>> the bank misses estimates and accelerate plans to move into higher growth areas. thentina, they reject market incumbent until back toward left wing populism. delay, this helps the u.k. crash out of the union on thursday. welcome to daybreak. happy monday. we closed at a record for the s&p on friday. it was driven by the cyclical stock. 3026 has already sent futures. .he fed meeting is in focus the weaker dollar is coming right before that. we had a bond selloff here in the u.s. we still wind up having earnings

trickling out here. we are up by about 1%. some of the headlines is they aboutstimates coming in $.94. they are going to add two new directors and the ceo will stay through at least 2020. they do plan that revenue was down. it was a tiny bit light versus estimate. they are adding two new directors. the integration is front and center there. the time is now for the global exchange. from london to buenos aires to washington, our voices are on the ground. let's start in london. the eu agrees to grant a brexit delay until january 31.

lacqua is in westminster. now what? francine: what we know is boris johnson once an election. he wants an election on december 12. because of the extension granted it takes no deal off the table. whether boris johnson gets an election is an unknown. he has various options. he can't just call an election. either two thirds of parliament is behind the vote. that is unlikely. thereses a bill that says will be an election december 9. we do have the opposition party, they will only vote for election if there is no cliffhanger. that could be january 31.

we don't know whether this parliament will vote for brexit or renegotiate between the eu. it sounds rowdy behind you. thank you very much. turnaround effort is 12% in the third quarter. bethe markets continue to jumpy. that is impacting the wholesale banking industry in europe. alix: we have more from london. walking us through the restriction -- restructuring. >> they announced a 12% reduction in pretax profits. they don't 11% return on equity. this comes after the bank ousted its previous chief executive officer, john flint. interim ceo.

he is looking at reviewing the business. he has talk about the u.k. significantg at charges across those businesses. for the first time, he has said he wants the job of chief executive. this looks like a strong signal that he is looking to impress the board that he is the man for the job at hsbc. wherewe had to argentina, the president losses seat -- lost his seat. aires isrom buenos jonathan gilbert. glock us through what we know and what the next 90 days could look like. jonathan: it was a big win for fernandez. it was not as big as we thought was going to happen. it was 8%. it could have been 16% in the

primaries. is problem for investors something he struck in his speech was not conciliatory. it was more campaign rhetoric. formarkets are looking moderation. is very president prevalent on stage and took a very aggressive tone. the good news is hein the lower. a little different rhetoric from the primary. thank you so much for joining us. light on fore 30,000 customers. they warned that more power shutdowns as wind gusts pickup.

what is the biggest hurdle now to bring power back? actually, it's an event coming up on tuesday night into wednesday where the company has up toeople from extract 100 mile per hour winds. the potential wally are restoring power to a number of people, quite a number, these are all large numbers, coming as of tuesday, there could be lots more outages. it is a matter of going from bad to worse. shareholders, for the bondholders, things look very gloomy given that there is a real expectation that these are potentially going to be in the

billions of dollars in damages before the fire season is over. nobody really knows when the fire season is over. d.c. we've had to the president and asked the death of the isis leader. >> he was a sick and depraved man. now he is gone. he was vicious. he was violent. he died in a vicious and violent way as a coward, running in crime. alix: this sets the tone where impeachment will be the question. declared victory after killing that isis leader. he recounted in detailed terms

here at the white house how special forces were able to kill this isis leader. it comes at a time when he faces pressure, local geopolitically. his decision to withdraw trips -- troops from syria, the president announced a permanent cease-fire between turkey and the kurdish allies of the united states. somewhat delivered a political victory for president trump as the impeachment inquiry moves forward over the weekend. there will be hearings on capitol hill. they will continue this week. they will become more public. the president announcing the killing of a

top isis leader. alix: thank you so much. we are going to end here in new york. you've got the fed and earnings and jobs friday. michael: i'm going to quote bette davis. bumpy ride.o be a just about every important indicator you could imagine will be out this week, starting with trade wars. it's going to be interesting. we're watching the trade balance figures. if you want to trade, but the wednesday when we get gdp and the fed meeting. gdp is less than 2%. the fed knows that will not affect them. it will have political implications. will japan increase their qe? income spending, also look to

friday's payroll report. 85,000 is the consensus. at is the smallest since 2017. isn number, will we get three months below 50? all of this feeds into the question of what will the fed do next? youou look at the chart, can see investors see a 90% chance of a rate cut on wednesday. what happens after that? that is the real question. change by thel end of the month. thank you so much. but of the story we are watching this morning. story we're watching

this morning. president trump got some hearty boos when he was announced at the world series. the nationals took on the houston astros. the washington post reports the booing coming up on this program, more of your morning trade analysis. this is bloomberg. ♪

alix: we give you the news and the trade analysis of the markets.

we have our team of insiders. one question on brexit, is there a trade? johnson is going to try to get a consensus to build a four and election. he is not going to get it. nothing is going on, waiting. it's going to go to january 31. i don't know why anyone is surprised. we will be looking at the same thing. it's been three years. we will get three more months of sloshing around. we will see what happens. alix: i love how you said that. different on to a political dysfunction. for you, you have this 100 year bond. what is the trade?

>> i hate to be more of the same. these markets are terribly liquid. after the election, people had a class is haas -- half full and tally. a be he will hire the right people. tosonaro did not agree congratulate him. speech, heory mentioned him being imprisoned incorrectly. it is already starting in argentina. they don't really trade is a goodly as you would like. i think it's going to be a very contentious battle. upx: i like that you brought brazil. it feeds into the agreement they have. that is also a negative. be the biga will

drag. the rest of latin america has done relatively well. if you are talking about emerging-market shares, there are eight companies in argentina that are members of the index. seven of them are down 25%. 60% sincef more than 2017. it is half since the summer. this is not the market preferred outcome. experienced this in argentina. we are looking for a catalyst to buy. there is just not a lot of reason to get excited. >> you made a great point about the eight companies. they trade in the u.s. people try to reengineer the blue-chip. this shows where it might go. nearly 60 to the

dollar. i have heard tom keene talk about that all morning. there is a can structural arbitrage built in. indication,t is any i think the pace is going to weaken. >> we could see a real jump in impression -- inflation. the black market, the dollar traded comes back in force. boarde the inflation telling you where prices have to be. alix: why would that happen? kershner is now the vp. if you are a ceo, you're going to be talking to them. why would that scenario happened? look, there is no question

fernandez came in. things have changed quite considerably. there are 11 counts of she may let fernandez run the ship. there is the risk that she puts the person and he's responsible for privatizing. there is a lot of this. .t's a return to kershnerism >> you can't say you are going to have a repeat of the past. we know what happened. i do think you want to make that point. the future from the imf will depend on some sort of revolution, some market friendly action emerging. this is not 10 years ago. we went through that experience. reforms he is

proposing are going to depend on some degree of imf funding. you have to prove that you do have a reasonable government structure. >> we haven't seen any policies yet. imf is overbooking. they always get the money back. he is going to have to put policies in place that they are comfortable with. will he stick with those once they get the funding? alix: to the point you made at the beginning, there is value there. you don't know when. growth is now underperforming. value wind up seeing outperform in the u.s.? do we finally see it back in

europe? if you address value rotation, we have had these bounces. we have had roughly eight of them over the last 10 years. they are relative to growth. we have had about seven percentage points. it should have happened all year this year. value earnings have been outperforming growth. facing out going into 2020. you get earnings. the gross earners will outpace the value sector earners. this should have been happening in 2019. in the u.s., this is another dead cat bounce. you get much better performance in financials. we are skeptical that can

happen. globally, are you going to get a brexit? that's for the value is. is there going to be a recovery in japan? i think this is a huge question mark. who knows? we don't know where the value trade is. growth is overvalued. so what? it's been overvalued for 10 years. what really matters is whether you get rotation and earnings. we have had that for most of this year. all you've got is 700 basis points. >> everything you just spoke of his the second quarter story. we are not going to see any resolution until the second quarter. >> i'm looking forward to wednesday. at some point, they are going to dial back fed stimulus.

if he missed communicate that message, all bets are off. the financials, getting the margins back up, that is key to the u.s. economy. i'm skeptical he is going to deliver that message. alix: what is wrong with you? thank you so much. happy monday morning too. you can find all the charts on your terminal. browse the features and check it out. this is bloomberg. ♪

>> you are watching bloomberg daybreak. jpmorgan may shrink its footprint in new york. the bank is considering relocating out of the area.

that would help rein in costs ahead of a possible economic downturn. they are committed to the new york area. it is healthy to review where employees are based. shares of hsbc are falling. profits missed estimates. a abandoned a key market for returns. the bank warned of significant restructuring charges. the acting ceo is getting ready to make steep cuts in underperforming businesses. the all stop deal is valued at $9.7 billion. liberty specializes in warehouses. that has become a hot part of the real estate market as more shopping moves online. that is your bloomberg is this flash. ba confirms it has held talks with tiffany's about a

possible takeover. 14.5offered to buy it for billion dollars. the tiffany is evaluating the bed. the deal is too low and they need a higher price. it would be the biggest acquisition ever for lvmh chairman. coming up, it's a big week in the economic sphere. you have the bet -- fed, you have the bank of japan, you've got gdp. we will break it all down. that's coming up next. happy monday, everybody. this is bloomberg. ♪

alix: this is bloomberg daybreak car let's check in on the markets are the s&p closed at a record on friday. is it a dead cat bounce?

things like industrials and metals rally friday the cyclicals of value stocks. is it enough to lead the market to another new high? in europe, you are not seeing movement anywhere you look. of 1% as the 1/10 dollar gets weaker. watch. we will talk about that in a moment. selloff in the bond market most pronounced in the u.s.. that curve continues to stephen at 19 basis points. in the u.s. and globally. have a right decision from the fed wednesday. on.brexit impasse rumbles the divorce looks to be extended again. we get the u.s. drops report -- jobs report friday. what is the most important event you are looking at? the two most important

events -- one is the fed. the fed is likely to cut rates. they have introduced some movements in terms of putting standing rates in place. we have the liquidity story helping along with this global inflation trade. the dollar is going to be stronger for longer. that is one way to think about it. tied that back to brexit. -- iwe have in brexit is heard about the trade around sterling. i think sterling should be lower. if you look at it versus high-frequency, it should be trading about $1.26. we are reducing tail risks, but we may have an election. we have more uncertainty about how this winds down. we have to consolidate in the near term. this is the dollar index. really sitting on that 100 day, one below the 200 day. why do you think the path of

levers -- least resistance will be higher when we continue to have a bigger fed balance sheet from the republican markets? -- repo markets? fed and ecb are offsetting each other. i do not think the euro-dollar is central bank trade. what is driving euro-dollar is global growth dynamics. if you think about the tools we look at -- there is a macroeconomic driven framework. one tells us we should be short and the euro because we are not seeing acceleration and european growth. we have not seen stabilization and asian growth. thedollar is moving in opposite direction of rate differentials. u.s. rates are rallying faster than the g9. this goes back to why the fed is cutting rates. the fed is not cutting rates because the u.s. economy is slowing. they are cutting rates because the global economy is slowing. they are worried about externalities of the global economy coming back into the

u.s.. if you want to talk about emerging markets or the higher beta currencies, those are relative value trades. i think euro-dollar is still sidelined in an environment where the fed looks like they are ready to pause for a little while. we are not seeing any acceleration and european growth. alix: i am glad you brought up the fed and the pause. what markets are respecting for wednesday and that is the probability of a rate cut. we are at 99%. what do they forecast after that? do you think this is the last one and then we go on pause? how does the market recalibrate to that? mark: i think they want to be as lack of forward-looking as possible. they have been extremely forward-looking since the acceleration of the trade wars. you could argue we have seen central banks providing accommodations for

forward-looking guidance channels since the beginning of this year. they want to move to the sidelines and say, "we are going to track the data. wherever the data goes, we go. we are not likely to see acceleration of the trade wars." it is enough for them to say we are going to sit back. we are not going to say whether we are going to cut or hike or be neutral. they are going to sit back and say we are going to assess the data and let the data guide where the next direction is. a pause would be hawkish for the dollar given what is priced in. >> good news for the boj. what you expect out of the boj? i feel like there are conflicting reports every day. view ise boj and our essentially winding down stimulus in an effort to stephen the yield curve. what they are trying to do is .teepen the yield curve most of our metrics shows the end 15% -- the yen 15%

undervalued. they are cautious about allowing -- allowing capital flow to come back into japan. they have offered more room to push currency outside of japan on an unhedged basis. that offsets repatriation. if you look at money supply growth, the amount they are purchasing, if you look at the conventional how well is the japanese balance sheet expanding, what you're seeing is they are moving in a more hawkish direction. it is clouded through language and other policies in the japanese economy. i would say on that it should be more hawkish. our framework that looks at relative yield curves shows you should be along the yen on yield curve dynamics, which is not something we have seen in a long time. you take that plus an undervalued currency and the yen is strengthening more for macroeconomic reasons. alix: interesting point. i am not used to that. let's get your favorite trade

here. what is your favorite dollar trade right now? >> i would say one of the two things that are very interesting -- there are two currencies trading like emerging markets trading with a discount. that is norway and new zealand. we spent lot of it is a lot of time traveling around europe last week. people in scandinavia -- the major question is what is going on with our currencies? why don't we understand them anymore? norway is trading like an emerging market. if you think about what is a good trade to give you cushion away from the u.s. dollar, you're basically selling the canadian dollar against norway. it is a cushion against the fed, another way to play the bank of canada. pure dollarto save trades, you're probably along u.s. dollar versus euro or sterling. alix: mark mccormick stay with me. viviana hurtado is here with first word news. leader: islamic state

abu bakr al-baghdadi was under surveillance for weeks. at. after being cornered in northern syria, president trump says al-baghdadi blew himself up. he spoke openly about coronation with russia and turkey. the european union agreed to give the u.k. a three-month brexit delay until january 31. that will prolong uncertainty for businesses and citizens but also ends the risk of a damaging no deal exit this thursday. british prime minister boris johnson is pushing his own plan to resolve the deadlock. today, the house of commons votes on his call for an election in december. in argentina, the opposition leader will be the next president. he won 40% of the vote. voters say no to the austerity program of pro-market president macri. this marks a return to a

movement that traditionally favors workers over business owners. is slashing the amount of u.s. dollars it citizens may by. global news 24 hours a day, on the air at tiktok, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. -- before this's weekend's elections in argentina. here is what he had to say about potential nationalization under fernandez's presidency. >> i am not saying it could not be a venezuelan scenario, but you never know. we have not seen that before in argentina, but we have to look carefully at what people are saying. alix: mark mccormick still with me. we are getting headlines over in argentina. the central bank governors says fx controls will not affect monetary policy.

you can only swap about $200 worth of u.s. dollars. it is pretty grim. would you be trading this today, and, if so, how? still believe what an earlier guest says. this is a very illiquid market, not a macro trade. argentina --ade toe trade argentina. it is tightly linked to what is happening thereafter the central bank is creating capital controls. what they are trying to do is limit how much foreign influence you can have in the currency. while it is likely to continue to weekend, it will be hard for anyone to participate in that. reserves for fx argentina. we are at 43 billion. that is nothing compared to the interest payments they have to pay to the imf. can you think of a time you have seen this in emerging markets? how bad could it get? mark: it can get worse.

we have a transition in a government, another movement into a place where people still feel uncomfortable trading. there is not a lot of investment coming into argentina to offset this. when we go to an environment where the central bank is controlling the flow of liquidity -- what i think happens here is people look for proxies. they look for proxies to express and argentinian view and potentially other currencies they can trade on a global macro scale. this is one that is trying to be kept out and handicapped for foreigners to participate. alix: what is your favorite em trade right now? mark: if you look at what is really the story around em, there is a weakening global growth backdrop which i do not think is going to settle down for the next couple months. you have an environment where there is value, positioning, and global growth. global growth is a negative for em. there is room for local fiscal policy through india. if you think about what is a

good way to think about a potentially euro that is moving sideways, a hawkish dollar, certainty around growth and trade wars, euro-india on the downside is one of your trades that insulates you from these global factors and allows you to participate in a possible recovery in em, especially since you get positive real rates out of india. alix: always good to catch up with you. the u.s. energy secretary as saying show productions turned the world on its head. shale productions turned the world on its head. >> united states develops the technology come up with the technology into place. we are reaping the benefits. the world is reaping the benefits. cheap energy is a good thing for the world. alix: oil and natural gas has made the u.s. one of the largest energy producers but many disagree that can continue as

existing fields decline rates. up, a bank goes through its biggest overhaul in years after profit misses estimates. if you have a bloomberg terminal, you can watch is online. go right to tv on your terminal. this is bloomberg. ♪

>> this is bloomberg derby -- daybreak. coming up later on bloomberg equitiesa real estate chairman live from the robin hood investors conference.

now to your bloomberg business flash. amazon may contest the pentagon's decision to award a $10 billion contract to microsoft. amazon was seen to have the upper hand in the competition, but president donald trump has been at odds with ceo jeff bezos . he owns the washington post. the president claims the paper has treated him unfairly. singer taylor swift will help promote the world's biggest shopping spree. she will headline single days in shanghai coming months after she performed similar duties for amazon's prime day. last year, alibaba took in more than $30 billion over 24 hours. ceo tried to raise money for the successor to the gargantuan vision fund. they are considering investments. they may include a pharmaceutical delivery start up, a company focus on robotics,

and lab grown meat. some investors have doubts. softbank made a big bet on we work. it went sour and last week they bailed out the company. to coverare going three things wall street is buzzing about. first, the massive overhaul. the biggest restructuring in years after missing profit estimates. vuitton offers for what could be its biggest takeover ever. jp morgan mulls drop ships out of new york. it is shrinking its workforce in his home ground. joining us is bloomberg's ed hammond. b.t's start with hcs >> we previously got into that 700 milliono

dollars to produce a similar run rate saving for 2020. i do not think those numbers have changed, but in addition to that i think we do expect structuring on top of that. result in additional severance costs. >> he had party balloons up in the background. -- we know biggest he wants the top drop on a permanent basis. he has decided he is going to take pain up front and try to push through the harder decisions, notably of the restructuring of the jobs. that alone can produce income by about 8000. it is interesting because it is a win-win for him. if the market decides he is doing the right thing, he probably gets to keep the job.

if you market decides he is doing the wrong thing, he leaves someone else. it is a smart move on his point tolet's move to the second stor, louis vuitton making a bid for tiffany. walk us through what the bid is and how much higher needs to go. >> we understand they made it within the last couple weeks, so it is interesting that nothing had happened until this point. -- there has not been serious engagement. they have been looking at it with their advisors. it is a first bid. it is all cash, which would suggest lvmh has some room. if othersit to see jump to this process? then you would have a competitive auction. tiffany is a high value brand. it is something that will get

you a big toehold in america. the chance of just lvmh wanting this is slim. alix: i was looking at some research. it was saying why would you pay more for something that has slowing sales and not growth you would be expecting? tiffany is going to want a higher bid, but why would you pay for it? brand,fany is a visible particularly in america. it is an interesting question. the true luxury when we think about it from the french point of view -- they will look at something like tiffany as being affordable luxury. is potentially why they would pay more. lvmh is so big, a $220 billion company. even if they pay up another few billion dollars, it is a relatively small acquisition for them. it gives them that presence in the u.s.. tiffany is a great brand. alix: bidding war?

ed: yes and no. had this not leaked, potentially they would have locked it up. betweenongoing feud and another tighten a french industry. it is likely they would go up against each other. alix: that would be fun. get the third story with jp morgan weighing shifting thousands of jobs out of new york, maybe even closing their headquarters here in new york. what was your take away for this? new york is often being written off at the moment. they are going to move jobs to columbus, ohio or texas. demise arenew york's often greatly overstated. i do not think we will see jp morgan make a real retrenchment. fromnk a lot of this comes

if you are trying to hire people into investment banking, which is hard already because they want to going to tech or hedge funds or private equity, you need to make it ability to them. in some ways, being in new york is appealing but some may want to live in plano, texas. a lot of them are flocking to columbus, ohio. they are not known as hubs of young, vibrant -- alix: we have seen hampton real estate prices go down. the most expensive apartment in new york -- that priceline is going down. it is going to have that interesting trickle effect. ed: it is good for us new yorkers. alix: you're in the market. ed hammond, thanks a lot. i push it is the return of anti-elite government in argentina. that is coming up. if you are heading out, jumping into your car, tuned bloomberg radio on sirius xm channel 119.

this is bloomberg. ♪

alix: the argentine peso begins trading in an hour's time. the country's central bank is in currency control. put on your old-school traders hat. what would you be doing today when it comes to argentina? >> i must confess i will be doing exactly nothing because back in the good old days there used to be liquidity in global emerging markets and increasingly particularly for argentina and brazil it is all in new york now. the bond prices are sketchy. what happened last time when we had the primary -- we saw prices in london look like they did not move much.

when they came into new york, they plunged. with the currency controls, i am looking at what has been happening in turkey. you have seen some amazing cots this last week, much more than the market expected. what did the currency do? very little. basically the same is happening in argentina. the moves you will see today will be less than we saw at the primary. it has been priced in and liquidity is no longer there. alix: is there a proxy you now look at? marcus: some of the shares are worth looking at in argentinian equities. i think this is -- by the opportunity here. no this is going to be not as bad as this could be. changes maybesome with macri. they will look at opportunities to buy some stuff but wait for

stuff to clear, for liquidity to come in. we know inflation is high. a lot of bad things going on in argentina. if we get good news politically from this, nice words coming from the new president, maybe this is a chance to have a look at argentina again. alix: great stuff, marcus. thanks for joining us, marcus ashworth. coming up, we will be joined by -- take a look at premarket movers. solid, microsoft getting a nice defense contract from under amazon's nose. a nice bid for tiffany as well. ♪ ♪

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daybreak on this monday, october 28. i am alix steel. here's everything you need to know this hour. >> he will never again harm another innocent man, woman, or child. alix: president trump got a political boost just when he needed it. just how u.s. special forces were able to kill this isis leader. alix: the president announced a daring raid by u.s. special forces in syria killed the government's most wanted terrorist. he said abu bakr al-baghdadi blew himself up after being cornered. fires are burning out of control in northern california's wine country. >> potentially going to be in the billions of dollars in damages before the fire season is over. alix: that forced the evacuation of over 200,000 people. pg&e started restoring some electricity to californians who lost power in the biggest

deliberate blackout yet. president trump got booed last inht at the world series washington, where the nationals were taking on the houston astros in game five. in the markets, the question becomes is it a dead cat bounce or a sustainable rally? we hit highs for the s&p friday, but really led by the values sector. is it enough to catapult it higher? it is a mixed dollar story. different opinions there of what happened into that fed meeting, particularly felt in the u.s., yields up by about four basis points. joining me now is romaine bostick.

>> i did not watch the game. alix: you have the astros d.c. anddc and -- in the d.c. guys winning -- you don't care. >> i was a former washingtonian. at what point -- at one point it looked like the nats were going to sweep. it looks like a good competition and i'm sure that is what the mo b wants to see. week, a busy week last another busy week this week. facebook, apple, alphabet. expectations are high. they have fallen out of favor. all of them are down with the exception of apple on the year. to get their mojo back and show they can reinvigorate not only growth but to get that swagger downthat has been pushed

-- it will be interesting to see. remember.i'm sure you point, s&pat companies have reported earnings so far, 40%. you have facebook, apple out later this week. joining us here on set, sameer samana. you heard some of the big names for this week. what is your biggest take away from earnings? sameer: much like last season, it is not as bad as expected. the tricky part is we continue to see this game being played where estimates get taken down right before the report and then they came out better than expected. the tricky part is growth year-over-year continues to slow. it is a little better than expected, so that is a short-term sentiment used. >> when you look at the guidance

we have gotten, that has been part of the rally. companies have stuck by that guidance. in a couple cases, like with intel, they have raised their guidance. , that buy into that forward-looking, upper looking? sameer: we focus more on guidance than on results because it is forward-looking. there is a lot of uncertainties. we take guidance with a grain of salt, especially once you step away from tech. if you look at the industrial sector come out once that are more tied to global growth, global trade, they are tending to guide more cautious. we have seen what fedex has done in recent quarters. that is the part that worries us. having --ou wind up apple is outperforming. does that continue? what do you see? howine: it is interesting

apple became the value play among big tech names. unravel.at complex you look at the upper performance microsoft versus these other companies now. it will be interesting with google. when you look at the trajectory , ifave had over this market you believe we are not at the end of this bull market, are those faang names the wants? sameer: toward the end of the cycle, people gravitate toward the staples come health care, utilities. you get this mix of stable growth and dividends. that is what people gravitate towards. if this ends up being a midcycle slow down and we re-accelerate out of here into next year, you probably want to own those value-oriented names. we are not quite sure that is the case. sameer: is romaine: is apple value? sameer: that is how it operates.

alix: what is it? would you buy it as a value play? sameer: if you are looking at technology and looking to play a market leader that does not trade as expensive as its peers, apple probably does represent value. within tech, it probably is a value stock. alix: i want to move to an interesting article that came out. j.p. morgan talked about overall profits. you can see the divergence. earnings you can change how you structure them have risen. is this a good way of looking at how to value companies? sameer: you would like both of them to move the same way. you would like sales and earnings to move in the same direction. more and more, if you have divergences, by themselves they

do not mean a whole lot. it does not mean the earnings are not growing. it tells you there is adjusting going on around the margins and usually companies adjust more when growth is slowing than when growth is plentiful, in which case you can say look how strong the top line was. now it is more about look at these adjusted earnings, how great they have been. that tends to happen later in the cycle as opposed to earlier. romaine: someone argue to discount that divergence or gap is more about the larger companies dominating the earnings and the market in general. that might explain the divergence rather than some huge difference. sameer: that is why we think it is such a great point. outycles end -- we just put a report about how markets end -- smaller cap companies struggle first. the canaries in the coal mines tend to be the companies with the least flux ability.

those have a tough time increasing profits and start to go first and then it catches up to large caps. romaine: we have not gotten to the small-cap earnings yet. so far, things are good with regards to larger s&p type companies. when we get to the mid-cap and small-cap companies, how confident are you that we will see those earnings even though the bar is low? sameer: we don't. earningsyear, estimates for small caps, according to bloomberg, are expected to rise about 30%. we do not think that number will bear fruit. the tricky part is you have already got -- if you look at the russell 2000 -- about a third of it does not have moneymaking companies. from that standpoint, you are seeing struggles on the small-cap side. it is probably telling us that analysts do not know how to adjust those estimates. by the time the earnings come through come a disappoint will show up. in the overall market, we think we are close to fair value.

you are starting to come back to a little bit of an alternative. as you approach 2%, it probably does make sense to rebalance some money from stocks back into bonds. samana will stick with us. more on his outlook ahead. some news on tiffany -- tiffany is considering lvmh's bid. they are looking at the $120 per share bit. they confirmed receipt of that proposal and they are looking at it. will they like it and will the money wind up being enough? there are two schools of thought. they think they are undervalued, but why would you pay up for it? romaine: i think investors are going to be the pushback. 100 play dollars looks like a $120 looks like a good offer. i could see this being bumped up into that $130 range.

for tiffany, is it worth teaming up with lvmh? tiffany is a strong brand on its own. they have relatively strong management. some of the problems they are going through now or more cyclical. maybe they wait this out. alix: it is a busy week ahead of the ego market. you have two central banks on jobs friday. this is bloomberg ♪ s bloomberg ♪

alix: central banks will take the spotlight again with a fed decision wednesday and the bank of japan thursday. the brexit impasse is rumbling on pure the divorce date could be pushed back again. friday, we get payroll data here in the u.s. sameer samana is still with

romaine and i on set. what is the biggest thing you will be watching on where we go from here? sameer: it is probably going to be fed. they do not have a lot they can say except we will probably give you one more rate cut in october. that probably means they are done for at least the year. we think maybe they think about cutting rates again next year if the slowdown is persisting. we think they probably tell you now that things are pretty good from an inflation standpoint. one more is warranted if you're going to make a midcycle adjustment. once you go more than three, it is no longer a midcycle adjustment, so they would have to change their language. romaine: i am curious how you think the market is going to react if the fed does pause or indicates this will be a prolonged pause. sameer: we think volatility comes in. we think the market continues to be a little bit too aggressive on the rate cut outlook. we think the fed and the markets

start to diverge, especially if the stay dry trade deal gets done and the u.s. and china continue to talk sweetly to each other. [laughter] alix: when they are on the phone call. romaine: phase one of a trade deal that could be multiple phases -- we know trump wants to get this done, phase one done in time for the apex. what is the significance for the bottom line and the economic bottom line? it seems like phase one is rather than some of the longer-term. sameer: it probably does not mean a lot for growth, but it does mean sentiment starts to reverse a little bit. for the last few months, we have had a situation where both sides have continued to escalate. if you take the escalation off the table, markets can refocus back on the fundamentals. you probably have a good chance that some of those pmi's bounce back, consumer confidence stabilizes. aboutn start to think

president trump wants to win reelection. he is going to buckle down and focus on the economy. that would be good for markets. romaine: we have the nib data overnight that seems to suggest that while people are concerned about trade you did not see sentiment falling off a cliff. there seemed to be strong hiring, relative willingness to boost wages in order to attract workers. while it has, declined, is still at a high enough level that it could rebound rapidly. sameer: we think so. it is one of the reasons we have not been in a recessionary camp that may a few people are in. there is still a strong consumer. wages are outpacing inflation. what we really need is this headwind to go away, which it seems like it will. alix: then you have goldman sachs saying the cash position is one of the lowest they have

seen in five years, meaning if everything did work out there is not much money to be pulled out of the sidelines into the market. do you see that? sameer: we do. if you look at household out in terms of what equity ownership looks like, it is above the historical mean and average. you have this notion that there is going to be more equity allocation. could you have more flows and equities? that is possible. romaine: you still have equities that are above their average line for the market cycle and you have a fed now that presumably is going to pause. you are not necessarily going to have that of rates falling down. sameer: it is not a concern. it means you have to be more selective. we have talked about value trade. that is an area where if rates are going to stabilize you could see financials. you have seen some real strength out of banks recently and that could be sustainable from the standpoint of some of the places

that have not played over the last couple years. everything?nds what is going to be that turning point where you have to go into more casual rotate? -- cash or rotate? sameer: one of the earliest signals is the yield curve. the yield curve can be years ahead of a recession. that is one thing to consider. the other thing is things like credit spreads. those start to take up. we have seen a couple times now where energy and credit spreads come back into play. that is something to watch. the consumer -- more and more, the u.s. economy is becoming consumer oriented. it is not so much retail sales but consumer confidence. that could get a damper put on it. vitriol comes back and consumer say i do not know what to do so i'm going to take a pause. that could lead to a recession. romaine: when you look at the corporate debt picture and where it is at now, the concern is

there is not necessarily a bubble. is that not necessarily a worry? is that not enough to give us armageddon? sameer: that is something to be concerned about. there is something in there for everybody. bulls tell you if i look at servicing, look how low servicing is. that is true from the standpoint of rates are low. when you have credit spreads data, wehave economic have sentiment turn on you, those rates spike up and the servicing becomes an issue in a hurry. we have been telling people there is this latent risk in terms of the debt levels that are outstanding. there is nothing to suggest that is going to be a problem in the short-term, but it is one of those things you are going to worry about when the cycle turns. alix: how do you diversify that? sameer: alternatives are a great way to get some of the equity exposure. we have told folks maybe a

little bit more on income. we recently upgraded utilities. alix: even after the round they this point in the cycle you want to stability in your portfolio. we talked about equity allocation andif you look at ths still under allocated, it is probably cash. the reason for that is due to rates being low. people shy away from cash and of going everywhere else. this is a time to rebuild those cash balances so you can be more tactical. romaine: what does that mean? does that mean moving straight to cash or going to the short end of the curve? sameer: a little bit of both. if you stay high in quality, give you a little bit of caring. those are two areas we have focused. you do want to plain vanilla cash to a certain extent. romaine: given that we know the fed is now active in that short and market. consider howyou

flats the curve is, there is no pick up by going further out and taking on that additional duration. we would say at least right now the iceberg is melting. the fed continues to cut those rates, but they probably only have one more and it is shrinking slowly and probably stabilizes in the near future. alix: the iceberg is melting and talk sweetly. those are my big takeaways. thanks a lot. coming up, power is back to some of the 3 million californians who did not have any this weekend. that could be short-lived as pg&e inspects power lines for damages. utility is tanking in premarket. we will check that out. this is bloomberg aaron -- this is bloomberg. ♪

viviana: you are watching bloomberg daybreak. shares of at&t are rising. the company won praise from elliott management for its new three year plan. the telecom promised to do much of what elliott has pressed for, including separating its chairman and ceo roles. after he happen departs 2020. spotify adding more subscribers than expected in the third quarter. it is keeping music streaming competitors in check. spotify has maintained its lead over apple and amazon. jp morgan may shrink its footprint in new york. is considering relocating out of the area several thousand employees. that would help rein in costs ahead of a possible economic downturn. jp morgan says it is committed to the new york area and it continually reviews where employees are based.

in northern california, wildfires are raging. pg&e began restoring electricity. in these -- electricity in the largest deliberate lockout ever. -- blackout ever. electricity tof keep downlines from starting more fires. alix: what i find interesting with this is this is not going to end. who winds up footing the bill? there are still debates whether comes to the state or the company or the shareholders, the bondholders. who is going to pay for climate change? aboute: we always talk this. there are a lot of small businesses that lose $1000 a day. that could be the difference between them -- make or break situation. a lot of them point back to the government there and say you have to compensate us.

this is another issue the government is going to have to deal with, not only the cost to fight climate change but if you continue to have these preplanned back out -- blackouts , how do you compensate businesses for their lost revenue? restructuring the winds up becoming, who is going to own that stock? governor newsom that warren buffett should buy them. why? alix: they are going to have to fix it. whether they have to move powerlines underground, fix the grid, they have to put money into it. why would you have to own the stock? amaine: this seems like massive government project, unfortunately. it will be interesting to see if state lawmakers can get it together and figure out a solution. they will. probably need federal help. -- they will probably need federal help. cost the two stoppages

upward of $3 billion. for individuals, $3 billion is a lot. thesee: when you see images of napa valley ms some of these vineyards going up, if you are planning a vacation ec this -- -- and you see this -- alix: pg&e cut off power moments before they had another failure of electrical equipment. is the return of the anti-elite government in argentina. we will take a look at that. this is bloomberg. ♪

alix: this is bloomberg daybreak. is this a sustained rally above 3000?

on friday.rd it was led by the value stock. other asset classes have a mixed dollar, up by 0.1%. the hardest hit here in the u.s. was 48 hours ahead of the fed meeting. 19 basis points is the spread. picked fernandez to be there latest president. he will meet with the current president. build the argentina we deserve because it's not true that we are condemned to this argentina. build again the country that our fathers dreamed of. alix: joining us is patrick in buenos aires. what happens now? patrick: good morning. i think fernandez faces competing demands between his

populist base that wants to see more social spending, more spending on the poor and vulnerable and investors. they have $100 million to re-profile with its creditors between the imf and private creditors. it's going to be a delicate balance between satisfying his broadbase that has a leftist coalition and making sure he resolves argentina's debt problems right now. it's going to be interesting to see how he moved sort of fee imf. moves forward with the imf. >> when you look at the results, you have a situation where the party isn't as defeated is some thought it was going to be, how does that complicate things in the long-term? had a muchs party

better showing than we expected in congress. congress is more divided. we could see more gridlock and more moderation from alberto fernandez when he realizes he needs the party to move some of the structural reforms. so far, we've only seen more leftist rhetoric. he talked about the former brazilian president who is in jail. he ran against the former president who implemented a live populist policies. a more left-leaning alberto fernandez. with a divided congress and gridlock ahead, he may moderate his message. for: thank you very much joining us. for more on argentina, we are ceo of an upstream oil and gas company.

there is currently in oil price freeze after the primary. also with us, the private equity fund ceo focused on south america. thanks for joining us. let's start with you. once the number one thing you want to see? the oil sector has been the main issue apart from how imf negotiations will go. that is the short-term focus. thisld like to say transition into a more left-wing government and having ties with other leftist politicians in the region, this is the first time there is a transition democratically between opposition and government candidates.

i think there is some type of maturity here in the political system. that bodes well for the country. i would like to be optimistic about what the immediate future will bring us. >> they have responded more mildly than what some people were thinking it would do. do you think politically we will get more of a moderate the party given didn't loses many seats? >> the intention is not to be moderate. they don't have that built into their mentality. journalists reached out, it's a clear example of that. we do have a closer election. he will need some help in order to get some of these reforms passed congress.

the idea, the willingness is a negative one. alix: was this offered up because of the oil price freeze? a you think you will get rollback of the oil price freeze? what do you do? >> i think you will see controlled racing into next year. there will be a progressive scale. you have to realize your sales will continue to go up toward the exchange rate is. we are about fixed. peso is trading over 60 now. you are going to see that in the fernandez government. they will be juggling many things that will be focused on how to manage the negotiations

with the imf. alix: what they need is your money. they need somebody to invest. what would it take? >> it is at 60? is it really at 80? what we need is some stability around it. the biggest issue is a lot more related to liquidity insolvency. there is only really one creditor to this country, the imf. they need to sit down with the imf. lagarde is no longer there. give thehat's going to effect of where it's going. you need to think about it internationally. >> how much do you think the imf will give them? >> i think very little. it's very little impact.

a 50% haircut would only affect 10% gdp ratio. a seriousneed discussion with the imf. back, doesmf pushes that force fernandez to take more extreme measures? view,from your point of as a ceo, when do you change business plans based on what the government will do? adaptedave to be changing your plans. we have been it, even after the election where fernandez had such a wide lead. our plans to look at to make sure we are focusing on low hanging fruit and more conventional resources. even now, that has to be balanced with meeting our

commitments. we continue to drill. year, werd to next will have to see what happens in these first couple of months with the transition and where things and that. >> to you maintain your business activity? do you ratcheted down? >> you tighten your belt. we are good at that. we came into this company and restructured the company and major was cash flow. we are doing the same thing. we are trying to be as efficient as possible. we are trying to focus on the growth and the development. alix: to broaden this out, you have an election that was difficult. you had a violent protest two

weekends ago. ecuador was forced out. when you look at latin america, what do you see in the space? to talk about the local opportunities. however, if you don't have any inflation, you know exactly when that's going to roll back. when you look across the country , where are the fundamentals? what do you want? do you want stable inflation so you can invest u.s. dollars? you can look at companies that are looking forward to reaching out. yes, it's very sad what's going on in chile, the fundamentals are still there. brazil, the same way.

brazil started 25 years ago. when we look at where we should invest, you should still look at theseopportunities on demands and transformation. you need to have a certainty. be companies we don't know. i think chile is still start strong -- quite strong from eight financial standpoint. i think colombia has a strong play also. outside's the only area to develop shale. government is going to have to give leeway to that area. the revenue and the oil to develop it. what changes that.

we still haven't seen it. >> it has started to happen. the exposure to nationalization, historically, argentina apart from the situation has not seen that action. whens in his second term it started to take off. now, there really has been momentum that has been built. that he wasfact indeed pro business, if you look at the fact, he deregulated the market for over a year. of brent 14 months linked pricing. there is no other play in latin america that has the size.

70 billion barrels of resources is the conservative estimate of what the price is and the amount of oil. if you go to brazil or mexico or ecuador, mexico has 10 billion barrels of reserves. brazil, it's a little bit more. 2.5 billion. magnitude of that prize, the environment in which you can operate, i'm sure that will arete the elements that needed. the question is what speed? it will take 30 years. that opportunity will still be here. i think we are looking in terms of the next 10 years.

there are other places that will be a lot safer. numbers, weive you have gone up to 100,000 barrels a day. you'll probably see that continue as we do you risk the plate. >> i agree with you. this is a long-term trend. i am more skeptical about the short term. you have an oil auction coming in. more flow to see toward the country that is more stable and see how it is going to play out. leftist government, you have to talk less about politics and more about the fundamentals. alix: and that's how you make a market. thank you very much. i appreciate it.

thank you both very much. we have an update on what taking headlines. before the attack by special forces, the islamic state leader was under surveillance for weeks. he was cornered in northern syria. he blew himself up. the president approve the attack on saturday morning. he spoke openly about coordination with russia and turkey. the european union gave the u.k. a brexit delay. that will prolong the uncertainty. it also ends the risk of a damaging no deal exit. the british prime minister is pushing his own plan to resolve the deadlock. the house of commons votes on his call for an election. they will shake up the government.

it's in response to civil unrest across the nation. a march drew more than one million people this weekend. this prompted protesters to take to the streets. they are raising pensions and the minimum wage. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. alix: thank you so much. coming up, it's the blue box bid. your --dy includes do dior. you can interact with charts around -- throughout the show. this is bloomberg. ♪

alix: president trump is speaking live. beanother good day will taking place in the stock market. good numbers are happening all

the time. we are in record territory. that's great for 401(k)s. it's great for jobs. things are going good. do you have any questions? we are thinking about it. the queestion was in my releasing certain parts of it? yes. think rudy giuliani is a great crimefighter. he has been a great crimefighter. he is always looking for corruption, which is what more people should be doing. he is a good man. looking probably to be ahead of schedule to sign a big portion of the china deal.

we will call it phase one. it's a very big portion. we will take care of the farmers and some of the other things. we will take care of the banking needs. we are a little bit ahead of schedule. we will probably sign it. the meeting is scheduled for chile. they are having some difficulties. i know the people and they will work it out. i don't think it's aggressive. i would be surprised if he made those comments in a negative way. i don't think the response would be if he meant that. >> are you concerned nancy pelosi and others can't be trusted with this kind of information? >> they were talking about why did my give the information to adam schiff and his committee.

i think he is the biggest leaker in washington. we all know that. i have watched him leak. he is a corrupt politician. he is a leaker like nobody has ever seen before. we had a good conversation with the ukrainian president. it was perfect. they don't ever talk about the conversation. now they don't want the whistleblower. then they had a second whistleblower. when then is whistleblower, when they saw what the whistleblower wrote and when i released the conversation which for no relation, they said their case was out the window. i think it's a disgrace. i told republicans who are being taken advantage of, they are being maligned and i think it's a horrible thing, they are looking to hurt the republican party. it is turning out to be just the opposite.

i would rather go into the details of the case rather than process. we already have 50 republican .enators sign up perhaps the other ones will do it. process is good. the case went so quick. i had a great conversation with the ukrainian president. i had another conversation with him also before that, which was the same thing. it was nothing. they tried to take that conversation and make it into a big scandal. we had transcribed. nutshell, the whistleblower wrote a false narrative of the conversation. now they don't want to talk about the whistleblower because they didn't think i was going to release the conversation. when i released the conversation, i blew up his act.

as you know, the new russian president made a statement. there was no anything. there was no pressure put on him. the foreign minister of ukraine made a statement. there was no pressure put on. they didn't even know what we were talking about. adam schiff when up before congress and made up my words. he didn't copy what i said. was going tot i release the conversation. i got the approval from ukraine. this all ties. that's what they should be looking for. adam schiff went before congress and what he did will never be forgotten. he made up a conversation that was a phony fabrication. people shouldn't be allowed to get away. they say he has immunity.

people shouldn't be allowed to do that. that's a criminal act. it's in there. it's a great agreement for the united states. it's been approved by mexico and canada. they are waiting. we don't seem to be able to have time for nancy pelosi. they are the do-nothing democrats. frankly, it's going to win very easily. it's going to have bipartisan support. i have no idea what they are doing with it. they are so busy focusing on a witchhunt and a scam. thank you. you are listening to president trump outside joint base andrews as he departs to go to chicago. it looks like they went ahead of

schedule. it wants to be bigger than expected. heavily been 19 pretty on this idea of getting that done by next month when he meets with leaders over there. he talked about the other big trade deal. it has yet to be ratified the congress. he seemed to imply it is being held up by the democratic leadership. alix: i think he definitely set it. he said it would be a good day in the stock market. thank you for joining me. happy monday. coming up, we are going to take a look at some of your technicals this is bloomberg. ♪

alix: it's time for technically speaking.

i could listen to bill all day. markets are breaking out, what about walgreens? .> walgreens beat estimates the stock's been going up and down since 2015, trying to find a bottom. , if it of this cap ratio it wouldbove that, support the moving averages. , 56-57.istance it's not quite the breakout yet. alix: thanks a lot. we really appreciate it. that does it for bloomberg daybreak america. coming up, this is bloomberg. ♪

jonathan: i'm jonathan ferro. the countdown to the open starts

right now. coming up, u.s. equities approaching all-time highs. investors hoping to resolve lingering macro issues. eu agrees to grant the extension boris johnson doesn't want. and political volatility shaping up markets once again in argentina. good morning. here is your monday morning futurestion with positive 13 points on the s&p 500. we are set for a record at the open. euro firmer against the dollar. treasury yields drift higher in the bond market i five basis points. -- by five basis points. equity markets approaching all-time highs. >> the market is up almost over 20%. >> the trend is upwards.