Mnuchin and says he is encouraged by chinas verbal commitment to open markets and remove certain investment restrictions as part of a trade deal with the united states. Secretary mnuchin tells reuters china is also pledging to remove forced Technology Transfers as part of the phase one agreement, but he is not at the point to make recommendations to President Trump on the status of the tariffs scheduled to take effect december 15. The Justice Department is close to a sweeping deal in fugitive financier jolo to recoup almost anillion dollars looted from indonesian investment fund. Sources say could be the biggest recovery and an anticorruption crackdown by the u. S. Government. As settlement could be filed soon as this week in a california court. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Shery live from bloomberg World Headquarters in new york, im shery ahn. Live in toronto, i am amber kanwar. Welcome to bloomberg markets. Here are the top stories we are following from around the world. Expansion. The it is a phrase that markets are waiting for. Will jay powell signal a stop, pause, or continuation of rate cuts . The bank of canada maintaining its target overnight Interest Rate at 1. 75 . Canada hasoz says not been immune to the effects of a global slowdown. We will hear from him next. Facebook and apple on deck. The latest tech giants reporting Quarterly Earnings today after the bell. We will find out how much revenue the latest iphone lineup is bringing in. Lets get a quick check on these major averages. Right now, really deciding to when it comes to major market moves ahead of that fed interestRate Decision. Under the hood is a pretty defensive tilt with utilities, real estate, consumer staples. Cyclical stocks like energy and financials are on the back foot. The real fireworks could be in about half an hours time. Away from all of this, i have been known, instead of wearing some nice shoes, wearing some nice uggs, but i have never gotten into some crocs, but im apparently one of the few. These are their shares up today 15 . This is actually close to an 11year high for what we can describe as the casual clog maker. They posted record revenue. If that was not enough, they are boosting their fullyear sales forecast. I dont know what it is about these shoes. Steve madden yesterday also hit an alltime high. Shoes arein retail, insulated from the headwinds. Crocs. Who knew . Shery i am not into them either. I know people that are, but just not us, i guess. Amber i dont know if we are the key demo. Shery take a look at the 10year yield. Pressure on a second consecutive session, now below that 1. 80 percent level but Still Holding above that 50day moving average. This, of course, as we head to the fed expected rate cut, expecting a quarterpoint for the Third Straight meeting. Our next guest says bond may rally temporarily but perhaps improved Risk Appetite could fiel a redeployment fuel a redeployment to bonds. Are joined by Candice Bangsund at fiera capital. Great to have you with us. How ready are the markets at this point for a hawkish cut . Candice not ready at all. What the market is essentially saying right now is that the fed will be in a holding pattern. If anything, the market is positioned more dovishly than what we and the fed is planning for. Amber ultimately, does it matter . We know it mattered in the Fourth Quarter of last year, the jay powells record in terms of how the market trades a day after he makes a Rate Decision is generally not positive. Nevertheless, here we are close to alltime highs on the s p 500. Regardless of what the fed does today, does that alter your fundamental view of where the s p 500 can go from here . The accommodative message from central bankers in general is largely one of accommodation, and this is creating a compelling environment for equities. That is why we think this bull market has further to run from here. Shery we could see bond repositioning, some that are overbought, overvalued, could be redeployed to equities . Candice when you think about the year today gains in equity market, you have not seen a lot of flows. Flows have been going into bonds. This is that overcrowded position that is due back or a reversal back into the equity market, should we get clarity on the state of the Global Economy, trade, etc. Amber i know everybody gets excited about the year to date gains for the s p 500 but almost all of that was generated in the first quarter. Subsequent quarters have been tepid at best. When you are looking for a greater run from here, what does that mean in terms of percentage gains . Candice we are targeting 3300 on the s p 500 in the next 12 months. Where wef the u. S. Is are really seeing the equity space. The equity market in the u. S. Has largely priced in the accommodative message from Central Banks, as well as some of the receding risks on the trade front. Outside of the u. S. , we see a rotation toward more value oriented, cyclical sectors and regions of the world such as canada, even emerging markets. Shery where in emerging markets . Every story seems to be different and they do seem to have idiosyncratic risks, such as chile protests, elections in argentina. Candice we use the call as an aggregate call for emerging markets in general but essentially it is a value proposition. This is an area of the world that is exuding Growth Prospects but has largely lagged the equity market rally this year. Amber is that a function of you look at the imf they say the globe is in a coordinated slowdown versus a couple of years when it was in a coordinated expansion. Can your thesis on emerging markets play out as long as that coordinated slowdown is still ongoing . Candice our thesis is actually based on a coordinated the acceleration or stabilization, and that revitalization in Global Growth and which is not yet raised in. Of course, there is a lot of pessimism on the state of the Global Economy on the weight of earnings expectations. We expect stabilization, recovery, and Global Growth. Of course, receding trade risks. All of which should bolster Global Growth, and emerging markets should be a prime beneficiary in that environment. Thank you for your thoughts, Candice Bangsund of fiera capital. Liking emerging markets as well as canada. We will tech about that in a moment. Dont forget, we have special coverage of the fed decides starting at 2 00 eastern time. As candace was talking about liking the value in canada, the bank in canada is one of the few Central Banks to resist the global monetary easing trend. Policy makers today cap their current policy rate unchanged or an eighth straight meeting, even as they cut their growth forecast for the next two years. Amanda lang sat down earlier with stephen poloz, the bank of Canada Governor, and asked about the implication of holding rates steady. Policy based on our conditions, not somebody elses. But we are not an island, we are feeling these international things. Two things. We are getting a rebound in housing, solid job growth, consumption spending at the same time, so there is a bit of an offset there. In aggregate, things are still ok. On top of that, inflation is at 2 . ,f inflation were below 2 significantly, then you would keep every Downside Risk more importantly to the Downside Risk , which is where we were in 2015. Here, we can be much more symmetric about it. Amanda you noted in your report today, there are risks that remain, the trade file. We have seen the effect that has on business. You think the back cap will show some of his weakness. Why raises the question, not do the insurance cut, why not get in front of that, what is the cost of such an insurance cut . In local situations we have higher financial vulnerabilities than the u. S. We have macro prudential measures in place we think to keep them in check, especially the stress tests on mortgages. That does not mean that we cannot reignite imbalances and housing markets by being aggressive. Here again, we are weighing those outside risks outside of the inflation forecast, saying, lets put due consideration to those things. There is a cost to those insurance. You will add to those natural vulnerabilities on the premise that maybe they will have another negative effect on you. Canada has been exposed to the trade war since trump was elected. We were first. A lot of that downside in investment is already in our decisionmaking and numbers. Amanda what are the biggest risks to your outlook . Uncertainty is the name of the game, so you cannot know. What do you worry about . Stephen i worry about an escalation in the trade war. And it doesnt even have to escalate. If it just continues in this haphazard fashion one day this, one day that. As a business person, how do you decide to invest and spend money . People have kind of frozen up. That can have pretty big consequences elsewhere in the world. It is all showing up. The next step would be Commodity Prices go on a bigger slide because world growth is down again. That all accumulates and then we are looking kind of like 2015. I think that is our biggest concern. Lots of other little ones, but without that one we would not be. Amanda and that is driving other banks, like the set federal reserve. We expect them to stay on a dovish side of the spectrum. How do you measure whether Central Banks have lost their ability to control what they once controlled . Market is oneo issue, but more broadly, are we at the end of the line of what you can do with rate cuts . Setting aside the technical issues of money markets, those are what they are. In terms of the effectiveness of Monetary Policy, its obvious not a lot of us have room to remove her maneuver, some have none. We have unconventional tools that have shown some secondorder implications for the economy. So those things are there. The other side of it is, everybody understands this is exactly the situation that they were writing about in 1936. This is one fiscal policy is most powerful and Monetary Policy is the least powerful. We have known that for a long time. This is not a revelation. Fortunately, here in canada, we had some fiscal support over the last few years. That support, which i spoke about in a speech in february, saved us about 100 basis points of further monetary easing. That is significant. You would have been doing that in the middle of a hot housing market. The fact that we were able to avoid that is a positive. Matters in all parts of the world, especially this one. Amanda therefore, when we expect more fiscal support coming, certainly every parties plan included spending do we get what we need . How do you know if those plans were enough . Allhen if you were to at the fiscal stimulus in canada, lets say 5 billion. That is on the order of a quarterpoint. It has about the same Macro Economic effect as a quarterpoint insurance cut. A couple other aspects matter. If you are using fiscal policy, you reduce fiscal monroe abilities because you raised the denominator of those ratios without people taking on more usingas opposed to interestrate as an accounting mechanism where you are adding financial vulnerabilities. By encouraging individuals to do the borrowing and spending, instead of the government. With that was amanda lang bank of Canada Governor stephen poloz. You can hear more of the interview at 2 00 eastern today. Shery biting into apples results. The tech giant reports earnings after the closing bell. What to expect from iphone sales and more. This is bloomberg. Amber breaking news on huawei. As our bloomberg calls are reporting, people familiar with the matter say the u. K. Government will delay any decision on huawei until after the federal election. A decision on whether and to what extent huawei can participate in the 5g rollout, likely now, according to two sources, to be delayed, until 2020. Other countries like canada have yet to make a decision on huawei s participation in the 5g network. We are also focusing on one of huaweis competitors, apple reporting after the close of trading. The company is set to face a major test today when it gives its outlook for the key holiday period. Analysts expect to see the iphone business still shrinking. To break it down for us is mark gurman in san francisco. What will be key to the quarter . Especially when you consider we are looking for the business to shrink but the stock has been doing just fine, thank you very much and in far this year. The stock has been doing fine but what likely apple will be reporting over the Holiday Quarter is that iphone unit sales continue to decline on a yearoveryear basis, as well as revenues now, despite the higher prices. Investors and analysts will be looking to how wearables and services are making up for the slack that the iphone is giving apple. Amber was talking about the 5g rollout in the u. K. , and huaweis involvement and how they will delay that decision. What about the 5g roll up by apple . Will that help in the sale of these iphones . Mark it is possible it will help returning back to unit in Revenue Growth next year. Releasing three new 5g iphones in september 2020. That is something that consumers, analysts, and esters are all looking toward. Amber what about reports that fitbit could go under the alphabet umbrella . Does that do anything to apple and the apple watch prospects, in terms of adding a more formidable competitor in the wearable space . Mark good question. I dont think alphabets ownership over fitbit would have any success impact over the success of the apple watch. The apple watch, for all intents and purposes, is a runaway hit. Slapping a google brand on top of a device that has not been able to compete with the apple watch will not do anything for it. From sanrk gurman francisco, thank you for that outlook on apple earnings. This is bloomberg. Loomberg. Amber this is bloomberg markets. Im amber kanwar in toronto. Shery im shery ahn in new york. Away from theutes fed announcing its Interest Rate decision. Carl riccadonna is with us now. A cut, thatcting appears to be in the back already. How important is it that the fed leaves the door open for december . Carl future guidance will be the key in the statement. More specifically in the press conference where we get a clearer read on where things stand. In the past and we had these , 1995,ance easing cycles 1998, three cuts was enough to do the trick. There is some expectation, looking back to the dot plots from the september meeting, policymakers are of a similar view this time around. But if they are resolute that we are done here, that will be interpreted as a tone deaf reaction from the marketplace. Then you risk that kind of same play of the market that we saw in q4 of last year, where the markets try to be an economic cheerleader, making the case for less easing that would have otherwise been the case. I think the fed wants to keep the optionality open. Whether december or potentially q1 of this year. The important thing is, in a slowing Global Growth environment and todays gdp numbers were better than expected but still disallow rating everything is slowing down, so this will be reflected in a lot of Economic Indicators that we may not have fully registered just yet. That means i think they will ultimately be nudged into providing more accommodation either in december or the first quarter. Amber you mentioned that economic slowdown. Whens out right shrinkage it comes to business spending for a Second Quarter in a row. How will the fed interpret that . Will they say that is why we took the insurance cut, or that perhaps suggest that more needs to be done . The concern and certainly, Business Investment has been stalling out, having to do with animal spirits in the economy. When you see that kind of weakness in animal spirits, the fed should be looking to add more jews to the punch bowl, so to speak. Not the only reason that they are adding accommodation but certainly a major factor. Often, what happens is, when businesses pullback on capital spending, they pull back on hiring shortly thereafter, if conditions remain weak. That is a real risk as we look to payrolls on friday, and also when job creation will look like in q4. Haveber of fed officials indicated they are paying close attention to whats happening with consumers. If consumers start to falter, the economy is in trouble. Shery any news on the Balance Sheet . Carl probably some discussion of that in the press conference. I dont expect to see it in the formal communicate. They are trying to use a bazooka to eliminate wholesale in the lending market through the turn of the year. Shery carl riccadonna, thank you for joining us for the latest on what to expect from the feds Rate Decision. That is coming up at the top of the hour. We are seeing a bit of a mixed actor in the meantime, with the s p 500 under pressure. The dow up performing a little bit. Index being boosted by johnson johnson. The 10year yield falling for a second consecutive session, Holding Around 1. 8 . The fed decision is next. This is bloomberg. This is the fed decides on bloomberg television. Im scarlet fu along here with tom keene. We are waiting the seventh decision, the fomc expected to cut its Interest Rate for a Third Straight meeting. After the announcement at the top of the hour, jay powell will host his News Conference. Investors will be scrutinizing his every word, listening for a read on how policymakers will move next. I think the phrase of the week is hawkish i think the phrase of the week is hawkish cut. Tom hawkish cut. Or dovish types we will see how we try for the composition. For the composition. Straightening out my bow tie. You know where the markets have been, the s p of the record high. The dollar has been there it we are rather blended index. We will talk to Jeffrey Rosenberg about this. One indication of bondmarke market dynamicst. On the treasury built to the benchmark 10year spread. It is one of the spreads Jeffrey Rosenberg looks at. Scarlet joining us from los angeles is the guggenheim cio and cofounder. For the with us in new york is jeff rosenberg. Does a hawkish cut look like, and how does jay powell communicate it . I dont think he wants to be too hawkish. Theyre looking for a bounce message balance message. They want to get out of this meeting without much volatility either way. They are going to talk about moving to data dependence. They want to get out of the easing cycle because it has been a very divisive subject for the fomc, and clearly as you approach an Election Year that is heating up, to lasting the fed wants to be is in the center of are they cutting, are they not cutting. They want to get out and move to the sidelines without disrupting Financial Markets with the scarlet does the hawkish cut move to a dovish cut if stocks are falling during the News Conference . Its interesting to him i dont know that the chairman will have the market data to look at. But we know a lot of times in the q a part of the discussion that the chairman had the ability to sort of amended the policy statement in a way that could send the message of we did this in december and we have autopilot on the Balance Sheet. We always have to leave the door open to the chairman reinterprets some of the statements for us in a way that might not be anticipated. , itink that in the guidance is going to be very important that he gives a nod to the hawkish members of the fomc. At the same time, make it clear that the fed will be willing to cut rates again if the market scarlet we will check in with Michael Mckee in washington. Michael the fed cuts rates a quarterpoint as expected, and drops the phrase as appropriate to sustain the expansion. The committee will contingent wanted to the implications of incoming information for the Economic Outlook as it assesses the appropriate half of the federal funds grateful to suggest that the fed is ready to cause the easing cycle as long as there is no significant deterioration in the economy between now and the december meeting. That is about the only change to the statement. The Economic Assessment is almost word for word, other than to know that