boost from the story about trump thatt and also our story trump is ready to do a deal with china -- story from trump's saying that he is ready to do a deal with china. so the big picture is around trade. because if the equity markets higher by as much as 1.7%. it are also signs of positivity in the dax futures, the german equities market. short-term reaction will be positive just as it has been for asia. but there could be questions about where trade tensions go next. from beingrate transpacific to being transatlantic? as a result of trump's sounding more positive on china? we will see. the big is up by 1.14%, picture question around trade,

many of these both being lifted on that news this morning. >> you will not be surprised to bloombergeen on the europe 500 index. it looks the same whenever you put a broad index across europe, and across asia as well. green on the screen. the leaders are consumer discretionary stocks. bullishne that is obviously, weuse will have a market that takes off, people will be it would've handbagsd buy whatever or luxury cars they want. consumer discretionary stocks are rocking. he also see materials and i.t. doing well. i.t. bump it up now a bit. tech stocks are doing well, a telling sign, especially after the apple disappointment we had yesterday.

. anna, when you look at the individual stocks, what does the mrr look like? anna: let us have a look. there was a shortage of individual stocks stories, i suppose, not quite as much corporate reporting. this is what we see -- at the there is a lotd, of company-specific news flow x, a business that operates the biotechnology sector in the netherlands. we have international consolidated airline up five print one 5%, there is performance for them. %.had of the open -- 5.15 power, mentioned paddy made a good guidance this morning. annette also think a logistics also up. kering,

arepean equity markets opening pretty positively come 1%, following a positive day in asia after trade talks between the u.s. and china. president trump has reportedly asked his cabinet to draft a possible deal ahead of this month g20 summit. he said yesterday that the phone call was positive. joining us in london is mark phelps, ceo of consolidated global growth at alliance bank. let us get your thoughts on these overnight developments around trade. we have the positivity coming from president trump, suggesting ont the deal could be done trade, something that the markets is to have been waiting for for a long time. numeral turn out to be a big storm, given by short-term political motive? he cannot say, yet, can we? >> it has meant that most of us a look at the fundamentals are reasonable.

we are taking a half-full approach as opposed to a half-empty perspective. steps been difficult to into some asian stocks which are extremely attractive on valuation, but you had this uncertainty and we did not know ho are seeing today. that was the question of the day, basically. trade driven rally a false dawn? by the way, our viewers can write in. i.b. plus tv , in order to ask in the questions about the pmi of the day. mark, what do you think about the possibility that this is just -- one of your called it a dump. pump and best stock market

gains have been so important to president trump and now it is not really part of his legacy. moneyit seems like market permission to me. , i wouldould never never allege that kind of thing. mark: there are some serious issues on trade, we are well aware of them. i think mr. trump himself is in the most pragmatic camp. the pragmatic approach is that we know the u.s. has been very favorable to other countries over the last 20 or 30 years on trade deals and looking at renegotiating those and tilting the balance of positive trade more in the favor of the u.s., that is seen as a good thing. i don't think is inappropriate, and i think the market so this respect that. if your concern is trade as an article of economic warfare as you are getting into the next 20 or 30 years, on how the

geopolitics between china and the u.s. plays out, that is a different discussion and that is where you fear some in the administration suggest a win is a smaller pie, but you get more of it. that would be very bad. so you have the pragmatic approach, let's us grow the pie but tilted to are the u.s., that will be positive. the other way, obviously, less so. if the other way turns out to be a renegotiation of mastec am i think the market will take that positively, then we can focus on decimate negotiation of nafta, than i think the market will take that more positively. then we can focus of renegotiation. and does not tell us why trump goes next, does it? mark: know but it tells us that if we can get a positive result from china, all markets will rise. growth nextal

year will be in excess of 3%. we have seen markets come back in the u.s., because of trade issues. the ability to go back and look fundamentals, we know that all european companies, ith as in china and an other countries, if they can get canr rules clarified, they get back to doing a good job. . index, itworld equity is a complicated and interesting screen. one of these columns, my favorite, changed year today. it shows that we are seeing all big losses across europe. in fact, they have been decimated. asia even worse, and the u.s. is not showing much again. where do you see, regionally, for example, we have seen the

biggest distraction. too much destruction that investors can make the money back if things start to go well. mark: my view on this is that if you get an agreement on trade, it is china, because they came back the most. today, but iflot you look at the biggest impact of the concern on trade, it was felt in asia, particularly china related, and that would be your biggest opportunity if we get very clear fears as to where the trade agreement will go post the november 20 summit. >> thanks very much, mark. it is an incredible day for mark phelps from alliance burstein is with us to help us guide through the gains. next, stocks are on the move, iag, air let operator which listed its long-term profit goals and the stock is up 3.3%. this is bloomberg. ♪

♪ anna: welcome back, this is "bloomberg markets: the european open." let us get the top stoke stories desktop stock stories. >> i know you are talking to the earnest of bank ceo earlier

today, who was pretty positive on his outlook. little markets look a bit different today. when it comes to the companies full-year revenue, number of intelligence analysts say that there were high expectations coming into these earnings, which could be one of the reasons we are seeing shares climbed. some positive movement, but they did release a headline heading into the day saying that there are upgrading one of their key target metrics. so investors maybe expecting more positive headlines. is one of the big gainers, they make armored cars for banks and their stock is up almost 4%. most of their earnings come from the u.s., as banks are starting to outsource more for them. matt, anna? thanks very much for that. we are not just four days away from the midterms in the united states and the polls are forecasting that the democrats

take the house, but republicans keep control of the senate. as we enter the home stretch, president trump has again focused the campaign on immigration while democrats have brought out there highest -profile campaign surrogates. >> hundreds of thousands of children born to illegal immigrants are made automatic citizens of the u.s. every year because of this crazy, lunatic policy. but we can and. we can and. obama: i am here to ask you to vote. to vote in what might be the most important election of our lifetime. matt: meanwhile, october's jobs report today at 12:30 p.m. london time, the last piece of economic data ahead of tuesday's election, and some would say, the biggest piece of economic data that we get on a regular basis. mark phelps is still with us.

mark, it is not really an economic issue, is it? the economy seems to be firing on all cylinders. is that due to anything ?resident trump has done paul: i on a good job in terms of stability economic activity, possibly too good, but the unemployment number is probably going to come through pretty well. i don't expect them to be any real surprise. any focus will be on the wage growth component, probably key if you are the federal reserve. chairman powell will be focusing on that issue. if we saw wages picking up a lot, then i think you would get into discussions about interest rates having to go up further and faster, better don't see that happening. i think they plan to see interest rates go up broadly in line with expectations, not even three increases next year, perhaps 2.

that is something the market can deal with. the unemployment situation is good, consumption is good, slightly rising wages possibly positive from a corporate perspective. the net-net on the economy is solid. the politics, clearly, is focusing on something else. wages.ou mentioned i have a chart here that took the about what we are seeing, the early wages number was we have seen. 3.1%, which isto quite a strong number, better than what we've seen over the last decade or so. strong of a wage that missable worry about the fed and others? more thanink much three on a consistent basis will be a concerned and it will be watched in great detail. you will see lots of differences -- there are pockets that are very strong, things like wages

for truck drivers, up through the roof. -- thereust in not just isn't enough capacity, not enough supply. the surprising, economics 101, their ridges are going up. if you look at what happened with amazon, in terms of raising their ridges, their biggest area of concern was getting truck drivers. westu look in areas like texas, you almost cannot get a truck driver to get into the trucking business there, it is extremely difficult. so you're seeing wages rise in areas like that. the big question, then, who will eat the increase? if wages go up, i it could be taken as a hit to the margins and employing the stuff, or do they passed that inflation to the consumer? if it happens, mr. powell will be even more interested. that is are you have a potential concern for higher rates? matt: if i use the ea function look at earnings in the

u.s., i see pretty incredible year on year growth. 24% of companies that have reported so far, it is a in terms for companies who have reported so far -- 8.5 percent. we are also getting a decent read on earnings, because theysts kind of lowball estimates. sales also coming in line. is there a problem with u.s. stocks, that we expect too much in terms of earnings growth? mark: i think on the numbers we have seen so far, there are coming in broadly in line with expectations, but those are very high numbers. the key, as we look into next year, we know the numbers will come back down significantly because we will lose the benefits of a tax cut that we saw this year. so we could be looking at the low midle digits, from 20's this year, next year.

i think that is healthy, the market will be comfortable with that, and we've had a valuation on the u.s. stock market come down this year, because earnings have been strong. the markets have not moved up that much. that, i think, sets us up for a reasonable return next year. i am afraid we will continue to have some volatility come at the thing that the market will have to come to terms with. if you go back to the late 20's in the us is looking at 100 years of data, the market 20% on average every few weeks. funny enough, in october, the last one was in february this year. so i think the market looks attractively priced, relative to positive earnings come up with that will not be a strong next year. but i think that is already in people's forecast. anna: thank you very much, mark phelps. up next, we talk oil. the u.s. has agreed to let eight countries keep her to sing

iranian oil, after italy imposes sanctions on monday. the sanctions come into force on monday, but there are reports aplenty.emptions what impact will this have on iranian imports? this is bloomberg. ♪

♪ matt: welcome back to "bloomberg

markets comic this is the european open when a day -- on a day -- this is a day when markets are up, up, up. let us take a trip around the world starting in hong kong. 4.2% gain, the biggest in at least best since 2015. the koreans are calling it a k pop. the cause be going through .5%. the stoxx 600 gaining a little more than 1%, the dax almost 1.5%. otters are a big boost. the second worst performer of the year here is that one of the best performers of the day, 3.5%. s&p futures are indicating that we could get a gain in the u.s. when the market opens up in a few hours as well. it is all due to trade, but we have some huge stories, including one on oil. anna: yes.

the broad market picture is really moving on this trade story. significant development around iran and oil. the u.s. has agreed to let 8 countries including japan, india and south korea to keep adjusting iranian oil. that is according to a senior officials in the administration, as wti crude heads for its biggest loss since february. a survey says opec production is at its highest level, with the loss of some iranian crude. for more is stuart wallace, executive editor for energy and commodity, and mark phelps from a lance burstein is still with us. alliancebernstein is still with us. about the eight countries. is this what the market was

expecting? i think the market was expecting fewer exceptions? >> for several months, without it would be a hard line and all the rhetoric of the state department and the white house was that we would go to zero. which seemed hard to kind of make work on paper, because china could ignore this. the key is, what are the hard numbers around not? how many barrels will they be allowed to buy? with it looks similar to what the obama administration did, in which case a downward slope in the prices for oil seem like they are in the right direction? onooking at opec my screen, one of the graphs you the crudes is production estimates. you can tell that saudi and its friends have been ramping up preparationtion in of this iranian blackout, and yet we have eight waivers.

or does that mean for the market and for volatility? stuart: i think it puts saudi arabia back in the position it was in a few months ago. outad those furious tweets of the white house, talking about how "manipulating the price. i think the reality that was found on the ground is that demand for oil was not there yet. over time, we saw the stockpile go down -- build up and the price come down. we see it there in a hard numbers on that screen, that is a result of dozens of dozens of reporters calling their sources in the market, trying to count the barrels coming out. no doubt, production is going up of of that we are not convinced yet that demand is there on the other side, which points to a downward arrow for the oil price. anna: mark, i have a chat here that shows that come with any of marketnear bear

territory we are for the oil price. if the fears around iran had given this higher, with these exceptions, we will go down on the oil price. are you investing around that theme? mark: i think this is a sign of the trump administration being pragmatic and they were concerned about the cost of fuel going up. for notp is known seeing the outcomes that he wants, yes, he would like to change things in iran and he doesn't want to see his own voters see rising costs. and of course, the impact on the federal reserve, with interest rates going up, that would have had a negative impact. so i think the administration's response is to say, we don't want that impact. this is a pragmatic approach. in terms of how to play the oil market, i think that is something -- my perspective is that the only thing that matters in the long run is the supply-a demand equation. demand over time, will continue to rise as far as i can see.

not that many companies are investing to bring up capacity. i think it will go down first, before it goes up, the oil price? matt: fascinating stuff. stuart wallace, thank you for joining us on oil. mark phelps will stay with us.

i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. matt: 30 minutes into the trading day. deal.g the president trump is set to want a trade agreement with china this year. card.washington is said to let eight countries keep buying iranian crude after sanctions go into effect monday. apple underwhelmed. the iphone maker says it will stop releasing unit sales data as its holiday forecast misses the streets estimate, shares slump as much as 7% in extended u.s. trading. good morning and welcome to bloomberg markets.

. i'm matt miller in berlin alongside anna edwards in bloomberg's european headquarters in london. to the upside, we have had a number of luxury goods companies in here. we have seen upgrades in that sector. are very was an early strong performer. burberry was an early strong performer. luxury names moving a little bit to the upside. downside we have krista bank, this austrian bank is focused on the central and eastern side of the european banking story. on.oke with the ceo early the stock is down 2.8% despite the fact they guided higher in expectations. they were making positive noises around cost control and dividends. down inhe market is

this morning's session. bank the u.s. has agreed to let eight countries, including japan keep buying iranian oil. that is according to a senior official in the administration. china, the world's biggest importer of iranian oil is still in discussions with the u.s., but is understood to be among the eight countries. wti crude is heading toward its biggest last since february. president trump is said to want an agreement on trade with chinese president xi jinping. sources say the u.s. president has asked key officials to draw up potential terms. the push comes after a telephone conversation yesterday, which is

their first publicly disclosed call in six months. >> with china, we are doing really well on trade. we are going to make the right deal. have beenon a year coming out of this country. i say we have to make the right deal and we are going to make the right deal. taylor: apple shares slump and we trading. trading putting the investment1 trillion risk. analysts say it is an attempt to hide stagnating smartphone demands. the world's most valuable public company says fiscal third 2019 revenue will be between $89 billion and $93 billion. aroundstaff has walked

-- out around the world because of how the company has handled claims of sexual misconduct among some top executives. with; media hosted photos -- with of the # googlewalkout. malaysia's government says it will push its deficit to the highest level in five years and john lauren come from the state oil company to help plug the shortfall. in the first budget since the new prime minister took office in may, the government is widening its deficit target this year. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. thanks very much.

we get the results of europe's toughest ever bank stress test today. italian lenders are in the spotlight amid a bond slump. bloomberg sources say deutsche bank will be particularly hard hit. joining us now from frankfurt is nicholas comfort. hit, its the hardest doesn't surprise we are deutsche bank could be among them. what kind of repercussions will the bank face? tests are all about capital return are whether the banks have to hold more capital. if you have a very bad result and test, it could be your supervisor will ask you to up the amount of capital you have on hand, or if you do exceptionally well, maybe you

can be returning more capital to shareholders and staff in terms of bonuses. that is with the key stakeholders will be watching. the test also includes some other metrics this time around. they're looking more closely at trading assets. also the link between profitability and growth, which is an issue for the german bank issue. emma bank that is one airbag we talk about m&a. we also talk about it in italy for different reasons. what i we likely to hear from the italian side? nick: if i was a banking analyst, we would want a more granulated -- they have made big strides this year. i would also be looking at the impact of the widening of the

rise of the yield. it is going to give you an idea of how things could get if they stay the same in terms oof where the bond yield is now. you go through this data for living. what to a lot of other people is complex and even opaque, is for you like a field day. i think most of our viewers want to know, are investors going to end up getting paid more back from profits after these stress tests, and are the bankers who are working of these banks going to end up getting bigger bonuses? it depends on the bank. if you look at the last two rounds of stress tests and average capital ratios in that. they, banks -- in that.

period, banks have set aside more. at thattion is are we inflection point where the banks can return more capital? we are seeing it at some individual banks, but i see the picture for the industry as a whole is one which is not quite as optimistic. anna: thank you. tests break later today. the european equity market session up by just over 1% on the stoxx 600. it is all about trade. it was all about trade in the asian session and once again here in europe. we saw stunning gains coming through. the hong kong market, the hang seng up more than 4% by the

close is bloomberg colleagues have been reporting that trump looks like he wants to do a deal on trade with the chinese. this is bloomberg. ♪

anna: welcome back. this is the european open.

mark carney is warning that a no deal brexit could mean further interest rate hikes. the bank of england governor says crashing out of the eu could trigger a once in a lifetime supply shock. joining us now is the lord mayor of the city of london, charles bowman. thanks for joining us. dealing with the details of brexit and what this means for the city of london, talking to the rest of the world about where the city of london evolves from here, what is it that still worries you? i have the wonderful role of acting as key u.k.sperson for the financial sector. oy 2.3 million people nationwide.

time, i would have spent some 110 days traveling abroad to between 25 and 30 different countries. anna: is the rest of the world worried about london after brexit? arles: it is all about business. i look at the questions in relation to brexit. my, they are keen to hear interest in relation to it, but they're looking at business beyond. innovation, green finance or internationalization of currencies. they are really focused on the future. matt: that all sounds great, but the bottom line is, are there still going to be the same amount of bankers in the city of london after brexit as there were before brexit? we were looking at massive estimates of 4000 acres leaving

from jpmorgan. it looks like those numbers have been drastically reduced by now. are confident that it is still going to be that one will still the financial hub of the western world? we need to make sure that we get the appropriate deal in place. i talked to business each and every day. what london possesses is something very unique. fundamentals. business does not want to move. they want to continue with the situation in london. one thing that would would beople to stay, a stable relationship with the eu. times,a report in the

which were dismissed by brussels yesterday that talked about some sort of enhanced equivalents, many with -- maybe with an arbitration board attached. reports that they u.k. and eu negotiations have been reaching a sense of agreement came out yesterday. to the extent, those are accurate and that is positive news. quiet confidence is very much in the interest of europe, and the interest of the globe and the u.k. to find that appropriate deal as it relates to both transition and trade beyond, to vie that risk developing across the european platform. matt: let me ask a question that isn't directly related to finance, but i think pertains to the eu's way of doing business. i've long been a huge fan of the city of london. it is a fascinating, diverse and vibrant place.

it seems that you have now instituted regulations that make traffic worse than it has ever been. there are streets that black cabs can't go down, bike lanes are forcing huge traffic jams, is there anything you can do to make that situation better? charles: we are constantly looking at developing london as a place to do business and a place to work. of the research that we have done this year with london and partners in the gla have focused on why london is such an attractive, it comes down to two simple words, creative energy. role of law, history culture, access to talent, diversification, taxation regulation innovation, time zone, language, security

property and a great place to live and work. we need to constantly invest in those fundamentals as we progress, not least in relation to access, traffic, the smart city of the future. anna: we will have to get matt miller a bicycle so he can enjoy the bike lanes. thank you so much, charles bowman. we need to check out the data just been released from italy. the governments in italy have talked a lot about growth and putting growth at the heart of their plan, but it has been the budget and government spending proposals that have been controversial with brussels. we have tracked that consistently. we are showing you the euro against of the u.s. dollar. story, only half of the --the euro story, only half

of the -- story. matt: let's talk tech. apple's decision to stop reporting how many iphones it sells landed with a fed. shares -- thud. shares fell after the company released third-quarter results. sources say apple does not want to disclose the following numbers. mark, may be back from apple a moment and look more broadly at tech. it is been so volatile over this market correction that we have seen in the past four weeks. what do you think about the sector as an investment? perspective, you have a lot of very interesting businesses that are growing at valuationsre that were more attractive than they were a couple of months ago. if we look at the numbers actually, facebook or apple,

they were not one million miles away from expectations. we're going to focus on numbers today, but if you look at the slightly lower guidance going forward, it is down about 2%. not a big deal move away. we have to go back to fundamentals.do we still see growth in this area bank? we do. we still see facebook and apple growing in double digits. i think there are other areas where some of the stocks, perhaps more expensive and there are a lot more within the business model that is hope rather than reality, but i was come back, any find good business is growing with cash flows that represent opportunity? i think you can. anna: how do we treat apple these days? for nottheir reasoning

disclosing how many iphones they sold every quarter is that they want to focus elsewhere, services. and will remain a hardware business still selling phones. they want to build up the services side of things. an entirely different kind of revenue stream. what difference will that make? mark: the nice thing with apple is you have the ecosystem. once in with apple, it is very hard to get out of it. do they sell you a new iphone? that is clearly not going to be the driver going forward, but they can sell you more services. in that respect, you have that opportunity. they are also going to sell you other things. the watch is a slow but very successful business. it is growing nicely, it had a slow start but i think it is getting going. you have the your buds and a variety of other things you can work. i think they're going to come back to home and try and focus on getting that right. that is an opportunity for them. what they're saying is they want you to think about apple as a whole company holistically between services, hardware,

software, accessories, phones. that is a big area for them to play. mark, thanks very much for cio of concentrated global growth at alliancebernstein. don't forget, bloomberg terminal users can interact with all the chart the on bloomberg television. browse the recent charts we have been showing and catch up on the key analysis and save them for future reference on your own terminal. up next, it is battle of the charts. this is bloomberg. ♪

anna: welcome back to the european open. we are 54 minutes into your trading day. a strong positive session in equity markets. time for battle of the charts. dani burger goes head-to-head with matt miller. dani: the big question today with equities rallying is is this a sustainable rally? this rally might be driven by sure coverage. i'm going to focus on the u.s. markets here. this is the performance of the most shortage stocks by goldman sachs versus the russell 3000.

if you look yesterday's numbers, this is the most those stocks have outperformed since 2016. that means the shares are rallying, it could be a sign of short covering. typically when we see if the strong, it is just that. once these shorts are done and i put back into the market, we might see some of the gains we are seeing pull back a little bit. anna: just writing down the function so i can check that out later. let's get to matt. matt: what i have is a fascinating chart that focuses in on the fed rate hike expectations and the importance of today's jobs decision. the charges shall you that so far, the market is pricing in almost for rate hikes for 2018 and almost to rate hikes for 2019. the interesting research done by one of our economists here at bloomberg intelligence says that it is really not the eco-data that matters right now to the fed's rate hike path.

the payroll print between 175000 and 225,000 probably keeps the odds of a december rate hike above 80%. market participants are watching financial conditions. at the stock market peaks between now and december, -- pukes, between now and december it can be markets not data that lead to a fed pause. matt, i love that and i love the reminder. to diary note said that we are going to get the payroll numbers later on this afternoon. i'm going to go with dani because it gives us a chance to ask the question of the day. when we look at the market performers we have seen, do you think this is a new beginning or a false dawn? involved and contribute to the conversation, the mlid blog is up and running. give us what you think on this mliv question of the day.

european equity markets in positive territory, up by 1% on the stoxx 600. that is it for the european open. surveillance is next. ♪

francine: equities rally, global stocks jump on hopes of the u.s.-china breakthrough.

but thections approach, u.s. agrees to let eight countries continue to buy a rainy and oil. oil.e shares -- iranian an apple shares sink. this is "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. because of the time change, we start and end together. a big day when it comes to equities. this is on the back of a possible agreement between the u.s. and china. tom: on sunday, we will fall back here in america as a look at daylight savings time. what we are really going to do is follow next tuesday. the election heating up. whatever your views on president trump. immigration, simple immigration, the only topic in america this morning. francine: four, days until the midterms it will be interesting

to see how that plays out with voters. let's get straight to taylor riggs. taylor: president donald trump is said to want an agreement with chinese president xi jinping. sources say he has asked chinese officials to begin drafting terms ahead of his meeting at the end of this month.this comes after telephone conversation yesterday what's is the first publicly disclosed call in six months. the u.s. has agreed to let eight countries, including japan, india and south korea keep buying it rainy and oil -- iranian oil. china, the world's largest importer is still in discussions with the u.s. on terms, but is understood to be among the eight countries. crude is heading toward its biggest loss since february. that is as a bloomberg survey says opec production is at its highest level for two years with saudi and libya offsetting the

loss of some iranian crude. apple shares a slump in late trading on a week forecast for iphone sales in the upcoming holiday. . investors are further worried by the company's decision to stop reporting how many mobile devices, tablets and macs it delivers, which is some analysts say is an attempt to hide stagnating smartphone demand. fiscal revenuey will be between $89 billion and $93 billion. on the earnings call, the apple ceo was asked about approvals and the u.s.-china trade dispute. >> we did see a few gains approved recently, but it is very far below the historic case. i don't feel that issue has anything to do with the trade related this gushes between the countries.

i think that is strictly a china.c issue in google staff walkout around the world in a mass how the company has handled claims of sexual misconduct by some top executives. starting in asia and spreading for europe and onto the u.s., social media posted photos. the action was sparked by reports that google paid millions of dollars to some executives in secret asset packages. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much. i want to show a chart on this in a moment. futures up 19. dollar weakness. oil soft.

in 18.83, down from the average of 20. the dow closed yesterday with a list of today. strong renminbi, weaker dollar. i put in mexico with a 20 print earlier. francine: overall, the story is spending globally that we are seeing. crude oil falling. this is when iranian sanctions hit on sunday. we understand of the u.s. has agreed to exempt eight countries from not actually using the oil. everything ok? tom: yes, just looking at the new slope. francine: this is a we have with european stocks. the bulls are back with global

stocks gaining on fresh hopes of routes between the u.s. and china after one phone call between the leaders of the world's two largest economies. president trump has reportedly asked his cabinet to draft a trade deal with china. by luigi andined gene. thank you so much for joining us. first of all, are we expecting too much of president trump and president xi have an agreement, they can always go back on it. always wish that president trump would spend more time on the phone than twitter, but they do always seem to lead to more productive outcomes. think that any discussion is seen as positive because there hasn't been any talking up to this point. on the other hand, when you look at the nature of the dispute, it is very unlikely get a serious breakthrough anytime soon. francine: what is your take?

luigi: i don't think we are going to have a week resolution because there are long-term problems between china and the united states. i don't think they're going to be resolved with a phone call. tom: we're looking at a trade war. i'm not sure if you study the trade war across the zingales academics, but defined the urgency for our viewers in this phrase, a trade war. trade wars have not been so common. that was the 1930's one. more than anear is escalation in trade. i think the recently alignment between china and the united states, up until now has been seen more as partners.i think move they will be seen

as potential enemies our opponents. i think this will change the global trade and i think a lot of countries, including europe have to decide on what side they whethern this tension, on the u.s. side or chinese side. tom: what is so important here is the pricing within the markets. we all look at fixed income for that. are fixed income markets acting in a way you would consider to be rational? gene: i would say they are acting in a way that is consistent with a role that is basically driven by u.s. growth. overall dependent on the u.s. growth engine, and engine that still does not appear to be faltering in any material way. the china trade dispute does not seem to have gotten in the way of that. with had our first test of that with the equity market weakness over the last several weeks.

i think we're still in an environment where maybe growth is slowing a little bit and we are past the best, but it still looks pretty strong. francine: two days ago we were talking about a possible correction. now, we talk about equities rallying, risk on moves because we see the u.s. and china. how quickly can things turn again? quickly.hink quite that is the tricky part now about how do you invest? if you look at what is priced into certain equity markets like emerging or even european equity, it is almost like we are priced for some kind of recession. that is not the case in the u.s.. they seem to have a lot more potential downside. i would say that things can turn on a dime, particularly as, if you look at the strength of growth, it really is concentrated in one place. everywhere else looks pretty weak and weakening. tom: their a good.

thank you so much -- very good. thank you so much. much to talk about, including talking to professor zingales about capitalism and his america. coming up, an important discussion on the economy america. he represents the president of united states, the former chairman of the president's council of economic advisers. the phd from pennsylvania. this is bloomberg. ♪

francine: -- taylor: this is "bloomberg surveillance." the ceo of u.s. retailer in on has weighed

-- i think a lot of this is pretty uncertain right now. overtime, if there are significant tariffs, many categories are many products, ultimately, that will impact prices for the consumer. for us right now, it is a pretty small part. austria's biggest lender said in income was 454 million euros in the last three months period, with revenue coming in at -- one of europe's longest-serving bank chief executive has said he was step down at the end of 2019 after more than two decades in charge. that is our bloomberg business flash. much.ianks so want to bring up a chart right now that is really important. this is how i look at the news

across the bloomberg terminal. it is a little hard to see, what all you need to know as everybody is weighing in on that. 226e priced target cut to versus 247 at morgan stanley. you're going to see a lot of that kind of talk today. with us is the gentleman and chemistry and physics from berkeley, eric ross. original on the sell side. and gene,eles clipping coupons in the bond market. the bulls say the profits are there. services growing. are they wrong? eric: that is exactly where apple is going. it is not just a hardware seller. tom: how do you react if we trade down 7% today.

i don't know what that is on the standard deviation, is at the mother of all values? has beenike it other times? eric: we are keeping our $250 price target. we think we are going to get back there. the guidance was a little bit worse than what we were expecting given the currency had went, but within the value going forward is a longer-term an annuity of selling into the install based services. other types of products, that is going to be a very positive by for long-term. francine: is it safe to assume , with appleket stopping to report figures it means the figures are bad? eric: not necessarily. the unit member was a little bit lighter than what we were expecting, but the average selling price was better than expected. from what we measure in the

supply chain, android across the board, samsung are doing very poorly and apple is doing well. again, you do numbers being basically flat every year, in an environment where the entire cell phone market is flat in general, they were able to raise their average selling price pretty dramatically. they are still offering the lower end handsets of the older model. they are just offering these new handsets. the supply chain partners we talked to are doing very well. francine: what you're telling me is the fact that apple will stop disclosing how many of a cell of each unit. the big luxury companies don't disclose the numbers of there is brands.is a that a good or bad thing or should we care? analyst, i like seeing as much information as possible. for apple, it is probably the right move because they can start to pitch this larger

story. in the family microsoft has changed from being the seller of apple products, they have moved up. tom: we are going to go physics here. you and i are going to do in our self force. -- inertial force. c if you're lucky/ the key question is the annuity business. guys like you look at this as $45 a month. that is the way it is. eric: the phone is just a piece of hardware. once you buy a phone -- cook anddoesn't tim his cfo say that this is not a thousand dollar transaction, it

is a $52 amount transaction and they're looking like an insurance company right now? eric: it is all of the other products they are selling alongside of it. people buying these phones are going in and buying the apple watch. we went to check out a whole bunch of apple stores across the country and people are going in there, all ages. tom: i noticed mac sales were flat. the fact is, it may not be growing, but it is not dying and going away. eric: pc's in general are doing fairly well. it is doing a lot better than people expected. we have been saying all year that pc's have been doing better than expected. there is an enterprise refresh that is going on and the mac is part of that. i'm keeping it at 250. tom: thank you for the optimism.

we will look for the opening this morning at technology in the finances of apple. sittingpimco patiently. luigi zingalaes sitting tight. mr. macklem on governor kearny. this is bloomberg. stay with us. ♪

francine: "bloomberg surveillance." this is "bloomberg surveillance." manufacturing hinting at continued weakness after the economy failed to grow in the third-quarter. this as they nation standoff at the european union continues. signed toent has approve the transfer of the italian budget law into parliament. still with us are gene and luigi. what is the endgame of this government? do they want to get out of the euro? is there a secret plan? luigi: i don't think so. it is always hard to predict italian governments. i think the ultimate goal is to try to change the relationship with of the euro. if this were to escalate to a point in which they can blame europe for everything, maybe. i think we would be more in an

intended consequence. francine: is pimco short on italian bonds? cautious.re i think our expectation is that this continues to get worse. we don't see particularly good value in italian debt at this stage. francine: we also have this uneasy partnership. as soon as he can, well salvini go at it? like: and italy, it is not the prime minister can call for new elections. that is completely different from the u.k. are most countries. salvini, if he could, would do that exactly, but he cannot. remember that there is a possibility in parliament of a different majority. if today, he were to say, i'm not part of this government anymore, there's a possibility

especially, the democratic party would cooperate. it is very dangerous for him to play this game. tom: i'm so glad that this item came up. let me show a chart which really speaks to all of the professor's research on try to figure out capitalism. here is a really successful italy manufacturing and gdp going up. a huge middle surge of the last decade. it is absolutely stunning to me how far italy has to go to get back to any sort of former vector, former glide path, former good feeling. how do they do that? fromhey extract themselves the manufacturing? to understandve that manufacturing is not feeling thing that exists in the world. today, they are very strong.

politics,lian manufacturing is still the number one priority. sector, is an important that we also need to move to other sectors. my view of the long-term italian malaise is that we are not ready for the innovation and communication technology revelation. there are more firms controlled controlled, not formally organized. we are not in the best situation to take advantage of the changes -- not surprisingly, we fell behind most in the sectors that gained the most from this revelation. i think what italy needs is more than a change in government, a change in culture. that is not an easy thing to engineer. francine: what are the chances of italy leaving the eurozone intentionally or unintelligent

intentionally? the next 10 years? luigi: i think 20%. there are a lot of possible mistakes. i think the euro was a political decision, not an economic decision.the only thing that can break it is politics, not economics. i think if i want to say what is the highest likelihood is it germany insists in adding a wealth tax to pay for the italian debt. francine: thank you so much. this is bloomberg. ♪

morning. bloomberg surveillance. francine lacqua london, i'm tom keene in new york and hearest taylor riggs. taylor: -- and here is taylor riggs. taylor: the u.s. has agreed to

let 8 countries, including japan, india, and south korea, keep buying iranian oil after it reimposes sanctions china, the november 5. biggest importer of iranian oil, is in discussions with the u.s. on terms but is understood to be among the eight. wti crude is heading toward its biggest loss since february as a survey says opec production is at its highest level for two years, with saudi and libya offsetting the loss of iranian crude. panasonic says it is on the verge of turning a profit at the giant factory and operates with tesla. on batteries and hopes to follow suit on the model three thanks to the output at the factory. whichnic said on tesla, is soon to exceed $1.8 billion, has been forced to consider foreign investors. >> i've never met a man like

elon in my life. half-full man and that simplified my decision to take a bet on him. taylor: blackrock's european hedge fund is said to have had its worst month ever. up more than 10% in the years since the year since september. they global selloff has hit the heads should industry, wiping out his gains for the year. the hedge fund industry, wiping out its gains for the year. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: thanks. us, sunday anoins important day for president trump and secretary of state pompeo. we look at sanctions, if you will. moved, brent crude has

moved, is that because of this pending news, this pending reality for iran? will: partly. the news we had overnight fed move the market lower by about 2% was that the state department was preparing to grant eight waiver tocountry's a import some oil. important questions remain as to how much oil those will involve. it is an important move for the market. francine: i guess we do not know what is in the waivers. could we expect volatility? will: exactly right. we do not know all the countries involved. we know four, japan, china, but there arendia other countries.

we do not know how much oil they import. we do not know how fast they will ratchet down. there will be headlines which could move prices in either direction. it may be not all details come out. it may be the administration plays a lot close to its chest. there may be guesswork. one more point is that in our story, it points out that all the money importers pay to iran for oil must go to an escrow account and the money can only be used for humanitarian goods, food, medicine, etc. it may be that enron may not may not want to sell under that. francine: i have a chart. it looks that wti, brent, some of the shale producers.

if you look at this chart, it is and brent both wti are on a downward trajectory. is that likely to continue for the price of oil? will: there is a bigger macro story at play beyond iran and what we see is a surge in shale production. the numbers for august are strong. that appears to be meeting an economy which is showing signs of globally growth slowing. and you got extra supply they slowing economy, that is bearish. ,hat is the broader picture now beyond the impact of sanctions from these waivers. francine: thank you so much, will kennedy in charge of oil coverage. still with us luigi zingales. how do you look at oil and the impact. this is dynamics of supply and

demand because of iran and venezuela. it goes back to how much demand because of slowing economy. gene: we think it is more of a supply story. , the production surge in the u.s. is important. the u.s. is the world's largest oil producer. they are hitting first levels of -- they're hitting production levels that were not expected until the first of the year. there were capacity constraints. if you look around the market broadly, there have been three popular trending trades. one is long dollars, long oil, long tax stocks. you have a speculative position on top of the supply story. we getting a washout. -- we are getting a washout. tom: thank you so much.

luigiant to speak to zingales about president trump in the future of american capitalism. to speak withood jeffrey currie at goldman sachs on this movement we see this week in oil, particularly with iran. the view forward, on oil. stay with us. this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine. a focus on trade after the europe negotiating, the u.s.-canada, mexico inked a fresh trade deal. ony failed to resolve issues

canadian steel and exports. tiff macklem, dean of the university of the rotman school of management. still with us is gene frieda and luigi been dollar's -- luigi been dollars. -- luigi zingales. is tariffs back on the agenda? do you feel like we have an agreement but it could unravel? tiff: in canada, there is a sigh of relief. the u.s. is by far our biggest export market. u.s.'s biggest export market. that the disappointed tariffs have not been removed on

steel and aluminum. hopefully, that is to come. discussions are ongoing. deal is ahe larger big step forward. francine: how do see trade tensions unraveling? -- how do you see trade tensions unraveling? know what toard to make of trump' latest statement. i think having the g7 countries engage collectively with china would be a step forward. deeper, more open trade relationship would be beneficial. we all have trade issues with china, particularly around intellectual property. if we could come together, that

would be a positive step forward. president trump has been more bilateral. it would be positive if he would work more multilaterally. one of the crown jewels a your school of management is a guy named paul martin. he has written the book about thinking about process. would you explain the view of what the new globalization, the new capitalism process will be? the rules are changed. what is a gwen to look like in five years? it going to look like in five years? tiff: paul martin was instrumental in the broadening of the g7 to the g20. the g7 still is an important group of like-minded democracies , market-based economies. face today,e whether it is global finance,

climate change, they are global. jobave got to do a better of working together to get a clear set of rules. tom: the challenge that central bankers and politicians have is we have a president who believes in a g1. what does martin say about the reality of a future g1? the g0.metimes called i do think it is a productive way forward. see moreoing to regional groups forming in the absence of a cohesive g20. see the glass half-full, hopefully they will get reconnected in the future. in tradeeeing this with more regional types of trade discussions. multilateral trade is dead. those can move forward without

the u.s. it would be better if they could move forward with the u.s. a global player and the u.s. has been instrumental and enforcing global rules. it does -- if it does have to move forward without the u.s., it will proceed and that some point they will come together. francine: is that right that multilateral trade is dead or are we redesigning trade with partners? if you keep the united states aside, i do not think multilateralism is dead. president trump, it is difficult to have any form of multilateralism. he likes to be in charge. he makes sanctions and negotiates extensions. tos is the ultimate power have everybody dependent on him.

that does not favor multilateralism. francine: how does it change in three to four years? we have midterms. luigi: it is not going to change his style. it is going to change his ability to pass legislation. the question is, what is going to happen in 2020. i do not have that insight. tom: when we look at the central bank task, they've got to work within the political mill you. -- milieu. are the central banks going to lose independence within the new populism? tiff: i hope not. seeing in, you are the u.s., the fed's wings have been clipped. you go back 10 years, the financial meltdown, the system had to over rely on central

banks because governments were not in a position to move quickly enough. i do think there are dangers going forward where elements of dodd-frank have reduced the powers of the fed in a crisis. so, there are dangers here. that, within the central bank community, there is still a strong spirit of working together. central bank governors meet regularly at a technocrat level. francine: thank you so much. the former senior deputy governor. coming up on bloomberg markets, the chief executive at 10:30 a.m. in new york. this is "bloomberg." ♪

tom: it is the best of times. it is the employed united kingdom. it is a hugely employed america for me.

jobs day. it is going to be great. the mostone of contentious elections in the history of america. . can take that back to 1802 gene frieda and luigi zingales who has thought about american capitalism like no one i know. his book was my book of the summer. it is a fed -- fact only the italian could write this book. recap ruling the lost genius of american capitalism. you and your book, pro-market, pro-business. how gilded is this age? luigi: more and more. 2012 and atbook in thatime, i made an analogy said given the situation, populism is an inevitable.

which kind? i did not realize how right i was. we are six years later in the middle of a battle between different populist. s. in the lastulists week of center down to immigration. i am not going to speak about a fancy guy like you. that were of italians could barely get through the door on ellis island. now we have got in immigration debate that is original. how do we extract ourselves from this mess with capitalism? luigi: as you said, it is a mess. i am a privileged immigrant but im and immigrant. many of italians sought to come to the united states. i am sympathetic. is a demand of slowing the

process down. this is not new in america. in the 1920's, there was a restriction in immigration following immigration by italians. to try toabnormal have slow down after a search, -- after a surge. is thestion is if that demand of most of the people. if that should be handed in a different way than the one president trump is doing it. francine: the fed and the treasury's care at all of -- care about all of this. how difficult is it for the fed to take into account political factors? gene: i think it is implicit. i do not think it changes their reaction all that much. where the issue comes into play is another round of stress in the future, it is the

circumscription of the fed's emergency powers. at the moment, we are fine. they one person who is not heard the message do not fight the fed is donald trump and that will be ongoing because fiscal policies and the way they turbocharge the cycle. francine: if the president continues attacking the independence of the fed, do treasuries react? gene: part of it depends on the data. inflation pressures seem to be in check. wage data looked contained. we have average hourly earnings today. to seeextent you start wages and inflation drifting up, it puts the fed under a microscope. the fed is willing to let inflation run above target. market willingness to

countenance that becomes less the more the president is tweeting. interesting is not only the classic do not fight the fed but it is also do not fight the bond market. bonds price reality. one of the great moments is francine's conversation with the leader of credit suisse. he has to fight negative interest rates every day. there are distortions in america like low real rates. when do we get rid of these and have a normal want market? -- normal bond market? europef i can talk about distinctly from the global market. we are in the process of exiting a period when central banks have suppressed volatility. they threw a wet blanking over everything. tries out everything and

you see volatility coming back. es out everything and you see volatility coming back. is it the slowing you are seeing in northern europe it seems to be related to trade? you want to distinguish between low rates and qe? tom: let us get out the function. the hallmark here is we have with headlineghi saying this is what we're going to do until 2019. that is unprecedented and shows the distortions of the market. luigi: i think low rates are not caused by the fed or ecb. low rates represent a low demand for investment. the imbalances that need to be

-- there is an imbalance of it needs to be fixed. trump is helping by overspending on the u.s. side. he is doing what the europeans should be doing. he overdoes it. francine: the u.s. can afford it. luigi: yes. francine: europe cannot. luigi: germany can. francine: will they ever do it? beela merkel's days may numbered because she is not going to be running for leadership anymore. luigi: this is a game changer. ?ho is going to replace her i am not confident that the next be an expansionist that would want to build more infrastructure and make germany great again. tom: this has been wonderful. luigi zingales with the university of chicago. gene frieda, thank you.

just some great conversation. it is jobs day. carl riccadonna will darken the door. him to come on. before that, tom porcelli with rbc. no one has thought about wage growth like mr. porcello. we will get an update on 3% wage growth. is it for real? a continual lift in the markets, futures up 18. from new york, this is "bloomberg." ♪ show me movies a grinch would love.

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by saying... "get grinch tickets" into your xfinity x1 voice remote. [ laughing ] uh oh. something in my throat. something in my throat. 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. tom: this morning, the markets surge continues. the s&p 500 corrected 11%.

call it whiplash november. the yuan strengthens. we have a problem, apple cautiously provides a view on holiday sales. profit is being minted. it is the weekend before the america is in gauged. this is bloomberg surveillance. live from new york, i'm tom keene. francine lacqua in london. europe care in about the elections? francine: of course they do. when you look at investors in markets, they look at what the u.s. does about 45% of the time. but weit is the midterms also understand the trump administration is looking at having a trade deal with china.

it is playing out in the markets. tom: one of the hallmarks was that headline we saw on slowing chinese economic growth a few days ago. your first word news. taylor: president trump is said to want an agreement on trade with president xi jinping. the u.s. president has asked key officials to draft terms ahead of his meeting at the summit later this month. the push comes after their first publicly disclosed call in six months. the u.s. has agreed to let 8 countries, including japan, india, and south korea, keep buying iranian oil after it re-imposes sanctions. that is according to a senior official in the administration. china, the biggest importer of iranian oil, is in discussions with the u.s. on terms but is understood to be among the eight. apple shares are trading lower

after a week forecast for iphone sales for the upcoming holiday, putting the $1 trillion valuation at risk. investors are worried by the decision to stop reporting how many devices it sells. google's staff has walked out around the world in a protest around how the world has handled plans of sexual misconduct by top executives, starting in asia and spreading to the u.s., social media hosted voters with the #google walkout. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." tom: thanks. equities, bonds, currencies, commodities, there is a pattern here. euro 114.36.

oil sell. thank you for that update. the vix wow, 22. 203.rday, dow futures up one of the quiet stories of the a weaker european -- weaker mexican peso. francine: stocks extending the gain globally. i wonder how much it will take for this buoyant mood to keep old. the pound, it is significant after the comments yesterday and markets trying to reprice the possibility of a rate hike here it -- hike. tom: midterm elections became a focus of the nation. yesterday, the president spoke. >> anybody throwing stones like they did to mexico and the

military where they heard police and soldiers, we will consider that a firearm because there is not much difference. when you get hit in the face with a rock, it was violent a few days ago. taken by the media. it is the idea of an original press conference. who is the president speaking to? the base. he was trying to get folks to turn out for the election. iowa, thes in tightening of this race has been fascinating to watch. i think it is almost like you are watching two different elections. you have progressives trying to mobilize and you have the conservatives. it sounds like a cliche but

there is no other way to watch what those remarks were than that. tom: run that video again. i want to show our audience the symbolism we see. the president walking out and there was the older roosevelt. horseback,velt on a moving out with some form of big stick. david brooks writing on this. mr. brooks brilliant as always. , i'me been in 23 states covering two separate electorates. one said, did you see what he tweeted? the other goes by like a thunderstorm. people are hardening into their categories. the venn diagram is dead. there is no overlapping area. an update on turnout.

kevin: david brooks lays it out perfectly. i was saying this yesterday to colleagues. about how this is a referendum on trump. is runningion that against trump does not have a cohesive message and that is what is interesting. come next wednesday there are going to be new politicians. there are going to be republicans who win. it is going to be the type of majority the democrats have, what are the new coalitions within the democratic hardy -- democratic party, within the jeff flake crowd? it is one thing to run against trump, it is another thing to run with new ideas. bencine: what will republicans be focusing on and what will the democrats be focusing on? kevin: republicans are going to focus on holding up the

battleground senate races. indiana, their eyes on where you have joe donnelly, a democrat, hanging on to some type of lead. more ofndful of centrist emma: itself for centrist democrats of for reelection. for democrats, it is about the house. i was in a briefing yesterday. early voting is at 25 million, the most we have ever seen. -- whethert is folks that is because folks are eager to it to the polls or whether that is a trend remains to be seen. tom: vote early, vote often. what you can do is celebrate kevin's birthday.

we like to do that. have a wonderful friday. our chief washington correspondent. with us is tom porcelli, rbc capital markets. i want to get to wage growth. let us get to the selection and the mood in confidence that comes out of our political process. is that playing in? tom porcelli: if you look at confidence, you can never make the claim it is high but it is becoming perky. the taxhe factors is cuts. the tax cuts were beneficial across the board. theou look back at february-march window, you concert to see that lower income confidence get perky then. here we are. where we arew is

that you did two years ago. we got decent wage growth. growth narrow up 3% wage or is it with some americans doing well and others, it is not happening? tom porcelli: that is the challenge. we talk about economics in the aggregate. there are going to be people that do worse, do better. if you look at low income jobs versus high income jobs, guess which is performing better right now? lower income jobs. we arest a touch of what going to do with tom porcelli. we will rounded out. he knows the report. mr. president, do not let the beans out.

please stay with us. this is "bloomberg." ♪

taylor: mrs. bloomberg surveillance. i'm taylor riggs. -- this is bloomberg surveillance. i'm taylor riggs. the company is aiming to boost profits by 11% annually. shaken byst overcapacity. goldman sachs says a global migration away from the libor

benchmark will be painful. firm,odcast posted by the the treasurer says switching from the london interbank offered rate should lead to improvements but it is likely to be arduous. that is your business flash. tom: it is jobs day in america. we start in the yen with the wage growth. we are two years ago on this mystery of tepid wage growth. let us go to a chart which shows so much of what you predicted. measurement and i have adjusted it for 3% inflation. i picked it. inflation that america feels even if it is less inflation. is barelyt but it

great. we just wrote about this. if you look at our wage model which leads eci, over the coming year you are near 3.5%. tom: can we get wage growth like we had in 2005? tom porcelli: the wage growth is tangible now. it is across the board. it is not just funneling to the upper income. it is going more now to the lower income buckets. i would say this chart is going to continue to rise. how many hikes are you expecting from the fed next year? tom porcelli: we are expecting a hike in december and four next year. i do not know if this is the segment you want to talk about iss on, what i would say

what we have to keep in mind is that if you look at the fed estimate for growth, what you're 3.1% this year, 2.5% next year. that is slowing in growth. is interesting is a they expect the slowing is on the back of fiscal stimulus coming off of oil. one of the things we have been trying to show is if you look at the savings from the tax cuts, most of that has been saved. people have monopoly -- have not been using this. that is compelling. in ae fed is baking slowing in growth and it does not materialize next year, they are going to feel comfortable with their three, almost four

hikes near it -- hikes. i think that is one notion to keep in mind. lot ofe: there are a people that say they are worried about 2020 because there is going to be a confluence of the slowing economy worldwide together with the tax cuts. you're pushing back against that. tom porcelli: again, i think the slowdown people expect is on the back of this fiscal idea, this notion that fiscal stimulus has been used up this year. you are not going to see much for next year. the evidence is clear that you have not seen much. tom: give me the sheet over there, that one. this is the heart of the matter. he brought this along. you have got the growth ended did not happen and we went down and we run along at mediocrity

compared to where we were supposed to go. the enthusiasm of this election is everybody wants to get back on track with what was. along or can we grow to get back on track? tom porcelli: we can grow to get back on track. the pieces are in place for that to happen. to francine's common, people are exit 2020. why? the length of time is not compelling. it is where the imbalances. we do not see imbalances that can drive us into a recession anywhere on our horizon. these dynamics we have touched on related to the labor backdrop continue to move as we think they will, it is easy to build a case that things continue to push ahead. tom: tom porcelli with us.

we will do this across all of bloomberg surveillance. up, we dive into apple earnings, the debate over fortress cupertino. we will look at the disappointments. jobs day. this is "bloomberg." ♪

francine: this is bloomberg surveillance. tom and francine from london and

new york. let us talk apple. apple shares are trading lower in premarket after week forecast sales for the upcoming holiday season. they're going to stop reporting how many devices it sells. it has investors concerned. joining us now is tom forte. what is the main concern? apple will at what or will not do, should we worry they do not disclose the units they sell? good morning. thank you for having me. in apple, the disclosure as bigles is not nearly a deal as some might anticipate. if you look at the story for apple in the last couple of quarters, it is their ability to sell products at higher prices, especially the iphone x s that

is enabling it to generate such fast revenue growth and high margins. if you look at some of their businesses not tied to unit growth, the unit figures are becoming less meaningful. francine: can you say that the smart phone market has matured and growth there is harder to find? tom forte: i would say it has matured. one of the stories in apple's earnings is when they talk about challenges in emerging markets, in brazil and india. , it is because apple lacks that low-end smartphone. the10 is excellent but it is still high price. they dominate in the high-end, high margin portion of the categories. tom: i was thunderstruck by the

lack of discussion about cash ,uild, about profitability about the use of cash including share buybacks. will they develop a double-digit dividend growth model? tom forte: yes, most definitely. the other story, combined with selling products at higher prices, is that they generate tremendous free cash flow. when you have today's environment with favorable regulation, apple remains a cash machine. the happy talk about technology, can we move from gross talk -- growth stock growt and canh we move to blue-chip stockiness? tom forte: absolutely.

for thenk that word not risks associated with china on the notion that more tariffs may be coming and the challenge for apple is that they are generating 20% of the revenue from selling to chinese consumers. independent of that, if you think about the future sets they have on these devices which is making them popular, apple is poised for strong growth on a continual basis. here is a-- tom: great blog from howard lindzon. he has been astute on the m&a world. i am surprised tim cook did not blame george soros and the caravan for the sales miss. service revenue is very meta. count me in. comment a continent --

on optimism. francine: i'm glad you picked it out. rge to go read tom's must-read. forte, with legitimate concerns by the bears on apple. we will see word opens up. more coming up. jobs the day. it is good to speak to tom porcelli. another gentleman who will stop in is mohamed el-erian. after the jobs report. ♪

i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. surveillance the first friday in november. francine lacqua recovering from halloween. of your kids when does the

duchess of cambridge and the other is the duchess of sussex. i was thinking they went as the girls. francine: we went as the federal reserve. next year. tom: right now, your first word news. fundr: the biggest pension has posted a second quarterly gain, with stocks outperforming its investments. government tension investment fund posted, rising foreign equities hope -- helped assets rise. panasonic says it is on the verge of turning a profit at the battery factory in operates with tesla. it makes money on power packs and hopes to follow suit on the model three, thanks to output at the factory. panasonic positivist bet on tesla has been a source of

concern for investors. >> i've never met a man like elon in my life. he is happy-go-lucky. glass half-full men and that solidified my decision to take a bet on him. blackrock's european hedge fund had its worst month ever. the fund fell 8.5% as global markets sold off. the hedgef has hit fund industry, wiping out most of its gains for the year. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is "bloomberg." francine: thank you. are back, with global stocks gaining on talks of a trade break between the u.s. and china. president has asked his

cabinet to draft a possible trade deal with china ahead of the g20 summit. joining us now is enda curran. thank you for joining us. any insight into whether china is giving up or the u.s. is giving up on its demands or whether china is giving and? enda: it does seem to be an optimistic turn of events. we have had the tweet, the telephone call. our colleagues in washington are reporting that the u.s. president wants to talk about a deal. china responded today. we have had diplomatic language going across the official news service. the next thing will be a speech by the president buy it -- why the president on monday. it will be crucial to see how president xi response. .- responds

he is unlikely to mention the u.s. by name. it would add to the sense that it is moving somewhere. as our colleagues have said, -- many a degree differences remain. country: overall, which wants a deal more? it is a tough call to say. nobody wins a trade war. right here, right now, you have to say the u.s. economy is strong. we have jobs numbers later today. the china side is slowing down. we have pressure on the authorities to respond. we have seen it on the manufacturing side. it is expected to get worse over

the coming months which is a clear negative for the rest of the world. there is a sense of urgency on the chinese side to stabilize their economy. tom: thank you. appreciate your efforts to brief us on asia. right now, tom porcelli with us. one of the advantages of that is the royal bank of canada, where you are hardwired worldwide to trade. how is the trade right now north and south from canada to the united states? tom porcelli: in better shape than it was another we have a new trade pact in place. it will be uninterrupted. tradeer expected the would be this factor that would drive economic activity down in the united states. perhaps that was a lucky call. i think of ontario and

michigan as a bridge were a lot of stuff goes back and forth. which way is the money going to go? tom porcelli: at the end of the day, we produce, we are an importer. that is what we do in the united states. the money will flow in that direction. we are the biggest consumer on the planet and we do not produce a lot. the money flows out of the united states. francine: do you worry about multilateralism or globalization taking a back step? no, at the end of the day open markets is going to be a better outcome. tom and i have talked about this. supposed to buy stuff from a low-cost provider. view on trade, if someone wants to say you something for cheap, you are

supposed to buy as much as you can. to me, that is the right way of thinking about this. my hope is we remain as open as we happen. means -- i was just saying that may be the way. if it to places your does yourens -- if it displaces citizens, as a president you have a duty to protect them. tom porcelli: just because a politician says something does not mean it is right. manufacturing has been in decline for decades. --nk about when the single if you think about manufacturing jobs -- guess when manufacturing jobs as a percentage of total jobs, guess when the peak was? francine: tell me. theporcelli: it was in

1940's. through today, all we have done is we had this steady decline. you would say manufacturing jobs have been displaced but the reality is the labor force has done nothing but grow. tom: we are going to come back on jobs day. axioss published -- published a lead article, they see cracks in the architecture of our economy. you do not buy it, do you? tom porcelli: we do not. a recession is going to happen but we do not see it happening in our forecast rising, two years. over the coming two years, we could see continued steady growth on the back of these consumer dynamics we were talking about. i have a hard time buying into

the notion we are going to have a recession soon. i think everyone asks the wrong question. i am less interested in when the next recession happens. i am more interested in what does the next recession look like. not know how many people remember the recession, it was a business led recession. the consumer came through unscathed. from 1990, which was the recession before, to 2007, the recession after, we had a 17 year consumer expansion. that is the right way of thinking about the coming years. francine: we will get back to that. coming up, jeffrey currie, goldman sachs at 7:30.

this is "bloomberg." ♪

taylor: this is bloomberg surveillance. i'm taylor riggs. the ceo of kohl's has weighed in on the impact of trade tariffs. she said if the recent dispute between china and the u.s. escalates, it could impact consumers. >> a lot of this is uncertain now. over time, if there are tariffs and it hits many categories and products, that will impact prices for the consumer. for us, it is a small part.

taylor: erste state bank has raised 2018 guidance after third-quarter net income beat estimates. net income was 454 million in the latest three months with , revenue coming in at 172 billion euros. europe's longest-serving bank chief executive said he will step down at the end of 2019 after more than two decades in charge. that is your business flash. loveone of the things we is to talk about jobs day and have a conversation on the picture as well. tom porcelli with us, rbc capital markets to carl riccadonna. i want to congratulate you for terrific election coverage. you folded your economics into politics. i cannot say enough about this.

today'sthe surprise in report? typically, when a hurricane depresses hiring in a and hoursh absences shortening were larger than usual in september. last month was a fluke. you get payback in the following month. my team is at 215. standard error is at 100,000. they are both wrong. bloomberg. i cannot go there. let me ask you about the broader picture. is this an economy like as an hour -- like eisenhower had?

isl: what is different now that we are sub 4% employment rate and we are not getting the wage pressures. they are coming slowly so we cannot say the phillips curve is dead. it works but it is flatter than it was during eisenhower. you can push the economy harder than you would have been able to do without causing an inflation problem. u.s. creatinghe quality jobs, jobs people want? carl: the u.s. is creating jobs across the spectrum. bywe look at unemployment education level, most of the jobs lost during the recession were lower quality jobs or jobs that require a lower degree in education. the majority of jobs lost. they are the majority of jobs being created.

we can say it is low-quality jobs being created. it is across the spectrum. we can look at unemployment rates for those with an advanced degree and we see the full spectrum. francine: who is not in a job? is there a category that this economy is leaving out? carl: it is pretty lean. reboundseen more of a among women than men. that may be tied into the fact the construction sector has been so sluggish. ,onstruction and housing typically male-dominated industries, have been slower to engage in the cycle. as we do see more wage pressures materialize, you are going to see workers coming off of the sidelines, folks we thought were gone will come back. thingse of the great about wages is it is wages and benefits.

a differential of those important things, is change. tom porcelli: just to pick up on a lot of what was said. the things that has been compelling from our perspective is the ability to pull people from sidelines. it in abeen doing significant way. it is interesting, we do this work -- we did this work yesterday. if participation rates continue to rise, which is all they have done, you could be looking at 3% by theunemployment rate time we get into the second half of 2019. that is astounding. it is not heroic to get there. that comes if you had job growth that slows closer to 175,000 on average.

it is interesting to think about. with even more wage pressures, we might see a dramatic rebound in participation. tom: i think this is important. bring up the chart. back tounemployment eisenhower. i is talking about a job unemployment rate down here under 3%, which gets back to the 50's. are the bodies out there to create that? tom porcelli: that is the thing, that is one of the hurdles. we have more job openings in the united states than we do the number of unemployed. it is not by a small number, it is by more than one million. that is one of the challenges. i can create a scenario to get to 3%. there is a challenging getting there.

the bigger point is the unemployment rate will stay low. at least over the next year or so. francine: if the trump administration signs a trade deal with president xi, is there a risk the u.s. economy will run hot? the arts are slim of reaching a trade deal with china. usualk this is the approach we have seen in trade negotiations. us make a leap of faith and assume they do sign a deal, maybe at the end of november. that improves economic efficiency. that would reduce the likelihood of the economy running hot. it is running hot. we are making the economy more efficient and removing trade affections -- trade frictions. tom: one final question.

this is what jon ferro and i look at, down it comes, with the data coming out. i want to go down to labor force participation which is not going. to getgoing participation back to what we remember? carl: i do not think we will get it this morning. if you watch the number above that, the average hourly earnings growth, when we start to get more wage pressures, you will see participation go higher. the story is, you will see that number drift up. tom porcelli: can i make one quick point? i love my bloomberg terminal. we are showing the wrong number. the labor participation rate is in decline. it is going to continue to decline. you need to look at the prime working age. tom: we will try to get that done.

we will look at labor force participation in our nerdfest. carl riccadonna, thank you. tom porcelli will continue with us. they agree to disagree. looking for fewer fed rate hikes. please stay with us. ♪

tom: we welcome all of you. francine lacqua in london, i'm tom keene in new york, on the edge of a historic election in america. jobs report of a make america great again, under 4% and employment rate. rate.mployment our single best chart is the , down, unemployment rate

this came from a service sector america. you mentioned manufacturing jobs, the nostalgia of football television. it is service sector america. tom porcelli: i get it. it is like making this argument that falls on deaf ears. i get it. we long for this day when manufacturing was this big base. it is not and that has not been for a long time. i wish you found that chart. peak from a manufacturing job perspective was decades ago, in the 1940's. is there displacement? there is and that is a reality. we seem to find jobs for people.

if you think about how the labor force has grown, it has been astronomical. francine: as an economist, how not push more into populism? is it redistribution? there is no: question you need retraining. reality ofent is a the backdrop and something needs to be done about that. that is where politicians can step in. you have to make sure you are using the right scorecard. do not say you need to bring manufacturing jobs back. we need to train these people. that is a better approach than trying to bring back something we do not do well relative to most countries. tom: this has been wonderful. tom porcelli with us from rbc

capital markets. his optimism on a wage growth adjusted for inflation and how that filters into rate increases in the next 14 months. forward the conversation before this election on an american economy on this jobs day. we begin with mohammed l el-erian. mr. reader will stop by with black rock. house,, from the white the chairman's -- the chairman of the president council of economic advisers. ♪

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stop offering unit sales. level could highest be hit since 2009. we talked to ellen zentner at morgan stanley. trump says, show me that video. potential draft of a trade deal after a good phone call with president xi jinping. david: jobs day. i'm david westin. it was also iran. alix: yes. the equity rally, oil not participating. potential eight countries that will get waivers. we do not know what that means. david: we do not know how much they will be able to get from iran. they don't send the money directly. it goes through escrow. alix: we are talking to jeff currie later on.