data dependency, there is this notion i got from the press a couple times, what happens next, what is your call for the next well, tell us what the data says. function of the data. we remain above 3000 on the s&p 500. create lackluster trading day. the russell 2000's and under performer. scarlet: had been outperforming. the value in small caps is taking a pause. romaine: it's interesting. it seems like a boring day, but just a few hours ago, russell 2000 was up. you had banks outperforming, then i guess people just decided. let's dive in deeper to the action with our markets

reporters. >> i have got records on my mind. we may not have a record high for the s&p hundred, but we do have a record high for the s&p 500 utilities sector. take a look at the time of 1.8%. a record closing high as yields have been down for days in a row. it may be worrisome. this is a defensive sector. you have investors going and while the broader sector is going into a record high. relative to longer-term charts, what we are looking at is the valuation spread between utilities and the s&p 500. from 1990 to 2005, we had the s&p 500 valuation trading richer than the utilities sector. the defense sector took off. that was true during the crisis, and we also had issues in 2011 where utilities took off. once again, trading at a richer

evaluation in the s&p 500. closer to a record. something to think about for a possible turndown at some point in the future. >> for me, it is about the ipo market. dog,ll take a look at data settling around $37. in spite of the tight $40 per share, this is after we know that rebuffed and offer from cisco. they wanted to go to the public markets. today, it looks like a good idea given the pricing holding in there with the market cap of $10 billion. what's interesting as we fold this into the competitive landscape, i spoke with the ceo yesterday. shares rose when the news broke that citgo was looking at buying data dog. they are competitors with each other. he said he might be the next target but he is looking for

further acquisitions. they have made 10 in the last few years. he anticipates more in the future and said this is just the beginning of the big data era. they are committed to making that happen. at least as we start to see the other competitors, a good day for data all around. oil,am taking a look at which has had a volatile ride after the strike in saudi arabia on saturday. markets are rising as the saudi's try to cover this post attack supply chain. they are picking up one-time supplies, five days after millions of barrels were knocked off-line. concerns continue about rising tension in the persian gulf. those were somewhat combed when mike pompeo said, trump once a peaceful resolution to the attacks that happened in saudi arabia. temperedoil rally was by concerns that severe flooding

in the heart of u.s. refining country in texas may reduce demand for crude. romaine: thanks everyone on the market team. charles schwabs chief investment strategist and bloomberg news cross asset reporter. let's take a look at the economic data. all this focus on the fed, all the market, we got decent housing data today. jobless claims seem to be trending in the direction that some want to see a trend. over the past few months, it has been encouraging. >> reduction picked up after two brutal quarters. that is marginally positive. we had the leading indicators out. yield spread is still a negative. he have seen the benefit to housing from the trajectory of interest rates. it has been our view that interest rates are not the elixir for what ails us.

that is trade, obviously. it is at least a marginal benefit to the economy. that is not enough to offset the weakness in manufacturing. for now, there is a dividing line between manufacturing, which is in a recession and a stronger consumer side. the strong -- the problem is, manufacturing tends to lead the consumer side of the economy. the leading indicators of employment are healthy. you see deterioration in manufacturing. right now, a healthy dividing line, but that is what i would pay attention to to see whether we see this malaise. interesting take on the data. what about the technicals and the simple rotation we are seeing. russell underperforming even though it was doing better earlier in the day.

gone? value harness >> today is and all one. if you look at what has been correlating, value in the russell 2000 incredibly highly correlated, in the way that momentum and anti-beta were a while ago. value reallywas underperforming as interest rates were rising. that has been diametrically reposed with the rotation that has been playing out. kind of a peak under the hood today. it is a huge head scratcher in terms of trying to determine whether these macro and under the surface drivers are intact. they broke apart today. they were not moving in tandem. scarlet: what do you think of this rotation? >> on the large versus small, we have been overweight large-cap and underweight small-cap for years now and that has worked out very well. about the only benefit in the

trend of small-cap versus large-cap was the evaluation. when you select shift toward a value mindset, maybe why it a relatively short lifespan at least at this stage, that is the only thing i think small caps have going for them on a fundamental basis. if you look at the profitability trajectory, the percentage of russell 2000 companies that are recordindebted, a near percentage of zombie companies. the fact that they were seen as an official areas of the tax cuts, so many of them are not profitable. i don't care what your tax rate was before. if you don't have profits, you don't benefit in this perception that they are purely domestic, whereas nearly 50% of revenue is from trade in they don't have the ability to be as nimble. i think we are going to be back

to an environment where we have the evaluation impact, but let's look at the fundamentals, which are not great. romaine: when you look at some of the successful ipos we have ago,cloud flare a few days do you think the market sentiment is still there, where people are willing to buy? willingnessugh right now. in this business a really long time. i have lived through lots of cycles and have watched sentiment, especially in my last 20 years of retail investors and there is nothing right now compared to the sentiment around ipos and the new companies, like in the late 1990's. we may be a different animal because we are not investment bankers, so we are not in a position where our clients would express this, but i have not

gotten a single question at a client event about anything ipo related. not individual companies, not broadly on the ipo market in general. again, it may be because of the unique situation of schwab not being in investment banking firm, not being in the ipo pulls, but it has not filtered into a general interest. caroline: you would have thought that news would have been of interest. moments, aring their lot of questions there. cannabis questions. but not ipo questions. the number one theme of questions i get i far is about the deficit. romaine: wow. caroline: so, that story does not change. >> well, it gets worse and worse. it changes in the fact that there is now bipartisan support for not caring about.

our politicians on both sides don't seem to think it matters. i often get the question, are we ever going to hit a debt wall. if you are talking beyond federal government debt and you include things like housing debt, i would love to know what rock you are living under in 2008 if you don't think we hit a debt wall. we had the bursting of a massive debt bubble that took the global financial system down, unleashed massive deleveraging on the household and financial sector but also ramped debt at the government and corporate level. i think the implications on federal debt, which many will say we don't have to worry about. we can print our own currency. i think we are already living the implications of high debt and that this is the largest economic expansion in history, but also the weakest. crisis in is a subtle terms of the indications for the economy to grow at anything resembling a robust pace. scarlet: fascinating insight.

thank you so much. charles schwab chief investment strategist. that doesn't for the closing bell. romaine bostick is here and "what'd you miss?" is up next. looking more into the market rotation. what happens next. this is bloomberg. ♪

caroline: live from bloomberg's world headquarters in new york. romaine: i am romaine bostick. caroline: here's a snapshot.

u.s. stocks closed lackluster. pretty unchanged. growing pains ahead. forecasts protecting global growth will slide to a decade to grow -- decade low. u.s. stocks trade near all-time highs as investors evaluate conflicting news on trade talks. i warning. i run says it will defend itself if the u.s. and saudi arabia strike against the country. romaine: in the last week, the fed, ecb and people's bank of china have eased policy. now, the oecd is the latest institution sounding the alarm over the global economy. what we are saying even more governmentshat should leverage on rates to invest in much-needed infrastructure. globally, there is a need to invest $6 trillion and that is

urgent. it is the turn for government to act. romaine: for more on this, we are joined by bloomberg businessweek economics editor. i feel like this is a broken record. we have heard so many policymakers who want to pass the baton or at least share the baton. what is the likelihood of that? >> we are not seeing a lot of it. the united states is one of the few countries doing a lot of deficit spending right now. germany is the poster child for countries that have the capacity to spend more and are not. just profligate spending. it is needed spending. not only for the macro economy, but for the essential infrastructure. roads, bridges, schools. these are things that have to be done eventually.

why not do them when interest rates are low. --oline: reporter: caroline: certainly, it is reflected in the numbers. germany is a number that can do that with spending. not only our governments not helping, but also hindering. >> that would be trade. that is a pretty late and form of screwing things up, when actually you have trade wars that not only have the direct impact of higher tariffs discouraging commerce, but sending a signal to business that they cannot plan. you don't know whether to expand that plan, open the new plan, do that big transaction if you don't know if the market will be there. is one of the key points that the oecd made in its report . this was the single biggest

obstacle to slower growth in the remainder of this year, trade tensions and trade conflict. oecd in its title is economic cooperation. isn't there this reality we are facing that sort of the multilateralism, the economic globalization we have had over the past few decades is fundamentally being changed. , gettingsort that out higher growth and coordinated growth is just going to be wishful thinking. >> you are right. when you think back to when , all institutions began these institutions grew up after world war ii, after we saw the tragedy of the great depression followed by the war itself and there was an understanding that countries had to work together for the benefit of all. that sometimes meant you had to think about the global interest,

at least temporarily ahead of your national interest. think of the big picture. there seems to be a deficit of that kind of thinking these days in the u.s. and many other countries. caroline: i want to briefly touch on the marine market. a money market economist is saying the next 11 days are going to be a disaster. again andoing higher all these things train cash. in off a lot of short-term auctions next week. we had done today. what do you make of the money es?ket cu >> it is doing what it has to do. every time the fed doesn't have these things overnight, it has to renew it the next day. markets are not healthy enough to stand on their own without people from the new york fed. they've got to do it again and again.

it is easy to imagine that this becomes the new normal for some time to come. great to get your expertise. we thank you. coming up, we take a look at the value rally and why one ceo says it is bigger than the tech bubble. this is bloomberg. ♪

big data.let's talk one quantum shop is turning to main street to make out the next craze. workers at value stock corporations -- corporate insiders have insights over their own stocks. and ouris with us

assets reporter has written up a great piece of research. shows thatyour data if you work for a value-based company, you're actually quite into buying your own stock, versus a growth company. >> that's right. the research started because we were observing more broadly that the disparity in performance of value versus growth companies is bigger than it was in the tech bubble 20 years ago. we wanted to see, is there some fundamental reason why that might be the case. we look to a couple things, but the very interesting one was what is the buying behavior of these managers like if you compare buying up value companies versus growth companies. conviction does this give you that we are not in a value track? >> we took a lot of conviction from this and from other methods

listed in the report. company,ple inside the the senior management, they will be the people with the best view. exposed companies were struggling, even if it hasn't come through in performance. that the relative levels of buying the value versus the growth, the levels were at all-time highs, relative appetite gave us a huge amount of conviction that this is just a big mispricing. romaine: when you talk to value investors, particularly ones that have been flummoxed the past few years, where value fell out of favor, they always make compelling cases as to why value works, or why it should work. the timing always seems off. when you are looking at this data, is there a timing element that gets factored in or that

you can apply to it that would make it easier for folks to figure out? >> one of the points we make in the paper is that it is actually very difficult to time anything frankly in the market. if you miss the first 12 months of a rally, that is all the benefits. in the long run, it will perform, but if you miss that, you've missed the benefit. the message is, you can't really time it, but one thing you can do is lean in. as thing we try to do is, value gets cheaper, we tilt more to value and as it gets expensive, we come away from it. in that way, you are leaning into the cycle instead of fighting it. saying, you should not be timing this for a long term structural change, what do you say to those who argue that

we are just seeing that value is dead? some the most dangerous argument in investment management is this time it is different. you have lost a fortune over the years following that. maybe, but almost always, it isn't different. it will cost you a lot of money in the long run. that you haveent got this huge under the radar performance for value versus growth, but there is no trap there. actually condom -- actually, the fundamentals are sound. a value: does what company is stay the same? ?ear models stay up-to-date >> we are always updating. we talk about value as if it is a single thing, but we have five

separate signals of value. we are always looking for different ways of expressing it, but by and large, it has been pretty consistent. romaine: how would you respond to folks who say that growth has also been consistent? >> as we talk about in the paper, if you look at the relative pricing, the relative cheapness revalue, where more than 90% of its history, past the 90th percentile. we have only seen it twice, once in the tech bubble and wants at the trough of the financial crisis, and each time, it was followed by anna norma's rally that more than eclipsed the losses. i would say history is not on your side. caroline: we have had some buying of the small caps.

a guess from charles schwab who said it maybe it was quant that drove this growth. she says as she looks at fundamentals, she doesn't care if the valuation is compelling for a small cap. do you think -- why you think the buying petered out that we have seen against the value? >> i don't think you can ever tell when a bubble is going to pop in the long run. when we look back, it is often easier to write the narrative, but at the time, it could be some small thing that nobody notices. i don't take too much significance of the fact that we had two strong days and then a flabby day. it does show how sharp those moves can be. romaine: we will have to leave it there. always great to have you. also thanks to sarah.

this is bloomberg. ♪

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bloomberg's word news. house intelligence committee chairman says the director of national intelligence is refusing to turn over to congress and urgent whistleblower complaint that concerns the president making an unspecified promise to a foreign leader. >> the whole point of the whistleblower statute is to encourage those to report problems, abuses, violations of laws, but also a legal mechanism to do so and not disclose classified information, because there is no other remedy. told reportersft

there is an effort to prevent this information from getting to congress, which he describes as an unprecedented departure from law. no giving no details, president trump denied he would ever say something inappropriate on such a call. the remnants of tropical depression in all parts of texas and louisiana with torrential rain today, prompting hundreds of rescues. areaasters in the houston issued a flash flood emergency today for harris county. 3-5 inches ofid rain as possible per hour. the houston mayor had this morning -- >> wherever you are, stay put. if you are at work, please stay put. especially if you are in the kingwood, airport area, greenport area, the north side of town, as this system makes its way from the north heading

south, and until it clears our area, i'm going to encourage everyone, wherever you are, please stay where you are. mark: so far, no evacuations have been ordered, and the airport is set to reopen tomorrow. the house of representatives has passed a stopgap spending bill to over a shut down, which could have taken place october 1. the bill will fund government until november 21. global news 24 hours a day on twitter,t tictoc on powered by 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. lots of economic data out of windows areas and it is more bad news for the president.

the economy shrinking for the sixth straight quarter. gdp decreased, marking the longest quarterly recessionary stretch in 15 years. to take us through the data is a cofounder and ceo of management. . let's start with argentina. what did we learn over the last couple days? >> i am not sure we learned anything new. you have got 57% inflation rates and interest rate at 75%, it is a dire picture. of course, the sentiment was terrible when you had that primary pull. i am not sure we are dealing with anything very positive. seeing a are we different mood in brazil? are we seeing any hope or is emerging markets tarnished? >> there are two things i really like in brazil.

one is the cost of capital is falling, and we saw, as you probably noted, 50 basis points cuts. frommeans it has gone -- b three has gone up 100%. romaine: are some of those structural issues -- is there enough confidence there that that is going to be dealt with in a time frame where it is going to be profitable for investors? >> from my point of view, i believe pension funds will go through. we should know at the end of

this month. then, there is much more reform after that. looking at tax reform, expenditure reform and that is reformsf the remarkable that are very underreported before bolsonaro became president. those have not gone through the system. i would say there is a lot of reform momentum. caroline: i like the way you started off with the central bank element. how does this spill over into easing from china, for instance? focus of the a key emerging markets. -- are the emerging markets doing enough in terms of stimulus? makethey got in enough to

them maybe eventually outperform? >> i think it is remarkable. emerging markets has a lot of dry powder compared to the developed markets. in the emerging markets, they are pushing on a basketball. i have got a lot of room on the monetary side. a lot of them can cut, and because the account deficits are smaller, they can cut without hurting currencies. not all, but many have room on the fiscal side and the united states, we don't have fiscal room. i think there is a lot more policy room in emerging markets. romaine: there has been a lot of talk of getting back into em. early this year, people were saying the trade in the decade redux. we got to what people thought would be rising interest rates. there was a little concerned. investorsve to think

are breathing a sigh of relief when it became clear that the fed is not going down and aggressive easing cycle. i think em investors would like to see easing, because the dollar has surprised everyone by think so strong, which means currencies are down. august was one of the worst months in about 22 months for emerging markets currencies. the worst months this year work may, when there were earnings revisions and august. value --

caroline: before we dig into the rotation, i want to go back to the u.s. dollar argument. even with an easing cycle, the dollar remains higher, because the u.s. economy is the outperform her. how do you tackle that in the long-term emerging market? >> in the past, when the u.s. has done well, it has been good for emerging markets. on the other hand, if interest rates are lower, there has been a search for yield elsewhere and that props up the emerging markets. looking at those two things going hand in hand.

togethern, they work and we have been a little surprised by the strength of the u.s. dollar and donald trump has been surprised as well and has said he would like to do something about it. mnuchin had a meeting about it. it is highly unusual, but i would not discount that the president sometimes gets what he wants. romaine: let's start with one thing you talked about with regard to etf's, there is a theory that a lot of people say passive investing is creating crowded conditions of a bubble but there is also an argument -- it is active management at the front, followed by indexes, which follow the managers. day, thed of the theory is, active managers are still driving the ship. have gottens., we

to the point where flows are over 50% and stock is over 50% etf's. india, 100% of net inflows this year were in etf's. the stock of investment is still active. investor is a local mutual fund and they are active and when they come back into the market, they will have a little shock. they will probably become active. i do not know that that will hold, as more people go into etf's. caroline: fascinating. we could talk for hours about this, but sadly we cannot. great to have you with us. coming up, chasing that high. the stock has never come close to the high since a year ago. we will talk about the company's wild ride.

this is bloomberg. ♪

caroline: time for a look at what stories are trending. while you are reading about democratic lawmakers who accused lawmakers of stonewalling on the tales of a whistleblower complaint. president trump dismissed the suggestion that he had said anything inappropriate. the unidentified whistleblower has been revealed as an individual in the whistleblower community who has made reports to the inspector general. ceo whoon the former sold his entire holding in the company he founded. sharesshed out 5 million and said he plans to plow the andeeds into gold, silver

cryptocurrency. tictoc on twitter has reported that more than one third of u.s. payments are still done in cash. amazon is bringing pay code-2 america to allow you to pay with cash on loan. andomers are sent a qr code orders shipped once the transfer is done. pay code is already in place in 19 countries. follow all the terminals stories on bloomberg.com. today,: one year ago tilray took a wild ride, doubling to $200 before wiping out the gains in less than one hour then back to finish 50% above where it started. one year later, it has missed its market value. our reporter is who covers cannabis from toronto. some technical difficulties

here. let me tell you, it was a wild ride today. cannabis stocks had been on fire. christine, i think you are there. >> yes. romaine: thanks for joining us. >> thanks are having me. sorry about that. not sure happened. romaine: we were just talking about your fascinating story. a look back to what happened one year ago. it really caught on fire after being lifted here in the u.s. back in july. of course, they had that wild ride in 2018. if you remember the day the stocks doubled to $200, then give up all those gains and wased up 40% higher, so it probably the most volatile day for any stock in the sector to date. since then, the stock has come hit,0% from the high it

erasing $17 million in market value. while it is an extreme example, it is emblematic in the overall klein in pot stocks we have seen since the winter amid a host of different issues. caroline: can it go much lower? it looks like despite erasing 90% of its value, the short is still pretty out there. >> there is still a huge short interest. million, despite the fact that it is one of the most expensive stocks because of the small public float. short-sellers are not determined by the high cost of borrowing. they are still piling on the stock and expected to fall, even though it is trading below $30, down from a high of $300. there are a lot of pessimists who believe the selloff is not done yet and tilray is not the only stock being shorted widely.

romaine: one thing i thought was most interesting is the volume, averaging about 1.7 million shares. last year, it was averaging 8.5 billion heading toward the end of the year. i want to ask you about what has been going on with the vaping situation in the u.s.. more than 500 cases of illnesses linked to vaping by the u.s. government, potentially more than that. is this starting to weigh on how people are viewing some of these cannabis stocks, considering that vaping at least was one of the main mechanisms people were using to consume cannabis or cbd? >> i would say it definitely is. if you look at the stocks today, the sector was broadly lower despite the fact that canadian stocks were mostly higher. i believe that because of the report from the cdc which greatly increase the number of illnesses and deaths linked to vaping, yesterday we had our

first illness connected to vaping as well. stillclear not -- it is not clear whether it is e-cigarettes, cannabis or both causing the illnesses. because companies have put so much money into vaping products and in canada, they are not even legal yet, companies have invested huge amounts and are betting big. if this is not resolved by then or if it is proven to be a systemic issue in the products themselves, that market may look a lot smaller than what companies have been banking on. thanks to christine, joining us from toronto. let's get a quick check on the latest business flash headlines. another sign that the u.s. housing market may be breaking out of a slump with previously owned homes rising to the highest since march 2018. contracts rise 1.3%. that exceeded all forecast in a bloomberg survey. soldccentric former ceo

his entire stock in the company he founded. patrick burns says he will put the proceeds into gold and cryptocurrency. he cashed out 5 million shares for about $90 million after he made comments about the deep state and his involvement in a government espionage probe. airbnb plans to go public in 2020. a long-awaited move for the company, which was founded in 2008. airbnb has more than 7 billion listings in 100,000 cities. theier cut -- earlier, company announced $1 billion in revenue. last year, the united postal service investment spree rattled wall street. improving,ins are even though ups is dealing with online shoppers who are less lucrative to serve. outperformed rival fedex and that is your business flash

update. caroline: thanks. let's talk about amazon going green. jeff bezos has pledged to make his country -- his company carbon neutral. bezosress conference, acknowledged criticisms about his approach to climate. bloomberg is part of the covering climate now project which includes more than 100 news outlets. interesting that corporate leadership seems to be picking up the mantle when it comes to climate change rather than politicians. talk about what amazon is promising. what targets, how are they able to meet these grand gestures? >> we are not sure yet how they will achieve it. quite a tech company or a logistics company. they are going to have to offset a large carbon footprint. they said they will achieve full carbon neutrality 10 years ahead

of the paris climate accord. aiming to power their own operations with 100% renewable energy. goals for aious company that contributes to a lot of carbon in the atmosphere. romaine: jeff bezos comments about how climate change is dire and the need to act quickly. we should point out that there were quite a few amazon employees scheduled to walk out on strike to protest what they called amazon's inaction on climate change. did this change what they were going to do? >> know, the employee still plan to march tomorrow and say there will be at 1500 of them walking off the job to join the global day of action on climate. was at theion company had not articulated these goals. they have been pushing for almost a year to get the company

to make the commitments it has done today and to commit to divesting from its own business interests with fossil fuel extractors. briggs: our thanks to met day, bring us up-to-date on what is going on with that climate proposal. coming up, the trade dispute between japan and south korea is threatening to upend the supply chain. that is coming up next. this is bloomberg. ♪

romaine: right now, japan, delayed shipment of a key material used for memory chip production -- companies will struggle to adapt. shery ahn is here. i know you are happy to be here and to explain to me what hydrogen fluoride is. i am not going to go into

the chemistry, but suffice it to say, it is used in making chips. 80% of the global supply comes from japan and 90% of those shipments go to south korea. south korea is very dependent on japan. korea, ain south high-level government official is saying these shipments have been delayed. there is no more explanation for that. we don't know if they will come through, but this is pretty concerning. as you mentioned, these companies depend on these shipments and now they have to go through tougher requirements starting in july, given that japan has upped those approvals. caroline: south korea is dependent on japan and on samsung. they will be affected, but who else? leigh: lg -- shery: lg display. we are hearing they are trying to develop their own homegrown

economy for these products. we have to remember that japanese companies will also be hurt, because they have to export somewhere. that somering companies -- we are showing the south korean stocks which have been doing well in the past year. samsung gained about 40%. there has been an expectation that they will be a rebound in semiconductors. those japanese stocks you are looking at are heavily dependent on exports to south korea. produce in china, so perhaps they will not be as hurt. caroline: keeping an eye on whether tensions will de-escalate. more on the stories. that is all from "what'd you miss?." romaine: "bloomberg

technology" is up next. have a great evening. this is bloomberg. ♪

♪ taylor: i am taylor riggs in san francisco. this is "bloomberg technology." coming up, wave announces its flagship 5g phone but it is missing googles services among a u.s. china trade war. plus, big tech to washington. facebook ceo mark zuckerberg talks antitrust with senators over dinner.