and people are overpaying. what is your view? >> as we close, i would say are through the roof. i am asking our private equity managers to be slow and patient. that is tough for them to do. scarlet: is that a bubble? >> there is a lot of capital. i would hesitate to use the word bubble because i do not think it is going to crash. scarlet: do you see a bubble anywhere across any asset class? >> traditional bubbles are hard to define and examine. right now, prices are high. we are melting up to ridiculously high levels. i think we can melt up a little higher. scarlet: ridiculously high levels it is far as we are going to get. there is the closing bell. 16 basis point increase for the s&p 500. for the dow, up 11 basis points. the russell 2000, also better as

well. >> let's dive deeper into the action with all of our markets reporters. abigail, get us started. movesl: with such small for stocks, i want to highlight a chart from last weight. it is small-cap. small-cap does very well in december. this chart makes a compelling case for small caps to do well in december. what we are looking at is a decade-long chart of iw m, the small-cap etf on top. we have iw m relative to the s&p 500 on the bottom showing small-cap has been on performing over the last decade. see these bottoming areas. that is when small-cap has started to outperform. frank appel larry is very bullish on the fact that small-cap is not only broken

above the 1600 level, but it does appear we could be in a position of time outperformance relative to small-cap. i am going to combine bonds and technology and see if we can do both in 30 seconds. twitter is issuing their first junk bonds, about $600 million. on eight-year notes, three and three coders. they are getting dashed three and three quarters. they getting interest of a billion dollars. it is the lowest amount of securities maturing in eight years or more within the high-yield bond market space since at least 2014. shares rising as bond pricing looks like it is going to do well. it is good that twitter is in the double be range. the rest of the high-yield market has only performed about 12%. spot has been the

out performer. investors get a little bit defensive. they are hitting right in that sweet spot. >> over the past couple of weeks, small moves have been the name of the game until this week. straight days7 where we have not seen a decline for the s&p 500 of more than 1%. today, we are back to relatively minimal moves once again. you have stocks higher although very modestly. 50 basis points for the s&p 500. roughly af's down percentage point. we see yields gain. all year long, we have seen stocks and bonds performing well in tandem. this has been discussed many times before. you're looking at the combined total return of the s&p 500 and the bloomberg barclays index

that tracks treasuries. year today, we have a return of roughly 19%. that is the best year for the 1640 portfolios since 1998. >> our thanks to everyone on the market team. some earnings coming across the wire. the big retailer of beauty products appears to be beating on the top and bottom line numbers. shares up about 7%. for 218.he estimate the three q comp sales number up 3.2 percent. scarlet: still with us right now chris ailman. abigail was talking about how tech goes lineup. rightdo you see rotation now? there has been a lot of head fake.

>> i would look at abigail's chart. that channel is going to continue to hold. small-cap could have a rally in december. they are still going to continue to underperform in this economy. it benefits the largest companies. technology and the large consumer products that go across the world. value and small-cap should come back, it is going to be a small-cap growth story. >> you know what is crazy? i have not heard many people talk about the jobs report tomorrow. for some reason, between everything else that is going on, it feels like it has not gotten as much attention as it deserves. how important is it? what numbers are going to matter? >> i agree with you. what has been interesting is the 10 year yield this year has not moved that much on jobs reports. a dailyen found that

drop of four basis points -- the idea the fed is so entrenched right now in not wanting to move unless it has to and the global data starting to cooperate already -- the global data has almost superseded jobs day in terms of importance because it -- because that is the main feed into the fed. i think jobs will not matter unless they fall off a cliff. anything good to be treated as good. anything bad might freak us out. people seem to be dismissing adp. >> a few more dates out past that to the fed meeting. does this mean we have a fed that does nothing for the next few months? >> the fed is going to be data-dependent. i do not think they are going to do anything. i do not think they should. i think they have tightened enough.

the bond market, the 6040 portfolio has been outperforming because of the bonds. it has been a tremendous year for bonds. it should not continue to rally a heck of a lot more. we are getting down to historic lows. scarlet: what is your allocation of fixed income? >> it is only about 15%. it is going down to 13%. we have other assets that replicate bonds. we are about an 8020 portfolio. as kim mentioned, it is a 90% growth portfolio. generally, people are long growth and not really -- and not willing to bet on rates. there is no point to be in bonds. >> we talk about the tourist stock rally. look across the total return indexes for u.s. bonds at large. u.s. investment grade debt. the s&p 500 total return is in the biggest draw down of all

those. everything else is closer than the s&p 500. 2018, the year where nothing works. between 19, could be the year everything ends at all time highs. scarlet: thank you both. that doesn't for the closing bell. we will be speaking with david woo of bank of america and merrill lynch. this is bloomberg. ♪

>> live from bloomberg's world headquarters in new york, i am

remain boston. how u.s. snapshot of stocks closed today. the s&p, dow, and nasdaq finishing in the green. stocks closing higher after rising on speculation that president trump will not go 15 levywith a december on chinese goods. elizabeth warren has her own trade plan. we hear more from the white house hopeful. opec reaches an agreement, adjusting targets but leaving oil supplies threatening barely changed. begin with the bond market treasury yields climbing on some positive eco-data. if you look at this chart, you will see the conference board leading indicator has been moving in tandem with treasuries. the uptick in yields signaling

the economy could be on the mend in 2020. running is now, david woo, head of global rates at bank of america and merrill lynch. in 2020.my on the mend it sounds like you are fully on board the thesis of the economy on the band. bullish fore been at least a year. the big story of 2019 was this massive escalation of political uncertainties that reached unprecedented highs, weighed down competent and led to the global slowdown party. my view is that 2020 is going to be about the dissipation of these uncertainties. if i'm right, i have to be right about the next three weeks. scarlet: why the next three weeks? >> i'm going to make three bold predictions. i think you are going to get a

significant u.s. china trade deal in the next 10 days. i think you're going to get a decisive victory for boris johnson and the conservatives. there is a good chance pelosi have no chance but to ratify usmca before the end of the year. if you get all of these three things -- even just two -- i think that will represent a tremendous lifting of this uncertainty that will allow the world go back to investing inventory. i could tell you -- in all the equity plans, people have been saying, we have been selling individual stocks because we do not see any value. because of the momentum, we have been buying indices. i think some of the uncertainty comes down. therefore, general risk premium has gone down. globalposition for

recovery -- fed has never cut more than 75 basis points at a stretch, which they did, without the u.s. going into recession. the market is definitely still pricing. cyclical stocks, while they have done well, they have not done any better. all of the dollar it the aussie dollar is trading $.70 below -- the aussie dollar is trading $.70 below. people at this point because there has been -- i don't know -- false hope in the last couple years, people do not want to pull the trigger until they see these deals done. >> let's talk about one of the deals. that is the potential trade deal. there will be a lot of people eager to take the other side of the bit, that they are about to get towards a meaningful phase i agreement.

why do you feel they are about to get one? it is not a question that chinese do not want to deal so close to the u.s. election. that has been a powerful argument. i was in china two weeks ago. told chinese leadership -- the feel the struggle with -- that biden struggled with the scandal in ukraine. third consensus in beijing is what was put to me by a former vice minister who said, we get a democrat in the white house, he or she might institutionalize the policy under trump. -- the conclusion in beijing is that the best chance for china getting a trade deal with the u.s. might be donald trump.

from trump standpoint, there was a poll a few weeks ago. 60% of americans think a recession is likely are very likely next year. 45% of respondents blamed the recession on trump trade where with china. factnly -- despite the that terms overall approval ratings are 45%, his approval ratings when handling negotiations with china is 35%. even among people who call themselves trump supporters think that the trade war is a bad idea. i think the political -- >> we are not talking about the resolution of the trade war. we're talking about phase one of -- a three-phase deal. -- we areth is pontificating. whatonest truth and 90% of

we know about the state of negotiations from the press conference from october 11 with the white house. lighthizer -- only two sentences came out of his mouth. i will tell you what they were. haveid the u.s. and china agreed on the need for a dispute resolution can is impaired the second sentence is, we are almost there. that was huge. this man, lighthizer, who not only commends respect among republicans and democrats, he has been saying for the last two years a trade deal with china would not be worth a peace of peyton -- the piece of paper written on msi comes with an enforcement mechanism. comestten on it unless it with an enforcement mechanism. scarlet: that is when you pay attention to the china hawks comment. threatened to has

fall off his chair, do that. stay with us. this is bloomberg. ♪

scarlet: according to bank of america merrill lynch, 2020 will be all about the dissipation of policy uncertainties. the author of that theory is david woo. it is based on the following key assumptions. a significant u.s.-china trade deal. finally, ratification of a u.s.-mexico-canada agreement. .ith us is david woo

you say the second half of 2012 will provide a roadmap for how things will unfold in 2021 it comes to how asset prices will react. the takeaway is the market will recover factor -- recover faster. what would you look for to happen in fx? i think first of all, let's remember what happened in 2012. the first have was all about the euro crisis having spread from greece to italy. whatever it takes speech. overnight, the eurozone crisis went away. the global economy mounted a synchronized recovery. the biggest lesson now is that back then, the pent up demand in the system had been a key relating from munson months. when they got released, the world economy sank. it is like a spring that was so

compressed. right now, it is the same thing. every company i have seen -- everybody is telling me, business is great. there really worried about u.s.-china trade war. it is like a huge cloud in the sky. we are not in the business of deciphering political risk. we are sitting on our hands doing nothing. if uncertainty gets removed, i think companies are going back to starting inventory. i think it is going to be great. i think -- you are right. the way i look at it is simple. if we go back to an inflationary world, that is not going to be kind for the u.s. dollar. i think the u.s. is doing great except that we get a trade deal, it is going to be better for the rest of the world. standpoint, aussie

shift yen is the ultimate away from safety to cyclical. david: already think the chinese have been so reluctant to ease policy? i believe they think they have very limited dry powder. with all of the uncertainty around the trade war, if they were to ease now, it would be a waste of ammunition. i think the aussie dollar is going to do very well, especially given that commodity prices have plenty of room to price higher. >> go back to the inflation, should help me believe. -- three inflation comment. help me believe. is, to me, the most interesting thing about this economy right now is that the wages of the 10% lowest income earners in this country is growing at the fastest rate in 10 years. that must tell you something

about how tight the labor market is. has been equal. with -- theproblem greatest -- i will tell you, the greatest support for reflation trades next year is the fate the fed just finished cutting rates. it will take them six month before they think about hiking rates. it will be five months before the election. the economy will be growing 10%. if you get a strong economy and the fed being held back, that will be highly reflationary. iffs are going to outperform. scarlet: the fed might be in position right needs to think about raising rates. >> but it will not be able to. scarlet: talk about how this dovetails with the election. everything is at stake.

what needs to happen before then? how do you gain out what is going to happen in november? >> that is the most crucial question. i would argue the outcome of the u.s.-china trade war in the outcome of the u.s. election will have a 90% correlation. to close theges trade deal with china, i think the economy is going to do well. he is clearly going to be the man to beat. if there is no trade deal with china, the stock market is going to go down. north korea is threatening to let missiles fly. then we go into recession. then you might get a country upping for a left-wing populist. i would argue the next three weeks is going to be important because the impact will be felt for years to come. >> one thing we have not had you expand on is the usmca. we think pelosi is going to have

to ratify it. why did she have to? what is the most sensitive -- sensible that one can make? david: the grant -- the democrats have been telling us they can walk, chew gum, and impeach at the same time. scarlet: you don't believe it? david: no. passing usmca will be a great piece of evidence. was he has said they are going to press ahead with getting a bow on the articles of impeachment. she is going to be thinking about how she will persuade the 31 house democrats sitting in swing districts who might think voting for this thing might not do them any good in the election next year. the best way to bribe them is usmca. usmca is a bipartisan piece of legislation. it is one that i think is good for america. from the mexicans and the canadians, they can make the case we did this because it is

good for the country. >> we are running out of time. what is your best trade idea? david: i like the mexican peso. why do you think mexican economy is in a recession right now? the uncertainty around the usmca -- right foreign investment has collapsed. -- direct foreign investment has collapsed. this is what i think this is going to get done. because forid woo the year 2020, he sees the usmca getting done. he sees the brexit uncertainty clearing up. >> are you always this energetic? david: i love the show. >> right answer. scarlet: thank you so much. officials chinese saying they are in close contact with u.s. counterparts. y joins us next.

this is bloomberg. ♪

articles house draft of impeachment, the actions of nancy pelosi criticized at the core of the probe is a july phone call between president trump and the president of ukraine in which president trump presses the ukrainian president by withholding military aid. >> why are we going through this nightmare? dayoes back to the first after the election.

they had a goal. they wrote a timeline. the basis andange move it to adam schiff's committee. they are sticking to that. ,he answer to your question they always wanted to impeach the president. pelosi said this morning that american democracy is at stake in the president's actions gave us no choice but to act. called an elderly iowa a liar after the man accused the candidate of improper dealings with ukraine. himselfr identified only as an 83-year-old retired farmer said biden was selling access to the presidency. old,so said biden was too

prompting biden to challenge him to mental and acuity test. liar, man.a that is not true. >> as the exchange ended, the fighter told biden he would not , biden told him, of course not, you are too old to vote for me. a special representative for iran cited unspecified reports and provided no evidence of the death toll in iran. iran, ay in southwest number of demonstrators blocked a road. the state department has received videos of what happened next. openut warning, the irgc

fire, killing several people. to iran'sreference revolutionary guard. 200 people were killed in an recent unrestn a over economic hardship. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over than 120 countries. this is bloomberg. wto members have agreed on the 2020 budget, averting a shutdown. as the issue heated up among members. usbring you into give perspective on these multilateral organizations not in favor at the moment. to alose was the wto shutdown. are we out of the danger zone?

>> not completely. mechanisme settlement requires judges. two judges retire this month. it will still exist, but frozen. set of issuesoad with the wto that need addressing and reforming. the time has passed and economies have changed. createa was to international agreement on a that, fair trading field has helped to power the strongest global growth in the history of the world. to allow that to lapse would be a mistake. i don't think there is much danger our allies would be willing to let that go. >> to see that potential labs come at a time we are negotiating a big trade deal

between the u.s. and china, the u.k. and the european union, what would be the enforcement mechanism if the wto is not a viable alternative? have enforcement, but the wto was created to create a level playing field broadly that would be seen as fair all around. to have a set of bilateral agreements that broke up the world's economy, it is hard to see why that is in anybody's interest. >> we do seem to be at a point where multiple world leaders are questioning in general all these multilateral organizations, and trump one of the most prominent. what will it take in your view for these to gain a more robust, stable stature so there are not these temporary crises?

>> the world bank, the trump administration did approve an increase in the capital available to the bank. has takenesident charge and hit the ground running and is getting that institution back to its roots of taking a close look at the needs of each individual country and aimed at outcomes. let's look at the imf. imf deals on quotas and resources had been stalled, but recently the imf approved the argentina.n with , the new managing hitting of the imf is the ground running and has now won approval on a new quota review, and the u.s. has agreed to increase in steps the

resources available to the imf. so to say that the environment institutionsral has gone completely sour misses important facts. >> the people leading these institutions are getting things done. one issue the world bank will have to address and steve mood nation -- steven mnuchin brought up today is whether it should still be considered a developing country. is chinaury's view needs to graduate from this program. does china deserve the title of a developing country. the timing is interesting. >> i suspect maybe this is under discussion within the trade negotiations, but for sure there ,as been no doubt that china

the world bank's operations in china have been aimed at alleviating poverty and dealing with poverty. whether china still qualifies for world bank assistance when they have all these other financial resources available to them remains problematic. in a short span of time that will be changed. romaine: when you look at the mechanisms comes the imf uses to deal with crises, particularly in latin america now, do you think those mechanisms are still up-to-date in no way that it allows these countries to deal with the crises without being overburdened with the demands? long said there is a general idea the imf has tools that are useful for crisis prevention, as opposed to crisis resolution. stepping insed to once the crisis has hit. what it needs are tools to help

in crisis prevention, to fund tools to prevent crises. joe: you mentioned argentina. what went wrong with that loan? does the imf have tools to address it? money?his dead >> it will be a difficult situation. the largest operation in the funds history, $50 billion already dispersed. the underlying assumptions that with the basis for the operation have fallen short, the performance of the economy, the international environment has been far short of what was expected from us that there will have to be some adjustment made. i'm sure there will be some

difficult discussions between the argentine authorities and their creditors, not just the imf, but private sector creditors as well. this will be tough. can this get resulted in 2020? >> no. this will take some time to get worked out. there will be some agreement because payments are coming due. deputy: the former imf managing director. joe: great to have you on the show. downing with trade, i sat with one of the leading presidential candidates and asked her what the trade policy towards china would be, and whether she would lift president trump's tariffs on her first day. >> the president has no plan. joe: you have a plan. what is the elizabeth warren plan? >> part of it is to say we need

an overall strategy on tariffs. trade is about tariffs, but not just tariffs. it is about regulations as anything else. what i want to see is a coherent plan for anybody who wants access to american markets. farmerso ease up so our are not being squeezed like they already and they have lost markets that will be hard for him to regain. need to bet is we working with our allies. we want a trade deal with china that is favorable to the u.s., then let's not declare a trade war at the same time on canada, asian allies, european allies. let's get everybody to work together on this to get china to follow a reasonable set of rules on trade. if china is hoping to wait

out the trump administration for a worn administration coming due wouldn't lift the tariffs? strategyd a coherent that works with our allies and makes clear where our long-term interests lie in trade. occur, but i trade want to see trade occur in a way that is helpful to the american workers, the american consumer. donald trump is destroying markets and destroying value around the world. joe: would you type chinese human rights abuses to have potential trade deal? >> working with our allies, we should be putting pressure on china, partly diplomatic and partly economic. we need to use all the tools in the toolbox. joe: that was democratic presidential candidate elizabeth warren, and to know michael bloomberg is the founder and majority owner of bloomberg lp,

the parent company of bloomberg news. he is also running for the democratic nomination. > did she answer your question? joe: no. i asked it a few different times. the only thing she was concrete in terms of how she would approach this then president trump issue would not antagonize a bunch of other countries at the same time and have a more unified front. that is a pretty low bar. a higher bar would be how she addresses these issues. joe: one thing i asked her is to passe be willing social programs if she could not pass the tax cuts at the same time. she did not say she would. up, opec canceling

tonight's press conference as arabias drag on in saudi raising $25 billion in the world's biggest ipo. this is bloomberg. ♪ this is bloomberg. ♪

♪ oil closing flat. tradersling to impress with cosmetic revisions to output quotas. now.e joined by a traitor what is your big take away? easily agreed 500,000 barrels would be taken out, right? wher in terms of who is

where it gets hairy. nobody is going to say we have this big event where crude can go back to 40 because everyone will start pumping in saudi arabia is no longer towing the so the downside is mitigated with what we are seeing right now. i don't think the upside momentum can take place until you see real barrels come off the market. i think that is where the detail lies. we are waiting for this opec press conference that may never come, but it seems that not every country is sharing. the news we are reporting is the saudi cuts are not cuts at all. it is basically what they have in place now and agreeing to

stay there. >> that is what is causing the friction. you have notaq and met your quotas are all of 2019 and you will be asked to cut more, and you look at what russia is doing. russia is saying we will cut, but we want to remove condensate from her output numbers, which means they don't have to cut anymore, so now you're opec family is you will make us take all the pain and let russia basically walk away from here from this meeting without really cutting? i think that is where the dig is coming. it is about who will share it. yes, saudi arabia is already producing at 9.8. already 500,000 over their allotted quota. >> you mentioned it removes the tail risk of crashing to $40 a barrel.

what is the different price point for different members. is $86 russia's $53. that spread is russia's leverage. the rest is somewhere in that range. russia is significantly below them, so all the companies in russia make more money on higher production of lower prices because of their tax structure. they are pressuring the government to pump more. it benefits us if we just pump more at lower prices, whereas the opec community is saying we want to see higher prices. that makes more sense for us. joe: let's talk about non-opec supply. the goldeng about age of u.s. shale is over and the boom is coming to an end. shale factor in?

>> it is a huge factor. driving this aggressive action out of opec. is u.s. production going to continue to grow? at the same rate the last five years? no. what opec plus is doing is playing the long game and waiting for that to plateau in the next three to seven years, depending on technology and costs, but it will not necessarily decelerate. they want to see it plateau faster. joe: always great to have you. romaine: thank you. this is bloomberg. ♪

romaine: japan's prime minister announcing stimulus measures deep recession at bay.

in shery ahn to talk a little bit about it. i read about this this morning. of people doubt the impact this will have on the japanese economy. expected,larger than but the economy now doubting the government. take a listen to what this economist had this a lot the package? we don't have the sound. a big pr stunt. way to the governments come in and tell everybody everything will be ok. joe: i was going to ask about the sales tax hike. it seems like the easiest thing in the world just to avoid it

and not do the sales tax hike. other developed when i was living in japan, it was 6%. there, but itime didn't have to pay that much sales tax. retail sales tank. the government tried to put safeguards around the economy and it still didn't work. not entirely their defaul fault. >> are people bringing up japan's public debt? it is plus percent, but

held mostly domestically, so japan is not worried. >> thank you very much. don't miss more with daybreak austria. >> bloomberg technology is next. joe: have a great evening. this is bloomberg. ♪ here, it all starts with a simple...

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♪ >> i taylor riggs in san francisco in for emily chang. this is "bloomberg technology." coming up, clouds gather. itsftc is widening investigation of amazon to include its cloud business. we have the details. the stance from france, more on the digital tax when we talk