is do i want to make a deal. if we make the right deal, i would love to do it. i thing it would be a great thing for china also. alix: trade deal confusion. china will leave talks today early. the u.s. opening up a currency packed as part of a partial deal. the fed's next move. a divided fed timbers expectations of a rate cut. we speak exclusively to dallas fed president robert kaplan. and pg&e's meltdown. power is out for 500,000 californians while the company is dealt a blow in court, losing exclusive control of its bankruptcy. welcome to "bloomberg daybreak" on this thursday, october 10. i'm alix steel. ernie's coming out now -- earnings coming out now. delta down by 0.6%. a bit better than they had guided. they were looking at the top end

of $2.32. for the quarter, they see earnings at the low end. the estimate was for $1.51. a large part of this will be how are they going to offset rising labor costs with lower fuel costs. when does that shift happen, and how are they benefiting from the 737 max? will that benefit continue? that stock getting hit in premarket. in the market, it is still overall about trade. it was very whippy action here. those numbers on your screen do not revisit the last 12 hours of trading for s&p futures, now down just 0.1%. we will get to some of the headlines in a second. euro-dollar at a two-week high, and oil on the move. the opecaving secretary-general speaking at the oil and money conference today. he is saying some interesting things in terms of oil in particular.

he's talking about opec plus will take appropriate, strong decisions in december. also the charter they are extending to the u.s. trying to bring in other countries into that opec agreement. we will be speaking with mohammed barkindo later in the program, the secretary-general of opec. time now for global exchange, where we bring you today's market moving news from all around the world. our bloomberg voices are on the ground with this morning's top stories. we want to kick it off at the latest trade develop ands -- latest trade developments. sources, there could be a tariff increase suspended. commerce secretary wilbur ross took a few shots at china's trade practices. sec. ross: china has not really changed its behavior. ways, it's, in some

practices have become more protectionist than before. alix: joining us now from john liu. what are they thinking about going into talks today? reporter: the chinese are there today. they will be there tomorrow, we are hearing. dipping on -- depend on how the talks go, there may be a chance to see president trump friday. the chinese are looking for a smaller, more narrow deal. they are looking to buy more american farm goods, which china actually needs, in exchange for the u.s. to hold off on listing tariffs planned for the middle of this month and december. alix: overnight, it was a really whippy session, whether you were trading the dollar, trading equities, because of all of these headlines from different sources. what do we believe over the next 48 hours?

john: there's been a lot of talk ahead of these negotiations. we had the blacklisting of eight chinese companies. we had the travel ban that was imposed. we had secretary ross on what we just heard. the chinese, at least he state media, has played it as those steps being attempt to gain some leverage ahead of the negotiation, and that the chinese are not taking it super seriously at this point. alix: thank you very much. it is going to be a very exciting couple of days. we want to turn to tensions in the middle east, where turkish troops begin a ground incursion in syria. president erdogan hit back on countries that criticized his wouldy, and said that he opens doors for 3.6 million syrian refugees. what is the latest on the ground? how is u.s. rhetoric playing into it as well? mentioned,s you just

turkish president erdogan was speaking in ankara. not only did he say he would open the borders and let the refugees pass, but also trying to explain the objective of this mission, saying that turkey aims to clear the area of northeastern syria of terrorists , and once that's done, hopefully create a buffer zone so that refugees currently in turkey can be resettled there. that is the main aim of turkey. of course, one of the main questions of this mission is the islamic state and those detained there. turkey being nato's second largest army feels that it can control the islamic state and make sure they do not reemerge. thatfeel quite confident it isn't going to be an issue at

all. we will also be hearing from nato's secretary-general tomorrow. it will be interesting to see what kind of message he sends. the message from the international community so far is urging turkey to use restraint. alix: thank you very much update. we want to turn to the unprecedented power shut down in california. millions in the dark after bankrupt utility pg&e cuts off power to prevent any wildfires from happening again. at the same time, shares falling out of bed following a court ruling on restructuring, which stripped the utility of exclusive control of its reorganization process. on the phone with more is bloomberg's senior utilities analyst. walk us through the blackout and the court ruling. reporter: right, good morning. the blackout is a step that the utility took with its ongoing

attempt to keep up with the likelihood ofe massive, disastrous fires. basically, their decision is that it is better for the utility, and hopefully for the customers as well, to have the inconvenience of a day or two of forges versus the potential major wildfires like they've had in the last two years, so that's where they are going. they have the ability to do that. at the end of the day, they are erring on the side of caution. we will see how that works out. there's political pushback to any outages, and if it goes on too long or people feel like the company is relying on it too into they could be forced changing their approach at least somewhat.

alix: thank you very much. now we turn to the fed. officials are debating how far it's rate reduction campaign should extend. minutes from the fomc september meeting show that officials generally agreed that downside risks to growth had increased somewhat in july -- somewhat since july. joining us from dallas is michael mckee. you are also talking to robert kaplan later on in the program. walk me through what the conversation is. michael: you take a look at the bloomberg,on on your and markets have already all but decided we will get a rate cut, but the minutes have suggested not everyone at the fed are on board with that. there's also a question of whether they will accomplish that much now as chairman powell said this week the economy's real problems are slowing growth overseas and trade. coming up, we will ask the

dallas fed president whether he thinks more cuts are necessary, and whether they are worthwhile. we will also get his take on companies in his district. what are they thinking about in terms of investment and expansion for 2020 in these trade war times? not to get you all excited, alix, but he has a lot of oil, nice in his district. the cpi may be on the move today, but in september, it was falling. does that push down on inflation, and what does that mean for a fed that is desperate to get inflation higher? a lot to talk to robert kaplan about. we will see you in an hour from dallas. alix: really looking forward to that. ike will join us in the next hour with that exclusive interview -- mike will join us in the next hour with that excessive interview. don't miss that. delta earnings come of that stock falling in the premarket. they wound up beating preliminary estimates for the third quarter, but they already lowered it.

the big story is the fourth quarter earnings-per-share actually missed estimates. we will be talking with the ceo later on in the program, ed bastian. it is all going to be about labor costs, fuel costs, and boeing. conversation.t coming up on this program, more on your morning trade and analysis in the markets in today's first take. this is bloomberg. ♪

alix: time never bloomberg first take -- time now for bloomberg first take. ,oining me, gina martin adams vincent cignarella, and with us, rossano, c6 capital

holdings founder and ceo. let me take you through the headlines over the last few hours. first, you've got the news that perhaps u.s.-china trade talks may end a day early. and that was rebuffed. then another news outlet said there were talks of it being cut short. aboutilbur ross talks trade practice is getting worse. literally, what do you do and what do you believe if you are a traitor? -- if you are a trader? vincent: you sound like you are having an argument with your husband [laughter] . -- your husband. alix: no, i would win. [laughter] vincent: what we can say is definitely through the end of this week, we will see a lot of volatility. that is obviously not a surprise from what we see from last night. you look for spots where you can

fade, come back, because you know there's going to be a counter. whenever a news agency puts out a headline, another tries to rebuff it. mark: i agree. you have to really respect the fact that the market is going to dance, and you have to dance with it. you have to adjust yourself accordingly. for me, i really do believe that there will not be a trade deal. i'm always looking to go to the downside and fade harder. at some point, the market just gets used to these and it is going to fade harder. gina: i have no idea what traders do because that is not my universe, but what i will say is the investor base has increasingly this year gotten more and more defensive. right now they are just sitting and waiting. you see that in valuation spreads at the sector level, as well as factor level. you see valuation spreads between stocks and bonds. but we are seeing among the long only community is sort of waited out.

sit in my defensive positions. clearly, risk has emerged over the last six months to the downside. i do think you've seen that in positioning. the trouble is that everybody is now positioned defensively, so shock asre than likely an upside, but nobody believes we are going to get a trade deal. vincent: i agree. the odds of a trade deal are small. what i see now, and she not and i were talking about this off-camera, -- and gina and i were talking about this off-camera, is the administration reaching. let's say we are going to have a currency packed, and that means we can offer them something -- alix: you mean the one we talked about last february? vincent: but a great many companies in china have dollar-based loan. they can't let the currency devalue anyway. so we are really offering them what they are going to offer themselves. we are getting nothing in return for nothing. there's no point in having a

currency pact. this is just a little ruse to try to get a smokescreen to say if you give us ag and pork, maybe we will do this and we will all be friends again, but we are really getting nothing in return. gina: this is really a need for victory. we will declare a victory. this administration definitely needs a win. the new slow over the last several weeks has been very negative. there's a lot of backpedaling going on. i think we will have a declaration of win even if there's not a lot actually done. that's what i think we are moving toward. mark: what am thinking about how to position, the optionality right now, you have pork inflation at 47%. alix: did you see that giant pig picture? [laughter] mark: it looks like a little donkey. absolutely. so you are seeing this

opportunity where they need our agriculture. they have no choice. people need to eat. you have 1.3 billion people. you need to import. you have worms ripping through crops across south asia. you need to import food. the fact that they are throwing out soybeans, they need us more than we need them on that side. on the other cited the dollar. i think there's a lot of -- on the other side is the dollar. i think there's a lot of optionality. gold is always your safest bet. vincent: i totally agree, and u.s. treasuries. to the point where we are going to get a lot of supply in the fourth quarter, even though you want to buy u.s. treasuries, i don't think you are going to see that capital gain you are hoping for. you do have to hide in places like gold and the dollar. there really aren't too many other choices. alix: we have euro-dollar ready to a chi -- euro-dollar at a two-week high. you are fading that. mark: yes.

where do you hide? at this point, it is that dollar safety, that dollar conversion. we do still have one of the strongest economies in this failing market on a global basis. alix: gina, to your world, what struck my eye over the last 24 hours is that the realized and implied correlation is rising for the s&p. i feel like everything for the equity market moves together. doesn't that signal that you're are in for something big? what does that tell you? gina: it is consistent with a selloff. fall, bondsstart to start to experience some volatility, what we seen is correlation starts to rise. everything moves in one direction or another because everything is moving on trade lines. there's no distinguishing between who's who, winners or losers. initial gut reactions are very negative or very positive. i do think there is one clear sort of distinguishing trade going on in the market that we are not talking about, and that

is the tech war versus the trade war. even if you get a resolution or a victory on trade with respect to agriculture, what's not happening is any sort of resolution with with spectra technology. you've got more and more companies on this blacklist. you've got really persistent pressures in the tech sector specifically. i think you are going to see that over time between what is happening in tax and what is happening with the so-called trade war. alix: i would broaden that out when you wrap up all the nba stuff happening in different companies with hong kong protests. all of that feels like it is now western companies operating in china are in trouble. that is an issue in the way that was different a few months ago. gina: absolutely, and i don't know that that is going to change. i do think you will get some sort of agricultural, i don't even want to call it a deal, a stalemate. maybe we agree on some sort of moderate currency stalemate.

but these things are definitely appealing to a base that this president needs. with respect to tech, we don't know where this is going, frankly. increasingly, it looks like it is going to a world in which it is east versus west, especially with respect to technology. maybe that extends to industrial production. maybe that extends further along -- furtherin along the supply chain. mark: we were always on this trajectory. if you think about where this started and each point from president obama to president trump, we seen this move down with the attacks on ip, and a lot of that ip is tech. now there is a certain amount of reciprocity. well, we are going to hit you, and now you are going to hit us. then you are complicated by the japanese-south korean trade war, which is increasing prices overall because that is where chips comingry and

from. companies that are going to have to go somewhere. is it india? is it vietnam? is it somewhere that has some sort of infrastructure that can carry some of the lost supply chain based on this east versus west? approximately a month ago, kudlow likened the trade situation to the cold war with russia. that took about 40 to 50 years to resolve, and now it is back again. so this is not going to be resolved this week. perhapsget a mini deal because we need a small win, but you go back to but xi jinping said in june two the majority of the party. we will not be bullied by the united states. -- you will just have to trust us on that one. he basically told lighthizer,

asking us to change the way we do business with subsidizing companies, not going to happen. take it off the table. it is just not a point of discussion. the administration keeps bringing that up, which basically says there won't be a deal. so we will see who the next president of the united states is, and i think that is what china is banking on. alix: in the meantime, we like gold, we like dollar, and looking a little at treasuries. vincent: it's rallied a little too hard for now. alix: there you go. gina martin adams, vincent cignarella, thank you both very much. you can hear vince all day on the squawk. capitalsano of c6 holdings will be stick with me. you see to be go to browse the features, check out the charts. browse the to features, check out the charts on the terminal. this is bloomberg. ♪ not going to get

an impact on oil. this point, it is what is going to happen in iraq. is that going to be relatively regional? at this point, i'm going to say it is not going to spread. at this point, you just look at the lira and say, what is this doing? as we spoke earlier, it's the dollar. you want to belong dollar. you can watch the lira, and if it looks to extended -- if it looks too extended, you can sort that. iran is going to continue to tweak markets. you had the chinese shipping company getting sanctioned and prices exploding. by prices exploding, i mean in terms of actual rates. so there's a big problem coming

forward in terms of where things are headed on a pricing level. alix: mark rossano of c6 capital will be sticking with me. coming up, delta shares down. we will discuss third-quarter results with ceo ed bastian. this is bloomberg. ♪

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own home. order now to get big savings - but only for a limited time. just go to leesa.com today. you need this bed. alix: this is "bloomberg daybreak." it's been a crazy, wild morning already. s&p futures just down by about 0.1%, but it doesn't describe the whippy action we've seen. multiple headlines on trade coming out of the next 12 hours. with health care stocks in europe, getting hit pretty hard. an earnings miss at phillips bringing down the whole sector. euro-dollar, good rally, which is weird because german exports in august were down almost 2%. really dismal numbers out of there. curve a little steeper in the u.s. volatility picking up. crude a little higher as well.

also looking for the ecb accounts. you have a lot of conflicting messages coming out of the last meeting. here are some of the highlights. in the meeting accounts, they say that some policymakers felt unable to support a rate cut. some in the ecb wanted an extended date-based rate guidance, and some argued for a 20 basis cut with no qe. they say a majority of policymakers "went along with tiering plans." still with me, mark rossano of c6 capital. those do not feel like an ecb that is united. as a market participant, how do you view that when you are taking a look at future central-bank policy? mark: it is actually starting to cause me a little panic. we spoke about how they have not much left, so the question is, what is going to happen going forward? are we going to see something we've never seen before?

i would say this means you're getting more and more discourse. it is kind of that race to the bottom. we have inverse rates across the globe in terms of yield. where are we going to go next? what is the option? it is that race to the bottom again. alix: how do you deal with something like the treasury bond sped -- the treasury bund spread? how do you think about that relationship? mark: you have to think about where is the connection. if germany is down, does that mean china is no weaker than people are perceiving, or is this just confirmation that china is going to continue to weaken? from here, i would look to go along the treasury. i think the u.s. will be safe, but the question is how fast people rush into the treasury. that's where you start getting pressure, but i can't see being long in euro. alix: would you belong the front

and/or the short end? -- the front end or the short end? mark: i think there's a lot of reasons why you can look at a steepener in terms of where things are headed, where guys will rush to the front end. i think there will be some opportunity in the backend. alix: in terms of the minutes we got yesterday, we are also speaking to robert kaplan later today. do you feel at the inflation over suits shorey -- inflation overshoot story, is that still on the table, or are we away from that right now? mark: i think we are away from that to a point, but there's more inflation than people will perceive. careu look at health schooling, just in general, basic consumer goods. there's that formula of how can you get the product the same. there is inflation out there. the question is what the velocity of money is doing. you are seeing this issue with

debt slowing things down, and you're really not seeing that dollar move through the market, which is creating a slowdown in inflation. alix: we do have a headline crossing the terminal here. china is now apparently asking the u.s. to end sanctions on its top shipping stocks. that had a material impact on chinese companies. that is a whole bunch of stuff that's muddled into the talks. it's supposed to be about trade. mark: coming back to turkey, as the u.s. pulls out of turkey, we still need to show we are going to be strong on an economic level. we had to show that we are not going to forget about iran. we are not leaving the middle east completely. i think that also gives trump a certain amount of optionality to say we will for you that bone, but we are going to want this in return. it is just putting more on the

plate that can come off and create that optionality. as we talked about with oil, there's a crude quality problem. we need heavy crude, and we know this. i think you will see some of that get back to the market whether he wanted to are not. alix: and only took 30 minutes to bring up heavy, so i think that's kind of a win for broad markets. [laughter] alix: mark, thanks a lot. mark rossano of c6 capital. delta shares are slumping in premarket as the fourth quarter guidance missed estimates in the airline is facing rising cost pressures. joining me from atlanta is ed bastian, delta airlines ceo. think you for joining us. i think the question on everyone's mind is if you preannounced a few weeks ago, how did you miss estimates for the fourth quarter? what changed? ed: great to be with you. first of all, i want to focus first on the third quarter. we had a great summer.

the man was at historic levels -- demand was at historic levels. a 2 billion-dollar profit, one of the highest in our company's history in a quarter. looking forward to the fourth quarter, we see the revenue momentum continue to be strong. one of the element we discussed with investors is that we will start to see some cost growth attached to the volumes we've been carrying. grown our business by 15%, by far the fastest growing airline in the industry in terms of overall topline growth. we have to reinvest some of those costs back in to continue to maintain the service and make sure resources are being deployed properly. that said, q4 unit costs are down because fuel prices are down. we are reinvesting some of those fuel savings into keeping the product strong for the long-term. alix: fair. those lower fuel costs helping to offset increased costs, but

how long does that actually go for? are there of room -- are there other levers you have to pull? what will they be? ed: our cost structure is in really good shape. we've given a plan that we will keep non-fuel cost growth to around 2%. we've been at that level for several years. the last couple of years, we've been below 2%. in 2020, we may be above that level by about one point come a so relative. once we have a chance to discuss -- one point, so it is relative. once we have a chance to discuss it with investors, i think people will see next year is going to be another really good year at delta. alix: what's your pricing power visibility -- your pricing power visibility? ed: our revenues are strong. q4, we are looking at a similar level, may be close to 5% or 6%

in terms of topline growth. next year is going to remain to be seen. there's a lot that could happen with respect to the max and how that is brought back into the airline system. that may affect some pricing. generally, our revenue picture is very solid. alix: i'm glad you brought the boeing 737 max up. all of the sudden, there is more capacity in the market. for delta specifically, you benefited from the max being out of service as you had more people migrate to you. what is your strategy for keeping those people? ed: i'll strategy is the great work our delta team does. customer satisfaction scores this year continue to set all-time record highs. we were up another five points in the motor score. customers migrate to delta, they stay, and they bring new customers along with them. the max is an open question in terms of when it comes back. i don't think we've gotten a

significant amount of revenue benefit from the max being down because the other airlines have done a very good job protecting their key revenue pools as they've pulled other aircraft into take place of the max. when the max does come back next year, we will see how it is reintroduced. i think a lot of those aircraft are going to be replace aircraft for planes that were extended into the new year, and fundamentally, i think the delta revenue picture is going to continue to be another solid story. alix: it does seem as though investors perceive that the max is a benefit. we have a chart on the terminal i will walk you through that shows delta has outperformed its peers since the 737 max was taken out of the market. it is the blue line there. so if the market perceives that and you have capacity coming on, and you want to keep your customers, that seems like you will have to lower your prices, which is less pricing power for you. ed: well, i think the paradigm in this industry has changed a lot over the years.

one of the things that delta we have done is improve the quality of the service. the people and the investments we are making comedy product, and what you have seen that delta over the last five years is our revenue growth story has been very strong. our market share continues to grow. we are always competitive, but we compete more these days on quality and reliability, not exclusively on price any longer. that share tends to stay with delta as we pull it in. alix: if we look at it from that side, if you want to have a better quality experience, which means you have to have better people, which leads us to the higher crew rages, currently -- higher crew wages, currently rising faster than inflation. what do you do if those wage increases continue to outpace inflation? long-term, our: goal is to keep the unit cost at a 2% level. that's what our outlook is going

forward. so we are growing, and scale gives you some benefits, some efficiencies. there's productivity as we are bringing in bigger airplanes and larger gates for every plane, and new planes we are bringing in. if we are replacing a significant amount of our to domestic fleet particularly over the next several years, that is a huge source of productivity. the efficiency we are driving for the airport investments we are making, all of which goes into being able to counteract any wage inflation we are seeing. wages, our employees are the very best in the industry. they deserve to be paid the very best. rod of to what he is one of the sources of that wage growth. alix: a two-pronged question. do you see a recession in the u.s. in 2020? and to that point, are you holding back any capex? 2020ell, it's hard to call at this stage. our crystal ball doesn't go out all that far. it goes as far as our customer''

booking curve goes. i can tell you the holiday season looks strong. u.s. demand is very strong. we've been up 8% in terms of overall traffic, and the fourth quarter is looking to be another strong quarter for the consumer. as you get into 2020, questions abound around trade and some economic pressures. i think you will see more of that on the international side of our business than the domestic side of our business. we have seen some softness in china and asia, as well as exit europe. art of that is also currency effects, not just economic pressures. but the u.s. consumer is very strong, and we continue to be a beneficiary of it. alix: it was really great to get your perspective. we appreciate you joining us this morning. ed bastian, delta airlines ceo. opec is set to release its earnings report anytime now.

secretary-general mohammed barkindo said that trade talks really cast a shadow over oil demand. he is joining annmarie hordern for an exclusive interview from that conference. yes, i'm very excited to be joined by the epic secretary-general, his excellency mohammed barkindo. i want to start with that monday morning after the saudi attack. we spoke over the prone -- over the phone when prices were surging. yet today, we have prices lower than we were before that attack. 5% of oil supplies were wiped off market. is there too much oil in the market right now? yes, i recall that when markets opened after the unfortunate incident in saudi arabia, we saw prices skyrocket by nearly 19%, 20%, and then receded.

unexpected. considering the magnitude of the attack and the volume lost at that time, 50% of saudi production. we are glad that we have put that behind us and the saudis have risen to the challenge. they have restored supplies in record time, and our opinion. he market is now more focused on the global economy and the trade talks between the united states and china. annmarie: given that environment, what action does opec and opec+ need to take when you meet in december in vienna? mohammad: there is a fundamental difference between the conditions we have found 2015, 2016, and what we have now. i begin to see some narratives,

some correlations. three years ago, we had no address the huge imbalance in the market. we arrived at the declaration of cooperation, a framework to continuously adjust supplies in order to maintain balance in the market, and this mechanism has been tested in the last three years. it has worked, and we remain committed to using the tools of this mechanism to ensure that this market remains in balance. therefore, there's no cause for alarm. are committed not to allow the situation to to what we had before

the declaration of cooperation. annmarie: you said all options are on the table. does that mean opec is going to cut deeper than the current deal we have now? mohammad: at the moment, the conference will hold on five and 6 december, but from my consultation with most of these members, they remain committed that we should put all options on the table. we must continue to navigate through this volatility we are seeing, which is largely being driven by factors outside the supply and demand metrics. then, at the very least, you are likely to extend deal for the first

half of next year. mohammad: in july, they decided not to extend to december of this year, but to the end of q1 next year, and for good reason. now we are seeing the wisdom behind that decision. so where would he have the decision in place that will last until march 31 of next year. we meet in- but when december, we will review 20 with -- reviewnow, and 2019 with real data now, and the decision that will be taken there will be a uniform on. annmarie: we just had an opec report come out. demand was at 2.5 million barrels a day more than supply. this is, of course, reflecting the attacks in the kingdom. what i want to ask you, are you seeing that iraq and nigeria are complying? come from iraq,

and i had met with the leadership. thateadership reassured me they will continue to comply fully the obligations. of theirconscious status within opec. they're the second biggest producers behind the kingdom of saudi arabia, a founder member of opec. they are very conscious of the consequences of not complying, and we have certainly seen the numbers in that direction. annmarie: we've just seen the headline about saudi aramco going to ipo. do you think now is the appropriate time for the kingdom to bring the company public, with investors running away from big oil? mohammad: they have worked very yearsn the last couple of

for this ipo, one of its kind. them for them to take a decision to move on, they must have evaluated the entire environment. it is in very capable hands, and they've decided that this is the best time. annmarie: do you think that will change how they deal with opec? obviously they will be a public ministryow, with the separate from aramco the company. mohammad: not at all. saudi arabia remains committed. we've heard from the highest levels of government in saudi arabia that the ipo will not in any way affect their memory chip of opec. -- their membership of opec. annmarie: you mentioned there are so many things going on not affecting supply or demand.

what are you looking for? a trade deal? better manufacturing numbers out of europe and asia? what do you think will benefit the market? mohammad: we are looking at a variety of macroeconomic issues. chief among these is the trade talks. u.s. and the chinese delegations are meeting in washington, and we are cautiously optimistic that some form of agreement will be reached, which would be in the best interest of the global economy. annmarie: a trade deal. mohammad: yes. annmarie: thank you so much for your time. that was secretary-general of opec mohammad barkindo. alix: thank you so much. let's recap some of the breaking news that interview. the first is that saudi aramco is set to give the green light for the world's biggest ipo next week. the way that affects oil prices,

many think that saudi aramco needs a really high valuation, in which case they need really high oil prices, so how much more will they be willing to cut? i same time, you had opec's monthly report that did highlight something very interesting. the oil market was insignificant deficit in the third quarter, the biggest shortfall in several years. despite that, oil was down almost 9%, meaning the macro fears outweighing the fundamental supply and demand picture for the commodity market. coming up on this program, trading safe havens have the latest read on u.s. inflation. we will discuss that next in traders take. this is bloomberg. ♪

alix: time now for trader's take. joining me for that is the voice of bloomberg audio squat vincent cignarella -- audio squawk

vincent cignarella. what we have today? mohammad: in an inflationary -- vincent: in an inflationary environment, rising inflation is a problem. we are in a deflationary environment, so higher inflation, higher cpi is a good thing. if you look at the chart, you see that consumer confidence lags the cpi. a little counterintuitive. inflations that as rises, the consumers feel better about themselves, and the economy is actually growing and feeling better, and we are getting out of this malaise of eight inflationary environment. interesting isnd that now you have cpi, for example, around 2%, but inflation expectations keep diving lower and lower. that, to me, is bizarre. vincent: that's because we are in this deflationary environment

and we haven't reached this level of take off of inflation where consumers will start spending money because of a fear that next month, the car or the washing machine is going to be more expensive. trading this is really difficult. i went through a function yesterday called etst, back testing a variety of asset classes. basically, the terminal is telling me there isn't a trade this week with the trade deal going on that you really want to step into. if we get a kick higher in cpi, the expectation for year-over-year is flat, you can feel a little better about the risks trade. startslips and inflation to drop again, it is going to probably weigh on consumer confidence, and you have to go the other way. alix: if there ever a strategy with that that you look at? vincent: i did, and i didn't do very well. [laughter] vincent: i didn't make a dime, so i don't do it anymore.

dollar-yen, short treasury. vincent: watch cpi today. i'm still comfortable that rates have bottomed a little bit. i feel better that rates will go higher, especially with this with this-- mini-deal we might get today. alix: some of the big movers we are watching today, delta down over 3% in the premarket on some disappointing fourth-quarter guidance. the ceo, though, seems pretty optimistic they are going to get pricing how are because they just have a better airline. i was skeptical in that interview. 31%.down bed, bath & beyond getting a big bid today, 22%, after they switch up ceos.

in the macro, we have an exclusive interview coming up with robert kaplan, dallas fed president. do not miss that. cpi on deck. with the action, lots of trade headlines. we will try to break that down for you. this is bloomberg. ♪

♪ alix: welcome to "bloomberg daybreak" on this thursday, october 10. i'm alix steel. here's everything you need to know. trade talks between the u.s. and china resume. the white house may rollout a previously negotiated currency agreement with beijing as part of the deal. additional tariffs on chinese goods set for next week maybe suspended. the highest set for

ipo next week. it is expected to raise $40 billion. turkish president erdogan does not like the criticism his country is getting for invading northeastern syria. he says if it doesn't stop, he will open the door for 3.6 million refugees living in turkey that would allow them to seek shelter in europe. delta airlines warns that earnings will probably fall short of expectations. delta's costs are climbing, and pricing power is getting weaker. we talked to ceo ed bastian. ed: we are always competitive, but we compete these days more on quality and reliability and not exclusively on price any longer. that share tends to stay with delta as we pull it in. alix: that's everything you need to know at this hour. in the markets, it was a very whippy session over the last few hours. s&p futures down 0.2 percent. let's of headlines on whether

the chinese trade delegation will leave early. a currency pact is perhaps now on the table. we will get some smaller deal in this tit-for-tat? euro-dollar climbing to a two-week high, despite german exports in august continue to roll over. yields go nowhere ahead of the cpi read coming at 8:30. 0.4%.getting a tick up the fed, clarity on trade. those are the two things markets are thirsting for. dallas fed president robert kaplan minutes ago released a detailed essay on what is wrong with the u.s. economy. we go to dallas with michael mckee. thank you very much. we would like to welcome rob kaplan to bloomberg television and radio. thanks for being with us this morning. you released an essay on the economy and monetary policy, in

which you say, "at this juncture, having adjusted the policy rate twice this year, it is my intention to take some time to carefully monitor economic of elements." that sums like you are not convinced you need to cut rates -- that sounds like you are not convinced you need to cut rates october 30. robert: i will reserve judgment until right before the meeting. i was an advocate of the september cut. the reason i was in favor of those cuts is i feel that decelerating global growth, weakness in manufacturing, weakness in business investment, there's a risk that those weaknesses may intensify and spread to other parts of the u.s. economy, and i felt it was appropriate for us to take some action. now that we've acted twice, i'm going to withhold judgment here. we've got about 20 days until the next meeting, and i plan to take most of it to make a judgment. michael: you also say, "i believe moves in u.s. markets are consistent with concerns about economic weakness

spreading more broadly to other parts of the u.s. economy." market rates, particularly fed funds futures, have priced in a rate cut. do you have to ratify what the markets are thinking? robert: no, the market rates i'm referring to, particularly i'm looking at the treasury curve. since fall 2018, over the last year, the 10 year treasury has gone from 3.2 point -- from 3.25% yield to about a 25 basis point rally. it is a substantial rally. in that time, the fed funds rate has only moves down about 50 basis points since the getting of this year. we've had a substantial financial move in market determined rates. some of it is global liquidity, but some of it is increased pessimism about future growth, mainly due to trade tensions. has chaseink the fed that move, but i think it did

,ell me that substantial move the setting of the fed funds rate, was probably too tight in july and september. it may still be, but that is a judgment i want to make through the next few weeks. michael: given that investors are so certain of a rate cut, do you risk a redux of the taper tantrum if you don't cut rates? robert: market expectations can change on a dime, and i don't think my job is to satisfy the markets. it is to figure out whether we've got the right policy setting that factors economic growth. also, the other part of my job is to call out it's not just monetary policy that's been a cause of this slowdown. more monetary policy will be needed if we are going to grow faster, and i'm talking about ,rowing the workforce

de-escalating trade tensions, and other moves that would increase our ability to grow. robert: the minutes -- michael: the minutes of your september meeting discuss when you would into this cutting cycle. do we get something -- would end this cutting cycle. we get something like that? robert: i'm not necessarily sure that something that that is appropriate. i'm agnostic about whether we move from here. that would tell you that if nothing changes, we are going to thinkhere we are, but i we've got so much policy uncertainty, i think it would be wise for us not to over telegraph where we are in the cycle. thise said that i thought cutting we are doing should be limited,

full-fledged cutting cycle. i still believe that. michael: in your essay, you noted that growth is being affected by slowing economies elsewhere and trade tensions in particular. i get asked all the time by people on wall street, what does the fed get out of cutting rates? we are not suffering from an aggregate demand shortfall here. how do you help? robert: i do think when rates are the slow, fed funds cuts, maybe the marginal additional effect be less than it would be if rates were higher or credit conditions were tighter, but that doesn't mean that cutting the fed funds rate doesn't have an impact. it does. there's still a substantial number of borrowers that borrow based on the short-term rate. i've been concerned about the shape of the yield curve, particularly if the fed funds rate is above the 10 year treasury, and there is a substantial cap -- and there's a

substantial gap. it makes it harder to borrow short and lend long, and that would cause a tightening of financial conditions. sometimes when you are cutting rates, there is a short-term positive effect, but you also have to look over the horizon, particularly as to whether you think there is some this torsion in the curve that i think suggests our policy-setting is too tight. michael: you are not concerned about running out of ammunition we do face a downturn? -- out of ammunition when we do face a downturn? robert: i'm worried about ammunition when it matters most. if we wait and withhold our ammunition, and wait to see a broader slowing in the economy, i.e. we wait for this slowing to reach a consumer and have a more severe slowing, we will have waited too long in that i don't think all the ammunition we have would be enough to arrest that slowing.

i think moving now gives us the best chance to avoid severe slowing, and that is why i want to use the ammunition now even though it means we will have a little less ammunition for later. michael: we are speaking with robert kaplan, president of the dallas fed come on bloomberg television and radio worldwide. given the fact that everyone is talking about trade as the source of our problems, can you quantify what it means? it is -- is it a headwind? is it an anchor? if they reach some kind of deal, does the economy turnaround? if they don't, does it tank? robert: if you just took the amount of goods we are talking china anda-vis us and other countries, and multiply potential tariffs on those goods, you would say the impact on gdp growth in the united states should be very modest. a second order effect we believe that the dallas fed is far more substantial, and that is the impact of trade

uncertainty on business investment and on manufacturing. what do i mean by that? a lot of these trade relationships, particularly as i've mentioned with mexico, our logistics supply chain relationships that are critical to the country. usmca isn't yet ratified, but the uncertainty we've had we think took the wind out of business investment. this trade dispute with china, which we think is very appropriate come on intellectual property rights, technology thesfer meaning more than size of the trade deficit, but uncertainty about that relationship and new events that occur every week or two that change the view on this, we find , are causing businesses to timeout. let's put business investment on hold. i'm not going to cancel it, but

let's put it on hold for this year and maybe next year, and that is why you are seeing business direct investment so weak. that's not a huge part of gdp, but if that slows, it can start to seep into other parts of the economy. so it is the second and maybe third order effects from trade tensions that i think have a more significant effect on the economy, which is harder to measure. michael: it's time when businesses are planning for 2020. you suggest they are going to stay on hold. so what we are seeing right now for growth is what we get for 2020? robert: our forecast for the second half of the year is 1.7%. maybe it will be in that neighborhood for 2020. i'm not sure what we see that 1.75%ake it better than to 2%. most businesses want to stay nimble, and they realize that there could be new policy pronouncements at any time, and

without amount of uncertainty, they are not cutting back their business, but they are putting new projects on hold. the other thing they are doing is watching very carefully if there is a broader slowing. if there is broader slowing they see in the consumer, i think they are at least on their toes that they will take further action, and that would cause even a further slowing. so i think we are in a fragile period, which is why i'm glad the fed has taken action in july and september. we can avert a more severe slow down, but i think the jury is out right now. michael: in the minutes, you got a report on what happened with repo just a day or two before you met, and yet you didn't discuss what to do. the chairman this week said you've reached some decisions you are going to move forward. did you have a conference call or something in between to set things up? robert: i'm not going to disclose things that haven't been publicly disclosed, other than to say at the time of the

fomc meeting in september, we announced these daily repo facilities. just for people who are listening, what that basically repois helps distribute a across the system. if big banks aren't lending their reserves in the overnight funding markets, a standing repo facility or a daily repo facility has the purpose of it in rid of those frictions. so we've been doing that everyday. we are having more to liberations. i don't want to foreshadow those, but we will be making some announcements in the very near future, not just about repo, but also about increasing the size of our balance sheet in a way that improves the reserve ofels, especially in light increased u.s. treasury issuance , tax payments, and other frictions that we are seeing. so i think we believe there is a need to do both repo and

increase the size of the balance sheet to some extent in order to raise the reserve levels, and we lost reserves since early september mainly because of tax payments and treasury issuance. we need to restore some of what we lost. michael: jay powell said you are not allowed to finish your interviews by saying, "but it's not qe." robert: it's not qe, and he is right to say that. he's correct that that is not the case. we will just be buying bills, whereas qe historically has been buying securities along the curve in order to lower term rates and incentivize mortgage lending and risk-taking. this will be just related to bills and primarily targeted to overnight funding markets, and making sure we can appropriately set the fed funds rate in the target range. michael: robert kaplan, thank you for joining us this morning. live from the dallas fed, we will send it back to you. alix: that's a great interview

from michael mckee with dallas fed president robert kaplan. michael --new york, joining me in new york is , morgan stanley managing director and chief strategist of u.s. policy, and from california, bonnie wongtrakool, western asset-management fixed income portfolio manager. how bad does that have to get to move the needle on trade? michael: the key things that i heard coming out of that are the exact same things we are concerned with. is businessnt uncertainty going to continue to be weighed on by the lack of resolution here with u.s. china trade because the transmission mechanism should be weaker corporate confidence, weaker capex. we've already seen those. is it going to get into the

labor markets? that is the next thing. if you have terrace escalation further from here -- if you have terrace escalation further from here and those persist over the next four to six months, recess -- six months, recession probabilities increase. alix: is duration where you need to be with this scenario? bonnie: we do like owning you restoration here -- owning u.s. duration here. general that yields in remain at lower levels, within a range. i think it's because inflation in general, something that president kaplan didn't touch on two much in the interview, is going to remain pretty low. it is suppressed by a lot of forces around the globe. the idea that u.s. inflation is going to rise a lot from here is probably not a very strong one. therefore, we think u.s. yields will remain contained. alix: when you go into talks

today, michael, and you are taking a look at those issues, and then you get wilbur ross overnight talking a harder line when we thought things might have been better, here's what he had to say ahead of these trade talks. not reallychina has changed its behavior. if anything, in some ways, it's moreices have become protectionist than before. alix: how do you make sense of all this noise into actual trade talks? michael: where we have conviction, regardless of what happens over the next weeks or months, is that over the medium term, there are sort of barriers that have been put up between the u.s. and china, both tariffs that are probably not going to come down and nontariff barriers that increase the cost of compliance, increase the cost of doing business with china. in the short-term, corporate

america has to spend something on diversifying supply chains, on compliance if they want to do business with china. those erode things in the thet-term and weigh on cycle. you look at the fed behavior on the back end, he or a bond trader, you're not worried about the fed -- on the back end, if you are a bond trader, you're not worried about the fed moving. alix: that makes sense. i understand the duration call. overnight, we had all these headlines, and we saw just as much movement in the ted year -- in the 10 year as the equities. that doesn't feel safe to me. bonnie: i think that as you see these developments come out, there could be short-term movements, but over the longer term, these complex issues still remain between the u.s. and china. they are still subsidizing state

owned enterprises. they still have intellectual property technology issues that we have a lot of issues with as well, and those are not easy to solve. even if we were to come to some terms, there's still the enforcement mechanism that needs to be worked out. i think the market recognizes and we recognize that any type of deal is not going to be comprehensive. instead, what we are looking for is a containment of the trade tensions. i think that is enough to keep the economy stable. so if we want to own u.s. treasury duration, i think there are still pockets of opportunity within the credit markets. alix: where, bonnie? bonnie: recently, i want to preface this by saying we have taken down some of our risk because we recognize as this trade issue drags on, the risks have grown. so we have taken profits and taken advantage of market liquidity. we are still constructive on areas like u.s. investment-grade credit. we think the fundamentals are still solid, and that

corporations can still be well. in addition to that, it is a really favorable technical environment. the u.s. investment-grade credit market is very large, very liquid, and the highest yield compared to almost anywhere on the globe. over 90% of the positive yielding bonds are in the usig market. if you are selected and you pick the right sectors, you can make money in that sector, and that is what we are doing. alix: it just feels that we have moved from overall trade risk to now company specific trade risk. wrote-ceo of bridgewater today, "there's increased likelihood that investment protectionism blocking the free flow of capital across borders is the next policy shoe to drop, coupled with u.s. probability of recession. this poses added risk to the global financial system and economy." secretary of state pompeo talking about operational risks in china.

how do you operate with that? michael: every investor has become aware of the new guidelines. some of this is already happening. is u.s. government increasingly interested in being involved in sort of refereeing cross-border transactions when it comes to sensitive technologies in particular. what all that means, back to my earlier point, is there is a higher cost of compliance for doing business in terms tariffs on goods out of china being higher, but also i need to be aware whether i am running a foul of u.s. guidelines and rules refereeing the products i am pulling out or putting into china. alix: buzz if you are sticking with me. coming up, we are taking a look at how political risk in the 2020 race are affecting trader strategy.

this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." saudi aramco poised to give the green light for its ipo next week, and it could be the largest ever. it also comes after disruption due to a drone attack last month on the largest facilities in saudi arabia. >> the kingdom of saudi arabia remains committed to opec as a founder member, as a defective leader as you call it in the media -- a diff factor leader as you call it in the media -- a de facto leader as you call it in the media, and we are confident that it will not affect their ever ship of opec -- their memory chip of opec. viviana: new problems for boeing that involve versions of its popular 737.

some of its jets will have to be temporarily grounded. ks in the crac structure that affects the wings and fuselage. house speaker nancy pelosi considering a vote on impeachment. how do you think about impeachment as it relates to policy trade 2020? michael: we started thinking more critically about impeachment earlier this year. for investors, it is about what does impeachment tell you, if anything, about the policy path in the u.s. coming into this year, it was fairly easy to conclude that we have a divided government, so impeachment was not going to move the policy agenda because we were not going to have much of one anyway. the question now is what does it mean for the post 2020 policy path, which is a function of what does it mean for the 2020 election.

it is far too early to determine what that is because we just don't have a big enough set of data in the polls, for example, but as an investor, something to watch would be the health care sector. to the extent that this is swinging voters against the president and towards democrats, investors are probably going to perceive health care stocks, particularly managed-care organizations, as being at most risk. i think the perception is that the bigger democratic victory, the more the business model in health care is going to be under pressure. alix: do you feel that the impeachment situation affects trade talks at all? michael: i think it is really hard to read through on that, to be honest. with trade in particular, what we've said is that this is one of the few issues that the president has been sort of core to his political beliefs the past 20 to 30 years. his actions have been relatively

consistent with that in terms of exerting maximum pressure on china. but i don't know that is necessarily going to change impeachment. alix: thank you very much. coming up, the latest read on inflation on deck. this is bloomberg. ♪ from the couldn't be prouders

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alix: alix: this is "bloomberg daybreak." i am alix steel. the latest raid on in just a few minutes. s&p futures down .2%. euro-dollar added two week high despite the facts exports in august down. perp steeper in the u.s.. volatility getting a pickup. barkindo speaking about that earlier on in the program. dallas fed president also speaking on inflation. here is the data. does not look promising. cpi you're on your basis, 1.7%.

sequentially it did not move, if you back out food and backup energy, we saw prices increase .1% on the year on year basis. that is 2.4%. all of that winds up speaking to inflation not going anywhere. inflation expectations falling to the lowest level we have seen since 2016. thelower inflation goes, more embedded inflation expectations go to the downside. highlight initial jobless claims coming in at 210,000, not as high as expected. willm strike at some point start playing into the claims numbers. is bloombergs whatel mckee in dallas, did you make of the read here? 1.7% year on year basis? michael: what we have to say is

inflation is not a problem, not something front and center for the fed. the number takes on less importance. it may or may not reflect strengthen the economy. the cpi has been moving up in recent months. this month it was flat. the forecast had been freed to go to get a 1.8%. that might had -- that might have had more implications. the bottom line is it gives the fed more time. the biggest thing that happened in this report was the biggest decline in used-car prices for some time, down 1.6%. that suggests may be weakness in the auto industry and that would be a problem for the economy on the consumer side. you may have some indication we may be seeing a bit of a slow down. a few minutes ago on bloomberg television, we were talking with the dallas fed president and he said we are on a knife edge with the consumer, as we see the bad

manufacturing news that could rebound any consumer spending decisions. we could have slow growth period next year. here is what he said. this year,cast for at least for the second half of the year is 1.7%. maybe it will be in that neighborhood for 2020. i am not sure what we see that will make it better than one point -- than 1.75% to 2%. most businesses want to stay nimble. theael: the good news in cpi report for consumers is energy prices fell .4. that situation has changed. alix: apparel prices were weaker and new car sales also. the highlight is the used car sales. cpi coming in 1.7%. when you get this kind of headline and you have five-year forward breakevens the lowest since 2016, what you think about inflation?

>> our view has been inflation will remain low. these numbers are in line with our view on the u.s. economy, which is that we are cautiously optimistic. we think the u.s. can continue to grow moderately. the fed is not experiencing pressure to tighten policy anytime soon. we do think you need to keep an eye on the consumer because we are at a point where as the tariffs go on you could see transmission into consumer confidence. what we are seeing in the data is very much in line with the modest growth, slow inflation economy. how does the fed deal with something when you have inflation not going anywhere, not 1% like europe, but inflation expectations that continue to rollover. how does the fed deal with that dichotomy? concernedhey are more about inflation expectations

than anything else. if inflation expectations move down on a permanent basis, to get to neutral, the fed does not have to raise rates as far, which is find it, except that when we have a downturn, they cannot cut rates as much. they would like to keep inflation expectations where they are. they think they are relatively well anchored, but the longer we get reports that say inflation is going down or not moving up, there is a possibility people start to incorporate that into their thinking. alix: i feel like six months ago we would've been talking about a fed overshoot of inflation. do you feel like that conversation is off the table? does that change asset allocations? bonnie: i think they are still targeting that and wanting that and there discussion how to achieve that. they will continue discussing that for some time because any change in their framework will be in effect for many years. kaplan has expressed doubt

himself because he does not want to be held to something in the future when he does not know where the future is going. i think that is the right attitude. for now the fed is maintaining their current stance but emphasizing the symmetry of their target. it is the right method. alix: also interesting in your interview with robert kaplan was when he wound up talking about the different -- the differentiation in terms of the different views of inflation, the different views of when to hike, when to transmit that to the market, and how he is not looking at markets but kind of looking at markets at the same time. pausel: he suggested a might be worthwhile to let the markets know the fed might be independent in making its judgment. i asked him what would he look at to decide on a pause at the end of the month. he said trade. we are looking at what happens if they reach some sort of deal, it might take some of the pressure off.

we look at the jobless claims numbers. that is a high-frequency number. we get it every week and it does not show any signs the labor market is weakening. we have the 3.5% unemployment. if jobless claims continue to stay in this ranger goes lower, it suggests that will not go up anytime soon and maybe some of the urgency for the fed is not there. alix: it is a good point, especially when we thought that was going to happen because of the gm strike. fedie, when you wrap in the predictions, where are you at and how are you allocating? bonnie: we are like the fed. we have to look at the data. in the short term, we do not think they are going to do anything unless the data warrants it. we will see how 20/20 goes and whether we see in effect on the consumer in terms of their confidence and spending. for now we are watching the data as closely as the fed is. alix: michael mckee, thank you

very much. and bonnie will be sticking with me. we want to get an update on what is making headlines outside the business world. viviana hurtado is here with first word news. viviana: the white house will consider a partial trade deal when talks resume today with china. of iterg has learned part could be a courtesy pass already reached. following will be a talk on core issues including intellectual property and technology transfers. in hong kong, months of protests have pushed the city to the brink of its first recession since the global financial crisis. data is likely to confirm the economy has contracted for the second quarter in a row. hong kong's government may unveil stimulus measures. a green bond boom. ireland, 2.2 million dollars bonds to pay for environmental products was oversubscribed. ireland is taking advantage of record low borrowing costs.

global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. alix: thanks so much. bonnie, you are also in charge of es -- of efg. what is your top trait within esg? bonnie: the way view it is we are integrating esg into our investment process. it is one factor that goes into our investment decisions. we are looking at financial factors but also esg factors, because that is the best way to determine the fundamental value of an investment. within the and investment universe of esg, you have the bonds like ireland just issued. that is one small part of the universe. we are seeing different parts of the capital markets develop. all of that has grown in response to the demand for esg from investors, primarily on other continents but beginning

also in the united states. we think this is an area that will continue to be supported by investor demand and regulations elsewhere and therefore a place we want to be active. aboutthe ceo of bp talked it yesterday at the money conference in london. here is what he had to say. >> the world of esg investors is a bit confused. is big and the s is small and the g does not count. there are 30 something different esg metrics and writings. all of that has to sort itself out. returns,gers want governance people say fossil fuels, the markets have to short -- have to sort themselves out. alix: what is your response to that? bonnie: clearly there'll be a difference of opinion when

applying investment analysis technique. which metrics to look at? which will be important? that will be the investors decision. we think there are certain metrics that matter more than others. mr. dudley referenced the third-party research vendors and there are many of them. any of them do not correlate with each other. what you need to do when looking at the metrics is drill down into what those ratings mean. we can be misleading looking at topline ratings, especially in these passive indices because they are going off a number of different metrics, some of which might not be material. i would recommend investors need to roll up their sleeves and think about what matters in terms of the credit worthiness of the issuer. esg bondoking at investing rather than taking the third-party ratings as they are. in terms -- alix: in terms of returns, what if you noticed in returns for esg focused

investment? you get the same? do you have to sacrifice? bonnie: thinking on this has evolved. in the past, people equated esg with exclusionary investing. now we have a lot more data and more tools to work with. we are getting strategies where you are able to achieve the objectives without having to exclude. with those strategies, what we are seeing is you are not giving up performance. during normal market conditions, we are performing in line. we are seeing evidence that when the market goes down and you have downside risk, these strategies can outperform. better risk-adjusted returns. alix: bonnie, thanks a lot. joining me for bloomberg ,commodities edge" later today i will be speaking with the ceo who made a big investment into wind energy. talking about that later.

citigroup says there is a possibility stop to go to zero. pg&e plunges after utility loss exclusive control over its bankruptcy process. bloomberg users, interact with the charts using gtv . this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up later on bloomberg markets, kyle bass, heyman capital management founder. now you're bloomberg business flash. the parent of louis vuitton and christiane dior shrugging off the impact of the hong kong protest.

lvmh reported faster than expected revenue growth. sales of goods rising 19%. hong kong is a key shopping destination for chinese consumers. retail sales slumped, but shoppers are buying fashions elsewhere. apple reversing course on hong kong, the company pulling the plug on an app that shows police activity in the city. a number of companies have found themselves embroiled in controversies involving the hong kong protests. one of the u.s. is biggest -- one of the u.s.'s biggest vapeers will now qualify rs as smokers instead of non-smokers. smokers tend to be charged higher premiums. that is your bloomberg business flash. alix: time for bottom line. we took a look at four companies worth watching. we are joined by cinelli bostick

and look southern -- we are joined by smalley bostick and brooke sutherland. onali: there the last of the big online brokers to do so. fidelity is privately held, so we do not get the same price reaction we have seen with the other online brokerages. they are doing something the other firms have not which is offer higher yields. you do see the brokerages trying to pulling money and business from their customers and all of these different ways. fidelity has 22 million accounts. by comparison, schwab has 12 million. fidelity is the whale in the room. they have been the last of the big ones to cut the fees to zero. alix: i see you the zero fee and i raise you something else. the next company is halliburton. brooke has the details. brooke: they are cutting about 650 jobs in the u.s. rockies.

wyoming. north dakota, this is how halliburton plans to turn its american workforce as oil prices continue to slump. companies diabetic spending as investors push for more dividends and buybacks. this is the ramification. this comes at a fragile time for the macro economic backdrop. week factory numbers, job losses there, when you throw in the oil services number it does make me more concerned about the industrial production weakness start to suffer -- alix: thanks a lot. the third story is delta. that stopped down. the company issuing a fourth-quarter guidance that missed estimates. one highlight was the 2020 non-fuel cost may be a fool percentage but -- may be a full percentage point higher. i spoke earlier to the company

ceo. >> we are always competitive, but we can keep more on quality and reliability, not exclusively on price. the shares tend to stay with delta as we pull it in. alix: the fourth company is pg&e. the stock getting totally hammered. this is a bankruptcy ruling. the court said they no longer have exclusive rights to their bankruptcy. what does that mean? >> we do not know, exactly, but it is definitely bad news for existing shareholders. previously they had the exclusive rights to propose a bankruptcy exit. as soon as you let other people in having as much right to make their proposal, their proposal says the existing shareholders could be wiped out. what we are expecting now is there will be negotiations, there will be arbitration, there will be more rulings by the court.

another six to nine months to go before we have clarity on where this goes. it shows the judge is saying let's have somebody in here besides the existing shareholders. alix: we wind up meeting elliott management, which means they will have a say in how the company winds up restructuring. >> no question. they are not in there to hold the stock for 10 years. maybe nobody is these days. they definitely have a clear idea that they can own more of the company than anybody thought. from we did have a call citigroup that says the company stock could follow zero, a 5% probability. a 75%our perspective, -- probability. if eight utility stop goes to zero, what would that mean? >> that would be the existing shares. alix: they also turn on the

lights. >> somebody will continue to invest in the companies. if worst came to worse, the state would back bonds and step in. conceivably, the state could own the utility. there is a lot of valuable assets, there is just too much debt and too little claims. alix: they are basically cutting power to some customers in northern california because of wildfire risks, do it now versus having liabilities. is this the right strategy? does this make sense? kit: i think they are somewhat desperate now. they see is a struggle to hold onto the company, it is a struggle to keep the system running. clearly they are airing on the side of caution and saying people have to put up with a little inconvenience, but the alternative is massive disaster. not only is that terrible for us

, many billions of dollars, but it is obviously bad for the people who houses get burned and get killed. alix: thanks, really appreciate it. coming up, market jitters, futures whipsaw after futures restart. more on today's "technically speaking." if you are tuning into your -- if you're jumping in your car, tune into bloomberg radio on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. bill maloney joints me now. what a choppy trait session so far in the futures market. how are we set up? bill: futures all over the place overnight. and were only down five, then turning to yesterday we were up a big, and then we had the late day fade on trade news.

where we fell yesterday? the 100 day moving average we've been talking about. resistance levels 2929, the 100 day moving average. 2925 is tuesday's high. 2919 is yesterday's close. yesterday's low, 2907, and then the 2900 level, which at we have been talking about again for the past week. alix: as the death cross gets closer to happening. the next stock is united health. jeffries says there is political risk that could last nine months. there is also enrollment risk. what is the chart telling you? my 2020itedhealth is election forecast stock. it was downgraded 1% in the premarket. going back five years, the chart does not look good. we do have the death cross here. the death cross can be overused. it does make the pattern more significant. you have the pattern here. it has to hold the april lows. is bed,e last stock

bath, and beyond getting a new ceo overnight. stock was up huge overnight. what is the resistance level? bill: we will see a big gap open on the stock. the downtrend back to last april has been broken. you want to look for 12 to 13 as your resistance levels. 12 is a retracement level. 13, 200 day moving average. alix: a lot of room to make up. appreciate it. you can listen to bill maloney on the bloomberg. he starts at 6:00. that wraps it up for "bloomberg daybreak -- america." coming up on "the open" with jonathan ferro, lally top blue. we are -- lale topcuoglu. shots.looking at live

what is on the table? trade delegation to arrive to start the high-level talks in the market. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, global markets whipsaw by convicting headlines the head of trade talks in washington. the white house at securing a concerns the -- a currency package that could see next week's tariff suspended. equities in total limbo. 30 seconds until the opening bell, here's your thursday morning price action. futures lower, down .1%.

all over the place overnight. treasuries up, yields higher two basis points. the dollar a lot weaker against the euro. euro-dollar at 1.1025. let's begin with the big issue. markets whipsaw by convicting trade signals. >> a lot of volatility. >> more volatility. >> uncertainty. >> on-again, off-again trade uncertainty. >>