"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> this is bloomberg daybreak middle east. >> market meltdown. the s&p 500 enters correction territory. the signalsit nor the markets are sending ignore -- can the fed ignore the signals the markets are sending? international pressure mounts on riyadh. why elon musk thinks that $24 million penalty he was given was worth it.

>> it is 8:00 a.m. across the emirates. 4:00 a.m. in london. manus: the world waking up to potentially give the pricing of the federal reserve. well date listen? -- will they listen? yvonne: the s&p -- s&p following 10%. confusing as it is, the latest from the russian energy minister. global equity markets, $6.7 trillion wiped off.

since 2015.nth most stocks have beaten expectations in terms of the report card. where does the money flow to? into bonds. that is a three-week low. you are seeing the market scale back. 75% probability of a christmas hike. let's get to your first word headlines. thank you. president trump has ordered flags at federal buildings to be flown at half staff for victims of a shooting at a pittsburgh synagogue. a man has been arrested and charged in connection with mailing 13 explosive devices that targeted high-profile democrats and the network cnn or the justice department has

identified the suspect. analyzing the devices. they are not hoax devices. we uncovered a latent fingerprint that has been sent -- from the device sent to congressman maxine waters. confirmed the fingerprint is of the suspect. whoeverdent trump says is behind what he calls terrorist actions must be prosecuted to the full extent of the law. saudi arabia says they will not extradite suspects in the killing of journalist jamal khashoggi. this is in defiance of turkish president erredogan's wishes. what wouldvoided

have been a second downgrading in a week. decision comes after moody's downgraded at a way to one notch above noninvestment grade. elon musk says a 20 mile dollar penalty he was given for announcing he had funding to take tesla private was worth it. shares soared as the company blew away expectations with the third quarter of positive earnings in its history. global news 24 hours a day powered by 2700 journalists. this is bloomberg. from the largest listed company in the middle east. going through the numbers. third-quarter profit at 6.1 billion saudi react -- currency. , the-quarter sales

estimate was for 42.6 billion. another beat. we are looking at 36%, manus. sabic is undere, the specter of aramco. the state owned oil company. they have more to do with petrochemicals. this is the deal to end all deals. the reason they are delaying the ipo of aramco. industrial nations demand forecast for petrol, accounting for more than a third of growth and will demand. globaling of these -- oil demand. yousef: will keep a close eye on that. let's get back to the big top story. global stock selloff friday.

pushing thehares s&p 500 into correction territory correct the nasdaq, one of the most total weeks -- weeks.e >> the u.s. treasury, during the months of october. we knew this was going to happen. we knew october was going to be a difficult month. once prices began to fall on the back of difficult liquidity flows, people say, i wonder what is happening question mark >> u.s. high yields has led to a low oil market. s&p coming down modestly. it is still expensive. everybody was long one sector, tech, and one style, which was growth. right now, it came under a little pressure. >> have a low level of liquidity. central banks withdrawing liquidity. a shortage of u.s. dollars.

where in an environment growth is not as strong as 2017. we are adjusting to that growth by seeing what these earnings sessions are about, topline growth. a lot of them are missing revenue. >> the recent market moves are sending a message to the fed's which appears to be sticking to the tightening plan. dallas president robert kaplan spoke to bloomberg about trump' s comments and his forecast for 2018. >> i have been saying 2018 was going to be a strong year. we have a substantial amount of fiscal stimulus. the budget bill, which increased government spending. we have been forecasting 2019 growth would be weaker than 2018.

and 2020 would be weaker still as fiscal stimulus wears off. we still have this hand would -- headwind of an aging population and slowing workforce growth. might look is pretty consistent. i have been expecting some moderation of growth because i have been believing the fiscal stimulus is going to wayne as we head into next year. >> one of the stories, donald trump's criticisms. janet yellen very strong in the financial times saying trump does have the potential to undermine the fed. how much should we worry about that? >> so i think people outside the fed, as appropriate, should feel free to comment. in my position, i will not other than to say my job is to do economic analysis and make jealous -- judgments without regard to political considerations or influence.

i think criticism comes with the territory. my mission and our mission at the fed is the same. >> are you being setup to be the fall guy for any kind of economic shortfall? it is very important i not worry about that. i think we are in a very challenging situation that you and i have talked about before. we have healthy growth and the a's states -- in the united states but fiscal stimulus is part of that growth. wane in 2019o and 2020. the trick is how to get the judgment and balance right toward moving toward a neutral stance but being -- avoid being predetermined or rigid in terms of what that destination is. that is complicated enough without me worrying about other factors. >> let's talk about the beige book.

a lot of concern about tariffs in american business. what are you forecasting? unusual for me to talk to a ceo that is not seeing cost increases pretty much across the board. labor costs, materials. it is typical. the only question ceos have is can they pass those increases on in terms of prices? in some industries, they are. in other industries given the dynamics, they cannot. the beige book is very consistent. if the tariff situation intensifies, my guess is input cost pressures are going to intensify also. >> that was our exclusive interview with the federal reserve bank of dallas president robert kaplan holding forth. let's welcome our guest host. ofaging director and head

investment management. i am reading words like carnage this morning. contagion. in terms of this market, how close to october 2008 is this? would you even remotely say it has the hallmarks of that? we have closed many times in the red as we did then. how close to cut his close make -- cataclysmic are we? we have compared this month of october 2, 2008. -- october. , they areepricing repricing valuation. they are repricing the markets. one number to put things in perspective.

last month, october, the s&p down 10%. valuation down 10% -- 20%. repricing going beyond valuation. it is hard to find clear patterns across asset classes. versus your cyclicals your defenses. no clear trend there. the folks at jpmorgan asking, why do investors hate everything? they are saying it is paranoia. the percentage of asset classes with positive returns, only 20%. that figure has never been so low outside of 1970's. what are you telling clients in terms of how to trade these storms? >> last year was a great year. most indices were up. we are seeing a rising correlation between risk assets and all asset classes in the red. the important point is for investors, one of the key things --y are not seeing, before

the fed is very focused on the job markets. usa domestic earnings. this is probably why you are not seeing the vix, which was before complacency level, it is moving to 20. people need to factor and we are in a different volatility level. it does not mean the bull market is over. >> it is a new way of looking at volatility. one of the things that is striking, basically the repricing by the market. you said there is no power put. inc. of america says that is 2500. down.heim says it is 30% would you repriced? do you think the dollar will reprice? do think the treasuries will reprice? two big assets. with the 10hat

years at 2%, real yields close to zero, i think the market can digest these financial conditions. we need earnings growth to be strong enough for the markets to go higher. in line with what we are seeing this year. growth, of earnings distant conditions for this market. in terms of valuation, if you look at operating yields, we are talking about 6%. the tenure at 3%. a very nice premium. yousef: we still have a lot to talk about. you are sticking around. let's get you a bit of a snapshot coming up this week. a busy week. the brazilian election is one thing. agencies completing the picture of the big lenders. rate decisions from the boj and

bank of england. friday, the u.s. jobs report. up next.oming italy escapes another downgrade. standard & poor's does lower the y's creditr the countries outlook. ♪

manus: petrochemical giant of saudi arabia has delivered their quarterly report. is in the business petrochemicals. much justs pretty above the estimate, $6.1 billion. of course they are subject to the bid from aramco. is the jewel hands in the chemical crown. if you go by the ceo at aramco.

getting one in in terms of sales and profit. >> you have the material sector, which is whe other stocksre sabic -- performing better. trading at about 50.7% written earnings per share, you compare that to 11.3 for comparable companies. to see how the market reacts to this latest move, 6.2% on high-volume. let's get back to another important story we are following. italy, they have avoided a second reading downgrade in a -- rating downgrade in a week. from the united, the chancellor plan as his budget britain prepares for life after

europe. charles, the story out of italy and the likely rally we may see, we heard earlier from the commercial bank of dubai, he was insisting we would see quite a bit of a reaction monday. what you think is priced in? >> the good news, we are seeing some deterioration in terms of rising bond yields. we are also not seen contagion. it is going to be a game of chicken between italy for the months to come. it comes together with the story of fiscal stimulus coming in the rest of the world. there were u.s. experiments and now they are shifting to the u.k. we heard about china, also. a fight to between italy and brazil. we do not think the story is over. saying, it is are

worth bringing the spread back to 250 basis points. it is interesting the imf, one there saying over the italian economy is stalling. fiscal stimulus maybe the only way to avoid a recession. i have not heard this argument. this is coming from within the imf. apiece we saw friday on the bloomberg. >> you might hear similar commands from france. in the forms of lower taxes. i mentioned china before. they are planning for 1% of gdp tax cuts for next year. policys like monetary coming to an end in terms of helping the global economy. the next stage is more fiscal stimulus. what is happening in europe is a good example of what can happen.

>> in terms of the story out of brexit, europe, the budget statement in the week ahead. coming off the back of all this noise around brexit. what does it mean for the future of the u.k.? the last budget before brexit. there are some numbers coming out of u.k. if you look at jobless rates. what is very important is to get more confidence of the businesses that have seen some weak manufacturing numbers. for once, there is some kind of a consensus. some fiscal stimulus coming into the u.k.. cake, take a look at it. going back to the currency story. i am trying to get a guesstimate from people where eurosterling goes. is very stable.

maybe it is because the two might --ese own issues i will not take a big bet in either direction on the euro cake. >> the managing director at cio, and head of investment. investment drive, saying they have received an response.ng positive that is next. this is bloomberg. . ♪

manus: welcome back. south african president ramaphosa is hailing the success of the nations investment drive.

he spoke exclusively to bloomberg's guy johnson in johannesburg. >> we are ahead of the track. we are way ahead. i am overwhelmed by the level of interest that continues to be in the south african economy. many potential investors are here. we have will over 1000 people here. of them are real investors, not just people who want to come and have a freebie at a conference. they are here because they want to put money on the ground and make money themselves. >> let's talk about where the economy is right now. numbers tou need the look good if you want to attract more investment. the midterm budget delivered in

deliveredon wednesday tough news on the south african economy. the outlook is half what wasn't is abated? rosyebt outlook is less than anticipated. is it the legacy from the zuma era, even tougher than you thought it was going to be? is the job of fixing the south african economy even tougher than you thought it was going to be when you took this job? >> it is tougher because now in the full glare of the commissions of inquiry, we are beginning to really get into the depth of what has been happening. we can see the damage that was toe to state institutions, government departments, and corruption had become endemic. fortunately, the wheels did not come off. we are beginning now to renew

and to roll back the best practices that had come into play. and therefore, we are now in a very determined way, moving forward and making sure that we do indeed did rid of corruption. ownedreposition our state into prices. you do improve levels of government within our government departments. yousef: that is the world's most valuable distiller based out of china. income of7 billion -- 24.7 billion yuan. reports of a government plan to curb alcohol consumption. down about 5%.

of what is up next. dubai bank, third quarter earnings. we break down the third-quarter earnings for you. -♪

ubai,ve shots of difc d estimated lower. there was a barnstormer, we'll see how our markets open today. a beautiful shot of dubai. let's get your first word headlines. christine is with us. >> thanks, manus. a man has been arrested in connection with mailing explosive devices that targeted high-profile democrats, including barack obama and hillary clinton, plus cnn. the justice department has identified the suspect as from florida.