decision, and i've got no indication he will have other thing -- have anything other than a great deal to put the tariffs on. alix: will they or won't they? the u.s. and china still try to hammer out a deal. bank of america warns the market isn't priced for a dot plot. we will talk to the man behind that call, mark cabana. saudi aramco makes history. the energy giant jumps 10% in its market debut with a market value of $1.88 trillion. welcome to "bloomberg daybreak" on this wednesday, december 11. i'm alix steel. lots of news over the next 70 due hours, but markets not really moving. is a patient wait and see when it comes to the equity markets, flat on the day. with a lot declines

of hedging backup. people going out and buying protection. the cable rate going nowhere. you're seeing flattening in the market for treasuries. 1.82% is how we trade. time now for the global exchange. we bring you today's market moving news from around the world. from riyadh to zurich, london and washington, our bloomberg voices are on the ground with today's top stories. in riyadh, history is being made. saudi aramco jumping 10% in its debut, giving a value of almost $2 trillion. bloomberg spoke exclusively to the ceo of the saudi stock exchange. if the full offering size is offered in the markets based on ,he $1.7 trillion valuation that is a on .5%. however, thi changes every

day. we are watching the price change over the next four days. but our anticipation of 8% to 9% would be the weight of aramco. alix: yousef gamal el-din joins us now from riyadh. give us the latest on the ipo. yousef: it's been a remarkable few hours. trillion, to $1.88 within firing range of the $2 trillion mark, which has been one of the hottest topics within the industry for the last year or so. $2 trillion is in range for the trading day thursday after the 10% move we saw. there are still a few factors that could guarantee that kind of continued upward move, including the fact that the size and scope of saudi aramco means it is on a fast track to include in some of the major indexes. goldman sachs is the stabilization manager. they still have an option for 450 million shares.

that could come into play over the next 30 trading days. the feedback on the ground has been very positive from investors so far, who now think that international investors have made out a little bit. an international listing would be absolutely critical. alix: thank you so much. now we go to switzerland, where credit suisse cut its main profit ability target for this year and next. joining me now from zurich is patrick winters, bloomberg's swiss finance reporter. give us some highlights of the investor day. patrick: i've got to say it's been more than a -- more of a whimper than a bang. not a great investment day for credit suisse. after restructuring, they have cut the main profitability target for this year and next. the good news is the dividend and share buyback are basically left untouched. that is something for investors to cheer. if you look across the rest of

the banking world, look at deutsche bank, ubs, these targets are all becoming harder to reach, so they are definitely not alone. just a bit of a tricky sector at the moment. alix: indeed, especially in europe. thank you very much. we now go to the u.k., where the general election race is tightening. according to yougov final mrp po ll, the conservative lead has been slashed by more than half. joining me is david merritt. why do we care so much about this report, and what is it telling us? poll: this is the biggest that is run. two weeks ago it showed a real landslide win for boris johnson. as you said, that has nearly slashed in half. it shows a general narrowing of the race so far. we had slip-ups and bad pr for the prime minister the last few days. is it possible we are going to have a big upset tomorrow night, the first proper indication it is going to be that 10:00 p.m. exit poll after polls closed

thursday evening. that has been very accurate in the past. is mr. johnson going to be able to sneak home and get his brexit deal through, or does this most tumultuous year in british politics have one more surprise to come? alix: thank you so much. in the u.s., the much watched fed decision coming out at 2:00 p.m. eastern time. joining me from d.c. is bloomberg's mike mckee. set it up for us. michael: if i had a nickel for every time i've said we are not going to care about what they do, we are going to care about what they say, you and i would be drinking a lot of champagne. so everybody, cinder nichols to -- everybody, send your nickels to alix. here's the first thing we care about, the dot plot. take a look at the 2020 dots i've outlined in red. . it won't take much for them to move up or down. want to startle to get back to normalizing and raise rates next year, or do we want to see, expect to see

people say and we are going to be cutting at least one more time next year? that is the market that. there will be a lot turning on the dot plot. one other thing jay powell is going to get asked about, and this is going to be important, i went to show this chart here. the folks at credit suisse warned that the fed may not be in position to cut off a repo rate spike we saw last december. we know what that led to because there aren't enough reserves in the system yet. jay powell is certainly going to be asked about that, whether the fed is confident we are going to have enough reserves that banks will be able to lend, and we won't see the plumbing of the financial system come to a halt. a little bit off topic, but it is going to be very important for people in the markets today. qe4. actually called it not us, the credit suisse analyst. the fed decides it to a clock p.m. eastern time.

wo articles oft impeachment were delivered to president trump. president trump's response? the articles are weak. pres. trump: even the democrats, they couldn't find very much because they put up two articles. that is frankly very weak. alix: joining me is bloomberg congressional reporter. what happens now? reporter: the judiciary committee takes a historic step today when it starts debating those two narrowly written articles. the hearing is expected to go several hours, then reconvene thursday morning and go through the afternoon, or perhaps longer. the aim is to finalize wording on this two articles that could be sent to the floor for a vote next week by the full house, but the process might involve debates on dozens of proposed amendments for both sides of the aisle, including sorting out this agreement -- sorting this

agreements among democrats on whether to broaden those articles to other areas, such as obstruction of justice. we will see how that happens, and it will play out through friday. alix: thank you so much. staying in d.c., we are going to end on trade. house democrats are celebrating revisions to the usmca trade deal. still, senate majority leader mcconnell says it is going to have to wait. sen. mcconnell: let me start by telling you what won't happen between now and the end of next week. we will not be doing usmca in the senate between now and the end of next week. that will have to come up, in all likelihood, right after the trial is finished in the senate. this as china sees delays on tariffs set to take effect december 15. joining me now is shawn donnan. who's right, peter navarro? are we not close to rolling back those tariffs, or are we?

shawn: what peter said last night is that the president has not made a decision yet. that is what we were reporting yesterday. what has clearly been happening also in the last few days, however, is the chinese are sending signals that they expect a delay, and we are seeing other members of the administration, sonny perdue, larry kudlow, wilbur ross, signal that a delay could be possible, especially if the president considers these talks to be going well, and the message from those folks is that the president does think those things are going well. but this is the waiting game we have played in the trade wars, and we are going to have to do some more of it. alix: thanks so much. really appreciate you joining us. staying on the trade theme, it is a great chart area speculation that the u.s. is not going to impose more tariffs this weekend as planned. if you get beyond that chatter, apparently there's a good reason

for that. new tariffs could have more costs than benefits. bloomberg economics calculated what share of u.s. imports from esfferent tariffs tranch come from china. it allowed imports to be sourced from elsewhere, and disruption to the u.s. economy was contained. tranche, thel share of goods is a whopping 87%. fallout would be tremendously elevated. coming up, much more of your morning trade and analysis of the markets in today's first take. this is bloomberg. ♪

alix: time now for bloomberg first take. joining me from our in-house team of wall street veterans and , vincentira jersey

, and with us too, sheila patel, goldman sachs asset management cochairman. how are we set up? what is the trade for today? ira: the market is expecting the federal reserve to maybe do something next year. maybe one potential cut. i think that is a little optimistic. today on the fed, the dot plot is the only thing that is probably going to matter. i don't think they are going to change the statement. importantly, what do they do with the potential for a repo facility? we know back in september, we had that big blowup in repo, and everyone got really scared. will that be something that jay powell discusses in any kind of detail his press conference today?

vincent: what he said. [laughter] alix: and we are done with the segment. is he going to say whatever? vincent: i agree it is going to be very optimistic to price in a rate cut. if anything, i think we heard a bit more hawkish chatter from some of the fed members. if there were asymmetric risks, it's that they would price and a hike at some point in 2020, but i don't think they will step over that line right now. they don't really need to shake up the markets at all. repo calling the markets went into year-end. keeping the dot plots and everything as they are, calling the markets on repo -- call ming -- calming the markets on repo. why rock the boat? sheila: i agree with the not rock the boat scenario. here we are in december. if using about where we were last year, we were pricing and free hikes, and ended up with three cuts. nobody is looking for drastic action today or in the next few

weeks. preserving let's ability has been the hallmark of the fed. i think with the questions around trade, growth and inflation, they will give it a chance. when how is that addressed you have trade -- and i honestly could not keep track over the last 12 hours of are we or are we not going to input the tariffs on sunday? we also have inflation. ira: the inflation number probably won't move the needle a whole lot. it would be surprising if you got a very large number, that the federal reserve would have to a knowledge that in their statement, but also preponderance of data is still pointing to a slow but not terrible economy. i think that at the end of the day, the fed is going to walk this tightrope of we don't want to do anything. we are going into an election year. we also want to save some ammunition because if we do get a significant slowdown, we want to preserve some of our firepower in order to cut rates later if we need to.

vincent: i totally agree. you don't want to do a bank of canada over the last 45 days. hawkish, dovish, hawkish, dovish. what the heck am i talking about? you also get real earnings today, which might disappoint because real numbers were revised higher. where's the consumer? where is disposable income? again, there's absolutely no reason for the fed to do we areg but suggest that going straightaway where we are, and let's talk repo. let's calm the markets for year-end. sheila: when you talk to where markets are positioned, they are calmer thanthey are any other market, which is were markable. the fed has some possibility, but they do have to watch earnings and watch where the markets go from here. long the u.s. has been the long-standing position of most

clients. if they have more money to put into u.s. equities, it is still u.s. equities they are interested in. what is the calm? can i go into europe? valuations might be more attractive, but stability sure isn't. ira: the fed has more firepower than other central banks do. other banks that have negative interest rates, there's not much more that they can do. in a worst-case scenario, even if equity markets in the u.s. go down 5% because the economy is bad, that is probably less than what will happen in other jurisdictions. those kind of risk asset trades make sense. the u.s. is the nicest house on a kind of shaky block. vincent: like you said, the fed is in a great spot. why mess it up? you're totally in the middle. the markets are expecting nothing. don't give them anything to worry about, and watch where the economy goes. they are data dependent.

they have the opportunity to lower rates if the economy falters in the first quarter and the trade deal doesn't happen. they have the opportunity to raise rates if exactly the opposite happens, so just stay the course. alix: when you talk to your clients, how do they understand it when they get different things from different administration officials? sheila: the story of my life is being on a plane on the time -- plain all the time -- on a plane all the time, so i've been in six countries over the past week. i think the last 24 hours, people have become more hopeful. resolution's some here. maybe it makes sense as you head into the year-end that we end up not seeing additional tariffs. maybe you even see some rollback on the september tariffs on clothing and so on. that is a possibility, we think. it seems to be stabilizing, and the hard part is judging whether that is everybody's hopefulness or reality. there's a lot of hope in that.

alix: also, what is priced in? yesterday, bloomberg broke the story and the markets moved pretty hard on the data. who's doing that? who's going to change their investment view we know that there is a tweet or somebody else from the administration that could totally reverse that? is that just machines? vincent: it is pretty much. i think traders are looking at this as a more political than economic decision. we have the impeachment trial coming up. we delayed the tariffs into the first quarter. mcconnell definitely delayed usmca into the first quarter, trying to bypass the democrats take credit for usmca. aconnell said this is republican agenda. we will push it into the next quarter and make it a senate republican decision. i think we get past the impeachment situation, and then start to see the trade situation develop. first usmca, then a nice, slow roll into phase one. this is the administration trying to build the momentum

into november on the trade story. ira: i agree. i think the republicans and president are going to need a win with some kind of trade deal. at the end of the day come up that might not be anything massive, but might be spun as this is a trade deal that is better for u.s. citizens, etc. he needs that when. once you remove some of that trade uncertainty, and hopefully brexit uncertainty -- i'm sure that's on the agenda -- we end up with an environment where risk assets can do reasonably well and the treasury market, what i look like on a day-to-day basis, they wind up selling off a bit back toward what our estimate of fair value is, about 40 basis point away for 10 year yields. alix: what ira doesn't know because he's not here that often is it is my goal to never talk about brexit. [laughter] alix: that is not my life today. we get that poll today that protected theresa may was going to lose her majority, and all of conservatives lose the

, sort of narrowing. how do clients care about brexit? sheila: first of all, i lived in london, so this is a constant. [laughter] sheila: actually, the running joke is my father was a bridge that negotiator and his father before him -- was a brexit negotiator and his father before him. [laughter] sheila: if you look at it, there's two big things. one is the election and brexit, but also beyond that. corbyn pullif something out the same way brexit surprised people, it aarts to have a bit of contagion effect. whether it is populace leadership, protests, there is an ongoing sense that if something happens one place, it steam rose into other places.

surprises, what does that mean for the election in the u.s.? vincent: that is interesting because traders are talking about that as well. we talked about this the last few days and how these polls were not coming up what people expect it. polls before thanksgiving said 40% of the electric could change their mind. some 13% to a 2% are undecided. that is basically 50% of the population that could decide to go the other way. the optimistic view but the market was taking, that this was going to happen, was well overdone. alix: we have to leave it there, so i spare you from talking brexit. [laughter] goldman sachsatel asset management will be sticking with me. stay with bloomberg television tomorrow evening for the u.k. election as soon as polls close. p.m. new york, 10 i talked p.m. london -- 10 a clock

p.m. london. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." credit suisse cutting its profit target for this year and next. trade tensions and negative interest rates are clouding the outlook for switzerland's second largest bank. credit also signaling this year, it's investment bank is set to make a loss. apple offering a number of pricing options for its new desktop computer. fully loaded, the mac pro will set you back $52,000, and that doesn't include the $400 wheels for easily moving it around the office. that is your bloomberg business flash. alix: thanks so much. i've got a new phone. i've got to take it slow. maybe the ceo chair should be

known as the hot seat because ceo departures from american companies this year are on pace to be the highest offer -- the highest ever. there were almost 1400 announced ceo departures through november, 12% higher than a year ago, and even higher than back into thousand eight -- back in 2008. accountabilityd in their executive professional and personal lives. that has led to a lot of turnover as well. coming up, saudi remco soaring 10% in its trading debut. we will have more with art hogan, national holdings managing director -- with rob thummel, tortoise capital portfolio manager and managing director. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i'm alix steel. we've got the fed coming out later today, ecb on the docket, and of course, there's brexit.

you had a two day fall for the s&p, and now seeing futures pretty much flat. you are seeing a flattening in the treasury market -- actually a little steeper now. sorry, that's the vix. the vix a little elevated viviana: we are seeing -- a little elevated. we are seeing a lot of hedging coming to the market. in the cable rate, going nowhere, but around an eight month high. oil falling a bit after a 12 week high. you've got some worries about demand, worries about inventory, but that slide did not matter when it came to saudi remco's big trading debut -- saudi aramco's big trading debut. it rose 10% on its first day on the saudi stock exchange for a value of $1.88 trillion. 20 me now is rob thummel, tortoise capital advisors were fully miniature, and with us

still is sheila patel of goldman sachs asset management. would you want to own it? own why would you want to saudi aramco? one of the reasons is dividend yield. saudi aramco is doing about 5% and will pay it for five years. exxon dividend yield is about 5%, but it's paid it for 30 years. i'm not sure that it is that attractive compared to royal dutch shell, bp, and others. what are the growth drivers? when we look at saudi remco, the growth driver is probably higher oil prices. it is not as attractive to us as other growth drivers as the world goes through this energy evolution, and things like lng and natural gas represent larger growth drivers for companies like royal dutch shell and other companies around the world. alix: i'm glad you brought that up. what also struck my eye is chevron with a $10 billion write-down.

that is a humongous write-down for an oil company. j almost matches slumber j almost matches slumber earlier this year. -- rob: obviously it is difficult to produce oil and gas at these prices. that is what really precipitated the write-down at chevron. we are going to have to see higher natural gas prices going forward. however, the u.s. is still the largest natural gas producer in the world. there are companies that are still able to produce natural ,as even at record low historical low natural gas prices. we see natural gas at tortoise is a big growth driver not just domestically, but globally as well. that is really important because it reduces carbon emissions in the short term. alix: when you talk to your clients, how do they feel about

energy right now? sheila: i think they are pulling at energy companies. they are looking at them and saying, what are the other things they are investing in? what is the diversity of their holdings, particularly around climate change and esg? maybe that is some insulation against regulation that might come down the road, which people are concerned about. i think people are looking for companies that have some resilience built into their metrics. alix: what i am always struck by is the divergence between european oil companies and u.s. oil companies, and just in terms of green and carbon emissions, and how much farther ahead or more seriously in some ways it feels like european companies take it. is that true? is that a real divergence as an investment thesis? sheila: i don't think it is as true specific to the companies. from an investor perspective,

that probably means european companies have responded to that. but if you actually dig in, there's a very diverse set of outcomes for u.s. and european to beies that may seem very green or moving their business is the right way, but actually, u.s. companies have done some great things as well. they just haven't been asked the question. alix: fairpoint. so when chevron ends up having a write-down in natural gas assets , are other companies forced to do the same thing? who is this really bad for? now, if youight look at the driver of the write-down, it is low natural gas prices. companies will go back and reevaluate their reserves from an oil and gas perspective and determine if the book value is lower than the fair market value, and correspondingly have to write down their reserves if necessary. they do that every year, obviously, so we will see if anybody else has to.

but the focus right now is more on the natural gas companies. when we look at investing in companies globally, as well as domestically, we are looking for the lowest cost producer. we really like energy infrastructure right now because there's no reserves to write down. you get enormously high dividend yields come over you can get 6%, 7% in you're talking about a treasury in the u.s., the 10 year at 2% or below, and globally, where there is very low interest rates. these are really attractive to investors from absolute you'll perspective. alix: which brings me to esg. when you talk to clients, how many are actually putting their money where their mouth is? they want esg, but are they investing in that way? sheila: it is really becoming a growing trend. we've evolved from the simple exclusion list two people asking us to go further. that will be the challenge for the asset management industry in the next few years. a lot of what's been done on esg so far is about what i'm not getting versus what i know.

are you getting me data or not? is it good data? is it good news in terms of how you are evolving? we are really seeing, particularly a number of the pensions, global sovereign wealth funds, saying we need more, and we want to figure out how we embed this in our portfolio and a more fulsome way. is it tilted a little more climate change than any other issue in the esg space? yes. is governance the easy one ever when expect you can incorporate already? sure, but there is more to do on that, too. so it is evolving, but the number one thing everybody needs to take it further in a real way is data. alix: do you think that it is going to be a revolution, or movement? sheila: i think if we get the data, it can be a revolution because if we can get the data, if we can get some standards in place that have companies give asset managers, give investors real information, it starts adding alpha. you start being able to judge

company's about issues, and not about a feel-good issue. it's about, do i think this company's premise for making money is sustainable given the way they are coveting, given -- they are governing, given the environmental issues they might have? right now it is very haphazard, very uneven, and most of what we are judging is just are you telling me anything, not whether what you're telling me is any good. alix: that is such a good point. sheila patel is sticking with me. rob thummel of tortoise, thank you so much. viviana hurtado is here with first word news. viviana: in the u.k., election day is tomorrow. a new poll saying prime minister boris johnson's lead has been slashed by more than half, calling for conservatives to win 339 of the 650 seats in the house of commons. that suggests the race has tightened significantly. geothermal activity increasing at the volcano off the coast of new zealand.

that has kept crews from therering the bodies after the volcano eruption. newe democrats embracing a north american free trade agreement after getting key provisions. next week they will vote on the deal. house speaker nancy below c says the changes, cracked security makes the agreement better for american workers. global news 24 hours a day, on air and on quicktake by bloomberg, 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, brace for more losses. credit suisse cuts targets for next year and says it expects to in major businesses. if you have a terminal, go to tv . canou missed anything, you rewatch it. check it out. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." lobby inf creditors california governor gavin newsom to reject pg&e's restructuring plan. bloomberg has learned it's a last-ditch attempt to gain control of the bankrupt utility. pimco and elliott management are the lead bondholders. power over the $13.5 billion settlement pg&e reached last week with wildfire victims. we sound down -- we sat down with her and capital -- with arend capital's ceo. >> a lot of these companies

didn't have any choice but to go public to raise this capital. it has changed as we've brought more capital into the space. viviana: he says it has become more complicated and extensive to go public since the postrecession reform. big tech companies used to be seen as some of the most desirable workplaces. now they appear to be losing some of that luster. facebook and google dropping out of the top 10 plays is to work in the u.s., according to a glass door annual ranking. -- googles top four coming in 11th, facebook, 23rd. i'm viviana hurtado. that is your bloomberg business flash. alix: we turn now to wall street beat. first up, credit suisse cutting its target after they had some mrs. and losses at the firm -- some misses and losses at the firm.

and women in asset management. we look at the challenges faced by females in the industry and how to mentor and higher. sheila patel is still with us, and sonali basak joins us. let's go to credit suisse. i wasn't necessarily surprised it was cutting its target. i was interested that they blame to trade tensions and also negative rates. sonali: i think what is difficult for credit suisse is they just got out of a very challenging restructuring, things are starting to look up, and now they have all of these global headwinds they blame. a lot of things in europe are under pressure. i think how much they cut is very interesting. they wanted to hit a 10% to 11% return on equity. now that is closer to 8%. that is not a great change. shares are down today on the news, and they've already made sweeping changes of the bank like a new head of investment banking, and changes that trading desks as well. alix: when you talk to your clients, do they like banks? sheila: we have a very

particular situation going on with european banks. clients are perplexed. it seems like maybe from a valuation perspective, there are opportunities, but then you dig in and think, how does it look on the management front? what does a very difficult rate environment in europe mean for them in some of their primary areas? i think european banks in particular are very challenged, and we don't see many clients jumping on the bandwagon on that quite yet. sonali: i think there's definitely a very mixed view on banks. people play the evaluation card, but a lot of these headwinds are quite structural. nobody knows what is going to happen with rates, so people think financials are a safe cyclical bet in some way, but they are not really able to capture that right now from the europeans. alix: let's get to the second-story story, which is citadel crushing it and hiring away from banks to come and join their ranks. sonali: i spent a lot of time from what i call the killers.

-- the bank killers. [laughter] sonali: some people love that off the record. citadel is privately held firm, majority-owned by ken griffin. figures, he's really -- and remember, he earned $870 million from his hedge fund alone last year. people forget it is a massive part of his empire. people knew the scale, one out of every five trades in the u.s. now we are starting to put some numbers as to how big that operation really is. alix: huge numbers, which raises the question -- i am not going to ask if you are leaving to go butitadel, don't worry -- when you have huge flows of capital going to concentrated layers, where do you see it? sheila: in terms of the financial system, there's so much changing right now. you're seeing new entrants.

you're seeing for banks in many ways. you are seeing banks try to reinvent themselves in a digital sense. i think that will be ongoing. but i think when you say the word bubble, it gets very particular to where you see people pushing to invest in this structural environment. whether it is talking about european banks or talking about investors, it is a low rate environment. it is making people do things that maybe later we will regret. so in credit, and the extension of the types of portfolios people will put together, that is probably -- i wouldn't quite call it a bubble yet, but i think there's more risk embedded than people expect, and more risk of a liquid portfolio than people expect because the could it he is another place that can get a premium. alix: there was an article on bloomberg yesterday that wealthy families are basically now doing risky loans because they want the yield. privateeven more the credit markets than the market-making part of the market. but liquidity i wonder about because when i make that argument for private markets,

people are like, well, look at the public markets. do people trust their counterparties? it's one of the big questions in the story as well. sheila: i think liquidity as an issue crosses both divides. not really a public-private issue. it is more about, are people getting, as they would say in the u.k., what it says on the tin? [laughter] sheila: is this a product that is suitable to the average investor? if they want to trade in and out of it, it works. if a certain amount of tension arises, doesn't flip? i think you will see potential he more activity by regulators to make sure the definitions are a little clearer. alix: this brings us to our third story, which is what it is like to be a woman on wall street. this is a series that we do talking to permanent women on wall street on how you manage and hire from a woman's perspective. how do you do that? sheila: i've been a very lucky

woman on wall street. i've enjoyed my entire career there, even with challenges. i look for the best people. one of the best ways to succeed is surround yourself with great people, men and women. i particularly try to find great women. you have some of them on your show on a regular basis who are fabulous. i think that finding people that have a drive, a sense of innovation, willingness to persevere through some top stuff -- through some tough stuff is important. but sponsoring them more than mentoring them, being able to speak up and say, this woman is great. you should give her more responsibly. you should hire her. sponsorship is what gets people head. sonali: i've covered investment banking for about five years, and there is a common complaint that women want to leave in their 30's. they are having children. they don't want to travel as much. i don't know if that is a myth yet, to be honest. [laughter] is a controversial

topic, i would say, but there's a lot of difficulty in the pipeline. i'm wondering if management does have a shift in terms of how women are treated in the lives they are able to build around. sheila: i think asset management faces some of the other challenges as other areas in the same- some of challenges as other areas in finance. our equities business is a woman, along with the lead of that business. we had to invest and make that a point, but i think there are great opportunities in that. the metrics around being a portfolio manager, you have many women on from many different firms that are portfolio managers, it is there. can you make me money or not? investors shouldn't care whether it is a man or woman running the portfolio. alix: super key.

and you are also a woman who has traveled, what, six countries in six weeks? sheila patel, thank you for joining us. sonali basak, thank you as well. we are going to look at another mentoring arrangement. it sounds like a plot for a sitcom. . a hedge fund billionaire mentoring a hip-hop mogul. it is real. ray dalio revealed that his is sean diddy combes. coming up, we are going to take a look at what is driving consumer spending in today's trader's take. if you're jumping into your car, tune into bloomberg radio across

the u.s. 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 are looking at income and spending. vincent: we are going to start at 30,000 feet and then take you down to the sidewalk on this one. as we know, income drives spending. aom the beginning of 2019, on three-month rolling basis, income has been declining. the blue line, retail sales, despite the gyrations, has also been declining. we had retail sales numbers out on friday, and we actually had real earnings today, which is another component consumer spending. the trend is your friend, and as we spoke in the last couple of weeks, i don't like the dollar necessarily in 2020. if this trend continues, i would be continuing to look at levels

where you are going to see the pops in the dollar, be it on trade, etc., whatever happens. look for opportunities to put yourself into a lower dollar trade for the first quarter 2020. alix: what's an example of lower dollar trade that would be good? vincent: you can short the bbxy, you can look at asia outperforming. it is a little tricky if we get a trade deal because of the haven stocks. pick your spots. one of the ways i think is really the major indexes. alix: we're just about half an hour from all of that data as well. vincent cignarella, thank you very much. coming up, art hogan, national holdings chief market strategist, as well as mark cabana of bank of america merrill lynch. this is bloomberg. ♪ ♪

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december 11. i'm alix steel. here's everything you need to know what this hour. saudi aramco makes its trading debut in riyadh with an eye-popping market value of $1.88 trillion. >> there are still a few other characters -- a few other factors that could guarantee that upward move, including that the size and scope of saudi aramco means it is on a fast track to inclusion in some of the other indexes. alix:alix: the company could be looking at an international listing in asia next year. >> the trajectory toward a phase i deal is pretty good. alix: will they or won't they raise tariffs? reports indicate the potential hike will be delayed, getting both sides move time to negotiate. >> delay could be possible, especially if the president considers these talks to be going well, and the message from those folks is that the president does think things are going well. alix: negotiators also talking

about reducing the rate of tariffs already in place. cuts its main profitability target for this year and 2020, blaming trade tensions and negative interest rates. beengot to say it's more of a whimper than a bang for credit suisse. after a three-year brutal restructuring, they have cut the main profitability target for this year and next. also warns of less client activity this quarter, and jp morgan expects less trading revenue. clouds darken for prime minister boris johnson as his conservative party lead narrows one day before the election. >> the story of this campaign, the gradual narrowing of the race so far. of course, we've had various slip-ups and bad pr the past few days. alix: if there is no majority in parliament, it raises the risk of brexit uncertainty.

, nothing happening ahead of the fed. s&p futures pretty much flat. you've seen two days of decline for the s&p, still a stones throw away from record levels. even the cable rate has stopped moving into the election. seeing a bit of able flatten or or -- a of able flatten bit of a bowl flattener. joining me for the hour, art , national holdings chief market stretches. pleasure. -- market strategist. pleasure. what is on your radar today? art: the house has gotten around 2.0, let's goa ahead with this. important.h more we can actually get a trade deal done. these are much more important

trade partners. we are ignoring this a little bit, but that is some good news not baked in because we are so concerned about this deadline sunday. alix: totally fair. the fed is going to deliver its final rate decision of 2019, and policy makers obviously expected to stay on hold. the market is focusing on the signals for next year and potentially the dot plot. joining us now, mark cabana, bank of america merrill lynch head of u.s. rates strategy. what mayot priced in, be a surprise, is if you get the fed at some point signaling a hike because they basically overshoot inflation. mark: that's right. there's a very high bar for them to raise interest rates, certainly higher than to cut rates.t we think they are going to signal the path of policy is in a good place right now. it would take material reassessment to change anything, and the dot plot. . will be key we think the -- the dot plot will be key. we think the dots will shift

lower, but we will have to see what the distribution around that looks like. we think that in 2021, they will signal they intend to keep a rate hike in. again, it is going to be a fed that will signal they are on hold for now, but it is really the distributive risks reflected in the dot plot that the market will be very much focused on. art: one of the things you just said is in 2021, they may put a 2021, which means a whole 12 months without a rate hike. you talk about the hurdle being high. obviously they are going to let that run above 2% for a time. how much do you think that is? 2.5% for six months, or four quarters? mark: we think the fed obviously want to get inflation higher and see it run slightly hot, above 2%. i think they won't get really concerned, at least in theory, until core pce gets closer to

2.5%, or maybe higher. the proof will ultimately be in the putting. it is one thing to say we are content to see inflation above our target, but once they get there tomorrow they still going to have that same patience? that is something the market doesn't know, and i think the market is skeptical of just because of the history we have with the fed, where any time inflation gets slightly above 2%, they seem to get a bit worried. they really need to prove to the market that they will tolerate that slight overshoot on inflation. art: do we think core pce is the right measurement for inflation? like, what do you mean there's no inflation? we've got housing costs, education costs. as the fed ever get around to saying we've been focusing on core pce forever? mark: it's a great question. i get that a lot. i think that for the fed, they are probably looking at not just one single measure, but a basket of measures that should be very should be of broad --

representative kustoff broad consumption components -- should be representative of broad consumption components. health care costs, same way. i think that's why the fed prefers broader measures of goods that a consumer would be purchasing. but core pce is just one of them. there's a number of different other measure they look at messages -- pce. i think they probably look across a number of different indicators look at the underlying trend of all of them to see where prices are evolving. prices have been around what the fed would be hoping to see, but relatively stagnant, and certainly not making up for the persistent under shoot the fed has had over recent years. alix: does that mean now is the time to buy breakevens? mark: that's what we have been recommending. we think the tips have been pretty much beaten up. we think there's very limited confidence in the market for the fed to generate some upside inflationary pressures. given that context, we think

there could be a but of a bouncing breakevens over the next couple of months. certainly a trade deal, we will see what happens on sunday, but something that would indicate tensions are cooling would help with that. we continue to believe rates will likely back up a bit into the end of the year. with think that's an opportunity for clients to lean long, but admits that backup, you should start to see breakevens begin to price and a little bit more risk that prices could increase. cpi shows this morning, but there is the potential that it comes in higher than consensus. art: how much do you think jay powell is going to have to field at the conference about repo markets? alix: you read my mind. that's a deadly where i was going to go. -- that's exactly where i was going to go. art: i think some might must be satisfied with that answer. it is hard to ask plane to the everyday person. we kind of have to say it is not just the end of your liquidity

issues. how much does he get pressed? mark: i think he got three or so questions last time, and he really didn't offer much. it was really on the third where he started to offer a little more insight into how the fed was thinking about it. he talked about daylight overdrafts in that context. i think he will get pressed three times or more in this press conference, and i think you should because if policy is on hold for the foreseeable future, then the question becomes, what is the fed going to do with its operational framework? why is it needing to expand its balance sheet? it is really remarkable how much it has increased ever since the fed stopped doing quantitative tightening, or shrinking it. i think he needs to have a good answer for what is the longer run plan that the fed is engaged in. these short-term repose and bill purchases work fine to address the liquidity issues that emerged in september, but we still don't know what the game plan is beyond that, and that is what i will be looking for and hoping that the chair provides.

unfortunately, i think he's going to be light on details. alix: i would agree with that one. what everyone seems to be looking at is credit suisse. "the safe asset u.s. treasuries is funded by hedge funds on the margin. if the fx swap market pulls away, safe asset is going to go on sale." live with, qe4 goes the fed buying with the funds are forced to sell. do you agree with that assessment? mark: i had very similar concerns to zoltan, but my concern level is cooling a little bit. i actually think if you talked to me three or four weeks ago, i probably would have sounded somewhat similar in relation -- in relation to zoltan's concerns. to me, at year end, dealers are less willing to intermediate the

cash due to regulatory issues they face. i don't imagine they are going to make a big regulatory change between now, essentially the middle of december, through the end of the year. i think if they are going to make changes, they've already taken them. you are not seeing signs of funding stress broadly in markets that indicate banks have materially cut back on the intermediation. you are not seeing it materially in the cross currency basis. you're not seeing treasuries cheapen, another part of what i with.zoltan is concerned it seems to be the fed has provided enough liquidity. dealers have adjusted sufficiently to deal with that intermediation. i am not completely confident to say we are all clear. there will still be pressures around year-end, but i don't think it is going to be broad and destabilizing, as he seems to believe. alix: we will even there, but we circled to the revocations of that.

art hogan of national holdings joining me for the hour, mark cabana of bank of america merrill lynch sticking with us. the fed decides starting at 2:00 p.m. new york time. and some breaking news on boeing. the 737 max certification is going to extend into 2020. that is according to the faa chief. obviously that stock is off now, 0.5%. he spoke to another news organization. that is the headline, that certification will extended to 2020. this is bloomberg. ♪

♪ alix: still with me on set, art hogan, national holdings, mark cabana, banc of america merrill lynch. what would be your top call into 2020? think there's a really good sign that the market is broadening out. people are starting to notice valuations on the russell much better than the s&p. i would say that is going to continue into the first half of next year. mark: in the rates space, we continue to think rates will willbly just hire -- probably drift higher. alix: where do you go along? mark: we've been recommending going long at the back end of the curve. we have been talking about the flattener due to expectations. if there is good trade news, you see the belly underperform and fed pricing taking out a little bit.

if there's bad global develop -- bad global develop its, the trade is going to like. art: when we talk about the fed having nothing priced in 2020, what is the hurdle for them to go the other way? how much bad news do we have to get on trade? mark: the market continues to 20 basis of cuts in the fed futures curve, and that is one cut over the course of 2020. the reason for that we believe not because the market takes the fed is going to cut, but more of a weighting of the distribution of risks. most investors would suggest risks are skewed to the downside. i expect powell will say that as well. given the pricing of recession or the pub ability of recession in the market's mind, if things go bad, the fed doesn't have much ammo and they will go to zero pretty quickly.

if you are pricing in rates stay stable or go to zero, what is the kind of weight you want to put on that? the market is assigning about 25 basis points, 15% to 20% odds, for recession over the next year. . i don't think that is materially wrong. what we are's adjusting is that you probably want to trade it technically because, good news will come and go. the bar for the fed to move becomes relatively high. you probably want to trade that between 35 to 15 basis point of cuts priced in the market until you are to see signs that defensively, something had changed. if there is a trade deal and inflation materially accelerates , if the unemployment stays where it was on friday for six months or so, then you could probably see rates rise in the fed consider a hike potentially at the end of 2020 or 2021, and if things go the other way, if keep december 15 tariffs

up and rates continue to slow come of fed may cut next year. but it will probably not be an insurance cut. they will probably go aggressively because they have seen enough evidence to see they are battling a recession. alix: we've seen the skew really move higher, so there's more hedging. where's he and correlations come back, so there's macro factors moving stuff. art: everything mark just talked about, all of the things, only one is binary, getting some type of resolution on u.s.-china trade. that feels like the only binary situation the market is trying to price and right now. i think that is the scariest piece of this, and that is most of the near-term volatility for the market place. does the market continue at the pace it is growing? no, probably not. i think that the difficulty for investors is going to be going into 2020, we actually get a phase one deal, celebrate that a then realizend

that better economic data is not going to be made immediately. not making a business decision over u.s.-china trade, in 48 hours after a deal, i am not going to go build a plant. surveyl see it in the data first. you will start to see some corporate confidence come back into the survey data, and then it will work its way into real economic energy. but that probably doesn't come to the fourth quarter of next like, ivestors will be thought it was the u.s.-china trego causing this problem. it takes a while -- u.s.-china trade causing this problem. it takes a while to take effect. mark: using corporates would still -- do using about corporates would still think about holding back until clarity on the 2020 election?

do you think that would serve as a headwind, or do you think investors are so accustomed to this election cycle every few years that it doesn't really phase them? alix: it is a great question, and we will answer that any moment. we have to take a quick break here. you said that a pretty well, though. -- you set that up he will, though. usmca tradehe agreement gets a signoff from house democrats, while the senate says they will wait until next year. we will speak to chuck grassley next. this is bloomberg. ♪

alix: house democrats give a signoff to a new usmca trade , and the senate holds off until next year. david westin is sitting down with senator chuck grassley. anid: we just heard there's

agreement on usmca. have you had a chance to look at the language or talk to robert lighthizer ? if you see any reason to believe you would object to the changes made by democrats? sen. grassley: there's a lot of republicans which had not been made, but in order to get this otherwise very good agreement through the house of representatives, they probably had to be negotiated. they weren't negotiated 100% to satisfy the democrats either. compromise is how things get done in the congress of the united states, so it was compromised in a way that i feel the overall thing is very good, and we may lose some republicans because of it, but it is going to get through the united states senate probably easier than it gets through the house of representatives. art: if you lose some republicans --david: if you lose summary public and's, will it be because of inlets will property -- of intellectual property protection or drug prices?

sen. grassley: that's one thing, but i am very much for protection of intellectual property. 10 years is less than what u.s. , but greater than what they have in mexico or canada. if you don't protect intellectual property, you will not get the miracle cures we sometimes get through the research we do. david: we've heard about what this may mean for the auto industry. what does it mean for farmers in iowa? sen. grassley: for the first time to be able to get a massive amount of dairy products into canada, to get cheese into canada, to get our high quality wheat into canada that's been cut out, i think that is the biggest advantage to it. also, don't forget that if we

hadn't had this agreement and mexico- or canada and are the biggest trading partners of the united states, so we want to continue that going along, and then we would have the thread of the president pulling us out of nafta. that would have been catastrophic to agriculture. you said yesterday that usmca as revised was a win for farmers, workers, and all-americans. if that is right, what is the hold up? why don't we do it this year, or before the trial on impeachment? sen. grassley: don't forget, my prediction of a week ago monday when i spoke on the senate floor was if it didn't get done by that friday, we wouldn't have enough time to get it through this year, so that was a timetable i knew then. so your question now is legitimate. why not do it before impeachment or this year? this week and next week is going

nominationsly on and on getting the government funded for the rest of the year, and then you have christmas and new year's. we could do this if we want to be here december 26, 27, 28, and 29, but then immediately in january, under the rules of the senate, impeachment has priority over everything else, including mandating working six out of seven days a week, so we've got to get through that. will that be one week, two weeks, or five weeks like it was with clinton? that is unpredictable at this point. so something like the treaty could be brought up. the agreement could be brought up if you have unanimous consent. but we won't get unanimous consent to do that. any one senator can object. david: on the u.s.-china trade situation, it appears maybe we are moving close to an interim phase one deal. one of the sticking points

appears to be specific commitments on agricultural products. why at this late stage are we still fighting over that? i thought it had been agreed to? sen. grassley: it had been agreed to in the oval office on october 10 or 11. i'm kind of surprised about that, too. that is something that we can veryre, and it is important not just for agriculture, but you can quantify is china keeping their word when they say they are to $50o buy $40 billion billion of agricultural products. everything else that deals with intellectual property, with their currency manipulation, secrets,ling our trade we can negotiate that today, but you might not know for three or four years down the road are they really keeping their word. are they living by it? we know in 2011, we made agreements with them, and they didn't keep their word.

years, orsure in two they actually buying $50 billion of agricultural products. china will probably wish they hadn't made that promise, but for us, it is a way of securing, making sure that they live by their agreement. david: with all that in mind, do you expect we will have a so-called phase i agreement with china before the end of this calendar year? sen. grassley: two questions ago, i heard you make a very positive assumption that you had heard rumors along that line. monday, i had a conversation with somebody that i am not going to mention the name, but it was very positive that we were going to have something done before the end of the year. david: that sounds excellent. let's turn now to wto, something you have been outspoken on. we no longer have a quorum on the appellate of the wto because of u.s. objection.

it has something to do with the scope of appellate review, as well as the length. are we likely to come to a copper mies agreement that will get the appellate panel back up and running at the -- a compromise agreement that will get the appellate panel back up and running at the wto? sen. grassley: i want that to happen, but it is not only an ,greement between wyden and me but also a situation that existed through the bush administration, the obama administration, and now the trump administration that the wto needs to be reformed. as much as i don't like the appellate body going out of existence, it is something that has to be done to get other countries to wake up. if you want the wto process, and i do like the wto process, it's got to be reformed from the standpoint of getting decisions within the 90 day period of time they ought to be making decisions, and to make sure that the precedent set in previous cases are followed and not

changed by the appellate body. david: finally, you mentioned earlier funding the government. do you have any doubt in your mind that we will have a continuing sen. grassley: one of two things will happen next week. either we will get total agreement on funding the government through september 30 with what we have an optimist appropriation bill, or if that cannot be done, we will have a continuing resolution that will carry us through february. in that case, we will have to make a final decision in february. government will not be shut down for 35 days like it was last year. senator, thankd: you very much for joining us. alix: bloomberg's david westin and senator chuck grassley of iowa. we are waiting for cpi, the latest read on inflation in the u.s. we will be getting that in about 20 seconds.

in the market, steady as she goes. s&p futures go nowhere. and the other asset classes the same thing. the vix elevated. lots of talk about assets moving in tandem. the question is what you want to hedge for. that is the question. 2-10 spread at seven basis points. cpi in line with estimates, pretty much went nowhere. on a month by month basis, coming in up .2%. keep in food and energy and it went slightly higher, up .3%. the other thing is real average weekly earnings. that coming in 1.1%, plus you have october revised higher. a similar story if you're looking at the hourly earnings, up 1.1%. mark cabana, bank of america still with us, and art hogan as well. is this goldilocks? >> if you are the fed you are

not thrilled with it but you will certainly take it. it suggests that inflationary pressures are in line with expectation. certainly you would like to see the cpi measure higher than it is right now. i think this does nothing to change the assessment that inflation is right around the 2% objective. >> the interesting thing we have seen is the increase in wages is sneaking up good if there is any form of inflation we would love to see, especially for productivity, we would love to see price pressure. if we will see inflation creep up whatsoever and have the fed have to react, that is the best place for that to come from and i think today's data helps that concept. ,lix: it also begs the question are we priced for things getting better? if we start running higher inflation, which is a good thing

, and weekly earnings are moving, is that the risk to the upside? mark: absolutely, and the market is skeptical of that. the market does not believe the fed has credibility or can generate or tolerate higher inflation. if we see that and the fed surprises and suggests we are not going to change policy on the back of this, and if we get a positive trade deal on china and the senate ratifies usmca, then you see some investment, political uncertainty notwithstanding, that is an upside in the market. the market has not price to that. the market still believes the risks are skewed to the downside in a meaningful way. if the risks were shifted to the upside, the rates market would have a notable repricing. art: the problem with having that priced into the market as quickly as needed to -- we had the fed that raise rates at this meeting last year and was

projecting to raise rates three more times. we have made such a strong pivot in the other direction that it is hard for market participants to say the fed will probably raise rates again and will need to. that is a hard thing to rationalize. if you look at the checklist, all of those things are potential. everything you said, getting a phase one deal done early, usmca passing in the senate, earning start to get better, there is a potential for all of that to happen. the only thing that is hard to predict is pc inflation getting over 2% anytime next year. mark: i think that is right. i think that is why the market is skeptical. there is not a lot of upside or inflation risk premium in the market right now. that continuespi to generate in a positive direction, and most importantly see the average hourly earnings begin to bump up, then breakevens probably have some

correction. alix: let's get back to that question you are asking art before you had to the break. facing uncertainty -- then we get a trade deal, then there is a november election. what you think? art: if you look historically at every election cycle, we talk about this but it never comes to fruition. things material happened around an election cycle. the only things you actually see peopleit generally is -- stay away from health care for a period of time if they think they're going to be some price controls or reimbursement rate changes. away from that, the election cycle has less to do with action in the market. the reason for that is whoever in the white house does not have a lot to do with the economy. it is the balance is what is the makeup of the congress. are there proposals that are outlandish? are we going completely to the right or the left?

it does not feel like the time you get to november of next year, whoever is going to win is going to be somebody who navigated to the center to win a major election. we find out life goes on. mark: i am not as sanguine with regards to that. i think the country is quite polarized between the two extremes. i think certainly some of the democrats compared to the president, they have fundamentally different visions for the economy. one is very do like her tory -- one is very deregulatory. businesspportive for fundamentally different views for fiscal policies. maybe i'm just perceiving that the country is a bit polarized and this time it is different. you're probably right. fornatural inclination

investors is not the price worst-case outcomes, but the most likely outcome. even if you did get a left-leaning democrat that took the white house, it is unlikely you will get a composition of congress that will be supportive of that. you can still adjust the ,rajectory, generally speaking for how law and regulatory policy will be influencing. alix: that is how we make a market. mark, great to see you. art hogan will be sticking with me. we did want to give you an update on what is making headlines outside the business world. here is viviana hurtado with first word news. viviana: today jerome powell is all but certain to keep interest rates unchanged. some of the calls may be looking ahead -- some of his colleagues may be looking ahead to when they may raise rates again. the fed will be releasing a statement at 2:00 p.m., after which jay powell will hold a news conference. house democrats embracing a new

north american free trade agreement. next week they will vote on the deal. democratssi saying made the deal better for american workers. in the u.k., it is election eve. boris johnson and jeremy corbyn beginning a whistle stop tour. the major opinion paul shows johnson's conservative party lead narrowed substantially. the yougov survey putting johnson on pace to win a majority of 28 seats. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. alix: time for bottom line. we look at companies worth watching this morning. first up, i'm taking a look at banks. credit suisse cutting its main profitability target. now they are hit again by negative rates and trade tensions and the structural versus cyclical issues for banks. how do you feel about banks?

an existential question. art: what is amazing to me is how much better banks are doing when the main driver everyone has in their mind has not improved. the yield curve is still relatively flat. demand for loans has picked up your if you look at third-quarter earnings report, whether it is citibank, bank of america, j.p. morgan, loan demand was high. that means the consumer continues to be strong and banks will do ok. there balance sheets are better than the balance sheets are better than the balance sheets of the rest of the world. if you look at deutsche bank and credit suisse and say you have two choices, you can have j.p. morgan and bank of america, the choice is obvious. alix: you're looking at gamestop. i love a stop that reports earnings. they know they have a massive disappointment and nobody says we should not announce this.

it is down 15%. gamestop probably has too many stores. secular decline is not what is going on in gaming. there is a shift and you can do it on your phone or your industry ise gaming growing fast. gamestop is missing most of that. if you're going to miss earnings you have to tell stuff. alix: or your stock is down 15%. we look at saudi aramco. brooke sutherland joins us. what did you make of the ipo? brooke: there was no way this was not going to be a success. there is no way you are not going to get the 10% trading limit of the day, no way you are not going to get the $1.88 trillion valuation given the fact they pulled this from the international market. they pulled up all of the stocks to make sure you had retail investors buying into this. i do not think you will see

price discovery on this for another six months, until some of these lending extensions expire and you start to see how this settles into the index funds and that should give us a sense of valuations. that does come into play when you get the reports saudi aramco is considering floating this on one of the asian exchanges. that the most uncomfortable bellringing you have ever seen? david: -- alix: it was weird. it was offbeat. the interesting thing about the deal is everyone knows they need six or dollar oil to $65 oil, but as a country they need $80 oil to $85 oil. what you think the delta is there and how does saudi arabia describe that to investors? brooke: the other variable is higher oil prices are good for u.s. shale companies which are some of their prime competitors. while need the higher oil prices to get to that valuation, that undermines the longer-term value

of saudi aramco. they are positioning themselves as the last man standing if you do see a pivotal -- a pivot away from oil demand. if we see these bushes into more climate friendly takes, they think they will be the last one standing because they are so big. that is a hard argument to make to international investors who are looking at other companies and the yields they are offering and saying i don't get that. alix: brooke sutherland of bloomberg opinion, thank you. and a very special thanks to art hogan good coming up, goldman sachs bullish on global growth. sachs chief economist joins us next with his 2020 calls. you can interact with us on gtv . browse all the features and check out the charts. gtv . ♪

alix: goldman sachs is out with their outlook for 2020. the bank expects the global growth slowed down to end soon. average gdp growth to rise 3.4% next year. hatzius.e is jan walk me through your main calls. accepte main thing is we -- we expect some acceleration in growth led by the u.s.. we are about .5% above consensus. consensus view is growth slows to 1.8%, recession risk is high. , 33% to 35%. there year wills gold next be 2.3 on average and we see a sick sequential -- we see a sequential pickup from where we are at the moment because of a

reduction in the impact from trade. .5%. subtracting nearly that diminishes if there is a phase one deal and a truce, and we think there will be some boost from the financial conditions. financial conditions have eased a lot. we have a chart that shows financial conditions and how they have been getting looser and looser. when is that impulse felt? jan: we are seeing it in some areas. by our estimates, financial conditions were subtracting three quarters of a percentage point after the big tightening in the fourth quarter. that is turning to a half percent boost by early next year. most of the way there, we can see it in some areas. the best example is housing, which was quite weak and 2018 and early 2019. we see a pretty good rebound in

areas like home sales and homebuilding. like a lot ofeel market participants are trying to figure out -- you might have growth that on an absolute level is better in the u.s., but the higher beta frio -- for growth could be in europe or emerging markets. how do you view it? jan: and emerging markets it is a mixed bag. you have some places where you could see a sizable acceleration , partly because it is a low base. latin america would fall into that category. india falls into that category. there are some places where it is more sideways. china would be in that category for us, where there is lower growth there next year than this year. europe, you could see a decent acceleration and you are starting to see that in some of the surveys out of germany from various levels. germany has been very weak, but a sequential acceleration of

.75% -- alix: might make a substantial difference when the basis so low. jan: they need it in some sense. when you're starting from contraction and slow growth in the euro area, you are pretty desperate for an acceleration. we are starting to see some of that. you also deep dive into rate cuts and you have a great chart that talks about how many cuts we have seen this year and how the pace of cuts is reminiscent of 10 years ago. who is left? what does this tell you? is a shift from rate hikes in 2018 in the u.s. and various other places for the economies to rate cuts and a short period of time. that is the most rapid turnaround. the extent of the cuts and

aggressiveness of the cuts is nowhere close to what we saw in 2008 and 2009. it is a hardship. that is the main reason -- a hard shift. that is the main reason for the improvement in financial conditions. we have seen three rate cuts for the fed when markets are pricing two hikes a year ago. that is a sizable turnaround that has shown up in financial conditions. alix: you also mentioned the single biggest event of next year will likely be the u.s. elections, and you are also looking at profit margins under pressure. how do you look at it? away fromundamental, the election, the fundamental trends we are seeing is a long labor market tightening. the end employment rate is 3.5% in the u.s., and we are seeing, contrary to what is sometimes expressed, pretty sizable increases in wages. overall wages are increasing three percent, 3.5%.

if you look at the lower income part of the income distribution, we are in the 4.5% range. subdued,nflation is 2%, give or take, depending on cpi or pce, that is starting to put upward pressure on labor costs and is weighing on profit margins to some degree. that is probably going to intensify as we go forward. despite the fact that we expect a good growth environment, and generally market friendly backdrop. this is one area where things might not work out as well as .eople might be hoping that is just the economics. there is political uncertainty around tax policy and the risks there are to the downside. we will not get tax cuts but we could get tax increases depending on what happens in

november. alix: we have cpi earlier, average hourly earnings, the fed later today, the ecb tomorrow. what would be your question for jay powell today, looking ahead to 2020? jan: it is hard to come up with new insights. my expectation is that the fed does not want to send a new signal. they are comfortably on hold. there pretty far away from positional cuts, at least under our expectation for how the economy does. tableare also off the still below 4%. getting a sense of how wide that interval is is probably the most interesting issue. i think it is pretty wide. my expectation would be the

answers to most of these questions are not going to be hugely surprising. that is the broad strategy. there are more detailed questions around what happens to t, what has happened to the divisions within the committee, how is the view of the sustainable unemployment of 4.2% in the projections, even though the end rate is 3.5%. alix: a nice way of saying it will be a boring presser. jan: there is always something, but this does not seem like one of the major events, especially when we look at meetings with new projections. alix: thanks. jan hatzius of goldman sachs. coming up, more on gamestop's potential support levels in today's technically speaking. this is bloomberg. ♪

alix: time for technically speaking. the big mover in the market is gamestop. what is the trade? gamestopes bought -- comp sales were down -- 20% in the premarket. here are your first levels. that is theis 531, october 31 low. second support at 505, that is 50% of the whole move. 531, thenort is you're looking at 505. alix: appreciated. that does it for me at bloomberg daybreak america's. ♪ here, it all starts with a simple...

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jonathan: coming up, china expecting the u.s. to delay this week's terrified. jay powell wrapping up the year looking to -- the british election and a clear pastor brexit hangs in the balance. live from london, where this program will call the city home with the u.k. election one of risk events for the week on the calendar, including tomorrow's ecb rate call and sunday u.s. china tariffs deadline. we begin this program with the big issue. counting down to a fed rate decision. >> the fed has orchestrated a nice soft landing. >> engineered a soft landing. >> they have successfully on inverted the yield curve. >> trade escalated and they had to come back in. >> the fed is going nowhere. hikee bar for the fed to or cut is high. >> where's the impulse for next