china skeptical on a long-term trade deal. officials warn they won't budge on the thorniest issues even as they inched towards signing a phase one deal. chair powell: we believe monetary policy is in a good place. alix: fed chair jay powell lays out the conditions for another rate cut and rate hike. the powell put remains in play. apple and facebook to the rescue. facebook sees u.s. user growth. apple finds more ways to sell iphones. now it is up to industrials and pharma. welcome to "bloomberg daybreak" on this thursday, october 31st. happy halloween, everybody. you've got the trade headlines around 5:00 that rolled over, and s&p futures are off by 0.3%. just goes to show how fragile we really are in this rally on any headline risk. dollar-yen did touch the 200 day moving average, now lower. some big buying happening in the

bond market in the u.s., as well as in europe, particularly in germany. time now for global exchange. we are going to bring you today's market moving news from all around the world, from hong , newto tokyo, to milan york and d.c. chinese officials are casting doubt on a long-term trade agreement. running the is enda curran. what did we learn overnight? of just is a reminder how far both sides have to go before we reach any type of deeper, comprehensive trade agreement. the signals from beijing that our colleagues reported today are that china will want to see the u.s. move on tariffs, to roll back tariffs and take away the threat of new tariffs. china has its own red lines around industrial and economic

strategy, and there's a question of durability. chinese officials are unsure how committed president trump will be to any trade agreement. the signals seem to be that we are on track for some type of interim agreement, but the bigger picture hasn't changed. both sides are dug in. alix: thank you. now we want to go to tokyo, where the bank of japan let policy unchanged, where interest rates could go lower if needed. said policyoda still has some room. kuroda: we didn't discuss specific easing measures, but if necessary, we will take appropriate action. alix: joining me from tokyo is stephen engle. walk us through what we learned, and what it means for the lower for longer conversation. stephen: there really were no surprises from kuroda.

,e were expecting them to hold and may be and the u.s. fed did a little bit of a favor by having that hawkish cut. it took a little pressure off of the boj. he said they have further room to ease if they have to, if the momentum if price inflation starts to wane. they do have tools, according to kuroda, to ease further if they have to come about where is that momentum being lost? he says it is mostly external at this time because there is no resolution yet on the u.s.-china tiff, if youade want to call it that. domestically, he says demand has held up. the economy has steadily started to recover a bit, even despite the october 1 increase in value-added tax, so overall, kuroda pretty much pushed things

down the road, saying we could possibly ease further, but not right now. we are going to take away the verbiage that says we have a spring 2020 deadline. basically, as necessary, they could ease further. i'm calling it the halloween hold. [laughter] alix: excellent. stephen, thanks a lot. we want to turn to europe now. andch carmaker peugeot italian american rival fiat approving a merger. >> the product of a merger psa is good and news both for france and the european industry because this would create the fourth champion at the world level in the automotive industry. alix: joining us is bloomberg's

milan bureau chief. reason, peugeot shareholders are in a world of hurt right now. reporter: yes, fiat shares are climbing, while peugeot shares are falling. we see before the deal a special dividend of 5 billion euros, and fiat chrysler will get a premium in the deal of about 5 billion euros, according to our calculations. it looks like peugeot is paying the cost of merging with fiat chrysler. you also have to take into consideration that peugeot will ,ave five movers on the board five numbers proposed by fiat. at the end of the day, if you look at the details of the deal, it seems that fiat investors are

gaining, while peugeot shareholders are ticking higher market risk. the deal is very preliminary. they haven't signed the first memorandum of understanding. they've made a tremendous job of returning peugeot to profits we have not seen for a long time. alix: thanks so much. now we turn to tech. apple and facebook both beat analyst estimates yesterday. apple posting services revenue that hit a record, and looked for more ways to sell an iphone, like a no interest payment on the apple card. joining me is alix webb. this comes after nine or 10 price target upgrades before their earnings. reporter: yes, i think investors will be happy to say the end of the 2019 fiscal year.

this is a year where they had to years -- outlook in 17 their outlook for the first time in 17 years. that was due to outperformance 9%the services offsetting a decline in iphone sales. as ever with apple come of optimism really stems from the ,utlook for the current quarter the first fiscal quarter, the three months through december. they see $18.5 billion to $19.5 billion. they are adjusting to a new .eality at apple growth is really the story of facebook. they are managing to do that

even with the regulatory headwinds they are increasingly facing around the world. we had seen a certain stagnation in user growth, particularly north america. in the recent quarter, they turned that around. they continue to grow revenue at a real pace. there had been concern the profitability might be hit as we moved towards new advertising formats such as instagram stories, but profitability increased compared to the previous two quarters, so positive news for both countries. alix: thanks a lot. really appreciate it. now we turn to the fed, where interest rates were cut for a third time this year and signaled the policy is just about where officials wanted to be. chair powell: the policy adjustments we've made since last year are providing, and will continue to provide, meaningful support to the economy. we believe that monetary policy is in a good place. alix: joining me is bloomberg's alex harris.

what did the markets think? alex: markets are still pricing in one rate cut for all of 2020, coming by next september's meeting, but we are still in a very precarious position. we were talking rate hikes this time last year. think about how far we've come since then. china now the story with about a long-term deal, this is still a very precarious situation. the fed can step in i did he come they see fit if there are signs of an slowdown or signs that trade is heating up and tariffs are heating up again. alix: thank you very much want the housed.c., where will meet this morning to confirm an impeachment a cory of president trump. ofimpeachment inquiry president trump. joining me is kevin cirilli. kevin: this is the first step of a resolution that would kickstart the impeachment process. this is the first time lawmakers

on both sides of the aisle are going to be held on record for whether or not they support this. it sets up the procedures for the process, and also opens the door for public hearings with regards to the impeachment inquiry. i'm told the vote will likely happen sometime before noon. this is just the first step in the process, however, and it also comes as the former national security advisor john bolton has been asked to testify sometime next week. no word yet on whether he will show. alix: thank you very much. coming up on this program, much more on your morning trade and analysis of the markets. this is bloomberg. ♪

alix: time for bloomberg first take. joining me from our in-house team of wall street veterans and insiders is vincent cignarella, voice of bloomberg's audio isawk, and joining us also darrell cronk, wells fargo investment management cio. i thought we were going to start with the fed, then all of the sudden we get the headline at 5:00 and then we get the futures down. are we really this fragile? vincent: i think we are. it woke me up because i got lulled into this false sense of security from the statement's from washington. the last i heard from my sources out of china were june, july, with the conclave where basically xi said to all of his top people, we are not going along with washington. he's a bully. we don't trust him. we don't think we can make a deal long-term, standing

with him, and we can outlast him. i haven't really heard much since. we haven't really heard from president xi exactly. he's kind of nodded yes and going along, and no we are really getting pushback that was probably underlying all along, and we are really back where we started. alix: darrell, what do you think? darrell: it is not surprising, and there's a bit of an irony here that every time the market startews hi, the markets -- the chinese start saying they won't make a deal. pec santiago news yesterday, the hawks will say this buys more time to position. i agree with vence, the deal was very fragile. even if you get a deal, there's just not a lot of substance. i truly believe that if you

deal, a if you ink a phase one deal, the markets will eight -- a bit at it. vincent: yesterday we talked about fading the rally, fading the bump in yields. know if i was still on the boards, i would've had the courage to do it. this has a little more substance to it. this brings back memories of everything powell said yesterday that was off the table, which is why he's been looking to cut rates any further. you really have to work that into where you're thinking is and where your strategy is. it is not a quick fix. alix: i love that yesterday, we pulled up the qualifications for a rate cut versus rate hike, and for a rate cut it is a material reassessment of our outlook. that seems to think something is really bad. the other is a significant move

up in inflation. what did you guys make of those two extreme scenarios he laid out for a cut versus hike? darrell: he set the bars really high on both. i would have preferred to see them -- alix: i wonder what serious inflation is. darrell: it's got to be well above 2%. alix: isn't it, like, 5%? [laughter] alix: that's too serious. darrell: i think there's a risk here that they may regret some of that language that they inlaid yesterday, and wanted to preserve some optionality. already, the data is suggesting the fourth quarter is going to be soft. there's good trends to suggest the beginning of 2020 is going to be soft. this idea that the bar is high for a hike, i agree with, but the bar being high for another cut, that's a little bit tenuous. vincent: i totally agree.

inflation is completely subdued. the reaction to the markets of that one sentence, when asked that question, i don't know that he really understands how the market reacts to the word he actually uses and how much the algos drive things. the markets went crazy, risk reversed completely, and we saw exactly what you just said, which is that there's no hikes coming anytime soon. worst-case asis, we are in this goldilocks, no adjustment, just muddle along, and the equities love that. vince is exactly right. markets were basically benign, and when you got to the press conference, all of a sudden curves flatten, equities start rallying. alix: low volatility stocks do really well. darrell: that's right. the markets basically said the fed is on hiatus now for any period of time, which actually

suggests a risk on environment. if you can get a decent, non-inverted curve steepening, we are coming into some seasonality, you've got sentiment at a decade low. investor sentiment is really low , which is a contrarian indicator. inflation is low. . there's a lot of things here the market could get more excited about the fed goes on hold and we get into this truce scenario with china. vincent: and the size that went through the bond market yesterday was hughes. in the futures market -- was huge. in the futures market, you just don't see that everyday. i don't know if that was positions being taken off, yields have gone up 30 bips, so maybe they were just taking that trade-off, or a combination of both, but it was a big movement. in the fixed income market, they weren't playing with spitballs. this was the real stuff.

the heavy hitters were out there. so it is going to take a lot to change that trade, and i don't think we will see at anytime soon. darrell: and it was a cover to take the ration risk. you are kind of -- to take duration risk. you're kind of free to do so. vincent: even in the ultra long bonds as well. alix: so did that change with jay's headline? is bad news going to be bad news? if we do get another fed cuts or the expectations ramped up, it does mean there is a material reassessment. vincent: i think the long-term trades that were done yesterday, the duration trades are going to be fine. without the risk of inflation and hiking rates, you really comfortable at the long end of the curve. now you have to balance that trade in may see some steepening come back into the curve. darrell: i agree with that, although we do think that the curve, probably on this news, flattens a little bit.

the steepening we've had through october which has surprised a , twos-tens down 17 or 18, i'm not sure you're going andet a lot wider there, inherent steepening on what you just got. alix: good talk, guys. bloomberg's vincent cignarella will be back in just a few, and darrell cronk of wells fargo investment management will stay with us as well. tune into bloomberg radio for an interview with fed vice chair richard clarida tomorrow. you can check out all the charts we used if you go to gtv on your terminal. check it out. and coming up, apple up most to percent in premarket trading after an earnings beat and a positive iphone 11 demand outlook. more on how to trade that next. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." shell is warning of a weak economic outlook that could slow the pace of returns to shareholders. for the third quarter profits, shall easily beating -- shell easily beating the highest analyst estimates, but cautions the company may not keep buying back shares at the current rate. apple creating new ways to sales.iphone in the latest quarter, iphone sales fell, but overall revenue rose. apple the holiday period, forecasts more topline growth. ceo tim cook hopes for a trade deal with china coming to matter how small. think hase tone i changed significantly, and i have long thought that it was in

those countries' best interests to get to an agreement that maybe initially doesn't solve everything, but solves some. viviana: cook says the company is already paying some tariffs. that is your bloomberg business flash. alix: thanks so much. crossre on apple, shannon , managing director of cross research, joins us on the phone. what was the biggest take away for you yesterday? shannon: i think the biggest take away was how the ecosystem was working and driving revenue, even if iphone sales were down. clearly, things are improving their, and services revenue re-accelerated year-over-year. they talked about growth across the board, both geographically and within the various segments and services. alix: in that narrative, you have a new muted reality for

apple. they have to do a lot to get the iphone out the door. why buy into that reality? how would you counter that? shannon: the idea is that the install base continues to grow. they are getting more and more devices out there. as people have the devices, they use them, and the gross margin differential is significant. to give you an idea, services was 20% of revenue, but over 30% of gross profits. it is growing significantly faster than the overall business. the bias is to the upside on those profits. alix: what is the biggest question you have going forward? apple is sitting much right -- is sitting pretty much right at the price target you have. shannon: how are some of these new services going to work, and what is going to the the response from the market? i don't think the company knows yet.

it remains to be seen what happens when we get past where they are offering apple tv plus two device users. alix: is apple now definitely a value stock and not a growth stock? shannon: i think it's going to be sort of mixed. we have 6% revenue growth next year, which is not necessarily in value land. unfortunately, value stocks tend to not grow or decline. in --k they are kind of land. alix: things a lot. really appreciate your time. coming up, china casting doubts on a long-term deal with the u.s. this is bloomberg. ♪

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lines that perhaps china isn't willing to make a longer-term deal. now s&p futures are down by 0.3%, but off the lows of the session. the dax one of the underperformers in europe. i should point out, european stocks are having their best year so far since 2009. who would have thought? in other asset classes, dollar-yen at one point kissing the 200 day moving average, now lower by a whole 0.6%. you are getting a huge flow into the bond market. yields in germany down by about five basis points. you continue to see a flatten are here in the u.s. tons of earnings are trickling out. the latest is celgene. earnings coming in, as well as revenue that beat on the top and bottom line. yesterday was about a lot of tech after the bell. today is about industrials, materials, and big pharma stocks. emma chandra is taking a look at some of the movers. give us the lowdown. emma: as you said, celgene just

report beating on the top and bottom line. other biofarma stocks also reporting today. bristol-myers also getting a bit of a boost in the premarket today, boosting their outlook atpite seeing stalling sales the big growth driver, their cancer drug getting a lot of competition from rival therapy at merck. moving on from biofarma, also heard from marathon petroleum, the second-biggest oil refiner in the u.s. come also rising in premarket today. bow to investors, -- also ay will change in leadership at western digital, the chipmaker. they were out with their report

last night. . actually seeing them fall in the premarket today, down around 7%. the company saying that projected profit for the second -- for fiscal q2, will be less than projected, and the ceo is set to retire. steve milligan had been really instrumental in the company's attempt to reshape the computer storage business. as i said, the stock down around 7% in the premarket, but overall this year, western digital stock up close to 70%. alix: good point. thank you very much. we want to turn out to trade. chinese officials casting doubt on a long-term trade deal with the u.s. ahead of signing that phase one agreement. going to me on the phone from washington is shawn donnan, bloomberg trade reporter, who is for some osmo for helping break

that -- who is responsible for helping break that story. ?hat was the vibe shawn: we've been talking to chinese officials privately, and talking to people who've been waiting their way through beijing and meeting with chinese officials. the constant theme you hear from chinese officials and anyone who's met with them in the last few weeks is we are going to get this phase one deal done, which donald trump wants. we are ok with that. it is a pretty narrow deal, but we have pretty big doubts about whether we get to phase two and that bigger comprehensive thing because we don't want to budge on any substantive issues. alix: in the reporting, how much of that was the general 's hardlinerssus xi within his government pushing back on anything china will give over to the u.s.? shawn: this is coming from a officials. of senior

thatcoming from meetings people have had with a lot of people close to the talks, and a little further away from the talks. people who have been in the room at times. this is not a piece that is based on just talking to the hawks. the hawks in beijing have for a long time said, look, let donald trump have his trade war, and let's focus on boosting our own domestic economy, and we are seeing a lot of signs that there is a middle ground that xi jinping is taking. alix: to wrap up, how much do you think is specifically president trump, as you saw the new nafta, usmca, and doubts that that would go through? how much is the unproductive village he? -- is the unpredictability? shawn: i think that certainly is an element. chinese officials say they have gotten used to the

unpredictability of donald trump. they are less anxious about that than they used to be, but they also see that is a fundamental problem in striking a deal. as one official put it to us, donald trump can tweet his way out of just about any deal very quickly. alix: that is very true. thank you very much, bloomberg's shawn donnan. for aeally sets us up conversation about earnings. the way you look at estimates, you should be seeing a trough now, the bottom for earnings growth. still with me, darrell cronk of wells fargo. i see you should because you balance trade on one hand and earnings on the other. is this the trough? darrell: probably not. maybe q4 is, and then you should see the acceleration into next year. the real number for next year looks more like 4%, maybe 6% in a good year. what's interesting is so far, if

you digest the season, 77% beats. we knew 3% earnings contraction was the consensus. we are beating by about 4.3%. 11 sectors aree set to report positive earnings this quarter. ,nd about the same next quarter as well. interestingly, we've been talking all last night and this morning, tech is one of those that come a, is probably going to see earnings contract 5% to 6%. alix: that also brings us to the value-growth conversation. ushave a chart that shows value-growth globally. this is a great example because on an earnings growth basis, growth is still going to have grown more than value. but next year versus you this year, value is going to outperform itself, basically. what do you do with that? darrell: there are some attractive places in value. health care is looking a little

better, if you want to call that traditional value. i think the events of this week have started to change the narrative back to cyclicality or cyclical exposure. for the entire month of october, it was all about yield curve steepening, defensive growth, defensive value. don't exit the market. if the fed is on the sideline, and you can even get this trade truce, today is starting to show you are putting a bid back into some of those cyclical sectors again, that they believe growth can run. alix: yesterday we saw low volatility stocks outperform after the fed. do you think that is a short-term thing? would you be fading that? darrell: if you're going to get weaker dollar, flattening yield curve, and yields moving down, equal, that is a good environment for cyclical companies. if you believe, as we do, that we are late cycle, you want

companies that can have topline earnings growth. some of your highest quality to bers continue technology, consumer discretionary, more cyclical sectors. alix: does that fly globally? is that, ok, do we want to look into europe, for example? darrell: probably not as much. it's interesting. europe, in the last three months , the stoxx 600 is outperforming the s&p 500, which hasn't happened in many quarters. you are finally starting to see europe gain a little bit of life again, a little bit of vibrancy. some of that is on a weaker dollar. some of that is on term premium coming back into the market on fading the brexit no deal risk scenario taylor: -- no deal risk scenario. there's some good value over there when you start dissecting companies that have great cash flow, but still feed the financials over there. the traditional industrial and more stable tech companies out of europe are at some of the

lowest valuations relative to the u.s. that we've seen ever. standardover a two deviation difference between united states and european differences, which you never see. alix: where? we bring up the merger of fiat and peugeot. , a majorin essence defense going up against volkswagen. that is a cyclical sector that's gotten really beat up, but i don't know if you want to own it. where is that value? darrell: i think you are still seeing something like that with a headwind of declining global trade, and a little bit of a concern that there still could be on the table the conversation shifts between u.s.-china tariffs to u.s.-europe tariffs. you have to look at your more traditional industrial, some of the staples over there

come over you can find good, free cash flow, decent revenue growth, and multiples in valuations close to 9, 10 times next year's earnings. alix: just to rounded out, if you take a look within the economy, small and mid have gotten hit since earnings estimates. you have the flattening yield curve, etc. does that apply to small and mid-caps if we are late cycle? darrell: probably not. alix: there was a sigh, everybody. [laughter] darrell: we've been overweight for a long time. it's over performed this year, and the earnings quality is bad there. we do believe you are late cycle. there's probably not a lot of reason to believe you want to be lower exposed -- you want to be exposed to lower quality, beta sectors like small-cap. it is just not appealing to us right now. alix: darrell, great to see you.

darrell cronk of wells fargo. tune into "commodities edge" at 1:00 p.m. eastern time. we will be breaking down earnings from big oil. if you are skeptical under dividend, the market did not like it. just ask bp. now we want to get an update on headlines outside the business world. viviana hurtado is here with first word news. viviana: a deal that would create one of the world's largest automakers, fiat chrysler and peugeot creating a deal to merge. the boards agreed to work towards a binding agreement. psa's brand includes peugeot and citroen. ceo would lead the company. four months of protests taking their toll on hong kong. the city has now entered a recession. in the third quarter, hong kong's economy shrinking at an enteral rate much worse than expected. it is the second quarter in a

row gdp declined. experts say for hong kong to recover, tourism from mainland china must come back. in august, it was half of what it was in january. over to southern california, where more than a dozen brushfires have broken out. the biggest near the ronald reagan presidential library. the fires are being driven by 60 mile an hour winds. in northern california, firefighters are gaining the upper hand on a fire in one country that has burned more than 76,000 acres and destroyed dozens of homes. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. kraft heinz out with earnings as well. the company beating on the bottom line. earnings beat estimates. the ceo says they are still competent and the ability to turn it around. results were below their

potential, but that they were positive in terms of sequential improvement versus the first half of the year. a little but of brightness there in the quarter. that stuck up almost 4%. coming up, bnp delivering. whopping 35%.g a that is in today's wall street beat. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later today, tiffany wilding, pimco chief u.s. economist. now to your bloomberg business flash. ford probably averted a strike

like the one that cost rival general motors billions of dollars. the automaker reaching a tentative agreement on a new contract with the united auto workers. includes $6 billion of product investment in u.s. factories. that also calls for the creation and retention of more than 8500 jobs. bnp paribas posting a third straight game in fixed income trading. the french bank outshined its wall street and european peers. at the same time, bnp is flashing costs. it shut a proprietary trading unit and has exited u.s. commodity derivatives. next month, alibaba may launch a sharply reduced $10 billion share sale in hong kong. bloomberg has learned china's largest company may delay the deal until next year because of global uncertainty. alibaba's billionaire co-founder jack ma has wanted to list closer to home. that would curry favor with china's government and hedge against trade war risks.

that is your bloomberg business flash. alix: thanks so much. we turn now to wall street beat. first up, you just heard about it, bnp fixed income surged. icey so revenue from the f trading up 35%. ubs overhaul continues. now, pretty much off a plane from vegas, is bloomberg's sonali basak. let's go to bnp. sonali: back to the european banks. alix: exactly. we heard from the cfo, and they talked about the rise in fixed income. here's what they had to say. >> when we go back to the fixed income products, basically both thorax and only g10, would

basically stay there, and we've adapted the bank so that we could serve the clients in a digital way to a very positive solution. alix: trumping wall street in european peers? sonali: it's pretty impressive. you don't think of bnp as a fixed income king, by any means. you are watching people discern the winners and losers in .uropean banking everyone is looking where they are going to cut, where they are going to add. alix: who did they steal business from? sonali: that's a good question. d fixed income environment was a little better in general for everybody, but as we reported so far, ubs didn't have a big fixed income division in particular. deutsche bank didn't do well, and they are usually a leader in that division.

you are seeing things change a little bit here in different trading divisions. looking at shares of bnp, even still, it is still kind of stagnating because they are under pressure in the same way as everybody else, and the sense that they are really worried about the low interest rate environment and what that means for the business. alix: let's go to our second story. you have must've some -- you have the investment forum in saudi arabia, you've got of his money, and there is no one in the audience. sonali: it is really interesting. not only at the saudi conference has this happened. there was really nobody ther e. alix: seriously. it is striking to see no one listening to the guy with almost $200 billion to invest. shawn: andy salyer --sonali: andy saudi arabia -- and the saudi arabia funds does have money in the vision fund.

they were all hanging on every word he was saying about the future of the ipo market. i think this is a pretty clear indicator. alix: the guy has a million other investments. alsoi: it came up in vegas because people are wondering what else in that portfolio is going to be marked down now. not just wework. people are wondering about their strategy overall. alix: let's get to movement over at ubs. basically have the head of capital markets leaving. why do someone like me care about this? sonali: ubs is not the top three in the equity capital markets. they are not goldman, morgan stanley, jp morgan, but they hang on strong, and the reason is because they have an essential wealth management movement. they do some private placements, so they work with a lot of young companies looking to raise private money. equity capital markets is one of

the really important parts of the investment bank. a lot of the talents that grew up in that business rose to the very top of that bank. who took am kendall strategic role, also on his way out of the bank. also grew up in equity capital markets. alix: so where did they go? sonali: that's a good question. a lot of the private equity firms and hedge funds, even millennium, has hired out of banks. takei are building up capital markets. -- kkr building up capital markets. alix: it seems like a decent bet. great to have you back. we missed you when you were in vegas. in today's off the beaten street, we've got your halloween on wall street jam. bankers shed the pinstripes and the bucky costumes -- and the wacky costumes. instead, we have one popular character, wework founder adam neumann.

are literally people dressing up like him and his wife. , a shortageky thing of longsleeve black turtlenecks in san francisco. it may be because people are just like the infamous founder start-up theranos. ok. also, earnings from fiat chrysler coming out. net revenue of 23 point 7 billion euros coming in like. the company did confirm its full-year guidance. shares around the lows of the session, still up around 8% because of optimism about its merger with tsa. -- with psa. this shows you need scale if you want to compete in the electric vehicle market. loonies. canada raising

its outlook pretty gp growth. if you are heading into your car, tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪ bloomberg. ♪

alix: time now for trader's take. joining me as vincent cignarella, voice of bloomberg audio squawk. some really cool stuff yesterday happened with the bank of canada, and we have gdp out today. vincent: i'm thinking this could be a slight beat. a lot of the u.s. consumer drives the canadian economy. we had good personal consumption numbers yesterday. i think that might benefit canada. either way, i see this as a buy the dollar dip story >>. dip story. the bank of canada governor, i think he might have quietly did

a little currency war thing by wanting to vocally weaken the canadian dollar. there's a lot of demand to buy on dips. a lot of people caught out short yesterday because the story was to be long canada. alix: i like this. i want to circle back with you on this tomorrow. vincent: we will see. alix: thanks a lot. coming up on this program, julia coronado, macro policy perspectives founder and president, plus mark stoeckle, and masson -- mark stoeckle, adams funds ceo and fund manager. he owns apple. what is he doing with that stock today? this is bloomberg. ♪ the game doesn't end after that insane buzzer beater.

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october 31st. happy halloween. i'm alix steel. it's ticket right from the top. chair powell: we believe monetary policy is in a good place. alix: fed chair powell signaling that interest rates are in a good place unless the economy slows down. >> we are still in a very precarious position because we were talking rate hikes this time last year. alix: the central bank lowered rates for the third time this year. china, they really -- look, you know it -- they really want to make a deal. alix: china isn't even sure it can ever have a long-term trade deal with the u.s. as long as donald trump is in office. >> there's a question of durability. chinese officials are unsure how committed president trump will be to any trade agreement. alix: officials in beijing are concerned about the impulsiveness of his nature. they think the president could even backout from a limited agreement. protests in hong kong have hit

the bottom line. the city is now in recession. the hong kong economy shrank by more than expected in the third quarter, the second decline in a row. andy washington nationals have won their first world series ever -- and the washington nationals have won the first world series ever. they beat houston 6-2 last night, the first time a team the d.c. has done it since senators in 1964. equity futures down by 0.3%. dollar also taking another leg lower. a safe haven trade coming into play. yen gaining, bonds outperforming. yields in the u.s. down by about four basis points. crude down by a whopping 1.5%. he said cutting rates for a third street meeting. fed chair jay powell signaled that's enough for now.

see monetary we policy likely to remain appropriate. perp it. appropriate. appropriate. we also see the risks to the outlook is perhaps having moved in a positive direction. that's our outlook. could be better. could be worse. you never say you've achieved it, but that's our outlook. if developments cause material reassessment of our outlook, we would respond accordingly. but that's what it would take, material reassessment of our outlook. alix: joining me now, julia coronado, macro policy perspectives founder and president, and mark stoeckle, adams funds ceo and fund manager. right? julia: that was the danger of closing any doors to further rate cuts. it's not that here. phase one even inked of the trade deal.

there's still a lot of uncertainty around brexit and many other things. it was a little surprising how hard he closed the door on further rate cuts. i think some of that reflects a lot of division on the committee about the appropriateness of cutting preemptively the way they have. alix: mark, were you surprised by the market reaction yesterday, and today with the headline that crossed -- the trade headline that crossed? mark: not really. you are working with a fed where there's a lot of disagreement. anytime you have that, we know that. i don't think that is a surprise. i wasn't surprised by the move. this morning is a wicket call -- is a wake-up call that it is not all good. phase one, whatever we are calling this thing, things that were agreed to in may, isn't really that important.

the notion that we will get something more substantial in that is pretty big. alix: julia, how to they walk it back? this is the fed funds rate and the implied yield for january, basically seeing one more cut in the next year and change. did they have to rethink the expectations? julia: they set the bar pretty high for walking it back. they said they need to materially reassess. that's another thing he said about 10 times, a material reassessment of the outlook. that means you need an accumulation of data, not just risk events or headlines. alix: you need something really bad. you shouldn't want that to happen, right? julia: no, you shouldn't. they've been in insurance mode before bad things happen to prevent them. now it seems like they are not cutting again unless we are actually worried we are sliding into a recession, which is sort of a signal they are going to be behind the curve if things get worse from here, and that is a little bit worrisome. that was why i wasn't so

enthusiastic about how hard they closed the door to further calibration. alix: two things get materially worse from here? where would we see that? julia: i think their assessment that they've done a lot and they may have done enough isn't unreasonable. we have seen a lot of resiliency in consumer health and spending, but growth is slowing in the u.s.. it seems to be lagging the global slowdown. it is far from clear that we are out of the woods. there's a lot of good things. there's also a lot of downside risks. i would say risks are still skewed to the downside. alix: mark, go ahead. mark: i think the hardest part is it could change quickly. thing, and all of a sudden, it changes very quickly. i think that is a hard environment for anybody, investors, the retail investor trying to maneuver with all of

this noise. you could get that one thing, and the perception of the world changes, and it could be a pretty big effect on the stock market. alix: i asked you before we came to air, have we really to really seen the trade impact in earnings, or has it been that we are going to blame it if we don't get the numbers, or it is idiosyncratic? what do you notice? mark: there have been some specifics, but in general, we talked about this before we came on, companies in the board room have been saying, is this the right time for us to add that new plant, add that , add some more people? add some more people? how do you strategize in this environment? you gotta make the decision today to spend over a long period of time, so that makes it incredible difficult from a strategic standpoint. i don't think we've seen a

really big change within companies specifically. we could, and i think that's still something that could come. it just takes time to really affect your business. you talked about supply chains. there are a lot of things you can do over the near term that can help. i worry more about one to four years down the road. julia: what we saw in the gdp report is that business investment has dried up. it is becoming a drag on growth. consumers are still resilient and businesses are still hiring, and that is the good news, but the worrisome part is they have stopped investing. the trade war has completely crowded out any positive effect from the tax cut. it's gone. businesses are retrenching. mark: the consumer has been great. everyone knows the consumer has been carrying us. the consumer has been doing this, and business has not. julia: you need them better in sync. mark: mike concern is that the

consumer has been carrying it for so long, they stop doing that, and business has not come up yet. alix: i am going to bring up fiscal because we do hear that from jay powell. i feel like it was mario draghi, but in powell's clothes. chair powell: if you really want the u.s. economy to be all it can be and raise the potential growth rate in the united states , you need proper monetary policy come about really it is fiscal policy that supports inclusive growth. alix: is that it? is that the answer? julia: well, it's very terrifying when, around the world, we are talking about greater need for fiscal policy, and around the world we are seeing more dysfunction in fiscal policy. it is not a good place to have to rely on fiscal policy. we don't have fiscal policy forthcoming anytime soon to rescue this process slowdown. not from the u.s., not from china, not from europe, which

has probably the most fiscal space. there's less political will to enacted anytime soon. mark: how much of his comment you think is trying to deflect away from the fed and more toward something else? julia: well, he's not wrong. it is true that monetary poly is limited. what he can do with a few rate cuts, and that is all they have left, isn't a lot. so if you do need some kind of impulse to grow, it does need to come from the fiscal side. the only problem is, that is not likely in this political environment. alix: but also, would fiscal solve the problem you were talking about, where the consumer is here and investment is here? mark: i still think you need fiscal. we've been talking about this for a long time. both parties talk about it, and nothing gets done. julia: infrastructure spending

is the one thing everybody around the world agrees on, and in some places it is getting done, but not in the u.s. alix: with this backdrop, we will have this one moment, and we can get to earnings more specifically, is it value or growth? i know you are a bottoms up guy, but what was the savior bet? what do you do -- the safer bet? what do you do? mark: i think the value-growth thing is a little on the silly side. [laughter] mark: there's no question that growth is outperforming value, but there are too many people saying that now must be the time for value. julia: versus 10 years ago. mark: versus a year ago, two years ago, three years ago. frankly, we would prefer to see it in the data, that value because you can tell -- to see that they have inflicted and they are outperforming. in september we had a 4% move, four point 5% move of value outperforming growth. so what?

it was a spike, and it was unsustainable. a couple of weeks ago, it was 1.5%. so i think you're guessing that now is the time for value to outperform. alix: that's the best banner, "value-growth thing is silly." thank you for that quote. both of your sticking with me. tune into bloomberg television tomorrow. we have an exclusive interview ida at 5:30d clar p.m. eastern time. coming up, we will look at some of the movers and how to trade them. this is bloomberg. ♪

alix: bloomberg's sarah ponczek is looking at the earnings desk. what are the highlights? i will start off with bristol-myers squibb. shares were higher this morning, but they've started to take off to the downside. we did see a beat on the top and bottom line, and boosted their earnings outlook for the year from the previous forecasts, but the focus seems to be narrowing drug.their core sales are slowing there, and it seems to be due to major competition from merck, so shares are now moving lower. i also want to take a look very quickly at marathon petroleum. we did see a beat on earnings, a slight miss on revenue, but really, where the big news was came in the form of an announcement. the company has been under immense pressure from activist investors to break up the company, and they are doing so. the company announced they are going to be spinning off their

retail fuel unit, speedway gas stations. investors seem to be taking that to heart, shares up nearly 1%. the ceo is also officially retiring. facebook after the bell having a great night, beating on the top and bottom line. user growth also coming in strong, pointing to the fact that maybe the u.s. market is not completely saturated. revenue,you look at ad it grew 29% to the highest amount for any single quarter on record. alix: thanks so much. still with me on, julia coronado of macropolicy perspectives and mark stoeckle of atoms fund. you own a lot of specific stocks, and i want to get to apple. it did get a lot of upgrades. would you be holding? do you sell, keep buying? mark: we like apple. i think what apple needed to do, and they did, was report a

really good quarter. in the last two months, it's added $200 billion of market cap, so it is getting more expensive than it was. we talked about a year ago about apple, and one of the things i said we needed to see, that they were doing very well, is the services business was something to grow. services and wearables were great. they were really good. they needed to be really good because the stock has had such a big move. i think people should own some apple. don't think you have to chase it. i think it could consolidate a little bit. but i think owning apple would be a prudent thing. alix: what is one stock that you don't own yet that you wish you do, or that you are looking at? can you tell us? you can't tell us. [laughter] alix: of the stocks you do own, what is your favorite? what is your most underweight? mark: we are most underweight exxon. alix: oh, ok.

mark: we are underweight microsoft. alix: that was a good bet. mark: it is not anything that is spectacular in what they do, but they are just very solid. your --oud business, as their cloud business, azure, has been really good. they proven they can compete with aws. you've got google, the poor man's number three. but that business has an incredibly long runway, probably five years. julia: mark, can i ask you, how worried are you -- one of the things i hear people talk about a lot, especially investors in the tech sector, is that one of the fallouts from the trade war with china is going to be a dual internet, a dual tech world, where the supply chains pull ks,rt and there are dual trac a european-u.s. pole and a china-russia pole.

what are your thoughts on that? mark: i've heard it. i think it is early for that. theoretically, it makes sense that something like that could happen. it is not something we are worrying about right now. alix: we are seeing it on the low end. take caterpillar, for example. they are not going to have the ability and the infrastructure to put together a cloud business. mark: the cloud business would be hard, but they can nip at it. julia: they are moving faster. mark: and investing, absolutely right. but i really do think it is still early on that. but it is something you have to look at because it is possible. julia: and would be truman to slay disruptive to the sector. mark: yes -- would be tremendously disruptive to the sector. mark: yes. alix: you saw the semi inventories in south korea moving lower, which means you will have to replenish. there's that narrative that

comes out, too. so your exxon call, you are underweight. is that a specific exxon call or a macro call? mark: for us, we think there are other alternatives in the space. we do own chevron. we like chevron. we own bp, total. we like what they are doing. exxon is a really good company, a big company. they march to their own drummer. they really do. the market right now wants companies that are not going to exceed cash flow. they want dividends and repurchases. they are saying, we are comfortable investing 5, 10 years down the road. we see opportunities. we will continue to take those opportunities. not with the market is really looking for right now. when you look, chevron is reaping the rewards, certainly on a free cash flow basis, of a

lot of the investments they've already made. european,bp, they are but they really act a lot the same way that exxon does. we just think they are better relative opportunities in this space. the gdp tie this into yesterday, you mentioned chevron, exxon, and part of their strategy is shale deposits in the u.s., some thing we saw in terms of fixed investment. oil and gas fell off the sideline, but lower rates aren't going to help that. trade resolution, not going to help that. how do you view gdp and what is a structural shift? julia: when we are picking about what monetary policy is trying to curet is not trying the drag on investment. it is trying to provide stimulus where monetary policy has its effect, which is housing. we did see turnaround that contributes to gdp, and offset

that business investment drag to some extent. that is the way too thick about monetary policy. from the investment perspective, it is a concern. it is a concern that the energy sector isn't investing in new capacity. we were talking about that earlier. oil prices being so stable has been such an important global shock absorber. we have seen such tremendous upheaval in the middle east, and yet oil prices are in the mid-50's. it is such a game changer for global shock transmission. i think that is important, but to keep that, i think the energy sector does need to keep investing in capacity. mark: one of the real challenges is the market has been very clear. we want you to increase your dividends and have share repurchases, and we do not want you to outspend cash flow. the problem is these companies are developing their land in assets that the pleat pretty quickly -- that deplete pretty quickly.

so all of a sudden, investors might be getting the dividends and share repurchases, but they are getting a company that is not going to go anymore. julia: that is different kind of investing. mark: it is a different kind of investing, but the unintended consequent is of i want these two, so you can't do this, is going to come back and hurt companies. alix: i can't believe you talk about energy without me. that hurts. [laughter] alix: mark stoeckle of atoms fund, julia coronado of macro policy perspectives, both of you are sticking with me. where do you invest in the environment if you are big oil? this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." a deal that would create one of the world's largest automakers. france'st chrysler and psa group agreeing to work

towards a binding agreement. includes peugeot and citroen. ceo -- fiat's chrysler's would leave the company. cancer-myers squibb's drug facing stiff competition from a rival made by merck. facebook maintaining its stance on political ads. if politicians want to run them, the social network will take their money. we spoke with chief operating officer sheryl sandberg. >> we are not doing it because of the money. this is less than 1% of our revenue, and the revenue is not worth the controversy. but what mark said is we believe in free expression. we believe in political speech, and adds an import part of that. viviana: it also will not fact check political ads. that is your bloomberg business

flash. alix: thanks so much. that is facebook. twitter, on the other hand, entirely different take on political ads. ceo jack dorsey announcing it will ban all political advertising. at the same time, dorsey was able to take a shot at facebook. he tweeted, "we believe political message reached should be earned, not bought." the change will go into effect november 22. to 2020.ng as we had coming up, the fed signals rate cuts are on pause. pce is on deck, the fed's preferred measure of inflation. this is bloomberg. ♪ oomberg. ♪ whether you're out here on lte.

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daybreak." you are seeing money going into safe haven assets like the yen. .ller-yen now down 0.6% a stark difference from where we were yesterday. we are waiting for the next data to drop, with consumer front and center. you have personal income for september coming in 0.3%. you had august revised higher, pretty solid. personal spending coming in touch later. jumped up 0.2%. you had august revised up as well. pretty solid either way. personal spending is solid. the pce deflator, if you look at the core number, on a year on year basis, in line with estimates, 1.7%. basis flat, so no growth. the initial blush appears to be personal spending still solid, personal income still solid.

no new data points than we usually would see, particularly from gdp yesterday. stoicalronado and mark -- and mark, am i right? this is status quo? this is a good report. the consumer has been resilient. we are seeing moderation. the pace of consumer spending slowed a little bit in q3. it is poised to slow a little bit further going into q4, but still very healthy. nothing to worry about. some of the numbers we got in q2 were sort of unreasonably strong. very solid report. i think the inflation number is important. it actually ticked down on an annual basis. inflation is low. core inflation is low. that is where i think chair powell struggled with his message yesterday, trying to say

inflation is important. we are looking forward to achieving our symmetric 2% target. they have not gotten there. inflation expectations are sliding lower. he was confident the u.s. is not heading toward japanification, but there is a lot in the inflation numbers saying if we go into another recession we will lose another leg in inflation and inflation expectations. that is the only concerning part of this report, combined with the fed message. alix: we saw yesterday with gdp that we are growing, but slowing. is that the same thing for the consumer? the personal savings rate is moving higher, but disposable income is growing. not as much as before. is this the same narrative? julia: the really interesting thing about the u.s. consumer is they have shown absolute dedication to higher saving rates the cycle. alix: is that a good or bad thing? julia: it is both. on the good side, they are more resilient.

they are not building up leverage. they aren't speculating in the housing market, taking on debt they cannot repay. that is good news from a structural standpoint. on the other hand, it means there is not a lot of cyclical oomph. indicationsrrisome this reflex rising income inequality. the more the wealthy hold all the wealth, and higher incomes -- you do not have these buffers amongst the majority of the population when the next recession hits. mark: i think it is interesting. i think it is good for the individual, maybe not good for the market. i do think longer term having -- julia: you mean saving more, not rising in equality -- rising equality. [laughter] alix: rising inequality is bad. mark: i mean saving more. that is good for the individual, maybe not the economy. alix: is this going to be reflected tomorrow in wage growth? overall average hourly earnings

also slowing down. are we going to continue to see bifurcation in wage gains? mark: -- julia: that is what we have seen. it is a trend throughout the year, especially top-end wage growth. we are down half a point off of the highs. are still pretty solid at the lower end of the wage spectrum. that is good. but we are not seeing any sort of overheating and wage pressures in the labor market, despite the fact that we are at a three and a half percent unemployment rate. this continues to be the surprise. there was no dirty little secret that wages were going to go up. in the last five years, every ceo knew exactly what was going to happen, and the plan for it. i think companies are not getting as much credit as they should be about how they managed that. it was not a surprise. people knew it was going to happen. if you plan for that and you know your costs are going up over here but you can make it up in different parts of your business so that earnings can

still grow, if you are doing that strategically, i think that is good, and i think a lot of companies have done that -- sort of the reason this wage growth -- wage gain has not heard a lot of the restaurants as much as you would expect it to, and a -- of the lower end employee the fact they are making more money has not really hurt the earnings, because they have been able to have a strategy to take care of that. the other-- julia: good news about that -- the fed -- there is a very high bar for them to take back these rate flats -- rate cuts, because there is no inflation. there is no core inflation. nothing looks like even the beginning of something worrying them. so they have cut three times, but the bar for taking those insurance rate cuts back is very high. there does not seem to be a need in the foreseeable future to do that. my concern -- where is the

low hanging fruit to keep doing that? at some point, if they cannot pass on a price increase, that is going to hurt their margins and we are in a totally different scenario. mark: one statistic i will give you is a lot of cloud revenue is not only coming from companies buying property, but they are buying it for efficiency, to get leverage. they are buying more of it because the leverage is more than they thought it would be. i do think there are discrete places in these companies where they can pull some of that out. alix: you are a productivity bull in certain areas? mark: actually, yeah, i guess. i guess i am. i do think that these companies have the technology investment, and what the clout has been able to do -- we have seen it in the numbers -- when a company buys it, they buy more, because it is significantly exceeding their expectations of the leverage they can get by employing it. i think that is one of the areas

that you can see that. we have been calling for, for 10 for a very long time. julia: and energy companies are the ones that do that the best, mark: the perfect example. mark:they shrunk their businesses. julia: but with the breakeven of oil prices so much lower than we ever thought it was going to be -- mark: the technology, the longer lateral drilling -- all of the things that go along with that have been remarkable. news: and that is good because gas prices are low and stable, and that helps productivity. alix: where do you not have productivity gains? you mentioned restaurants. i guess retail has more productivity gains in terms of automation, but where do you not have that? julia: retail isn't a tremendous date of disruption. they have been shedding jobs for more than a year now, and that is not necessarily a cyclical reaction to the trade war. that is a structural transformation.

there is a lot of upheaval and transformation in retail space, retail employment, retail sales. consumers are still very finicky, very price-sensitive, very selective. i think it is a harder landscape. mark: it is harder. brick-and-mortar is really hard. julia: so is online. it is expensive. mark: it is expensive. but the difference is you are likely -- if you are depending on brick and mortar, and people , and peopleour to walk in your door, that business model is not robust anymore. you have to figure out how to do it firmly. it will cost more. the difference is, we have got to make those investments because we are probably not going to have this if we continue the way we are going right now. alix: we get jobs tomorrow. i'm curious as to your expectations, but also we had the gm strike. they resolved it. forthcoming to a uaw agreement

before there was any kind of strike. are we seeing any kind of power revert back to the worker? is it good? is it a bad thing? how do you see it? julia: you can absolutely see the strike effect in the context of a tight labor market. absolutely, labor does have a little bit more bargaining power. not a term is amount. that's why we don't see wage growth continuing to accelerate. there is some, and i think that is a good thing. i think the labor share of national income is still close to historical lows. it would be a good thing for consumers to gain back some of that bargaining power, some of the purchasing power that comes along with it. that would be a more balanced economy, a more sustainable economy. i think that is an absolutely good thing. it will weigh on the numbers tomorrow. tomorrow's numbers will be ugly because the gm strike will still be in it. we know that. we will have to pull that out of their and try to read the tea leaves, but we will get a sub 100 k number because of the

strike. alix: i really enjoyed our conversation. policyd julia with macro perspectives. stay with "bloomberg daybreak -- "bloomberg daybreak america." we will break down all those numbers tomorrow, so stay with us. that's get an update on what is making headlines outside of the business world. viviana: officials in china doubt a long-term trade deal with the u.s. is possible. it will not budge on the stickiest issues. the chinese are concerned about president donald trump's impulsive nature. they fear he may back out of even the limited deals. both sides have said in the coming weeks they want to sign that deal. four months of protests have taken their toll on hong kong. the city has now entered a recession. in the third quarter, hong kong's economy shrinking three point 2%, much worse than expected, and it is the second quarter in a row gdp declined.

for hong kong to recover, tourism from mainland china must come back. in august, it was half of what it was in january. and in southern california, more than a dozen brushfires and broken out. the biggest near the ronald reagan presidential library. by 60res are being driven mph winds. in northern california, firefighters are finally gaining an upper hand on a fire in one country that has burned more than 76,000 acres and destroyed dozens of homes and businesses. local news 24 hours a day on air and a tictoc on twitter, powered by more than 2700 journalists and analysts in more than 100 20 countries. i am viviana hurtado. psa is a marriage of equals. so why are peugeot shares taking a hit. the bottom line coming up next. tv and check out the charts and analysis. ♪

viviana: this is "bloomberg daybreak." coming up later, the ceo. ceo -- cigna -- viviana: now to your bloomberg business flash. shell is warning of a weak economic outlook. the dutch energy company says that could slow the pace of returns to shareholders. for third-quarter profits, shelley easily beating even --

shall easily beating estimates. a warning the company may not keep buying back shares at the current rate. the owner of british airways reported a drop in third-quarter earnings. they were hit by the first pilot strike in 40 years. the ceo says if you factor out the strike, the company had good underlying results, but he warned the economic outlook remains soft. ford has probably averted a strike like the one that cost general motors billions of dollars. the automaker reaching a tentative agreement with the united auto workers on a new contract. ford has invested $6 billion in u.s. factories in the deal. it all called -- it also calls for the creation and retention of 8500 jobs. line,time for bottom three companies worth watching this morning. shonda and brooks join me now. first, we will take a look at all tria.

give us the latest on this stock. emma: the maker of marlboro cigarettes rising in the premarket, up 1.6%, reading on the top and bottom line and its latest earnings report. for your outlook coming in slightly higher. investors liking that, and liking that enough to largely ignore a 4.5 billion dollar charge the company says it is taking because of its investment in juul, the maker of flavored vaping products in the u.s.. altra says this chart is not related to one single event, but reflects new challenges facing least the prospect of potential bands by the food of drug it -- food and drug ministration in the u.s. our colleagues at "bloomberg intelligence think a write-down could be coming, so investors are not taken hugely back by

this. they are pleased the company is taking its medicine now, rather than waiting until may, when the fda will make a decision on whether it will bam some forms of flavored e-cigarettes. alix: the second company we are taking a look at -- starbucks results after the bell. analyst: shares up about 2.7%. they did beat on the top and bottom line. if you look at comparable sales, that is a key metric. for the quarter, beating an estimate of 4%. even though we are seeing increased competition in the cost space, and the breakfast space, starbucks seems to be holding their own. what drove the beat? one was foot traffic. we saw customer traffic in stores in the united states and china really pick up. at the same time, we are seeing the digital strategy, the membership program, start to pay off.

from ahip was up 15% year prior. the ceo told bloomberg news that starbucks is focusing on the core things that differentiate the business. that does go back to what they are doing with beverages, what they are doing with membership and digital ads. as you can see, back up in the premarket hours. alix: we are looking at the fiat and psa merger. what is interesting is how much peugeot shareholders do not like how this is playing out. >> this was billed as a merger of equals, but you know nothing is never truly a merger of equals. you see peugeot shares down about 10% this morning, and that is typically what you see with an acquirer. fiat shareholders are putting less into this deal than they are getting out of it. fiat plans to issue a dividend to those shareholders, about $6 billion, and to give shareholders the robotics arm. they are getting a decent payoff. that also applies to the family

which is the biggest shareholder in fiat. spending onpeugeot a dividend? >> they are, but it is not quite as much. it does make sense, because fiat had a smaller market cap going into these conversations, so they should in theory be the target. i think there is more in it for peugeot. i think they want the deal. i think they see the value of scale in the auto industry. they are really behind on the electrification trend. they do not have a presence in china. neither does fiat, but it does have a u.s. footprint, an area peugeot is interested in we are -- in reentering. they exited in the 1990's. they have made comments about wanting to rebuild a presence. show --is also goes to my broader question is, is this going to be enough? these traditional car companies having to put out a lot of money for electrification, but it is not profitable yet. at the same time, there is cyclical slowing in terms of car

sales, and i don't know if this is enough to make up for that when they are up against a volkswagen. >> i don't know that it is either. they are talking about synergies, but they are not planning to cut plants, which is where most of the cost savings come from. the idea is that you get sale the idea is that you get sale and -- you get scale. i am not sure where their come from, and france is the biggest shareholder in peugeot and has a lot of interest in making sure jobs are maintained. alix: not to mention that you ev.d less parts to make an how do you do that with cost savings while not closing plants? i don't know if that is possible. >> that is the thing gm is grappling with. you saw the strike over here. and toyota does not pay as much and is further along in this process. how do you make this company competitive, given all the political pressures? not to mention they are focusing on europe, where car sales in general are not great. saw the numbers from volkswagen, predicting a downturn in car

orders. alix: and to your point not having a big arm in china. i love talking about this merger. i am assessed with a. coming up, three stocks making big news after earnings. one is at more than 50% on the year. we will break it down. and if you are heading out in your car, tune into bloomberg radio. ♪

alix: bill maloney joins me now. check him out every day on the bloomberg. you are looking at apple.

200 day moving average, a big run-up in earnings. what do you see? bill: we will start with apple pay. highs around 250. above that, you were talking a record all-time high. stocks already up 50% year-to-date, about 50 points above the 200 day. that is a bit of caution. support, 233. alix: typically when you are the extended, is there a reversion at some point? bill: there can be mean reversion, but if we go five-year, apple does have these big swings above and below the 200 day over the last two years. that is a bit of a sign of caution, that much extended. alix: facebook coming out with solid earnings. the big surprise is the monthly active user growth was strong globally, as well as the u.s. what are you looking at? bill: facebook is going to break

out above 192 today. that has been resistant. the first resistance around 200, a round figure. above that, you are looking at the july highs of 209. alix: starbucks, we talked about her earnings did beat. what is the stock looking like? bill: starbucks is argue with the worst looking chart of the three. it looks like it is going to try to break this downtrend from the august peak, around 86. the 88 is a retracement level. 89. alix: if you break above a 50 day like that, do you get back to a hundred? bill: exactly. alix: really appreciate it. your three traits to set you up into the open. that wraps it up for bloomberg daybreak americas. coming up on the open with jon ferro, tiffany wilding, the chief u.s. economist, will be joining us. you had the fed benign

yesterday. you also had trade information coming in that potentially china is not eager to make any deal passed phase one. you end up having personal income, personal spending, a little weaker. inflation a little weaker. everything is ok. that is where you are panning out in the market. you got a rush of safety for the yen. a move into the bond market. withpper former, the bond, yields down five basis points. 60 basis points from where we were, re-rating from yesterday, pre-fed, and oil rolling over, with futures a little soggy and softer. happy halloween. happy end of october. ♪ when it comes to using data,

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coming up, china doubting it can make a long-term trade deal with president trump. chairman powell signals the fed is on course, following its third rate cut this year. apple and facebook beating wall street expectations. good morning. here is your thursday morning price action. futures just a touch lower. foreign on action in euro-dollar. we go nowhere. and in the treasury market, yields coming in. a bullish move. the long end of the curve. let's begin with the big issue, shall we? an optimistic view gets just a touch cloudier. tradere is no tech -- no deal yet. >> there is a chance we get a mini deal yet. >> phase one has been cosmetic from the start. >> increased risk that china and the