is 2015. asian stocks flirt with a bear market. trump's blame game. he says maybe he regrets jay powell as his pick. war, openrnal conflict as members protest. it all brings her leadership into question, again. david: welcome to "bloomberg daybreak." at&t out with earnings, a slight miss on gps, a slight beat on the revenue. because it istell the first quarter since they bought time warner. at&t-verizonke the story. two stories, two bets. david: we will be curious what

at&t says they will do with all that content from time warner. they are looking to the future in content. ,lix: revenue looks like of the earnings on an adjusted basis in line with expectations. they are giving a full range, so right around and estimate the street was looking for. s willnference call for up be interesting, traffic, margin issues, tariffs. david: the postal union. alix: there is that too. david: if the u.s. withdraws, it benefits ups a lot. alix: in the market, it will be the battle of the macro versus the micro we saw unfold.

the s&p was below 2700, then we rebounded. futures continuing to selloff, .6%, despite that europe is holding up well. earnings mostly from consumer staples. that is playing out in euro dollar. part of that is weaker pmi. germany factory orders the lowest in years. that is a trade story percolating in europe. two10 year yield lower, basis points. we had a solid auction yesterday. yields are high enough for investors to buy. brent continues to roll over, off .5%. david: the saudis are doing that. alix: it was like a mario draghi moment. david: we will pump more for you. it is time for the morning

brief. followed by new home sales at 10:00. 1:00, the u.s. treasury $739 billion in five-year notes. at 2:00, the beige book. bell, earnings from tesla, microsoft, and ford. byx: now we are joined bloomberg's editor for global business and mark cudmore. both joining us from london. excited to have you here. this is the chart we are looking at. it is worldwide stocks set for the worst month in three years. are we at the bottom? p? you buy the di >> we are in risk aversion. it is the worst month in three years. good, longn in a

rally. now we shifted to higher volatility. that doesn't mean the world is ending. growth is going down a little bit next year, 3.8% to 3.6%. david: companies are reporting earnings that are disappointing. we had caterpillar yesterday. how much is triggered by company stories? 25% through%, reporting in this earning cycle. all but 15 of the companies he forecasts. daystock prices the next fell an average of 0.5%. what you are seeing is pressure on comps affecting the bottom line. market is looking for tensions around trade tariffs. some of this is creeping up in the rhetoric you are hearing from companies. from thet i love

caterpillar conference call with the cfo saying we can't growth that fast all the time. a $50asically said we are billion topline company. you can't grow forever. i felt like that was the weirdest explanation. what do you think, mark? >> this is more about excess optimism. is weidance going forward can't keep growing at the same pace. there is a difference between a slight slowdown rather than a negative world. i think we need to recalibrate. ,e have had higher volatility but not a reason to get long-term bearish or sustain the selloff. david: the reason we had a selloff like yesterday, why did it happen? some people are talking about fed tightening, margin pressures, china growth, but president trump has his own view. it is the fed. he may be regrets appointing jay

powell as chairman. he says every time we do something great, he raises the interest rate. is it possible the fed is behind this? >> it is not the dominant factor. we've had other issues, the stress and european politics, the saudi arabia situation, the squeeze in oil prices. i think the fed is part of it. we haven't broken through those higher yields. the market is pricing in the fed will stop hiking rates by the end of next year. that was a factor a couple of weeks ago to start the selloff. alix: homebuilders and automobiles make the argument it is those higher yields eating into earnings growth. >> that is another factor, another confluence. it is a factor. everything is getting more expensive. there is pressure on that cost base. it is not to be ignored.

one thing we are saying interesting this quarter's companies starting to say we have to say we have to rethink where we put our supply chains. it becomes more expensive to import from that market. there is yet another confluence in this basket of uncertainty. point, not only china to the u.s.. china, mexico. our third story is my favorite story, brexit. you have the cable rate. its movingis near average. when will we stop talking about another referendum on vote of confidence for theresa may? is this different than it was two months ago? >> i don't think we will stop talking about it soon. it will come to a head. it is clear the problems are more domestic. it is theresa may's fight on the home front, not with the eu.

the eu wants to reach a deal, but the problem is what deal will be supported domestically. it will keep on dragging on. some love it. some hate it. david: in the meantime, companies have to make decisions. if you are in the u.k. are europe, had you anticipate? >> if you look at the japanese themakers, japan is one of biggest investors into the u.k. outside the eu. they are saying we don't know where to place our bats. quietlyearing companies putting operations in france and different markets on the continent the cousin have no visibility about the future. alix: we see theresa may there and parliament. seven of her members coming out against her brexit deal. way, we area chartering ships to bring in

food and medicine. the cabinet minister said, what? they are worried the ships can get through. >> not a real reassuring sign. one of the things you take away is the supply chain has been disrupted in the you can u.s., so why are asian markets doing better? both very muchu for being with us. xm beat, butrious basically held to their forecast for the rest of the year. they are up 2% on the news. alix: i'm looking for nasdaq earnings. david: let me recap at&t. it came out just before we came on the air. they missed on gps, a slight beat on revenue.

this is the first quarter with time warner. they have to announce what they're doing with time warner going forward. at&t is down 2%. alix: earning slightly better there. you get hit. if you have a beat, you can still not sustain your stock rally. if you have a miss, that gets brutal, just ask caterpillar, 3m. 's earnings coming in line with estimates. share, so the forecast misses the midpoint estimate. is the tugbig story and pull. they have more cost to deliver these packages, but they are investing a lot in inefficiency.

-- in efficiency. g the coming up, pickin winners and losers. we will break it down with our guests. the damage we saw yesterday on the equity markets. this is bloomberg. ♪ ♪

alix: the s&p 500 down 6% from the record close last month. individual stocks bearing the brunt of this rolling bear market. s&p,w an 18% drop for the worse than february, and we are close to that decline in 2015,

that 22% level. i want to look at the technicals. us on the phone now. i want to talk about the lows for the s&p and the new four-we close for stocks. what does that take you about the direction of the market? declines,steep market it is important to focus on what the individuals dock is doing. often those individual stocks give us the warning the selling is about to start, but gives you the first warning of potential bottom is closer. looking at how many stocks in the s&p 500 traded at a it gives low gives us, us warm inside. the selling pressure, a lot of it has taken place. if you look at october 11, two , 76% of theew lows

s&p 500 members made a new four-week low, so three out of every four stocks made a one-month low. by our measures, 60% is extreme. that is washout conditions. we far exceeded that. what happened yesterday? the number of stocks that made new four-week lows, 52% of the s&p. that is still bearish. that is not good. that is 25% fewer stocks at new lows. that shows the selling pressure is slowing, not ending, but slowing, coming to an end. alix: fair point. i want to look at tech. the nasdaq is the top panel. the bottom panel is the relative strength index. to beng below 70 tends oversold. what does this tell you?

tech has been confusing. yesterday, it was one of the holdups. last week, we saw tech rebound. how do you think about this? good and helps us measure the momentum of the market and gives us an idea of the magnitude of the recent price changes. we go back to october 11, the most recent low. rsi for the nasdaq hit 18. anything below 30 is oversold. 18 is extreme oversold levels. we have not seen an 18 reading september 21, 2001, so the recent selling has ton more volatile since 2008 2009, more par 4 than the flash powerful than the flash crash. it is slowing and starting to

ease. yesterday as the nasdaq retested not at a new low. pressure,till i selling but not as strong. bottoms are made with these positive diversions is. we are saying we are closer to a bottom than october 11. alix: thank you so much. less bad is positive. david: a warm feeling. fundamentals. the we just heard about the technicals. tell us your attitude overall to the market. after yesterday, do you say valuations are cheap and it is time to get in, or a time to sit on the sidelines? trading 17 times

earnings. a year ago, it was 19 times earnings. the stocks have traded water over the past year, while earnings have grown substantially. you have valuations more on your side. pick, hard to bottom but 5% or 10% pullbacks not accompanied by a recession tend to bounce back quickly. david: what caused the selloff to begin with? how concerned are you with earnings? >> earnings have been strong. you see more companies eating earnings forecast then you traditionally do. less than wee been have had, but one of the things unique about this selloff is when stocks pull back, you see interest rates pullback. it. time we have not seen i think it has been caused by

this rise in interest rates. interesting, because stock investors are typically more often than not optimistic and bond investors tend to be pessimistic. we almost have a reverse of that where the bond markets don't seem to be as concerned of the stock markets. alix: you are talking a lot like donald trump in terms of the fed , which we will be breaking down later. in a simplistic way, what do you like, what do you not like? one thing this has seemed to do over the last few weeks is you have seen value stocks gain back a little of what they lost this year. it seems like there is a rotation from growth to value. it has been a long time coming. it has been a long growth stocks cycle. we feel like we could be on the cusp of a rotation to value. to be inors want equities, but more defensive,

beenh care, equities have a place where you have seen a rotation from tech the health , or for growing earnings likewise dividend paying stocks or something that might give investors a way to play defense. david: we just scratch the surface. you will be staying with us. cutsg up, deutsche bank its revenue forecasts and abandons its long-term profit goal. this is bloomberg. ♪ aware that we have had a track record of surprises in the fourth quarter. we are working to avoid such a surprise. ♪

david: barclays and deutsche bank reported earnings today. the british lender saw its trading business outperform u.s. rivals, but corporate business the worst performing unit. the ceo spoke to bloomberg

exclusively. this is what he said about the recent quarter. >> we are pleased with the results of the third quarter. this is the second clean quarter for the bank. we have no legacy issues. profits were up 40%. for the second quarter in a row, we generated over one billion pounds clean. that is a demonstration the strategy of the bank as well on course. a dollar basis, our markets revenue in the third quarter was up 19% year over year, the best performance of any bank to report thus far in the third quarter. share inained market our investment banking market four quarters in a row now and demonstrates the return on investments in that business. barclays u.k. had a great quarter, positive jobs, earnings 2 billion pounds, so good performance there.

this is the third quarter in a row that barclays as a group generated double-digit return on tangible equity, which is our goal. >> good morning. talk to us about equities trading. there were high expectations in the market. tell us how that performed. have been doing well all year on the equities trading side, from cash equities to trading of what is called flow derivatives. we arewe are launching new elecc trading platforms over the course of this year. that has had a strong impact. we have a new management team in place doing quite well. we have done well from credit to equities. we are pleased with market performance, gaining market share. thing the most important he said it's we are on track

with our strategy. he came in and laid out a multiyear strategy he has been delivering on, unlike other banks. you see in the trading how well they are doing. his basic there is a strong retail base, which is in england, married to an international investment bank. alix: this chart highlights the earnings, barclays versus deutsche bank. that says it all. is german lender posting third lowest quarter revenue since 2010 after cost cutting and layoffs. we spoke to the deutsche bank cfo earlier. comparisonson year is what the market typically looks at. that shows you sizable numbers like 15% in fixed and equities. line witho be more in

the market performance broadly. alix: this is what we have been dealing with for a while at deutsche bank. you cut costs, how do you grow? david: he said one strategy for the last three years. deutsche bank has had how many strategies? alix: what do they do now? look at investor trading revenue. what do they do? david: they cut costs. we know they want to cut costs, but i'm not sure. alix: and stay the course? coming up, disappointing industrial earnings. we will have third-quarter results next. this is bloomberg. ♪

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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. alix: this is "bloomberg daybreak." we're still going to look to open lower today as futures are off by 13.

can going stand the washout we saw from 3m and caterpillar yesterday? nasdaq futures are down. eeking at acks gain. cannot hold if the s&p stays in the red? european banks a little softer. deutsche bank versus barclays world, the have's and have not's. a stronger dollar story. euro weaker. endhave buying in the long looking ahead to the five-year treasury auction coming at 1:00 p.m. today. crude flat on the day. david: we now have earnings out from boeing. they be on earnings per share and revenue. $23.9 billion. 737's.ivery of the

they are raising their revenue and earnings per share guidance going forward. strong numbers out of boeing. it looks like they are up about 2.8% in the premarket. general dynamics is out. they have earnings per share of $2.79. $9.1 billion. something of a miss on the revenue that it be on earnings per share. alix: i'm interested in terms of boeing. will there be a pop and then they can't sustain it? will this help the overall industrial sector? numbers were not as good as the street wanted them to be. there was a market pressure issue. david: a lot of the issue with caterpillar was a warning going forward because of costs. we will see what boeing has to do. they are guiding upwards. dynamics -- they don't

650's to deliver. i can afford a car. i have friends you have one. alix: lockheed martin, for example. yesterday, they were great. a little eeking out bit again, at least in the beginning. david: we want to find out what's going on outside the business world. we turned emma chandra. emma: good morning, david. turkey has direct the accused the power behind the saudi throne of involvement in the death of journalist jamal khashoggi. princeide says the crown has "bloody his hands." those who ordered the killings should also face justice. the head of the house's tax-writing committee supports president trump's support for

10% tax cut for the middle class. kevin brady says if republicans retain the house and senate, they will move forward on the plan. it is a signal the tax overhaul is improving. president trump stepped up his attack on jerome powell. the president told the wall street journal he may be regrets appointing powell. he was not say under what circumstances he would fire him. he said he was intentionally sending powell a message he wanted to lower interest rates. global news 20 hours a day on-air and a tictoc on twitter powered by more than 2700 analysts and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: i love that clarity. i want you to lower interest rates. president trump pointing that finger at jerome powell. are there other dynamics at play behind that market selloff? a lot of it is maybe technical, margin pressure, repricing

profits, value versus growth, china growth, etc. joining us now is jerome schneider. we are focused on the fed part. is president trump actually write? -- right? jerome: we believe it will be about 3.1%. a little below consensus but the message stays on tack. slack is diminishing. inflationary pressures are constantly slowly building, meeting wage pressures are building, etc. there is a fairly healthy reactionary function over the near-term, which is going through its course, normalizing monetary policy and continuing to increase interest rates over the next year or so. alix: it sounds like that makes sense. in some sectors of the gotten pummeled, auto, home builders, that seems to be a direct

correlation to higher rates. jerome: those sectors are absolutely some the ones for which higher interest rates will filter through the broader economy. bc slower housing starts. auto sales are looking like they might be peaking. for investors in the long-term time horizon there are had.tunities to be we are shareholders in general motors. gm is getting squeezed by tariffs, weakening global demand and higher interest rates. we recommend investors look for stocks that have a high dividend yield like gm, a 4% yield. that is a name for a long-term investor they have done a good job -- they may have near-term weakness. reforming theinto company for the future where they are automated, automated cars with electronic vehicles, ridesharing, whatever

the future of the auto industry looks like, g.m. should be a part of it. david: until recently the fed could raise rates and it did not tighten financial conditions. that seems to be turning around a little bit. how much control does the fed retain? we have more auctions today at five-years. there is a lot more supply. will that inevitably raise rates? jerome: number one, the fed has to be reacted to the data. they have to be more reactive in real time than it has in the past, especially as we get into 2019 when powell can speak it every fed meeting like a press conference. it changes the dynamic in terms of the communication policy. even though we have tighter monetary policy, the message might be clearer. the second element comes in regards to how do you react to tighter financial conditions? financial conditions have

tightened about 75 basis points over the past six months. yes, they are tighter but that is what the fed wants to do. what does it mean for investors? investors have to recognize tighter financial conditions, tighter financial policy leads to higher volatility in the marketplace, less uncertainty, and he had more diligent about your asset allocations. placeselter in other that focus on lower volatility. alix: which one is it? jerome: we suggest a barbell approach and focus on the front end of the u.s. yield curve that remains more fairly priced than the rest of the yield curve and offers a low volatility approach. you have volatility on the equities. you have long duration bonds that have been slightly underwater with headwinds with higher rates. the short end has been low

volatility, more or less a 1% volatility, but you're approaching 3% to 3.5% type of returns and a good diversified portfolio. that is what we're seeing. de-risking d --e--- balance portfolios. you don't necessarily have to be making these decisions right now. just preserve your options for the future. david: at what point do we start asking questions about stocks versus bonds? or are we simply in the stock world? jerome: we are in a little bit of a world of financial pressure. i understand the president thinks rates of gun crazy, but real fed funds rate is relative to cpi is so negative. money is still pretty loose. as interest rates go up we think there should be some competition between stocks and bonds. that is one of the reasons we

feel it's a good environment for dividend payers. eyewitnesses dearly recommend a lot of bond proxies, utilities or some of those that are going to be interest rate-sensitive, but if you look where they are actively raising dividends, financial service firms, the health care sector is finally raising dividends but also a place for your getting a lot of buybacks. and likewise these are areas that phase other tailwinds. financials could benefit from rising interest rates. health care benefits from demographic trends as well. alix: franklin templeton doubling down at 4%. they are continuing a short duration. is that something -- if we get the 4%, does that mess up the whole economy? jerome: we have to focus on why we get to 4%. we don't believe we get to 4% at pimco, but we believe in a steepening yield curve. term premiums increasing.

and you have increasing supplies. is due to physical need -- fiscal need. be theyields will motivating factor to incentivize new divans in the marketplace. it is to be relatively void at this time. over $1 trillion in incremental financing that needs to be done over the next 1.5 years, but reality is we need to find buyers. the steepening yield curve does seem to be the -- questions, for more fundamentally look at the fact that normalizing monetary policy ultimately impacts liquidity conditions. what we are talking about for the past two weeks is changes in liquidity conditions and what goes on in the market. share, earnings comes into play, political statements, to play, but those sentiments are the underlying theme that liquidity

is changing from an easy monetary policy to one that is slowly maturing to a tighter when. -- tighter one. alix: inflation is not accelerating. we know it is around 2. oil, falling. jerome: that is a risk-off trade. slack is being reduced in the economy and growth is continuing. all you need is a slight change to the term expectations outside of the curve. i agree with you. 2% or so. the policy you get to 2.3% or that has pretty make impacts in terms of the expectations of how much real return investors want to have. there are a lot of uncertainties. if you're not highly convicted that inflation is going to remain static for the next 10 the curve, be outside

or dividend-yielding stocks, be more defensive and understand liquidity is more costly at the front end of the yield curve. david: when you're talking about stocks, does that mean there is a premium on cash flow, balance sheets, leverage flow? you want companies that will not get caught in a liquidity crunch. jerome: absolutely. investors are moving more risk-off. if you're going to remain in equities in this environment,. companies that have rocksolid -- look forts companies that have rocksolid balance sheets. the financial services -- jamie dimon said the entire sector is on better footing than it has been in many years, if not decades. that scenario benefits from the andcuts, from deregulation ever since the financial crisis you have better low quality that

better loan -- quality flowing through the system and that is something to look at. david: jerome schneider, thank you for being with us today. the government getting out of the business of eliminating online gaming in china. alix: a look at some of those earnings, it is the beat from boeing. third quarter revenue beating earnings. the stock holding on to gains in the premarket. can it the industrial sector find his footing? general dynamics off by 3%. beat.le bit of a g.d.ker sentiment for this is bloomberg. ♪

alix: -- emma: coming up in the next hour, ahead of barclays credit research and strategy. this is bloomberg. ♪ emma: this is "bloomberg daybreak."and ever energy reportedly has a sale the value it more than $10 billion. the texas-based company has considered an ipo, of plans of stalled because of concerns about tepid appetites for oil and gas stocks. shares of the two parent -- gucci's parent surging today. they had been down from their 30% -- they have been down 30% from their peak in june.

shares of volkswagen are lower today. says they are likely to end this year lower or flat. china is vw's largest single market, thinking of more than 40% of the total global sales. alix: thanks so much. we cover three things this morning. deutsche bank cut costs and employees as they attempt the revenue rebound. jpmorgan private bank chief departs. one of wall street's most prominent women stepping down as the head of the firm's u.s. private bank. china posits the game. they hold a special approval process for new games, threatening the world's biggest giving market. david: joining us is jason kelly. let's go first to deutsche. we came into this

earnings season relatively upbeat across the board and here comes deutsche bank. -- we gothave to talk to talk to the chief financial officer. they are making some money for a change but the have got to cut a lot of costs. >> we have been profitable in the first nine months and we have been working towards a profitable year. we have been working towards achieving near-term targets, around expenses and headcount. the third-quarter results demonstrate our progress towards those goals. david: the question i keep asking is, what are they? i understand they want to cut costs and headcount, public today want to be? jason: that the big question. they have talked about growing the investment bank. that is not really happening yet. they are at a point where they do need to start growing revenue. you can only cut costs so much. it is not great when the cfo is talking about being in a vicious

circle. that is not the message you want to get out there. i will review what he says. "a lowerng revenue credit rating and rising funding costs." alix: if you work for deutsche bank, what are you thinking? what you doing? are you aggressively trying to find a job? put your nose down and stick it out? jason: that is one of the unspoken parts of the vicious circle. if there is not the enthusiasm, especially at a time and other banks seem to be posting good results, you will not too far equity berkeley's, revenue of 35% ther. -- there. alix: jpmorgan, we have some management shifts. she let the private wealth bank in the west and she is now

leaving and handing the reins to barry summers. bummed a man gets a job, but she is one of wall street's most prominent women. jason: this is a business that is doing well. has to got like she find a new job. revenue is up 14%. this has been a growth engine for every bank. alix: where does she go? she's only in her early 50's. david: she reported to another woman. it is not like -- alix: i'm just saying it would be nice if there was more of a trickle-down. david: now let's talk about the games in china. tencent has gotten hurt. they came up with a temporary way of approving games, and now they are going to shut that

down. jason: when i first read this i thought, is this a tariff thing? it is actually more about china saying we may be going overboard with all of these games. where the world's largest gaming market. they have talked about addiction, myopia related to youth culture because mobile games are so deeply entrenched. david: and social issues. president xi once the clampdown but that will hurt a lot of companies like tencent. interestingll be to see if this trickles through the some of the big u.s. game makers. david: i won't tell my sun. -- son. alix: what is a hot game now? fortnite. david: thank you to jason kelly. you can tune into jason every

day on bloomberg radio from 2:00 to 5:00 eastern time. coming up, another bruising showdown ahead for theresa may. more on what i'm watching next. alix: you can check out tv . watches online and interact with us directly. this is bloomberg. ♪

david: what i am watching is theresa may and her cabinet. she apparently little overnight

and said we will have to extend this time we are in. the thing that struck me is her deputy said we are chartering a bunch of big ships to bring in food and medicine in case of a hard brexit. the cabinet said, what? alix: they could stay in the customs union for a longer period of time and you don't have a say in the rules, which is the opposite of brexit. seven numbers were like no dice. david: there are six. senior members were giving her a tough time. she is fighting it out right now. the problem is the reason they want to extend it is they don't to confirm what to do about ireland. they have a real problem with the irish border. -poundit is also a euro is an interesting one to watch. how are you going to make the hard choices? just rip off the band-aid.

you are not going to be able to please everybody. how do you make the argument you don't have a falling currency? david: some prominent people in england say they should have done it at the very beginning. rather than trying to negotiate every deal around it. that is the best case. alix: now is like, can she survive? will be a vote of no-confidence? david: and all these companies are having to make decisions. alix: up next, we preview tech earnings with mark stoeckle. mark stoeckle. 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. ♪ alix: boeing helped stem the

selloff. the company reported. blame game. he may be rejects jerome powell as pick for fed chair. some say the market is ripe for a bounce. 3200 as and p call for this year. david: welcome. i am david westin with alix steel. alix: industrials get hit. you have a rebound towards the ascent be. -- the s&p 500. take boeing. analysts say i want to buy, but what is the catalyst? david: it is fascinating about whether boeing could be the anti-caterpillar. it is a good start. europe did well. alix: not too shabby. let's take a look.

500 negative but only two points. the dow joins flipping -- jones flipping. a stronger dollar story. 113 is how we trade so part of that story is weaker emi out of europe. all ahead of the ecb tomorrow. remember the inflation conversation we heard? how does he defend that when economic data has continued to come in soft? the 10 year yield down to basis points. will the five-year be as solid as today as well? have a stronger dollar but also stabilizing after mario draghi. whatever it takes and that is a brutal day for the commodity. david: leaving him, taking him at his words.

we're going to get market manufacturing bni followed by new home sales coming in at an :00. the u.s. is making that sale that alex is talking about. page book.eases a to first world news. the house ranking tax committee supports president trump. republicanssaid if take the house and senate in next month's election, they will move forward on the plan, a --gle -- signal trump as stepped up his attack on jerome powell. he may regret appointing powell. he would not say under what circumstances he would fire him as trumps -- trump told the

journal. the first time turkey has accused the power of the saudi throne in the death of jamal khashoggi. sayskish president mohammad bin salman has but on his hand. president erdogan says those who ordered the killing should face justice. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. this is bloomberg. alix: thanks. u.s. equity futures are comparing droppings. market sentiment still fragile. see,kind of follow-ups we how do you play the last few days of the selloff? >> the dax up of the u.s. economy is strong. recessions always happen. >> the important thing is let's

-- what of the returns over the next three years? >> it looks like the market is having a fear trade where we will worry about earnings, growth and i think from that thatective, the technology is going to put up the numbers is sad. can save us for the minute. >> it is a double whammy in terms of slowing earnings of the rising cost of capital. >> we like the discriminatory session. we do not want credit -- clients hiding. >> tomorrow is going to be about ratios and becky be vulnerable. alix: joining us is mark stoeckle. there is breaking news from south africa. david: it is a surprise. they see their fiscal deficit 4% of gdp.

4%, seeing growth of .7% for 2018. 1.7% for 2019. we will take a look. looks like the dollar went down. it is coming up so the rant is following against the u.s. dollar -- dollar. take a look at the bonds and how they react. that is not favorable news coming out of south africa now. i am like, where is the bigger selloff? we heard the theme. romaine, what are the analysts saying? >> a lot of analysts are sticking with tony dwyer. we saw jason hunter. he is saying when you look at the lines in the sand, this level we are at the s&p 500 is where you start to buy. tothinks we may go down $2700 but that is a buying opportunity.

this seems to be the narrative coming out. we have broken every technical level. with theinally braked moving average. people are not looking at the 250 day moving average. it is just how much you want to buy into its. i think what is most important is keep the noise at a minimum. it seems silly. one of the things i think is important today, this is great. this is an opportunity where if you have been spending time, know your companies and see things -- the companies are being punished for no apparent reason, it is an opportunity to invite them. i think it is trying to keep the noise out. >> in general, it is a good idea to keep the notes out. president trump thinks it is about the fed but is there a signal we should pay attention to? >> i do not think there is one

signal. i think it is motion. i do not think it is one point in time. if you invest, you should invest for the long-term so buying something today it is going to do well, is a tough game to play . if you are investing for the longer term, we can find opportunities today or stocks have been punished with a should not have been, where earnings are going to come through. court earnings started off well for most companies. we think they will continue. julie: -- alix: even if you beat, you can be punished. i understand caterpillar and why in theory but the quarter was good. we have gone through a period in this market where it was easy to make money in indiscriminate way. that did not matter as long as there were brought trajectories and what you see now are

investors on the flip side of that. they have quite -- not quite figured out how to be more individualistic and picked picking sectors at a winner. in the meantime, somebody's component will get punished. david: there was an interesting chart we came across that compared. graphic. a draft -- stamina sidelines. see the book. that is an interesting point because most investors do not ask that way. it is interesting that had happened. i had happened. i have not seen that because most investors get worried about times like this and scale back. i think actually that is a good sign. that is a very good sign. investor isidual

thinking long-term. hockey lasted tim night. how you've seeut more activity by the investor climbs they cater to and he did not think that was encouraging. a lot more cash be put to work in those accounts he sees and maybe that is a good sign for the market. david: you said some stocks are getting punished unfairly. where do you see that now? by sector or company? if you look at the relationship, because we do intersection are -- intersect a relationships, it is starting to get to a level which is interesting. we have a couple names. we're looking at adding potential value to that because they have hit so hard of the last couple months.

alix: when we take a look at the sector breakdown, the cyclicals got really yesterday. is that kind of earnings enough to be the catalyst for the bottom? >> boeing is the biggest company in the dow. we have a much smaller weight in the s&p 500. you have to split that out. when you are looking at the broader market picture, you are going to see weight on technology and industrial. david: thank you so much. adams funds will -- will stay with us. they say gdp growth 1.7% for next year and part of that becomes the fiscal that -- cap will be cnet 4% at gdp.

they came clean on tax revenue and you see the dollars breaking moving lower on that news. david: president trump says rising interest rates of the reason. is it really the fed or are we -- this is bloomberg. ♪

>> this is bloomberg daybreak. boeing is out of quarters in revenue. was flow says jet make up better than expected. costs and blend because of production of 737. shares are rising.

tighter profit margins increased spending's. third-quarter earnings matched estimates and ups remained profits. at&t reported while a subscriber loss. that disappointed investors a day after verizon posted its strongest results. david: thanks. the best response to the selloff is it depends on white happened, with the range of reasons being given. says he knowsp what it is about. it is like the fed losing rates. maybe jerome powell us chairman. he said every time we do something great, they raise rates. the come to michael mckee. best welcome to michael mckee.

-- welcome to michael mckee. >> it looks like a donald trump excuse. has he equated the stock market with the economy? it has to be somebody's fault. meana flex but it does not it is actually going to fire jay powell. there is question about whether he can do that. look at the federal reserve and the relevant section. each member of the board of governors was supported by a 14 your term unless removed by cause from the president. nobody knows what cause means. you where the lawyer. it has been interpreted to mean neglect and duty. i do not think it has been litigated. business, it is not because robust disagrees with you. you think bad. >> this refuse to the term as a

governor, not as fed chair. there's nothing in the statute about fed chair. i suppose if this came to that, the jury would be marks people. it is going to be the markets because it is going to go crazy. alix: is there something to what president trump is saying? the white line is training -- trailing earnings. the blue line is trailing sales per share. sales are not moving up as much gain these margin guys are having despite slowing sales. my would you want to raise rates? david: -- >> the practical matter is we have the employment part of the market. it is difficult. you were going to see some of these companies have difficulty

, higher expenses because of that and you could make the argument it is for company specifically as an issue. ,hat the economy is doing well and to figure out how to make sure it does not overheat, the raising of the rates is the right way to go. we are going to get a new gdp number friday. it is going to be a tie as it was. the direction is down. to me, it looks like december is a stint. where there is a lot of consternation is next year. the way and look at next year is, let's wait. the fed has proven they are willing to look at the data. if the data changes, they are not going to connect -- continue to look at the data. people are extrapolating.

are not a must the data tells them that. >> people over interpret the dot plot. alix: shocker. starting in june, they were going to do raise rates with december as the last one. we do not know what is going to happen. tune in to the december meeting. alix: until that point, part of bit issue of the selloffs is we margins -- operating margins versus the s&p 500. you have margins rolling over, then you have company is wiring, companies treat to hard data. how do you look at it? david: let's not forget a lot of people have been calling for margins for years. this is something that is nothing new.

one of the things we spent time the organics, growth. can they grow organically so markets can be maintained. it is going to get uneven, which is what active managers do well. if you can find those companies, revenue was not. they beat their number but the revenue growth was not high enough. if you find companies that can do that come your margin per compression -- impression is not going to be as bad. alix: thank you. coming up, texas instruments. more on that next.

david: this is where we take a look at three companies. we are going to take a look at two and one.

deutsche bank and barclays. let's start with barclays. we had an interview with the ceo. they did well on their investment bank and we have an activist and richard branson. we will meet in the next couple weeks come up for the second time i have met him. i look forward to his ideas. he is not expressed them to us. we are focusing on our tinto run it is the second-most popular nine-month period in the modern history of the bank. you have marks in one hand and deutsche bank in the other. bush it is down with revenues down again. they are making money but down again. they are cutting on costs.

alix: it feels like if you are going to be an activist, isn't that a good place to be? david: yeah. alix: i am taking a look at texts instrument and what to the -- do to the estimate? it was the why. service a ton of markets, but they do not know the semiconductor cycle or they also have and use slowing. that can be worrisome for the markets. they have fingers in so many different things. david: i heard they have more customers by numbers than anybody else. they know that space and they do not know what is going on. we brought brookes

sutherland said she can take the credit. great weekot been a for industrial earnings. we had big plunges. boeing is a bright spot. they beat estimates across the board, really monster free cash flow numbers and that is the key data point i was watching. -- maintain their delivery goal from commercial aircraft area there have been where these they may need to walk that back because we saw a weaker shift in the third quarter. they are sticking with that, which is assigned the supply are not doingck too much damaged. david: what are the plans for driving? or is it the new aircraft? julie: you are still seeing a lot of volume the 737. that is where we have seen the bottlenecks so are working through that. they did raise their margin for

the commercial air crash. that is due to the uptick on the 787 forecast. alix: what do think of the questions for a call for boeing? i think people are going to ask about the trade war. . did a search not a single mention of trade, carrots, china were anywhere in this -- in there. what we see is it is not necessarily caught in the crosshairs to be from a. part of that is china needs those aircrafts. another topic i would expect to be on the call is saudi arabia. for thee reports out state or airline could look at a big order. it is going to be a subject of conversation. david: you are having a good deal -- day.

we have owned boeing for a while. our analyst did great job couple years ago of identifying what he thought was monster free cash flow. it has been the driver, that and getting by the production issue, we thought if they could do that, they would be reported. season,seen in this they will come up with a specific numbers on how much they are going to lose because of tariffs. companies that will do it better than others. company like walmart is so focused and they are really good and working with their providers and saying, i know you this source this in the making you source it from somewhere else? it is an obvious issue, something we need to look at. we will be uneven.

alix: i want to wrap that in to the industrial space. the honeywell's we have seen, have you gleaned takeaways yet? is aryl andway defense is a place to hide. the collection rates are strong. air travel demand remains strong. that is one place to look to pick up on what you are talking about supply chains. bottlenecks give for suppliers. companies say they can make shifts until disruption and extra costs. look at how companies are able to manage that, does the trade war have an impact? david: we see companies talking about changing their supply chains. what is it due to margin pressure? >> there will be some expense because i think that is logical

.ut i think it will accompany you talked about aerospace and defense. the other part of the given to sting is transportation. if you look for topline growth, good margin going forward, these transportation stocks ahead up above most. yeah. where does that leave the united rentals? of what you can define transport, because their earnings do not live up. david: we are talking about rail and trucking and every now and then come airlines. i would not put united rentals. david: how is transportation doing? good. i think they are holding up well. david: at one point is the

-- or are weively not there yet? is that enough to watch the multiples but at the same? >> it gets down to individual names. another sectors difficult. the investment is about data and your ability to get it, to understand and to make decisions. the data does change and you cannot say, trade is going to be bad for all companies and walk away. there are opportunities within of peopleven group where the differentiate themselves or you can make money. you have to stay on top of it willie --ling -- really be willing to work the data. na market, we had boeing

roundup helping to lift the doubt. the s&p 500 now down 4%. we are still down by 5:00. again unitedhlight technology, the risk you will write up -- why did seeing in terms of the semis. the european industry is already doing better than the u.s. and asia and getting more of a boost. earnings as well. banks flat. they were lower. higher. stock the consumer staple made them a 20 month low. take a look at euro pound. interesting by its 200 day moving average. will we hold another against you had softer pmi

meeting in germany where factors had a missed. all of that creating more buying now despite that rebound. and clues, inching its way into the positive territory of one person of 9% after falling yesterday. it was brutal. friends now and that is a from the statement. now we are going to get update on what is making headlines outside the business world. i'm a -- and a? --emma? the two will meet in when a series. larry kudlow's is the hope is they will agree on safety principles.

best tod a principal resolution to the trade war. beencans say they have not from the trump economy. no word. he is trying to do something

difficult. he says time is wasting and we do not have a plan. >> the company came out last quarter by saying not only did they were going to cancel investor day but that they had slated for september but did not reschedule it. it was not only pulling back towards coming forward with a plan but there was -- it was left open-ended when they were going to be ready to share details about what they were going to do. that is why you saw lashing out and as michelle mentioned, jonas has been tough.

he openly asked whether or not hike it was going to be around. michelle, there are two i can see. that may include reducing costs as well is getting rid of operations. then there is the autonomous vehicle. i think the immediate ways on board now. peak in termspost of sales. sales are going down. they have had a drought of product. they have some coming. we sought new products coming out next year. the got to sell those products to finance the future of to feature anable electrified future. i would be focusing now.

to --go david: let's go to tesla. now, all of a sudden, we are expecting profit today and positive cash flow. are you expecting that michelle? >> michelle: we clearly are going to get news knows -- good news. i think that is good news. i think the news is breakeven, turn a profit. that is what we will be waiting to see. they are not out of the woods. ,hey have got to sustain that sustain the production of the model three and deliveries and if they breakeven, they need to sustain that for more than a quarter. -- love that model tray. the question is how many can they generate?

what used -- what are you expecting in terms of production levels? >> they came out and -- to meet their targets. they do not talk much at all andt the go forward you that is a break from the past with a have come out and coming usually missed their goals or .ome up short of their targets but always kept everybody fixated on the next one. they came out and said they were threes. build 63 model they probably did not. there were questions about the production is and also, when and how they're going to get to a point where they can invest to take the production up to 10,000 a week that it to the bond we are not used to seeing from a regular full line automakers. david: one more on the overall

site. we are coming off the growth pattern. what are we expecting from the size of the pie? in north america and globally? >> we are more conservative at tax automotive's than others. atthought we would come in $16.8 million. it could adjust. we expect a little bit lower next year and the year after. nothing catastrophic, still close to 70 million but not quite there. david: you are investor, what do you make about the auto sector. -- sector? >> one good thing about being an active manager, you could choose to be in or not. which is not. there are other opportunities than an actor. what our position is? alix: you do not want to get in

there because of growth issues? david: it is not -- >> it is not relative valuations. it is relative opportunity. earnings,he opportunities are much better. a number of other discretionary names and making money is hard. >> no question is hard. we hear about the challenges of this new world. is there a private goal to be in that rainbow? somebody can figure it out. is there a huge upside potential? >> i suppose there is, but when is that? they finance the future. we do not know what that future looks like. they have got to be on board with investing.

we don't know when it will arrive and we don't know who will win and how much profit there will be. paths bute these two also, investing and peering for the future. there are other competitors. it is not just automotive's. did not know the business well just said for knows. >> i think it is telling. alix: it is realistic. david: i very much agree with you. problems, which is tricky. -- trigonometry. they seem to be struggling in china. >> is it coming, and saying i am freaked out. china problems trade was.

stealing aluminum tariffs took $1 billion profits from us and howdirect and talking about much that is happening in the last couple days. joe hendrix, president under saidtt also came out and still is costlier than anywhere else in the world. the auto industry has not been vocal for just how bad trade is for them but ford has broken from that a little in the last -- weeks and alix: what is the one stock you want to buy that has trade concerns? is there one? >> there isn't. it is not to say that good stocks do not have trade concerns, but we -- we talked to the companies we know all the time.

alix: thank you very much. we appreciate it. coming up, you got netflix forced to think you're a higher yields. ecb meetingor the tomorrow. this is bloomberg. ♪

kailey: this is bloomberg daybreak. coming up, the nasdaq president and ceo. this is bloomberg. ♪

emma: wall street is gushing with enthusiasm about tesla. announcementuarter head of today after the close of markets. speculation is after months of turmoil is a production and tesla may be entering a new era where it shows a profit. shares grew 13% yesterday. china sales every year as a flash lower than last year's totals. time is the largest single market. itself in an unusual situation. the world's largest tv service has offered yields. that is the first time that has happened.

netflix five $800 million in bonds and $1.2 billion for 4.6%. the company now has $10 billion of debt. alix: let's delve deeper into the corporate credit market. joining us is barclays head of research. great to see you. the price of netflix bonds -- do you feel that? are investors finally pushing back? >> i would not go that far. it was not that much they paid. it shows the market softer. trying to do something in the u.s. come in europe, i think that is part of it as well and one thing we have seen recently, both markets are softer but europe, it is trading softer even for companies that have bonds in the u.s. and europe. alix: what does that mean for the high-yield market in general?

that is going to have an impact on high yields. to be fair, the metrics in the high-yield market from a leverage standpoint look good. one is burning cash, which is not the same for most issuers but we have seen pressure the wb triple be spread is out of to the widest it has been in months. it looks attractive for double these now. as rates go higher, they get bearish on high heel. be--undo, it can lizards as a result of that. we are at the highest level since june. were you going to see the same kind of opportunities at ig? >> it depends on the supply excerpt. to spring for high-yield all

high-yield has not seen supplies. high-yield has trained at incredibly tight range. rates have been rising. it is down year-over-year but a positive number where is the high-yield is a negative number. investment grade, ok as we are in earnings season and not a ton of supply. you were going to see plosser. what kind of idiosyncratic factors are we going to look at as the central bank stops and rose back buying from the corporate bonds. in the lasthave couple months, as it has been announced, you see more bonds that have sizable price drops as a result of earnings, mrs. etc..

you not have the same volatility in europe. there are buying with high-grade but a lot of traditional high-grade removing in. the answer is volatility increases in europe. it does not have to be a substantial move spread wider. this.it shows that spread is moving higher for triple b's. what is the best if you are looking at u.s. opportunities and fundamental ships when it comes to central bank buying? there are different things i would say. if you are looking at the u.s. in general, i think it is an in high-yield. when you look at europe from what has happened, the get double b's and single b's where the company has bonds and the company has bonds in the u.s. -- you see the bond

in europe are trading cheap. there are is opportunity for people who can look at both. alix: where does that leave you in the leverage loan market? in europe, we moved there from that great market. they are shrinking a bit. and you mentioned central banks. we have had the bank of england, the fed, and mentioned there are risks in that market. certainly leverage is moving to the market as opposed to the high-yield market. when the cycle turns, it is going to have an impact on loans. it will be less thoughtful than last night because it's a new loans were owned on recourse leverage and that is not the case today. feels liket-term, it

the rising rate environment will continue to support loans and as long as it still increase continues, the low market is good be stable. alix: great to get your perspective. coming up, the biggest on wall street, tony dwyer and his latest market call. this is bloomberg. ♪

alix: tony dwyer wrote yesterday -- said the stage for the market. is going toeople finish -- the s&p is going to finish this year. joining us on the phone is tony dwyer. when do you want to buy into this? >> that was yesterday where we put that out around 11:00. anytime you have gotten a spike in volatility, you are close to

surrounding the low and a couple -- besides volatility. alix: do we have to see a catalyst for a bottom or is it going to be enough to have indicators technically? you are getting boeing as a catalyst from an uptick in lows in the future. you had every rating of what people expect for earnings going forward on the back of caterpillar and other industrial companies. when you listen to what they said, they are not saying things -- they are saying things are good. that is the theme. this is a market event -- more of a market event than an economic events. -- event. for me, we talked about this. the stage was set for volatility a month ago.

you had extraordinary optimism. condition and vix with an 11 or 12 and now it is just opposite. i find it unlikely we are going to get to 3200 because when you get this kind of market crunch, it takes time so they get rolled into next year. alix: what do you like, tony? >> my overweight sectors have not been high. it has been a terrible call but i think it is going to work. it has been done there. overweight the financials, we are overweight the industrials which have been hit recently. we are not different from where we were. alix: all right, tony dwyer. can people -- any kind of gains from boeing? you do not have any follow-through of buying through the day. david: everyday is interesting.

it is not boring. alix: it will not be boring for you because fortis coming out after the bell. and you will be speaking with -- david: bob shank. there are doubts about ford. a lot of the questions will be forward-looking, plank the fran. it -- that does alix: that does it for bloomberg daybreak: america's. coming up, jonathan ferro. on the markets, you're looking at a potential rebound going to help lift the dow. this is bloomberg. ♪

jonathan: i am jonathan ferro. the countdown to the open starts now. ♪

jonathan: equity market volatility going nowhere. the s&p 500 on a losing streak. the president stepping up, an attack on chairman powell. ceosche bank's latest facing the same old problem. where to find revenue growth. openinges away from the doubt. futures negative. a strong dollar story. treasuries stable. yield. after a message few weeks in the equity market, investors trying to navigate the volatility. >> this opportunity is in equity. the dow move in stocks is excessive. isto meet your risks, it next year's story, not this year's story. >>