"bloomberg daybreak: australia." >>"bloomberg daybreak: australia." tocome to -- welcome "bloomberg daybreak: australia." sherry: we're counting down to asia's major market open. haidi: these are the top stories were covering in the next hour. u.s. shares rising the most netflix is a winner in late trade with shares surging on news that 7 million new subscribers signed up last quarter. saudi arabia repeats that he

knows something about jamal khashoggi's disappearance. let's get you started with a quick check of how markets closed in the tuesday session on wall street. the s&p 500 getting past the 2800 level and rising more than 2%. 2.2%, andnes gaining we had a strong corporate earnings from the likes of goldman sachs and johnson & johnson, not to mention united health. the nasdaq 2.9%. every sector in the s&p 500 was in the green. we saw these very broad moves on the s&p 500, also above the 200 day moving average. all caps outperforming today, up 2.8%.

we have data on u.s. factory output expanding in september as well. let's see how all this will translate into asia. a broad-based recovery rally we saw overnight, it will be interesting to see if it goes into asian tech as well. let's look at how markets are shaping up in the early part of the asian session. is even trading up by 1.6%. the kiwi dollar and the swedish monarch or the outperformance in that space, as a barometer risk appetite reflects the volatility falling overnight. sydney futures looking positive, building on yesterday's modest 71 with the ossian keyway -- the aussie and the kiwi being boosted.

jessica: e.u. leaders meet for a offeringummit, concrete proposals for preaching the brexit divide. say new facts are needed to revive talks that stalled over the weekend. theresa may is expected to address the 27 other e.u. leaders to discuss the issue without the u.k. being in the room. needsides goodwill, we fax. tomorrow i'm going to ask prime minister may how she's going to break the impasse. >> the president of the european commission says there will be a violent reaction of italy pushes ahead with the controversial spending plan. jean-claude juncker spoke confirming a spending increase that would push the deficit to two point -- 2.4% the deficit

nest year. a new report says china may have a hidden timebomb was nearly $6 trillion of global debt. financing vehicles don't always have the backing of regional authorities. the growing issue comes amid record local government defaults this year. s&p says it is akin to a debt iceberg with credit risk. and the renegotiated north american trade deal will come to a vote in congress this year. senate majority leader mitch mcconnell told bloomberg there is some time on the legislative calendar. up the possibility of across 45 if the democrats when the house next month. confirm it will be top of the agenda in 2019. next yearll be in

issue because the process we have to go through doesn't allow that to come up until the end of this year. >> global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. diving back into the u.s. market close, we get the latest on rebounding tech, the surgeon the s&p 500 and extended our trading where we're seeing ibm fall as its revenue misses. the latest.s what was interesting about today's session was that 90% or more of the s&p 500 gained ground, one of the broadest rallies we have seen so far. su: there was a big spate of corporate earnings that were positive that boosted investor confidence and retreat in the rhetoric between the u.s. and china and the u.s. in saudi arabia. that also allow the rally to go forward. take a look at the market snapshot because we had the

dollar down for a second day in a row, near a two-week low. bond yields holding, they did not rise, also giving investors confidence. and the nasdaq 100, the heavy concentration of tech stocks, far and away the pocket of the russell 2000, the broadest measure of the market as well as smaller domestic companies, both up close to 3%. let's take a look at some of the companies out with strong earnings, chief among them goldman sachs and morgan stanley. they had positive reports that cheered the market on. united health helped the health care sector. johnson & johnson, a medical devices company, they blew it out with the forecast for a 20% increase in revenue for the 2019 fiscal year and investors gobbled that up. let's take a look at some of the other tech stocks that were big stories. advanced micro devices, one of the chip stocks, up better than

7%. look at theacebook, size of gains we saw in this sector, and in after hours, as discussed, i the in disappointing, but we also had and we that christ it, will hear about that in just a moment. let's go to the bloomberg because the stock index is something worth looking at. there's something called the death cross where you have two different moving averages cross. back here we had this cross that led to a bearish period. bear in mind that chip stocks , even 154% year to date though they recently were part of this big selloff. that is a cautionary note that perhaps the selloff has more to come, possibly for this sector it does. oil, becausebout we thought fluctuate a little bit, now gaining ground. the story has remained saudi and

u.s. tensions, but there could be more into this. > it looks like justice we're seeing those tensions reduced, president trump tending to shield the saudi king from any blame here, we got a private >> it looks like justice we're seeing those tensions reduced, president trump tending to shield the saudi king from any blame here, we got a private report, let's look at the last five days here in new york, and we saw a late date boost in oil because the private report shows there would be a surprise drop in supplies. granted because of hurricane michael, we are likely to see some aberrations. thatmay explain forecasters would say there would be a bearish build, and now we're hearing there may be a decline. so buckle your seatbelt, there could be a while they like the oil trade on wednesday. receipt and gold not only rise of the number of holdings increasing also for these etf's, a lot of that having to do with the geopolitical can learn. and are watching china's

holdings of u.s. treasury, they fell for a third straight month in august. president trump continues to criticize the fed interest rate hikes, calling them his biggest threat. su: if we start with the china reduction in their holdings, that has a lot to do, and was say, with the trump tariffs. take a look at some of the numbers. down from 1.7 trillion dollars in july, at if you recall back in march, china's ambassador said they may cut back on their were tochases if trump impose the tariffs, and since then he's levied almost half of all chinese imports. meanwhile we saw the president on another network criticizing the fed yet again, saying these rate hikes of the highest, basically, the biggest threat that he faces. some, saying the top is

designed to distract from what could be a big problem in the trump administration. yesterday about the budget deficit, there could be a looming --deficit much bigger deficit possibly approaching the $1 trillion mark that could be another problem ,or the trump administration that he likely find his way to talk his way around. haidi: su keenan there in new york. netflix quest third-quarter earnings. the results easily topped expectations. netflix had projected 5 million new users and actually added 7 million globally. let's get the latest from emily chang. these are very strong numbers. what is still driving them? emily: subscriber numbers much better than analysts had anticipated, both on the international and the u.s. side,

and especially coming off a very dismal second order. our reporter who covers netflix tell me in the hour earlier that he was totally prepared for netflix to report another disappointing quarter, but it was intact the opposite. if you look ahead to the forecast for the current quarter, that is also strong. the growth is really coming from international subscribers. u.s. subscriber growth is still strong, but international subscriber growth is fairly surprising. the company bring it in by .87 million international subscribers in the third quarter and expecting to bring in 7.6 million in the current quarter, and of course all that matters is how much netflix is spending programming, and that is billions and billions of dollars. that's every time you put on netflix, there is so much in terms of original content that you can get. that is clearly paying off.

>> he added 600 something new shows in the last quarter, and it costs a lot of money, if you look at the bottom line, the forecast for earnings is not so great, but for netflix, investors have always been more focused on subscriber growth and they have been on profits. to investors talked about negative cash flow, saying we want to ensure investors we have the same high confidence in underlying underlying economics in the past. this is likely to help us keep her revenue and operating profit for a long time ahead. withd a guest on earlier the company that measures netflix audience engagement. he thinks netflix will have a tough time keeping up at this rate, producing content for so many different markets in different languages in different

cultural sensibilities, and they are just not going to be able to keep up, especially as other competitors like disney, at&t, and amazon catch-up. shery: did they say anything about asia then? emily: we are learning more about asia. asia is the, biggest challenge for netflix, but also a big opportunity. they got new partnerships in japan and india that the hope will charge growth, but the market is very unique. in india there is an explosion of broadband happening which could certainly boost netflix, but amazon is also quite competitive there as well as another competitor called pop star. in other markets like japan and south korea, they have been a bit more challenging for amazon. we have the analyst projections that asia-pacific should count for 15-20% of the market over the next five years.

28 million subscribers from asia, but certainly netflix has a long road to get there. shery: emily chang, thank you for the latest from netflix. goldman and morgan stanley top estimates for banking. we'll have the highlights from bank earnings so far. up next, overall strong corporate earnings lifting stocks the most in six months. we'll talk about the opportunities in the market. this is bloomberg. ♪

shery: we have an alert breaking on the bloomberg right now, is in trump telling ap that saudi arabia -- saudi arabia being blamed for missing journalists jamal khashoggi is another case innocent until proven payment in the past he has

suggested that roque killers might be behind his disappearance. of course the missing journalists has been missing since he went into the saudi consulate in turkey. we have seen secretary of state pompeo visit saudi arabia to straighten this out. we're now seeing him headed to ra to hold talks with officials there. saudient trump now saying arabia being blamed for the missing journalists is another case of guilty until proven innocent. we will have more details on this story as we get them. haidi: turkey continues to say they have evidence that he was in fact murdered. continues toaction play out with the jump in oil prices as well as the continueso play out with the jump in oil prices as well as the u.s. dollar. let's get back to the session, stocks gaining the most in six months and corporate earnings dividing some respite from trade tensions and geopolitics. is ceo russell

pillemer. let me get your thoughts on the events of the past 10 days or so. is this a pretty regular indication of where we are and should we expect more volatility? russell: volatility has been way too low and its time it came back into the marketplace. these types of reprieve -- agreements we've seen overnight or a few days ago, are almost certain to continue. u.s. stocks, especially technology stocks, in our view, are really just too hot at the moment. tryingk to the downside, to predict where they will ultimately go in the short-term. our research is to the downside. we are down around 10% from september. you can't just blame it on --

japanese tech stocks that had a horrible time lately. in asia, if your long-term investor, you believe in the demographic story. should you be holding tech? russell: absolutely. the situation in asia is quite different to the u.s.. the stocks are much cheaper and there have been longer-term growth prospects. there are risks in the short-term, with the rising interest-rate environment. longer-term, we absolutely see some fantastic value in asian tech stocks. the most bearish in a decade when it came to the global economy, we can show you this chart that we have right now, 85% of fund managers say the global economy is in late cycle. should we be avoiding cash at the moment? good asset tois a hold at this point in the cycle, that is for sure. world is a big place, and there

are lots of good opportunities around, so we think that some fun mending good stocks have been taken down to give stocks that are overvalued and those opportunities should be sought after. stocks that can take advantage of secular opportunities in the marketplace. a good example would be health care stocks, which will be in demand with respect to what's happening in growth in the global economy. investors should be on the lookout for that and not just those markets. shery: what about u.s. banks? financials have been underperforming, despite the fact that we have higher bond yields and also pretty solvent earnings. we are concerned about the u.s. banks. we are concerned with what an

inversion of the yield curve might do to u.s. banks. we are trading very much with caution when it comes to u.s. banks and actually don't hold any of them in our port folio. chief economic advisor at allianz, talking impulse that other investors have at the moment to rotate out u.s. allocations. allocatevitation to out of u.s. is huge. i tend to think if you are going to do that, do it within the framework of dollars at risk. it's part of dollar to dollar reallocation. the amount of volatility you are underwriting right now by getting out of the u.s. on the market is considerable. haidi: would you agree with that? russell: there is some relevance to that, but i think that investors should really look at

their portfolios in totality, and not so much worry about a geographic allocation like the u.s. or europe or asia, but really find the stocks that work best for them. whether that means -- it's hard at the moment for the u.s. market, so inevitably you are going to be further afield. haidi: talking about how cheap e.m.'s are at the market, but not one he to take that risk. if you are afraid of the trade war and you believe the tightening story, you want to invest in the u.s.. willu look at asia, what do well despite all of those headwinds? russell: we see value in the asian tech stocks. we see some value, for instance, growtioned secular type

stories, like education in china. that will be a classic situation. look for those types of opportunities. a trade war is not going to necessarily really hurt that type of stock. we want to stay invested in the markets and find those sorts of opportunities that allow risk at this point. shery: given the geopolitical risks in europe, i wonder what you think of this. this chart on the bloomberg showing analyst estimates for 2018 for european profits have been slashed since august. you see this drop right there. citigroup's earnings revisions index, they're cutting forecast by the most in more than two years. any sectors in europe where you can still find any sectors in europe where you can still find opportunities? russell: yes, as i mentioned, there are sectors, for instance i pointed to health care, that are not really going to be impacted by what happens in

europe in and of itself. we are very concerned about europe, obviously what is happening with brexit, etc. those are big unknowns. europe is cheap, but i would tread very carefully. shery: thank you so much, r.ssell pilleme get a roundup in today's edition of daybreak. on mobileavailable so you can customize only get the industries and assets that you care about. this is bloomberg. ♪

haidi: haidi: let's get a quick check of the latest business flash headlines. the wall street journal says uber could be valued at up to $120 billion. that you wish and, uber would

only have to offer about 21% of its shares to become the largest ipo of all time, beating alibaba. rivalrival lyft has a valuation expected to top $15 billion. sinopec says net income for the first nine us of the year jumped by as much as 57%, thanks to higher oil prices and encouragement that it's upstream operations. profits up byber over $3 billion compared to the same time last year. brent crude average almost $73 a barrel during that time, about 88% higher than a year ago. shery: rising profit as investment in greater automation paid out. of company reported earnings 558 dollars in the september quarter as revenue climbed 17%, its fastest pace in two years.

haidi: come and it next, the saudi crown prince is under fire on capitol hill with one senator calling him toxic and a wrecking ball. president trump will be forced to act over the missing journalist. ♪

>> it is 930 a.m. in sydney. futures positive despite another drizzly day and sydney. building on gains. asian equity futures seem positive as well after we had s in 12ond day of gain days of trading. u.s. stocks jumping the most in six months. it is 6:30 p.m. in new york. you are watching "bloomberg daybreak: australia." >> turkey says investigators have found evidence proving the killing of jamal khashoggi in

the kingdom consulate. security forces went to the saudi console after he left to the country. president trump said the crown prince said he knows nothing about jamal khashoggi's fate. he said it would be bad if the prince were involved. saudi stocks were volatile again mpeo arrived in rian. saudi officials reject allegations jamal khashoggi was killed. they admit he died at the consulate after a botched interrogation. holdings of u.s. treasury stalled in august. that is as it struggled. of one $.6hip trillion was down from july. japan is the largest donor of

u.s. treasuries after china. tokyo decreased its holdings a month earlier. a fall in forest numbers for the first time in five years. arrivals fell off after the earthquake and storms brought a halt to travel in some of the top destinations. a year fell 5.3% from ago, the first drop since january 2013. visitors from china dipped 4%. global news 24 hours a day on air and at tictoc on twitter powered by 2700 journalists in 120 countries. i am jessica summers. this is bloomberg. >> we are getting the latest headlines of the bloomberg. president trump's interview with -- will beng that the next counsel, according to to the according

president, who is having an interview with the ap. he has talked about a missing journalist, khashoggi, saying the fact saudi arabia is blamed is another case of guilty until proven innocent. let's go to greg. and do we know about pat his role as the next white house counsel? >> he is a former justice department official. he is with a private law firm. the washington post reported trump interviewed him and liked their interactions. he will be replacing don began who had said he would leave after the confirmation of brett kavanaugh. faced tumultuous time at the white house over security clearances and other things.

he said he was leaving and it appears we have his successor. >> we are getting headlines on saudi arabia. president trump saying saudi arabia is blamed for the missing journalist. another case of guilty until proven innocent. we know secretary pompeo is headed to turkey. >> that is right. a littleed a statement bit ago saying that he had all of these meetings in saudi arabia at the bet has stuff president trump and the officials denied any knowledge of what happened at that consulate. president earlier today said the crown prince denied to him any knowledge of the event. this isying that similar to the brett kavanaugh case of being guilty until proven innocent. remember president trump has a keyaudi arabia

relationship in his foreign-policy. they are a major player in the middle east and his approach to the middle east. has contracts with his country. saudi officials have gotten along well with certain officials, including his son-in-law and visor, jared kushner. this puts a strain on this relationship. several lawmakers are not reacting like the president with his response. mitch mcconnell told bloomberg he sees the fight over brett kavanaugh as a plus for midterms. this has been interesting when both sides reading it differently. take a listen. like arizona, nevada, montana, indiana, tennessee, west virginia, florida, i think it has been a shot of adrenaline to republican voters. hopefully we can match the

democrats in enthusiasm. >> how has it been beneficial? what is the midterm picture look like? >> the midterm picture is interesting. particularly because a looks different on the house side. when you hear about kavanaugh motivating voters is probably true. it is true democrats are enjoying a surge of enthusiasm. what is different is that democrats are playing in house across the country. every district is up for reelection. on the senate, only a third. just by chance, that favors the republicans. 10 democrats have to win reelection in states trump won in 2016. only one republican is playing defensive in a state hillary clinton won.

earlier it looked like nevada, tennessee, and texas were tight races. polling has turned a little bit toward republicans. they started running ahead in texas and tennessee. it is tight in nevada. republicans have taken the lead in north dakota, which would flip it from the democrats. a very different picture in the senate where it could be an in the house then where they look poised to have a good shot of doing so. sullivan there with us. let's take a look at the asian trading day. i'm going by adam from sydney. earnings give you breathing space. in terms of how, the bigger picture, there was one survey that looks depressing. double edged sword. we have earnings in one corner providing some kind of relief,

providing a reason to talking about fundamentals rather than geopolitics or trade. let's remind her selves of how big these moves were. onre is a great chart, 2% all of the indexes. we have not seen that in six months. clearly some of that will follow and we will asia get a decent start. the question around pessimism on the global economy was the line from the recent bank of america survey we have received. that speaks to the idea of people slowly dialing back those expectations. ofe of these bigger ideas the slowing world economy and how much earnings can continue to grow in that environment. a lot of people were dialing back expectations going into this q3 season. it has been decent so far.

we've had netflix results, giving the nasdaq futures a lift. it are to be the focus. the worries about global growth are not going away. >> volatility seems to have been tested. do we know where the trade is going? the interesting thing about the short volatility trade, trades that profit from this environment of low volatility we've had over the recent years with some of the central banks, a whereentering an er that stimulus is being wind it down. strategies, those strategies that benefit from being short have been profitable. the most recent data we have on the vix positioning in the u.s.,

this is a great chart. tople are very skewed further future projections on this volatility remaining low over the next 6-12 months. weeresting given last week saw a surge in volatility. a lot of these traders get hit hard in the short-term. it does not take long for people to readjust those long-term outlooks for the expectation this can be a profitable trade, betting that inequities and in bond markets, volatility will remain significantly depressed whereget through this era banks are winding back the stimulus. >> adam, thank you for that. you can find his charts on the gt the library on the bloomberg. let's turn to some solid corporate earnings. morgan stanley rallied the

most in nearly two years. goldman jumped the most in six weeks. stanley.rt with morgan why are investors celebrating? >> why wouldn't today be celebrating? they beat revenue, fixed income, investment bank across the board . most interesting relative to the banks in terms of revenue for banking, they were the only bank to beat on both of those counts. take a look. it is in purple. bank of america, citigroup, j.p. morgan went one way or the other. only one,as the excuse me, the only one to rise on both. in terms of what analysts have said, you can see what the

recommendations are. kbw, aside from the positive i went through, they said they had rise in termsint of operating leverage year-over-year. barclays says expenses were controlled. bernstein said if you were in investor, they checked every box a bull could four. -- hope for. revenue.beat on that was year on year. take a look at what happened in terms of the quarter. they fell by 8%. let me walk you through the numbers. they were lower in terms of the advisory fees. fixed income trading was lightk

b. . saying sustainability is actually an open question. had aein said the company fervor and quarter. they were bullish in terms of rating. they have an outperform of $300. the last price was over $220. now with all of these banks reporting, let me show you the takeaways. from friday through monday, tuesday, it has been a confusing picture. taking a look at the fed hikes we had seen. forctually was positive those net interest margins. jpmorgan had a record. wells fargo had a record. also positive results for equities, fixed trading generally fell.

citigroup was the outlier. , coste the higher rates for bad loans continue to fall. still managinger to pay down those loans. usually we see defaults rise when interest rates rise. those investors liking results. boosting sentiment overnight. let's take a look at the reserve bank of australia. the deputy governor was speaking , making these remarks regarding wanting to send a thank you note to jay powell, they've been to have theng time effect of pushing down the australian dollar. it would be helpful for inflation objectives. the currency has provided a boost when it comes to the economy. it is very export dependent.

that impact probably was not very much. on australian dollar is down the strength of the greenback this year. also falling property prices, major cities like sydney and melbourne, prices are not declining in every market and have gone up before coming down. not clear how much it could hurt on the way down. some of the sentiment in those rba minutes we got yesterday, dollar weakness is helping the economy and the next move is going to be increasing rates. plenty more to come on "daybreak: australia." this is bloomberg. ♪

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"daybreak: australia." the stock route did not last very long with a most every stock a winner today. there are still dark clouds ahead. the move lower was necessary to rally,he next leg of the something that could come after november 2. take a listen. >> the correction now is a rally thatore will incur after the midterm election. >> why is the correction happening now? is it the economy, geopolitical concerns? >> investors got complacent. they thought nothing could go wrong. the economy was growing. unemployment was at an all-time low. they just thought there was clear sailing. when investors get comfortable,

the market is vulnerable. >> good morning. is this dip a buying opportunity? >> i think it is. i don't think the market won't go lower. that is one of the risks. i don't know if we are totally done with this correction. i do know in a couple of weeks there will be a buying opportunity. there will be a strong rally after the midterm elections. the fundamentals are very sound. the outlook for 2019 is positive. think when the next session is going to occur in 2021 or later, and as a result, it is a good time to look for opportunities. market has been selling a over the lastocks

few weeks. we are going to get netflix earnings tonight. what is your view of the tech sector? are investors correct to trim back? companies thate aret have been overvalued moving into fair value status today. ended prospects for many years to come. many of the technology stocks. i tend to favor growth over value and i think some of the favorite stocks are moving into the buying range. >> one of your predictions was the republicans would lose control of the senate and the house. do you still think that is the case? moreoters going more and negative? >> that would have been a

surprise if the republicans lost the senate. the republicans will lose the house. i don't think they are going to lose the senate. politicsch is domestic and geopolitics impacting markets these days? it seems like there was a definite correlation the first 100 days. i am not sure now. >> there are a number of negatives out there. there always is. geopolitics.t the it is the situation of saudi arabia, the italian economic situation. all of these things have an influence. brexit. the united states has had a good run in the economy. the rest of the world does not. the question is, can we continue to do well when the rest of the

world is not? that concept is probably the biggest negative. you bring upg italy. italy is going to have a budget deficit next year of 2.4%. to the unitedhat states, the u.s. does not come off very well. 2.4%?you believe that >> somebody told me, byron. only person who believes that number. italy is proposing a cut in taxes and a guaranteed annual income for all of its citizens. that 2.4%.not buying nobody is buying it. italy is going to have a bigger legend deficit than that. >> that was part of our

a blackstoneh group vice chairman. on our watch that live interactive tv function on the bloomberg. you can dive into any of the securities or the functions we talk about and join in on the conversation if you have any messages for our guests. this is for bloomberg subscribers only. this is bloomberg. ♪

i am in new york. haidi: i'm in sydney. you are watching "daybreak: australia." a quick check of the latest headlines. the missed estimates in last quarter. overall revenue fell more than 2%. in clem from the cloud business rose 10%, half of what we saw on the second quarter. profits are in line with

expectations. to boostdoubt on plans growth. >> netflix jumped after smashing subscriber expectations. the company attracted a fraction under 7 million new users in the through september. its total is above 137 million. accountednal markets for 84% of new customers. netflix rebounding from a slowdown in july. >> china has slapped a fine on a company at the center of the recent vaccine scandal. regulators fined the company and on its products and operations. chinese consumers were shocked by revelations about the company peddling ineffective vaccines. that is just about it for "daybreak: australia."

taking a look at trading, new zealand just getting underway. we are a few minutes away from the open in australia. take a look at how we are shaping up. we are shaping up, it seems. trading atllar 65.84. sydney futures looking like they are going to extend. the aussie dollar trading at 7142. we just heard from the deputy governor saying the weaker dollar, we can thank the fed for that. >> we will discuss all of that right now. fed andtalk about the more risk in stocks and the fed policy is not yet restricted. it will be in 2019. that is just about it for

"daybreak: australia." asia" is next. this is bloomberg. ♪

>> a very good morning. australian markets have just opened for trade. shery: good evening from new york. welcome to "daybreak: asia." >>