i tried to get a baseline from pimco in what they were looking for in 2020. looking for 1% growth next year. growth slowing to something like only 1% in the first half of next year, as the slow down in manufacturing, global trade recession, is starting to spill over into the u.s. service sector and consumer. low growth,iod of stalled speed, obviously, the economy is very vulnerable to any adverse shocks. jonathan: luke hickmore, are we ready for 1% gdp growth going into 2020 in america? is that your baseline? luke: i think our economies are a little bit about that, but the risks of that are very high. jonathan, over the last year or so, we have talked numerous curveabout how the 2/10 is such a good predictor of slowdowns. we cannot ignore that. we cannot ignore the consumer is probably at the best they will be at the moment, employment at the best it will be. we cannot ignore that. our u.s. colleagues have been moving underweight u.s. investment grade credit for the first time indicates. it will be a problem. we are going to see slower growth. we are starting

injure balls from pimco -- andrew balls from pimco stays with us. joining emmanuel macron for a frenchservice in the the viewingay after for jacques chirac. ♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. we were talking about brexit and the probability of a no deal. andrew balls of pimco is still with us. i also want to talk about the probability of recession in the u.k. andrew: it is quite possible. germany is already in recession. it is not hard to have a recession in europe. u.k. a little bit elevated, the same in the u.s. as well. you do have these uncertain outcomes in the u.k. if you had the most chaotic form of no deal brexit. that would be a recession. at the moment, i think the bigger issue for u.k. growth is global growth and global trade growth slowing everywhere. francine: what does it mean for inflation? inflation expectations are sliding. are you putting any inflationary hedges? andrew: no. one thing the u.k. has been good at is having inflation close to target. i don't see deflation risks in t

we talk with tiffany wilding of pimco. that is next and this is bloomberg. ♪ david: this is "balance of power westin. am david mark: hurricane dorian is menacing the u.s. east coast. the storm is lashing florida after ripping through the beatingin a two day that cause damage that may cost the island billions. dorian has weakened but is still packing winds of 105 miles per hour. forecasters say it could make landfall as a category 1 storm thursday. the european union is warning businesses and people likely to be hit by brexit to prepare for the possibility that britain might leave the block without an agreement next week. as. officials have released checklist for companies to use. they will minimize disruption to trade. the commission also wants to make funds available for those hardest hit by a no deal brexit. hong kong's chief executive has made an about-face that may help ease tensions after months of protest. carrie lam has withdrawn legislation to allow extradition to china, but she knows that may not be enough. >> aft

up next, we speak to someone from pimco after his outlook -- about his outlook after the fed's secondat does it mean for fixed income? we get the outlook. this is bloomberg. ♪ >> i am disappointed by what the fed has come out with year because the market -- here because the market is price for action. action.d for is hard to say this is a dovish situation. i prefer the way it has been characterized as a risk management, as an insurance cut. i think this was the second payment on an insurance policy. >> we were expecting a more. -- expecting more. >> the fed is not as accommodative as i would like to be simply because my forecast run over 2%. so i think there is more room for accommodation. >> i think the fed is too preoccupied with inflation expectations. they have changed the way they are operating at a fundamental level and have moved towards this expectation-based way of looking at the economy. i think it is a very confusing. some ofose were just the guests on bloomberg television reacting to federal reserve policymakers cutting the benchmark interest rate. let's continue that conv

joining us chief investment strategist and pimco's chief investment officer of global credit good toou both. >> nice to see you, carl. >> pimco, fair to say you guys saw this coming months ago >> carl, we've been quite cautious on the global economy we think u.s.-china relationship has fundamentally changed. u.s. economy throwing from 3% trend lastier to 1 1/2 we're basically probably going to enter stall speed so clearly we're likely going to have a profit per session about 20 to 40% of the companies likely see year over year negative growth and that should feed through to slower hiring and capital spending the question question, can the consumer hold up the consumer is 0% of the economy. so far it's really more of the global manufacturing sectors which have been hit. if the consumer slows, the u.s. economy will be quite vulnerable. >> does the consumer hold? >> we think it does. especially considering you have to remember, too, no one is really talking about that. lower interest rates is a break for the consumer right? number one number two, consumption experience is really interes

topics surrounding where some of the world top investors and politicians expect the growth to go pimco's ceo says, issues around the world are likely to drag down u.s. growth specifically. >> we see the u.s. economy slowing down, and the number we have in mind is we are slightly above 1% for the first half of 2020 and obviously the elephant in the room is the trade war with china. how to resolve itself. and also other distinct incident across the world think of saudi arabia, think of brexit, think of italy all these things basically are a dampner on growth , only so much monetary policy can do to reignite growth. >> but vice president mike pence who spoke with joe kern nan had a different take, arguing the u.s. economy is benefitting from his administration's policies. >> american economy is booming that's absolutely undeniable since election day, 2016, more than 6 million jobs created by businesses large and small, unemployment is at a 50 year low, wages are rising at their fastest pace in more than an decade one fact after another, as we travel around the country, the enthusiasm, the c

we heard from manny roman the ceo of pimco, luke ellis of man group and others i think the common thread the u.s. is doing well thank you, u.s. consumer the global economy is not. when it came to the biggest risk factor, i just wrapped up by asking facing the global economy, for a lot of them it was the u.s. consumer and whether confidence can continue to remain high there was actually a little back and forth. luke ellis was a little worried about whether fedex was a canary in the cole mine or whether that was a function of what was happening globally in trade that gives you a sense of where investors are, why the fed is split, why investors and economists are all split about the outlook for the u.s. how much of the global economy is going to infect us. >> obviously you mentioned fedex and the numbers yesterday, which gave people pause. two days ago randall stevenson the ceo of at&t, talking about the business investment. he said it was flashing yellow, not red, but yellow. of course, he concluded saying eventually it spills into the consumer so we're watching it closely. >> the other ri

we are joined by the managing director of pimco, in germany, and today he is in newport beach california. you just heard the talk about the negative basis points for the german ten-year. we were negative about 70 a few days ago. a bit of a selloff in global bond speed what is happening. globallyk bond markets were scared by the outlook for growth and inflation coming out of all of the trade negotiations or lack of progress thereof. so we had that big down move webally, and from here on sharp toirmation of a take yields lower. maybe were getting consolidation now after what was a very big move down globally. vonnie: how does the ecb interpret this tomorrow or the next day, what will they do? the ecb will not be bothered at all by some of these ups and downs that we have seen. their focus will be on getting inflation back to target. what will they do? i think they will restart the package, what they've done before, and this time it will probably include a small rate cut move. the tearing of that rate on excess reserves, because it is starting to hurt bank profitability, a resumption of the

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"power lunch" is back after this >> announcer: this cnbc program is sponsored by pimco. the right toneting ♪ lower carbs. lower calories. higher expectations. ♪ the light beer you've been waiting for has arrived. corona premier. >>> uber is fighting back after california passed a bill design it had redefine the gig economy. we have more from san francisco on how they're planning to do that >> uber wasting no time reminding us that the passage of the bill is no magic wand changing everybody's status to employees. that's how tony west put it on a call to reporters yesterday just after that bill passed the assembly and also outlined uber's strategy going forward as the bill does get closer to reality and ride sharing still doesn't have its exemption uber will go back to an argument it has used plenty in the past but one that we haven't heard a lot of since dara took over. that it is not a transportation company. west said on that call yesterday that, quote, drivers' work is outside the usual course of uber's business which is serving as a technology platform suggesting some have said that

the behavior last fall was so wrong on the part of those selling it >> erin brown on pimco >> i likeg the defense sector this is really at the positive end of given what we'll face in the coming year, i think you want to stay vested in defense >> marathon petroleum. this is more about what is going on with elliott and the decisions being made because of that, i think the stock goes higher. they've been right if this last guy is right, this thing is going that's it for us "the exchange" starts now. >> thank you, hi everybody china fires back on trade saying it will increase foreign access to its market. could this be the first real win for america or just a hallow gesture? we'll ask. more conflicting data on the economy. leaving averages roughly unchanged. which way will markets break in the final quarter? >>

pimco. >> okay. >> so -- by the way, doesn't actively manage money, but did at tcw he called this just saying p you want to know the bond market is going, go west, young weiss. let's take a, back to trump. i like that conversation better. no offense >> worked up when i slammed the west coast >> no, my daughter's on the west coast. i go out there quite a bit it's fine. if you take a look at trump's business, who stands to benefit the most from negative rates his real estate. right? that's what it is. no surprise there it's a conflict and by the way, look what negative rates have done for all the countries that have it look at where they are which economy do you want to be in ours or that what do you want to do with the retirees that have seen their incomes go down every single year with rates going down so i'd say there's only one bonehead in that conversation and it's not powell. >> who is is it? >> leave it to -- let's move on. >> got a lot more to do. good discussion to far, guys here's what's coming up on the rest of the halftime report. >> costco shares rallying more than 40% this

rick rieder of blackrock, matt hornbach, and tiffany wilding of pimco will be joining john.tarts with a simple... hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, it is federal reserve decision day. a divided committee expected cut rates once again as trade officials get set to restart talks. larry kudlow says the mood has turned more optimistic. saudi arabia keeping the oil flowing, restoring output weighing on crude prices. good morning good here is your wednesday morning price action. futures down .1%. in fort exchange, the dollar stronger against everything through the morning. at 1.1055. back treasury yields lower by three basi

pimco saidlps at that while recession is our base case, it does not take much to tip over an economynk it is important to focus on capital preservation and to be conscious on corporate credit and equities. how do you see that? it will not take a lot to tip us over into a recession? kathryn: i completely disagree. it will take quite a bit. the consumer is two thirds of the economy. -- yousumption growing have consumption growing. it is hard to see, without a significant shop, the can -- a , the sectorshock toppling over. this combination of data says the fed does not need to cut the three times the market is pricing in. the fed should not anymore. the fed has a two-pronged not five.ot three, as we have heard the fed talk about global expansion, helping the lower classes get more access to credit, the domestic expansion, maintaining financial markets. it has a two-pronged mandate. this gives us the space to win back at some credibility and keep rates on hold. alix: what is the fed narrative now? narrative is the base outlook is good. we are worried about downside risk, which is a wise

fromrday i heard a number pimco expecting about 40 to 50 billion euro. we were told it would be more like stimulus in disguise here. it is intended to fight climate benge, but it will also very stimulative. we are still waiting to get a headline number from the government. they were negotiating all night, 16 hours of final negotiations from last night through this morning. in just about an hour and a half, we are going to see a press conference with finance minister roll up schultz -- with .inance minister olaf sholz this will boost gasoline and diesel prices by three cents a liter in 2021 and six to $.10 a -- two $.10 a liter. alix: great stuff. looking forward to that press conference. now we go to brussels. european commission president jean-claude juncker thinks a brexit deal can be reached by october 31. he said, "i am doing everything to have a deal because i don't like the idea of no deal. if the objectives are met, all of them, then we don't need to backstop." ian wishart joins us from brussels. irish ministers then warned us a brexit deal was no

ben jocalso speak with no and pimco vice chair, john students key. don't miss those interviews. this is bloomberg. ♪ ♪ counting down to asia's first major market open this morning. we are taking a look at korean futures, which are higher at the moment by 1/10 of 1%. this coming after a great winning streak for the kospi which has gained ground for the past 7, 8, 9, 10 sessions. this is "daybreak: asia." i'm shery ahn a new york. paul: time paul allen in sydney. -- i'm paul allen in sydney. trade talks have resumed paving the way for negotiations next month amid signs that they may edge toward interim deals. there has been a burst of conflict during -- conflicting rhetoric from two advisors paired let's get to our trade editor, sarah mcgregor. what is the rhetoric been sounding like it -- in the lead up to these talks? sarah: in the lead up to these talks, we have seen both sides trying to appease people and say we are making progress, we are going after an ambitious deal, but at least we are still talking. michael pillsbury today. upsaid the tariffs could go by 50%, 100%. both s

. >> yesterday sara and i spoke with manny roman who runs pimco, one of the largest asset managers ine focused on it. he said all technical in his opinion and not a sign perhaps of the inability of the fed to control rates. >> watch that, obviously big ramifications for the fed balance sheet. speaking of which as we said, sara is in d.c. alongside a special guest. sara. >> thanks, carl. good morning from the federal reserve. i'm here with the vice chairman of the fed richard clarida thank you for taking the time. big week for you guys, big day as we close in on record highs biggest surprise i think out of the fed is that the divide inside the fed is growing. why is that? >> well, you know, sara, first of all, we have 17 folks around the table and the fed has a long tradition of candid frank discussion about the economy i think it's the strength of our system, chair powell indicated that the other day i think what it indicates is the economy is in a good place, but in the 11th year of expansion there are also some risks and the committee is looking at those risks and making a judgment

. >> for more let's bring in libby cantrell head of public policy at pimco it's early we know.like that from cooperman are you getting from your clients? >> i actually was in a client meeting and it was the number one question, what was your outlook for 2020 it's early days. to put context in it, in the 2008 cycle around this time fred thompson, rudy giuliani were polling ahead. in 2012, wick perry was pulling ahead at this time so it is very early days and importantly we shouldn't extrapolate so much in terms of polling in iowa remember, senator ted cruz won the iowa caucuses in 2016. mike huckabee won in 2008. rick santorum won in 2012. it's notable we should certainly take it as new information but it's super early and too early to extrapolate policy or market implication. >> news to hit from the u.n. general assembly president trump was just asked sort of related topic about the chinese delegation's canceled trip to u.s. farms an deferred to secretary mnuchin listen to this >> that was actually at our request they did delayed that. we didn't want there to be confusion. they

. >> he is straightforward he knows the markets he came from being an adviser from pimco and knows thel. and a keen eye on global economies which i think is really huge right now for the fed which is how much of that data dependence they are following the next move is going to come from overseas and the trade wars. >> also you were mentioning the other interview. >> of course kristine lagarde is monday mentioning. >> i'm looking forward to that mike back to the markets wh what the fed chair says. >> it's a crucial factor all else equal flattening action in the yield curve yesterday. but right now i think the market is comfortable with the idea that the fed is likely to cut rates again unless the economy observably gets better that's an ee gas station equation we can live with for now. >> where where is the catalyst coming from. >> that's the other question it seems to be running out of steam. i would say it's broad enough and credit has been good it's hard to see how it falls apart with microsoft and jp morgan at all time highs >> "fast money" begins right now. >>> live from the nasdaq