market. pressure in global equities. goldman cash will be competitive. bedman sachs says -- will below average in 2019 but the cash will be competitive. target misses on sales. deck.uy and kohl's are on welcome to bloomberg daybreak. i'm alix steel. jason kelly joins me. david westin is off. let's get like to some earnings. best buy is raising their full-year guidance for 2019. 90 -- earnings, solid, $.93 a share. outlook, best buy is pretty good. ?re you looking at gold .ason: i am

the estimate there, $5.49. rollout,00 numbers more positive than what we have seen so far. target getting hit hard. a near miss for target. it was not a bad miss. there is little margin for error . alix: kohl's and best buy. the highlight is they are raising their view. earnings guidance, kohl's and best buy racing. targets consensus was high-end. it was materials. lots more coming up on retail. in the markets it is still tech front and center and what that will do to the equity market. futures are down 20 points, down .7%, asian and european stocks lower. .2%.dollar down by we had seen a strong euro rally, that was the best in three months.

we are breaking that. 10 year yield, a little bit of buying on the margin. crude down by .1%. the big question is if we are selling winners. i do not think we will know until january 2. jason: there has been a lot of red in the market so will be interesting to see what happens. even though it is a slow thanksgiving week. black friday coming up for all of these retailers, we will get an indication of how they are feeling. let's get an update on headlines. taylor riggs is here with first word news. taylor: a federal judge barred the trump administration from refusing asylum to immigrants who cross the border illegally. president trump is viewed -- issued the ban this month. homeland security says it wants asylum-seekers to show up at official ports of entry. the trump administration is preparing to add venezuela to the list of state sponsors of terrorism.

that list includes iran, north korea, sue don, and syria. -- that couldist limit financial transaction. venezuela is accused of backing rebels and has blood. -- and hezbolah. nissan announced plans to dismiss carlos ghosn. the arrest could endanger nissan's relationship with renault. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. jason? say, thisave to carlos ghosn story, it is amazing how to accelerated throughout the day yesterday and even overnight. yet the french government involved, you have japanese

corporate culture, we will be digging into this a lot through the day. the point was raised yesterday, why was he responsible to report his salary? mike, this is my salary. there is a department for that. i do not think this be over even if the carlos ghosn question is over. and the big issue of corporate governance in the auto sector. a lot more to come. time for bloomberg first take. we are joined by rachel and jason. we are flirting with the bear market in apple. let's just round up and called a straight bear market. the question for me is this a cell the winter thing, luke, or is this something different? luke: with apple it appears to

be sell the winner, and also expectations of future weakness. the winners that have been sold, and apple, at morgan stanley they highlighted the idea that the forward pe for the growth stocks has obviously come in faster and harder than for value stocks of the market at large. growth is also seeing four word earnings estimates flash by more than their value appears. they are getting hit by both ends and i think this is symptomatic of the larger trends. notice?chel, what you apple is a major holding of a number of etf's. in september we saw a reclassification of alphabet and facebook. that means of vanguard tech fund are more weighted than they were before.

--have seen bgg outflows vanguard funds tend to be where the stickier money is because they are cheaper. that happening there suggests this is not something just affecting trade, but wider sentiment about the companies. jason: maybe tech from a sentiment will get a breather today as all eyes go to retail. let's talk about what we have seen so far, luke. if you look at the board. that is a lot of red and it is pretty meaningful, especially with target and kohl's down almost 6%. a surprise given what we were initially seeing in the headlines. what you make of this retail selloff? luke: it shows how much the bar has changed for these retailers over the past year. you see that in terms of a very near miss for target, still a mess. merger pressure on both sides.

s, which is of lowe getting hammered. you should see some of the things the ceo of merit his health has said. court exit -- for execution, poor management. the optimistic take is this is the kitchen sink quarter. in terms of etf, it came down pretty hard into earnings season. that suggests people were setting up for something positive. the bar is higher to get people to fold up and find a retail. rachel, i feel like we've been able to dismiss rumors of retail apocalypse. is it now upon us? rachel: if you dig into the details of same-store sales, you start to see a better picture, but people have been reacting to the gross margin number.

people spend money now to prepare for the future. they have to deal with amazon and other online retailers. do that they need to have their inventory, they need a better shipping system and that requires investment. i think it will be interesting to see whether that starts to pay off in terms of their profit margins or whether we see optimistic light that becomes a negative again. polls is down because it's earnings forecast missed estimates, the midpoint missed estimates. no break. our third story has to do with the value of cash for next year. i know this year saying the perspective adjusted risk equities will be less than one half the long-term average and cash for represented a competitive asset class to stocks for the first time in many years. luke, what are you hearing about cash? luke: the market investors are

way ahead of him. in january it was ray dalio that said whynd bradford are people hating on cash the first time is yielding something in a decade? i think rachel can speak to this more, but in terms of etf flows, it is very much dominated to the short duration, cash oriented instruments. i think investors have been woken up to the competition for capital and the availability of returns. you can see advertisements on the stock trading websites saying forget about stocks, look at the return you get on cds. alix: there are still cds? jason: so that is the sentiment you are hearing? rachel: it has been fascinating to watch. if you look at the edge eight -- if you look at the shb shipped, they have seen nearly $1 billion of inflows.

if you look at bill, that is seen inflows. you are seeing the shift and a short paper. it has something to do with cash but it also has something to do with the risk sentiment we are seeing in the market. if you look at higher-yielding securities and etf -- an interesting amount of inflows. if you look at the short interest, that takes up. people are coming into that to short and. if you look at other credit related etf's, you are seeing outflows. stillsomehow my bank is .003 percent is how much i yield on my savings account. bloomberg's rachel and luke. thank you. kohl's did raise their earnings guidelines but missed their midpoint estimates. comps solid at 2.5%. best buy also solid. that stock will be trending lower -- a little bit higher.

it appears to be dragged lower by target. it didn't just it's earnings forecast and beat estimates. over 4%. when was last time you went to a best buy? jason: i actually bought a tv from best buy not that long ago. alix: wow. you live in a place where you can do that. coming up, investors prepare. ray dalio believes the u.s. is entering a period of low return. this is bloomberg. >> if you are in average investor, you have to prepare for lower expected returns in the future. ♪

taylor: i am taylor riggs with your bloomberg business flash. sales of deutsche bank fell to an all-time low. more than half of the $230 billion in suspect funds handled by the bank was funneled through another lender's u.s. unit. a person familiar with the matter identified the letter as deutsche bank. that could make the german bank liable for penalties. boston scientific has a lead to buy its reddish medical rights represents 37%at premium over the company's closing price yesterday. makes medical technology devices for doctors, especially in the field of cancer. in london the price of sold homes has risen to a record high. inventory is surged by half. the market has been hit by brexit uncertainty and affordability issues. and now takes the average lender

more than 14 times the average salary to buy a home. that is the highest multiple ever. that is your bloomberg business flash. says years ofo low interest rates and quantitative easing have squeeze most of the returns out of assets in the u.s.. in an interview with bloomberg, dalio said expectations for investors. ray: if you are an average investor, you have to prepare for lower expected returns in the future. most people should not be making tactical movements in and out of the markets to produce alpha. that is difficult. they have to know how to balance their accounts. when i refer to what is risk parity, how do you balance those things. alix: joining us now is carla harris, morgan stanley manager and client advisor. thank you for joining us.

carla: thank you for having me. alix: do you agree with ray dalio? carla: i think people are cautious about the market. ybor are tempering their expectations with respect to returns. alix: going forward, where does that leave you? la: our advice has been not to run out of the market, our strategists are sick -- are constructive about the market. advantagence and take around names and industries you like. jason: what about as you going to the board room? i have to think as ceo puts out like we are seeing in retail -- maybe a tiny miss, and gets whacked by investors and they think, we are doing pretty well. does the mood in the board room match what you are seeing with investors? ceos arethink

constructive about the market, especially given the overall think about if you the number of companies that have outperformed street expectations. there is still cautious mood, what i do not think there is anything on the horizon causing board room conversations to be bearish. jason: you get a sense that even with a little bit of caution, there are still deals to be done in 2019? m&a activities. carla: you see a little bit of a pullback but you will continue to see strategic acquisitions getting done. at the end of the day, interest rates are favoring m&a transactions. alix: when you talk to your clients, what is their biggest worry? carla: the thing i love to sale the time is the market hates uncertainty and surprise. there is a lot of uncertainty around the trade conversations.

there is debate about how many interest rate hikes will there be. it is the thing you do not expect that people are worried about. what will actually transpire with the trade conversations are the things that are weighing on people's lines in the uncertainty category. jason: how to they think about trade in that regard. i feel like that is been hanging on our shoulders for some time. there is a big meeting later this month between president xi and president trump. will that be enough to satisfy people will this be a worry for years to come? carla: it depends on what transpires. we have been conditioned to wait and see how it goes. alix: when it comes to the fed, at the end of the day our biggest concern is the fed. to me, the fed has been clear. carla: i agree. alix: despite william being like we will raise legs -- raise rates somewhat, it is clear.

we are in a hiking cycle until we are not. carla: i think they have been clear and their behavior has been consistent with what they have telegraphed. alix: it feels like the yield curve is pricing goldilocks. short-term rates are lower, but the longer-term stays stable because it is not going to be a recession, it is not going to be horrible. where you see the economic risk? carla: i do not think people are worried yet around a recession. the issue is whether or not we will have growth around the world and certainly we will have temperate growth in the state. nobody is calling that yet. jason: on the investors side in the corporate side, are we done worrying about politics until the 2020 election ramps up? did the midterms provide any relief? parrot alix's

response -- what? i think people are watching the markets, watching washington very closely and reacting day by day. alix: we talked earlier about david kosten saying cash will return for the first time. do you think investor should be in cash? carla: i'm not prepared to say so at this point. i heard what you showed, but i'm not there yet. alix: it brings into question the dollar call. morgan stanley notoriously bearish on the dollar. it is interesting how binary the calls are. hsbc says why would you not by the dollar, growth is awesome. everyone else says we have seen growth slowdown in 2019. what camp do you think makes the most sense? carla: i still say there is not enough data out there to be definitive, which is why you see

argument in the marketplace. , think at the end of the day over the next quarter or so, we will get a lot more data that will solidify the view. knows i cannot of a conversation with someone as smart as you cannot ask about alternatives. especially appetite, in a more cautious environment, but maybe a public equity market not getting gang buster returns. does the appetite increase for alternatives in your estimation? carla: as we get more data we experience more volatility in the public market, then i think you will see people think about alternatives more constructively than in the recent past. jason: have people delineated between hedge funds and private equity's? state ofds are in a accidental crisis, it feels like, every day we are seeing

bad news. does the paul: to private equity? -- does the ball go to private equity? carla: i think people will migrate to private equity as you see more pressure in the public market. with private equity you are looking at much longer term return than with hedge funds or the public market. that is one of the things i'm excited about and we will talk about today. jason: let's talk about that. it is demo day today. a big day for you. tell us what this is. this is the next generation of corporate leaders. carla: this is one of the most exciting days at morgan stanley because it is looking at the next generation of corporate leaders are and we have nine companies in our innovation lab for the last six months where we have given them cash, content, as well as connections. what i'm most excited about is that it is across all verticals. there's semtech, there is health check, there's hr tech and

energy tech. to see these companies common to market, all of which are disruptive and using tech enabled strategies is exciting for us. this is our pipeline of ipos and m&a transactions in the future. jason: let's talk about disruption in a different way -- it is not a bunch of companies -- and i say this is a middle-aged white dude -- it is not all middle-aged white dude. carla: there is a specific focus on entrepreneurs of color and women. of the nine companies, eight werecarla: founded by women andn have multicultural founders. that exists no place else in the market. today we will have 16 companies that will demo, because we are also showcasing terrific companies from our partners, including hearst labs and nor venture partners. will be a great day for private

investors, family offices, and private individuals. alix: you mentioned energy tech? a company that helps energies incorporation optimize their use of the grade. there is over $30 billion of waste every year with use of the grid. has a technology platform that will help these entities use the grid in a more efficient way. alix: health care tech, that is a new theme that will be disruptive. what is going to be new about these companies? carla: within fin tech, we have a company called hatch which will allow you to created app without writing one line of code. i cannot write any code good this democratize is the creation of apps. there's a company called my lab box, which will allow you to take a blood sample and within 48 hours you get a return message and also an opportunity

to speak to a doctor through telemedicine. these are things that are revolutionizing those industries. jason: how do you find these companies? what is the process? carla: we have been part of this ecosystem for three or four years. now the emerging companies see morgan stanley as a place where they can come and get high-value content as well as exposure to investors network of and corporate who can help them scale their business. one of the ways we do it -- today we are out with an invitation to apply. we are also very involved in that ecosystem. the companies will come to us. the messenger matters. it does matter who is asking for the companies to come into their accelerator and that is something we have been able to do and i am proud of our position in that ecosystem. alix: what is the biggest worry?

carla: what is the next round of financing going to look like? it is money. it is access to capital. the reason we started this is entrepreneurs of color and women are disadvantaged with having access to capital. aboutend to do something it because these are great commercial opportunities for investors and corporate spirit. alix: it sounds fun. carla harris of morgan stanley. our exclusive interview with morgan stanley ceo is at 12:30 in new york. coming up, we'll be talking autos and tech. this is bloomberg. ♪

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spread to europe and asia and continues here. you have target earnings. comp sales do not be estimates. that was disappointing, as well as kohl's. their midpoint earnings guidance missed consensus. that negative sentiment will be weighing. european stocks down by .7%. auto stocks down .4%. we are still digesting all that carlos ghosn and renault and nissan. it will be a flight to safety. .3%,uro-dollar lower, down breaking a winning streak that lasted five days. the yen is near a two week high. markof england governor carney saying volatility is here to stay. get your options going. .4%.10 -- crude off interesting to see how the session of all when you have the tech issue and then you wind up

having the retail issue front and center, where i thought we would be in a better place. jason: i did too. we went in today with the retail earnings lined up, thinking these guys have been positive over the last few quarters. the retail paco lips has not, -- the retail apocalypse has not come upon us. there are not zombie stores wondering around. holiday shopping season, indications are it is good, and yet -- alix: and i've been doing my part. i only shop on sales, but i have been doing my part. robert dole is joining us, what do you make of the selloff? it is normal in a selloff -- what goes up the most comes down the most. tech is getting whacked pretty hard. sell the winners,

how do you take it seriously when it is buy back the winners in january? robert: i do not think it will be quite that smooth. longer correction than what we saw. i think it will take longer for us to recover. it took seven months than to get to a new high. within the tech sector, what concerns you the most is there a subsector? i am thinking chips. robert: certainly the stuff that went up the most. i will call it growth tech, high pe tech. that is what is coming back to earth the fastest. those stocks did get overvalued. their fundamentals are reasonably good. not as good as they were. some of the value tech stocks are interesting. hp's, in an the environment where you want to own tech but be careful of valuations. speaking of old-school,

the auto industry is very much in the headlines today and yesterday with the presumed ,eparture and the interrogation the investigation into carlos ghosn. one of the things that complicates this story is renault and the ownership of renault. big ownership stakes by the french government. we got a comment from the finance minister, here's what he had to say. >> i would have all the necessary discretions with the people that are in charge and we will take decisions as soon as possible to ensure stability and long-term vision of both renault and nissan. jason: joining us on the phone from london is problems smithers senior autos analyst. julie, what you make of what happens next, especially from the french government's perspective? what do they need to do to ensure renault is in safe hands

going forward and do they still think they can maintain this alliance that carlos ghosn was the architect of? , the biggestsly concern for investors is what happens with the future of the alliance. the first one is the level of cooperation will be maintained. the companies are likely to continue to share our deep and manufacturing and distribution. these projects are in place and the partners are benefiting from them. there is no reason to walk away from something that works so well for almost 20 years. the french government -- it is in the french government's interest to retain the strength of the alliance. will now contact nissan as quickly as possible and find a formula to continue

working together, even without mr. ghosn as the key figure who held everything together in the past. alix: we are getting headlines out of france saying france is set to plan and interim renault leadership. the chiefrecommend --rating officer of from no and the current french-american foundation president, formerly of jpmorgan. it does appear they will be switching leadership. julie, why would nissan want to stay with renault when they are responsible for about 50% of renault's net income question mark they deliver and renault takes the profit. used to call ghosn it a win-win relationship.

although nissan is doing better than renault, if you look back over the last 20 years, i think they were mutually benefiting corporations. the synergies created were large. the cost savings were great. -- especiallyther if you look at the context of the industry, you see automakers trying to forge new alliances, finding new partnerships. why would nissan walk away from a partnership that works quite well for them for a long time? they have people working together, common projects. it would still make sense to work with renault because -- one other point i should mention is that one major concern for

nissan was the merger. they were concerned about the french government taking control because they want a 50% stake in renault. i think with mr. ghosn off the picture, the chance of a merger are small. you could almost argue it is in the interest for nissan -- they consider the table with renault and continue for cooperation. alix: thank you very much. appreciate that insight. robert dole is still with us. do you like autos? robert: we are not crazy about the autos. anything interest sensitive, it is amazing it lasted this long in the cycle. not so good for me here to the end of the cycle. stocks are cheap. we own gm, but we are underway. disruption in the

sector has been massive up late. there has been the race to electric, and with ghosn exiting and the death of sergio marchionne, you have seen some of the primary architects of the postmodern auto business does appear. -- disappear. robert: it is a change for the guard and the new technologies are coming quickly. tesla talks about it all the time. gm has good technology that does not get talked about enough and eventually will help transform g.m., hopefully. jason: you're going to be sticking with us. we have a lot more to drag out of you. let's turn over to bloomberg's taylor riggs with a roundup of the retail earnings. .aylor: let's start with lowes you're seeing some of the weakness in the housing sector play through. lowes ms. on sales. they are seeing a challenge with inventory.

having a hard time turning customer visits into transactions. they are also closing their mexico operations. lowes falling with the s&p 500's homebuilders etf. another one we've been talking about was target. they were off 11% this morning and missed a little bit. the problem is they're expecting the number to slow going forward , and we are seeing a lot of this where you have the numbers coming ok, but the share price reaction has been worse than that. kohl's trading in sympathy. you have a big story on the margin front with kohl's. as we all go toward digital, that is pushing up their shipping costs. you will see pressure on the margins. we are still waiting for ross and tjx to come out. best buy could have been a good story, taking a look at the five debut we have seen a little bit of selloff. they raised their four-year view

to 509 to 519. story.this is a margin they are trying to set themselves apart by becoming a leader in technology and installation and making your home a smart home. the problem is that is pushing up some of their costs, so we will have to wait and see how that opens. alix: picky. taylor riggs, thanks a lot. robert doll, still with us. what you like? robert: of the five names, we own best buy and target. this is not a topline problem, it is a margin problem. go back 18 months, amazon will put every bricks and mortar out of business. it was a wake-up call and needed . these companies are coming up with new programs. merchandising strategies, delivery mechanisms, new ways to sell their wares and it is having success but it costs money. that is what the margin problem is. jason: there was an interesting

story out of bloomberg this morning about them giving shipping for free. that is hurting target specifically. amazon doing similar things. walmart sticking with their minimum price. as you say, that has to crimp margins. how much of this rests on a good holiday season and how much on a longer-term play? robert: it is both issues. i think the holiday season will be fine at the top line, but companies will have to buy the business, which will hurt margins. if they will keep in gain share and very some of the other bricks and mortar retailers that do not have the flexibility to come up with new programs, that is what they have to do. alix: you will not by retail from margins. robert: correct. same-store shales -- sales. ,lix: looking at revisions

revenue is not as much, which means it is a margin story. when is the street going to realize this? robert: that is part of the correction we are going through now. can't grow earnings 20% anymore. i heard someone say we won we have 10% to 12% next year. the long-term averages 6%. we still have long-term -- jason: if you want to yourself a few years ago and said 10% to 12%, you would say give me. robert: where do i sign? jason: what about -- alix: what about cash? moment,at the underweight bonds, neutral weight stocks and overweight cash. alix: how much of the portfolio in cash? robert: it depends on the portfolio. i mostly manage equity portfolios. in alternative projects were we have flexibility, we have more cash at a negative beta in an

equity market mutual fund. jason: bob doll, you are sticking with us. coming up, we will get more of the interview with ray dalio. he takes us back to the 1980's and mexico and a time when his company almost went out of business. alix: maybe he wore scrunchies. i wore scrunchies in the 1980's. jason: this is bloomberg. ♪

taylor: this is bloomberg daybreak. i'm taylor rates in the hewlett-packard enterprise greenroom. our lead advisor chairman and ceo --

jason: we turn out to wall street beat. first up, nissan's credibility at risk. -- thechairman resignation of carlos ghosn map long-term impacts on the company's credit. then ray dalio's life-changing lesson. we talked about this going into the break. after losing everything on a bet gone wrong, the founder of the world's biggest hedge fund recounts his life-changing lesson. burn.he i love talking about hedge funds. -- it has to do with president trump's overhaul and making struggling hedge funds even less appealing. alix: bitcoin in now. still with us, bob doll. there are 70 parts to pick apart with the carlos ghosn story.

there was a note from a credit analyst in tokyo saying it is not -- nissan's appraisal has fallen to the ground. was he the only one responsible for reporting his salary? how does that work? robert: this will take a lot of time. they will have to go back to square one and figure out how to we put procedures in place and convince our investors and other constituents we have it back together. this will take time. jason: there are so many constituents. you think about the alliance ghosn put together. one of the things that has backed up on him in this case -- he is getting paid by all of these entities and it must be hard to keep track of all of that. alix: that is so hard. jason: not to keep track of the money but keep track of the activity. more the investors trying to figure out how this fit together and whether this

alliance is able to go forward. robert: part of this will fall apart i suspect as people sort through this and realize it is not easy to keep track of and does not make a lot of sense. there are conflicts along the way. some of this has to come undone. alix: hard to keep track of? disk on account -- just call and accountant jason:. jason:you are going hard on this one. alix: you have people with multiple jobs who can file tax returns. jason: it feels like there's a lot of drama. alix: it feels like it is a blank check. we love you until we don't. jason: and then under the bus. let's talk about ray dalio. we did hear about this pivotal moment back in the 1980's, where bridgwater almost went out of business. here is what he had to say. ray: mexico defaulted and there was a sequence of default and there was a debt crisis.

i thought that was going to cause an economic crisis. i cannot of been more wrong. i was more wrong. i had maybe a people who worked for me, i do let them all go. i lost money for me and for clients. dadto borrow $4000 from my because i do not have enough money even to take care of my family at that point. that was painful. it was a most bible thing that happened in my life, -- it was the most valuable thing that happened in my life. it changed me. i wanted to find the smartest people i could. amazing. is larger-than-life characters and stories that go back decades. you would not think that would happen to ray dalio. robert: often that is what makes the ray dalios of the world. they go through that can they get a new discipline about how they do things. jason: let's talk about hedge funds. i love talking about hedge funds. there is the shift happening

where all of the sudden management fees, which are fairly controversial because they are not based on performance, as you know. they are no longer going to be treated the same way from a tax perspective. investors having yet another reason to avoid hedge funds. robert: no question that is the case. the returns alone, and let's talk about the levels of these. -- the levels of fees. and 20.s worth two people get lucky. they are very big numbers. we should not feel sorry for people who have the ability to pay those fees. jason: one of the big questions in hedge funds and private equity has been as these funds have gotten bigger, the management team is not in substantial amount of money. the amount -- the idea that you just keep the lights on with this money. if you are getting a couple billion dollars in fees, you can

keep some pretty nice lights on. robert: i do not disagree with that. interesting, some people yesterday said the perception was so negative about hedge funds it makes them more interesting. now they are smaller it is easier for them to function and everyone hates them. robert: i do not disagree with that but they have got to show the returns. i do not want to throw everybody under the bus, but the industry as a whole has not done what it was supposed to do. jason: -- alix: let's talk about bitcoin. crash, crash, crash. robert: the crash is not surprised me. what surprised me is how far up we went before we had the crash. bad is a little heart -- fad is harsh but not far from it. cryptocurrency has a future, but the winners and losers, way too soon. jason: jamie dimon referred to bitcoin as a fraud not too long

ago and said it was not going to zero, was going close, but it makes spike before it comes down. as if he needed something to be cocky about. robert: i cannot get out of a retail meeting without bitcoin being asked about. then. -- more recent one has been same parallel. they get overbought and over believed. alix: that means we are not at the bottom yet. jason: what a pleasure to have you with us. robert: happy thanksgiving. jason: happy thanksgiving to you as well. coming up, this is the moment where alix regrets inviting me to be her cohost. we will talk about taylor swift. that is coming up next. this is bloomberg. ♪

alix: what are you watching

today? jason: it has to do -- you will never invite me back again. taylor swift signing a new deal with universal music group. the reason i find this interesting is not because of the huge amount of money she will get paid, but part of what she negotiated in was proceeds from universals stake in spotify being distributed to her and other artists. this is a big deal. remember taylor swift had a beef with spotify for not paying artists enough. now she is getting it on the back end and using her leverage for artists everywhere. alix: i agree. that was unusual. spotify, we do not know what it is valued at, but it is hot. we do not know the value of the deal or how long the deal is for. i wonder what other concessions might have been in their. -- in there. i don't know.

jason: i am sure you got -- i'm sure she got it big deal. i am going to make you a playlist. alix: teardrops on the guitar? my producer was not telling me that in my ear. like an old woman in here. jason: tomorrow we will bring you an interview with tiger woods and phil mickelson. this will be a much -- a must watch showdown. alix: even i am super pumped for this interview. coming up in the next hour, cumberland advisors chairman and cio will be here with his take on retail. this is bloomberg. ♪ [ phone rings ] what?!

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text cells off, semi's gatecrash. goldman cash will be competitive. equity risk-adjusted return will be below average but the cash will be competitive for the first time in years. arden. hardy, margins narro welcome to bloomberg daybreak on this tuesday, november 20. i'm alix steel. jason kelly joins me. retail, when was the last time you shop? jason: i am a little bit of a shopper. i have teenage boys who love to shop. my 15-year-old and i sure close. -- share. shopping. of online amazon prime is a big deal. alix: it must be hurting

retailers. to getwe are also going a look at wall street from a different perspective, the ceo of morgan stanley later today. alix: find out where he shops. we have a risk off mode developing, s&p futures down by 1%. we had a tech selloff yesterday, now spread to the u.s. s&p futures took another leg lower after target reported. kohl'sy and you of got kohl' coming out. it is a risk off buy safety scenario. the dollar moving higher. euro-dollar off by .3%. if you think buying on the margin, yield lower by two basis points. it improved on its own but not dealing with a stronger dollar well on its own.

jason: want to bring you breaking news. softbank to invest $2 billion in saidean e-commerce site, to value that company at $9 billion. softbank at it again. alix: talk about e-commerce. jason: talk about an investor people tend to follow and it has disruptive the most forces in investing out there, continuing its vision fund, calling it a guerrilla is probably an insult to gorillas. have $1 trillion to invest, you have got to invest. jason: e-commerce on the minds of retailers. let us turn it over to taylor riggs. going to start with lows and get to some of the other retailers.

it points to a weakening housing market. i am looking at lows. strugglecontinuing to with inventory and turning visits into sales. the sharee seeing is price versus home depot which had been outperforming. they are dragging down home depot with them. target is a big one we are watching, off almost as much as 11%. the problem is, they expect that number to slow further next quarter. we have seen that with all retail where the numbers are ok but there is so much uncertainty that the share price is reacting much harsher. i want to look at some of the margins. best buy has been a margin story. they raised their earnings guidance. to hire than what they had. they want to become a leader in

making your home smart. they are having to pay to do that. you are seeing gross margin slow and expecting to slow further next year. that is a problem. the long-term, they are said to outperform because they have partnerships with amazon. perhaps some pressure in the short term on margins but long-term, a better story. alix: staying with retail, joining us is the senior analyst. what do you think of price action? >> i'm not surprised. there is no room for error, for mistakes. the companies we look at all had mistakes in the quarter and i think the biggest takeaway is that inventory levels appear to be rising at a faster pace than sales growth. not a good thing coming

into the fourth quarter. some pretty soft numbers. why is there no room for error? is it because of the run-up? angstbecause of the across the retail sector? you look ahead as the market does and we are going to be facing tougher comparisons. that, coupled with where we are in the cycle, people are concerned now and you have seen it over the past couple of weeks. rarely have retailers gone up even if numbers are great and stocks are underdressed. alix: are there any stocks you would want to be buying? kohl'si look at the print and i see it down but i think it is an overreaction.

the gross margins were better than we thought, inventory levels are in good shape. that is a name we like. target, they're called just started on why inventory levels are so high. it could be calendar, them trying to bring in product ahead of the tariff increase. the inventory situation is perplexing. alix: thanks. kotok. us now is david great to see you. thanks for being here. david: it is a pleasure to be with both of you. happy retail thanksgiving. jason: not so happy. alix: i have my shopping cart with these things i want to see on sale. do you like retail? heard half one piece and the other half, disappointment, no margin for error.

on the other side, you heard tariffs. we have lowered income for consumers with a tax cut. now, we are imposing a sales tax with a tariff. you have this going on in retail. let trump make a deal with xi and clear this stuff out and we are not worried about margins for error because we will resume a growth standard. if we do not do that, we will not resume the standard. jason: let us talk about tariffs in china. you were nice enough to bring a piece you had written. it is for david westin. david: i brought two copies. jason: you quote napoleon. let china speak when she wakes, she will shake the world. how worried should retailers be,

u.s. companies? david: there is a debate about the trade war. i do not agree with peter navarro. misguided the president who has bought into this. with a picked a war sleeping giant and we woke him up. that is a mistake. things were on a good path. peace eray of the which is available for $.99, the history from the peloponnesian war is being replayed today. andsaw the reference to it in paul kennedy's book. dalio put was ray that in his ably agra fee. we did not -- his bibliography.

we did not collaborate. we are not paying attention. alix: if you're looking for some agreement to stem the tide, what is that? is it rolling back the current tariffs? i do not know about the hugs. if you look at the european model, what did juncker do? he said, let us call a truce. we have a truce, not an agreement. a truce would be fine because that means the accelerator to 25% tariff margins will not be in effect. this market is worried about that. is worried. every business operation that has an international peace is deferring capital investment and worried about it. jason: i was talking to one of

our guys last week and what are the lessons we learned from the nafta agreement and part of it is, trump wants to win. he can frame this as some sort of when with china, that is good enough for him. can be declared a victory and stop the battle and allow the other side to save face, a cultural thing needed. the best thing to come out of , a truce.es let us keep talking, let us stop the fight. kotok of cumberland advisors, you are staying with us. we are going to talk apple, coming up. enoughar market, close for investors. this is "bloomberg." ♪

alix: this is bloomberg taylor: -- taylor: this is bloomberg daybreak. shares of deutsche bank fell to scandal.ay amid the it estimated that more than half of the funds handled by the bank was fumbled through another lender unit. a person identified that lender as deutsche bank. that could make the bank liable for penalties. one of the most influential american bargain hunters appears to believe that the swiss asset manager has reached the bottom. bought a 3% stake in gam. that makes him the seventh

biggest shareholder. in halfket by was cut when the suspension of a bond manager prompted billions in reductions. the founder of china's lu iserce giant richard trying to calm investors. concerns about prospects amid a global trade war. he is waiting to see if u.s. prosecutors decide to charge him over race allegations. he said he will focus on new businesses and strategies. that is your business flash. alix: thank you. goldman sachs cutting its price target on apple for the fourth time -- second time in just two months. the target was lowered to $18202 .209. if you look at the bloomberg, it is 19.9%. the idea is that all the

optimism in the stocks is being drained out. we spoke with david kotok. the market is sensitive to this. are you buying this dip in tech? david: we started to. we took a position with an etf that has the group and tech. maybe we are early. i do not think we go into a recession. i'm an optimist. a truce happens. if i'm wrong, tech is going to be slaughtered along with markets worldwide. that is what is at stake in the trade war. estimateswngrading of , with apple, you have an issue about a high price, follow-up and sales. what are they going to do to keep growth rate? the group specific, slowing growth questions and integrated with that is the fed and what is

the fed going to do? jason: i want to press you on that. i do feel like the faang stocks have gotten lumped together. there are specific issues related to each one, not only apple, certainly they spoke. do you start to -- certainly facebook. decouple?rt to faang andouple, de then put it together and say overthat cast a pall stocks that trade in the united states? i do not think so. say i'm going to ratchet this back? i think so. that does not mean you abandon the market. i do not want to put everything in 2% cash. it is better than zero.

i'm not convinced that is the place to be. alix: the way you understand the ach selloff is it is fundamental based on trade fears, not we are selling based on trade fears? david: you had a run-up in the sector that went to extremes. the price-earnings ratios were huge. they anticipated growth rates which are not appearing. they have to correct. the corrections are part of the sequence. i do not think we have a bear market recession forecasting element. there are people who disagree. .aybe we will get it one of the elements of the tech story that may get overlooked is the chip sector, i am old school in that regard. these are hardware companies.

that seems to be entering into a dark moment. it happened in october. the stock is down. how do you feel? david: it is a worry because you have the supply chain sequence leading up to the device. that is global. you have the global exchanges which make that efficient threatened to make them less efficient. it is bad chemistry for the sector. jason: and the trade war factors in, it feels like. david: i think it does. alix: when you said you were cash at 2%, is that more or less than before? david: cash earns 2%. we are nearly fully invested in the selloff. we think this clears and when it 5oes, you are going to say $17 earnings out of the s&p.

at 15 or 16ts it times and there will be a single digit positive growth rate. alix: david kotok will be sticking with us. here are the numbers. mp sales coming in at 7%. adjusted earnings coming in at $.54. net sales looked good, coming it at 9.8 billion. no doubt, you're going to see the earnings estimate are what going to -- are going to hit the stock. 7%.have comp at that does not make sense. jason: this is the story of the morning. allor riggs ran us through those retail numbers. it is red this by what seems like positive elements to almost all those reports. alix: you have good sales but

you miss on earnings, that has to be some kind of margin story. going to be looking into that. jason: we are also going to look at the ghosn story. nissan under fire. we're going to get into that, coming up. this is "bloomberg." ♪ oomberg." ♪

alix: time for bottom line, three companies worth watching. apple, goldman sachs downgrading its price target for the second time this month. to reason why, in addition the weakness in demand for products in the balance of price and features in the iphone may not have been well received by users outside the u.s.. we are not talking services, demand. are talking about specific

products that are not measuring up. jason: people are like, i do not like it. that is a big deal for apple. alix: when you're dealing with china, that is the market share you have to get into. there is a different front of mental than just the top line. story than just the top line. jason: i am looking at nissan, this was a revolutionary idea that ghosn had. will it stay together. his chief lieutenant is there. he has got the french government weighing in on this because they own a big chunk. this is a big story. are no coming out saying we will have an interim ceo. that is interesting. another big story is boeing. columnist joins us

now. tell us the story. boeing shares have been under pressure the past couple of airs because of that lyon crash. the report so far, we do not have a berdych out of -- a verdict out of investigators but what they think is there is a system designed to prevent loss of left. plane system senses the is starting to stall, it will push the nose downward. an erroneous reading and this tricked the plane into diving into the ocean. why this is an issue is that pilots insist you did not tell us about this. there is a way to override the --tem but pilots say this say we did not have detail.

boeing has pushed back and say, we did tell you everything. i do not see the motive for the pilots to be disingenuous. that raises questions about is there anything else you are not telling us now? say is asi do want to far as the boeing story, i do not know how much this changes anything. this is a safe airplane. you're talking about more of a software fix. this is not like the battery they spent money to get that back into the air. it is more of a reputation thing. they are going to be making their case. .> that call has been canceled i do have details as far as why but that raises more questions

and gets to the heart of that question about honesty. airlines have questions if you are having that call in the first place. why are you not having it? do you need to go back and get your facts lined up. alix: what is your question? >> is there anything else, anything pilots should know that anybody needs to be aware of? 19%: that stock down almost since october. individual stocks in a bear market almost. coming up, the house of housing. housing starts and building permits next. we talk affordability.

alix: this is bloomberg daybreak. i'm alix steel. we could be opening up a rough session. nasdaq futures are by two percentage points. 52 stocks are in bear market

territory. the selloff is substantial. we get housing starts. will that add fuel? bid, ther getting a two 10 spread getting broader. housing starts coming in, month on month weaker than estimated, 1.5%. totember, revised lower 5.5%. building permits in line, down by .6%. we thought they were going to be down .8%. september was revised up to almost 2%. on the permit side, not as bad. like the looks ondline says starts rise rebound in apartment groundbreaking. we will have to explore that to figure out whether this is a multifamily story.

cities about growth in rather than suburban areas. interesting to see how that plays through the market, whether investors go into more whether -- what sort of reaction we get. housing is something people look at and on a day when we are focused on retail and what that says about the consumer. alix: homebuilder sentiment was terrible, the worst since 2014. the 30 year mortgage rate has been rising. jason: still with us is david kotok of cumberland advisors. you look at these numbers. how do you feel about housing? you live in florida where housing is on people's minds. david: we are in a boom. you cannot see straight. jason: is that going to

continue? look into your crystal ball. david: my crystal ball is cloudy. the best forecast is from three quarters ago. do we keep mortgage interest rates at this level? themthe fed engineer higher? i think not and we are making adjustments. we get to a housing sector and it has balance. it was booming. nothing blooms forever. if we get a recession, a different story. i'm not a believer in the forecast. jason: for 2019? david: no. alix: for 2020? david: i'm not sure. if the fed does not kill it and the street does not kill it. jason: those are two big if's. have beening stocks

pummeled, off by 30%. david: it is true. months, horizon is six 12 months, 18 months. for us, this is opportunity. seize opportunity when things look ugly, when people are scared, when prices have corrected, that is when you want to be a buyer. we have been scaling into this market since the selloff got serious. jason: scaling into homebuilders? we did not by the homebuilder etf but we did by consumer staples. withd it equal weighted etf rather than cap weighted because the cap weight has to bake and international component and there is the trade war problem. getcould go it awaited and into the sector that way. -- you could go equal weighted

and get into the sector that way. jason: let us get a check on news. a federal judge has bar the trump administration from refusing asylum to immigrants who cross the border illegally. banident trump issued the this month in response to caravans of migrants who started to arrive at the border. homeland security has said it wants asylum seekers show up at official ports. yvonne: trump's lawyer has defended her use of private emails. they said she use the account while transitioning into government and not for classified information. during the campaign, hillary clinton's use of a private server became an issue. the parent of ross dress for less store the estimates. the chain came out with a forecast for earnings of that was better than expected. boston scientific has agreed to for $4.2 billion.

that represents a 37% premium over the closing price yesterday. makes medical technology devices for doctors in the field of cancer. 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." alix: thanks. wall street is buzzing about a biotech company, they bought more shares of amarin than any other company. early results of a fish oil drug suggested the drug reduced the risk of heart attack by 25%. investors show their confidence but shares started to selloff. there are questions remaining about results. joining us now is john barrow, the ceo. >> happy to be here.

we have a lot to be thankful for. alix: it has been quite a ride for your stock. now, there are questions about if the comparison of the drug was accurate. you compared your drug to a mineral oil and there are concerns about was it a fair comparison? john: interesting to hear people calling mineral oil bad. our feedback, it is early, we have had these results for a week and they have. the feedback has been positive. editorials written by competitor products fit our drug saves lives and should be considered -- products said our drug saves lives and should be considered. our drug toected

extensive scientific review. those folks know the data best and conclude our drug is effective. having a drug that reduces heart attack by 31% and death by 20%, statin therapy, we're just getting started. jason: what do you do next? it is hard for a small company in this space. do you need to team up? how do you deal with the broader market? does it require you linking up? john: the finish line is huge. if you look at cardiovascular disease, one in four people in the united states have an issue. it leaves 65% of that risk there. we are talking about millions of

patients who could benefit. reaching millions of patients takes effort. we have great data from our drug. force expanding our sales , tripling it, we are at 135 reps. we will start at over 400 reps. we have had over 18,000 resumes. we are looking toward the future. alix: david kotok year. do you have a question. ? david: i have a stent, high triglycerides, i changed my diet and i am sitting here. i am in favor of any drug that gives me a better opportunity to enjoy life. anything that focuses on an omega three that might be more

pure helps me. wouldn't you want to compare it with a cohort like me, your drug versus a nutritional supplement that is over the counter? john: the profile you describe for yourself is a good profile for the types of patients we studied in our outcome study. we showed significant results. we compared against a placebo. this was designed with the fda. it is difficult to compare against fish oil supplements because they are different. , supplementsseen have shown no benefit. that we compared against fish oil, they are not showing benefit. david: does a cohort have

dietary issues? i was emailing releases this morning. with an expert in nutrition geriatric care. said the people change their diets, triglycerides change and that should be part of the conversation. i do not want to disparage your company, what you're trying to do. i am in favor of anything that improves health. do we need a holistic conversation? john: we do. we encourage diet and exercise first. all comers, patients who are treated for well-controlled cholesterol. on average, they had their cholesterol down pretty low. these are well managed patients to begin with. what we showed on top of that was a 25% risk reduction.

oh make a complicated science. lowering triglycerides is not enough. that is a small piece. it aant to figure out is flu, get to the underlying symptoms. our drug gets to that. we are reducing plaque in the arteries. , things that might have resulted in the triglycerides being a problem. if the science versus other omega threes the deliver this result. forward, what kind of company would be good to partner with? david: with john: -- we think we are well-positioned to do this on our own. we do have a partner in china who is progressing a clinical trial. we have a partner in the middle east and in canada. have --nited states, we

this is affordable. if we are going to help patients, it needs to be affordable. the alternatives are expensive procedures first stroke. -- for stroke. because benefit is positive. the benefit against risk is positive. it is compelling. both for theyou discussion. coming up, we go back to japan. with going to check in wisdom tree to give us a sense of what is happening and what it tells us about corporate culture and where we go from here. this is "bloomberg." ♪

taylor: i am taylor riggs. coming up later today on balance of power, an interview with james gorman, the morgan stanley chairman and ceo. let us get your business flash. softbank's vision fund will invest $2 billion. that will allow the largest online retailer to speed up development of new shopping services. the deal is scheduled to push the valuation up to $9 billion. the ultimate fighting championship spans -- plans to spend $30 million on a new training facility in shanghai. the 10 chinese fighters are

under contract and it hopes to raise it to 75. the organization was bought two years ago for about or billion dollars. in london, a stockpile of unsold homes has risen to a high. inventory has urged by have. the marks it has been hit by uncertainty and affordability issues. 14takes the average person times more than the average salary to buy a home. that is your business flash. jason: thank you. we have been talking about the ghosn case. this has rocked the world, nowhere is that more true than in japan where the corporate culture is under scrutiny. a biggerns out conversation about where japanese corporate culture goes from here. joining us is an expert, jesper koll, wisdom tree japan ceo.

great to be with you. a inhas become topic tokyo. jesper: absolutely. it is what everybody is not just talking about but taking seriously. corporate governance in japan, there are questions about it. the one thing that is clear, reit and self-enrichment is not tolerated and public prosecutors came down hard on one of the superstars of management, ghosn. jason: this was someone who revolutionized the global car industry but enhanced some of the best-known car names there in japan. this tell us about what may happen going forward with other companies? corporate governance before this

was top of mind, not as top of mind as now. are twoi think there key issues. yes, greater transparency and accountability off corporate leader actions, that is going to become a part of the discussion. want theese do not plutocracy that we have got in the united states. case is so the ghosn important because it sends a signal you are a leader of a public company but you cannot enrich yourself and live so much better than everybody. alix: i love you called him a superstar. that is what we heard at that

press conference. he said there was a concentration of power in one individual. that had to be given to him. what role did me some play? is an important point and people forget, nissan was bankrupt in the 1990's. nobody wanted to touch it and it was ghosn who saved the company and turned the company around. this was a bankrupt company that within five years of his leadership turned into the most profitable car company in the world. act, he did the second hired a second rate french car company into a global contender for the top spot by building alliances. forward, when you have the ceo saying we are not

going to do that again, have this power in one person. mean for ceos and boards in japan? jesper: the message is clear. we do not want the superstar model. there is going to be greater , moretability bureaucratic style of leadership rather than charismatic leadership. think does this make you that maybe the appetite will not be there to continue this alliance because of a sour taste is it japanese mouth or in the country and leadership's best interest to continue this relationship which saved nissan? jesper: absolutely, the fear

that the alliance is going to break up, that fear is exaggerated. let us face it, there are too many car companies in the world now. the chinese have not begun to enter the global stage yet. the consolidation of the and the will continue alliance. is here to stay. if the alliance takes hold, who is the type of person who could emerge? you know so many of the big ceos in japan. e you wouldarchetyp look to? are sayingike you the era of the big character is over for now. now, you think right

have some person who is d who is goingn to lead the alliance. there may even be a run by committee rather than just one ceo that leads the company. we will see how that goes. think that the superstardom, in japan, the nail that sticks out gets hammered back in. from that perspective, it is back to a more normal state of affairs. alix: thank you so much and thanks for staying up late with us. we are getting headlines from france, the finance ministers saying they wish to keep the alliance. he does say the probe will expand to the alliance and they

will wanted to go -- they want it to keep going. it is it does sound like in everyone's best interest to keep this alliance together. it is going to have to be run in a different way, probably not one ceo. alix: coming up, retailers in the red, more on what i am watching. this is "bloomberg." ♪

alix: what i'm watching is the bloodbath evolving and retail. they are all down for different reasons. target had an inventory issue because of toys. kohl's had the midpoint of their earnings estimate which they revised up. saying there is a fiercely competitive holiday environment. jason: bad blood. taylor swift. alix: it will be interesting to

see how this plays out. of those stocks is staggering. 52 of those stocks are in bear markets. 216 of the 505 in the s&p are in a bear market. jason: one of the questions you pose is do you buy here? optimism about the holidays, coming up. alix: this is it. jonathan ferro is up next. carmen reinhart will be joining him. this is "bloomberg." ♪

jon: from new york city, i'm jonathan ferro. the countdown to the open starts now. ♪ jon: coming up, the equities selloff deepening. apple adding fuel to the recent tech loss. say maintain your equity market exposure but boost cash. arestors in fixed income angling for a year and rally. -- year-end rally. equity weakness, futures negative, the dollar stronger. treasury yields down to basis points. stocks falling from london to shanghai as the tech rout goes global. >> the correction was overdue. >> it is healthy. >> valuation concerns are more relevant now. >> equity markets in the u.s. are pricing -- are significantly overvalued. >>