you beat earnings that you will manage positive growth. today felt like volume is down 20% and s&p down 0.2% even as we await the dread of earnings season. we are down nine points on the s&p 500. nasdaq off a similar amount. clearly lackluster trading going on today. is athink that if there question longer-term, that we are seeing lower stocks in addition to lower bond yields. caroline: hey bit more of a risk off day. the short-termat etf.uries investors usually put money into

this fund in times of turbulence. we saw them withdrawing as markets calmed. traders tell me this is usually a cash parking vehicle. sarah: i have been keeping an rates, or theven spread between nomination yields and those on similar maturity. really all month long, we have seen them moving lower. 10-year and 30 year, we have seen them fall the most this month than any other month this year. i spoke with the head of u.s. ate strategy over a ups -- ubs. he said they are following along with the story and equities and oil, also saying it is setting a similar message as to the

inverted yield curve. lisa: thank you so much. andl with us, dances of the -- dan suzuki and luke kawa. i want to pick up on a notable theme. i wonder what your take is, that even though the federal reserve is expected to cut rates by 2-3 more times this year, it seems to be ineffective in getting the yield curve to steepen. what is the message? dan: i think the messages that things are slowing down. there's a lot being made of the yield curve. if you look at all of the research coming out of wall street today, pretty much every report is telling you that this time is different, you shouldn't worry about the yield curve. we expected that to happen.

people say that every time. i don't think this time is different. and history, yields curve is not ait has missed it, it has been late, early. the mess policy is actually getting too tight. cutting fast not enough to keep up. caroline: we heard that money is coming out of the cash parking etf. jp morgan saying, brace yourself, we are getting close to the moment where you should be redeploying in stocks. defensive foreen a while now and we are beginning to take our foot off the gas pedal. why would you get more offensive, more bullish, when the yield curve inverts. if there is any signal, it is

telling you to get less bullish. i think there are plenty of opportunities. sitting on the sidelines, i don't think that makes a lot of sense to us. we have massive overweight's in anything defensive. we do think, within the fixed income markets, the biggest area of risk is probably inflation expectations. they are way too low. i think you are seeing plenty of signs that inflation is starting to pick up. cpi, there's a lot of evidence that it will start to have pressures which puts the fed in a typical late cycle rock and a hard place. joe: i am curious your read on sentiment here. we are still not that far from all-time highs.

you can imagine getting there in a couple of weeks. is there a disconnect between stated pessimism in the market and how much the market is falling? but it isnk so, difficult to square. you're still getting a lot of notes, this will be temporary, buy, or this will pass. i think one way to kind of talk about or explain the high degree of pessimism is that the volatility has been so intense in two ways. we have gone generally nowhere. generally it is up one, down one. if it was a slow grind, i think that is when you start to see a lot more people throw in the towel. of yieldn the idea curve inversion, typically after that, stocks rally even more. you have companies buying back their own shares.

how much is it a technical rally in addition to a valuation argument they still have yields that can pickup. how much is that sort of the driving factor? dan: that is essentially the investment question. the story this year has been lower yield pushing you into riskier asset classes. reynoldsomething brian has talked about a great deal. lowern funds having to return expectations or put more into riskier assets. recently is we have always had the amount of easing priced in. the new thing is that people do not expect the 10 year yield to rebound in the coming years as much as it did. this is lower for longer trajectory as much as it is a cyclical slump.

>> if you look at this year, there have been hopes that the market will rebound, that you will get resolution, and three, that the fed will save the day. if you want to see the market really breakout to new highs, you want to see those things turnaround. i would love to get anybody on the show tell me, what is the major signal that earnings is going to rebound. people have that in their forecast. i would love to see the data. look at the market pmi, it just dipped below zero. leading indicators are slowing. everything you can point to that is an indication of growth, all of these things are continuing to slow, whereas people are pointing to consumer confidence. these things are terrible indications of when you should bullish on the markets.

caroline: food for thought. always great to have you with us. we talked about earnings and the profits. hpe coming in and raising their full-year adjusted per share forecast. sounds like a pretty good set of numbers. adjusted earnings per share coming in $.45. to $.37arter, $.33 above estimate. one dollar 76. raising their forecast. lisa: "bloomberg technology -- " "what'd you miss?" is up next. this is bloomberg. ♪

♪ live from bloomberg world headquarters in new york, i am caroline hyde. here's a snapshot of lackluster trading. we are down about 0.3%. joe: the question is, "what'd you miss?" caroline: the new york fed president bill dudley. with the trade war appearing to take a new turn every day, emerging-market investors are getting more cautious. and, together again. 10 years after splitting, tobacco giants phillip morris are in talks to reunite. joe: the story of the day, bill dudley coming out of retirement to make headlines.

the former new york fed president: on the fomc -- fomc tot calling on the resist trump calling for trade cuts. -- tote, a choice to can continue enabling the administration down a path, or send a signal that the administration will bear the risks, including of losing the election. fed spokeswoman shel smith saying the policy decisions are guarded solely by the mandates for price stability and maximum employment. bloombergscuss is opinion columnist carl smith in bloomberg -- in washington, d.c. and, someone from employee america in new york. carl, what was your first

reaction? carl: i was in shock. it was a little bit unbelievable. he said that perhaps they should try to get rid of trump because trump has bad policies. it basically fed all the worst conspiracy fears of trump supporters. i was pretty taken aback. was there anything redeeming? >> not really. the last paragraph especially kind of felt partisan. the whole piece in terms of the scope of the fed, the idea that the fed should be the back door policymaker is absurd. i am not here to judge the intentions but it is a bad look to i think it is counter what the fed is trying to achieve. caroline: how would the fed go

about making clear that they are not cutting for a specific reason, like they don't want to incite further trade tensions are further moves on the president? karl: they could just say that much. what dudley said, and sort of that message will get out there. would it work? almost certainly not. even if they are trying to be subtle about it, it is doubtful the president would back off. but if they challenge the president, there is nothing about trump that says he would back down. they could say it, be clear about it, but i think it is equally clear it would backfire. skanda, let's go back to your point that he said, essentially, the fed should not be bailing out trump's trade war, talk to us about why that, just that, even if you forget

the election part, is deeply problematic? skanda: mission creep, fed overreach. the fed is not tasked with trade policy. that is the job of treasury, robert lighthizer, steven mnuchin. to be fair, the president ran on a certain trade agenda and hasn't really drifted away from what he said. to have somebody discipline the policymakers -- the point of the fed is to read and react. if they have to lower rates because it softens the growth outlook, so be it. it is not a net benefit or a net cost. argument,the sake of take the other side here. what about the argument that actually, if you look at what the fed is doing, that is political in that it is supporting president trump and his ability to take a very hard

line by exactly what bill dudley is saying. >> their job is to support national employment no matter what. to price spikes are similar trade wars. dudley is saying, we have this huge size -- this huge supply side effect. the central bank should not worsen oil price shocks. they should attempt to have the , anomy look through them little bit of a price increase. they would be treating the trade war the same as they have been treating a real war. that is not a geopolitical

choice, that is the choice of the mandate by congress? i'm struggling to see the motivation. i don't think the fed is as political as bill dudley makes it out to be. been more has disciplined. the trade war could have long-run benefits, costs. a could have some short run benefits but the short run costs are pretty obvious. what bill dudley is saying gives a different impression and undoes some of the communication that has been pretty solid. joe: you said that essentially what dudley suggests the fed do is worse than any conspiracy nned.y trump himself has fa how much has bill dudley made the lives of his former

colleagues today worse than yesterday? karl: incredibly difficult. i have a column coming out about that tomorrow. the democratic overreach is appropriate, the entire philosophy is bad. on twitter, you could imagine in a fantasy of a silver lining, this could turn around the argument about fed independence. they have said they are worrieds like it is caving to trump. cut, itit does not looks like it is trying to undermine trump. obviously, it will make their lives a nightmare in the short term. lisa: my biggest take away is just how political the fed has become, even if it is not trying to. that is sort of

the narrative right now is really what dudley was trying to speak to. roundly he, i think seems to agree, it probably hurt the fed maintain some independence. joe: i want to point out, bloomberg opinion put a round of column of all the people. theline: i have to say, issue of banks -- of central banks being politicized, i know well being from the u.k.. the central bank was brought into exit. it is hard to be a central banker right now. karlberg opinion columnist employnd skanda from america. lookingorris and altria

at a merger. this is bloomberg. ♪

altriahilip morris and in talks to merge. the two tobacco giants valued at about $100 billion each. drawplan to join forces to people to e-cigarette products. they look like hospital websites. they talk about how smoking is not a good choice and how you need to be non-smoking. what is the idea here of brain these together? -- of bringing these together?

and philip morris over the last few years of tried to change their image. their website looks like a hospital or advocacy group against smoking. i have tried to market e-cigarettes. large investment in juul. s.so these heating stick instead of burning the product, you heat it. there's another product that altria has the right to sell here. joe: you wrote a column in summer, 2015, so you are like four years ahead of everyone else. you deserve a lot of credit for that. one thing i find interesting, philip morris, the international one, that was seen as the growth one. the domestic one.

but altria has really lapped philip morris in performance. with philipartnered morris. even though they are still separate companies, they are seen as sister companies, connected in some way. september,nches in altria would get some of those profits. they are stronger together, more profitable together. it doesn't make as much sense to investors anymore. philip morris has lagged behind. they need something to get investors excited about their growth prospect. the healthow about effects. they are tiny contributors financially. both stocks are ending the day down.

i think a lot of that is because it is an all stock merger. atria is not really getting real premium, they are called to get a merger of equals. caroline: we thank you. a quick check of the latest business flash headlines. revlon will start to approach potential bidders last month. they are exploring a sale of the whole company or indeed its major brands. they are trying to find a buyer that will turn around the company and keep it public. a former uber engineer has been charged with selling technology from the waymo unit. of conspiringuber heh levandowski after absconded with information. the american store in shanghai was overwhelmed with customers willing to fight over discounted

products. cosco finally had to suspend operations in the afternoon. three hours, apparently, to enter even the parking lot. joe: what trade war? they are not going to stop capitalism. lisa: communism, too. it does make me a little bit happy -- not happy, but at least relieved that it is not just the united states. we talk about black friday and people getting run over and things. it is not just us, capitalism everywhere. caroline: i have seen fights break out. lisa: maybe we should change more, but everyone is doing it. coming up, china braces after trump trade flip-flops. from new york, this is bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond.

with i'm mark crumpton bloomberg's word news. the united nations special envoy to the middle east issued a warning that the region could be on the brink of an escalation of violence. he pointed to an increase in violent incidents in the west bank and gaza over the past few months. he spoke to the security council via video link. forceael must use lethal only as a last resort. hamas must prevent the indiscriminate bombing and rockets toward israel.

it must ensure that protests remain peaceful and prevent provocations. ask: the warning came israeli prime minister benjamin netanyahu cut fuel transfers to gaza in half. tensions have risen further after a teenage israeli girl was killed in a bomb blast last week. on abortionsi ban at or after eight weeks of president -- of pregnancy will not take effect. blockedwas temporarily as a lawsuit plays out in court. the abortion ban includes exceptions for the mother but not for rape and insist. pro-choice activists are viewing the law as unconstitutional. missouri has some of the strictest abortion policies in the nation. more than a dozen of jeffrey epstein's accusers stood before a new york judge today, taking advantage of an extraordinary

opportunity to be heard in court jail suicidetein's denied them should -- denied them the chance to testify in a trial. >> jeffrey epstein's death, whether it was a suicide or murder, does not end the case. does not end there fight for justice. it does not end there feeling that they were manipulated and victimized, and that they were child victims of mr. epstein. mark: epstein had pleaded not guilty to charges that he sex trafficked women in the early 2000's. one of epstein's lawyers said an expert hired by the family said injuries to his neck for more consistent with homicide than suicide. a russian space capsule carrying themanoid robot docked at

.pace station the robot sent out a tweet upon arriving, saying, "sorry about the delay, got stuck in traffic now that -- in traffic." now that it has safely arrived, the robot will perform two weeks of tests. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. about emerging markets. obviously, an extraordinary times, caught in the crosswinds of global trade slowdowns. weekend, president .rump signaled the talks

there has been a call. credibilityrump's and issue in reaching a deal. mcnamara., paul thank you very much for staying in late and joining us from london. let's start big sure. picture.u can -- big em overallthink of caught in the crosswinds of these headlines and trade war's? >> our main concern at the moment is really looking at the dollar. when the dollar is strong, em is weak. you can flesh out all the trade war stuff. anything that contributes to a stronger dollar. at the moment, it really doesn't areer how concerned we

about the u.s. presidency or whatever. if the dollar is stronger, em is weaker. lisa: as someone who focuses on emerging markets, what are you doing with your time? on just avery focused couple of markets that we think look reasonable. turkey, the politics are horrible but the economics are headed in the right direction. mexico, similar. there is not a huge amount to be positive on at the moment. areline: u.s. dollar, you resolute, will remain strong. earlier today, we had someone saying there are opportunities in emerging markets. tech.s calling on chinese are there idiosyncratic

opportunities within certain countries or do you have to take a broadbrush approach? paul: bouncing back from a very nasty crisis last year. mexico, quite similar. broadly speaking, when the dollar is strong, em is weak. asset class, we are not hugely enthusiastic about. joe: let's talk about turkey. at one point, you were negative .bout turkey . when you talk about the economic signals, you can't argue the economic data. what are the indicators that you like to look at that allow you to feel comfortable going into a country? paul: for us, the key thing is

the external balance, the current account balance. given that imports have collapsed, bring the current account balance back into balance is a major part of it. argentina, no matter how bad the recession, theyrecession, they'o that stage. imports collapse. that is classic em recovery scenario. lisa: i've talk into managers who say this is a great time to go into emerging markets. why do you disagree? is aboutbig concern the dollar. at the moment, when they want safe haven, they do tend to go to the dollar. you can say what you like about

the lunacy of your president, but money tends to migrate to safety. we are not in a risk seeking stage, we are ready risk avoiding stage. that means a stronger dollar. gamline: paul mcnamara from investors will be sticking with us. this is bloomberg. ♪

caroline: a sense of deja vu, perhaps went comes to argentina. two decades ago, argentina faulted out of its debt and spiraled into depression. now, it could all be happening

again. mcnamarah us, paul staying late for us in london. what have you been looking at in terms of argentina? are they going to have to keep on giving money because at the moment, they've got so much exposure. paul: this is the problem with argentina at the moment, that we have an election with a purely binary result. , theydez, if they win will look to restructure the debt. that is obviously a problem for the imf. it all comes down to election results. followed --have you you have followed how the imf deals with this for a long time. in the interim period, there is

another trench of the bailout money to be released. everyone assumes that fernandez will win and the market has spoken. how do they go about playing it here? imf are in the serious trouble. the biggest purely imf program we have ever seen. an they are talking aboutan election result were a party that isn't committed to the imf program could well win. the imf are extremely worried at the moment. if they are not going to roll over the program to a new thing the imposition of capital controls, discussions about restructuring, the imf are not going to go along with that. lisa: let's work through what

happened. if the imf does not go along with it, argentina defaults on its loans, what happens to the imf? a huge think it is problem for the imf. charge -- it is in is quite unlikely that the defaults and imf loans. but there is a serious concern that the default on the latest round of debt they have issued. that obviously reflects very badly on the imf. caroline: is it uninvestable, argentina? paul: i think it is invest only with money you can afford to lose. countryico was another that come along with turkey, use opportunity.

-- you saw opportunity. paul: the thing about mexico, the things they are doing right now is wrong. they are not doing anything to theease the depth in economy. the level of depth is very low. can'te thing is that they afford to default on the debt. the central bank is fairly aggressive. one of the highest levels of real rates in em. you have got to like it here. but for rate short-term -- caroline: a silver lining amid the clouds. thank you. sticking with latin america, let's talk brazil. bolsonaro says the president will not discuss

eight to the amazon rain forest and less there is assurance that its sovereignty will be respected. this came after his foreign as redundant. aid this is a mixture of great sadness when it comes to the type of forest, plants, animals that you see in the amazon, but also social media at the moment. some slides turns of phrases. 100%, all the way through. his also, a key part of plank has been ranchers. there is a lot of demand internationally for beef and they have to grow it somewhere. there is a lot of hypocrisy on the part of people around the world who eat a lot of meat,

then fires are set to clear land for ranchers. thecan see some of indignation at the way people around the world treat the country. totally fair point. i think the issue here is simply rejecting money. even the nation wants to see in order to fight some of these fires. i think that is more of the issue. caroline: also notable that they are burning part of the amazon for soybeans, too. lisa: you are wrecking the world by being alive, basically. caroline: time for a look at what stories are trending across the bloomberg universe. terminal users, you are learning about the billionaire who is known for the -- the millionaire who is known for the meme salt bae.

he could dispose of as much as $819 million. home flippers in long island. a hotspot for investors with 2.8 million residents ranging from new york city to the hamptons. last year, they purchased 90% of homes there. tictoc on twitter is reporting that a company is teaming up with -- that kfc is teaming up with beyond meat. they will test the nuggets and chicken wings at an atlanta location starting today. let's switch gears to media. is cochair and executive bullish on cbs. the biggest independent holder in voting stock joined bloomberg

to discuss the merger. vonnie quinn asked about the possibility of litigation on grounds that shares were bought at below market value. areurious as to whether you actually suing on the valuation. are stillour options on the table. it is not a big number, by the way. they're only like five, 10 million shares of the voting stock. if they would pay you extra dollars, it is $50 million. as they say in the new york language, not a lot of money. we will do whatever is necessary to help our clients who own the stock. of b-shares that will be outstanding -- by the way, this is a good deal. the stock is a buy, cbs fire come.

>> are you buying more of it here? >> we are buying it indirectly by buying some viacom. 2, 5, 8 streaming services. cbs behind in streaming? out, thellion shares stock has 45. we are paying $40 billion for the entire enterprise. that enterprise, without a major success in streaming, but putting money into content. >> should they bring back gunsmoke? remember in childhood, they were apoplectic over all the old people. up a great point. "dark phoenix" lost a lot of

money. you want to buy cbs because it is going to work. jerry is going to be in command. >> what happens next? they do have streaming services. hbo, cbs all access. >> they are not going to buy bloomberg. it is not going to work. that, if i am amazon, i am looking at how i get into this in a bigger way. witham sony, what do i do my music studio?may be the path is open . some further dynamic unfold. hopefully it happens a year from now. gamco chairman and chief executive mario gabelli.

another sign that the u.s. housing market is cooling down. gains decelerated for the 15th month in a row and they were weaker than expected. that is according to the shiller index. property values rose 2.1% from a year earlier. norway's trillion dollar wealth fund is bullish on america. it is calling for a shift away from europe in a move that would allow it to boost its holdings of u.s. equities. the norwegian fund wants to take a larger chunk of the technology company. golfers, what would you give to be able to pot with your eyes closed. used self driving technology. 100% cheating. camera,ves an overhead a monitoring system. the same technology will debut next month in japan in the new

nissan skyline. basically, another brilliant marketing campaign to show you what you can do with a little technology. no luck whatsoever. joe: it is offensive. that kid has got to get it in without the self-driving golf ball. lisa: spoken like a true father. not everybody gets a prize. it is outrageous that he gets that satisfaction, right? caroline: he's got to learn the hard truth that golf is hard and sometimes a little boring. fundcoming up, how one went from in the red to the world's best performing hedge fund. this is bloomberg. ♪

theline: three years ago,

election of president trump should markets, including the global fund. and it isrd to today a much different story. it is the best performing hedge fund in the world. shery: we are talking about returns of 278%. you talk about the s&p 500 being up 20%, then you can. to this hedge fund. annualized average return has been about 40% since they launched, which was only a few years back. iss is a hedge fund which singapore-based. they are now trading on the exchange traded futures. 278%if you are getting a annual return, you are obviously getting a lot of risk. founder,ght now, the what he is doing is he is the

sole operator of this fund who operates mainly in his own home. what he is doing is to put as much as half of the fund into highly liquid money market accounts, which is really not that different from what everyone else does. his returns have been incredible. a loss of 50% in 2018. but it all averages out to 40%. lisa: it's sort of raises the question, the idea that he is in his own home operating this hedge fund and is the best performer out there. shery: only 10 or 15 investors, from friends that pooled $24 million in the beginning. whenine: who needs we work you can have so much fun at home. don't miss this. reports, tiffany

second-quarter earnings before the bell. joe: the richmond fed president speaking in virginia. koreajapan removes south from a list of trusted trade partners tomorrow. joe: this is bloomberg. ♪

♪ riggs in newaylor york. this is "bloomberg technology." formerup the next hour, uber engineer is accused of stealing tech from waymo. plus, smoke them if you have got them. phillip morris is in talks to reunite