president trump tweets he protested u.s. interest rates in powell's meeting. d.c. speaks out on hong kong. mitch mcconnell urges the president to defend protesters. mike pompeo says he is gravely concerned about the violence. u.s. stocks close at another record. technology stocks raced to their best earnings in a decade. . retail on deck. come to "bloomberg daybreak" on this tuesday, november 19. earnings, and on comp sales wind up looking like for the full year. it downgraded its full-year earnings. you got the home depot and kohl's double way me in premarket, but other than that, it is really quiet. you're still seeing that melt up in the broader equity market.

time now for global exchange, where we bring you today's market moving news from all around the world, from hong kong to berlin, dubai, new york, and washington. our bloomberg forces are on the ground -- bloomberg voices are on the ground with today's top stories. boeing and airbus will go dubaio-head at the annual airshow. >> we will be talking about may be the first next year, possibly even a bit longer. but in the end, i will repeat the question, the only entities which will sanction the flying of these aircraft are the regulators. it is not boeing. alix: for more, our correspondent joins us on the phone. walk us through some of the big take away from the dubai airshow and some of the surprises.

reporter: thank you. a maxlly, boeing secured , the biggest order after a drop. version ofse, the the max has been -- [indiscernible] 8 secured the 737 max from a supplies only character in the uae. [indiscernible]

airline, ofsister emirates airline, which makes it the second largest customer for the 737 max. alix: thank you very much. now we go to hong kong come over chief executive carrie lam called for peaceful resolution to the scene at polytechnic university. >> if the protesters are coming out in a peaceful manner, in other words, they stop violence, they give up their weapons, they take their vice off the policeman, then there is no situation that that sort of violence will happen. alix: bloomberg greater china

government editor karen leigh joins us on the phone. walk us through the situation at the university. how many are still in the area? karen: this was an interesting day. hong kong hospital saying they were overwhelmed with injured protesters from the university .ampus schools are due to reopen here following days of chaos. schools have been suspended since last thursday, and a move we haven't seen through the duration of these protests. carrie lam says she wants a peaceful into this showdown, and that has alleviated fears that this could lead to a bloody crackdown, as we saw hundreds of protesters, some of them students, essentially trapped on this campus, surrounded by police. 600 came out overnight. betraying are now -- are now being treated at the hospital. alix: thank you very much. the pictures are unbelievable.

we turn now to berlin. the imf managing director praises germany and sees upswing for the global economy in 2020. a heavy cloudite of uncertainty hanging over the world economy. the more government can do to use all the tools they have two-state in disposal to burst , if you have monetary policy space, use it. alix: for more, matt miller joins us from berlin. she wants monetary space to be used. is anybody listening? is the perfectis place for you to say this because we are in berlin. she's meeting with angela merkel. she said she applauds merkel's government as it is. they are already spending money, to some extent. she especially applauded the german climate plan. she said more countries should

follow in terms of putting big numbers on fighting climate change. . she told me a lot in today's interview. she says she has a lot of opportunity -- she sees a lot of opportunity for africa. it has long been an important project for the chancellor herself. georgieva eva -- but said that 40 countries in africa are at distressed debt levels -- debt.ssed levels of others need to be careful they don't put themselves in an unsustainable debt position. we talked a little bit about argentina. she said she's interested to hear, watching very closely, to see what argentina's plan is and what their new government brings out, but that it needs to focus on helping the poorest people in the country. so a lot from the imf managing director today. alix: thanks a lot.

in the u.s., president trump taking to twitter after he met powelld chair jay yesterday. "i protested that our fed rate is set too high compared to the interest rate of competitor countries. our rates should be lower than all over. alix: too strong a dollar hurting manufacturers and growth. michael mckee has more. what happened in the meeting? michael: we don't know exactly what happened. both sides maintaining the polite fiction that it was cordial and productive. powell, he's going , althoughd bear it the fed statement afterwards was quite artful, inserting a phrase that is different from what they said after the dinner in february. here's what they said. that chairman powell told the president the fed will set interest-rate policy as required

by law to support maximum employment and stable prices. we will make those decisions based on careful, objective, nonpolitical analysis. for the president, perhaps something of an economic lesson. or a real estate developer, low rates may always be a good .hing, but not for the economy when i spoke with the boston fed president yesterday, he was pretty firm on it, and he explained why. take a listen. general,t like them in but particularly for the united states. don't think we have the desired stimulus to get long-term deal negative in parts of the world. havee united states, we some very vibrant short-term money markets. i think it would be pretty disruptive if we went to negative rates. descended onngren all three rate cuts -- rosengren

dissented on all three rate cuts this year. he does admit that maybe they've helped a little bit sensitive sections like housing. later this morning we get housing starts for october. alix: thank you very much. retail names out this morning. home depot cutting its full-year outlook. kohl's cutting its full-year adjusted forecast as well. both stocks tumbling in premarket. happened? reporter: it's been a gloomy morning and retail. for home depot, the most concerning thing is that they didn't talk the septa macro factors like they did when they cut their guidance earlier this year. they said at that point, this is more about lumbar deflation and conservative santarus. this type -- conservatives and tariffs. this time they said it was an limitation issue.

things are moving along slower than expected. we'll be looking for more detail on exactly what went wrong and how quickly they expect the -- how quickly they expect to turn around. 0.4% is clearly is still very light. it is below what analysts were expecting. the number that really caught my eye was gross margin of 36%. that came in quite like. i think we will want to hear more from them about what happened. do they have to resort to clearance to move inventory? were they able to move through all that inventory as we head towards the crucial holiday season? i think we had good results from walmart last week, which suggested it is not a weak consumer necessarily hurting these retailers, but execution issues. with a lot of other retail earnings to come, this did not quite set an upbeat tone. alix: great analysis, sarah

halzack. and in d.c. for the second week of public hearings underway today, kevin cirilli joins us from the white house. walk us through the rundown. kevin: later this morning, the house intelligence committee is going to year from a handful of key witnesses they say were witness to the president trying to bribe ukraine president zelensky into looking into the bidens. they will hear from jennifer williams, a senior aide to vice president mike pence. taking to twitter to call her "a never-trumper." we will also hear from a senior diplomat at the national, someone who also has information about the commit occasion president, rudy giuliani, and the ukrainians. poll this morning shows

that 65% americans say that nothing in the public hearings will cause them to change their mind on impeachment. on the issue, americans still very much divided along partisan lines. many still say -- alix: thank you very much. something else today, norway says it's a sovereign wealth fund belongs to the people. now the people wonder if they should actually cash out. the fund hit $1.1 trillion last month, but now they are considering what they can do it.

on theup, much more markets and analysis in today's first take. this is bloomberg. ♪

alix: time now for bloomberg first take. 20 need for our in-house team of wall street veterans that insiders -- joining me for our streete team of wall veterans and insiders, gina martin adams, vincent cignarella , and also with us, marquis on a of g6 capital partners -- ups with us, mark rossano of c6 capital partners.

vincent: they change their coupon policy. this is a really big deal. you saw what happened with jcpenney. this is really big with consumers. nobody pays retail, oddly enough, anymore. everyone is looking for a deal. when you take the deal away, consumers shop elsewhere. that is exactly what happened alix: so it is an execution thing. it doesn't necessarily point to a broad retail malaise. mark: i would say it is a mix. people are always looking for a deal. if i can't save that dollar, i am going to wait until i can. a consumerre is issue. i do think that the consumer is going to be hurt on a broad spectrum in the sense that you've seen credit has increased. you have loans. you have people just underwater at this point. i don't think you're going to get that big bump we are

expecting on the consumer side. alix:alix: he's a really happy guy. [laughter] mpty whenss half-e it comes to investing. gina: i think it comes to the function of expectations coming into the earnings season. everyone was piling into the consumer defensive names, thinking it would be a terrible earnings season. the results are that consumer names are higher than much of the rest of the index. so we are entering into a season in which disappointments are going to be counted down more than they would've been for some of the lower disappointments earlier in the season, and even beats are probably not celebrated as much because you are set up from this expectation standpoint. ungur term, i think you have the rotation going on towards interest-rate sensitive sectors, but some of this safety, late cycle consumer stuff is not as safe as many people may have

perceived. vincent: look, we are in the season. a couple of weeks is black friday. the consumer is on the sidelines. we have no wage inflation. there's nothing to stimulate this extra spending which might lift consumer stocks. alix: what if we had a weaker dollar? mark: people always say that -- vincent: people always say that, but the dollar needs to be a lot weaker to make a difference. you need at least a 10% move in the dollar to make imports that much cheaper, where that passes through the consumer. generally speaking, it stays on the top line. [indiscernible] [laughter] you may notnt being agree with the tweet, but doesn't president trump have a point? we would be better off in a manufacturing since if we had a 10% drop in the dollar, if we had a weaker currency? -- vincent: it is

a glass has full situation. the whole wealth effect comes in with a strong dollar. but to trump's point, the interesting traders take from calls powell trump linen basically says, listen, the talks with china aren't going that well. if the wheels fall off the wagon, will you cut rates and support my economy? and of course, the statement came from the fed, not the president. the media statement was we are independent, data dependent, and just so you know, we weren't influenced by the president. mark: he clearly got the wink and the nod that everything would be taking care of. but the issue at this point, and we always come back to it, no country has ever gone bankrupt with a strong currency. but they have gone bankrupt with a weak one. you look at what inflation is

going to do, what are people going to look at, and right now the u.s. is safety, especially because we do have a positive yield. how many places can you find positive yield and a certain amount of safety? vincent: canada. [laughter] alix: fair. mark: and then if you look at it, how money countries don't have a commodity backed exposure? we are very diversified. we have a certain amount of growth. we still are the last person standing at this point, and unfortunately, this china thing is going to come down. people are going to have to make that decision, what are we going to do? are we going to defend human rights or try to close on a deal? i think human rights will end up winning out. gina: i fund the whole currency discussion really bizarre because we are a much bigger importer than exporter as a nature. we need a stronger currency to support those imports. i understand maybe we want to rebalance that to some degree,

but the dollar and oh -- but the dollar alone will not cause that. you need the dollar to continue to accelerate to cause that rebalance. i don't think the dollar right now is being driven by monetary policy and interest rate differentials. i think it is more a flight to safety push. if it is driven by trade uncertainty. i have a lot of mixed emotions around currency. when i think about the u.s. equity market specifically, many more sales in the s&p 500 come from domestic industries and from international. so a strong dollar is very good for stocks. alix: i love it. you are at your desk, thinking, i really have to think hard about my thoughts towards the dollar. [laughter] alix: it does affect the rest for safety, etc. the dominance we have seen in u.s. markets and the rotation to value. the value rotation is holding up versus other areas, and u.s. stocks are crushing it versus the rest of the world. can this last? anyone?

gina: absolutely. it probably will continue as long as risk is skewed to the downside. thatng as perception is global growth is somewhat tenuous. the dollar would continue to be the beneficiary of that. one of the most underappreciated things about this is the fact u.s. corporate's are the most profitable corporate's in the world. we are just much more efficient this cycle then rest of world. so you need to see that gap start to close. efficiency needs to accelerate in the rest of the world for those equities to work. vincent: you can see it in the markets as well. bad news is very much discounted versus good news. good news comes out, markets pop. bad news comes out, we dribble off a little bit and then get back to where we were. yeah, i will let you know

at 7:15. [laughter] alix: thank you very much. capital -- off g6 c6 capital will be sticking with me. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." shares of home depot down sharply in premarket trading, cutting its growth estimate for the full year. it is the second time this year the company cut its guidance. for the third quarter, same-store sales were worse than expected. same story at kohl's after the department store chain cut its earnings forecast. wholesale earnings did worse than expected. that is your bloomberg business flash. alix: thank you so much.

all of that playing out in the markets as well. s&p futures, though still higher 0.2%, closing at a record high yesterday. other than that, you're seeing not a lot of move across any asset classes. euro-dollar pretty much flat. yields go nowhere. the curve a little bit flatter, by much. speaking of oil, saudi arabia takes more steps to boost local demand for the aramco ipo. more on what they are doing next. what it means for the global oil demand world, and what it means for u.s. companies that drill in the u.s.. this is bloomberg. [laughter]

alix: this is "bloomberg daybreak." i just pointed out, s&p futures still climbing off of record highs. basic resources stocks, very

surprising rally in europe, despite the fact you have tata steel cutting as many as 3000 jobs across european operations. that is helping boost the sector. in other asset classes, not a lot of move within the fx market. even the cable rate seems pretty calm. we want to touch on rates. on thirdt touching and quarter same-store sales falling short, and the company cutting its full-year outlook. what happened to home depot? >> sales came in a little later than expected, and same-store .ales overall for 3.6% wall street was looking for 4.7%. they missed by about 3%. they talked about some of the benefit from their investments not flowing through to sales just yet.

they are still hopeful that will be the case. our concern is that we have seen a bit of a slowdown in housing, and maybe that is some of the cause here as well. this bode fors lowe's tomorrow? is this a broader issue on the consumer? for lowe'st 3.5% tomorrow for same-store sales, and i think wall street says 3.2%. even what we just saw and what we seen the past couple of quarters, lowe's has been pretty close to home depot. we would think somewhere around that 2.5%, 3% may make more sense. they may see a similar bit of housing pressure on lowe's ticket to the numbers tomorrow. alix: i healthy rhetoric was that lower rates would help home depot and lowe's. has that not happened, or is this a company problem? >> i think with the housing market, there's historically

been a six to nine month lag before you see a trend in housing flow through to home depot and lowe's. if you go back to this time last year, the housing market was pretty weak. i think we are just seeing that flow through now. --st recent quarter of data the most recent quarter of data has showed a little bit of improvement. things may get a little better quarter or now for two -- or quarter or two from now. alix: really appreciate it. now we turn to another thing in the market, which is saudi arabia, doubling down on efforts to boost global demand for the .ramco ipo prices of those shares could see major fluctuation in the first six months. i spoke to the head of the atlantic council on that yesterday. >> there's not going to be a lot of liquidity once the shares hit the market. that could then mean that we might actually see the price

rise in the beginning of this ipo. within that first six months, there's possibility to get new and then sellipo the price up. that means we could see a big drop in the share price for saudi remco. alix: joining me now on set, former franklin mountain energy coo. of c6 capital holdings is still with me. what did you think of what she said? >> i don't think there is a short-term opportunity just because think the demand is still going to be there. think they are trying to push it onto the locals, and in terms of the people within the country. can't sellnt, they the international roadshow for a reason. i don't think those individuals are going to show up. i think that will be an issue in terms of long-term follow-through. i think it will open and just fade at this point.

alix: do you think there's just too much supply, not enough demand? or is it a company no one wants to own? be something that everyone wants to own. you have a 53 year reserve life index,. they are doing exactly what investors want. have $85 billion of free cash to easily support a dividend. they have the lowest carbon .ntensity they are doing everything right, so you want to own it. the question is, because they dominate the market, and it is owned by the kingdom of saudi arabia, it is hard to see them grow. it has to be a high-yielding dividend play. with 6% to 7% that probably brings in investors, but that will be substantially lower. >> as oil prices go higher, the

royalty rate actually shifts up that you have to pay into the government. i think this is the concern, that if oil prices do go higher, you will get that negative pushback. is this really going to hold true? as you go forward, they've gone down to the molecule chain. they got into chemicals, into refining. are you really going to buy those assets if you think oil is going to $100? how can you talk about drumming up new oil demand? i thought oil demand was going up 1.5% every year. why won't it happen for the next five? i think you're getting towards those real questions of have we hit peak oil, and we can go through what that means in that moment. i also think in order to understand their production levels, you need to understand the marginal producer in the world, which is the u.s. the u.s., in terms of a peak supply thesis, were pretty much

there. if you go back to the data of , we are drilling for percent longer, and yet production only grew 3% until august and 2018. if we are at 12.612 .7 million barrels a day, the question is, do we grow from there? even analysts are saying we grow -- we grow 400,000 barrels a year. if that is the case, growth for the rest of oil has to come from the rest of the world. >> at this point, i am looking at it from exit 2019. at that point i think you will get that slow down. everyone talks about 100 million barrels a day of demand, but you have to break that up into oil, natural gas liquids, and condensate. propane growth in the

market, but are you having demand in that oil market? other types of these.s with going toefiners are have to make the decision of, do i want utilization rates, which are going to hurt demand? alix: if the marginal producer is rolling over a little bit, if we hit that peak and hit peak demand, how much are we going to need from the rest of the world? do we get it from saudi arabia? i still think, to your point, let's say in five years it is 105 ilion barrels. the u.s. is drilling wells

faster. when using about low commodity prices, which is what low producers would tell you, i think it is actually a crisis of balance sheets. have two, three, four times ebitda. down and they are your debt to ebit levels going up, we see a lot more chapter 11 in 2020. that will take the lower cost weaker -- or higher cost weaker --panies out of the market wi markets, which should leave a good environment. >> following that through on a realized price basis, it wouldn't be a show if i didn't talk about heavy crude oil. crude quality matters. what is actually being produced, which is why offshore make sense. bring has been waiting to

back that neutral zone, and saudi arabia is finally like, let's do that. problem whenpply you're looking at what kind of oil there is. when you look at the best, we have a lot of ultra sweet, ultralight, and all of that has a place in this market. a lot of these refiners need that heavier crude to make those assets. alix: have you ever heard me not talk about a lot of oil when these guys are on? [laughter] alix: thank you very much. always fun to get you on set. now we are going to give you an update on headlines outside the business world. 50 our tonto is here with first -- viviana hurtado is here with first word news. viviana: hong kong chief executive carrie lam is calling for a peaceful resolution to a university siege.

about 600 demonstrators evict --orist cap you -- or were demonstrators escaped or were evacuated. antigovernment protests in iran raising the question, is the trumpet ministration campaign of maximum pressure starting to work? last week, demonstrations began when tehran raise the price of gasoline. --globaled -- that news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. coming up, top issues facing

capital markets as we head into another election year. bentsen.to ken if you go to tv , you can check us out online, interact with our charts and graphics, and interact with us directly. this is bloomberg. ♪

alix: we are having a special edition as we head to washington, where top players in the capital markets are gathering for an annual meeting. david westin is with ken bentsen. take it away. david: thanks so much. thank you for having a set of your -- thank you for having us at your annual meeting. tell us the biggest challenges and risks for cover markets as we had to 2020.

kent: thank you. what we try to do at this conference is bring together all of the different parts of the types of members, which runs the full gamut of the capital markets business. side, sell side institutional regulators. we have john williams from the new york fed, but then we have discussions as industry leaders around the retail brokerage wealth management side, institutional capital markets, really looking at the array of issues that market participants face. daivd: you have your normal issues like dodd-frank, volcker rule, but we are going into election year. we are hearing things from the democrat side that could fundamentally affect your business. how do you take those into account? kent: we are a highly regulated

industry. those issues keep coming, and they bubble up to the top. we have changes in the industry. i think on the political issues, those are starting to see been in, anding to seep that is something we will look into. are looking into complying with the european rules. where are we on that? kent: we are very appreciative that the sec did give the extension of the no action ruling, but there needs to be an endgame as it relates to research. in addition, when i've been in europe recently, and actually repeatedly over a couple of years, folks in brussels had talked about that they want to go back and take a look at method to. when will that happen? who knows. we could be talking about this

five years from now. but i think there is still end game ahead >>. daivd: -- game ahead. daivd: how do you talk about the larger issues, like when it comes to trade david -- david: how do you talk about the larger issues, like when it comes to trade? how do you take that into account for your industry? kent: it's a good question. had senator tim scott yesterday. we talked about the usmca, which we strongly support. i think it is an important piece of legislation. we are hopeful congress can get that done because while it is not specific to financial services in all respects, it also has broader economic impacts on markets. china, we've been working for many years to gain better market operating u.s. firms in china in the securities business. china has made steps in that direction, but that has now been

pushed forward into the debate. we are optimistic that this phase one of the u.s. china agreement would include moving forward on financial services. that is very important as well. david: does your industry take positions on initiatives when it funding auditing services? kent: we haven't gotten directly involved in that. we have watched the legislation that's unfolded, that senator rubio and others have put forth. it is something that, from a corporate finance perspective, we are taking a look at. to theis any risk industry, the risk of disentanglement was capital markets in china and the united states? kent: i think we want to expand the entanglement, if you will, of the capital markets between the two countries. we would argue it is to the benefit of the chinese economy to have more direct foreign

investment in a broader capital market system. too bankthey are dependent. likewise, that benefits the broader global economy by having a moving forward of china. this is youry, annual meeting. do you talk about fundamental ?eform one of the issues is women in the boardroom. you talk about these things? kent: absolutely. this is something that the industry, large and small, is very interested in. i would argue that while there's a long way to go for financial services, i think this is something that financial has always tried to be not justrefront of

who's in the boardroom, but also looking at the client base and the changing of a graphic of america. changingething the -- demographic of america. it is something the industry feels very strongly about. david: how do you measure that progress? kent: you have to look at it many different ways. we work with our members. it is not only a question of improvement. probably the bigger question is retention. everybody has strong recruiting programs, but how do you retain top talent and achieve your goals of diversity and inclusion , and matriculate people along the way? that is almost more important than the recruitment side. david: you are the executive director for sifma. what do you want the people here to walk away with? david: i think if people learn something that they didn't know

that i can take back, whether directly into my business from a market perspective or from a policy perspective, something they've been thinking about, or i learn something from my peers and competitors that i think this is worthwhile. a member of getting trade association. thank you so much. thank youy --david: so much. will later today, david have another interview. the chicago police pension fund is the latest to withdraw assets of september for fisher investments, 112 billion dollars. coming up, today's trader's take. if you're jumping into your car, tune into bloomberg radio on

sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time now for trader's take. joining me as vincent cignarella, voice of the bloomberg audio squawk. you can listen to him under terminal if you go to squa . vincent: i was not very optimistic about this trade. i was not optimistic about the trade deal. a lot of guys on the street were not as well. the deal has gotten so watered down, sub the optimism for getting a deal done is so often table that anything done is exciting. but we are seeing is positive news the markets are really taking in stride and have moved a lot. negative news we've marked down a little bit, and then we go back to where we were. if you look at the msci emerging market index, since august there's been a nice channel higher.

bits of fits and starts. clearly a trend higher. clearly, the markets wanted to go higher at that top yellow and if we go from there, doubt.d be but it just looks like the upside is the better side of the trade. alix: do you get a sense when you are talking to traders, are they trying to hedge the go by everything rally, or does it go into the end of the year? vincent: i think coming into the end of the year, people feel good about risk. where are go into january, i can't say, but if this continues, we are going to see dollar,of the bull run and emerging markets will come to the fore. alix: bloomberg's vincent

cignarella, thank you very much. squa , you can listen to him all day on the terminal. he likes european carmakers, but the guidance has not been great for the likes of daimler and volkswagen. also, some of the retailers getting hit. home depot and kohl's to the downside. depot mrs. on -- home depot misses on comp sales. this is bloomberg. ♪

♪ alix: welcome to "bloomberg daybreak" on this tuesday, november 19. here's everything you need to know at this hour. let's take it from the top. protests continue at polytechnic

university. sen. mcconnell: the world should hear from him directly that the world stands for these brave men and women. >> we have to recognize accommodative policy helps. alix: imf sees upswing for the global economy in 2020. >> she actually said she applauds merkel's government as it is. they are already spending to some extent. alix: she warnsalix: upswing needs policy effort because growth won't fall from the sky. big chains could use retail therapy. home depot falling after cutting growth forecasts for the rest of the year. >> our concern is that we have seen a bit of a slowdown in housing, and maybe that is some of the cause here as well. alix: and a story similar for coal. -- for kohl's. actually, we continue to see

up and up. alix: airbus wins in dubai from middle east carriers. [indiscernible] alix: boeing still gets orders for its grounded 737 max, while ceos say manufacturing quality needs to improve. markets want to be happy. i think i read multiple research reports this morning on the way forward is going to be up because the s&p is just ignoring any bad news. r --res closed at a revo at a record yesterday and are moving back that way. joining me now for the hour, romaine bostick. do you get the same feeling reading through your report? veryne: it is definitely a slow melt up. when you look at where the price

wilson isre, mike now finally capitulating. but then when you look at the pricehe median of target, that is pretty much where we were back in june and july. really what you are getting is a couple of the laggards finally realizing that the fed support, some of the fiscal support, that is enough to keep this market going. what you don't see a some of those same people talking about 2020 with the same bullishness. i think that is where you have to be concerned whether all the good stuff is in 2019, and once we get to 20, things will shift. alix: good point. up rally hasmelt been the rotation into value for to much across the board. come inside the bloomberg. the blue line is a standout for

me, s&p value versus growth. the yellow line is europe value versus growth. value has outperformed, particularly in the u.s. is that going to continue to be the right trade? joining us is david herro. you are the international value guy. is now a good time to be buying value after this move we've seen? david: from an international perspective, we seen a bit of a move since late in the summer. we are really nowhere close to getting valuations where they should be. the low valued stocks are still selling at a fraction of where they are both counterparts -- where both of their counterparts are. there's been a huge digression between these over the last decade. now we are just starting to see a tiny bit of movement outside of the u.s.. maybe inside the u.s. it has been a little more pronounced, but still, value stocks are just starting. it's because of price.

if you look at the price of these businesses my what you are being asked to pay is at significantly lower levels than the growth and momentum stocks. look at then we outperformance of value over the past couple of weeks and months, you have any concerns that want to start to see people nibbling back at some of those cyclical sectors, we saw that show up in 3q 13f filings, that could squash the rotation into value once people aren't willing to take on that risk again? david: what will happen is he will have a situation similar to 2009. recall 2008, towards the end of what was the down stroke the global financial markets. everyone was clinging to safety and stability, from consumer staples to utilities to health care, and the value stocks were left in the waste bin. then what happened in 2009, you

saw a huge rotation out. of saw a very large amount money go back and do you value -- go back into value. that stocks were so small it really doesn't take a lot of moby to get them moving -- a lot of money to get the moving. it might even be more bifurcated than what we saw at the end of 2008. this is just the beginning because the measurement i would use is just devaluation differentials between these stocks and certain sectors. if you look at consumer staples, mid-20's price-to-earnings , they grow 3% to 5%. consumer discretionary's grow at single-digit. single-digit price-to-earnings ratios, and they grow at almost, not quite, the same amount. these are the reasons why i think that there is some good

value, and this is just the beginning. it will start, and then begin to landslide as the weight of money goes into the sectors. romaine: d using that how we define value or what constitutes a value stock these days, has that changed to the point where essentially, people aren't necessarily buying traditional value, but rather more of the growth stocks that have simply lost some of their luster? david: i never liked this differentiation. ability to convert revenues into sales. there's various aspects. some of them qualitative, but they all can be representative quantitatively. stock alsoiced grows, you should be willing to give them a little bit more valuation for that. intodon't necessarily buy

this whole value versus growth because i think growth is a component in valuing businesses. i just think when you look at traditional value stocks based on low valuation metrics, you also have to compare that to what you are getting for what you are paying. you have to look at the return structure of the business versus the price. alix: let's talk about one of the sectors you own a lot of, and that is autos. dinner a motors, bmw, daimler. you heard -- general motors, bmw, daimler. we heard across the board that this is a difficult environment. which once up selling stuff to the automakers, says north america is weak. what do you not known in the auto sector that you want to buy that is not a value drop? david: we have plenty of exposure, as you mentioned, in the automobile sector. over the medium and long-term

term, these kind of prices, literally some of them, 1.5 to to 2.5 point -- times cash flow. we are seeing the big three markets stabilize, and should stay that way. there have been some structural and cyclical aspects that have driven down the price of these stocks significantly over the last 18 months. there's been a low rally here and there, but the price of these businesses has completely fallen out of the sky on the belief that these industries are dead forever. one of the things that is causing short-term pain is preparing for alternative drivetrains. most of this investment has been

done. we do see a much better picture in the next two to four years for the out mobile sector, and the price is more reflective of the current situation, thereby giving us an opportunity. the last thing i will add to, unlike in past downturns, these companies are going into their recovery mode with very strong balance sheets. almost all of these businesses have significant amounts of net cash on their balance sheet, so they are able to weather the storm markets that they encountered over the last 18 months. will there be enough consumer demand to support that growth story? is extremelynsumer healthy almost universally, between low interest rates and low inflation, relatively high employment levels, consumer wages up ticking. in actuality, the consumer is quite strong. even in europe, unemployment levels are well off their highs.

in many instances in some of the key markets. germany, the u.k., the u.s., japan. the issue has been finding workers and skilled labor. this is one of the things that provides me with confidence. the consumer is relatively strong. they may not be as confident as they were, given some of the macro noise, but the consumer is strong, employed, and with growing wages, and relatively compared to past periods. we are constantly looking at new areas. we are looking at areas where we are underexposed. we are underexposed pharmaceuticals in health care. has been at this stage relatively expensive. but we are exposed to consumer discretionary. we are exposed to industrials.

we are exposed to materials. overexposed, one could say, to financials. the reason is, not by coincidence, that we have these bifurcated markets. this is where the value is today. it's really gotten beaten up over the last 18 months. we speak of these stockmarket recoveries. these things have barely bounced off the bottom after being down 30%, 40% in the last 18 months. of the areas some outside the united states, they are able to buy undervalued businesses using undervalued currencies, see you get kind of a double prospect of greater return for the future. david, great to catch up with david, great to catch up with you. coming up, can u.s. stocks maintain momentum? more on market positioning for 2020. global head of risk advisory will join us.

this is bloomberg. ♪

alix: the s&p rally this year proved many year-end predictions wrong. one analyst at morgan stanley lifting his forecast for the year, but remained less sanguine for the coming year. "we expect the markets will , ons on more fundamentals the bearish side." tariffs might have peaked. he will have fed cuts that really help on into conditions, and the bond market in an inventory cycle. joining us now, mark connors, credit suisse global head of risk advisory. how do you deal with that bifurcation?

we had q4 come into our headlights. people are ready to close the route. they had a bad year last year. hedge funds are up. get a payday, so they took risk down. int caused almost an uplift the back draft of a light positioning. the market melted higher. there's no resistance from people trying to de-lever. they were already out of the way. we think it was a positioning -led rally. we were just talking about low rates. that really does still have that financial repression did namic -- repression dynamic. people need to go out the risk curve. equity solves that. romaine: if this is a position led rally, what does that mean once we get to the end of the quarter, the end of the year? mark: we will tell you. [laughter] mark: people were talking earlier about how hedge funds are doing better.

the majority of funds are still quantify -- are still quant funds. those are quantitatively based funds that go after factor-based investing. they have reduced their exposure 30% over the past 12 months. at was the biggest reduction in exposure we seen on our books ever. they are not in the market. they have a lower leverage profile. it is because of the factor volatility that will go -- that we will go into later if you like because it is all tied into rates. romaine: with all the money sitting on the sidelines theoretically, whether cash or in short-term investment, that could come pouring in should you get a clear signal on trade and may be a clear signal that the economic malaise we all thought was going to affect the world might not be as bad as we .hought mark: yes, that cash will come back in. the question everyone is asking, where does it go? does it going to cyclicals?

banks are up 18% since the end of august. that's 10 weeks. they've had a good year in the last two months. is it going to be the cyclical or rate sensitive trade, or will it be back to the secular killers, tech names? alix: kennedy both? -- can it be both? mark: that's so egalitarian, alix. thoughen a winner even it's been a bit of a pullback recently. it is a secular grower. if we have a low growth , we think cash flow is where you make money. tech companies have done a good job of that. romaine: when you look at some of the names we saw come out of the most recent 13f filings, specifically some of the newer positions, you did see a lot of the software companies, cyber

security companies. techof the large-ish companies, we also saw health care, or those trades a little too crowded? or are these funds onto something? mark: that nuance of going down in cap is huge. that is where you're going to get some more gearing. i think you hit the nail on the head about -- because those trades can get crowded quickly. the larger ones, harder to move. but back to the point, crowded trades usually work for a long time. and then they don't. romaine: as we get into 2020, the question becomes, are earnings going to support some of the valuations we have? are we going to see a rebound in economic growth? what does a 2% economy and a 20 plus multiple on the market -- is that attractive enough to bring you back into, if you are

not already positioned? mark: that is the new normal. if we are in this low rate schillingt, terry wrote earlier today -- and the work we do says we are in a low rate environment. if we are there, you have to have companies who can reinvest and do scale. equities may become structured products. the way we look at that, they are already buying back stock. they are already doing financial engineering. 2020 may be a midline on pes. alix: based on that, the non-volatility we have

the volatility on the vix is picking up. are there structural changes in the volatility market? mark: there are structural changes the fed has absorbed over time. we look at them as a coiled spring. everything seems fine, and then you have a repo market dynamic. we are all figuring out what to do in this heavily indebted, low rate environment. it goes well for a while, and then we have a snap. romaine: how do you diversify, going back to the crowded trades? mark: the biggest one has been trade,all it the fab long faang and bonds. it's fabulous. [laughter] mark: and that has worked. you can look at the 10 year is one of the most wonderful financial instruments ever. do we know what we are doing in 10 years? the certainty involved in a 10 year instrument is unbelievable, and it is powerful. to have that along with equities, which is pure promise without an expected price path, that has been a great play. you kind of keep doing that, i think. alix: the black swan? mark: repo year-end.

alix: yeah? it is going to distort everything? but it is contained, right? mark: they have a repo facility they put out. you folks have done a good job of bubbling up to the surface. they said primary dealers, we are going to allow you to come to us. then they say we will go to the open market and just buy bills. even all of that may not reach these real value traders and broker-dealers. is a real intricate market. at year end, things get tribal. people husband balance sheets because of other dynamics. it is already being priced in. it's about average, but it could spike again. alix: mark connors of credit suisse will be sticking with us. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." boeing is building momentum for when it's grounded 737 max jet returns to the skies. the company selling 50 of the planes at the dubai airshow. learned anas undisclosed customer order 20. the orders total more than $6 billion at list prices. alibaba's $13 billion share sale in hong kong proven to be wildly popular. the offering is already many times subscribed. alibaba will start collecting orders early. a small part of the sale has been set aside for individual investors. the macro hedge fund started by former traders for billionaire stan druck and miller is looking for new investors. the fund dropping 19% this year. 2011,it began trading in

it has rarely opened to new money. that is your bloomberg business flash. alix: here's a note for portfolio managers that caught my eye. yesterday, sof you may have missed it. online dating is obviously a game changer. if you take a look at how they are doing it, the percentage of couples meeting for family and over,ers are all moving while those meeting online, that orange line, are all soaring. it was actually an economic trend. "with the advent of online dating, women in primary productive hr in the dominant position in the dating market for the first time in human history. the cascading inflations are profound. the online dating phenomenon is intersecting with culture in a profound way, particularly in muslim countries." wow, this actually

has repercussions outside the u.s. romaine: when you talk about women of prime age, or whatever they said, when it gets to a certain age, it flips and men get the upper hand as they get older. one interesting thing about this report, which was incredibly thorough, the idea that this has a knock on effect with cosmetics , photography, and others because you have to put your best face forward. alix: and in other areas, not just the u.s. coming up, we look at what housing and mortgage bonds are saying. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i'm alix steel. just moments away from the latest read on housing. it was not good for home depot. in other asset classes, not seeing a lot of movement in the bond market or the fx market. crude down over 1%. differing from what we have seen in the equity market.

rotation into value whether it is u.s. or europe, another same case when it comes to commodities. the data dropping right now. we have building permits coming in in october a little higher than estimated. up 5%. huge jump sequentially and much better than estimated. housing starts coming in weaker, 3.8%. we care about the permits because that where you will get the permits to start building your romaine: underneath the hood, the single-family numbers pretty good as well. that has been the bright spot. some of the overall numbers obscured by the multifamily weakness. people like you and me stew out there buying homes. alix: you wonder how much of that will be because of low rates. we have building issues in different areas of the world. you are still seeing movement across the equity market. we are also waiting on earnings. they are out. let's see what they did.

not a good number for kohl's and home depot, but you are looking at positive on tjx. for the full year earnings raised on the high end by about two since for the third quarter -- by about two cents. comp sales almost doubled. that is solid. romaine: you had a lot of analysts at guggenheim and barclays saying that if you are looking at retail, it is this level, this price point level of stores. tjx, ross stores, these are the places to be. these are where we will see better-than-expected numbers. alix: still super solid. growing your margins in terms of revenue coming in over 6% year on year. if you will look for a readthrough of the consumer, make the argument that a kohl's and home depot will have idiosyncratic execution issues versus the broader consumer. if you look at tjx, could be better.

it looks like the fourth quarter earnings estimates missed by a penny on the high end. we will see how the market takes that. romaine: a couple quarters ago i tjx and got schooled on wide tjx was a strength story. i went to a tjx over the weekend. it was my second time. i shop at high end stores. i do not go anywhere below 59th street. [laughter] it was an interesting store and i can see the appeal, and if sarah is watching i can apologize. alix: i live at t.j. maxx. mark connors is still with us. walk me through you get better permits, tjx comes in solid, what is your consumer readthrough? mark: on our position to go back to what we see and positioning, still very defensive. we have seen short covering.

if you want to talk about cyclical engagement like we did about commodities, that is why we do not think this is an engagement of the cycle. europe, we think it is a valuation play. u.s. banks are 18%. european banks not as much. all the positioning is in europe because of the evaluation. we think this is a rotation into that vacuum of positioning, seeing what is cheap. european banks with the negative rate environment, those are cheap. back to what earnings are going on, i would not look too much into bricks and mortar versus the secular low. i think that is still there from an investor standpoint. above 59th street. [laughter] fair, there's is a t.j. maxx at 60th street, if either of you are checking it out. let's go broader to what the mortgage bond market is saying about housing.

a demand for a type of loan for borrowers with iffy financial records is rising. mortgages, what are they and what have you noticed? a nonqualified mortgages are type of mortgage going to a borrower with less than perfect financial records. we are talking a prior bankruptcy, some reason. maybe they are a freelancer and do not have a standard tax return. some reason they do not have the most perfect credit going in. issuance of these bonds has been rising quickly. this speaks to why investors are bullish. the housing market looks strong. these consumers do default or go to -- or go delinquent at a higher rate, but it is not concerning to most investors. romaine: what is the bullishness based on and why will it be different than 2006, 2007, when everybody was piling into subprime. is it because of low rates?

what is the situation? claire: it helps that the housing market is strong. these are not subprime borrowers. they have a credit score in the low 700. that is a prime borrower, maybe with just a bit of past credit history. alix: who makes these loans? that is the interesting thing. the mark did had a mix of bank and non-bank lenders. there are many different companies that have sprung up to be leaders in the space. that being said, the market is not that big. we are looking at a 30 or $35 billion market. issuance will be north of 20 billion. romaine: when we talk about investors are doing, and there is this idea they are adverse to risk. people going out on the limb, whether it is these

products claire is talking about or the high end corporate debt. mark: the old strategies are not working right now. we see volatility. it is more where can we make money with leverage? that has been harder. you take a leverage profile down and going into a riskier assets with a higher margin, clearly there will be more demand for this and a low rate environment. the bigger pools of capital, high yield is up 14% in issuance. that is a $4 trillion market. there is an appetite for risk, but not -- risk. what what you something -- you do with something like ccc's? do you want to go down that risk scale to get return? mark: hopefully were not in them three months ago. alix: no, no. mark: are strategist has been on

this and watching this. ccc's are down. we have not seen engagement there. that would be the canary in the credit: mine to watch -- in the watch ccc'smine to to see if they are left there. romaine: what are you seeing in terms of the credit space? claire: it has been a tale of two markets. i speak to people on the buy side who say they're not comfortable holding ccc risk even if it may look cheap just on the basis of underperformance. you wind up seeing buying coming into the energy or ccc's, that is a warning sign to you? mark: the warning sign would be the default. could meangement

cycle continuing at low rates and lower for longer. people could refinance. if they refinance, those names will lift. alix: going back to these nonqualified mortgages, are we seeing default? this has onlye: been around in size for two years so we are just getting to later on what delinquency looks like. the bonds are holding up extremely well. it would take a massive downturn for them to see any sort of losses. that being said, you're talking of a delinquency rate of 3% to 5%, quite a bit higher than you might see in a fannie mae or freddie mac. romaine: is there a higher risk of refinance with the types of bonds, given where the borrowers are on the spectrum combined with a lower rate environment? mark: definitely -- claire: definitely. these things prepay fast, so they will refinance in a conventional loan.

typically these borrowers are paying a higher rate because they are more risky. bloombergs claire boston, great to have you. mark connors is sticking with us. we want to get a headline -- we want to get updates on what is making headlines outside the business world. viviana: in hong kong, chief executive carrie lam is calling for a peaceful resolution to a university siege. the standoff raising fears of a bloody crackdown. overnight, 600 of the demonstrators escaped or were evacuated. 100 remain on campus. today the u.s. walking out of military talks with south korea. oul balking at president trump demanded pays five times more for having troops stationed there. that raises questions about the stability of one of the u.s. is closest alliance. president trump says he protested interest rates in a meeting with jerome powell. he says the u.s. has been

deprived of the benefit of negative rates sent by central banks in japan and europe. one central banker who is not a fan of negative rates is boston fed president eric rosengren. we spoke with him. >> i do not like them in general, and particular for the united states. i do not think it has had the desired stimulus to get the long-term deal so negative and parts of the world and it starts to get distorted behavior i do not think is helpful. in the united states we have vibrant short-term money market and i think it would be disruptive if we went to negative rates. he has dissented against all three of the fed rate cuts this year. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. say -- just heard you you agree? mark: it almost seems like he is the sage in the room.

easier for lower rates to get people to refinance to get the velocity of money going. the moral hazard. if you're not having people be able to save, they will make non-economic decisions and go out with the risk curve of maybe a new product and find out three years later it was a bad decision. zero rates is almost abdication of control by the central banks. if they make it uninvestable, then how they influence behavior? i know that is a heavy statement for so early in the morning. alix: i've been up since 3 a.m.. negative rates are still a work in progress and we do not know what it means. is onlye other is there so much the central bank can actually do, which leads me to policy, which leads me to 2020. elizabeth warren talking again about private equity and lambasting blackstone for buying mortgages after the crisis.

how do you think about that kind of risk? mark: if low rates met private his endowmentst were a lot of people have gone to. they constrained risk by putting it into illiquid instruments and say if we stay low rate, we will probably make that 18%. they have accumulated a lot of assets, easy targets. if any candidate wants to help, there's a lot of evidence that shows a recession will allow for a lot of physical policy because you have the destruction of credit instruments. you will have a reallocation of capital. if you do not have that, the bigger can get bigger. in this low rate environment, it is not the democratization of capital. very heavy at 8:30 in the morning. a recession will do the best job of fiscal policy unleashed. you cannot do it now. alix: it also means romaine and mark might go below 59th street

to shop. [laughter] mark: that is a great point. it will. with the value trade? that is it right there. alix: mark connors of credit suisse, always a blast have you on set. appreciate it. permits have blown past estimates, housing starts coming in light. the permits was the one to focus on. you're also taking a look at tjx rising 1% in a premarket, did beat on the top and bottom line adjusted basis on a full earnings basis. also raised full-year earnings guidance. coming up, it is the have and have-nots of retail. home depot and kohl's disappointing, keep -- tjx beating. we will have much more in today's bottom line. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i am viviana hurtado with your bloomberg business flash. shares of home depot down sharply in premarket trading. the company cutting its growth estimates for the full year. it is the second time this year the company cut its guidance. home depot same-store sales were worse than expected for the third quarter. home company of marshall in t.j. maxx reported third-quarter comparable sales that beat estimates. earnings by tjx were better than expected. the company says the fourth is off to a solid start at its discount stores. maybe romaine bostick will become a maxanista. i am viviana hurtado. that is your bloomberg business flash. alix: romaine, you will get shade forever for that. a look at customers -- look at

companies worth watching this morning. joining us is stacey widlitz. it was a bifurcation this morning. what is your biggest take away from what we learned for retail. stacey: it continues to be the haves and the have-nots. tjx up 4%. we are all tjx shoppers. alix: he is not. romaine: one of us. is getting the overflow that is not selling at department stores. they are getting the best inventory and the consumer continues to go there to find treasure hunt value, and most importantly the home goods, returns to positivity after being flat last quarter. romaine: that is the thing i never got about the tjx story. what is the proposition for customers? is it just that you can get things cheap or is it something unique in terms of the branson quality you're getting that you cannot get elsewhere. why tjx and not calls? to me they look the same from the outside. alix: wow.

[laughter] retail intervention. tjx is a treasure hunt. you go for the gold label and see if you can get it to percent off. for kohl's, it is a completely different story. just didecution, i stores all weekend, calls versus target. kohl's has brands that everybody else has. they are all on sale, and they are doing the amazon returns initiative in the stores thinking that will bring traffic into convert to sales and it is not happening. i was in a t.j. maxx this weekend in chicago and i was surprised at how orderly and nice it was. my impression was it was much more lower quality. when they are trying to compete, not just against kohl's but against the bigger department stores, are people making

decisions, saying i will not go to macy's or bloomingdale's, i will go to t.j. maxx. is that a competition? stacey: it is. when you think at how well the off-price channel has been doing , whether that is ross or tjx, backstage macy's is doing their own off-price inside the stores. i would argue that cannibalize is your business. everybody is trying to chase that business down. obviously, retail apparel has been tough. they get all of the good overflow into the stores and they sell to you at a discount. alix: when we talk about home depot and kohl's it would be easy to make a narrative the consumer is weak but it seems like that is not what you are seeing. stacey: that is not the case. not all retailers are created equal. target and walmart are putting up amazing comps because they are doing specific things for target black private labels. for kohl's, it is an older customer, they are trying to get the younger customer in and not

able to do it. trying to do beauty initiatives, kind of too little, too late. it is very much the have and have-nots. romaine: with regards to pricing a discounting, i have noticed anecdotally you are not seeing as many discounts as you used to . maybe that will change as we get into black friday and beyond. our stores having more pricing power this year than what we saw two years ago where it seemed like you are always waiting for 50% off? stacey: in 2018 a lot of the channels were cleaned up. the department stores would not let you throw us under the promotional bus. a lot of people cleaned up, the margins rose, and this year the promotions have creep back in. i was out of the malls this weekend. buy one get 150% off, 40% off entire store. this is par for the course and it will only get worse as we

creep into the official black friday. alix: stacey, always great to get your perspective. stacey widlitz of s w retail advisors. and romaine, always great to have you. romaine: we have to set up a shopping trip below 59th street. alix: your mother needs to take you shopping because she is an animal when it comes to t.j. maxx. we will have much more on all these retailers price action in technically speaking coming up on the other end of the break. breaking news. conocophillips 10 year plan of $30 billion in share buybacks. that represents almost 50% of its current market cap. they are having their annual meeting in houston where they are outlining their 10 year plan and the big highlight is a huge $30 billion share buyback. 50% of its current market cap. if you're heading out and jumping in your car, you can stay tuned to bloomberg radio heard across the u.s. on sirius xm channel 119 on the bloomberg business app.

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alix: time for technically speaking. we will give you three traits. bill maloney, voice of bloomberg's squad joins me now. listen to bill all day if you type in sq ua . home depot getting hit pretty hard. what you see? bill: down 3% in premarket numbers. it will likely gap below the 50 day moving average. the hundred day has been holding since january. we are still in this long-term uptrend since december. above 222, stock is still ok. alix: let's look at lows, they report tomorrow. you're looking at the 200 day tomorrow. lowe's is down about 2% in sympathy with home depot. it has been in this long-term trading range. 111,irst support is around

below that is 108, the july high. the stock is still in a trading range. alix: calls, real fast. bill: getting hammered today. kohl's is down around 13% in the premarket. the stock was bottoming out. it was looking good until today. it will be back in this trading day. 54 to 44 today. back to no man's land. alix: super appreciative. bill maloney joining us. that wraps it up for me. withg up on "the open" jonathan ferro, priya misra.

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, the longest winning streak since july taking stocks deeper into uncharted territory. president trump facing off with

jerome powell, pushing back against fed rate policy but remaining silent on hong kong. senate republicans pushing a bill supporting protesters. here is your tuesday morning price action. equity futures firm or six points on the s&p 500, elevated .2%. in the treasury market, a little bit of a bit, yields lower a single basis point to 1.81 on the u.s. 10 year. recent price action for the euro. euro-dollar 1.1077. let's begin with the big issue, the equity markets shaking off everything thrown at it. >> markets will continue to grind higher. >> continued to grind higher. >> the market at record highs. >> approaching melt up terrs.