stabilize. lame tech, retail, and oil. tech, retail, and oil. contagion and credit spreads. investors worry us a lot is triggering stress. eu rejects italy. it says the budget is unacceptable. we speak to the european commissioner. welcome to "bloomberg daybreak." david westin is off today. not only that unbelievable selloff yesterday, we come in and get the report they will be cutting costs. apple can't catch a break. >> absolutely. they are cutting costs. it is not good news. if one of your big suppliers is saying we have to cut back, and this and still the gloom. we have heard from suppliers already. alix: we will see how that goes.

there was a lot of falla yesterday. unbelievable day yesterday. with two selloff hundred 20 nine s&p stocks 20% under their 52-week highs. that is a bear market. apple is 9.5% of that loss. s&p futures up 13 points. -dollar stronger despite the fact the eu rejected the italian budget. 10 year yields did nothing yesterday, despite the big risk off move. crude, another 7% selloff. i have not seen this in my career. now oil is up 1.6%, despite the fact the saudis are pumping a record 11 million barrels a day. jason: i was hoping you could explain that. i don't understand what is going on there.

alix: with the oil price? if you are goldman sachs, you will say it will get better. it is always hedging and things like that. time now for the bloomberg first take. come inside the bloomberg. this is the chart. >> this is the chart that shows the s&p flirting with the 10% correction. is this dead cat bouncing or what? >> it is not a dead cat bounce. this is a persistent and sustained selloff. earlier this year, february and march, there was much more of a

rush for the. -- the exit. this time you are seeing specific sectors being sold off and not a rotation into new sectors. jason: what is the big picture for you? >> yesterday, people were trying to find a reason. there was a rotation. it was tech stocks selling off the most. we know the stock market is closely watched in washington. weigheddlow yesterday in on the possibility of correction. >> corrections come and go. i hate to see anybody lose any money anytime, but that is the reality of it. you have roughly a month left. we will see how the year ends.

as it did earlier, the economy is very sound. jason: stocks go up, stocks go down. everything is fine. alix: i'm like, larry, get out there. jason: put your coat on and go stand in front of the camera. alix: it did have repercussions in the credit market. now the conversation is are equities leading credit? you can see how spreads have widened. is it true? >> equities had been leading credit. , thathe energy selloff has been fueling the weakness in the high-yield credits based because a significant portion of tied to oil and gas companies in the permian basin. you see their valuations decline. that said, people are predicting we are seeing as good as it gets

. at this point, credit is still price to perfection given that rates are rising. , as stocks were selling off, treasuries did not rally that much. that equilibrium is not there. people are getting skittish about credit. jason: i feel like we are seeing peak everything. alix: peak negative gama. >> it is peak everything. alix: is it? >> we have had so many people telling us the credit side is sound, but when you look at the companies with high debt ratios, you're talking about a fifth of the s&p with a debt to ebida over five. it is like a quarter of the russell 2000. it gets worse and worse. this is why you are seeing that connection between credit and equity. ?hich is the card and horse

i am not sure. they are intertwined in a way that will push the market down if credit deteriorates. jason: one thing is europe, and specifically italy. the european commission rejecting italy's budget. what was the quote earlier about sleepwalking? that is amazing. alix: let's go buy some bonds. >> that is what i don't understand. alix: this makes italy less credit worthy. the conflict is increasing. bond yields went down, prices up. i don't get this. how does it make sense? jason: this is what the fight is about. >> i think people were expecting this. the european union did not castigate italy and threatened to not either bonds and take a harsher stance, but the fact

this is a relief, that we don't like your budget and we don't like you? alix: we are getting fired up. stay with bloomberg for a conversation with the eu economic and financial affairs minister. we will put those questions to him as well. you can find all the charts we used at gtv . you can even save the charts. go to gtv . jason: we were also be looking to london where the prime minister of the u.k. is taking questions. these have been rowdy. alix: they are always rowdy. talk about a lack of reaction. the gilt goes nowhere and the cable rate is moving higher. later today there will be a big meeting. jason: it feels like every

meeting has the ability to move this forward. when this is also the time she is like, i am taking over guys. i would do it myself and get this all done. coming up, more on the selloff with principal global investors. this is bloomberg. ♪

>> this is "bloomberg daybreak." another sign of falling demand for iphones. one supplier plans to cut expenses in 2019. according to a company memo,

foxconn faces it faces a difficult and competitive year. 10% of non-technical staff will be eliminated. john deere reported fourth-quarter earnings that missed estimates. forecastd its earnings for next year. shares are lower in premarket trading. there is a sign that t-mobile's argument may not be winning over officials. t-mobile is telling regulators that the tie up would help it compete against rival carriers. in september, it focused on how taking over sprint would give it an edge in building a 5g network. alix: some headlines crossing from theresa may speaking in parliament. a possibilityexit if parliament rejects the deal. i don't know what that means, but it feels like a threat. is no brexit.

we are not leaving or crashing out? is no it feels like there brexit, which presumably means a large portion of the u.k. population with say, ok, cool. let's not do that. alix: words will be explain there. jeremy corbyn speaking now. it has been a painful year for equity markets. the morgan stanley ceo said it is not surprising that investors have been anxious. firstly, weep back, are in a tightening process around the world, led by the u.s.. three the four rate increases this year. that has consequences. balance sheet hasot limitations, so we have turmoil. there is a lot going on. every morning you get up right now and there is a strong news

flow from overnight. tariffs, political risks , protectionism, immigration. before we get to the markets, before we get to china and the middle east and the sanctions in russia and the war in syria and north korea, testing or not testing, it is a lot for investors to absorb. this is what markets do when they deal with uncertainty. they get anxious. short-term, sometimes they get it wrong. in the long term the market is always right. alix: joining us now is our next guest. laying out the negatives compassing positive in the end. are you buying the dip? >> no, i think there is more pain to come. we don't expect a recession. were talking maybe a deeper

correction. there could be an end of year rally. the chance of that is fading. is anre is, it opportunity to reduce exposure to u.s. equities and move into different parts of the world. alix: does that mean you will go offense and there are better valuations elsewhere? is some safety. you want to go after quality. within credit, you want to be looking at investment grade. ith defensive coming till he's, health care, consumer staples should do well. ,f are looking at equities there are opportunities around the world. japan is looking attractive. if europe can work through the italian saga, then it looks good. next year and emerging markets

could look attractive again. jason: tell us more about japan. that has been in the headlines. what is happening there economically or fundamentally that makes it attractive potentially? >> we have seen solid growth. q3 was but given the natural disasters and the economic data showing that. what we are seeing and hearing his that there is a pickup in pace. expect there to be of bounce back. we have the boj still extremely easy, so that is another one. valuations are looking attractive. japan is the favorite tech. jason: what about the china factor, japan and the united states and how much do worry about trade the moment? two or threeof the

top things to worry about. i would worry about the u.s. rather than china. i think the bad news has been priced in in china. point, within the next few months, we should see those fiscal stimulus measures kick in and start to prove the economy. suddenly happens, japan will feed off that. alix: what part of the call is based on a slower fed and weaker dollar? asiar emerging markets and especially, you need a positive catalyst, in proof meant and reduction in trade tensions, which i am deeply skeptical about. or do you need a weaker dollar. i think the weaker dollar is more likely. definitely not recession. this is still a slow down, but given the dollar strengthened because of those relative differences in economic in theance, a weakening

u.s. should play through to a weaker dollar. that will be the catalyst. jason: you talked about weakness in the u.s. we are starting to hear more and more speculation that the fed may slow down rate increases in 2019. what is your sense of that come and what should they do in your estimation? >> the market is hearing what they want to hear. they will saying that be listening to the data. , therelook at the data is nothing there from a central point perspective that would convince them to stop at this stage. you have to look at the labor market, record lows in unemployment, wage growth coming through, wage pressures starting to build him a so why would the fed stop? they also have to keep an eye on the next recession. they need some kind of cushion. the market is putting itself up

for risk of repricing in the next couple of months. we saw in january and october, that repricing of fed expectations is always a trigger for the next market correction. alix: that raises the question for me, how much of the selloff is fundamental and based on that repricing? you have hedge fund redemptions. come inside the bloomberg. this raises that point. this is the bloomberg growth portfolio momentum and leverage. leverage is the white line, a big underperformer. growth has also been slowing. how do you view it? >> maybe this was somewhat overdue. there is a lot of fundamentals driving it. suddenly realize there would be further tightening coming forward. there is a creeping fear come

especially with the technology sector, which has been a key leader. as you see the sector suffer, it can only steer through u.s. equity markets. it is fundamentally driven as well. jason: how much are you worried , we are through the midterms and talking about 2020, a divided congress. good for investors come and how does that settle out for you in 2019? >> you tend to see a rally post-midterm elections. there is some comfort knowing not much can change in the near future. the one takeaway is there is no prospect of another tax cut. there is no prospect of further fiscal stimulus next year. a negative, but having no change in itself is an element of stability going forward. alix: what do you make of the oil price? there has been a litany of

excuses as to why the selloff, technical, negative gamut when banks have to sell, growth slowing a real concern. what is your best read on that? >> it is a combination of several factors. the sharp move down in the last technicals, unraveling a lot of positions. going forward, there should be some slight bounce back. we think there will be a u.s. slowdown next year, and it could take some time before you see the chinese economy pick up again, that tells me it will be moderate. we will not see $75 a barrel. you will stick with us as we make sense of every in coming

at us this morning. let's go to prime minister questions, theresa may getting questions on brexit. she says no brexit is a possibility if parliament rejects the deal. jeremy corbyn says parliament will reject the deal. she is defending it again, saying the eu did concede to the kate on the irish border -- concede to the u.k. on the irish border backstop. her defense will continue until something materializes. jason: i don't think we have seen any serious discussion yet, and tell today come of the possibility of no brexit. now, as you said, to reiterate, theresa may saying no brexit of parliament doesn't approve it come and jeremy corbyn, who could be the next prime minister it theresa may went away, saying there will be no elementary

approval of this deal. alix: they haven't gotten enough letters for a vote of no-confidence yet. the cable rate moving higher. the other big news comes out of europe, deq rejecting italy's budget. italy faces of fine. the body warns italy is in serious noncompliance. it confirms the existence of a serious case of noncompliance with what the italian government has put on the table. we see the risk of the country's sleepwalking into instability. joining us now is pierre moscovici, the european commissioner for economic and financial affairs. eow much will you fin italy? fast. you are going to let's move step-by-step. is ansider italy's budget

serious deviation case. this is why we are responding to the italian government. we ask them to change their plan. they did not. they sent almost exactly the same. we confirmed our analysis. we had questions on the structural deficit, growth, debt. we had doubts, and these questions have not been answered. i believe this budget is not good for the italian people because it increases debt and is not likely to create more growth. we have not decided any kind of procedure today. if there is no change and the member states agreed on our analysis, then we are paving the way to the opening of such procedure. , the 19cil of ministers ministers of the eurozone and 27

ministers have to examine that. , we willgree with us have to propose such a procedure and propose a recommendation on the trajectory required from italy to reduce its deficit and debt. we are not yet they are. alix: but the market reaction, euro higher. thinkslls me the market you weren't as aggressive as you could of been on italy, giving them a reprieve. how long do you give them? what do you need specifically to see to back off on a potential fine? are not of all, we getting time, negotiating, or trying to find a compromise. we have rules that are common to all member states. all of them have respected them and made tremendous efforts to

reduce the deficit. in 2010, the average deficit with 6%. today, it is under 1%. imagine everybody acts on its own without respecting the rules , then there would be no eurozone. this is why having such behavior is not respecting the independence of countries inside a single currency. rushing,am not pressuring. i am just following the rules and respecting the spirit of dialogue with the italian authorities. to thep to them to adapt new situation and take necessary veryres to show this serious deviation can be corrected. if it is not the case, we will move forward. my door is open to dialogue with

the italian government. the interests of the eurozone and eu is we moved in the same direction at the same speed. with the same rules. jason: thank you. come yourf you can rank in order what the issues are. if they walked through your door, what would be agenda item number one that would make you feel comfortable with this budget? debt.ber one is public the public debt of italy compared to gdp is the second-largest in the eurozone after greece. it is 130%. it is way too high. andur forecasts are correct they are the same as all other , thisational institutions public debt will not be reduced. it costs a lot to italians.

isbudget which raises debt not a good budget for the people. more debt makes them more vulnerable. debtuestion is how can be reduced and growth enhanced. we don't see in this budget the real reforms that would create growth and reinforce productivity in greece, because that is the main problem for this country. finally, the structural deficit is way too high. three, we ask questions and have raised doubts. we received no answer. that is why we are persisting and see that undoubtably there is a very serious deviation to our rules, which is bad for the eurozone and italy. it has to be corrected. alix: you talk about the spirit of dialogue, but you are not

putting their feet to the fire. if investors will buy their bonds, you are not putting their feet to the fire enough to get them to move. we are not there to overcome our responsibilities. sometimes people say the commission is a non-elected government led by bureaucrats and they have all the powers and can say yes or no. this is not the case. we are not bureaucrats. we are political appointees. we are under the control of the european parliament. the markets are also watching us. express the general interests of europe and follow the rules, no more, no less. stronger, wee would be accused of being intimidating. we would not be useful. we are at our place, and we are there to say there are risks and

they need to be addressed. need toe balances the be corrected. this budget will not reduce deficits enough to reduce debt at all and produce growth, as it should, so we are moving step-by-step. i want to keep my door open to dialogue, but i will also follow path with great determination and total firmness. commissioner, while we have you, we have to ask you about brexit. the prime minister of the u.k. speaking in parliament right now, a lot of heated discussions. what is the contingency plan if there is no deal agreed upon, if we do have the u.k. essentially crashing out of the eu come march of next year? pierre: i am not going to expand

on that. this commission has a key role in those negotiations. the chief negotiator is my onlycessor and he acts not in the name of the commission but also in the control of all eu member states who will meet on sunday if there is no exceptional event intervening since then. we prefer by far, because we believe it is in the highest interest of the u.k. and europe that there is a deal and we believe that the deal on the table is the best possible. we are dedicating all of our strengths and forces to that. we respect the will of the british people. we regret brexit, so we need to succeed in the best way possible

to have a very strong relationship in the future. alix:. moscovici,- pierre thank you. a politician's answers if we have ever seen them. we respect you, but we are going to do them this way. jason: we are totally focused on this deal. alix: really into it. in the markets, it was a brutal day yesterday. 200 stocks in the s&p are in a bear market. now we are seeing a bit of a rally. all the gains this year wiped out in yesterday's selloff. we are going to go into the holiday weekend, or have we finally hit a bottom? taking a look at european stocks, italian banks getting a nice pop. the buying in btp.

yield isp and 10 year up 12 basis points. we eu comes out and says don't like your budget, no dice and the market goes and buys btp. i don't think that is enough incentive for italy to come to. -- to come to the table. a 7% selloff yesterday. goldman sachs still a believer, potentially looking at more weakness. they need to see physical evidence to feel better about the market. jason: moving from italy to germany and deutsche bank. the headlines just keep on coming for them. the troubled german lender had tried a strategy to move some of its risk into what is known as a central risk book in the u.s., attempting to avert losses. that ended up in the red to the

tune of $16 million. that is according to reporting just out from bloomberg news. alix: here is another one. nissan, the board says it is divided over whether to dismiss carlos ghosn. the press conference, it was a done deal, he is gone and this thursday vote is a formality and now it is potentially not the case. jason: this follows last night when the french government, which owns 50% of renault. renault saying for the time being ghosn will remain the chairman and ceo of renault. alix: because they have not seen any charges or evidence. we don't even know where he is being held. jason: we don't know where he is. alix: literally. nobody knows the law either when it comes to japan. it has been a bizarre couple of hours. jason: let's get an update on

what is making headlines outside the business world. emma chandra is here with "first word news." emma: the u.s. is wrapping up the trade dispute with china. the trump administration is accusing china of continuing its takeback campaign of intellectual property and theft. meanwhile, president trump won't let the merger of a u.s. based -- murder of a u.s. based journalist damages standing with saudi arabia. he says he will stand by the saudi's, regardless of whether the crown prince ordered the death of jamal khashoggi. president also sees the saudi's as a block on iranian influence. all this as saudi oil production surged after stronger than usual preparing forents

a disruption in iranian supply. opec needs -- meets next month. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. was a retailay bloodbath. hitet and ross the hardest taking the s&p retail index lower her and 18th day. joining us now is rsr research founder. allas interesting that they had different reasons for why they were struggling, whether it was margins or inventory. what stocks were justified in the selloff? >> l brands is the only one that was justified. target's inventory up because they are trying to capture the sales that toys "r" us left on the table.

i am not surprised about that. by every other metric, they are doing well and they are investing in something that is not cheap and that is managing the online sales world. i think it is going to take some time to get more efficient. it is something we predicted for several years, that this was going to be a problem. the street is going to have to be patient. with ross stores, the one that is the most in trouble is l brands. jason: you cautioned patience for investors but they seem quite impatient at this moment. very little margin for error in all of these names. why is that? is there nervousness about spending? thehere nervousness about way these companies are being run? >> i don't know. amazon is getting this crazy

valuation and when you look at it, amazon's own retail operations are not profitable. they make their money on their web services and marketplace. you have a traditional format trying to do battle with a company that does not make any money and is held to a different standard. i don't understand the impatience. i don't think it is warranted, i don't think it is right. they need to become more patient. ofon: we are two days ahead your christmas already, black friday. alix: i am not waiting. jason: what do we need to see at this point that will make people feel better about some of these retailers, or is there the possibility that black friday can solve all these problems? >> you have to look at the season as a whole. one of the problems we get into

in the last seven years was looking at thanks giving weekend and say it -- at thanksgiving weekend. when the final bells were run, it turned out that the quarters pretty much performed as we would have expected. the only difference was the demand curve for -- curve got warped. does that make sense? alix: absolutely. we appreciate all of your insight. rsr research.m of jason: still with us is seema sha. paulawere discussing with , this is a very impatient or trigger-happy to sell market. why do you think that is? seema: a lot of investor caution at the moment.

we are going into a time when people are worried about slowdown. that thesee to think are all on a case-by-case basis but what you tend to see at the beginning -- at the end of the idiosyncratic shock. we don't think there is going to be a big downturn in consumer spending but there is going to be some difficult -- difficulty ahead. 18 months to get those rate hikes. we are seeing the effects of only june of last year. we have had four or five hikes since that point. there is still a lot more difficulty to hit the u.s. economy ahead. alix: if that is the case, where do you hide? seema: yesterday was a

particularly tough day but if we really believe in a slowdown, we ,re looking at defenses utilities, consumer stated -- consumer staples. u.s., you can the going to other countries which will be in a relative value basis looking a bit more attractive. jason: talking about japan and what isrlier, seema another country you would find some safety? seema: some safety? i think one of the areas where i have confidence right now is parts of latin america. they have already had a tough time this year but they are -- but their macro fundamentals have improved. -- not not effectively affected necessarily by the trade war.

they look more attractive than they were, historically. had 2009 -- two dozen 19 earnings estimates for the u.s. come in enough in a beat scenario to start coming into play next year? seema: we are still early. q3 was a very strong earnings season. however the earnings guidance has become somewhat more negative. some -- people have not priced in the negative impact of the trade war completely. there is still some downside there. the recent idea that the fed may suddenly stop, there is going to be a reality check at some point which could create some bad days ahead. alix: seema sha of principle global investors. jason: let's check on some of the business stories making headlines. emma chandra is here with the

boot -- with the bloomberg business flash. emma: the board of nissan is divided over whether to fire chairman ghosn. the nine-member board is due to vote on his fate tomorrow afternoon. ghosn was arrested monday after stepping off a plane in tokyo. -- according to the wall street journal, the companies have talked about a variety of joint ventures. last month, the walgreen ceo called bloomberg -- told bloomberg the company should have -- four years ago. in golf, tiger woods has raised the stakes for the $9 million winner takes all pay-per-view match on friday. in golf, tigerit will cost $20 . at&t has the rights. that is your bloomberg business

flash. alix: i might even watch this one. jason: it is amazing. this is going to be a spectacle like we have not seen in a long time, and i love the idea that there are side bets and the other thing they are doing, you think about watching golf. i think about my late grandfather sitting in his recliner. it is very quiet. you have the commentators whispering. these guys are going to be mic'd. while they appear friendly with each other, they want to win. they want to beat each other. this is one of the great rivalries in golf. bloomberg tv spoke to the golf legends and here is what they said about how the big event will be different. is giving are doing the viewer an opportunity to see something they don't ever get to see. we are to have different drum willages, live mics so you

hear our campers to -- our conversations with our caddies. there is no cutaways for commercials. you are going to hear all the talk, all the banter throughout the entire thing. >> we are going at each other head-to-head. whether it is a regular to event or a championship event, we do not like losing to one another. we're going to have an exciting time on friday but at the end of the day, i am not losing to fill that i am sure he feels the same way. weren't the side bets like $200,000 or something? jason: the bet is that nicholson will make a birdie -- mickelson will make a birdie on the first hole. people are going to watch this. where i am most interested is one of the makes a mistake and is mad, what do you say? anybody who has ever been on course, especially watching

tiger play, they are very hard on themselves. a lot of talking to themselves. taking all of that up on the microphones is going to be interesting. if one of them has a bad day, look out. alix: that is what i am saying. how do you censor yourself? a lot of people turning into the -- tuning into this. it is not an old man's game anymore. jason: it might still be. alix: fair enough. let's turn to wall street beat recover three things. that going off the table this thanksgiving. manager's fund apology goes viral after losing all of his clients' money.

the morgan stanley ceo says the market is over worried about general electric. jason: joining us now is lisa abramowicz. we love her thoughts on wall street. let's talk about that going. i remember sitting in this newsroom, joe weisenthal predicting everybody is going to go home, talk about bitcoin at thanksgiving. this may be second only to politics as the one thing you don't talk about. if you got your aunt martha to buy some bitcoin, she is not going to be happy with you. lisa: i recommended my family by bitcoin last thanksgiving and this year is going to be awkward. it declined 75% since its peak. it is not the buzzword anymore. it really was a fad and that is clear. what is going to be on the mind is the dow.

my mother and mother-in-law are going to use the dow and they're going to come in and day what is happening? alix: your mother tracks the dow? lisa: you are going to see headlines like bloodbath and boeing getting hit. i bet that comes up. should i sell out now? putting money in the mattress. lisa: i have had that conversation before. on a more serious note, this was an unbelievable story that came out. there is this hedge fund called optionssellers.com. they have options that are unhedged. andthe money was wiped out the head of that hedge fund had an apology the cap posted on youtube. here is part of what he had to say. >> good afternoon.

this is james of optionssellers.com. update.et and account thank you so much for the barbecue sauce. so many of you chose to entrust in us the ability to navigate in the world of investing. i was talked about steering your investment like a boat. i am sorry that this rogue wave capsized our boat. alix: it was 10 minutes of this. it was really painful to watch. lisa: what was he thinking?

why would you do a video like this? hostagentice style or style video? talk to them personally. why put out this video where you are talking about steering it like a ship? economy what does this say about -- reputationally, what does this say about his judgment? how do you deliver this kind of news to your clients? i'm going to guess this is not it. alix: and all the responses. jason: it was tough. one of the most read stories today is about ge and its banks and all the credit that has been extended to ge. one of the banks on the hook should ge continue this path downward is morgan stanley and that conversation erik schatzker with james gorman yesterday, he

brought it up and james gorman was pretty optimistic. personally i think larry has done a great job. in an been strong incredibly tumultuous situation. i have a lot of empathy. i have walked a few miles in those shoes myself. the market is over worried. ge is a fantastic institution. they have tremendous ability to restructure and selloff pieces of business. i am not concerned about ge's credit at all. they are a world-class company. >> even if they do end up drawing down a credit facility, your money is good? >> absolutely. this is one of the great institutions of the world. jason: one of the most fun things was watching your face during that sound. i am looking at the bond

and stock prices on ge assets and they have fallen off a cliff. stock price is now it's lowest lowest -- -- now it's its lowest since 2009. james may not be worried but the rest of the world is. the fact that they are struggling with their capital structure is a hot topic. jason: it is good to have your banker publicly having all that confidence i would imagine but investors are worrying, maybe they are overreaching. alix: i think some of the bonds are rallying today. to be fair, they were really hit. the bigger question becomes if there is a sustainability issue, how does that spread? they were sort of immune to

certain rally selloffs and now they are not. lisa: this is a systemic issue. $11 billion of debt is a lot. it is a very big company that there is a chance it will not be necessarily systemic. it could be painful and we have seen it with other issues that have come up where banks have had to take write-downs. hard to see how it becomes systemic risk unless it is endemic of other companies starting to struggle now. jason: it is interesting to think about ge being potentially some kind of contagion whether it is equity or credit. alix: some analysts said the write-down could be the tipping point. it could lead to a huge amount of breakdowns. lisa: there are a lot of tipping point people have been waiting for. general election may continue and may be a good company in the

future but this is certainly a risk people are watching. alix: thank you so much lisa abramowicz. oil very exciting. it went down yesterday and it is up today. president making it known where he likes oil prices. it was just $82. that only is he consistently walking down the oil prices, while saying we cannot go against saudi arabia in any capacity because we need low oil prices. jason: this is following a lengthy statement that he released yesterday. the president essentially saying it is what it is as it relates to the murder of jamal khashoggi and doubling down, tripling down on the relationship with saudi arabia and citing oil specifically and arms deals specifically. alix: how do you stay in oil when then oil bull

president is walking prices down? jason: -- i cannot stop watching this. our senior editor joins us now from berlin. it is fast moving to say the least. great to see you. we have heard from nissan, we have heard from renault. give us some context for what happens next. >> we are waiting to see. dayscan hold ghosn for 23 and apparently we're getting word that they have asked for another 10 days to be able to hold him. we have not heard from him. we have read that the french ambassador has visited him and we think possibly some american officials may have gone in and talked to his associates for we are not sure about that. we are really in the dark here. they have kept him very much in

isolation. we have a number of people that have contact with him. it is kind of a mystery what is going on right now. jason: there is an interesting element here which is some withinwn or misalignment the alliance as it were between the french and the japanese. what are the implications of that? >> this whole thing has kind of revealed the fault lines of what is going on in the alliance. we have also heard that ghosn was moving forward with a full merger of the two companies when this came together. speculation that says this may be an effort by certain parties in japan to push back against a full merger

because the japanese side, they have always felt like they were disrespected, a jr. partner in this thing. jason: david rocks, thank you very much. you can read more on carlos ghosn in the latest issue of bloomberg businessweek. >> is that it? jason: that's it, we are done. alix: a great read. coming up, linda of federated investors. do you want to be buying the dip? our stocks on sale? -- are stocks on sale? this is bloomberg. ♪ ♪

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contagion in credit. investors worry equity selloff is triggering global credit stress. white house hawks, bullish on china. of u.s. accuses china continuing until actual property theft. -- intellectual property theft. the day before thanksgiving here in the u.s.. i am alix steel joined by jason kelly. just buy it. jason: by about. tart -- buy ita up. you are making a tart. feeling confident? alix: i am feeling confident about pie, not about the tart. jason: you know who is feeling confident? president trump. never lacking confidence. at the latest tweet

from the president. he is talking about oil. oil prices getting lower, great, like a great tax cut for the world. enjoy. thank you to saudi arabia. let's go lower. clear,n case you weren't the fed should not hike and oil prices should be low. how the you become an oil bull in that scenario? jason: it is difficult. it follows commentary the president made about saudi arabia, doubling down on the relationship with united states and saudi arabia, speaking directly about the murder of jamal khashoggi, essentially saying it is what it is and that saudi arabia is an important economic ally. alix: like we were mentioning, you would think that headline would tank oil but no dice, it feels like it is a buy everything kind of day after yesterday. euro-dollar up by 3/10 of 1%.

andmber the eu coming in saying italy, we don't like your budget? go ahead and buy the euro and btp. up by nine basis points. a huge bidnot get for treasuries yesterday and crude is ignoring the headline from president trump and the fact that saudi production hit a record in november. painful year for equity markets and we just got word yesterday, leading investors to wonder if it is time to buy the dip. you are what some of our guests had to say. >> our investment -- our device would be not to run out of the markets just yet. take advantage of that, especially around industries you like. waye have nibbled our nearly into fully invested in this selloff. we think this clears. dips, the interesting

question is whether u.s. equities are starting to get attractive. >> a fundamental change with this selloff, we see it from a different look but because the fundamentals still remain there, in some cases, it does not look like a time to be too worried about this drag down. >> i think we will still get a bit of a santa claus rally. 2018 is going to be a flat year as you pointed out, but that does not mean that 2019 will not have a positive market -- positive bias. alix: joining us now is linda of federated investors. do you buy the dip? >> good morning and happy thanksgiving to everybody. we are still secular bulls on the market. we think it is a long-term buy. market weresual

nothing seems to be working at all this year. you have had lots of rotation. when we say should we buy, we ask a couple questions. is there a recession on the horizon? no. do we have an inflation problem that would make the fed accelerate their tightening? no, we don't. whenuestion is what to buy day after day, stocks say we made our earnings estimate but ?e are a little shy on revenues that is a gut wrenching experience. about one oftalk those sectors that has been gut wrenching and that has been retail. what is happening there? why are investors so worried even when they are near misses at best we are hearing from the ross's of the world? >> retail has been shaken up by

the amazon affect. if any company wants to be really relevant during this holiday season, they need to figure out how to send us what we want to buy over the internet and do it without charging us anything and that is very expensive for margins. they are fighting a losing war .ith amazon however when we look at retail sales, we have seen these last number of months all up and down the income spectrum that main street is selling pretty good and people are going out there and they are doing their shopping chores. very recently, consumer sentiment in the lowest income , higher than the highest income strata and those people will go out and do a lot of shopping. alix: we are going to dig into more specific names in just a second but i want to get into the different rotations and trends that we have seen here.

momentum, growth, leverage. they are all down. leverage gets hit the hardest. what is your interpretation of what we have seen and what investors have sold? this year to date, there is no asset class that is up more than 5%. that is a very rare year. it has been a question of has the tax-cut been a sugar high? 25% of earnings increase which is tremendous for the first three quarters and can this carry on into next year? growth has been winning for years now in an outside fashion. we need toed and if sell something, then that is what we sell. what has been working is the faangs and the small-cap stocks. what do you do when you sell that?

what you put your money into is the conundrum. alix: but there are two different parts going on. momentumto sell some but the selloff we have seen in leveraged stocks feels like a more fundamental issue. higher rates, a blowout, investors have to look at these kinds of stocks. it?h thesis is lisa: credit spreads are something bulls have been looking at and they are still quite tight. that indicates there is nothing wrong in the overall economy. now they are starting to suffer as well, so now people are asking the question, is there a recession on the horizon and what we have seen all year long stateside of the united manufacturing indices, --

accelerating growth in our -- omy and rocky times like this, we start to question, we start to see spreads blowing out a bit. jason: you mentioned the fed at the top of the conversation and there has been increasing speculation that maybe the fed is going to reconsider the pace at which they may hike interest rates. what do you make of that talk? lisa: i agree with that. everybody knows that the fed historically in their tightening campaign has been responsible for every recession since 1950. they go too far. the fed knows that and we are coming off of a really global financial crisis. negative yields around the globe

, still very unusual and the fed is watching that, so we believe that they will give us one more hike this year and only two next year. the fact that we don't have an inflationary problem evidencing itself this year and that we have slowdowns around the world, and they are watching the credit spreads will allow them to really stay at bay and slow down the whole thing. there is no recession at all in the u.s.. we can carry on with our bull run. alix: we danced around it. what is safety? lisa: safety is high-quality dividend oriented stocks. this is what i tell people when i travel. i travel every week on behalf of on behalf of our current -- b -- on behalf of our company.

government bond yields have not really come down very much. what we are seeing is that utility stocks in particular, which is the go to sector in the well market, doing really and in fact i just read that utility stocks are beating tech stocks on a year-to-date basis. strategiesy dividend look like they are coming back into favor now and of course it is a great short-term strategy as the fed is in tightening mode. jason: you had me at what is up with that. linda is going to stick with us . little bit up, a store's gross margins. -- four of theed most used words. this is bloomberg. ♪

jason: while most americans are celebrating thanksgiving tomorrow, american retailers are celebrating the start of the big holiday shopping season. spending for holiday at their highest levels in recent memory but investors anything but optimistic. emma chandra is here to break it down. emma: we have a bit of a retail bloodbath yesterday with l brands closing down close to 18%. it has been falling for the past eight days, losing some $200 billion. a number of america's biggest

and best retailers reporting earnings. for the most part, earnings have been good. we saw average sales growth topping but still we are seeing a number of retailers in bear markets. 66% of the consumer discretionary sector in bear markets. the likes of gap stores closing -- arnings missed what might be behind all this pessimism? we look to the earnings calls for some of the biggest retailers like walmart, kohl's and look at the words that came up the most. investors are still interested in how a number of retailers are leveraging their real estate. look at margin and inventory. references to those outstripping references to online and e-commerce. that should should concern on

whether retailers are getting into online shopping for how they are having to pay for it and spend and invest to capture customers. we are talking the likes of promotions, free delivery. when it comes to inventory, there is a concern about stockpiling ahead of christmas and also potential tariffs pain -- tariff pain. alix: looking in an interview with the macy's chairman and ceo, coming up this friday. that retail bloodbath, l brands, target and ross hit the hardest and 90 of have s&p retail index lower for eight straight days. sarah ofs now is bloomberg opinion and linda of federated. which stocks got unfairly punished in which stocks got justifiably punished? >> unfairly punished was target. it does not actually look that

bad. it had a really strong increase in online orders. a 49% increase. on thest put pressure film and cost and i would argue tothis point, in its effort do battle with amazon, you want to see it getting those sales. gap is another story. they had to resort to a lot of heavy discounting to get rid of inventory that was not moving in that is concerning. jason: linda, coming here because we were talking about this earlier but it seems like you can explain every single ,ame and yet the trend overall you both mentioned amazon, is not positive right now and there is very little margin for error. will there be something that can lift these names going forward? i think that in our

business, we are watching what is going on on wall street but main street is in a really good mood and i found it interesting midtermy did the elections and people came out from voting and they asked them what is your big problem and the biggest concern has been health care concerns. they are not worried about things like the trade war, pe ratios. there is sentiment indices are at a near time all -- a near all-time record high. we want to go out and go shopping. that does not change the fact that the landscape has changed. retail andt individual parts of retail. some you like target, i don't do individual names but target is trying to fight the good fight against amazon. a retail it is going to do well is one that has a particular

niche type product or one that has a really good beginning to end experience, so they can keep their margins under control, but the rest of them cannot compete with amazon. if amazon has been getting crushed, that might be the way to go. they are still going to be the way to go. sarah come in here because l brands is one that is just fascinating to a lot of people and not just because they own the torilla secret but because of the new ceo and they were the biggest loser in the s&p yesterday. what is going on? secretthe victoria's brand has been in freefall for some time now. they clung to this sexy look that is not resonating with young women right now.

american eagle has this new chain that is producing more comfort as leisure focus lingerie and has this real beauty type marketing campaign and victoria's secret has been the market share leader for so long, that has forgotten how to react to new competitors and has not done a good job of adapting its look and marketing for where shoppers are. jason: thank you so much to sarah hall zach -- sarah halzack. coming up, ge looks to insiders to save its power unit. this is bloomberg. ♪

alix: time now for bottom line. we look at three companies worth watching. deutsche bank, we had news earlier they are set to unlock money in the u.s. -- lost money in the u.s.. addition, yesterday, another record low.

their debt is under pressure. credit default swaps are starting to pick up. jason: also some of that bad money may have gone to deutsche bank. alix: of course it did. a bad news in the financial sector has to affect what you make in some place -- in some way. andn: i am watching apple foxconn. talking about foxconn cutting costs, which you would think would come back and weigh on apple pretty heavily. it did not w\eigh very heavily -- weigh very heavily. is it that the foxconn thing is they are getting better at their operations? jason: before we came on set, you said maybe it won't hit apple stocks. maybe this is a company just trying to get its house in

order. i look at it and think it is not good news for apple. alix: it is not good news, especially when goldman downgrades the target three times in the last month. jason: a number of suppliers have come out and said business is not so good and most worryingly, you have had researchers come out and say people are just not digging the new iphones. third company story we are watching is ge. we have to bring in brooke sutherland of bloomberg opinion. a lot of different angles for this one but the big part is the credit market. brooke: i want to highlight the decline in ge's perpetual preferred shares. a real significant drop. these are some of the most actively traded securities for ge. abouteoning concern

whether or not the company can handle its liability. as you said, this is sort of the big worry on investors' minds. the angle to this is the credit line. they are advertising that as a backstop in terms of their ability to deal with these liabilities. the flipside of that is there a banks on the other end of this credit lines and if there were anything bad to happen to ge down the road, this is not a situation we are envisioning but if you were to talk about a default situation, that would cause significant pain for those banks. jason: james gorman talked with erik schatzker yesterday and he basically said believe in larry. that is what you want from your banker. obviously if he had been worried, he would not say it this is a lot of exposure for some brand name

banks. brooke: a significant amount of exposure. the top 5 wall st firms have at least $3.5 billion exposure to ge, which is a significant number. 5% of their loan liability. this would cause a significant pain point. the james gorman's point, this is not a right now situation. we have time and ge has options it can use to raise cash. it has ways to bring down these liabilities. the question for investors is what is the timeline on that? they have already walked back the target of reducing the debt by 2020. we don't have a specific updated target but a lot of the estimates talks about three times in that window. a much longer time frame but this does not necessarily mean it is going to go up in flames. alix: gorman talked about bigger

cues. he said that could result in billions of write-downs. brooke: this point was that they are selling it below the book value that they paid for the asset, so you could have goodwill write-downs which does impact overall creditworthiness and i think more importantly, they sold that at such a low and some desperation on their part. alix: brooks of bloomberg opinion, thank you very much -- brooke sutherland of bloomberg opinion, the thank you very much. -- thank you very much. this is bloomberg. ♪

alix: this is bloomberg daybreak. on, is where we stand, risk buy everything you sold yesterday. despitebanks rallying

the european union saying no good to the 2019 budget. btps. euro-dollar continuing to see a little bit of an uptrend. a tiny selling on the market. durable goods coming out right now. here is what we can tell you. durable goods coming in weaker than the headline basis, down 4.4%. nondefense ex-, air, we were expecting it to be up by 2/10 of 1%. it is just up by 1/10 of 1% and september of eyes lower. we knew these numbers were going to be dicey but this appears to be even dicier than we thought. jason: that topline number that it fell 4.4% and the estimate was to be down 2.6% is a pretty big gap. alix: then you have

unemployment. softnessg to be some but the unemployment picture still looks pretty good. jason: every investor keeps coming back to that idea and we have been hearing about exit polls from the midterm elections. people are worried about health care but not the economy. they are not worried about their jobs. interesting as this data blows through, especially because as we talk about what the fed they do next or may not do next, they're going to be looking at this sort of data more they're going to be working -- looking at the stock market. alix: this is not a happy number. orders for u.s. business equipment also trailed forecasts in october. you are seeing a little bit of movement. you can see yields moving at

306. jason: still with us is linda of federated investors. when you see numbers like this, what do you make of them and does it worry you about where we are in the economic cycle? linda: remember that this is a very old economic cycle and we are in the back half of it and we have seen some weakening numbers. accelerating capital expenditure figures earlier this year but we have been disappointed in the third-quarter. we get all this information and has -- and we have to try to make out the trend. this is potentially the beginning of something but there are concerns of business leaders around the country, debbie around the world as to what the nut oft of it is -- big it is. it is a binary question. alix: also very different from

what larry kudlow said yesterday. want to get your thoughts on u.s.-china tensions ahead of that summit in argentina. the u.s. trade representative's office accusing china of continuing a look -- continuing intellectual property theft. greg allen, the u.s.-china business council joins us. how does this set us up for g20? easy.the g20 will not be i agree with linda that this is a binary choice. they will be an agreement at the end of the dinner on the evening of december 1 or with there will not be an agreement -- or there will not be an agreement.

very difficult to say. 50-50. have to give it a jason: that report coming from lighthizer. you know a lot more than we do about the contours of differing opinions within the administration, like kaiser on one side and maybe the cut lows -- like kaiser -- like kaiser -- lighthizer on one side and maybe the kudlows and mnuchins on the other. there is vigorous debate going on even in the white house as to what the appropriate policy is. on the one hand, ambassador light heiser -- ambassador lighthizer -- others within the white house are concerned and want to deal sooner rather than later.

where would we end up? at least partly affected by security concerns as well. this is not only an economic issue, this is very much a security issue as the ustr technology effectively points out. jason: linda come on in here because one of the issues that comes up when we talk to this meeting may determine a lot about investor sentiment going into the year and into 2019. how much might the market move? how much will your strategy change depending on what comes out of that meeting between president trump and president xi? linda: the results of this meeting, it is one of the most important questions now for the near term in terms of what the market does. ae problem is the stealing of lakhdar the stealing of intellectual property is huge --

the problem is the stealing of intellectual property is huge. i operate under the assumption that our president would like to win reelection. that fact has allowed stock markets to do well every year after a midterm election year for many years because they behave that way and our president knows that if he digs in for this much-needed fight now, we are going to get a global economic recession. we have to suffer that one day in order to repair this and maybe he will wait until his second term and let that be his legacy when it is not have to worry about getting reelected. though i have not read the art of the deal. alix: craig, you talk to leaders of both countries and businesses in the u.s.. what is there base case now? are they holding money? have they reallocated supply chains? there is an enormous

amount of uncertainty. it is unprecedented. companies are looking to invest either in the u.s. or china and what tradein as to barriers might pop up as of january 1 or early in the new year. everyone is laboring under a huge amount of uncertainty and is being particularly affected on the investment side. supply chains are moving, particularly at the low end. labor-intensive textiles, furniture, plastics, toys out of china. very little return of supply chains to the united states, so net gain for the u.s. economy, i don't see them. jason: before we let you go, you are back recently from shanghai are you met with a lot of

chinese business leaders. what is their take? craig: they are concerned. between some mirroring the united states and -- washington and beijing. there is a mirroring of our business communities as well, uncertain as to where to invest, what the economy will look like, whether or not this will have an effect on the macroeconomy, either bilaterally or indeed potentially globally. we labor under tremendous uncertainty and look forward to some resolution of this dispute, hopefully as of the evening of december 1. craig allen, president of the u.s.-china business council. great to see you. let's get an update on what is making headlines outside the

business world. emma chandra is here with the "first word news." emma: president trump is thanking saudi arabia for lower oil prices, tweeting that it is like a big tax cut for america and the world. he also said he would stand by the saudi's regardless of whether the crown prince ordered the death of u.s. based journalist jamal khashoggi. -- theresa may is trapped between colleagues who want her to rewrite the deal and european leaders who say they will walk away if she does. she meets with the european commission president tonight. just in time for thanksgiving, americans are being warned to not eat canadian lettuce because of an e. coli outbreak. the fda says the contaminated lettuce is probably still on the market. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120

countries. this is bloomberg. that: i have to say, when romaine tweet came out from the cdc, that is not good news for big lettuce. alix: it was not like it is this brand or this brand. all of it. jason: just don't eat it. alix: one of the hospitalized a potentiallyed life-threatening form of kidney failure. jason: this is not a joke. this is ahead of thanksgiving. i am not a big salad eater on thanksgiving. my mother-in-law's stuffing is the best thing you have ever tasted. alix: my mother-in-law is a baker. we are not going to be eating romain lettuce this weekend --

romaine lettuce this weekend. but will potentially be watching some golf. jason: this is a breakthrough moment for you. if this can get you interested in golf, i think you are attracted to the trash talking. alix: totally. what gave it away? jason: a sixth sense i might have about that. alix: bloomberg spoke to tiger woods and phil mickelson. they are basically going to duel in vegas on friday. they will have a mic on them the whole time, no commercial breaks. $20 on directv. they are betting and there are side bets. jason: that is what people are fascinated about. alix: and they are already trash talking. >> wagering is part of what we do in the game and it is just enough to make it uncomfortable or make you think about it, that one particular shot. >> it is an important part of

the game does it teaches us how to perform under pressure and ultimately in turn immense or the biggest competitions or in the head-to-head matches like this, those types of elements really bring out the best in you and train you to play your best under the most pressure. alix: there was no trash talk. jason: they are going to get into it big-time. it is on. alix: do you have directv? jason: i do. alix: i don't because i cut the cord. jason: you will find a way. i have a feeling at&t will find a way to make it available to you. alix: we're looking forward to that. let's get a business flash. emma chandra is here with that. emma: i will have the business flash for you in just a second. the board of nissan is divided over whether to fire chairman

carlos ghosn. they tell bloomberg they have been given too little details on the nature of his crimes. ghosn was arrested monday after stepping off a plane in tokyo. ofle's biggest assembler iphones had to cut $2.9 billion in expenses for 2019. foxconn says it is facing a very difficult and competitive year. 10% of non-technical staff will be eliminated. farm and construction clement makerdeer missed estimates -- construction equipment maker deer missed estimates. that is your bloomberg business flash. alix: it has been a big week for housing data. u.s. new home construction could be stabilizing. confidence among u.s.

homebuilders shows the biggest drop in u.s. homebuilder sentiment since 2014. joining us now is the edward jones senior investment strategist. so great to see you. >> happy thanksgiving to both of you. alix: in the world of housing, where are we? >> we are in a place of change. if i could say anything about housing, it is in need of a structure your renovation -- structure renovation. we're going to blame interest rates for falling demand but i submit to you today it is not about rates. there are things going on in the housing market that have long-term implications, namely the price of land which keeps going up and the tightness of supplies right where millennials need it most for that starter home segment. those things are not interest rate driven. they are secular and longer-term and there needs to be policy action. jason: there is a great story

and bloomberg businessweek about frisco, texas. the fastest growing city in america. selling having trouble these higher-end homes. there is an oversupply in some places. what we make of this imbalance? nela: there is an oversupply at the high-end. you see that in every city. how we got there is from homebuilders who are risk-averse. remember what happened during the financial crisis. there was an overbuilding in the sands. they were building for affordability single-family homes. we see where that led them. the worst housing crash we have seen nationally. now the trend was billed at the high-end is that is where there was a sure bet. was a bet made by

homebuilders that the demand would be there. now there is an oversupply of the high-end just for millennials are coming into the markets. jason: joining us now is someone who knows a thing or two about this stuff. sheryl palmer is the chairman and ceo of taylor morgan. what do you make of all of this? what are you seeing on the ground and across the markets where you build? talked about on our q3 earnings call, we are seeing different conditions. macroook at the most standpoint, we feel good about the strength of the economy, the consumer is feeling really good. consumer confidence is nearly at a 20 year high and that has a lot to do with jobs and .nemployment we are seeing traction on income and we look at the demographic tailwind with the millennials

entering homeownership ages and those are things to feel good about. certainly we have seen the customer take a step back, trying to digest what is happening. a lot of data points coming their way. we have seen interest rates move about 100 basis points over the last year and we have seen appreciation across the u.s.. it is going to take time for the consumer to absorb that. come inside the bloomberg and this illustrates what we are talking about. the yellow line is the 30 year mortgage rate. the blue line is the home price index or the affordability in some respects. the purple line is wages, year-over-year. why can't we counter it with making more money? remember wage growth is a

phenomenon. there was no wage growth and home prices were growing double digits. a couple months of strong wage growth is not going to solve it. ask you aboutto millennials, one of our favorite questions out there. how are they different as homebuyers? millennials are not as different as we hear some of the rhetoric around. is they arece buying a little later but if you were to grab -- graph homeownership ages over the last 40 years, you would see that every couple years, the age of homeowners moves slightly up. the trend line is not that different. when we look within taylor morrison, we have about a quarter of our buyers are millennials and interestingly, about half of them are buying

their second home. time just about the right and usually marriage and children have a lot to do with that. what you think of the thesis that was laid out that yes you have higher interest rates but also affordability issues and the types of homes being bought are different than the ones we have supply for. how does that scenario change how you structure your business? certainly you have to look at this, this is a very local business. market by market we have to take a strong look at the supply and the demand characteristics. it is very hard to generalize across the united states. there are markets where the supply is very constrained and there are markets where it is very constrained at that first time move up. it is about talking to the customer, understanding their wants and needs and making sure

we are in a position to provide for that. jason: if there is one data point you are most looking for or you need to see one way or the other, what is it? nela: that the consumer stays healthy. that has driven the economy. that is the key source of economic growth, not just in the housing market but in the stock market as well. as long as those conditions stay rising and we see that wage growth, the tailwind is what -- is with millennials. alix: what interest rate freaks you out? of consumero a lot research and we most recently updated with in the last 30 days and what we are finding out is the consumer is not freak out about the interest rate. freaked out -- about the interest rate. that changes by consumer group

but think about millennials who are just enjoying homeownership. they don't really appreciate the impact of a 4.5% interest rate. based on the research we have done, i don't think the market or the consumers really begin to change their views on homeownership's for another couple hundred basis points and that is demonstrated when we look at our backlog and customers actually have anywhere from 300 to 500 basis points of room. they could buy a bigger house. i think they still have some room at of them. nela: i think counterintuitively, the rates are not just writing the buyer because they are higher but also the trade up buyer. why get rid of your 3.5% mortgage if you don't have to? alix: three and a quarter. nela: that is why we are seeing a strong renovation market.

we saw that in home depot's earnings for the third quarter. a lot of people who are middle-aged are making the choice to stay put. that impacts supply at the low end. jason: a couple of the macro global economic issues -- global economic issues continue to play in. immigration issues. does that start to filter through already or does it happen more in 2019 or not at all? sheryl: it has been with us for quite some time. at most of the u.s. today, sitting with interest rates in 3% to 4%. it is going to have an impact on movement rates and mobility but as far as immigration, this is something we have been dealing with from a labor shortage, not just in 18 but for the last few years and is an industry, we are working on a number of solutions to really engage the new

workforce. cheryl palmer, tiller morrison chairman and ceo, thank you both and happy thanksgiving. alix: what i am watching has to be oil. rebounding today after falling below $54 per barrel. joining us now from cme in -- what are you doing with oil today? >> you love that crude oil. i am looking for it to rally. you go back to the first and second quarter and we went from -- it lookspplied like we will be closer to 60,000 barrels for the completed numbers of q3. to $60 simplyk up -- $60 because price action does that but it will continue to be of rumors about

production being cut because of saudi arabia is not on board with the physical cuts, you can get that rebound, but that will be sold as the numbers filtered into the market. alix: talk about how you interpret this tweet from president trump. yesterday he said if we broke saudi arabia, oil prices would go through the roof. this morning he tweeted you should be happy, we were at $83 and now we are at $53. is there anyway you can make a case to be an oil bowling president trump does not want to -- bull when president trump does not want to be? >> if this thing with jamal khashoggi did not happen, -- it is a point taken not just with the saudi arabia situation where if you look at the exemptions for the countries given the iranian sanctions, seven of those eight are in the top 10. they have already placed orders,

such as south korea and india and now they find out they can take a rainy in crude as well. that is excess crude on -- iranian crude as well. that is excess crude on the market. excess supply comes out of china and gets put back into the market. it is difficult to be a medium-term bull in crude oil. trade you arethe going to take on? puts andoing to sell not going to outright crude oil. i certainly would not take any outright longs. long would be call spreads when volatility has calmed down a bit. alix: great to get your perspective and happy thanksgiving. important why oil is is because it spreads to the high-yield market which is are

rating throughout the rest of high-yield and that is where contagion gets dicey. jason: and even beyond markets, the political aspects of this, the president moving in yesterday and as you mentioned today on the price of oil, that obviously place to the price of gas. going into a very busy travel holiday right now. alix: and also negative gamma. jason: i have to google that. alix: those banks dealing with their slots. that wraps it up for bloomberg daybreak: americas. happy thanksgiving. coming up with bloomberg markets the open with jonathan ferro, mark lehman. this is bloomberg. ♪

>> from new york city, i'm jonathan ferro, account and the open start now.

coming up, equity futures rallying as following. a painful day in the markets. apple struggling to catch a bid. iphone assembler facing a tough year. the european union clashing with italy, taking the first step toward imposing fines. 30 minutes a liquid opening bell this wouldn't stay morning. good morning. futures positive 7/10 of 1%. in the fx market, yesterday, dollar strength, today, dollar weakness. euro-dollar 11411. stability in the treasury market. your yield, 3.06%. for many investors, it seems to be wishing away the rest of 2018. >> when we talk about a year and rally, that your end is really coming up, that is not a 2007 type peak where every single rally is going to get sold. we have settled into a highly volatile, non-trending sideways phas