trading days. certainly coming off the lows of the mid-day. we rallied to the close in a manner speaking. meanwhile, the nasdaq did see a pain threshold. seems that it is a software andany the likes of adobe the worst-performing workday. tesla also having a very painful day. earlier in mentioned the show. some of the payment companies -- it is the really popular hedge fund stocks that are being hit the for -- hit the worst. just to bring you back into the conversation, the vix as we have seen the u.s. stock market come off its lows, the

stock market also came down. art hogan was telling us earlier that most of the moves we have seen when the bond market is closed on a day like today is that they tend to get reassessed the next day. what he is concerned about is the rising vix and the strength of the dollar. do you agree? alex: i think the biggest picture will be what central banks get up to going into the fourth quarter this year and going into 2019 we are approaching a pivotal crossing over point. since we have embarked on this on orthodox policy, -- and it is policy triggering or could trigger volatility going into next year. as the ecb and the bank of japan pullback, i would be looking out for volatility picking up next year. who benefits from that? large-cap financials.

joe: you talk about the global perspective. the other thing besides the actions of the major central market andt of political hotspot's right now whether it is italy, india and markets getting hit hard as well as china and south africa. turkey has been doing better quietly. to what extent can the u.s. remain at popular strength with so many fires to put out? regardless of the wranglings happening in washington, i don't think there will be much that changes the fundamentals driving u.s. equities higher. that getting reversed. looking internationally, some of the risks concern me. some do not. the areas i am most focused on is -- are some of the geopolitical issues building up

as well as the middle east. they have a growing list of issues that i believe can rock markets. there is talk of triple digits. caroline: jova told off a list of emerging markets, what about the opportunities? brazil. getting some political certainty. potentially -- where is their potential? i'm interested in latin america but i am not brave enough to jump into those waters until the political clouds clear. exciting opportunities i see in southeast asia. i do not think the trade tensions have particularly damaged the backdrop and in the valuations today, they are cheaper than they were in january 2017 before we even had the 40% run-up in gm mark would just em equities last year.

run up in em equities last year. scarlet: are people looking into purchasing brazil? said, peoplee alex are not brave enough to invest in those areas. we know there will be economic aowth in the u.s. so why take leave at this point since we don't have the evidence that the emerging markets will be coming on in the next few days. joe: earnings season coming up soon -- what will be the big thing that will determine if this is going to be a good one for the balls or not? -- for the bulls or not? reporter: maybe estimates were too good in the past and now we

are bringing them down so companies can beat them. we are expecting 20% earnings growth. we will have to match that or beat that. are concerns that we might not reach that. if we come in near 20% we should be fine but if we come down lower, we could really see the market rollover. alex: for me, it is about forward guidance looking into 2019. it is about where earnings are going. the backdrop has been the engine for the equity rally over the last few years. itself deepsustain into 2019 we need strong earnings, forward guidance, and maybe some as well for productivity growth. day like where on a today do we anticipate tomorrow when the bull markets will reopen. greater: that is a

question and we have seen some cap smocks -- cap stocks lower. with rising rates, people have said this is a more speculative area of the market. keep watching the 200 day. tomorrow, if that can hold. people have been watching technicals as well. another line to watch tomorrow when the bond markets are awake. caroline: good to have your perspective here. thank you. up not onlybuilding to saying goodbye to the close of the treasury market today that also what we will see on friday. berlet: the banks will reporting. setting the tone for what we can expect for the rest of the season. we know a lot has to do with tiger input costs. what will be the common thread? alex: looking at margins and discipline on the bottom line will be key. , ittopline revenue growth

is about trading revenues. seeing theks generation of extra? scarlet: what do you think -- you mentioned you are long u.s. financials, how does that compare to the regional lenders? get me wrong, i see value across the space but particularly the large cap. the smaller financials i can see some areas benefiting from m&a action or benefiting from the strength of the u.s. economic cycle but what really drives their profit margins is a steepening in the yield curve. that is where the banks that do not have that trade have an upside. as we get into the late cycle stages, a great way to play that volatility will be through the large-cap names. scarlet: thank you so much,

alex. we are going to stick with financials because goldman sachs has said to be -- is said to be cutting targets. consumer credit concerns wax. for more, let us bring in bloomberg's goldman sachs reporter. when we talk about goldman cutting market lending, that will slow down the growth but not shrink the division. gives us a clue about how they are thinking about the consumer lending market. nothing is alarming but they are keeping an eye on the horizon. joe: they are going to shrink the loan growth targets. less possible that this is a macro call and more that they misjudged because this is a new area for them, consumer market lending and they are calibrating their own business? reporter: i don't necessarily think so but if we look at their

centuries,y of 1.5 they have been used to dealing with large corporations. this is a new step for them. goldman getting into the space of personal loans. dealing with declines that they are not used to. they are operating outside of their we house. they have gotten skeptical questions so it makes sense for them to be more risk-averse at this stage than might be necessary. they said thatt, loss rates are about 4%-5% which is where they have targeted through the cycle which is optimistic if it stays at this level. it makes sense. it will allow them to achieve that. caroline: i am interested in how it might affect the rest of the space. alternative ways that people are starting to borrow. off by 2% werere

3%. has there been much talk about consumers hitting a difficult moment in terms of credit? reporter: that makes sense. been theloans have fastest growing segment of the consumer lending you have personal loan outstanding balances of about $125 billion. the interesting element is that a lot of that growth has been driven by the new online lending platforms. they are responsible for 36% of the growth. compared to 1% in 2010. bigrly, they have made a impact. they are developing market sure -- market share in eating into traditional market share. there may be caused to be a little bit circumspect. but at the same time, it is moves like this one where you decide to be a little bit cautious which might allow the cycle to last a little bit longer. scarlet: are we hearing from any other banks stating concerns

about the credit cycle? a couple wells fargo of weeks ago or last month talked about loan growth probably slowing down a little bit. rates are climbing up ever so slightly. everyone out there is trying to figure it out. we are nine years into an economic recovery. will it go on and on or will there be a turn? that is what everyone is wrestling with. scarlet: at some point, it will crest and turnaround. that does it for the closing bell and for me. we will take a deeper look at builder blues weighing down the building sector. this is bloomberg, at the close. ♪

good afternoon. we have a snapshot of how the u.s. docs closed. -- u.s. stocks closed. caroline: -- joe: the question is "what'd you miss?" assets jumping. getting off on the wrong foot. the shanghai composite posted its worst day in october performance in a decade. joe: the builder blues. -- fell againer

today making it the worst losing streak in its almost 13 year history. plaguing on what is the industry, here is stephen kim. what is going on? it is fairly straightforward because rates shot up over the course of the year. the homebuilder stocks pulled off pretty much at the same time. and if there is one razor in housing, it is that rates go up and stocks 10 to go down. what is interesting is that we are seeing a lot of strength in housing at the lower end of the market. which is actually the most important part of the market to see strength actually. housing strength does not typically trickle-down but it pushes up from the bottom. the fact that you are seeing that and good job growth also are all very encouraging. we also think the market may be overestimating the degree that

housing rates are pricing people out of homes. we are not seeing that. we are getting more intrigue at the builder stocks here. we think it is a little early. you can wait. no need to rush in. we think there is an interesting opportunity to have a trade heading into next year. joe: is it is all because of demand or lack of demand? pretty big backlog of homes so there are buyers. stephen: there are two things happening. you definitely have signs of slowdown in the industry. no question about it. pretty much across the board as well as ever core isi -- evercore isi. you're seeing softness on one hand. the easy conclusion is that people cannot afford the homes and so they are not buying. but you are seeing strength at the low end of the market which does not seem to suggest that people cannot afford. we are not seeing cancellations

increasing or people stretching to purchase homes. what happens is when rates rise if they cannot afford it, they canceled and they get their money back. we are not seeing that. caroline: how much of this is a global story? estate market is weakening when it comes to the u.k. and other parts of the region. is this a u.s. domestically focused issue? international? as much as i would like to give credit to the average homebuyer and that they are watching bloomberg, i believe it is about as domestically oriented as you can get. i will go with that for now. in january, homebuilder stocks were still riding high and part of the story has been that the housing market was still in the structural hold. it had gotten so deep from the crisis and there was pent-up household formation of -- that there was still going to be a

tailwind. stephen: it is one of the most intriguing things we are seeing. we have a significant pent-up demand for household formation and homeownership. both. slightly different but related. we think that combined with a strengthening economic sign -- that combined with the strengthening economic signs we are seeing. when you put that in the context of the rising material rates, are there particular sectors of the home building sector that would be safer for investors? stephen: rising rates does -- do not necessarily prevent people from buying but what they buy. and there is the opportunity. for example, we are seeing a lot of strength at the entry level. a price pointa in range where builders have been struggling to reduce a nav. we think that they cracked the code. thaters have indicated

their margins on entry-level homes are good or even better than the margins they get on the fancier homes. that creates an opportunity for them to come in and build a lot more homes at that price point where demand is strong. that is one example. caroline: what about regionally speaking? seenen: certainly, we have tax reform create another interesting dynamic. i don't think it is lost on a lot of folks that it had some of the coastal markets a little more than some of the areas in the heartland what with the inability to do. the state and local taxes and property taxes cap at 10 gram. that has created a little bit of softness. unfortunately where i am. in westchester county, new york. in california the same thing. joe: one of the stories earlier intense selloff was that labor titans was really

impinging on the homebuilders. it was a matter of labor costs being high. they cannot find the workers. how strong is that in the story? important. is very the last few years, builders have been struggling to produce enough homes of the entry level. i said that i think they have cracked the code. what i mean is that the builders have discovered that the consumers are willing to trade choice for clear value. that enables the builders to build a much more standardized product which means they can drive more of efficiency's and throughput with the same manpower. you can create more houses now. that has been an important change that has come into the industry in the last few years. we do believe you will see more production even from a given labor base. caroline: perhaps a little less diversity in your choice of house. for that, stephen kim fantastic element of analysis. coming up, it is almost the most

wonderful time of the year. almost. retail is ready to shine. with such a strong 2017, will they be able to get higher? we are looking at christmas already. this is bloomberg. ♪

caroline: not like you want to wish your life away but apparently the holidays are around the corner and the forecasts are trickling in and retailers are feeling good about the upcoming season. our retail analyst joins us from washington. you have got to be analyzing this stuff. reporter: while the rest of the world is thinking about halloween, the rest of us are in full bore christmas mode.

looks like the industry is set up for a good holiday season. economic fundamentals are quite strong right now which typically spurs consumers to spend. the real question will be whether wall street gives them much reward for that. romaine: why would they not give them much reward for that? i would think that wall street would be all over the stocks right now. already: i think they have given them quite a bit of reward for their performance this year against this backdrop and that is the problem. walmart had its best comparable sales growth. target had its best comparable since 2013. at this point, a good holiday season is something of an assumption and it will have to be more than good. it will have to be great for investors to see a promising story there. what are the expected breakout trends expected this holiday season? who will be the winner?

reporter: it is early to tell but one important thing to tell -- to watch will be toys. toys "r" us was in business still last year. betweenfight was there toys "r" us and walmart and others. trying to take advantage of that to billion dollar hole left in the market. if we see any one of them doing a particularly good job of pricing the items right and merchandising them right, that will be a good sign for their holiday season overall. caroline: when i think about irchasing gifts for my son, am thinking of a lot of issues with china. reporter: a lot of retailers have long ago purchased their holiday inventory. boatss stuff they had on much earlier this year. there may be some seasonal items coming in that may be affected. in general, the tariffs are more

of a worry for 2019. hearing are you anything yet about brick-and-mortar retailers and how they are approaching this holiday season? i think a lot of them are making a really concerted effort around click and collect. where you order online and pick it up in the store a short time after. i think when they see that --vice is really strong to $50 onlinent and then come into the store and pick up another $40 of items. they will be playing up those services quite a bit and trying to take specific advantage of that. joe: we hear a lot about a tight labor market -- will that make it challenging for retailers? sheriff well.

and it did not help their cause that amazon dropped the bomb that they will have a $15 minimum wage as of november 1. that will be hm much for them. cases, then a lot of store workforce is now the online workforce. a chainlike kohl's -- they fulfill 40% of their orders online. -- if can find the right you cannot find the right talent , that can really be a drag and make it difficult to go toe to toe with amazon. caroline: thank you for joining us. those dynamics are fascinating. even though it is months away. romaine: i cannot wait for retail season. prepare for a lot of red sweaters. joe: the least surprising thing all day. caroline: as long as you are spending it on us we are happy. ull market for brazil.

how it is giving investors a boost. this is bloomberg. ♪

>> i am mark crumpton with first word news. in toll,rosenstein president trump talked about policing and security issues with police chiefs from around the world gathered in florida. rosenstein flew with the of thent to a meeting international association of the chiefs of police. president trump told reporters as he was leaving the white house that he does not have plans to fire the justice department's number two official. and that he needs him to help them sort out the terrible shooting rage in chicago. the president has encouraged a

new policing strategy. the death toll from an earthquake that hit haiti has climbed to 15. thousands along the north coast have dragged mattresses and chairs outside fearing new aftershocks. seismologist say the earthquake was a 5.9 magnitude. a professor says there is so much noise about climate change -- his work integrating climate change into long-term macroeconomic analysis has earned him a share of this year's nobel prize in economics. as for the skepticism and denial from the white house, the professor called this a difficult area. period.difficult >> this administration will not last forever. i think it is anomalous in the position ons this climate change.

universityrk professor shares surprise for factoring technically -- technological innovation into macroeconomics. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. caroline: thank you. brazil has ended a bull market. -- far right candidate bolsonaro. why does the market like him so much? he has promised to privatize many of brazil's state owned companies like petrobras and state companies that in theory bolsonaro could privatize. the question remains to be seen thesecan produce on

promises. investors were excited because not only has he performed strongly in the presidential elections but the makeup of congress has also changed. toare seeing a large shift the center-right which could make passage of economic reforms and more liberal economic agenda more likely. joe: that last part is the key. it is not just that he appears to be set to win but he also appears to have the votes to an act things that investors want. things that investors want. today, we saw him speaking to congressional leaders and we saw a huge movement towards his candidacy. some people are still holding back from an official endorsement. he is trying to break the mold the brazilian politics by reaching across party lines towards values defined congressional deputies. he seems to be having some success with that. to a lot of people are keen

throw their luck in with him in the second round. that should make mobility which was a concern before this election. that will make it much easier in the months to come. romaine: we hear about a more liberal economic and fiscal policy but has he given any concrete idea of what those policies are going to be? reporter: this is the big question. record of ag statist. he has been in congress 28 years. he has rarely voted for anything related to a liberal, pro-market agenda. he seems to have had a conversion. his economic advisor is a man that is from the university of chicago and is a trained economist. he says he wants to privatize everything. it remains to be seen if he will be able to do that because

brazil remains a country where state countries still play an important role. and a shift in a privatization program could be exceptionally difficult even though we have had a major shakeup of brazilian politics. when it comes down to it, congress may drag its heels. it may not prove that popular. what he appears to be elected on has more to do with anticorruption and moral proposals than economics. joe: thank you very much. for more on the election and its impact on markets, we want to welcome in shamaila khan. when we look at what happened in brazil and some of the other populist moves we have seen in mexico and elsewhere, what does that tell us about the economic future of the region in general? there areit tells us opportunities and not just risks. i would classify brazil as an opportunity.

particularly after the results that we saw last night. not only was it important that olson aro had a significant lead versus the leftist candidate but also the change in the composition of the legislator -- legislature is very important. challenges ability less daunting which was a major concern of the market. caroline: i'm looking at petrobras. the yield are tumbling. will benefit from these policies? shamaila: the currency. local rates are still very attractive. ownedtely, the state entities will benefit especially if they are in q4 privatization. there is still a second round for the election though. we are still a little cautious because of the tailwind that is possible.

perhapsaddition to being a reformer on the economic front, bolsonaro has made a lot of provocative comments on the campaign trail and historically criticizing gays and praising torture. he said at a rally that we will execute the workers party members. that may have been a joke. concern you inat terms of long-term democratic institutions? having covered emerging markets for decades what we have seen historically is that candidates say a lot of things on campaign trails that they do not follow up on when they become the leader. we have seen signs of that in the speech last night where he was a lot more conciliatory towards minorities and women. his job will be to form a coalition in congress would also bring a very divided nation together.

is going to be in charge of brazil has to bring the country together. i do expect him to tone down a lot of his rhetoric. reconcileow do you with this idea of promoting economic growth, getting economic policy going forward. we solve this rally in the currency and the stocks, but will it last? reporter: i believe so. the most important thing is the shift in the congress and the senate. even the elections. moving toward more market friendly reform supporting candidates. if bolsonaro gets elected and he has a positive economic reform agenda, can he implement it? we do not see that fully reflected in prices yet. caroline: what about the other side of the currency equation, the u.s. dollar?

where are you seeing that dynamic shifting? shamaila: that is an important dynamic and we are watching it closely. the dollar has stabilized versus the em currencies in the last few weeks but we cannot take that as a given. within that spectrum, we expect to brazilian currency consider the positive economic reform agenda. joe: big winner today -- state owned companies, petrobras gaining over 10% in new york trading today. where else are the opportunities in brazil? big players? we had a guest last week talking about consumer names. shamaila: the names that would benefit that i would expect to see especially if the leftist candidates are out of the picture. on brazilianrag sentiment particularly locally has been the concern that the

left will come back. those can alleviate concerns and we have bolsonaro in the presidency, with a positive economic reform agenda, anything related to domestic growth will do well. the currency will do well. broaden this out from brazil. look at e.m. across the board. we have a lot of people talking about it being time to get back in. seeing fundamental factors there where getting back into e.m. is safer than it was? make aa: it is hard to blanket statement like that. some countries are still in the woods and some are emerging from the woods, brazil being one of them. moves thereeen some with turkish banks. turkish banks are looking pretty attractive. you have to be selective still. joe: second round of the election -- is there still a chance that the leftist candidate could win?

shamaila: there is always a chance. they have a great amount of funds at their disposal. i am sure they will try to form a coalition but it really looks like bolsonaro has the momentum here. stockse: and the hottest in brazil -- we thank you. shamaila khan. , google. security issue discovered more than six month ago. we take a look at the longer-term implications for the tech giant. this is bloomberg. ♪

caroline: a quick check on the business flash headlines. agreed to purchase about a billion dollars in assets. no terms were disclosed. june, john flannery said he would sell up the bulk of ge capital. private equity firm bain capital has agreed to purchase a majority stake in a rocket business. -- and theervices deal would allow it to increase spending. rocket is owned by foursquare capital partners. the next ceo at airbus would also be the head of commercial air class. tom anders will be replaced in april. ceo of airbuse since 2012. volkswagen is close to having an

initial public offering. the truck business has a value of about $38 billion. your business flash. interesting times to be looking at selling off. romaine: mercedes is doing the same thing and they are pursuing the same options. maybe there is a way to get better value out of it by letting it run free. caroline: whether the share price will be heading any highs at the moment. google said it found a software glitch in its google plus social network in march. the company did not tell the public until today out of concern it would trigger a backlash. u.s. politicians are stepping up their attacks against the

influence of technology giants. could potentially look into this do you think? reporter: it has a consent degree in facebook launched in 2011 after google. held to privacy standards you don't often see here in the us there is a potential that it will take a look at this. what it will be most intrigued by is why google did not report this flaw in march when it first learned about it. that is the question regulators everywhere what want to know. joe: are there uniform requirements for companies to reveal this or is it entirely at their discretion? are 47 different standards in the united states. one thing congress is looking at

uniform breach standard. google's main argument will be that it was not a breach. it was a security flaw. that we looked into this and no user data was put at risk. and so we did not disclose -- and so we did not need to disclose. i mean that might appease regulators but for the regular consumer, that seems like semantics. i wonder for these companies on their so much data consumers and don't seem to be able to protect that data, is there any legal recourse for the users of the sites when they learn about these breaches or hacks or whatever they are? reporter: we always see consumer lawsuits filed after these breaches. thatdo not often amount to

much because in the u.s. at least there is a standard that you have to show that you were damaged by the breach and that is a difficult standard to meet in terms of the class-action lawsuits. , in the u.s., there is very little you can do. that is where the european union comes into play. their regulations -- it's regulations do allow for harder penalties when there is a breach of this nature. and it allows normal consumers to sue even if they cannot show a lot of damage. is anne: google international company and has an international user base. are there regal it -- are there regulators from other regions that will be looking at this announcement? reporter: everyone will be looking but especially at why there was such a delay in reporting. they learned about this in march. to just hear about this in october, i think there will be a

lot of close inquiry as to why it took so long. what exactly was google doing during that timeframe? and i think that will take place in the united states and certainly in europe. caroline: from bloomberg intelligence, thank you. post holiday slump. chinese stocks comeback for -- come back from golden week. we will have the answer for you in our asian preview session. that is next. this is bloomberg. ♪

caroline: a warm welcome back from the holiday week for chinese investors. biggestcks are the laggards. the fourth this year did little to dispel the gloom hanging over chinese stocks as markets reopened on monday.

the move will free up 175 billion dollars of liquidity as being that it is being seen by economists as a further shift towards an easing bias. it follows official pledges to/ taxes and boost infrastructure spending to bolster growth. the pboc said the triple are cut would not lead to devaluation pressures on the yuan. bash on monday and the renminbi fell. capital outflows are back in focus. data out over the weekend shows the reserves have dropped by about $23 billion. caroline: we will get analysis now from bloomberg's shery ahn. it is interesting how much tech has been hit. romaine: the technology shares

continue to fall out pacing some of the drop we have seen in the u.s. i wonder how that is playing into the general sentiment? reporter: now we are seeing the u.s. tech story and the china tech story converge. the correlation is rising which could be a bad sign for u.s. tech stocks but a good one for chinese tech stocks. some people think turning more cautious about what could happen in the chinese market. as we have seen, despite the triple are cut, we still saw the biggest fall in a year or so for the ftse 50. take a look at this chart. this -- these are the reserve ratios in china which were already cut for the fourth time this year. is needede liquidity in the financial markets now and get the stock markets did not react. more people turning cautious. jp morgan chase, nomura and jeffries. you can see the difference

between the rrr and the lending rate. you are also seeing some more optimistic calls that this could be the bottom. from hsbc.ing that i will speak to the ubs analyst and he says it is ok because you are seeing international investors having more access to the chinese market. joe: talk about the slow down. my favorite story of the day. people arriving at the office of a chinese property developer and someone posted a video on twitter of people that own condos and the remaining ones were sold at a discount. -- those owned condos are now worth less. you see people showing up at the office and they are smashing windows. this is a way bigger deal than the stock market in the sense that where people invest. mistaken,if i am not

there were also protests in shanghai. this is important. the chinese market and the economy has been fueled in part by this property boom. and the property sector was one bright spot despite all of the other challenges happening in the financial market. now, as you said, you see the difference between what they paid for these apartments last year compared to this year and the price has dropped 30%. people will not be happy. the problem of course being that when it comes to chinese markets in understanding the economy come you have to take a look at what it means and they are trying to curb property prices. where does the money go? in the past it went to the chinese financial market. when they tried to curb them and put a lid on them, it went back to the property markets. what this tells you is how you can see money moving in the chinese economy. caroline: where is the next

bubble? have no idea. if i knew, i would not be here. but i am hearing optimistic calls for chinese equity. some are saying that chinese banks have been underperforming 10%. i am hearing a lot of things. if i knew, we would not be here. romaine: i would still be here. reporter: i would share the wisdom. caroline: shery ahn come at great to hear your perspective. you don't want to miss this. waiting for the imf and the world bank. joe: and making remarks at a conference tomorrow. itsine: google unveils latest pixels as well as other hardware in new york and in paris. caroline: that is all for "what'd you miss?"

bloomberg technology is up next. have a great evening. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up, google caught, not disclosing a software glitch that left data for hundreds of thousands of users exposed. however happened in how regulators will respond. plus, facebook taking on amazon and google with a new smart speaker optimized for video chat. but to consumers want facebook in their living rooms after a string of privacy scandals? and united nations painting a