york, i'm romaine bostick. and i'm taylor riggs. this is bloomberg markets, the close. romaine: it's an early close today, the abbreviated week and an abbreviated day following thanksgiving. you can hear the closing bell, the major indices are finishing down 4/10 of a percent, even with today's losses, still up strongly on the week. s&p, and the nasdaq are down, small caps are down and this was the last day of the month. it was a strong month, one of the best we have had so far this year. a lot of risk appetite in this market with a lot of folks looking for optimism for economic growth for that trade deal and everything in between. taylor: even with the small losses and a pullback today. we are posting the best month since june. the volume is a little like

light today.ittle -- a is still a risk tone risk off tone today. i want deeper action with our markets report is ranging from equities, bonds, currencies, and commodities. >> small caps are having a great day, they are bricking to a 52-week high. chart.ake a look at this our colleagues are seeing this breakout happen, the s&p 500 and blue on top. the russell 2000 right there, they risk on the rally. the small caps are not so much, seeing a bit of the trading range. this is until today when we see a bit of a breakout, now that we have the small caps on board. roomoks like we have some to roam -- run.

have beenn equities doing quite well, so what is the cause of this in the u.s. equities? it's really emerging markets, you see the emerging markets index, this was from about the performancert-lived of u.s. equities reached its venous -- it's zenith. what would make this much worse is that the biggest contributor to the emerging markets index, alibaba, was not doing well. there were shares of the tech giant above 7% lately and the shares of the hong kong issuance has helped fuel a bid. that yourtant to note take currency into effect. the emerging markets have contributed somewhat to the underperformance. a head to version is doing a

percentage -- a hedged version is doing a percentage point better. romaine: for more on today's market action let's bring in a global market strategist, alex, happy thanksgiving. the big question after we had three consecutive record highs, and finishing on a good month here, traders will have to confront this question of what to change. alex: a big part of that is where you see the trade tension evolving in 2020. the market narrative at the moment is very much positive mood music. we have had a drip feed of a potential trade deal, but the details are like. be we believe investors may needing to be more cautious on trade. even if we see a u.s.-trade -- u.s.-china trade deal, it is not the finish line.

we would like to see some evolution between u.s. and european trade tension, this might be a challenge to live with. taylor: if you are getting more cautious, where you getting defensive in the equity markets? 3 that's a fair -- alex: that's a fair question. we are looking for security if we do see some evolution in the u.s.-china trade tension, we would pull out of internationally exposed equity markets, europe in particular, large-cap u.s. equities in particular show robust strength. u.s. buyer over some international peers. of people are making the case that europe could outperform next year, for no reason then a valuation perspective. we have the record highs this week, but we are in oversold conditions if you per -- by into

the technicals. we have four valuations are relatively rich. is there not a case to be made for putting money overseas? argument isluation really attractive. but the challenges that investors have been jumping into this game the last few years and have been stunned year-over-year except in 2017. just because something is cheap does not mean that we should automatically buy it. we have to identify a catalyst for why that cheapness would disappear. what we need to see happen, the u.s. dollar needs to weaken to take the pressure off emerging markets and international equity benchmarks so the valuation differential can come back. romaine: let's talk about the u.s. dollar, we did see the dollar weaken a little bit. every time we get these bouts of weakening it always comes back. nothing seems to knock the dollar down. we get a resurgence in economic

growth, doesn't the dollar move higher? pull.we are in a push and it is way down by a trade budget deficit and shrinking interest rates differentials between the u.s. and the rest of the world. on the flipside, in this point of escalated global trade tension, sentiment is driving the bus, that's pushing people to look for safety in the u.s. dollar, putting a floor on this. resolvee trade tensions themselves, which could be 24 months. the dollar is likely to stay in that range where the economics keep a lid on it but this system means it can fall much. whenr: moving into bonds, equity prices rise, the record shockingly, bonds are as well. as well. the correlation broken down, and

dividend yield are still higher than the 10 year treasuries, are equities still attractive? alex: on that relative argument, yes, from a dividend yield perspective it looks relatively attractive versus fixed income. trading a lot -- is not particularly attractive on a historical basis. but on a relative basis with fixed income it looks good. for the investors that are seeking yield and income, dividend yield socks do -- stocks to pay something but i would be cautious about the values on offer, and we have concerns about the quality of the balance street -- sheet. our thanks to alex dryden of jp morgan. super rich are getting

skittish about their future, given the trade war between the germany, and as violent clashes in hong kong. there is we can to demand in super yachts, they get dropped off as the first hands of a recession and they have fallen to a four year low in november, captioning the uncertainty in the global economy. super yachtare in territory, what do you see in the water? taylor: behind me below the bay bridge is the massive super yacht going out to maybe come visit you and go around the caribbean. note, it'sre serious interesting. the consumer makes up 70% of gdp , as you and i have been talking about all day, the consumer is holding up the economy, holding up the growth in the gdp numbers

we saw on wednesday. so we cannot talk about the superrich and the super yachts as it relates to the general health of the, you do see little cracks. harbinger if it's a of other things to come. i like to tidbit in the story that you had, only 102 super ,acht dealers shipped this year and it's down from 199. that's a huge drop. whether it's a barometer or not, you hit on the, you're talking about discretionary spending. taylor: and i would say that people here have seen the plentiful and the trough of that all going back to the 2000 dot-com bubble. people here are pretty aware of how quickly things can come and go. coming up we will stick with the holiday shopping season.

it's taking off. black friday setting up to be the most wonderful time of the year for retailers. this is bloomberg. ♪

taylor: welcome back. let's get a check on first word news. >> in london, police shot a suspect after a terror attack, which sent hundreds running for their lives. several people are believed to be injured in a stabbing, this took place in the london bridge area near the city's financial center. please leave the suspect had a fake bomb strapped to his body. >> i can assure everyone that

anybody involved in this crime and these attacks, will be hunted down and brought to justice. >> in 2017, 8 people were killed in a terror attack in the same part of london. google and other platforms are being probed over how they track users across the internet yet the warning -- the internet. the warning comes from the e.u. competition commissioner who told the data business model used by google and others to collect information on how people use the web. global news 24 hours a day on air and at tictoc on twitter --global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. from toys to electronics, this is the moment that retailers have been preparing for all year long. black friday is underway in the u.s., the national retail federation is expecting more than 165 million black friday

shoppers. each spending over thousand dollars. our correspondent has been speaking to ceo's about the results. let's start with the brick-and-mortar side of the equation, who's going to the stores? people without computers? >> everyone has computers and cell phones, it's a lot of young shoppers, the millennials and ze giannessi -- gen shoppers. american eagle and urban outfitters are really benefiting but electronics always benefit, sophie will who like tv's and big electronics are also seeing foot traffic. taylor: much has been made about hasholiday shortened time -- the shortened holiday time between thanksgiving and christmas. shopsick-and-mortar concerned about how short the season is? retailersthink all

have push the promotions a week in advance, this has led to black friday being a little less relevant. people have had more time to shop. but some of the retailers that will win in this scenario are those who offer by online and pick up at the store and you can push that to a week later. romaine: there have been companies like target and walmart that have done this pretty well, what about the newer players into that only channel experience? jordyn: we see a lot of department stores getting an honest, you can think of nordstrom, but what's really key is making sure that you marry the convenience with having the results. so people are not waiting in long lines when they go into the store, but they can pick it up with these. taylor: thank you to jordyn

holman. i want to stick with black friday and bring in the national retail federation resident and ceo. he joins us from washington. what are you seeing? what is your sense on the ground ? thatew: our forecast was sales would grow this year between 3.8% over a year ago. we know the consumer confidence levels have been high, we have low unemployment rates, wages are growing and macro conditions are good. having seen the retail sales numbers, they are quite strong. there is positive momentum in the market. we feel good about the way we are off to the season. things start early this year because there are fewer days between thanksgiving and christmas, but retailers have adjusted for that, giving those deals to their customers earlier . we think the momentum will continue to the holiday.

in the last hour we spoke with charles o'shea, he has put it nicely, i don't care how much they sell, i care how much they make on the bottom line. how are you viewing discounting and that heavy emotional and -- promotional environment? dark of the environment has been very promotional and i think most retailers and economists would say that. i think the difference now is that after this many years of adjusting supply chains and trying to manage the ply chain more effectively, you are getting inventory management under patrol -- under control. so the promotions that you see are promotions that have been planned for. in some cases many months, going

back to last year. so working with suppliers and vendors, retailers are identifying those products that can be put out there to get consumers excited about the season and do it in a way that will preserve margins and drive traffic, but not have a negative impact. and i think we will see that. we talk about how these stores are trying to create experiences to get people into the store, making them instagram a bull, if you will. but not every retailer has the capacity or the willpower to do that, is there a place in the retail sector where stores want to sell things and not necessarily the experience? do those stores have a place in the world? >> as competitive as this environment is with the level of transparency in terms of the information consumers have to than given the assessment of

pricing and the way the environment in this country has changed, so we all have different levels of expectations about experiences in all parts of our lives, one way or another, to be successful, you have to create an experience that makes it memorable to be engaged with that brand or company. i think retailers are finding a way to do this. so i don't think it's exclusively or even primarily about scale. retailers's about getting creative and distinguishing themselves in the market and finding their niche. we have very strong macro conditions which means everyone will do well. there are always winners and losers, but the environment is positive and you will see a lot of companies figure out a way to make themselves unique and deliver real value. you mentioned the macro conditions, does the flip

applied? can you look at the holiday shopping season and glean some big the broader macroeconomy? >> that's a good question. we feel with an economy that is driven two thirds by consumer activity, particularly in an environment like this where we see businesses holding back on the business investment side, that we are relying on consumer behavior and activity more than normal, maybe disproportionately this year and in this quarter to help drive the overall economy and gdp numbers, keeping them stable and growing. we look at this is the retail industry is very representative of what's happening in the market latest. consumer behavior is reflective of the signals that people are picking up in a variety of places, whether it's in the equity, unemployment markets, housing, lots of things. and i think we should read into that, that we have a strong and

healthy economy. we should keep it moving forward and not do something silly like perpetuate the imposition of tariffs and self-inflicted wounds that will hurt the economy. taylor: are thank you to matthew shay. more next. this is bloomberg. ♪ ♪

our walltime for street beach, first, morgan stanley ousted four traders as it investigates andy bmp trader was fired on a $19 million loss who goes on to win a civil lawsuit. andy ram because ipo is drawing bids. ipo is drawingco bids. onthe four senior traders

the $100 million loss for morgan stanley is a big year -- a big deal. morgan stanley was already challenged to begin with. they were flat out lying about these losses to begin with. taylor: and we are looking at another story, bnp had a trader that was fired for a loss, but won ans like he one -- unfair dismissal lawsuit. sonali: for bnp, they are not saying he is getting any money back 40 career damage. what they are doing -- for any career damage, but they are talking about severances and that's why he is winning the 1.4 billion dollars -- $1.4 million. romaine: everyone has their eyes on the aramco ipo. sonali: it's a little oversubscribed, which is good news, but not as oversubscribed as the ipo's coming out of saudi

arabia. lackluster is a good word. they have had little interest, but the bits come in through december 4 and we will see how it shapes up. taylor: it's interesting, we get headlines that oil is posting its worst we can months -- week in months, but we are seeing strong demand for the aramco ipo. are there any correlations? sonali: on one hand yes, but also this is the world's most profitable country today -- company. it would demand interest as such. that doesn't mean investors are not turned about the valuation of the come -- the company. are generating significant cash flow and it is the gym of saudi arabia that people are looking -- the gem saudi arabia people are looking for. and i want to get a look

at a market check as we look at this black friday holiday. i have been talking all morning about shares of target, walmart, best buy, and things that people are seeing strong foot traffic for these companies, because the electronics. target has done well on their inventory merchandising. romaine: i spoke to some people this morning, they look at the sales, saying it will be higher, but they also think the profit margins will expand. taylor: i will let you go out and get shopping, real yield is reacting to the latest news in the bond market, that's next. this is berg. -- bloomberg ♪

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from new york city, i am lisa in for jonathan ferro. bloomberg real yield starts now. coming up, inversion watts. the longest stretch of flattening since november of 2015. investors don't care with wagers on a steepening yield curve gathering momentum on wall street. a momentum and high-grade continuing to build with buyers flocking to debt sales. we begin with the big issue, markets debating whether a flatter yield curve is here to

stay. >> the yield curve is incrementally flatter. >> we expect that to continue for the short-term. >> it has been catching investors off guard. >> i think it's there for the long haul. >> at this point in the fed cycle we would anticipate the curve should steepen out somewhat. >> part of that lay cycle may havey or -- lay cycle behavior is a flatter yield curve. >> you may see the long end drift higher. a spread perspective, it is telling you there are no risks whatsoever,. a >> the launchpad controls are very much in the hands of politicians as opposed to central banks. >> if you see these deals go through, you could see a steepener. >> we think you create the conditions for an upside to expectations on inflation, and we think that gets manifested in

the yield curve steepening. , andining us from london joining me here on set in new from imonother en, ian capital markets. we have seen a shift with a growing number of strategists say they do expect the yield curve to speak -- to steepen. what is your take on that? >> good to see you again. essentially we have running steepening all year, essentially the combination, we like it to be long-duration, we prefer to take the duration risk at the front end of the yield curve. certainly now what the fed has done is raised the hiking rates ridiculously high and that is not going to happen anytime soon. it means the yield curve is directional here. when you have -- that tells you the market is expecting height, which is not lightly taken

anytime soon. the combination of being long -- one of your guests in your clip was saying they were concerned about potential inflation risk and steepening the yield curve that way. even though i'm running with steepener, i find that difficult to believe. when you look at the base effect, notwithstanding at the end of december, it really does seem like unless we have a massive oil rally, headline inflation is going to struggle to make any headway higher. for that reason we are not expecting inflation but we have seen recently with bond markets, it doesn't take much of a push upwards to see that curve getting dragged steeper. pretty nuanced take. don't get too excited, this means inflation is going to pick up, is that what your take is?

out is aou have gotten two-year curve that is anchored to some extent by the fed on hold. the fed has told us they are going to be on hold. and at the moment it feels like we are so reliant on what the outcome of trade is over the next few weeks. if we are in an environment where you do get tariffs added, in mid-december i think the reality is you're going to see the lows on the 10 year. the flipside of that is if we get some role of rollback. then yield pushed back up towards two, maybe three. >> i can just feel the exhaustion.

we have to talk about this again, why do we care? if this isn't going to say something about fed policy, is this necessarily going to signal a recession, do we care about the yield curve? >> the market tends to spend a lot of time focusing on the shape of the yield curve. if we look at the elation ship between the three-month build and the 10 year yield, there is a year .5 lag -- a year and a because it takes that long for that spread compression to work its way through corporate profitability. that hits the employment sector. that's where a recession is going to come from. it really becomes a 2020 story that i think we need to focus on. >> we did see that inversion is the same period of time in the three-month versus 10 year yield. i want to talk about this exhaustion that seems to be

evading the markets. i'm wondering, from your perspective, do you think bond markets have generally entered this sleepy phase where central banks are tamping down any volatility, and not that we are going to get for the next few months. >> we have been in that phase for about 12 years. >> there was 2013, there was a blip there. there were a couple of experiences of excitement. >> 2018 was different than what we got used to experiencing. we've had a couple of those cycles. we saw dramatic changes in these market reactions. what we got used to is central banks in general and the federal reserve specifically pumping painkillers into financial basis, anda constant you get this risk parity type of approach that works in almost all environments, almost regardless of what is going on

under the hood. and it feels like we entered that phase with recent policies from the federal reserve, which they may call some thing other than q. week, but by anyone other -- by anyone else's definition, it is qe, equities can ignore a lot of noise and bad news and drift higher, but they can only do that with --stant i do expect that the change in 2020. >> we are going back to the drug addiction metaphors with the central banks, and i'm wondering what that buys for 2020. have we brought forward that tray of going to risk, barbell that approach of safe government bonds and call it a day? are we going to see the same thing in 2020? thismething going to shake complacency? in 2018,tioned earlier

that was a tough time. we had quantitative hike -- quantitative tightening. they may not want to call it qe, but they are injecting liquidity into the system, and it may end up inflating asset prices at the same time as the fed easing policy. you have ecb back in the markets. it does feel like it is an environment where you should be happy to buy risk assets, it should be an environment where yields are unlikely to go much hired -- much higher. greatesten the indicator of recessions. it has to have some form on impact. as long as not any negative news around that, it feels like a market where all assets can continue to be supported.

>> i think we have a quarter or two of this euphoria we are going to see play out >> is this as good as it gets? >> it is historically very long. we are starting to see some indicators that the consumer is not particularly on strong footing. it does take a while for it to flow through. disappointing few retail sales prints over the course of the last several months. if we think about the amount of leverage in that core consuming --e, -- consuming cohort >> do you guys agree we only have a quarter or two left? which quarterew or two, but i agree with ian's comments.

i don't know how long that process takes, but the broad suite of indicators of profitability say that peaks by six years ago and say that is not a health looking environment above and beyond the steroids coming from the central reserve we had >> steroids, morphine, you name it. everyone is sticking with us. coming up, the auction block. the busiest month of supply or than two years, that is coming up next. this is bloomberg real yield.

>> this is bloomberg real yield. i went to head the auction block and began in europe where the

primary market surged ahead of thanksgiving with 16 issuers offering note more than the past two sessions combined. november is poised to be the busiest month in two years for high-yield supply. junk-bond issues slowed after last week with just two deals for nearly $1.5 billion pricing. november volume still moving, climbing to $36 billion to make it the busiest month since march 2017. a shortened week is expected to bring over $3 billion of u.s. investment grade bonds to the market. sticking with investment grade, raising concerns about the valuation in the triple b space. >> a lot of investors who are not allowed to go to noninvestment grade have gone into the lowest level of investment grade and that is boosting the amount of money coming in.

perspex ofaley, your on the triple b space. we have heard a lot of doom and -- youring into 2019 perspective on the triple b space. we have heard a lot of doom and gloom going into 2019. still lie investment grade quality bond, we can get the yield pickup, it doesn't look like treasury yield. the central banks have got our back. we are starting to hear more overseas demand coming back as some of those hedging costs that were so painful to european or japanese investors over the last year or so are coming down as the fed has been easing policy. i think there is going to be content new -- there's going to continue to be strong demand. collect for a while we have been

focused on the notion we have been seeing some widening in the credit market as the expansion moves on and on. it's a grab for yield that is going to persist until we see something break. whether that is a broader slow , until the consumer side then i think the key issue is people need to add any kind of deal they can. >> it seems both are saying the momentum is out perform, more gains there. would you agree? expect isy what we the fed kills the recovery, the age-old saying they don't die of old age. we are not going to have that and to the cycle this time. the other side is to say the

stock globally has gone up measurable that gone up measurably. and it has gone up to generate the necessary cash flows. it's a bit of a goldilocks period for risky assets in general. the economy hasn't slowed so dramatically but the fed is -- fed has already begin providing financial markets even more cheap or free liquidity. my concern would be when we start to see the economy slide further to that scary zero number, it is always the weakest link in the chain. i would observe globally and not just investment grade credit across a number of regions, we have already begun to see the weakest links in the chain starting to crack. we started join all these pieces together.

there are signs of what should be early warning signs. it definitely is a 2020 story. i don't believe you are being rewarded for taking on the risks . >> you are not buying triple b right now? >> absolutely not. >> you raise an interesting point, that a growing number of investors and policymakers are highlighting what are the unintended consequences and what are another wave of stimulus. warning investors of a potential blow and credit, writing, beyond the short-term the trend is toward a more aggressive policy, the result will be an extension of the credit cycle that could end in an explosion, though it is unlikely to happen. the chart we were showing earlier shows how triple be graded credit is counting for the highest proportion of investment grade credit ever. nearly half of all this kind of debt is triple be rated. i guess i'm struggling to

understand. to last outl trying of this rally buying bbb? there is no catalyst to ended insight. alexei don't think we will know what the catalyst is until after the fact. it's one of the situations where we will look back and say, "of course it was the retail sector, of course it was autos, whatever it ends up being." that's just a broader macro story. collect which asset class do you think is most vulnerable when we do get the blowup a lot of people will -- people are expecting will inevitably come? >> i think you have to look at downing qualities when you look at the high-yield market. we have seen the differentiation in the u.s., maybe not so much in europe. where we have seen investors

between see credits -- you have had that up and quality trade. it is the bottom capital structure people are going to be focusing on. that is where you are going to see the largest spread. the reality is yes we may have a slow down, we may even have a recession, that it is likely to be a shallow one, which means the full rates will pick. going to be those weak hands that are going to be impacted and i feel that is already to some extent, the market is taking account of that. >> are you buying triple bees? >> i think you need to be looking at it on a company by company basis. there are companies out there where they are looking at making that journey down toward high-yield. if you can get the right credit selection you can buy good

quality triple b, maybe even move up as they do a couple of things and get leverage ratios down, i think there is an environment with that grab for yield. starting to look at a quality trade and move up the spectrum. they want to move up through treasuries because there is not much yield there. you are put into that middle space of investment grade credit to get the yield you need. >> still ahead, the final spread, a week featuring a slew of economic reports and global pmi's and u.s. perils report. this is bloomberg real yield. ♪

lisa: i'm lisa abramowicz. the final spread. coming up over the next week, on monday we get u.s. ism manufacturing numbers, then a rate decision from the rba. euro area finance ministers are meeting for talks in brussels thursday. we get german factory orders. then on friday, the main advantage, u.s. jobs report. there is a question given the central bank report of markets right now, doesn't even matter what we get with respect to economic data? what is -- which is the most important eight appoint you are focusing on? >> we are getting breaking news i want to bring you here. coming from the u.k.. labor, they are going to be electiong fair

campaigning for friday evening. labor suspends campaigning in london because of that terror attack we have been reporting on all day. labor leader jeremy corbyn has been commenting in then email. labor has been suspending their election campaigning for friday evening. we will keep you posted as more develops. this is bloomberg. >> i think we should be continuing to look at manufacturing numbers, we had that sharp decline. if we can get some such -- some stability there i think people are concerned the weakness we have seen in manufacturing aren't going to roll over into some services. we have had a bottom in manufacturing and that would be good to see that flow through -- nonmanufacturing surfaces services. >> what we need to see to change that? >> i definitely think rate cuts is a lot easier to see or are a lot easier to see. what the fed has told you is there needs to be material disappointment relative to their outlook. they have a fairly negative

gross outlook for q4. possibly it was at the top end, it has come towards market consensus now. we need to see some disappointment relative to that. possibly as soon as next month is a bit too soon. q1, if we see data underperforming relative to their expectations that would do it. we know the federal reserve is sensitive to the financial markets, i don't think it would take much disruption in the equity market. i have to agree, it's all about jobs, job is lagging, so i want to see the survey forward in a component ism. fire, threerapid quick questions. which will perform better next year, high-yield or investment-grade debt? >> i'm going to go with the investment grade. >> treasuries.

>> i'm going to go with high-yield. we are at an interesting inflection point. >> have we already seen the cycle lows for u.s. treasury yields? iain stealey? , definitely not? >> james? -- >>lutely not absolutely not. ?> ian lyngen >> absolutely not. credit we see a explosion in the next two years? >> no. >> yes. >> i'm going to go with yes. >> from new york, that does it for us. this is bloomberg real yield. ♪

payhe following is a program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates or its employees. a sponsorlowing as program. >> is larry king. men 30 million american have prostate problems.