♪ mark: i am mark crumpton with bloomberg first graders. jeff sessions say that -- says that they are charging a sort of man with federal crimes. including mailing explosives. they carry a maximum of 58 years in prison. federal at the -- after federal authorities cesar sayoc jr. to obama andbomb's cnn. >> the threat of violence is a

threat to our government. it is a threat to our respect for law and process that allows our people to accept legislation. elections, court rulings in which they do not agree. >> none of the devices exploded and known has been entered. officials say that he has an extensive record of past arrests. including a stint on probation for making a bomb threat. he is a registered republican. he supports donald trump and denigrates democrats care. -- democrats. angela merkel says that her country is not ready to export arms to saudi arabia until the killing of saudi journalist jamal khashoggi is properly investigated.

herking in prague, she says country will not deliver any arms to the saudi's. the chancellor reiterated that saudi have to ensure access for humanitarian aid to get into war-torn yemen. vladimir putin may be visiting the united states next year. speaking in the soviet republic of georgia, he says that putin has been invited to visit washington for talks. putin and president trump are set to meet in paris next month while they attend a benchmarking 100 years since armistice day. the two held a summit in helsinki in july. benjamin netanyahu has just returned from the gulf state of amman. his office says that he was invited by the sultan of oman. this is the first type of meeting like this since 1996. they don't have diplomatic relations.

they issued a joint statement to say that they figured out ways to advance the peace process in the middle east. powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton, this is bloomberg. >> from bloomberg world headquarters in new york, this is bloomberg markets. i am scarlet fu. and i am caroline hyde. we are once again very much in negative territory, up 2.4% on the nasdaq. companies are driving us lower after apple that and amazon missed. amazon was off by 8.5 percentage points. tesla was not so high as it

previously was. since may of tear 2013, managing to shape of concerns about the wall street journal piece revolving the criminal investigation into oj. i want to show you the reality. -- the brazil rialto. moved up or dow has down at least 125 point. it looks set to continue that trend. right now of my 325 points. this is the same etf, giving back almost all of the 3.6% advance. posting its is biggest drop ever. one analyst said yuck. they came below expectations.

there is a bid for this. the yield on the 10 year is going down. it started the week at 3.09%. caroline: time for our top calls. this is on the back of analyst recommendations. twitter was said to outperform. next, j.p. morgan downgraded snap. analysts saying it will be challenging for snap to paul uses away from instagram. 1200 hundred dollars. attack despitely currency headwinds. that will be the top call. scarlet: speaking of currency. amazon wanted to currency fluctuations. while the dollar hit its third straight high this year. let's bring in catherine.

the dollar index is a bit lower today. it hit a 2018 high this week. this is something that multinationals will have to contend with. >> absolutely. i think the dollar strength was a european story. there was really disappointing data out of europe with pmi's and ugly german figures. you saw the ecb yesterday. that he was asid optimistic as he could be but he did not give the market any reason to buy the euro. scarlet: it was interesting that -- how much iound was starting to hear echoing and reverberating around the corporate system that this is starting to hurt them? how much is the fed starting to at the dollar as a headwind for corporate? the dollar is at its

highest level since june of 2017. it is down from the highs we saw in the immediate aftermath of trump's election. bite maybe starting to corporate a little bit. scarlet: japanese companies are in a worse position. the fed does pay attention at some point to dollar strength. they have cited in the past. what would cause them to take a closer look at it? katherine? we would have t see: would have towe see numbers that we saw at the end of 2016. we saw another big move higher in u.s. yields. maybe that would be your next dollar catalyst. i am not sure how many people are calling for a huge move to 3.5%. david: the dollar has been a

haven trade. -- caroline: the dollar has been a haven trade. how much have we seen the normal havens take their place? it seems to fall in and out of favor. i think the yen has been the tried-and-true haven. it is the strongest performing g10 currencies against the dollar. somewhat unsurprisingly given the treasury yields moving so much lower. it has been on this weakening path. this is something that everyone is keeping a close eye on. most of all, chinese authorities. that level seems to be psychologically important to a lot of chinese companies and chinese consumers. katherine: absolutely. seven is one of those big around the numbers that investors like to focus on. even though it is psychological, it is important because we have never seen the dollar and the offshore yuan reach that level

before. there is a debate on what happens if we reach that level. a few sources have said to me that that is maybe when we see serious capital outflows from china. woroline: certainly given t years ago. scarlet: if it continues weakening, it will come up between president trump and presidency -- president xi. david thank you for the great analysis. -- caroline: thank you for the great analysis. wreck, we will get into the details. this is bloomberg.

♪ let's get you a check of the latest business flash headlines. larry ellison says that he in tesla and --

elon musk. he went off script to bring up electric carmaker and the ceo. he says that tesla was his second biggest investment. he criticized media coverage of elon musk. he says that tesla has a lot of upside. google is firing for employees for sexual harassment and sent them away without severance packages. the revelation came in on email. it followed a new york times report that says that the company had protected some mail employeesand -- male and offer them severance packages. caroline: for more, let's bring in alex in san francisco. let's peel apart the differing expectations we had here. amazon seems to be getting hit the hardest at the moment. how much of a letdown was a to those in the bay area auction

mark -- bay area? gave a pretty bad forecast to the key holiday quarter with revenue and earnings a little below expectations. also, the current quarter report. the main advertising business, it did pretty well but it did not do as well as they thought. google keeps pretty tightlipped about the future. forecastch on the front. i would say the message is that things are pretty good, just not as amazing as they had been in the last four or five quarters. scarlet: given the reception that apple that and amazon got to their result, do you think that this would cause the companies to dialback some of their spending plans going forward?

>> they said that they would spend a lot -- google said that they would spend a lot in the cloud, data services and things like that. there was no hint that they would slow down. on the amazon site, they spent a time talking about cost efficiencies. that type of talk is not good for companies that provide some of the equipment that goes into this data. it suggests that there is a little bit of caution. caroline: after that shares are seemingly flat on the year. let's spin it forward. we have facebook and apple coming out next week. how significant are these bellwethers? companies have no margin for error. ofx: facebook has a lot lower expectations because they had a rough year. they already had their reckoning. that is a bit more sentimental.

problems with fake accounts and their authenticity and advertisers pulling back. they had a big growth wanting from the last quarter. if facebook results and forecasts are in the middle, i imagine the shares might do quite well. i think apple is the opposite. they released some new iphones. any comment about how sales are closelyere will be monitored. that stock has not had major disappointments. i think the expectations are pretty high for apple. >> thank you so much. on a day with text under pressure. that was following apple that and amazon results. been a lot., it has

the small caps are down by 3.8%. a bit or treasuries is pushing up. caroline: from new york, this is bloomberg.

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♪ countdown to the close. i am caroline hyde. scarlet: i am scarlet fu. we are bringing in joe weisenthal. joe: it is the theme of the week. this brutal market overall. have beenmebuilders one of the worst sectors overall. outperforming itv. etf's are in the green. that is major outperformance.

when you look at things like sector rotation and tech continuing to get crammed. this is interesting. scarlet: they are like an early warning signal for some of the bigger economic systems. maybe because they crashed and came back, this could provide hope. >> they remain a warning signal. in terms of the gdp numbers. >> residential investments are not good. to the extent that interest rates are having an effect, that is definitely an important component. scarlet: when you look at markets, with eight minutes to go before the closing bell, the dow is not as lopsided. there are a couple of best performance here. they are actually gaining. caroline: that is one of the outperformance. tpoerfor -- outperformers.

scarlet: this is home depot, cisco, american health, all down by 2%. >> that is one to watch. this is what it looks like for the intraday action. a significant pair of losses in the early afternoon. it looked like if we continued in that direction we could have raised our losses. the s&p is slated to close down on the week. off by 4%. caroline: that is on track for the worst month we have seen on the spf 500. scarlet: we are moments away from the close. let's start in. we begin with our correspondent. >> the companies did not make a lot of the products that go into those homes. they are really selling off. industries.wk ceramic and title are down 24%. this will be there wednesday on record. they came at with pretty pessimistic earnings. higher than expected.

weaker market conditions and an unfavorable product mix resulting from customers trading down to less-expensive products. less forecast is about 25% than what analysts are looking for on the etf level. be tied to the weakness that we are seeing in the economic data with regards to residential investment. was anp number interesting residential investment number. this is marking the third straight quarterly decline. that hasn't happened since the tail end of the housing and financial crisis in 2008 and in 2009. a lot of competitors of mohawk like fortune brands, armstrong they are all selling off dramatically today. quite a bit of divergence here between what we are seeing and some of the enthusiasm for the people that build homes and the people that i shall supply the materials that go into those homes.

sarah: this is a stock that is bucking the trend today. up 3.8%. almost as caroline was mentioned. -- mentioning. they give a more bullish forecast. we saw a number of analysts raising price targets on the stock today. and look atit up semiconductors, it is a very different picture. lower once again today. this is the philadelphia semiconductor index. you can look at the charts, you can see that is down almost 15%. that 15% loss would make it the worst loss for semiconductors since november of 2008. luke: i'm looking at the homebuilders. i am also looking at kra, the regional banking etf. we are learning more and more about what the selloff is and what it is not.

those sick that are very domestic centric to the u.s. economy. it has seen them outperform. also, the yellow line has done -- gone and absolutely crushed. .his is not the u.s. economy it is a broad repricing and over evaluation in that sector. back to you. caroline: we thank you. let's talk tech now. earnings are sending tremors through u.s. equities. here with more on the winners and the losers. here is gina. long?r are we a how important of these momentum stock spend too earnings, hits, mrs. and impacts in the stock earnings,been to hits, misses and impacts in

the stock market? this is the key. >> it doesn't matter. amazon is a perfect example today. amazon price expectations by the widest margins so far on the season. yet, the stock is selling off. it is selling off because revenue wasn't as strong as expected. investors seem to be picking into the details of earnings season with great fortitude. scarlet: that shows you the extent of the earnings surprise. this is for all securities. it gives you a sense of how big these have been. >> is the outlook so bad or is it clearly an environment in they are not that that

objectively? are they getting punished? looked2 might have not so bad. >> it is not about any sort of earnings weakness. one thing is unique. we have seen a reduction of four quarter earnings estimates for the first time this year. a lot of this is an adjustment process that we have not had to deal with and quite some time. expectations have continued to elevate. when you look at with expectations have fallen the most, it is quite intriguing. these are for staples and utilities companies. these are the market leaders on the index. there is a lot of noise. there is a lot of earnings news. it is not necessarily dramatically impacting prices specifically. this market is showing tremendous tendency toward sell everything. so evident was cyclical. so anything with any sort of

cyclical ties. that until the dust starts to settle before you take any sort of outside action. upside action. scarlet: it doesn't look like we are doing that. let's bring in any. that the selloff that we have been seeing, today's action is a mirror image of what we saw in the days of the trump rally. eddie: that is what we have been seeing. back in november of 2016. didaw a big rally, not only the market go of but particularly in areas like regional banks like joe talked about. also, small-cap stocks did very well. we saw a lot of those cyclical names. we are seeing a mirror image of that. all the weakest areas are those areas that did so well after the election. this is an

unspooling of the trump trade. i love those areas that were winning are -- they are now the biggest losers. to themuch farther>> punishing go? it is a down day for the u.s. stock market today. eddie: i would be hesitant to call that. the volatility will last as long as we are below the 200 day moving average. that is the tripwire about the volatility. more storm andee stress within that market. once that there's off, i think the clouds will dissipate. >> it is not rare at all. it has been very rare this year. environmentn an that tax reform has stimulated

earnings quarter after quarter. when you go back, most everything -- season has a slight reduction. caroline: that's the closing bell going into the movement. hads&p 500 off and nasdaq tech underperforming. amazon, alphabet, but interestingly tesla held its held -- self up. all 11 industry groups are down. discretionary is off as the best performer. the best performers were materials and energy. caroline: everything in terms of red. is $800zon's market cap billion. that seems so long ago. caroline: tech still dominates because amazon fell to third. what comes in second? microsoft. scarlet: tech replaced by tech.

joe: the today -- two agent companies -- ancient companies. let's get started on our market reporters. luke? >> i'm watching something that is not supposed to be happening during earning season. the implied correlations among nasdaq 100 constituents. they are pretty high right now. that is not supposed to happen during earning season. companies are supposed to trade on micro factors and the teal line is the realize correlations. this shows they are trading as a group, and in markets, they selloff as a group. we had that fever break a little bit and realize correlations were nearly at the highest in the year and they started to turn down. that's investors almost saying this tech group who has been key to the market rally, is going to keep trading more as a group and not according to the individual

factors of the stocks reporting earnings. watching some of the tech etf's that got hit today on the back of the disappointing earnings we got from alphabet and amazon. -- fund dropped today and ask ok was also down 30% during the day. all of that was on the back of the disappointing earnings we saw from amazon and alphabet. second-largest holding. it has been a really bad month overall for the tech stocks and some of the etf that track them. d xlk werehe qqq an down 9% this month. romaine: i want to go back to something luke was talking about with regards to regional banks. take a look at this. this is a bank out of silicon valley that primarily makes commercial loans to a lot of

these midsize and small tech. companies that pepper silicon valley it is down about 12%. a lot of these problems don't have anything to do with silicon valley specifically, it is more about the regional bank story we see play out all of earning season where the high rate environment is cutting into the spread they have earned between the deposits they have to pay out to customers and the loans they are making on the other hand. that spread has narrowed to a great extent and they are seeing a lot more competition for loan growth. if you take a look at what the kbw index has done, since october 11, for these particular banks it is down about 6% or so. down to its lowest level. all 24 members of the index are though larger bank indexes are down 9%. when you take this into account, is there anything you can read in between the lines with regards on what is going on with sep and some of these regional banks.

make loans to companies in the realm and that business is still holding up and doing well. they need to get a handle on the spreads when it comes to new interest rate environments. scarlet: a small task there. -- note small task there -- no small task there. joe: eddie, you heard romaine talk about silicon valley sbb getting creamed. what do you do with tech here? eddie: tech has been a safe haven surprisingly in this market. that is looking at tech relative to the high beta index. with tech, you really see a dividing line between some of the smaller names and a larger names. i still think there are opportunities out there in tech. the faang, i think that story has played itself out as far as valuation. i still think there are opportunities if you want to

look a bit downscale in the tech universe. when we looka, ahead to next week and we have apple, facebook, how important do you think these momentum howks can be for the index worried should we be that these companies can underperform? gina: i think there are limited expectations for facebook. it is one stock in the faang sector that has suffered a lot. expectations are relatively limited so you might be set up for a positive surprise with respect to facebook. ethical -- apple is critically important because it is such a big part of the overall infrastructure and overall supply chain in tech. it is a huge part and huge story of tech. it is critically important. ethicalwith respect to facebook, investors already started to capitulate on the stock. that is not the case for apple. it is to bang totally different two totally different

stories. high duringkets are the downtrend, when the dust settles, you will see winners and losers emerge intact. it is not the same trade a year ago. instead, you see winners and losers determined. scarlet: i know you are focused on the for guidance and what they say they are looking at them what they anticipate for the rest of this year or next year. have we heard anything from companies on the effects of the tax cut? that should be what gets spending. we have to some degree. that was a big part of my financial -- the financial story. they said they will reinvest their money into businesses as opposed to sending it to shareholders. that is why they have underperformed because these companies are reinvesting in their businesses and not deploying x it were in 2017. i do think you are hearing this .cross the index

there's a buyback blackout so you won't hear about companies and what they will spend on buybacks, you are consistently hearing they will spend a lot more money. that is one of the reasons operating margins are coming under pressure because they spend more on operating expenses in the like. it is not about trade. please are spending more and it is showing up in smaller operating margins. joe: what is the read about the overall macro picture when you see what goes on with the company like mohawk that is getting absolutely cremated this year, but also before these companies that sell into the housing market, the they were you overall? eddy: yeah, it does. it touches so many different areas, not just builders. getting killed going into this quarter. they were down over 50%. you see names like sherwin-williams. it touches so many areas it

is a concern. i think people are overestimating the housing buzz. i think people have forgotten housing can have a coming year and not be peak of the cycle. we have forgotten we think every housing downturn has to be an historic bust. i would be a little hesitant to carry out this theme farther than a few months. scarlet: i'm looking at the vix and it did close higher today. it is elevated compared to where it was in 2017. currently at 24.59. , whate look at volatility event will be pivotal in determining waves appurtenant selling and buying continue? willoughby the midterms, donald trump xi jinping meeting at g20, the december fed meeting, the santa claus rally? eddy: remember the overall determining factor within volatility is where the market

is. when we go up, volatility plummets. when we go down, volatility goes up. thatber it was a month ago we were talking about historically call markets. markets.ive -- calm the s&p 500 went 75 days in a row without a.m. up or down move -- without an up or down move. as long as the market -- volatility follows that tale -- x is not that high and not even close to the highest point we were earlier this year -- 25 vix is not the high -- that high and not even close to the highest point we were earlier this year. joe: any popular trends were destroyed in october and anything like utilities are holding up.

gina: investors were over positioned in faang, tech, communications, whatever you want to call it. growth, faang, momentum were the excessive positions. it's clear when you see this the rating we have gone through. where they are completely under position is also global value. even the value stocks index have the rate and more which is a really surprising fact giving how much growth has berated. they are underinvested in value -- derated. they are under vested in value. they were overreliance upon growth and momentum and we are still seeing that downdraft occur. eddy and we thank you, gina. all that break down as we had the close. we also got breaking news out of italy. this time, the rating is

downgraded in terms of italy's outlook. this has been anticipated by the market. we're not seen much market reaction. the euro is trading up versus the u.s. dollar at 3/10 of a percent. yields come down today for italian debt. about five basis points, but we have seen the concern about the 2.4 deficit -- 2.4% deficit that we have been aiming for. something seems to be knocking where the overall outlook that trades. overall, they told the italian debt rating stable and the s&p is still downgrading the outlook. scarlet: that does it for the closing bell and for me. romaine bostick is stepping in where we look at why the u.s. is need for skilled labor is not going away -- u.s.'s need for skilled labor is not going away anytime soon. this is the market close. ♪

caroline: live from bloomberg's world headquarters in new york. how the u.s.ut stock market closed today. on across the board. almost a trillion whites this week from the s&p 500 market capitalization. joe: the question is "what'd you miss?" caroline: the s&p 500 heads for sports month in 2009 and they might be pointing to junk bonds for the turbulence. third-quarter gdp came in better than expected but the investment is another knock from building. and consequences of an immigration crackdown. by president trump's tightening

grip could take a toll on the u.s. economy. joe: investors are seeking choppy from increasingly waters and junk bonds. it is a weird market. one thing that is weird is the economy -- if the economy were really taking a turn, you would expected to show up in credit markets but it has not as it? luke: i think that is a big tell you talk about recently. credit has been the main supporting actor, even when those things were struggling saying this really cannot be that bad. bonds worst rated junk are holding up and jump in general is doing well -- one thing i took a look at is how does the bloomberg high-yield index do. we see 5% raw downs the s&p 500 over the past five years. drawdowns inis -- the s&p 500 over the past 25 years. what i found this the losses and

stocks are shale -- shared in yield. been more like 10 to 15. percent it is clearly better and it think. 10 to 15%. it is clearly better, but they are not pricing in the end of the expansion. how much of this relative strength we see in high-yield is more because folks are looking for return somewhere and a time with the normal returns we were getting on the equity side have vanished or diminished? luke: i think that is certainly a part of it. it's important to note investment grade and treasury yields are offering a better return than they have in years. the blue not seeking safety there. that would be assigned you are reaching for credit risk and are though corporate has slowed down, you have had an uber issue starting this

downdraft so well received you have to go -- the gates are still open for people that want to raise money even if they are not a public company and if you don't know much. so that cryptoch miners are currently looking at potentially coming to the leverage market or in high-yield bonds. i'm interested you have run these numbers. not been ahas signpost of the capitulation that the rest of the market might have focused on. wells fargo put out a great note this morning showing in times of stress and your 2015 post evaluation, 2011 s&p downgrade an earlier this year, when you have equity panics, the moves in the vix index are bigger than you would expect given the move in the s&p 500 at the time. this is not the case. stocks are pretty much acting as though -- as you would expect

them to behave. i find that interesting since we start of the selloff worried about a breakdown in your classic hedge which is bonds. still, people still didn't fly the barn. joe: so there's not much evidence of a real panic. there's not much evidence of a deteriorating ego story, so what is left? luke: the biggest thing that is left is the tech story. a still -- still as a big driver of the market. all the tech heavyweights and in sincel is off at least 5% the s&p 500 had an all-time high. a lot of them below the 50 day moving average. are all moving together and selling up suggests to me it is a story about investors not having the same visibility in earnings, not having the same faith they will grow that much faster than the rest of the market. if they will not do that, why

you are you going to pay more? caroline: evaluations valuations have come down, but remain shows they are not down that much. andine: they are still high i wonder how the equity valuations factor into this picture. if we are not dropped back down below the recent averages, at what point do we call a bottom or make a decision that now is a time where stocks are cheap again? luke: that is what both scares me and you could also call it optimistic. has to reachtech rate in terms of the pe gap of the s&p 500 and the nasdaq 500, then there is still a lot of downsides for tech. on the other hand, that also does imply it is not necessarily a fundamental story in that a severe or a large move downward from here might still not imply that much about the u.s. economy as long as it stays intact. romaine: going back to junk

bonds, are we still waiting for some sort of confirmation about downside from high-yield? do we need that confirmation from high-yield? luke: i think one reason we might in this case is because a lot of times, when there are cracks in credit or risk assets in general, and hike yields hold, the bonds are getting priced and once people had for the exits, that is when you see things are bad and people are worried. people are worried about that this cycle because the ability to keep corporate on your balance sheet is not as attractive as it used to be. the exit doors are seemingly smaller. this time, even in the secondary market, trading in high-yield has held up firmly. there is price discovery going on in high-yield just like in stocks. that is one reason the confirmation signal would be huge. caroline: luke kawa, we thank you. andng up, good news third-quarter gdp but bad news

for the supply-side. we will to you this what -- what this means for the economy next. this is bloomberg. ♪ s is bloomberg. ♪

caroline: third-quarter gdp results surprised modestly to the outside but the composition of the activity has implications for the greek -- grief outlook. bloomberg's is senior economist. underneath the hood, consumer goods corporate that's a good. >> this is almost often the case. the details are more important than the headlines. the details indicated concentration in one segment of

the economy, consumer sending. that is not -- spending. that is not necessarily a bad thing to see consumer spending and growing. the concentration is not a good thing. you need to diversify and it applies to economic growth as well as investment decisions. one of the not that optimistic parts of the report was business investments has continued to slow and has been a steady deceleration since the end of last year. see means we will not growth in potential gdp. reforms were trying to achieve. romaine: when you see the deceleration, what can you read in about future growth for the economy? is just ahope it temporary slowdown and it could still pick up, but this raises

questions as to whether this , ah business investment loan, can sustain the growth in business investment. it might raise questions about whether it's tariffs that are starting to kick in and people are waiting to see what the outcomes will be. joe: because it is a cliche that nobody likes uncertainty, but sometimes that is just an excuse people trot out. in theory, if people were worried about supply chain and where they were going to source their part, that would be a good reason to tap the brakes on investment plans. yelena: not to tap the brakes but to slowdown down, pause, and with the nextns batch of tariffs or going into the next year. joe: the good news was the consumer. the consumer knocked it out of the park, particularly on nondurable discretionary items. what is that about? yelena: i thought that service

spending was another thing -- caroline: are we all eating? yelena: restaurants in another report more particularly week for two months. i don't think it is that part. acceleration in the nondurable discretionary spending. this is good for the economy going forward. that tells us the strength is concentrated in the consumer sector, but the question is whether it is tax cuts that are driving it. caroline: i'm interested by how the fed is going to be looking at these numbers and interpreting them. at the moment, i look at the market reacting and the market is diving back its expectations for the hike. only 67%, but it is down from 80%. yelena: i think the fed will see this numbers and they will

probably -- it will dissuade them they need to continue to remove accommodation. is -- it is not raising the potential growth of the economy. it is that sugar high type of spending that is probably driven by tech stocks, and it will probably not been to be -- not going to be sustainable. caroline: so you think no hike in december? yelena: this is our official forecast and not on the economic fundamentals but on market , dollar strength, and of the market misbehaves a lot by the end of the year. who knows what happens in the elections. not the fundamentals. fundamentals are pretty good. caroline: a great analysis from yelena. coming up, president trump is trying to make the midterms about immigration.

this is bloomberg. ♪

mark: i'm mark crumpton with first word news. these were not hoax devices. the message from the fbi director at a justice department news conference outlining the arrests of a florida man in connection with this week's string of nationwide mail bomb attempts. authorities identified the suspect as a 56-year-old of florida. republican with social media accounts containing posts supporting president trump and denigrating democrats. the devices were sent to prominent democrats including president obama and hillary clinton. director ray told reporters the suspect was found in part using fingerprint evidence and possible dna.

that 13n confirm i.e.d.'s were sent to various individuals across the country. each device consisted of roughly pipe, aes of pvc wiring, and what is known as energetic material which is potentially explosive material that give off heat and energy through a reaction to heat, shock, or friction. mark: authorities add that he is a 58 -- has a 58 year sentence if he is convicted. crackinguthorities are down on migrants trying to catch up with the main caravan. ofay, they detained a group about 300 migrants who crossed the guatemala-mexico border and were walking along a highway. the main caravan of thousands of migrants is about four days ahead of the smaller groups. officials say the migrants will be bust to immigration

processing centers for possible repatriation. intensifying its demands for saudi arabia to extradite 18 suspects in the killing of jamal khashoggi. the saudi government has said it arrested and would punish the individuals itself for what he described as a rogue operation by officials who killed khashoggi istanbul. -- in istanbul. 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'm a crumpton. this is bloomberg. -- i am mark crumpton. this is bloomberg. president trump trying to frame the midterm election around immigration and the caravan of migrants making their way through mexico. the white house is even considering in order to block asylum-seekers at the southern border. this ignores the reality of the labor market according to the next guest.

the united states's need for immigration is not going away and we welcome noah smith. the immigration debate is very multifaceted and there is an argument for more high skilled immigration, more h-1b, people with more technical knowledge. how does the question of lower skilled immigration fit into the overall controversy of the discussion? low: the main fact about skill immigration we have to understand is that it has decreased dramatically and almost stopped. even immigration has pretty much been zero or negative over the last 10 years. most of those people did not have advanced degrees. mexico and from other latin american countries, which tended to be less people with advanced degrees, has dried up. if you talk about mexico, people have gone back to mexico over the last decade.

you still have a few of the central american people coming in like this caravan, or trying to come in, but overall, it is not a big thing anymore. there is not much happening. romaine: is there any real consequence to the economy as a result? noah: it will raise prices for food and landscaping in childcare and other things like that. this seems to of been downp by trump to punch what.kle it is in reality probably a bigger problem how much are we already starting to see that hit certain companies. what about the skills labor we are starting to see shortages of? >> it is difficult to say because trump has not been in office for that long. we know low skill immigration trickled off a decade ago, but trump has only been in office for a couple of years. we have started to see lower

green card applications, less foreign students coming in. we still hit the h-1b cap because it is set low. h-1bs get awarded at all so we still see that philip. trump's rhetoric and his policy changes he has made, not letting spouses of h-1b workers work in america, things like that that harass these skilled immigrants and make it harder for them to calm, it will have an effect. joe: is this going to be the kind of thing where we get a long, slow degradation of productivity and on for dealership, or will there be something more acute you would expect to see if we really do on theharp clampdown availability and supply of high skill immigration? noah: it is this long slow

degradation because that is the real ticker. suddenlynot see silicon valley uproot and moved to mumbai or vancouver. it will just be very slowly we lose competitiveness. you will see some stories and businessweek or whatever about how vancouver is the new tech , and earnings slightly disappointed. you see this for years and years and at some point, someone says what happened to silicon valley. joe: the politics of immigration are firm -- immigration reform, it is like there are two separate issues. there are people that want to make the u.s. a welcoming place for migrants, particular for people escaping violence, and there are people who make the case from a business perspective should expand high skilled immigration. what is the right nexis? are there any countries that really get the model right where they balance these similar but

not exactly overlapping perspectives? noah: there is one, canada. they get this exactly right. canada is similar to us. they do this exactly right. they have a great skilled immigration system that brings in tons of high skilled immigrants. some points to people for having family in the country. they have family-based immigration, and they accept refugees as well. so far, it has. not tanked their economy or society. they have a very peaceful society with good economic growth. romaine: bowling you compare the economies of u.s. and canada, two much different economies. how much does the abenomics growth here -- how much is the economic growth here contributed to what canada provides or vice versa? noah: both. canada is a very different

economy because they export a lot to us in a small population wise country. they have a different mix of industries. we have these wonderful industrial clusters that make us kick but. -- butt. they generate some which output because you have all of these talented people in like the tech industry, entertainment industry, clusters and clusters. canada does not have much of that because they are a smaller country. they are working to build that up but over the long term we could lose it. caroline: it's worth reiterating how many companies have been founded by skilled immigrants in the u.s.. particularly in silicon valley. i don't know the number off the top of my head, i had thought of them as 30%. it is quite high. set you'reon which talking about, but it is

absolutely true that immigrants are more -- low skilled immigrants are more entrepreneurial. so whether people are starting a corner store of the next big tech company, immigrants are starting companies. when you select the people willing to uprooting come to another country and make it in this new, foreign lands, sometimes without being a native speakers of the language often, you will select very entrepreneurial, bold, self-starter people. caroline: we will see how it unfolds. fantastic reporting, noah smith. you can see more of his writing online. coming up, amazon and alphabet drive tech down to its worst week in march. we will dig into the details next. this is bloomberg. ♪

caroline: a quick check on the latest headlines. --organ has really old revealed of regulation preventing branches for opening branches a new states. people familiar say that is trump -- thanks to the trump administration rollback. thangan has racked up more $30 billion were the penalties, legal costs, and related obligations since the 2008 financial crisis. the oracle founder says he believes in tesla and elon musk. he went off script during a meeting to bring up the electric carmaker and the ceo. he said tesla is his second largest investment that did not provide more specifics. he also criticized media coverage of mosque and feels that tesla "has a lot of upside." rolls-royce is wanting into hurdles on engines for the new neo-jet. says the engines will be

delivered by the end of october. [indiscernible] that is your business flash update. phenomenallystock down 14% at one point. romaine: all this up because of design flaws or were the real manufacturing problems that were independent of the research? joe: yeah, design faults. it is hard to bill self sometimes. we sort of my taken it for granted that you can build an engine, but some in different parts have to come together. , that is ag is off real thing. you don't hear about it that often. on the flip side, it is a miracle that they go as well as they do without a hitch. is taking these

particular engines. joe: remember boeing had a big production --? it's fascinating to see some of those planes get built. let's turn to something that does not need to be built. today.and alphabet fell that was after the disappointing earnings report. we have tom giles live in the san francisco bureau to talk more about what happened today. tom, when you look at what the earnings report over the last couple of days, is the tech story the growth story we have seen out of these large names? is that still intact? tom: on one hand, these companies are still growing at the pace that many companies around the world -- it is the and the of many companies to see

the double-digit growth consistently that you have seen from the likes of amazon and alphabet and will continue to see. the challenge is that these companies are priced for perfection. we have seen the stock prices through the roof over the last several years. the nasdaq, tech industry, has really been leading some of the market's biggest gains. in order to continue to justify the stock price going through the roof like that, you have to see companies exceeding expectations. what we saw in the case of alphabet and amazon yesterday, it is companies that are not quite meeting wall street's very high expectations. this is the second quarter back to back that the revenue forecast for amazon didn't quite meet what wall street was looking for. heading into the crucial fourth quarter, this is the holiday season where people are ordering more things online, and you really need amazon to be bullish

in order for wall street to continue to be bullish about it's prospects. joe: one of the big ones we will get next week is facebook. i'm curious. we all know the challenges facing that company. in your reporting, and the research you have seen, is there a serious usage problem with facebook? or is this the kind of thing where the business can get momentum again? tom: i think what you have seen with facebook is they have really been sending a message to advertisers, and investors that we are trying to clean up our act. , some more day frequently than that, we get releases about them removing more fake accounts, accounts of people whose identities we cannot verify. it just today, we heard about accounts emanating from iran. they are very desperate to tell the world that they are a place that is safe, where hate speech is being removed, where fake

news is being cracked down upon. they are hiring tons of people. they are really sending the message don't leave us if you are a user, and advertiser, if you are a wall street investor. will see, did the trends we saw on the second quarter that were so alarming decrease this user growth -- this user growth not quite robust as it has been and maybe advertisers were holding off while they clean up their act. they have to show that trend reversed or you will see the kinds -- maybe to not the same degree of declines but you will see the bearishness around facebook. , very clear message from them and they don't have a lot of time. the election is in november and the clock is ticking for them. romaine: we will look forward to facebook earnings and apple and a lot of the big tech companies

next week. tom giles live from san francisco. caroline: romaine, let's keep it on the social theme. stocks are making waves in social media and you can find us on the terminal. first up, intel shares moved higher after the company beat estimates. they also delivered a forecast and reported growth. companyf another chip was down. the staggering growth of cloud computing may be slowing down. check that out in terms of the today -- two day move. rough day for udf. this is largely the same deal setting the stage for a potential strike. there are your social climates. coming up, what is one of the biggest casualties of the stock route?

the answer may surprise you. more ahead. this is bloomberg. ♪

caroline: so what is to blame for this week's market meltdown? >> it is all about credit and liquidity. we had a squeeze from the fed and the u.s. treasury during october. toknew this was going happen. we always knew october would be a difficult month. once prices began to fall on the back of difficult liquidity flows, some people say i wonder what is happening here. >> u.s. yields moving higher has led to a very overall -- overvalued market coming down. basically everybody was on one sector and with higher rates, that was always going to come in to pressure. >> we clearly have a low level of liquidity and the central bank's withdrawing liquidity and

a shortage of u.s. dollars. anondly, we are in a environment where growth is not nearly as strong as two dozen 17 and we are adjusting to the growth by seeing what the earnings are about which is topline growth. caroline: there are your reasons why. let's check out what happened in the stock market with our hedge fund reporter. sara, we are on track for a brutal month. >> we really are. if you look at the s&p 500, we are on track to have the worst months is 2009. since 2009. it is hard to find any returns. we have big tech names leading the selloff, but it is up cross the board. today. it tesla and all those, who would

have thought in this market. at the same time. if you focus in on some of the hedge fund, let's take a look at this etf. hedge funds now have huge holdings in apple, adobe, microsoft. these are clearly some of the names who have taken a hit and we would hear from apple next week. we see etf tracking hedge fund vpi's -- vips taking it as well. joe: catherine, talk to us about strategies. my impression is that all of the different hedge fund strategists with traditional stockpicking, out rhythmic, trend falling, it is all having a terrible month. >> with a few exceptions. goldman came out with a report a few days ago saying those funds were down almost 9% when the market was only down 6%. so for the first time, they are beating the market. [laughter]

romaine: i thought these funds were set up to take advantage of the rise and even if there was a downturn. we are not seeing that. katherine: not so far. we wonder if some of the macro funds have done ok. we're not gotten any good numbers yet. i spoke to more traditional long short equity attend to have a pretty big short book. one was up a little bit on the month. joe: do we know some of the names of people who are going to have tough investor letters to write in the days ahead? sarah: i think anyone that us tech focused. . lot of the ctas are down those people argan have some explaining to do. caroline: when we are looking silver lining, where have they been?

if you're going to take algorithmic trades and long short positions, it has been hard to find. hard, buthas been even if you look it active, looking at correlations between the s&p 500 and stocks, a are falling together so it has been hard for portfolio managers. so my have spoken with said that is the root of the frustration because even if they have a stock in their portfolio that is not been of the report earnings and talk about input costs, it is being dragged down by those that are. romaine: i thought correlations that come down? sarah: it did. romaine: isn't that what these computer programs are programmed to take advantage of? sarah: that's what you would think. we're not seeing it happen. correlations have come down slightly. highs in the month s&p 500 even though they have come down a bit. on thelook at a chart

story crossed assets, oil is higher on the year, the dollar is a bit higher, and other than that, a sea of red. overall, the industry is having a tough time not just this month but structural issues. an inability to safe investor's money is not going to help, is it? katherine: that is absolutely true. we are also coming on the deadline for people to pull the money at the end of the year, november 15. if conducting -- if things continue bad, we will see a lot of reduction. . don't miss this, rounded to of the presidential elections. joe: and i will be watching earnings out on tuesday. romaine: an apple reports its earnings on thursday. caroline: that is all for "what'd you miss?" romaine: "bloomberg technology" is next. joe: have a great evening. this is bloomberg. ♪ ♪

emily chang san francisco. this is "bloomberg technology." the tech wreck is sending stocks sputtering. amazon in alphabet are among the companies pummeled among the latest results -- as the latest results. it. can chicago be the next tech up? we will talk to a u.s. commerce secretary -- a former u.s. commerce secretary who think about it.