broader earnings concerns. because the earnings concerns are not margin. craze --oes not a escape that story. as we reset margin expectation, we are starting to see stock it is aeset and different environment than the environment of the quarterly earnings we have been in for more than a year. at down you're looking one and a quarter percent for the doubt. nasdaq is losing more than 2%. volume has been heavier than usual. 60% above the 20 day moving average. following steve mnuchin saying he will not go to saudi arabia to attend the conference. caroline: breaking news coming in from brazil. we've seen a move of the united states dollar up against the brazilian currency.

emerging markets have been front and center today. the tone,na setting weakness, concerns about the selling in china, and what has been happening in terms of where we go with the gdp data tomorrow. starter --e dollar's stronger putting pressure on the in markets. romaine: 15% -- that business showed an interesting decline in sales in the most recent quarter. that created fears about the broader slowing in his gentle segment. in addition to sales being down, margins declined by about 200 basis points. they had planned to spin off this business in 2019, and a lot of that was because we had this boom in this dental industry and of session in the u.s. with

having the perfect smile. back in july, we start to do here from analysts that the consumer spending in this up.ion was not holding that is what is starting to hurt some of the companies like you saw on your screen like patterson companies, henry schein, and those are companies of theg 40% to 50% revenue from dental supplies and aligned with these cosmetic dentistry practices. the darling stock over the past year or so has been the company that makes the of his life braces. of the one best-performing stocks in the nasdaq and s&p 500. they are also falling today over the same issues. we will have to keep an eye on this to see if consumer spending habits are changing. >> i am paying attention to two factors. that's the volatility of the s&p

500 and valuation of the s&p 500. the vix index is up about 18% today to above 20. to the levels of about 12 on average last year. all the ability is of this year and investors are concerned volatility will keep advancing as uncertainty over the earnings season increases. the decline in the s&p 500 over the past two weeks puts the s&p at 16 times projected earnings. that is the lowest valuation since 2016. there's a lot of question about how longer valuation can go after that level. scarlet: thank you so much to our market team. still with us is benjamin segal and gina martin adams -- gina marti. we have this new volatility regime, and the overseas impacts we have a shrug off, overseas

concerns, seem to be affecting us daily. benjamin: i think the world is economically connected. scarlet: it did not feel like it's a month ago. benjamin: that is true. we tend to forget about these things from time to time. hastrump administration talked a lot about trade and getting better deals. the europeans as wells the chinese have found themselves on the wrong end of that rhetoric. thatnk we are recognizing there are domestic implications in the u.s. and europe which is kind of the innocent bystander between china and the u.s.. they are relatively unscathed in this environment. you are also seeing wage pressures in north america. you talk about weakness in emerging markets and the european economies have been sluggish. they do not see wage growth. this environment of volatility, we see attractive

opportunity in europe in particular. caroline: we will come back to that in a moment given the italian pressure. gina, i want to dig into emerging markets. -- have great reacher's research showing if sentiment is too pessimistic ahead of the china event tomorrow. gina: certain markets are showing signs of bottoms. earning estimates are showing higher. they're not the headline grabbers. this is not china, argentina, or south africa. these are mexico, brazil, and russian events moving higher. the risk is some of this is related to commodities. will it continue is the big question. the first time since april, we have seen earnings growth move higher. unnoticedeen largely by prices which continue to generally come off by a vast margin. meanwhile, corporate

news. american express coming out with its numbers. it shows for years adjusted per share view beating analyst estimates. had been for $10.7 billion. earnings coming in at $1.88, but the full-year adjusted earnings per share is at the higher end of the previous target and above where the market expected. scarlet: the stock moved up marginally by 1/10 of 1%. american express also said cardmember spending was up 8%, 10% adjusting for fx. go back to the idea that the u.s. is doing well and the consumer is doing well, in the americas even as we see a lot of the uncertainty pickup overseas. caroline: talking about uncertainty overseas, let's go back to what the benjamin was saying. you say there is opportunity in europe. they are the innocent bystander between the u.s. and china but they are not innocent when it

comes to italy. it is interesting that italy has been in the firing line for a budget deficit that many feel is not to her and this -- two for in this -- too horrendous. benjamin: italy is clearly a concern. when i talk about europe, i talk about european businesses and many of which operate in emerging markets not just in the health markets. italy is a destination for --panies that are italian italy as a destination for companies that are italian is small. i do not have a particularly differentiated view on italy. it does serve to reiterate the point around value and valuation. we are in an environment where some of these highflying stocks to not reinsert -- reassure on

growth going forward and they are getting punished. we talk about emerging markets recovering and that is a little bit of a value trade. we have seen some of those situations before in recent years. it tends to have been relatively short-lived. i'm thinking the 2016 trump rally, if you will. in a higher interest rate environment, in an environment where consumers are not judging by the american express numbers, they will feel the pinch. i feel they will with amazon raising wages. that is going to bite the u.s. consumer who has been unbelievably resilient and recent years. when that happens, some of these while you -- value stocks will roll over. it goes it goes back to the

margin story you were telling us about, gina. what is your take as people seem to be trimming holdings of u.s. stocks? where are they going? gina: they are going to bonds and cash. you are not seeing equity markets outperform in this environment. you're seeing remarkable stability in europe relative to the u.s. and em. the u.s. had a lot further to fall so the trend is still in favor of the u.s.. in the short run, we selloff harder. look at october today, the u.s. is leading the downdraft -- to date, the u.s. is leading the downdraft. thee seems to be value in markets. maybe they did not do well over the summer so they have less to selloff, but investors seem to be stickier in those markets. , within the u.s. market, there is one strong dominant theme. that really consistent five of the top 10 factors last week in the big downdraft, the

ones that drove stock prices, were margin related. this clear sensitivity to margins profitability that has emerged over the last couple of weeks, that is what is to be expected in volatility spikes. we find what performs best when volatility is increasing as profitability. scarlet: good thing it is earning season. the nasdaq is down 7% so far this month. our thanks to measurements ago -- benjamin segal and gina martin adams. closings it for the bell and for me. romaine bostick steps in for me where we look at the prospects of markets. this is the bloomberg market close. ♪

caroline: live from bloomberg's world headquarters in new york, i'm caroline hyde. romaine: romaine: romaine: i'm romaine bostick and joe weisenthal is off today. caroline: tech is under fire. romaine: the question is "what'd you miss?" caroline: it is not all fun and games. netflix overshadowed by activision's disappointing color duty. weakness coming from the east. china as trade tensions between the u.s. and china. and betting on going slow.

the u.k. and that you are hoping taking longer to forge the deal will and the brexit deadline. probably one of the biggest development and markets over the past couple of weeks has been the breakdown of the correlation between stocks and interest rates. here to talk more about that is and has the fed gone loco here? [laughter] [laughter] >> when i talk to people from my article in the magazine, a lot of people set my agreed with the president. they agree to to the extent that interest rates are affecting the stock market. they disagreed a fed is overreacting. probably do need higher interest rates at this point. the interesting thing about the ,orrelation -- for a long time higher interest rates did not bother stock market at all. i think it is because the labor is still so low that people were

so the about deflation fact inflation was rising a little bit, and well below the fed target, send a signal the economy is strong, profits were strong, therefore, because earnings drive stock prices, it should be good for stock prices. romaine: so just to be clear, when we talk about the correlation, when we go from positive to negative correlation between stocks and interest rates? peter: right. high rates seem to be hurting stock markets recently. romaine: how many times has this happened? peter: it depends on how you one person counts four times. signal whenish people start to worry in the sense that the rate goes up, and stock prices go down.

seenis because it is now -- inflation is starting to get at the fed target. if it goes above it, the fed will tighten and that will be bad for stock prices. caroline: and it is a competing investment once again. you're finally getting some yield. peter: and you should expect stocks and bonds to because the two each other for that reason. you could make a choice between stocks and bonds. a yield of 3.2% on the 10 year treasury is pretty handsome compared to the dividend you see in some stocks. it's understandable why people moved to the bond market. caroline: i'm interested in the pickup of volatility we see there. this whole moving rates higher is not new. we knew this was happening. phrasenot the turn of that jay powell seem to mention we go straight through the neutral rate.

was that the tipping point? we have known normalization was about to come. peter: it is the kind of thing where you have to figure out the exact thing that caused it. some point, just the mood shifts because it gets high enough that everybody says oh there is a problem -- uh-oh, there is a problem here. wall street can change but when it does it could be an adorable change. romaine: when you look at the comments that the president made about inflation and all the activity we see at the fed. is that the best indicator than the lack of health in this economy? lunch withnt to a the vice chair of the fed and he talked about whether our measures of inflation are giving us the right picture of the economy, and therefore, the

right guide for monetary policy. he said he learned to be a pilot and they tell you do not chase the needles. that means don't fixate on any particular thing you see on your dashboard because it b could be giving you the wrong message. .hat is really sound advice it is sort of a form of data dependence. caroline: are they looking at the market when they look at those betas? -- datas? at somehey have to be degree because the markets are part of the financial condition. a week stock market makes financial conditions tighter and that is something the fed takes into account. they do not just want to be led around by the nose like a b ull because then they will be accused of having a powell put. romaine: what do you make of this idea that the u.s. is moving ahead to fast relative --

too fast relative to the other banks? there was concerned that the fed may not be taking into account the effects of its policy hikes on other nations. peter: this is a perennial complaint of other countries. the response from the fed is our job is to take care of the u.s. economy. that interest-rate increases harm the rest of the world and therefore rebound to the united states, then we care about it. we cannot be steering our monetary policy for the sake of indonesia or south africa, or any other country. caroline: interesting as we anticipate the chinese data coming out. you are quite, thank you -- peter coy, thank you for breaking it down. romaine: paypal is reporting third-quarter earnings now. i need to pull it up. caroline: i will bring in the numbers. fourth-quarter adjusted earnings is 65 to 67. that is above estimates.

they are boasting the earnings-per-share forecast beating on estimates and net revenue for .2 billion to 4.3 4.2 billion to 4.3 billion. romaine: it is all about the guidance and about the conference calls. this is what we hear from a lot of people is that what ever is reluctant -- written in the release, they want to hear from management. paypal is in fierce competition with square and amex. caroline: we have started to see a little love for these new age paper companies in the last couple of weeks. romaine: paypal was at the forefront of that. they are finally getting its due assuming they can keep pace with square and others. caroline: coming up, we mentioned netflix crushing estimates. to see is post earnings gain of

apparatus, we will see what is behind the tech stocks next. this is bloomberg. ♪

caroline: a pre-from aig letting us know pretax catastrophe losses will be large. 1.5 to $1.7 billion. talking about monsoons and overall statement to the press. japan's own data came in week because of young growing concerns -- weak because of the on growing concerns of catastrophes. have cut their earnings estimates because of these one-off events, but we are seeing aig fall after hours. let's get back to another

earnings story. the glow from netflix earnings only lasted a day. for more, let's bring in paul sweeney. paul, you were with us when netflix broke. the subscriber growth was .antastic yet, after a couple of days, the bounce fell away. don't think it is a netflix specific issue, they delivered everything they needed and more. they gave strong subscriber growth and the forecast for the fourth quarter was good. showsot a lot of big launched in the fourth quarter to support the subscriber growth. this is a function of the marketplace with the nasdaq off over 2% today. when you think about the headwinds for some of these high beta stocks, higher interest rates do not help your when you discount those cash flows. and any other issues relating to

global growth or tariff issues, i think the nasdaq feels the pain more so than any indices. specifically for netflix, they delivered everything they needed to. romaine: this was in the narrative not just for narrow flicks but -- for netflix but for other high companies like this. they reach a level of growth where people are questioning whether they can continue at that pace or see leveling off. there is concerned that this might be as good as it gets. paul: to the extent you are concerned about global economy slowing which would be an issue consumer disposable income and the 10 to $12 that seems fine for the subscription is maybe not so fine. when you think about netflix, they are a global company now, different from a couple of years ago. they are in every country on the planet with the notable exception of china. i think tech investors and these

high-growth investors will be looking to out for up and facebook coming up because they will give you a better read -- tut for bet and face -- alphabe and facebook coming up because they will give you a better read. the outlook for a lot of these social media companies, digital media companies, remains strong on the top line. google's parent had hopes of global additional advertising. netflix said itself up on how the rest of the faang stocks will perform. we thought of it as a bit of a bellwether, is that dead? paul: i think for netflix, the model is different. thisetter bellwethers for group might be the more broader, global advertising depending companies like alphabets, facebook. this earnings release coming up

for facebook will be extremely important for not only the company but the sector. their stock has been under pressure and external issues stock.g on the what this company needs is a strong blowout quarter to let the bulls drive the ship a little bit. nasdaq has been under pressure angs being the best performers are bearing the brunt. maybe earnings this quarter can turn the narrative around. romaine: do we need to drop the end from the -- n from the faangs? paul: i don't think were quite just there. caroline: paul sweeney, brilliant to have your opinion. thank you. coming up, the summit showdown. brexit talks fall flat setting up the two sides for a december crunch. the situation in europe, next. this is bloomberg. ♪

mark: i am mark crumpton with first word news. president trump says it certainly looks as though missing saudi journalist jamal khashoggi is dead. the president did not say on what basis he formed his conclusion about his fate but he says the consequences for the saudis "will have to be very severe if they are found to have killed him." in the meantime, 11 democratic senators a sign the letter -- signed a letter asking for full disclosure about president trump and their financial ties to saudi arabia. 43 house members, including one republican, sent a letter urging the president to impose

sanctions on those responsible for the shoji's disappearance -- kashoggi's disappearance. president trump threatened today to close the u.s. mexico border with mexico does not stop a turkish caravan. theants have arrived guatemalan side of the border in hopes of reaching the united states. -- thatpean union's is you and u.k. is urging to an agreement. while the eu summit in brussels fell short of a breakthrough, both sides think there is merit in keeping the u.k. inside of the eu's full membership rules for longer after it formally leaves. now emerged is the option to extend the

implementation. could be a further solution in northern ireland. mark: one sticking point remains. i heart border between ireland and the u.k.'s northern ireland. the issue that has brought talks to a standstill. -- i am a european and an irishman. we cannot have a situation for a buy. at the same time, we were undercut in terms of standards whether it was environmental standards, health, labor laws, state competition. i don't think any union would be asked to accept that. mark: the french president told reporters in brussels today "the key settlement for a final view is on the british side. there is no additional political compromise to be made on the european side." global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.

caroline: let's get more on the summit showdown. the senior in european economist read it just at schroders. give us the european take because we heard after is the -- after the u.k. dinner, it is still a mystery to us. >> this latest delay is quite convenient for the u.k. government. they do not talk about it openly but they have to pass up budgets in under two weeks time? iershey upset the brexit in the meantime, there is a good chance the brexiteers will vote down the budget automatically checking the general election. on the one hand, it is a bit

risky to leave all talks lasting through december, pretty much the last chance to get an agreement. at the same time, they want to be able to go into the talks that the threat for general election is not there. romaine: you think the eu will hold the line on this? azad: they are pretty close to a deal. the noise is coming out of the republic of ireland suggesting the idea of having the u.k. within the customs union, at least temporarily, is acceptable for them. it is beginning to be acceptable for downing street. --o not think caroline: the issue for the is the longer you are in the customs union, the longer it takes to make other trade negotiations. azad: that is exactly the concern for them. they could end up in a limbo brexit, a never-ending brexit.

distinction on what happens with this transition that to do we set an automatic end date or do you set it up see you need to have a vote to and the transition? they are leaning toward the latter. if there is not the majority to end the transition period, it could roll on. eu are not only just dealing with the u.k., but they are dealing with italy and their recent budget that came out. i wonder if maybe that eu has been put in a position where they have to negotiate too many things. azad: i was talking to some of my colleagues recently and the swiss have had their issues with the european union. they felt because of brexit,

they have not been able to voice their concerns, negotiate free moves of labor sufficiently with europe because they do not have the capacity. your would love -- europe would love to move beyond brexit. caroline: talk to us about italy. i want to bring in another key economist. the view from deutsche bank has been one that needs cut of slack. is tot italy needs jumpstart the economy. we need to stop talking about more reforms. it is just a matter of jumpstarting the economy. to make 2.4 the end-all be-all is the mistake. they have all the rights in the world to go through 2.4 and they will. is note: he says 2.4% that bad for italy. let them grow the way out -- their way out. do you think italy should be allowed breathing room to

jumpstart the economy? azad: the problem from the european commission point of view is they provide italy with breathing room under the previous administration. what happened was that the government collapsed and we have a new government. they would like even more breathing room. so they have to set red lines. it is difficult for them to push italy too card. hypocritical for them to attack italy in such a way. in one way.is this is an expansion of gdp. most countries do this and no one blinks. risk of very much at the bond vigilantes out there, but at the same time, 0.6%, compared to what was threatened

months ago, that has not happened. they have been quite sensible. romaine: these red lines are what seems to be fracturing -- what is fracturing the eu. i wonder why we don't see more romote by the eu to p this fiscal growth. there is an argument to be made that fiscal spending can help economies. azad: they can. a lot of them are on a good position of physical balance -- fiscal balance. there are only a couple of countries that have more to do. like germany, you can argue they should be spending more money today to upgrade their infrastructure, productivity as well as a country, yet they do not to do that. most of these countries are running quite high debt to gdp ratios now and they feel they have to get these down ahead of the next 10 years when the aging

population impacts starts to hit the public finance. trend growth in all of these countries will come down. italy will probably be negative for a couple of decades. i ticket: and i they come down in population. azad: they already have a shrinking population. caroline: that is the conundrum that continues on the eurozone. thank you, azad. great to have you in town. coming up, we are getting ready for a seasonal block of ipo's. this is bloomberg. ♪

caroline: is a secretive data mining company, it is cofounde d -- let's bring in the ceo of triton research. are the doors flying open? lyft,,earing of over, so why all this excitement about the market as it falls out of the bed? >> this has been running at in terms of tech ipos. we joke here about this being the uber market. moments the uber might be coming. it seems to us we are taking a little break from the election now because tencent music put

their deal on hold. caroline: is it the election or volatility? rett: both. volatility comes and goes, but the election will be the sign it is time to go again. wheree have these periods go and the grand finale of the big bang will go. romaine: of these companies going public because they need the money or it is a way for the early investors to find the cash? rett: pelletier, they prefer not to go public but once liquidity for shareholders. it is not a new company. it has been around for a long time. caroline: i'm interested by the juggernaut that is uber. if it is going at $120 billion valuation, do they have to close the market because that will not

be any more cash to burn? >> all the oxygen is out of the room and the cash has been spent. what we've seen before when they were big moments like facebook, twitter, snap, people need a break after that. i think this market has been running in the very hot way for a while. uber has been clear about what their intention has been and everyone can plan around it. romaine: what about the appetite in the secondary market for this? in previous eras of ipos, you -- set ofndary seven investors getting an early. you are talking about the run-up in the growth of the companies. rett: one of the things also different is the aggregate dollar numbers are so big now that there aren't enough retail investors. , if it is a $40 billion

--pany, to great meaningful to create meaningful liquidity, doing that with original investors will be difficult. mapping that to a lot of these , it is a veryies effective wedge to create a vehicle good for liquidity and fundraising. caroline: that is interesting with tencent music. they're looking to sell quite such a big part of the company to the public. how much are we expecting to go public into free flow from the likes of that to support the valuation? rett: if uber is worth $120 billion, the big dog of all big dogs was alibaba. it is a lot of money. this is many multiples of the full-year dollar volume of tech ipos. where does that money come from? it is special occasion and a alatile environment -- in

volatile environment, that goes into how much of the company they want to sell. romaine: palantir was introduced as a secretive data mining company. of thesethat with some companies, they have been shielded from public scrutiny because they were private for so long. how do they deal with it? document that a is a disclosure document that goes up to the world, a lot of the times the real stuff is in there and sometimes it is not. the transparency index have statistics i need to analyze the. -- analyze you. caroline: two companies maintain odor control as well? we saw it with snap getting a push back. rett: we score for founder power. our the founder still there and do they have the vote? do they have vote seats?

founder power is generally good and highly correlated to success except when the founders have less of an idea of what to do and have total control. caroline: it is always great to get your opinion. the ceo of triton research joining us there. apple is expected to unveil new ipads in an event in new york on october 30. bloomberg reported earlier apple planning the largest revamp of the ipad probe since 2015. plus there will be a new laptop and another mac mini.

revenue rose 2.8% which matched estimates. paulinterest me because palm and of unilever is the big question mark to find when he goes. and when you saw her leave, that was the first thing everyone thought. maybe this is the setup. this is her a sent to the top of a major company. she was not getting that opportunity. caroline: it's notable she has the asia focus. romaine: asia is everything. if you cannot make it in asia, you are basically not been a be worth much to your company. caroline: all eyes on what happens with the unilever there. facebook has been under scrutiny when it comes to policing content on its platforms. particularly around elections and misinformation. that causes the company to

invest heavily in cybersecurity. a war room. created >> this is facebook's election war room. the nerve center of their election interference operations where teams of engineers and data specialists are patrolling for fake news and meddling. what is happening in the war room now? >> right here we have experts from across the company, and data scientists are looking at dashboards to see if there's any spike in content that could be related to voter suppression and prevent any of it from going viral. >> this to not exist in 2016. personally, i think the idea facebook, ofs on

which it is a small amount of the contents influences the election in any way i think is a pretty crazy idea. >> in the last two years, it has been clear russia expertly weaponize facebook with the express purpose of sending u.s. elections into turmoil. facebook has apologized for not catching it and committed massive resources to combat it. what facebook calls coordinated inauthentic behavior has continued. not just from russia but from iran. with u.s. midterms weeks away, facebook said activity is ramping up in the majority of it is coming from inside of the united states. publicrder to manipulate faith, you have to understand the culture you are targeting. we're talking volume. overseerference from as can be influence. there you have a foreign state

looking to meddle in another country's policies. >> this effort expands around the world. now including former law-enforcement, government, and secure agency talent also monitoring facebook messenger and others. not just ahead of the u.s. elections, but the presidential election in brazil. our investments in machine learning have allowed us to block fake accounts usually at the moment of creation. >> there is still an indefinite amount of new want when it comes to what kind of activity and content could breach policy. takeompany said it would down misinformation about how people would vote and whether their vote will count. other types of voter suppression under threat by active shooter would be outsourced to third parties and potentially flight if false. lawmakers are watching. >> i think facebook and the of the -- the other platforms were slow to react to this.

they were unprepared during the last election as the russians weaponize to social media. that does not mean that there won't be efforts. >> there will always be unexpected threats and challenges. >> the question remains, will 2018 be different? caroline: great reporting there. let's bring you breaking news on dupont. it will take a $4.6 billion cut to thepairment long-term 80 sales profitability forecast. are off of the lows after hours. romaine: it is also talking about unfavorable currency impacts in latin america. what thisclear -- no is tied to. it seems most of this is tied to what is going on in the americas.

i'm not sure if this has to do with commodity prices or if this is a currency issue. we will have to keep an eye on it. the share drops. caroline: this from new york, this is bloomberg. ♪

romaine: we want to revisit that news. a $4.6 billion write-down. this is related to goodwill. they are citing lower growth expectation that were driven by an unexpected, unfavorable shift n inoybeans from cor latin america. back in august, they reported issues with their profits because of the decline in soybean prices as well as increased planting in china and elsewhere because of the trade war. the release does not mention the trade issue at all, but it says the issue with soybeans does seem to be tied to the write-down. caroline: this leaves us to talk

about asia ahead. todays drought deepened dropping to a four year low. what is going on? we hear the impact of the trade war on soybeans and dowdupont. what do we see on the impact of trade numbers from china later today? shery: we of the numbers coming out tonight. we'll see if there are impacts of the trade right now or if we see the left over deleveraging also happening. are noters out of china as reliable so the expectation consensus is that the economy, in the third-quarter, has grown 6% year-over-year. caroline: fascinating. we will keep a close eye on the retail sales. what is the other one? industrial products? shery: yes. caroline: that a set to fall. sherry, thank you. you.ery, thank

caroline: that is it for "what'd you miss?" romaine: "bloomberg technology" is up next. caroline: have a great evening. this is bloomberg. ♪

emily chang san francisco. this is bloomberg technology. facebook goes to war to try to save democracy. we go inside of the social wherek's war room employees are running interference on domestic attempts to undermine the vote. plus, india is the next battleground in the fight for e-commerce demo on -- dominance.