make a deal cannot of the g20, he is ready to put tariffs on all products into the u.s. it can present tariffs could be placed on mobile phones like the iphone and news ways on the stock already in a bear market. shares of apple suppliers feel the heat. inflation warning, the san francisco fed says there is a considerable possibility that inflation will fall below the 2% target we speak to dan cerullo on the fed's reaction function. david: welcome to "bloomberg daybreak." i'm david westin here with alix steel. onhave theresa may taking it the road, she is going to sell this plan and she goes to belfast. alix: why don't people start getting old lettuce and throwing in anger? david: she comes to town. alix: your visit is wasting your time. of the dup leader which theresa may needs.

place.ck and a hard david: to build up to a vote on the 11th and they are going to have a debate with opposition from the labour party. i don't know why you would want a debate before the meaningful vote, but we are definitely watching the cable rate and drama coming out of belfast this morning on an additional markets are softer today i'm s&p futures now the .2%.erritory off by it's a mixed dollar story in the g10 space with the exception of it reallyrate and seems like we are getting some movement from italy, moving the budget deficit down to 2.2% of the euro unable to react today, and maybe that was a mario draghi warned about growth yesterday. 306,e u.s., 10 year yield 40,000,000,005 notes coming out, will they show up for the five? david: it's time for the morning brief, said vice chairman richard clarida is speaking here

in new york followed by fed president esther george, and charles evans on a panel this afternoon. case-shiller home prices in the month of september will be released in nighthawk this morning and today's the day for mississippi voters to choose the editor in a statement is historically always gone republican what now? republican senator city have smith is a surprisingly tight race against the democrat. that's all coming up today and right now, right here we talk about the first taken we're joined by bloomberg's romaine bostick and lisa abramowicz. with president trump's interview to the wall street journal yesterday where he said in part if we don't make a with president trump's interview to the wall street journal yesterday where he said in part if we don't make a deal with china that i'm going to put that to a $67 billion additional tariffs back on. the only deal would be that china have to open their country to competition from the united states. is this posturing or are we headed towards war? are -- the market thinks it's mostly posturing.

that said, president trump has made it clear that he wants to change supply change. -- the supply chains. he wants tech companies to move for action from china to the united states and this made it clear even the fact that he said u.s. couldn the handle an increase of 10% with apple products. they can handle it. so this is not a problem for us. the fact that even said that indicates again that he wants them to move the factories back here even if it means short-term pain. was a note last week read before thanksgiving by a gaggle of morgan stanley economist and strategist that hints at the same thing saying the market and demanded evaluations enough to make this possibility. and it had a holistic companies that essentially were going to have to change their supply chains or really feel the pain in terms of prices. alix: just when it comes to margins. lisa: i think the way these

tariffs are currently it is important. if you look at the input cost of, for example, a product in an apple product, a much bigger proportion of that cost goes to u.s. consumers than chinese consumers comes so the tariffs will that u.s. consumers much more strongly than those in china. david: in fairness to the markets being confused, president trump says two different things. on one hand is all about the trade deficit in the tariffs and that's one thing that sort of feels like president xi saying we can do that and he like we were doing in tech, we do like you moving ahead and we may even impose export controls and that's a much more fundamental problem in much more difficult to overcome. romaine: it's not going to be salt of the g20 or the next few weeks or months. the issue here is what would he is the trumpet administration and maybe a little bit of a tariff side and deal with the import and export side and get down to some levels that may be

himself would like, that might be enough to at least pause things. most analysts don't think there will be a resolution but there is a possibility we can at least pause this whole process and i will be a positive for the market. alix: what will we be doing on saturday? the second story is apple and what happened after markets. we had a potential 10% tariffs on phones, maybe the apple iphones, the stoxx got it down 2%, exactly what the tech sector needed and today apple suppliers also getting it as well. a 10% increase when you are buying an $800 phone is like peanuts. if you're going to say that much money buying the phone. for thehe should it not money to buy the phone in the first place. lisa: i will say this. where this comes at a time when smart phone purchases are slowing down, when there is questions about a peak in

smartphones and in saturation and there's a question about apple is trying to increase the price to offset the slowdown in the volume of sales, and not even reporting volume anymore, so this couldn't come at a worse time, it basically shows that this if you get another incentive not to buy new iphone when you start to see a new model. ton of: there's been a evidence that people are buying the higher-end phones which can be as much is $1500 they're going for the iphone 8 consider incident upgrading to the iphone x or keeping with the iphone 2 like alix. david: on apple for a moment, that may be true in their last earnings report, the whole news of the average selling price was going through the roof. we are selling a lot less of them but we are selling them for a lot more. romaine: you got near that a german dollar market that's where we're starting to see the slowdown. whole question is what is the breaking point for consumers and appears to be around that $1000 level where people just aren't willing to trade up to it.

you have to wonder if you had another 10% to that are people going to buy? alix: don't look at me, i still have my iphone 5s the san francisco fed hurricane bret it was a and considerable possibility that inflation will fall below the fomc's 2% target and the recent upward pressure hinges on cyclical factors could diminish in the future. this is things like wireless prices, they recovered an entire that's helping a cyclical inflation with the boost is done in that sort of a warning sign. and if it was interesting in relation with commodity prices. lisa: this particularly hits a note based on where oil is. even tracking this very closely and this hasn't really fed into the inflation ratings we have seen so far which is looking gas prices. they have fallen by $.50 per gallon in the past month. if you take a look, it's a dramatic decline in gas prices and that's going to trickle into other things and have a negative

effect on inflation. david: the fed is clearly in is debatingrybody this, but the question is always market moves, is it something the fed is going to pay attention to it all because us far they've said we are on track. i think they do. the market is saying he doesn't believe that the inflation target has been met on a sustained basis so when you look at this report, someone is are looking at breakevens and some of the other metrics and markets used to gauge future inflation, the fed looks at the same thing familiar looking at fort swaps and a lot of the same metrics. that someone is going to come in to the conversation and how much it slays them, who knows, right now the market doesn't see sustained 2% inflation. david: reagan a talk with dan be here at 7:30, 20 minutes from now are we talking him about exactly what the monetary policy should be and are they communicating as effectively as they might? can go to paying for

an iphone now, you are saving $.50 on the gallon you can spin on the iphone. david: you don't drive. alix: i do drive now,, license five years ago. romaine bostick and lisa abramowicz, thank you. you can browse recent features and save charts and there are some tom keene specials go to gtd go. it's more on the mounting u.s. china tensions ahead of the g20 summit, with absolute strategy will be joining us next. this is bloomberg. ♪ erg. ♪

taylor: this is "bloomberg daybreak," i'm taylor riggs. united technologies will focus on aerospace and spin off its elevators and climate control division. the move follows united technologies twitter $3 billion acquisition of rockwell collins. blessed ceo greg hayes is better pressure from activist investors bill ackman and dan low. president of politics and economics of the auto industry are crashing head-on, president trump says he's pressuring general motors to move production back into ohio, state that usually a critical battleground in presidential elections. gm plans to dismiss 14,000 workers and close seven factories. one of them is in lordstown, ohio, which makes the slow selling seven -- chevy cruz.

in a very bad here is getting , after thehomas cook company reported annual profit below guidance that already been cut twice. decimateok says it ms. a three years to get things back to normal and the company failed to plan properly for the hottest european summers on record which led millions of potential customers to holiday at home. and that your bloomberg business flash. tensions between the u.s. and china are melting ahead of this would g20 summit and president trump saying yesterday if we'll make a deal that i'm going to put the $267 billion additional tariffs on. the only deal would be china has opened up their country competition from the u.s. joining us now is ian harnett absolute strategy research chief strategist. how do you hedge this weekend? mr. harnett: it's very difficult an exit tatian as president trump is going in self will make the stuff demands and then get some kind of deal. he wants some kind of deal,

something he can bring back to the u.s. public. from an investment point of view, clearly asserting the seas concerns and hopes that we will get some results. ist we have is a big picture even without getting a deal here we are looking at higher tariffs and higher inflation and we are looking at slower global -- slower global growth. the only way you could hedge this is still staying relatively offensive and you might get a short-term pop but if this is just a short-term move then watch out because the other thing going on in thethis backgd is that liquidity is still tight and because the fed and tariffs can be slightly a diversionary tactic. david: the fed and the ecb on deck about tightening. how much of the global growth slowing are we seeing is because of fundamentalsdeck about tight. such as liquidity and things like that as opposed to trade slowing? of this is: i sense much more liquidity event and

much more about higher interest rates and rising real yield and importantly, that stronger dollar. those three factors together are really the thing that were slowing the global economy even before we saw these terrible effects coming in. -- the tariffs affect coming in. if you get more hikes at the beginning of the year then you are going to see higher inflation, lower growth, and the one thing we know is that that kills equity market multiples. the tariffs of just the icing on the cake. alix: we have mike wilson a morgan stanley saying the rolling bear market is tired but 2650 forne and he sees the first quarter. ofk of america sees a peak 3000. these are hugely divergent views. our sense is that you are looking at a world where you have to stay cautious but not necessarily bearish.

we can still pull back from this we get a fair deal, if we get a fed solution as well where there is a pause to qe, qt, and a arises we canster draw back from this. if we don't, then the risks are that the recession risks rise for 2019, 2020 and bear market risks rise anywhere going to want to be as max defensive as possible. we are not there yet. the risks are still biased to the downside in our view. word, he said the magic multiples. the s&p in the white, blue is the 12 month for price-earnings rate and you see it's really falling out of the lowest since may 16. what is driving that? ms. greene: --mr. harnett: accommodation of slower growth and hybridization. i worry is when you look at those 12 month for earnings that that chart is still based on, they are still looking at and hybridization. a .5%,

9% early's growth and our models are telling us 0%. alix: 0% earnings growth for next year? mr. harnett: whether that is top-down a model of, this combination of slowing growth and rising labor costs is going to make it much tougher for the corporate sector and that stronger dollar, so don't forget that maybe this is one of the reasons why gm had to go out there and talk about making some cuts are on the world. the stronger dollars having an impact on corporate america. david: in a nutshell, it's a margin squeeze. mr. harnett: end of story. david: you think the top line is not going to be growing. mr. harnett: when you look at the forward numbers, the dps numbers of gone out and numbers of care to flat rate, we haven't seen a big acceleration and sales expectations either. deceleratingwth is and we look at china, we look at the eurozone, can the u.s. pull the rest of the world or will the rest of the world fully was down?

at the moment it looks as if it's the latter story once you get the fiscal cliff, it is a max impact of rising rates and the dollar and that's were you get the slowdown. alix: you can see where your underweight or overweight. three things, defensive stocks like utilities, treasuries in cash, can you rank what you like more defensive world? mr. harnett: i think you still stick with treasuries and our models say nothing about 3% on 10 year yields or 30 year yields actually looks really attractive. attractive relative to equities on our models, one of the best signals that you had for switching out of equities into bond came of the beginning of this year, one of only seven signals the last 70 years. we still think that is out there and cash really, you would want that if you go max defensive. if we see the fed continue to tighten three times or four times and quantitative tightening continues, and we have more trouble in the banks. mobile banks are still under pressure.

the defense of stocks will give you a nice edge and they can give you some protection. even if we do get some solution and everything in debt comes better, those will still go up, it just won't go up as much as some of the more cyclical players. david: what about health care? mr. harnett: for the top picks of the current time, one of the best performers and it has outperformed financials and tech as well. it harder to staying with us. apple tumbles after president trump suggested 10% iphone tariff. we will discuss with tom forte, this is bloomberg. ♪ ♪

david: apple shares moved sharply down yesterday after president trump said in an interview with the wall street journal that he might include iphones in the next round of tariffs on chinese imports. if you can't meet a deal with president xi. welcome on the phone with tom

forte is a buy rating on apple with a price target of $290. i read your last note before this interview, you said they are charging more for their phones and it's terrific. is your view any different this morning given what you heard from president trump? mr. forte: good morning and thanks for having me on. why think about apple shares, i think the china risk is the most significant risk to shares nowise important? -- so why is it important? a lot of their phonics are manufactured in china with a stare of risk in 20% of their sale chinese consumers to the extent you might see patriotic purchasing chinese consumers wanting to buy products from china as a result of this prolonged trade war, it is a tremendous risk for apple and when we are monitoring closely. david: how do you assess that in? in price that

mr. forte: that's a great question. all that is an introduction, i think that investors in general are underestimating the ability of companies like apple to mitigate this tariff risk. success apple is having their iphone sales. devicesm selling pure -- fewer devices and higher price points great the tenaris 7.5% more expensive than the e. i do think apple has rising power and has the ability to offset or pass through potential of percent tariffs to consumers so may not be as damaging as some investors fear. matter and trading invest in, as you look forward to the g20 meeting if they call a truce and say we won't go forward with more tariffs at least while we are talking, what does that do to apple? it would alleviate

the greatest risk to the stock to the extent that it would eliminate concerns on tariffs and that would be a short-term boost for shares for certain. to --tom forte, thanks great to chat with you. i'm guessing you don't like tech get?how much worse camtek mr.ine: it is still -- ruskin: there is still a downward pressure from global growth. and there is still that pressure and we've seen in the harbor stocks. mr. harnett: the real question is, does that mean you have to get out of the u.s. completely? what we have been saying to people is the u.s. is more than just the technology sector, it is still the world's most defensive market and many ways, so if you don't like the global economy, you can still see tech come down in the u.s. can

outperform as it did in 2002, 2003. alix: you can see the valuation gap between tech and the s&p having decreased. what steals the leadership, because energy and financials are not doing it? mr. harnett: is unlikely to be energy or financials particularly in this world where the fed is raising rates in the other area we remain most concerned about. chart,u look at that that's actually wishing to go through negatives in a world where economic growth is slowing and you get a synchronized slowdown, you expect that to be the case but come back to what we were saying before, things like health care start to outperform, things like utility start outperform. it's the bond sensitive plays that outperform and that kind of environment. this is what the market is telling you. get ready for slower growth and potentially lower inflation at some point and the defense of outperform. this logo risking health care as well. this new congress we talking

about drug price relation there's a lot of things that can happen that could affect the profitability of health care companies. david: we started from a low --mr. harnett:on we started from a low relative position from health care attacks, one third of the move. potentially of a long way there and relative to financials as well as financials have further to come, people will just gravitate towards the safe haven done beat her i would call it rather than smart meter. harnett, ray to catch up with you. is staying the course on rate hikes the right fed policy? we bring you down with d'angelo, former federal reserve governor. this is bloomberg. ♪

alix: this is "bloomberg daybreak.". i'm alix steel. dow futures down 63 points. a soggy mess all over europe as

well. major indices down. italian bankshares have not performed as negatively as other asset classes. it seems the budget deficit may reduce to 2.2 percent. optimism not felt in euro-dollar, which is interesting considering the move yesterday. euro-dollar flat on the day. anything is flat on the day. the only big mover is cable, down by six tens of 1%. -- .6%. said thisf the party is a wasted visit. don't bother even coming. you can't get more clear than that. david: it is hard not to feel sorry for theresa may. she is trying so hard. alix: at 1.i want to be like, you guys do it. i'm going -- at one point, i want to be like you guys do it. taylor riggs is here with first

word news. ministerritish prime theresa may is in belfast to sell the brexit plan. the unionist party is opposed to the agreement. northernt impales ireland's place in the u.k. by potentially trying to break the eu whirls and definitely. her try will be a waste of time. paul manafort could face a lengthy prison term. special counsel robert mueller has accused him of line repeatedly. s cooperation could hurt robert mueller's investigation. president trump about escalate the trade fight with china. he says he will likely go ahead with plans to raise tariffs on $200 billion of chinese goods. chineseimpose duties on imports to produce a trade deal.

china says the two have agreed to meet a mutually acceptable proposal. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. david: we are a good deal from the federal reserve with vice chair giving a speech this morning and chairman jay powell appearing at the new york economic club tomorrow. tarullo.ow dan he served assistant to president clinton. thank you for joining us. dan: good morning. david: you used to be inside the room. we would like to have your thoughts on what the fed is doing and should do. thatl put up a chart indicates what the market is

expecting in terms of rate heart -- rate hikes in 2019. the market is anticipating it is not a pause button the slowing down of rate hikes and what is the right policy for the fed? dan: my own view all along has the fed needs to be a little more aware of the risks. it seems to me the difficulty inflation has getting above 2% given that kind of employment indicates secular forces. of less importance, the fed it needs to articulate to everybody what their view of what is going on in the economy is. a speech is being given this morning named data dependence and monetary policy. i think that will explain how they will filter the data on which they are dependent.

it is one thing to say we see industrial production and employment good but durables and housing are good. that does not give you a narrative for what is going on in the economy. david: what would the narrative be? i will put up a chart that finds that there is difficulty getting to 2%. what are the data they should be looking at? janet yellen focused on the labor market. dan: janet was probably a little more inclined to models than jay powell has suggested he is. her narrative is you suggest was looking for the indicators in the labor market other than straightforward unemployment rate. it was at the point where part-time unemployment and labor force participation changed that she thought it was time to start moving rates.

of theticulation narrative helps people inside and outside the fed understand her reaction function, and thus helped understand where the fed would take rates and if people disagreed, they could say, she is not going to be able to pull this off because we don't think she has it right. is what one wants to hear from the fed, how they put together data. on the inflation front, that has been a chronic problem for a decade. cleanis this contest the -- between the cyclical forces pushing up inflation and what i suspect our secular forces holding it down. alix: you agree with the san francisco fed that the atypical factors will peter out? somewe don't know, but at point they will. it seems we are in the late stage of a recovery. on the other hand, unemployment

is low by historic standards and wages are creeping up a little bit. one could tell a story that there is more to go and there will be more pressure on inflation over the next year or so. it is not the direction i would be inclined. the question is -- is there a narrative that suggests that may be the case? alix: do you think we are starting to hear that narrative from the fed? reticenteard them the more than what we will see on thursday would suggest. they are saying they are closer to neutral. william said raising interest rates somewhat -- is that what they are doing? dan: it appears -- the fed has been about as close to autopilot as it gets for the last year or so. now and your earlier guests were giving reasons why. now there is a rethink going on.

they are trying to predict -- project more uncertainty about the pace of increases. we will probably have to wait until the december fomc meeting and the new dot plot to see the bulk of the fomc is reflecting that same uncertainty. david: you say the fed should be a little more aware of some of the risks. let's talk about the risks. i will put a chart up that shows with the rate hikes, we are now seeing financial conditions in the united states and internationally really tightened at this point. is that something they should be concerned about and what should they the concerned about? dan: a couple of things. between relationship the fed balance sheet runoff and monetary -- straight federal funding monetary policy is

something that people have been wondering about. it is something that would be useful to hear the fed's view on. the financial conditions tightening presumably have something to do with the runoff of the balance sheet. how those things come together and how the fed explains them could determine how much importance they are attaching to some of the indicators reflected on the graph. think the, again, i u.s. economy is what the focus will be. that is what they should be areing at, but where they putting the weight, my own view is that the sluggish dish -- sluggishness of incompletion -- of inflation and can we anticipate the federal runoff and as we become more vulnerable

to more modern -- moderate external shock. one thing you didn't have, the president of the united states and twitter. president trump tweeted at a big tax cut to good economic news, inflation down. are you listening fed? the only time he has tried to send a message to the fed. what should be the effect of that? david, it will, be at least at the margin the opposite effect he would like. , there arendicated reasons to think about how quickly rates should be raised right now. when the president intervenes like he has, it will raise questions in the market as to whether a shift in fed policy is because of what he is saying as

opposed to analysis of the market. at the margin it might incentivize some members of the fomc to stay the course to hike rates a little more quickly in order to maintain credibility with the market. his not being so vocal might actually help the cause that he is trying to promote. talk about the regulatory side. we have a new sheriff in town, so to speak, someone you know and respect. what do you make in a shift of reggae terry approach -- of regulatory approach? dan: most of the changes by congress and banking agencies were directed at smaller and medium-sized banks. although one could agree or disagree with the particular changes and how friday went, most people were reasonably relaxed about those. what has changed recently is

that now some of the proposed relaxations is going to affect the biggest banks. speech on's latest stress testing, there is a strong suggesting that he at least would like to respond to the industry's request to give them more data, to make the stress test more adaptable, to remove the leverage ratio, all things that would have the effect of reducing the information value of the stress test. we will see how that goes. i think he was speaking for himself and not the whole fed, but the direction certainly indicates that the most companiesly important will get relief. a lot of people say that

is an effective regulatory tool. there is a matter of transparency. what is wrong with saying we should let the banks know what the rules are they are playing by as they go into the stress test? dan: if you give the banks enough information so they know what the fed supervisory model is, then they can plan the balance sheet at the time they will be submitting their balance sheet to the fed for the stress test. in order to take advantage of the functions that are in the model, if they are not fully sure of what those are, it gets harder for them to do that. that is important because it means you are not getting an indication of the average loss function for a particular asset class. instead, you are getting the bank being able to risk precision saying we will have this asset because it gets risk weight h.

if you do that, to get resiliency and the banks, you have to have post stress minimum capital requirement higher. some banks would except that trade-off. other banks want their capital requirements lower. david: terrific to have you with us. i appreciate your time. that is dan tarullo coming to us from boston. coming to us from boston. coming up, corporate greed at its best. we will discusse discuss that n. this is bloomberg. ♪

i'm taylor riggs in the

hewlett-packard enterprise green room. coming up, global head of commodities research at goldman sachs. bloomberg at your business flash. auto alliance is threatened by the arrest. a board will meet in amsterdam thursday. he remains chairman of the partnership which includes mitsubishi. the sun is posing to split -- nissan is posing to split the top job a. eu consumer groups are accusing google of abusing tools that top user location spirits of and european consumer groups say they will file complaints with the national regulators. google says it will see if anything it can use.

elon musk says you can change the world but not if you work only 40 hours a week. the man behind tesla, spacex, and other companies wrote that 80 hours a week is a sustainable number with peaks above 100 at times. he warned that when you start working more than 80 hours, the pain level increases exponentially. that is your "bloomberg business flash.". alix: does it have to be aided? -- does it have to be 80? get off your email, you need to deal with your homework. here is the wall street beat. chestll's $5 billion war has assets ready to be deployed at the next downturn. chief market shank was a contender to run deutsche

bank before leaving. now he is setting his sights on weinberg. gm/for corporate greed. jim hides a diversion -- sites ance -- gm diversion between wall street. the market by and large still expects there to be a deal, and -- if theretruly truly was a hard brexit that was devastating, i think the markets would react negatively. david: that is glenn august. he did say that. he said if you have $5 billion you are holding, we have a lot of drive power. firms outre so many there that have been saying we

are raising money and not seeing opportunities right now and we are holding onto it. what does that mean in a dislocation? it means there is capital or dry powder hanging out ready to pounce. it provides a cushion. if we get some distress, you have to imagine these guys will be eager to jump in. was also a report that other billionaires are amassing money they can use quickly is they don't have to sell assets they don't want to sell. the foot site it is embedded leverage. if people are taking out credit lines, where are they basing credit lines on? are they back i the valuations of assets falling in a downturn? much unseen is how leverage is getting built in under the surface as people try to protect against whatever might come. we are talking about the

top investment banker who left deutsche bank and was a ceo. he is now going to weinberg which is trying to be the child for european deals. lisa: they are ranked 33 and global deals. it highlights how smaller firms are trying to grab share as deutsche bank and other european financial from start to bluster. david: it is all about the talent. we saw it earlier. lisa: and connections. made thefore they first acquisition, ever core has in the past and other boutique investment banks are doing. you see a lot of big investment banks trimming their fat. overall, it is how much missed they do and can they take that on? graphichird story, a

between wall street and main street. willannouncement yesterday lay a 14,000 people close seven , and it got sherrod brown's attention. he wrote that ohio taxpayers rescue gm. it is shameful they are laying off workers right for the holidays. this is corporate greed at its worst. that was sherrod brown. he was not alone. a lot of people said this is greed. what happened to the stock? alix: it surged. lisa: here is why it is contentious. a lot of people, led by president trump, are blaming some and globalization for of the shift in production and manufacturing we have seen. on the flipside, automation and other advancements are at the root of a lot of these changes as well. what it comes down to is even if there are shifts and they trade

landscape, these cuts may make sense to general motors and its shareholders. reelected want to get again, you want ohio. many thanks to lisa abramowicz. coming up, lying repeatedly and robert mueller's team said paul manafort reached a plea deal online on a number of issues. this is bloomberg. ♪

david: i am watching paul manafort. she pled guilty pled guilty to get out of the second trial he was supposed to cool operate -- cooperate. prosecutor, robert mueller, said this guy didn't cooperate. he said manafort committed to bel crimes by lying special counsel's office on a variety of subject matters which constituted breaches of the agreement.

he said throw the book at him. he doesn't care. david: he tampered with witnesses and the judge told him not to and he did it again. they put him in jail. point is, i will be pardoned anyway. david: if he hangs tough for the president, poll point was robert mueller wanted him to turn, it is clear that won't turn -- happen now. alix: jeff curry of goldman sachs research will join us. soybeans were short. we will break it all down. this is bloomberg. ♪

alix: goldman is a commodity.

we speak to the man behind the call, jeff currie, global head of commodities research at goldman sachs. president trump says if you have president g cap make a deal -- can't make a deal, were tears could be coming. fed says there is considerable possibility inflation will fall below the 2% target. vice chair printing clarida on deck. -- richard clarida on deck. david: i'm david westin with alix steel. it is all about the fed. da speaking today and jay powell tomorrow. alix: really interesting how they will have to walk back a little what we might see in the minutes. david: we think we will know what is going on in the december meeting, but there is

speculation. markets, nothing really moving except for the cable rate. s&p futures up by 12. dow futures up by triple digits. it feels like relief we saw yesterday a far thing in the past. not a lot of movement in asset classes. euro-dollar flat. two-year was ok yesterday. we will see all -- how it fares today. david: there you go to time for the morning brief. at 8:30 eastern time, fed president -- vice chairman richard clarida speaking in new york followed by esther george and evans on a panel this afternoon. -- will be for released. incumbent republican senator

cindy hyde smith is in a surprisingly tight race against a democrat. let's get a check on the headset -- headlines. let's get to taylor riggs. facer: paul manafort could a lengthy prison term. special counsel robert mueller has accused him of lying repeatedly after striking a plea deal and promising to cooperate. lawyers for both sides have asked that manafort be sentenced soon. british prime minister theresa may is in belfast to sell her brexit plan, but the democratic unionist party is up you -- opposed. they say it and perils ireland's place. the head of the dup tells bloomberg that may's trip is likely to be a waste of time. shares of apple suppliers are lower today.

this is after president trump suggested in an interview that iphones in china could be hit with tariffs. funds have been excluded in tariffs up until now. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. david: thank you so much. for more on apple's sharp move down on the threat of iphone tariffs, we welcome from denver, a portfolio manager. apple is among her holdings. thank you for being here. this is the latest in a string of developments that have not been pleasant. since the last earnings they said they would sell less units and their "stock of the hour hit. .ow we have tariffs is apple seeing the best they are going to do? >> i believe apple will probably perform in line with the market. it has had a big downturn.

trade is going to eat into their profitability. any additional tariffs, no. most of it is posturing. david: apart from the tariffs and what that will do to the cost, what about china as a growth market for sales going the other way? carmel? the reality is penetration rates and handsets is high. the incremental growth will be limited for any handsets -- handset holders. believe the comments from trump regarding adding the tariffs really is not going to come to fruition. that in my mind is off the table. david: are services a potential growth engine for apple, and if so, is it positioning itself wisely and not worrying about goods being imported and tariffs

because it will be services making the money for them? carmel: services is their area of growth. handsets are a large part of their profit. if that is slowing down or declining, it will affect their growth. every indicator complies forward growth in terms of gdp next year . we don't have that tailwind anymore. alix: if you come inside the bloomberg, this is basically the tech bubble. tech versus utility. the blue line is 1993 two 2002. we all know what happened there. now we have 2011 to present, it looks very much the same. what are you doing with tech, reducing any positions or by? on dips? carmel: we dubai. it is sector neutral. our team picked -- we do buy. it is sector neutral.

our team pick stocks that have decent dividends and perhaps don't have astronomical growth but have healthy growth and multiples that are quite as expensive. alix: like what? carmel: let go daddy is a name we added recently. they are a background backdrop for the small businesses, where they provide the ability to be to helpeb, the ability with various services that are more digital for these small companies so they can focus on what they do best. david: what about where we are in the cycle as we see it? to what extent are you as a manager of a portfolio focusing on free cash flow, balance sheet, leverage? carmel: let's take a step back. why did free cash flow -- it was healthy this year, why do we expect it to get better? continuety is, if you

to invest in, which we have seen not just in tech but other sectors, then you don't have as much free cash flow to pay out. we expect companies to slow down on, particularly in the united states. you only have to add so many yous to your factory before are getting decent capacity utilization . i would expect that to slow down and cash flow should remain healthy and grow a little. alix: you will be sticking with us. coming up, and jeff currie, global head of commodities research at goldman sachs. more on that. this is bloomberg. ♪

>> this is "bloomberg daybreak.". i'm taylor riggs. split technologies will itself. it will focus on aerospace and elevators and climate control divisions. the move follows a billion-dollar acquisition. the ceo has been under pressure from activist investors. a very bad year is getting worse for thomas cook, british company --fter the

thomas cook says it may take three years to get things back to normal. the company failed to plan properly for when a hottest european summers on record and that led to millions of customers to spend a holiday at home. residential politics and the economics of the auto industry are crashing the president trump says he is pressuring general motors to move production back into ohio, a state that is usually critical battleground in elections. ge is dismissing 14,000 workers and closing seven factories, one is in ohio. that is your bloomberg business flash. alix: president trump wants a more potential tariffs on chinese goods into the g20 summit. the meeting is a catalyst for commodities. the currie wrote that global gdp is expected to grow 3.5% in 2019. they see no evidence of recession demand weakness.

week's g20 meeting will likely serve as a catalyst to bring risk capital back into the state. joining us is jeff currie, global head of commodities research at goldman sachs. always nice to catch up with you. jeff: thank you for having me. alix: why will g20 stabilize commodities? jeff: if you think about the issues driving prices lower, excess supply of oil recently, particularly in the iranian deal. the trade war has had an impact on base prices and soybeans. deal can see a pause or a on the trade war this coming week, as well as some type of agreement between russia, the united states, and the saudis. against higherg oil prices, you will have to get the agreement of all three.

is in the u.s. interest to see oil prices higher because you are digging into the cost structure. between trade war, u.s.-china relations, and opec cutting cost, that is the basis. alix: sticking with oil, and you have a chart that points out where the supply crude is for u.s. shale and why that is a precarious position where we are. can explain the chart and what kind of cut we need to see from opec. is with they there recent decline in prices, you push oil back down to cost structure. metals have been there and hit cost structure back in july. once you are bouncing on cost structure, you create pain for the industry. when we look at the surplus productionc increases, increases out of the

at 300,000 barrels per day, plus both libya and venezuela to the upside, we estimate you need about one million barrels per day. that isthat is on the low side. consensus is closer to 1.3 million barrels a day. we have stronger demand growth. our expectations are for continued strong gdp growth at 3.5 percent. our demand forecast is 1.45%. we are lower, but consensus 1.3. it is in the best interest to get the oil back up and you showed it -- us what it does. the president is more concerned about what people pay at the trump -- pump. how much interest does this president have over oil prices? the relationship with the saudis and he is not solve spoken -- soft-spoken about what he wants. jeff: there are very few

discretionary trades in the markets. it is hard to take a fundamental view based on issues like cost aructure when you have potential for tweets suggesting oil below 54 when the cost basis is 55. why do i think it will likely be of interest in the end? towe remember what happened credit markets in 2016? a barrel, you $50 have credit problems, not only within high-yield, but think about the revolving credit lines, banks, people were very concerned back in 2016 when prices of oil went to sub 50. it puts pressure on credit markets. alix: interesting was broader commodities of why they are so underperforming other asset classes when we are looking at the same kind of data. they are not trading on the

basis. can you walk us to the broader implications. jeff: let's talk about what is wrong with the current picture. right now, we have every single asset class down on the year. economic crisis or economic recession. that has never happened before. one of the key reasons why you see an outperformance of commodities late in the cycle, is the equity market and financial markets key off the higher interest rates. it makes the equities go down. however, the concern is about future growth. growth today is robust. that is why commodity prices should remain higher. things that are primary left in the market, commodities start trading like forward-looking assets. forcearity program's

commodities to key off markets like equity that have an anticipatory component. alix: oil and natural gas standout. a lot of conversation was that if you are long oil and short natural gas over two weeks, you quickly reversed that trade and that was responsible for the rally. what is the top for natural gas in that environment? jeff: you have to take the shorts out of the market. march-april in spread went beyond the polar vortex. we had already went over what was a max scenario, dire situation. will come top trades more in line with fundamentals. you have artie overshot it and the market was pricing a doomsday scenario -- you have already overshot it in the market was pricing a doomsday scenario. it is the lack of liquidity in

the market, the dominance of the trading regimes. you put them together and the lack of liquidity is the key issue because they can run issues -- the markets to extremes. david: why is it softening global growth? jeff: it is softening and we expect it to soften with the higher rates. that is the goal of higher rates, to not have an overheating economy. look at oil demand, metal demand. it is slowing, but not collapsing. it is slowing as it should in late cycle. the only thing that would be concerning is the excess supply due to the fact that you have a mismatch between run-up in opec production and the fact that you didn't get as many or got more waivers men were expected on iran. -- more waivers van were expected on iran.

translate tos that steel and aluminum when you have gm closing for or five factories? or seven? david: 14,000 people and seven factories. alix: what does that do to prices and the environment? jeff: it is part of the excess capacity that has been taken out of the markets globally. looking at iron or which came which came out sharply. you didn't get what you typically get with environmental programs. it ended up being 20% of capacity and not 30% of capacity. it illustrates a point that there is still a lot of capacity in the system left over from the previous decade that needs to be rationalized. that is why when we look at the metal side, we didn't have nearly as bullish of a story as energy because energy is tighter

in terms of excess capacity than what you have with oil, even with the current situation. alix: always a pleasure to catch up with you. david: thank you for having me. --jeff: thank you for having me. david: gm cut score business to cut -- focus on new technologies. more on that on this week's bottom line. this is bloomberg. ♪

david: time now for the bottom line. this is where we look at three companies worth watching. united technologies has been in the news. they have an ounce what people expected, it will divide into three separate companies. they will deal with climate and then aerospace and otis will deal with elevators. they are doing it. alix: loving that space. david: it has damaged a little bit.

alix: amazon had the biggest shopping day in history yesterday. customers ordered more than 18 million toys and 13 million fashion items on black friday and cyber monday combined. that is a number. david: good news for fedex. alix: everyone remember, today is giving tuesday. david: the third company we are watching is general motors. the analystine is and is on the telephone. welcome. thank you for coming. tell a short take on this. i saw this yesterday across the wire. is it entirely unexpected? james: thank you for having me and good morning. i don't think it is unexpected. you can debate, could this have happened years ago? this will effectively look at the car segment, which is a segment under incredible

pressure as consumers shifting to crossovers. japanese imports dominate the segment of market share. incentives that are an incredibly destructive ways to drive volume. there is an already low segment and drives it further. it is getting cleaner and then getting out of europe was an earlier structure. there are significant political overtones here. really financial, this is exactly -- purely financially, this is what gm should be doing. is this similar to what ford announced earlier? ford said they were getting out of the cars in terms of sudan and going into pickups and suvs. businesses that

even coming out of the recession with bailouts, g and -- gm and chrysler being the most notable, they made adjustments to get out of certain brands. they certainly did not go far enough. the late great sergio marchionne said it best, auto companies have had a difficult time earning cost of capital through an economic cycle. cars are incredibly low-margin relative to the pickups and suburban suvs. acceleration in electronic vehicles and autonomous vehicles that gm did not count on when it laid out its initial plans to get to $9 billion or $10 billion in free cash flow. david: you suggested two things. how much of this is just a softening market demand, particularly for sedans? how much is trying to hard cash

to put into the electric vehicles and atomic us -- autonomous vehicles? certainly there is accelerated investment going on in cruz automation. -- and automation. -- in automation. that is a driving force. without understanding all the intricacies of the unions and factories, it probably held up timing more than anything else. the market pressure has been here for some time. asis hard to say -- as soon cars weakened in terms of sales, they could've cut business three or four years ago but probably had various contractual reasons and waiting until now to make the commitment. it will take a year minimum to start closing the facilities. david: how much pressure does this put on ford?

they had made announcement saying they will have down sizing but not specifics. james: ford is probably holding more cards than they are given credit. i had an opportunity to write in to ride -- in an -- and an autonomous vehicle. we will see for being one of the leaders in second or third place competitor behind waymo ngm. -- waymo and gm. alix: thank you very much. welso is with us to do like the auto sector? carmel: the auto sector is

struggling. we have to take all the cost of shutting down plants and invest a lot of money in order to build up expertise in automation facilities. it is probably still a little too early to be investing heavily in autos. issue, youbroader also have the trade backdrop for the car guys. gm got hit and so did ford on the steel tariff. industrialsosure in need to account for potential tariffs? think the tariffs that affect them the most have already occurred. that is behind them. this is more about adjusting the lineup for the future. they can take the pain now and start to adapt to the new environment or they can postpone it and have last in a few years after losing money on smaller

sedans and some of other -- some of the other areas. i think this is a great move all around and future tariffs will not have as big an impact as people expect. caps bottomed? they did well and then as the trade continues to filter they can't stand up. carmel: they have had a huge tax cut. the economy while slowing is very healthy. mid-capsmall caps and are some of the most attractive areas to invest in. wellso will stick with us. risk off after yesterday's relief rally. dow jones off by 109. s&p up by 5%. italian equities in the red, despite the fact that you budget

not at optimism in the market. you can see that reflected in the currency market. euro-dollar flat on the day. the big mover comes in the cable. cable down balance go nowhere. include a little lighter after lighter aftertle the headline. david: he said gradual rate hikes still make sense as neutral rate uncertainty. he thinks we should have gradual rate hikes. he talks about productivity gains in capital investment. it is important to see that rebound. the things productivity gains are cyclical and sectoral. a mediafew weeks ago in interview, he said we are closer to neutral. now, he says neutral rate is uncertain. it was friday and the markets moved on his comments. i wonder if he is trying to backtrack. we will give it a few minutes

because i wonder what details we will add to that. an updateis time for on headlines outside the business world. taylor riggs is here. taylor: president trump is not backing off his threat to china. he tells the wall street journal few will probably move ahead to increase tariffs from $200 billion of china's goods. the president says if he cannot reach a trade deal, he will impose duties on all remaining chinese imports. the leaders will meet at the g20 summit in buenos aires later this week. there is speculation president plans a shakeup of his cabinet, but two key players will not change. the president plans to keep treasury secretary steve mnuchin and commerce secretary wilbur ross. look have been subject to reports that president trump is dissatisfied with them. in mississippi, voters will decide the last u.s. senate race of the midterms. cindy hyde smith faces mike sb -- espy in a runoff.

th has been- hyde smi accused of racism after saying she would take a front seat at a public hanging. it is not certain if that will hurt her support. powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. david: president trump is heading to buenos aires, where he is scheduled to talk trade. before he makes a deal with china, he has work on the agreement to replace nafta, with ratification in congress still up in the air. you can senator pat toomey, republican from pennsylvania and senate finance committee member. and hasritten an op-ed not hesitated to express reservations about the use of tariffs to shape trade policy. thank you for your time. welcome. sen. toomey: thanks for having me. david: i will quote from your

op-ed in "the wall street journal." you said the president should incorporate free trade features in implementing legislation, so it can be passed before the next congress is sworn in. explain why that is so important, that you get this done in what is called the lame-duck. sen. toomey: let me unpack this a little bit. in my view, the agreement the administration has negotiated is not as good as the underlying nafta, the original nafta, what it is not terrible. with a few tweaks to move it in the direction of a more pro-trade agreement, it is something i could support. i think the vast majority if not every republican senator could support it as well. i have suggested there is a path to getting this ratified in this congress. it will require that these changes be in the implementing legislation, not reopening negotiations with canada and mexico. path, it seemse

to me. the alternative is the administration waits until next year and then begins discussions with nancy pelosi. we have seen that movie before. we have seen what has happened in the past, when the republican president has handed a free trade agreement to speaker pelosi. she never moved it. refused tooff tpa, put it on the floor, never had a vote. it was only when republicans took control of the congress that the colombia free trade agreement and south korea were able to be voted on. there are potentially divergent outcomes. i encourage the president to work with those of us who would like a free trade agreement. david: without getting into the sausage making, you have limited legislative days to get that done. you have a spending bill to the the president agreed enough -- a spending bill to pass. does the president agree enough? sen. toomey: it is a free option to go down the road i am suggesting.

only thing thehe white house needs to do is deliver to congress the documents, the legal text. deliver it to us. they are running out of time. it has to be by the end of this month. thehey do that, they have option of passing it in this congress if they can negotiate an agreement and find time on the floors. if they cannot, there is always next year. but if they do not get the documents to us on time, they do not have an option this year and will be at the mercies of the new speaker. david: let's talk about what is going to go on in buenos aires. interviewent gave an to "the wall street journal" yesterday where he was aggressive in saying he would remainingariffs on chinese imports if we do not get a deal in when a series. what you make of this strategy? is he sincere that he is going to impose more tariffs, or is this a negotiating strategy? sen. toomey: this president likes tariffs. i do not.

when we impose tariffs on imports, it is a tax on american consumers. i am not a fan, but the president is. if he is threatening tariffs, people should take that seriously. ism very skeptical that this the right path to getting the agreement we need with china. it is in our interest and china's interest to have an end to this escalating trade war. that it does mean china has got to change its ways. real problemat the is not the size of the deficit. a problem is the systematic theft of american intellectual property. priority thee the administration should negotiate for. if we can get that solved, in return, we should drop the tariffs the president has imposed. we would both be better off. david: how much influence does the senate have in this process? by the constitution, you should have a substantial role. judging what happened with nafta 2.0 or usmca, whatever you want

to call it -- as a practical matter, are you able to influence the president, a president from your party? sen. toomey: in fairness to the president, he is very engaged with senators. i speak with the president periodically. he knows i disagree with him, and yet he still returns my calls quickly and we have substantive conversations. so he listens. i am not sure i am able to persuade him. you make a strong point. the constitution is unambiguous about this. trade policy and specifically tariffs on the role of congress. it has been congress's mistake over decades to see this cede this authority to the president, and we should take it back. david: you have said there should be an investigation into granting waivers for steel and aluminum. what have you heard? what do you know? sen. toomey: we have this massive backlog of american companies -- i have pennsylvania

constituents that are very andrsely affected by steel aluminum tariffs. in many cases, they have no choice but to buy these from overseas, often from a sole supplier overseas. the rationale for the tariffs does not stand in those circumstances. they are supposed to be able to get a waiver, and the process has been terribly slow. it seems inconsistent. it is not sufficiently transparent. i and some of my colleagues have written a letter to the gao to do an investigation. let's find out what is going on with this process. why is it taking so long? how do we get it fixed? david: talk about constituents in pennsylvania. are they better off from president trump's trade policy, taking into account the revisions of nafta, the standoff with china, the imposition of tariffs -- are your constituents overall better off with this trade policy? sen. toomey: my constituents are better off because of the overall economic policy, which is dramatic tax reform, rolling back of excessive regulations.

but the actual trade policy that has been implemented has mostly been increased tariffs. the new nafta has not gone into effect, but steel and aluminum tariffs have gone up, and the net effect has been negative. you are former people employed by -- there are far more people employed by and consumers of steel using industries than there are producers. it has helped producers, has raised the cost of steel and aluminum. that there are a lot more people who are adversely affected. david: thank you for your time. republican senator pat toomey of pennsylvania. alix: in the meantime, we have vice chair rich clarida speaking. the headlines not surprising, but not hawkish, as one analyst pointed out, saying the fed does back gradual hikes since neutral rate is uncertain. a few weeks ago, he said we were near neutral, so that shift is interesting. he said he is cautious on raising rates too fast and too

slow. makes me think of goldilocks. he does seem to think the risks are less skewed to the downside, versus three years ago. he would adjust policy outlook if inflation was above target. earlier,lking with dan the former federal reserve governor -- he says we need more data. we need more attention to data. dan was saying, what is the narrative? what is the story? it is fine to collect data, but what are you paying attention to? alix: we always say, more communication, but do you really want more communication question mark carmel wellso of janus do you want more communication? carmel wellso of janus henderson, we see two hikes in the first half and then a pause. what do you see? carmel: i have to agree in terms of a pause in the 19. as i mentioned earlier, we continue to see a slowdown.

i expect capex to start to slow down. the knock on effect from investments that took place in 2018 will not have as much impact next year as they have this year. all in all, i just -- i think we are unlikely to have as many hikes as we expected even six months ago. two, three -- i'm not sure. i do think we will have less than we originally expected, which was four. alix: based on that, when do you want to diversify into utilities, defenses, health where -- health care? you are sector neutral, but what is your rotation? carmel: we have been getting out of high multiple stocks, adding to names that have dividend yields. there are plenty of companies who have already done their investment in capex. you would expect them to have better free cash flow next year, it always ends up in having

better dividends. beenis where we have focusing. we talked about a few of the stocks. about sectorsing i would shift into, it would not be utilities. partially, i am a growth investor. i want to buy things that are going to be the future of the country. electricity consumption, even --they arer telecoms good for short-term trade. i want to invest three to five years out. david: carmel wellso of janus henderson, thank you for being with us, and thank you for your patience. alix: coming up, impact investing in africa, for our second day in the series "the race for africa." ♪

taylor: this is "bloomberg daybreak." coming up, and exclusive interview with the e.u. competition commissioner. alix: it is time for our weeklong series, "the race for africa," a look at investment in largest continent. tomorrow, depressed -- distressed debt. thursday, we look at the u.s.-china race for resources. i am joined by the calvert .apital president and ceo calvert works with investors to move capital into communities around the world. thank you for being here. jen: good morning to you both. alix: you have three ways you can invest for impact. jen: we run a syndication

business, enabling high net investndividuals to directly in fund's ordeals. the most common way people engage is, we sell a note for fixed income products. we offer rates and returns, take that money, and invest in funds. intermediaries can lend to businesses. we have raised $2 million this way. we have returned principal to investors over time. and we are providing the impact jobs, economic outcomes, health, education. africa, what kind of investments have you made? jenn: the investments in africa are varied. it is a great opportunity for impact investing. the thing we have been focused on is off grid solar. it is a market that is anonymous. 1.2 billion people are off the

grid, without reliable energy. and it is leveraging mobile payments, payments on your mobile phone. these business models are making solar home units really affordable to a huge new swat of people. wath of people. these investments are rapidly growing and we see great these investments are rapidly growing and we see great opportunity not only for financial return, but clean fuel, better health outcomes. the book and have tightened security outside their home, as , as as side businesses well as side businesses -- barbershops, refrigerators. david: what is the credit risk? what does it mean? you have these microloans, in effect. the impact is enormous. jenn:jenn: from working in these markets for decades now myself, i think it is a misaligned perceived to real risk. we work closely with the markets

and i would argue it is lower than the perceived risk perhaps mainstream money would see. we understand how to mitigate the risks we see in these investments. and we leverage a lot of risk capitals to bring it back to the investors with risk-adjusted returns, meeting other needs around liquidity and diversification. ared: what sorts of people your investors? are they looking for a return, looking to do good? are they high net worth individuals? jenn: it is a great question. we are unusual. we have a huge diversity of investors. we have $20 everyday retail investors, and $20 million investors. right now, we have about 5000 investors in our notes, and they are looking for both. they are looking for a return -- and we do offer a return of 1.5% to 4%, depending on the return you pick. it is consistent. in down markets, investors have said this is the best performing

asset in their portfolio. and they are looking for impact. alix: how much money do you see coming into africa versus five or six years ago? jenn: 20 years ago, there was not private capital in the continent. that is close to accurate. 10 years ago, a lot of infrastructure started to get built. savvy fund manager started to move into the continent. today, we are seeing a lot of money starting to flow. a lot of private capital. more recently, we are seeing market mechanisms develop, so capital within the continent is moving into investments on the continent. david: where, because africa is a huge place? we do not understand how big geographically it is. it is a diverse place. is there a differential of where the capital is flowing? jenn: there is a lot of opportunity across the whole continent we see, but geopolitical risk plays in here. we see a lot of people diversify across many countries. there is a lot of non-correlation among the

countries, so you can create a nice portfolio that way. kenya is a hotspot, a growing hub for entrepreneurs, tech, mobile payments that businesses are leveraging as they grow. alix: how do you assess the risk? jenn: the risk of our investments, we assess very much with our own models, our own staff. we are built for purpose. we have 40 people based in washington, d.c. alix: do you have boots on the ground? fund managerswith and intermediaries. we do not invest directly in africa, but work with savvy, seasoned fund managers that work on the continent and know the local context, the markets well. we work with them. we get to know them. that is where we place our capital. david: who are your competitors on the intake or outcome side? who are you competing with? jenn: it is a growing market, rapidly changing. the money out, it is a

collaborative market, i would argue. we work with a lot of development finance institutions. they provide a lot of the de-risking and leverage to allow private capital to move in. a lot of fund managers, we work in partnership with to help grow and scale the businesses in place. also, local governments. we find great success happens in these communities when everyone is working together -- government, private capital, and the ngos. -- ngo's. on the money inside, traditional firms are emerging, and we want to see that go mainstream. alix: thanks so much. we appreciate that. cx isg up, you gx -- u falling ahead of trading. ♪

alix: united technologies falling in the premarket. they just had a conference call. the company is splitting in

surrey. here are some of -- is splitting in three. they say there are more m&a hurdles for parts other than carrier. .hey made investments in hvac and they will use money for deleveraging. investors do not like this. beid: i thought this would unlocking value. that is what they usually say, companies focusing on what they do best. alix: exactly right. .nd in terms of what you do otis elevator -- who would be interested in buying that? haven't equity firms, for example. i wonder if you choose deleveraging over buybacks -- with energy companies, if you want to deleverage, you will get hammered by the market. david: it might be the prudent thing to do if there is going to be a softening. other movers say they want to invest in places that effectively do not have too much leverage on their balance sheet.

alix: the take away for me is the big conglomerate model is dead. david: not dead. sorry. alix: dying. david: it goes in cycles. give it 10 years, it will come back again. this is the history. alix: i am not saying it is dead forever. this is another one like ge -- david: or fiat-chrysler selling its robotics arm, daimler selling its trucks. it will come back. it will be a while. into thewill watch utx open. coming up, bloomberg markets with jon ferro. this is bloomberg. ♪ [ phone rings ] what?!

ready for christmas? no, it's way too early to be annoyed by christmas. you just need some holiday spirit! that's it! this feud just went mobile. with xfinity xfi you get the best wifi experience at home. and with xfinity mobile, you get the best wireless coverage for your phone. ...you're about to find out! you don't even know where i live... hello!

see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪ jon: from new york city, i am jonathan ferro. the countdown to the open starts right now.

coming up, raising the stakes ahead of g20, president trump signals he is ready to increase leverage on china. apple caught up in negative headlines. iphones could get hit with tariffs. are you blaming trade on tougher times to come? in fiveng 5000 jobs factories. futures a little bit softer following yesterday's a day of gains, down 0.4%. the dollar hanging out near 2018 highs, following a neutral and balanced speech from vice chair richard clarida ahead of chair powell tomorrow. for investors worldwide, continuing to count down to the g20 in buenos aires. >> everything is at stake. >> what happens with china? >> some kind of pause on trade? >> hopefully we get not back -- not