tough negotiations. the freshly named u.s.-mexico-canada trade -- is waitingre for final congressional approval. says the wilbur ross new deal will spur a windfall in the auto industry. >> we have lost a quarter of a million jobs or more in the auto parts sector. the are going to see a vast majority of those coming back. scarlet: u.s. president trump and canadian prime minister justin trudeau both touted the

agreement on both sides of their border. we welcome josh ring growth from ottawa. this doesn't quite have the same ring as nafta. canadian dairy farmers though, do not necessarily come out of this matter. >> that is true, although it sounds like they will get a big paycheck in the mail pretty shortly. the canadian foreign minister had a press conference a short while ago as that we have compensation coming down the pipe for all the dairy farmers who will be affected by this. this is normal, both the anger among dairy farmers and the bio fit that comes with it. pretty much everybody expected ,hat they would have to give up and trudeau's argument is we should focus on the best majority that is waived, rather than the little sliver that i agreement. the so far, it is not taking hold that way particularly among dairy farmers. carolyn: trump also touted this

as being a truly historic deal, talking about the 25% loss of jobs in auto workers in the u.s. and how that will turn around. what has actually changed for the sector as a whole? set capslly, they have on canada and mexico on auto production, but those caps on not anywhere -- they will kick in years down the road. but they will change roles in a with that gives incentives for companies to build with high wage labor. they will have to build a car at portion of the high wages. that may not necessarily bring back auto jobs to the u.s., although there is some optimism -- buthat, but there is it will probably going some way in stopping the flow of manufacturing jobs to canada and mexico. trump will be highlighting that is a hallmark of the deal. scarlet: so the auto sector breath of relief

here. but what about the steel and aluminum, it doesn't get addressed in this trade deal. what is the path forward for ?hose sectors josh: yes, there is a big outstanding issue, not only the u.s. tariffs on steel and aluminum, but also their retaliatory tariffs that canada and mexico put on on all kinds of american-made goods. we are -- some floated the idea of a quota, similar to what the countries agreed to on autos. there is optimism that there could be resolved in the coming weeks or months, but right now, those tariffs remain in effect. caroline: thank you very much, josh win growth, for that insight. coming up, former cbo director doug william -- douglas william elmendorf joins us. this is bloomberg. ♪

♪

scarlett: that is get a quick check of the business headlines. ceo of the biggest drug maker in the u.s., ian read, plans to step down from pfizer at the end of the year and will be replaced by pfizer's chief operating officer. he will continue on as executive chairman. shares went up in his five years as ceo. firm former flagship competitorshind four years after the ouster of its longtime manager bill gross. the fund was down 1.6% in september, caused by the effect of the emerging markets and rising interest rates. a new study says republican voters are more likely to bet on stocks after donald trump's victory and therefore reap the gains on the bull markets. democrats increase to their investment in bonds and cash.

♪ your business flash update. president trump is a have reported, is claiming victory on the international front on the new trade deal with canada and mexico. hethe domestic front though, is facing both of challenges. let us get back to the national association of business economics conference in boston where our michael mckee is standing by. >> thank you very much. elmendorf isam another dean of harvard's kennedy school. we were talking about which is to offer, being in government or in academia. [laughter] you are here to talk to the economist about the situation with the budget and the fact that with the tax cuts and the --nding bill passed, the jet the deficit will be skyrocketing in years to come.

my question is this, so what? in the sense that we have had high budget deficits in the past, we went through it during the financial crisis and it did not bring the country down. douglas: you can run budget deficit for a while and given how interest rates are in the country, you could run them for a little while. . still but eventually as the debt piles up, you have to change taxes and spending to put the debt on a more sustainable path? michael: if that is the case, when do we know it? when we go back to the reagan administration, the big deficits then were going to send interest rates skyrocketing but interest rates went down? douglas: interest rates are surprisingly low down, given the amount of debt that our government has issued. as economists have reassessed the situation, we have a little more time. but we should not waste it. if we wait until interest rates go up, we have waited too long. we need to use a time we have to set in motion changes in policy

which take a long time to do in a thoughtful way. we should be working on that right now? michael: you are a former cbo director come with synonym for , because think, pinata both sides take you on [laughter] how do you take on that agreement? there is athink roiling sea of partisanship, and the more boiling that see is, the harder it is to be in a position. my colleagues will continue to deliver the honest assessment, but ultimately, the congress has to act. the cbo will offer its view of what needs to happen, but congress needs to act which ms. congressional leadership has to act. but they have not been doing that, and i blame the republicans in particular now, because they passed the big tax cut, but they have not found a way to bring tax and spending intercultural alignment. everybody likes lower taxes, but now, federal government revenues

are about the smallest share of gdp that they have been in a long, long time. the last time they were this low on a sustained basis was in the we haveand since then, added social security, medicare, medicaid, and people do not want to lose those benefits. so we will have to raise taxes and also do cuts in spending over time? you are advocating raising taxes qamar think you will get elected. douglas: no, i not running. michael: what will the terrace economy andon the revenue collection? not necessarily the revenue that comes in from tariffs, but also in general? as long as having trade skirmishes and not a trade war, the economy can do pretty well. skirmishes might still be costly in some sectors or regions of the country, they could cause some economic slowdowns, but as long as we avoid a full out trade war, the economy can still

stay ready strong. if we lurch into a trade war with high tariffs and a lot of imports, that dislocation and really slow the economy down? michael: one last quick question, you were in government and you are in academia now. do you think the economics profession is recovering from thehit it took after financial crisis? looking from the outside now, where is economics? douglas: it is important for economists to learn from their mistakes, like everybody else. i think we have learned a lot from the financial crisis. but there are some important things that economists got right. we understood that having a federal reserve system, pushing credit into the system and having a congress -- cutting taxes and raising spending, providing a fiscal boost, those were good things to the economy and they help to bring us out of the recession. caroline: douglas william elmendorf, thank you for joining us today. caroline: we love that pinata

phrase. ofnk you so much to both you. ge, check it out, they have a new ceo, up on the stock market. this is bloomberg. ♪ ♪

♪ caroline: this is the countdown to the close, i am caroline hyde= and i am scarlet fu. joe, you are focused on the turkish lira? day,m. is having a good the turkish lira is up today, their economy getting into balance. argentina is also having a good peso.th the i think if we are going to talk about all of these e.m.'s getting slammed on the way down, we should at least give them the

credit, their currencies are balancing. caroline: it is not the best picture, the. >> that is true, but the currency gains help you. inrlet: if you are investing u.s. stocks as well, you're looking pretty good right now. the s&p 500 is higher, the nasdaq is in the red, down .2%, small caps also losing ground. in terms of industry groups, let us pull this up, we will just do it on the fly, how about that -- the beauty of live television. we are looking at industry groups, energy and materials leading the way. energy is up one point 4%, crude oil continues to move higher. caroline: 80. scarlet: five dollars on the brand contrast. scarlet: and on the downside, utilities are also lower, industrials up by .8% because of ge. we will dig into that a little later let us take a deeper. dive into the equity action with market reporters. remain, what are you watching. >> i would like to turn your attention to stitch fix, their

earnings will come in after the bell tonight. in theock got caught up selloff early this month and was down about 15% from september, a lot of it having to do with the fact that there were reports that amazon was testing a website that was very similar to features that stitch fix has come on online personal styling space. but the shares have really rebounded, four cents per share on epf and 318 million on revenue. that would only be a tad higher than the 317 million that they had in the previous quarter. but still, a lot of folks have confidence in the company. they specifically have a lot of confidence in the ceo, katrina lake, that she can take the company to the next level. shares are still triple the ipo. >> i am taking a look at ge, nobody thought it would be a morning,ay, but this the ceo was ousted.

the market loved the news, despite the fact that it came with a warning, that the decline in the power unit could create a shortfall. shares are up nearly 7%. they are doing a lot better than they have been doing of late. analysts are looking at the news , saying that this is a new beginning for ge and other saying that is not possible to change the narrative around the conglomerate at this stage. we must not forget, ge is struggling, they have lost nearly $500 billion in market cap since its peak in 2000. shares are still trading just around $12 a share at -- and one big endorsement came from the former ge ceo, jeff inmelt. he said that he expects the new ceo larry culp to be a good leader. >> one of the big stock stories of the day is tesla. this is a four day chart, it has been a remarkable few days.

last friday, the worst day for the company since 2013 when there was talk of the settlement by the sec. now, back above $300 a share, and on friday, it was closer to $260. elon musk will no longer be chairman, but he will remain ceo. chanceves investors are to focus on the bottom line. the profitability second quarter, we are awaiting to hear the earnings. we have looked at this chart before, as this seems considering all the volatility, investors have been pretty bullish. the big battle between bulls and the bears that is going on in 2018. more recently, the range between the buyers and the sellers, thosen 250 and 400, higher lows are telling you that the buyers like the stock despite to the big short risk. we could see shares trade back

up to the top range of 400 and even above, especially if they really deliver on their model 3 target and their profitability goals. caroline: that is the key thing. we thank you, our entire markets team. shares of ge got a boost, but this also came after the ceo ousted ceo -- after the company ousted ceo jeff flanery. bloomberg's in reporter, sarah. is up, boeing is up, norfolk, how much are we getting a boost also because of the relief that we have a trade deal? definitely get a boost across the sector. ge is going higher, industrials as well. people have been saying that industrials are ground zero when it comes to trade. ,ut it really hasn't been industrials were the best performing sector in the past quarter right behind health

care. you can say yes, in one sense, it seems people have been getting optimistic about trade. people were always sensing that we would get a trade deal, which is why industrials were able to power along, but they also seem really. >> resilient. >> almost assisted just repeat phrases without really saying whether it is true or not. ge is now up 7%. when we talk about industrials, is ge in its own category with its own troubles that does not really read through to any of its competitors? >> yes, speaking to investors today, people have said that ge is a very individual story, it has been dealing with its own issues over the years, with the turnaround. just not quite coming about. caroline: the power part of the business has also been an issue. >> power can be a market-driven issue, but it is much more than that. is, the power industry, that why they are getting the $23

billion charge and it can be an issue, but there are companies in the industrial space that have been able to capitalize that ge has been floundering and struggling to get ahead. scarlet: ge is only one of 100 72one best ge is only members, and it is no longer in the dow. so it is hard to say that where ge goes, industrials will follow. sarah: i was talking to an analyst today and she pointed out to me that when you look at industrials as a sector, it is made up of 12 industries. it is pretty diversified. ge is one name, however, you cannot extract related above the entire sector. he has aerospace, missionary, she even pointed out that many of the management companies fall under the sector and those are companies that should have rising power. so it is really a very diverse sector. scarlet: right now, we want to bring in brian belski. marketsbmo capital

chief investment strategist. less thank you for having us. i would say this, we have had the great fortune of doing sector research on wall street for over 20 years, that is our claim to fame. i guess what you have to understand is that industrials are the most eclectic sector of the s&p 500. like return on assets and return on equity, that is a longer-term fundamental picture that you need to look at for industrial. when you look at stocks like 3m, waste, rand, management come out with management really has a positive. we have taken up so much capacity from the waste industry -- when i first got into the industry three years ago, there was a lot more best my very first mentor on wall street was

william o neill and he said, when the economy goes up, we create more garbage. and we do. he went more waste management, and also, defense contractors. martin,ook at lockheed 25 straight years of increasing dividends and cash flow, yield slow, that is a good company. >> brian, you made an interesting point, people may think industrials are at the heart of trade tensions but it is hard to see it in the stocks. what is the relationship you have seen so far between trade headlines in anything in the market? that is a great question. we have been overweight all year and we have been wrong because stocks by and large underperformed, but we believe that they have underperformed for emotional reasons, but not for fundamental reasons. we could make the case that, a lot of companies have not raised their numbers yet, and we think numbers could be too low in the industrials ace.

from a longer-term perspective, you need to play industrials carefully because they are neutral with the market. so you by the industrial sector when they have been underperforming and you sell them money have been outperforming on a longer period of time. cycle ofust begun the outperforming. scarlet: so now we have the closing the snp off by a longshot. d russellq falling, an 2000 also declining. some selling resume in treasuries. caroline: we are and i'm interested -- we ended up in utilities and communication services. this relatively new industrial sector has come into play. i want your take, brian. you have been saying that you like this sector. america, whoank of

you just were talking about, also coming with sell. >> the sector was there for a week and now we are in sell? i don't know where we are in the process. i would say that you take a look at the communications sector. there is a big valley. the major themes in communication services as an investment theme is cannibalism. this is all about content. with spect to the rates and utilities, that is an easier story -- with respect to the rates and utilities, that is an easier story. these are assets. rates and utilities have been outperforming for decades because of interest rates. downs, ratess go and utilities go up. amount of massive data that they are still unwinding.

we have had a very skittish pulling manager this year. we have seen more turnover than i can remember. scarlet: when you look at the new communication's sector and talk to investors, a lot of them have already gone in. they knew that the reshuffle was coming up. >> at the same time, on the retail side, we saw people piling in the names like xl c, and a lot of portfolio managers that wanted to get ahead of the changes and get in front of it. what is at plate is facebook. facebook has been struggling since july. it keeps happening and facebook is bringing the sector lower. chief.ew instagram maybe turning it around, but maybe not. people are still seeing the downside to facebook. facebook has a big weight in the sector.

that could be extrapolated to the entire sector. gainern, the other big today is energy. energy stocks are not as hot. they haven't reached their highs of the year yet. >> in canada we are covering canadian strategy and we like canadian energy companies more than u.s. energy companies because canadian companies have not raised their numbers along with oil prices like the u.s. companies. in the summer we had a nice little rally at wti in the u.s. countries raised numbers and then wti rolled over. we are starting to see oil strength. day, supplyf the levels and demand levels are roughly matched. from an energy perspective in america, there is more

stockpicking. in canada, you want to be long in the energy sector because from a management perspective, they manage companies much proven otherwise, until we break out at 85. canadian oil companies and energy companies have proven that they can manage their companies better. dr. ford: interesting that you have -- caroline: interesting that you have this going on today. what about the trade deals that you see? how much of this is a relief rally? >> my canadian brothers and theers know that i call average canadian industry the moral equivalent of eeyore from winnie the pooh. they are always negative. they know how i feel about that. it creates opportunities. it is the most emotional investor ever experienced. of will see the majority

companies in canada where the revenues come from inside canada and are underperforming all year long. the market has already been telling you that this would happen. i believe that foreign investment will come back to canada after this cloud. is underperforming. the average global portfolio manager is underperforming. they left the u.s. because of -- i think canada is the place to be. >> let's talk about canada. -- they'reike obviously excited that things are doing well. they are talking about getting took a restrictive slightly at some point. does that concern you? >> i think that the fed is doing a good job. we have to have a press

conference after every meeting and need to know everything. i don't want to know everything sometimes. t.m.i. i think that the fed is doing a good job. i think they are under promising head over delivering. growth will be higher than people think next year. scarlet: your target for the s&p 500's 2950 and a full target of 3250. not going to change my chart for the sake of it. i put my target out in november 2017. a lot of my other compatriots change it every month. we don't do that. we think we are in a 20 to 25 year bull market. i want to sue the bull case get blown out and we have to have a big core of fourth quarter. 3250. it has been that way since november of last year. there is no doubt that the market will eclipse 3000. number.st a

the trajectory we think is still positive. i think that third-quarter earnings will be good. he won fundamentals not based on any kind of price target. fundamentals not based on any kind of price target. scarlet: tesla closed sharply higher today, following elon musk reaching a settlement with the sec. this agreement allows him to say on as chief executive but bars him as serving as chair for three years. let's bring in the bloomberg businessweek columnist, max chafkin. they have a big problem and need to figure it out. max: you might see it as an opportunity. and teslanvestors employees have wanted a little bit more restraint on elon musk. >> just a teeny.

i think he is part of the brand and they don't want to but the of the sizzle, sec settlement calls for a new chairman and some new directors which will mean that musk has more oversight and some kind of vague plan to keep his twitter in line but we don't know what that will be. >> is there a guessing game or a parlor game for who might be the new chairman? x: there are a bunch of names that have been thrown around, someone brought up former vice president al gore. the likelihood of seeing a big name join the board seems unlikely to me. there is still a lot of uncertainty. it's not totally out of the woods in terms of shareholder lawsuits. we don't know what will happen with this doj inquiry. elon is a wildcard. if you are on the board you have to take responsibility for him. to imagine ar me huge name joining the board but i'm sure that they would love somebody who is the adult

supervision of silicon valley type. people have talked about eric schmidt or maybe an industrialist. and the auto sector is back at number one. it is back at the most valuable auto company. how can it prove it is worthy of that? >> they have to sell a lot more cars. all indications suggest that this will be a good quarter. some gmail's from elon musk leaked over the weekend that to dot they are going pretty well. over 50,000g to be cars but that is very small numbers in terms of .anufacturing on the g.m. scale they have to keep growing and

they have to turn profit because there is a huge amount of debt coming due and they either need to raise money or be in a better position. scarlet: when it comes to tesla, some things don't change. we still fixated on the number and them having enough cash to meet responsibilities. over the weekend you had customers volunteering at stores to help deliver the cars. there are super fans and they like the craziness of the company. >> that does it for the closing bell and for me. romaine bostick will be stepping in. this is bloomberg. ♪

caroline: live from bloomberg's headquarters on caroline hyde. romaine: hamerman bostick. caroline: -- romaine: i am romaine bostick. done.ne: the deal is ceo.s what new ceo has the market expecting to bounce. the nafta rebound3. wide president trump's new trade agreement is no economic revolution. lagarde speaks with us about trade, trump, and much more.

>> general electric shook up naming itss morning new ceo and moving out john flannery after two years. we want to talk about what this means going forward. we have justin bergner. he was only there about 14 months. and this new ceo coming in, with some of the changes flannery put in place, is this going to be a change in the complete direction, or just a change of the figurehead? >> that is a great question. my view is the strategy will not change much under larry coker'-- larry culp's leadership. takenk the execution will a renewed focus on the urgency. larry hats experience from his time at -- as ceo and dana herne.

different accountability and goals for that type of structure. joe: what can he learned from his dana herne experience compared to what we will expect at ge? there is an element of confidence he brings to the market. from his time and dana and i think he proved himself a capable ceo on numerous fronts. in terms of his managerial leadership, grooming talent, running industrial businesses with appropriate incentives and structures for individual business units and driving strategy and folio management. inquisitive on the 60 --ut with some of his successful tenure at danaher. caroline: the debt did not

respond in the same way. it doesn't show how much debt they had. this is a debt-laden company that needs to maintain its tightening. so? they be able to do >> it is a great question. is getting ge through some of the asset management and continuing with -- i think the look atating agencies their strategic plans and wait for that to come into effect over the next year, it should continue to give them leeway because there is a leveraging plan in place. there are some humps to get over. romaine: are they going to give culp the time to do that? they didn't give a flannery the time. >> i wish that i had a crystal ball. news releasesome

suggesting digital sales. that could bring in additional liquidity that should get some cash in the door. with the ceo announced that -- islso announced a new this the so-called kitchen sink and has the new ceo given himself a sufficiently low bar that he can jump over it? thee don't know if it is .itchen sink yet will have to wait until third quarter earnings. i am still very constructive on the stock. i have a buy recommendation.

we have the expectation the stock could trade close to $20 year-end 19. theithstanding all of problems with power, we think the value and the stock is increasingly less related to the power business and more related to the high-quality health care and aviation businesses. the oil and gas and transportation is mrs. which drive another four dollars and value via proxies. caroline: we thank you come at justin bergner -- we thank you, justin bergner. bank in line at $.17 overall but the net revenue is also in line. and the estimate per share is well above the estimate. but now the estimates per share

are tanking almost 12%. joe: they've done so phenomenally well you have to wonder if in line is not enough. romaine: with $318 million in revenue, people want to see more. will have to, she find a way to take this company to the next level. caroline: to take on amazon. joe: you have no sales on the stock, a few holds, that people are bullish. romaine: the stock is up 200% in a year. hours decline, it is not massive but it shows the bar is pretty high. joe: i agree. caroline: the stock performance over the last three months is 61% higher but it is down after hours. this is bloomberg. ♪

>> here is what i'm watching. turkey's economy showing signs of adjusting months after overheating. what does it take for a company to rebalance? it has to improve its terms of trade. when you have a slight showdown in domestic demand and a sharp weakening of the currency, that is what happens. the top chart shows the monthly trade balance. you can see the best trade deficit for turkey in years. when the economy collapses, you start to import less, the currency improves, so the exports to better. this is what it takes for a turnaround. was that the only way out? joe: pretty much.

now we want to see if we get the same numbers for brazil, argentina, to see if they undergo the same adjustment. the same medicine turkey had to take is happening. caroline: it is brutal. romaine: it is what had to happen. caroline: the pain had to be taken. president trump announced a new trade deal with canada and mexico. christine lagarde spoke exclusively with bloomberg about the new agreement. >> she will steal the show from the. she will rescue me. tom: we'll see about that. did you speak with bernanke? >> i did speak with quite a few economists but their intelligence about her, the way that she leads, the way that she works, the way that she operates with teams, that this is the best decision.

fromindonesia is 690 miles bali. imf has a method of helping poor countries stabilize during these processes. indonesia is not a poor country in need of imf services and yet the imf wants to contribute. lagarde: we have rapid financial facilities that can be mobilized quickly when a country is facing such hardships, but that is not the case and has not been requested by indonesia which has the monetary means to deal with the saddening developments that are affecting them. we are also a community of individuals who have feelings and who want to help. languedoc, wer

have a collective fundraising exercise. i will be very clout -- proud to deliver a check next week. we are starting a new round of fundraising for the people of these communities who are affected by the earthquake and tsunami. everybody from the executive board who contributes willie matched 100% by the imf -- will be matched 100% by the imf. this is just reaching out as a community. clock, can you move this back to 60 minutes. let's dive in. there is so much to talk about including trade and the announcement from the president and canada last night. this, talking about

wendell holmes, you have to have courage to go into the wind went sailing. it takes courage to steer that drift. what is the courage required from the imf and your major parties? lagarde: it takes courage to look beyond the numbers and situations. caroline: that was the imf's christine lagarde speaking with tom keene. aston martin has lowered the price range for its planned ipo in london this week. the carmaker made famous by james bond movies has cut the top and by 11%. analysts had been skeptical that aston martin would reach its previous goal. luxury home builders in the u.k. are about to get squeezed. theresa may is looking to impose higher taxes on foreigners.

about half of all residential transactions in london. but by the today company with the most exposure to london. that is your business flash update. come over from the u.k. the british love to talk about the property markets. joe: the irish border fund might happen, i saw something about using blockchain. romaine: if they work cannabis in, we have the trifecta. caroline: that would be a novelty. has this overcome something that has been in the u.s. as well? hasn't been in the u.k. much, but the idea of high end being hit -- maybe it is not so much a brexit issue but a global eco-issue. meanwhile, a trade

deal name. new details on the agreement between the u.s., canada, and mexico. this is bloomberg. ♪

>> the senate will vote this week on brett kavanaugh's nomination to the supreme court. that comes from senator mcconnell. the fbi continues its investigation into whether it's -- brett kavanaugh sexually assaulted women as a teenager in the 1980's. president trump is celebrating a canada, theith u.s., and mexico. the president spoke today in the

white house rose garden. pres. trump: time -- i am using them to negotiate. hopefully we can make a great deal with china, a fair deal. mr. trump called the accord the most important trade deal we have ever made, by far. he said the new agreement will easily pass congress after he signs it by late november. the republican national convention will be held in north carolina's largest city. the divided charlotte city council voted 6-5 in july to approve a bid to host the gop convention. the city hosted the democratic national convention in 2012. in las vegas, hundreds gathered to mark the first anniversary of the mass shooting that killed 50 people and injured hundreds.

the nevada governor brian sandoval addressed the crowd saying today we are reminded of the pain that never goes away. global news 12 four hours per day on air and on tictoc on by 2700powered journalists and analysts in more than 120 countries. this is bloomberg. caroline: trade promises kept. that is what president trump is saying about the new deal between the u.s., canada, and mexico. pres. trump: it is my great honor to announce we have successfully completed negotiations on a brand-new deal to terminate and replace nafta. that is an agreement removes uncertainty for manufacturers and investors and improves labor rights for all northern americans. it is an agreement that will be profoundly beneficial for our economy, for canadian families,

and for the middle class. that we goor more on to the -- advising partner, stefan seelig. profoundly improves. will it profoundly improve very much? >> it is definitely a win for the president, a win for u.s. businesses and workers. we also avoided what would have been a big misstep if we would have exited nafta. is 25 years nafta old and going and he did to be updated. many of the provisions we were hoping to update were included in the transpacific partnership. this is a good step. i think the president is quite right that it is good for the country. i think we should give them our congratulations. joe: what specifically is the win? we are notne,

exiting nafta and putting in cleverly -- in jeopardy global supply chains. joe: we avoided a loss. is we have the fact better access to the canadian dairy market. they are keeping their complex dairy system in place but access will be improved. this could go up to 75% to get tax-free treatment up to nafta. it will become located. -- it will be complicated. romaine: when you look at the way they negotiated this particular agreement, can this be used as a playbook for the other outstanding trade issues, particularly with china? >> i'm not so sure. fundamentally, we are much

closer to canada than we are with china, which will be far more complex. canada is a market economy and an ally. china is operating in a wildly different commercial and economic sphere. i don't think this should be considered a harbinger to a near-term success that the administration is likely to have. the asks are much broader and the systems are more complicated. that will take a fair amount of work. caroline: is this new deal more of a hit? barse that it effectively fromhree members negotiating a new deal because it cannot negotiate with a nonmarket economy? can would say that if we get this behind us and work with our allies to deal with these issues, we will be in a much better position. chinasues we have with are not a factor.

they also affect canada and the eu. to the extent we are not fighting all of these battles at the same time, we will be in a position where we can hopefully make progress on the big fight. critics knock to trump is that this isn't a revolution and is a refurbishment of nafta, but it has a new name and has been rebranded. is it a new deal or is it nafta 1.1 or 2.0? >> it is an update, not a do over. tpp abouthe things in labor rights, environmental standards, protections of i.p., and other standards are in this new deal. if we can do tpp again and collect the trump pacific partnership -- and call it the trump pacific partnership, i would be all for it.

renaming it is great as long as we don't do damage. >> when you talk about the benefit for the u.s., where will we see those benefits? >> the auto thing. we will see how that plays out in terms of increased employment. specifically, there will be benefits to our dairy farmers. be specifically, there will higher standards in this new agreement. it will force canada and mexico to have to adopt some of the rules and regulations that we have. result, not to put our companies at a disadvantage because we have a cost structure that is fundamentally different. that is all good. rallies forsee nice the peso in the wake of this announcement. when you talk about north america, will it be good news

for mexico? >> it will. one of the things we have created in the last 25 years is an unbelievably strong manufacturing block in north america. we make cars. they go back and forth and allow us to produce world-class cars that can effectively compete with south korea and germany. allowing that to continue will the good for this country, good for exporters, and will eliminate the uncertainty of not having nafta going forward. what i have been hearing from clients and business leaders around the world are people who have been sitting on their hands, not making investments, not knowing how this will play out. i hope that the president is right. this does need to be approved in all three countries. my guess is that may be challenging in the united states.

it's going to happen in early 2019. we will have to see what happens with the midterms. we should be hopeful that it gets done. caroline: a sigh of relief to the market rather than euphoria. as we just mentioned, canadian dairy farmers are saying they are on the losing end of the new trade agreement. our next guest joins us from winnipeg to explain. why, if the u.s. is getting more ability to sell into canada, what that means to dairy farmers over there. >> it has been a disappointing day for canadian dairy farmers. they were optimistic that the government would defend its supply management system which matches production with demand. there are no oversupply issues like what occur in the u.s.. that means if there is more american milk, cheese, and cream

coming to canada, there will be less for the farmers there. one farmer called it a slap in the face by canadians who control the amount they are producing to match domestic demand. >> the basic structure of the canadian dairy system will remain in place. where is the alteration? reporter: one of the big things that has been touched on as a win for the u.s. is the illumination -- elimination of the class seven milk pricing. them toit cheaper for buy ultrafiltered milk from canadian producers. u.s. farmers complained their exports dried up and it was blocking them. president trump took up that cause and has repeatedly attacked that policy saying he wants to get rid of it and it is unfair. other producers were saying they

were concerned that extra exports would depress world prices. waselimination of class vii a big win for the u.s.. domestically it is unclear. there has been farming and production in general to respond to the extra demand for things like butter fats. it is possible we could see some of those expansion plans put on hold. farmers are already saying that they had plans to boost their own capacity on farms. that might be jeopardized. romaine: are you hearing about any backlash from canadian voters or farmers with regard to this change that trudeau has agreed to? >> today, there is an election in quebec. it will be interesting to see how that plays out. some are saying this is a bad day for quebec. there are a lot of dairy farmers

there. they are vocal. and the blowback for trudeau, it is too early to know what that will mean going into the next federal election. definitely be a key thing for dairy farmers. they are still picking to the details of this agreement to figure out, dollar value-wise, what this will mean in terms of losses. caroline: thank you very much. did not like how your favorite show ended? netflix is about to let you decide the fate of your favorite characters. that's next.

caroline: verizon is rolling out 5g service to several different

cities. it's the first time a u.s. provider has made that available to consumers. i spoke to the ceo and he said why he wants to win the 5g race. >> we have many use cases. adding fiber to the home, we are adding wireless to the home. it is a revolution of what you can do with wireless. today we want to make the first customers in the world getting 5g at home. it is an exciting time for us. caroline: why is it revolutionary here and now? for the internet of things in the application of 5g it doesn't become a reality until 2019. >> things are happening in 5g. there will be a lot of enterprise solutions. you and me as consumers will get 5g smartphones in 2019 which will be a new experience. factors thatmany

with 5g over 40. now you can have latency that is super low, battery life that can be extended. there are some of the things you can do. we are starting with 5g home because we think that is a new market for us where we can address our customers. caroline: how many have signed up? >> we had massive interest but it is a bit limited. so many people are coming in to check if their zip code is included. we are starting smaller and we will have a global standard of 5g that we want to roll out to the masses. caroline: it is a lot of investment. when does it help your bottom line? >> these technologies that have so many use cases -- we have enterprises, home, wireless customers using 5g. caroline: how quickly? >> i think we will see this over

years. customers are so important and they will be there for a long time. 5g will roll out and we will see smartphones in 2019. volume-wise, into 2020. caroline: the competition is ramping up especially when we see sprint and at&t becoming a competitor with 5g. how do you feel? >> we are more focused on executing all of our assets. we don't spend much thinking about what others are doing. caroline: you have been streamlining your workforce. when might you see this ad to jobs? will the rollout add to jobs? >> right now we are doing this because we want to stay ahead of the curve. program that will give us $10 billion in four years.

they are not really correlated. we want to see that our employees have a great way to take that offer if they want. caroline: that was the verizon hansans whispered ear -- lisberg earlier. now there is a rumor that netflix will allow viewers to choose the plot of a tv show or movie. black mirror is freaky enough without being able to dictate the ending. >> this is just experimentation. netflix has this with a children's show. they have always been at the forefront of this. we can't necessarily say that this is the wave of the future, but it is an experiment people will be watching. >> could something like this open the door for netflix to get into deeper integration? videogames and things like that in the future?

>> there have been a lot of rumors about netflix getting into video games. we have come to the conclusion that they are not. what they have been doing is licensing videogames for traditional tv shows, like minecraft. they are looking at incorporating the choose your own ending element into that. so many people are watching videos on ipads and phones. to be able to move over and click on something, we have never been more able to do that. hand, tv is basically a medium where you want to kick back and relax and not think much. whether thisr will take off. romaine: how much will it cost netflix to move into this? it seems more complicated than a regular television program. >> it certainly is more complicated. when you change the storyline,

it has a cascading effect through the show. you end up shooting more than one ending, for example. netflix has something like 700 shows in development, $700 billion they are spending on production. this cost will be a drop in the bucket. joe: you said 700 shows? i feel like every time i hear that number i am blown away again. 700 shows in development? >> yeah. movies and everything. it is incredible. we say it is the golden age of tv. sometimes it is a struggle just to keep up. someone says watch that and then it becomes a commitment. you have so many series at once. it is staggering. caroline: there are not enough hours in the day. we thank you. it is staggering. 700. romaine: i am amazed at the amount of money they have to spend.

it has been successful so far but at some point, don't you reach a limit? joe: i just want to say i'm not going to do the interactive black mirror. i watched one episode and i was disturbed for three days. even if there is a chance to give a better ending, i'm not interested. romaine: maybe it will be a cartoon. joe: that is more my taste. soaring: japan's nikkei to its highest level in 27 years. it is not the usual suspects driving that. this is bloomberg. ♪

caroline: time now for asian ahead. fallen -- average has in 27 years. what is leading the charge is not the usual winners. >> it is not the usual exporters honda,k of, mitsubishi, and all the names we are used

to. it is more about retailers and pharmaceuticals. it is also to do with the nature of the index itself. we are seeing fast retailing, as well as southbank. they take up about 14% of the nikkei. joe: it is worth noting that the yen has been very weak. if you are an international investor, you are not looking at 27-year highs. guest: now we are hearing that we had a weaker yen. not that much. exporters to get a boost. gb the same time you have g yields that are higher. people are cautious about what that could mean. if you see any change in the yen or day-to-day yields, that could backfire. romaine: i'm still confused about what happened with the nikkei. a couple weeks ago i looked at it was down for the year. i look today and it is up 7% on

the year. what is transpiring? defenses are seeing taking place. we were talking about drugmakers. we can blame it a little bit on the -- as well. buyingties have been into nikkei futures. there is a word of caution. there are leverage funds as well. the leverage fund's-long positions rising to the highest in 17 months. we are seeing the relative index around 71. that is legible -- the level you usually see in volatile territory. charts,ws you the top the stock price and on the bottom the rsi, just past the 70 level.

joe: we could talk about stocks and quan's and cpa's piling in. what is going on? guest: it depends who you ask but when you talk about gdp and spend numbers driving, it has been good. in the second quarter, japan's economy grew at the fastest pace in two years. if we had the gtv chart, i can show you the business sentiment has fallen. you have these large manufacturers worrying about trade concerns. caroline: consumers going there with retail up but some businesses are worried. watch her at daybreak us trillion and daybreak asia. go to the national business economics conference in boston. joe: i will be looking at auto sales, gm, ford, chrysler, fiat and others revealing their

monthly numbers tomorrow. caroline: that is all for what you miss. joe: bloomberg technology is up next. this is bloomberg. ♪

emily: i'm emily chang in san francisco. coming up, elon musk's settlement with the ftc. he is out as tesla chair and he combined will pay a $40 million in fines. we will look at the road ahead. instagram has a new boss. the vice president of product will lead to come to me -- the company, taking over for the founders