We are down 0. 3 on the s p. Back down to 1. 90 on the 10 year. We got up past 1. 95 a little earlier. Disney one of the Better Stories today after earnings, up 4 . Gap up on the ceo leaving gap down on the ceo leaving more than 7 . Guy the president has just been indicating that he hasnt agreed to tariff rollbacks with china. This was always the risk with this rally. Absolutely it was built on a single man risk. If the president didnt agree, you were going to get this kind of reaction. The market is down by 0. 4 . In some ways, this reaction is relatively muted considering this is a key demand from china, that we do see some degree of tariff rollback. The fact that we are only down 0. 3 on what is a relatively big piece of news i think is worth paying attention to. The market may be signaling it Still Believes that a deal can get done, but we have rolled over this news. The president saying he hasnt agreed to tariff rollbacks with china. In terms of the way we are seeing that rippling through into the european markets, the stoxx 600 is down by 0. 4 , the which hass it been down versus the dollar, is barely budging. We are seeing a bid come back into the bond market. Italy has had a very bad week for btps. We have been trading down, yields three basis points higher today. Up by 20 basis points over the week. Even the peripheral markets like the italian bond market. Saide one more thing he is that he plans to sign any china trade deal in the United States. We know this is a particularly fiery demand when it comes to china. China may not want to come to the United States to sign anything here. There had been an effort to look for some neutral territory, and that wasnt going very well either. Aremore on all of this, we joined by paul chryst for, Wells Fargo Investment Institute head of Global Market strategy by , wells fargoher Investment Institute head of Global Market strategy. What do you do on any headline . Paul you wants to stay close to your longtime allocation target. There has been some good news on manufacturing. It looks like the headwinds are abating. Just dont see a catalyst yet. Yesterday the markets seemed to believe that youve got some deescalation going in tariffs, if wet could be that could get it, but the president indicating today that there is no deal. Waituld really have to for that target to come back. Stick close to the longterm targets, and dont get overextended and risk. Vonnie you said there were some signs of easing to the manufacturing headwinds. Where do you see those . Even today, we got the Inventory Data down. Paul i think of the Inventory Data as a positive. Inventories in the u. S. Have been too high this year, and d stocking has very much been in order. We are probably in closer to a bottom, from which you could begin to increase production to more reasonable levels. I think that data, plus the soft data you see in manufacturing surveys, are indicating a bottoming process going on, but not a turn higher yet. I think this market has gotten a little ahead of itself in that respect. Point, paul, can we talk a little bit about how the market is reacting here . My sense is that the market is reacting more positively on positive trait news then it is negatively on negative trade news. What do i read into that . Paul we have definitely seen what you would call a nonescalation. That is already there, and that is what the markets are prone to respond positively, more positively than negatively. What we were hoping for as of yesterday when the chinese spokesman said that the u. S. Had agreed to rollback some tariffs, we were hoping for deescalation. Today the president flatly rejects that intention, that speculation, so the markets are going to react negatively to that. Still, to your point, youve got the nonescalation piece on the table. We still have to see with the phase i deal looks like, but it does look like the summer 15th tariffs are not going to be unlimited. It does look like october 15 will go on hold. You will not see a rollback of the tariffs already in place. The market now may be makes that smaller adjustment. Guy do we need to see deescalation for particularly the industrial data to get better . Paul yes, i think we do. If we had the december tariffs coming on, that would be further escalation, and manufacturing would get worse. If you remove those tariffs that havent been applied yet, then you get manufacturing a chance to bottom. As long as those existing tariffs are in place, four rounds of u. S. Tariffs, about 400 billion worth of chinese imports, that is going to continue to be a weight on the u. S. Economy and manufacturing. Vonnie we are asking about the bond move this week, paul. We obviously had a big move yesterday and overnight, and we have given back some of those gains now. I am curious if yields will stabilize come up can will stabilize, particularly when it comes to the bond market. Paul we have seen some move higher, especially this week, and a lot of that has been optimism that we would begin to see reflation trade. By reflation, i mean reflation or additional activity in the economies around the world. I dont mean inflation. Just more activity. That is going to help risk markets get a better grip, which would tend to move money out of bonds, and that is why youre seeing this move higher in yields. Vonnie does the reflation trade sustain . What would we need to see . An improving economy, more inflation . Paul youre just not going to get the kind of Inflation Numbers that would generate lower bond prices. Theres so much debt in the world right now, and activity is pretty limited. Consumers are ok, but manufacturing is very badly hobbled. That is going to keep inflation low. What you really need for reflation to be sustainable is some very strong stimulus coming from china, where the government takes on a lot of new debt, so somebody is stepping up to do a lot of spending, or you really need the tariffs to be rolled back to some degree, or at least begin to be rolled back for manufacturing to finally see some easing in that headwind. Unfortunately, we dont see either of those two prospects. Ok. We believe there we will leave it there. Vonnie Paul Christopher stays with us for a few more moments as we watch the market drop now, recapping those breaking headlines from the top of the hour. President trump says u. S. Has not agreed to a tariff rollback with china, and plans to sign any china trade deal in the United States. Those Key Headlines because, of course, there had been efforts to sign a trade deal elsewhere, and it looks like we were moving towards one. We will bring you these coming from the president and a few moments. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is Bloomberg Markets. Some bragging news on vaping stocks. President trump also making some comments, saying he will raise the age limits for vaping, and will release the vaping off soon in order to enforce age limits. Just checking now, one of the vaping stocks had been affected by that. We will get to that any moment. Lets get to markets with abigail doolittle. Abigail we are looking at a mild risk off tone. As you see behind me, Global Markets taking a tick lower. The s p 500 down about zero point 2 after President Trump did say that the u. S. Has not agreed to a tariff rollback. You can see that the ftse 100 in the u. K. Down about 0. 6 . Emerging markets on the outside of the risk continuum selling off just a little more. We have a little bit of a risk off tone, even though, and it is confirmed by the fact that we have bonds rallying earlier. Bonds had been pulling back. But on the week, we do have solid gains for stocks around the world. As we take a look at both the s p 500 and the nasdaq here in the u. S. , this is a weekly view. What we are looking at, weekly gains for the s p 500. Five up weeks in a row, the longest streak since march. For the nasdaq, a six week winning streak, the longest streak since may. Investors overall in a bullish stretch even though there is a small pullback on the day. This is an around the world risk on rally. This is an intraday look. On an intraday basis it is a bit risk off, but we have gains for dax, haventhe gold and yen trading lower on the week. Finally, one of the big marquee names on the day, disney. Take a look at this fiveday view. On the week, up 4. 4 . It is its best day in about seven months after they put out a solid quarter, but of course, all eyes forward on disney , their streaming Service Launching this coming tuesday. Investors very excited about it. The spike in shares higher for disney certainly reelecting the good quarter and a good feeling around disney . Guy absolutely. Check out the front page, the front cover of Bloomberg Businessweek this week with a look. We are back with Paul Christopher, Wells Fargo Investment Institute head of Global Market strategy. We need to recap what is going on here in terms of the situation surrounding the trump comments in the Market Reaction we are getting. Alex, are you surprised that the market hasnt reacted more to these comments . Alex no, i think the market is trying to take everything one step at a time here. Ultimately, i think the sentiment is weighing more towards optimism that a deal might eventually get done, or you could see these this ymer 15th tariffs that are supposed to go into effect be delayed a little bit ash these december 15 tariffs that are supposed to go into effect be delayed a little bit these december 15 tariffs that are supposed to go into effect be delayed a little bit. Guy we havent heard from him on this subject. The chinese have been making all the running. Paul, are you surprised at the volatility in the equity market and in the bond market, remaining subdued as it is . Paul not really. The Economic News has been positive. Think about the report last week, manufacturing looking like it is putting in a bottoming. Then you add to that the nonescalation of a phase one deal, and youve really got the beginning of hope that this could be the turn, the end of another midcycle slow down, and possibly another pickup in growth after this. Vonnie of course, we did have a little bit of cold water thrown on things by Peter Navarro overnight. Things might be whipping back the other way. Alex, yesterday was the biggest day of all. A lot of volume as well. A lot of headlines. There was supply coming into market and so on. What happens next week . We have a day free for bond market traders on monday, and then we are back. Alex theres also a huge corporate deal coming on tuesday , 28 billion coming into pay for m a with allegan. Theyve been talking to investors the past couple of days, and that is looking to be the biggest deal of the year. That should put some pressure on the treasuries on tuesday. You,e paul, let me ask where can an investor hide right now . Paul we think the best place to be is technology. Growth is still positive. There are risks out there, especially trade risks, but as long as growth remains positive, you still want to be oriented towards those sectors. We like information technology, consumer discretionary, and financial. We would stay away from cyclical sectors that dont have good cash and earnings potential, and cash to debt ratios. Those would include materials, for instance. You want to stay with cyclicals, where you can play growth, but do so in a quality way. Guy paul, lets stick with the trade theme and figure out what happens next. This week, european markets have been huge out performers on the equity side. The german dax in particular a real standout. If we get a trade deal, the market indicating that it Still Believes it is coming, do you continue to buy europe . Do we see flows moving out of the United States into european equities . Paul yes, but having said that, i wouldnt be a buyer right now. Why . Because if we really do get a phase one deal that is more than just a truce, that is to say, a phase one deal that really starts to rollback tariffs, you will have time to get into markets that have been pretty depressed for the last several years. Valuations are still very attractive. Given the Political Uncertainty and our expectation that phase one is not going to be a rollback of tariffs, but really just picking the low hanging fruit and call it a truce while they wait to deal with the harder issues in the coming year, we think you are better off waiting right now on europe. Guy alex, just a quick question on the fed and its relationship to the bond market. At the end of this week, is the bond market more or less convinced that the fed is on hold . Alex they are more convinced. Fed funds futures are not fully pricing in any sort of cut for the foreseeable future. So i think, again, and the fed will probably tell you this, they are in wait and see. They will wait and see how the data goes and react accordingly. But the market is definitely convinced the fed is on hold. No chance of a rate hike right now because youve got to see how things play out, and no chance of a cut in the foreseeable future. Vonnie we did hear from bostick and evans this week. Did we get any further insight into how the fomc is thinking . Alex not really. Everyone is telling that line that they are going to be patient, they are going to look at the data. Brent is still an issue. Trade is still an issue. The president hasnt been as hawkish or punitive when it comes to trade, so the rhetoric has been dialed back a bit, but these are still issues out there, and they can still turn very quickly. I think the fed is cautious and aware of that, and i think in the short run, thinking about liquidity and the repo market, how they are going to manage year end because that is coming up on us quickly. Vonnie and of course, next week is the deadline for the president to decide on euro tariffs. Europe has been saying there arent going to be any on the part of the u. S. Anyway. Guy absolutely. Our thanks to Paul Christopher, Wells Fargo Investment Institute head of Global Market strategy, and alex harris, bloomberg market and rates reporter. Thest want to highlight news on this case running in europe for three years. It is italian related. Were just getting the headlines crossing now. We might get a bit more analysis later on. Vonnie still ahead, the s p is up 23 this year, but that hasnt meant strong flows into equity etfs. Weekly etfwhy in our discussion. Thats next. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is Bloomberg Markets. Time now for our weekly etf friday segment. The s p is up 23 this year, but you wouldnt know it if you took a look at the flows into the etfs. Here to tell us why flows have been pretty lackluster, tom psarofagis. This is an unloved rally. Nobody is on board. Cash is sitting on the sidelines. We are incrementally plotting our way up. Athanasios the market was down 4 last year. This year you have not even half of that, 93 billion or so, on a 23 rally on the s p. It talks about how this sentiment has been all year. Its just been very defensive, no one really buying into it. In isney that is coming very defensive, but theres not that much money coming in, frankly. Vonnie is there any performance chasing going on . Could we see this chasing . Athanasios i think we can, and i think where you could potentially see some money come back into equities in the last quarter is going to be some performance chasing. I mention some of the money going into low vol. Because the market has been rallying so much, low vol is starting to underperform by a significant margin. We are seeing that money come out a bit. That could potentially be put into more risk on stuff. You mentioned in the segment before some flows coming into europe. You are starting to see some interesting technical breakouts in european etfs. Youve seen some bullish moves, flows starting to perk up in the european etfs and other international ones. If money does come back into equities, it will come through europe some of the other international etfs. Guy speaking of yearend, what kind of a factor is that in all this . Athanasios typically the Fourth Quarter is the biggest on average, 35 to 40 of all flows for the u. S. Guy why is that . Athanasios some of it is end rebalancing, some tax loss reversing. This year, you have a really big up market. You probably will not get as much of that in the Fourth Quarter. But typically because of positioning at year end, the First Quarter tends to be a big quarter for your end etf flows. Guy thank you. Tom psarofagis joining us from bloomberg intelligence. The market continues to go higher. Vonnie it is time for your latest Bloomberg Business flash. Hbo, and a coalition of cable industry titans are going to crackdown on password sharing. It is a loophole that could be costing them billions of dollars. They are considering a number of measures. Number of further considering cuts to subsidized electric vehicle purchases. Bloomberg has learned that regulators have been discussing the proposal, but holding off on electric car sales data the next few months. It could deal another blow to a once emerging industry facing an unprecedented slump. Foreign investors think Saudi Crown Prince Mohammed Bin Salman still has too high a valuation on aramco. He is believed to have cut his expectations from 2 trillion to 1. 7 trillion dollars, but Money Managers such as alliancebernstein still think it is too high. The firm says lowering the valuation would be a sign of strength on aramcos part. That is your latest Bloomberg Business flash. Guy still ahead, the latest movements in washington ahead of public impeachment hearings, which kick off next week. Looking forward to exactly how that is going to go. We get some analysis in advance of that. Lets take a quick look at where the markets are. Equity markets in europe went down on President Trumps comments relating to tariffs. They pretty much retraced all of those losses. We are well off our session lows, still lower today. The cac 40 by 0. 2 , the dax down by 0. 4 , the ftse in london with 0. 6 . We are an hour away from the end of the trading session in europe. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is Bloomberg Markets. The impeachment inquiry taking a new turn. Staff mickf of staff mulvaney defying a subpoena this morning for public hearings next week. Lets bring in Bloomberg Government congressional reporter Emily Wilkins from washington. We werent really expecting but mulvey need to appear, but hes another in a long list of people who havent appeared. What do democrats do now . What does this allow them to say . Emily for democrats, this is just another example of what they will categorize as obstruction by the white house. Numberseen them say to a of times, from the very beginning, that they are going to take any sort of noncooperation by the white house as a sign of obstruction. Guy we are going to get into public hearings next week. Do we think the administration is going to respond in a kind of asymmetric way in terms of how it approaches other policy . Some people in the markets are worried about a government shutdown. How will this impact other policy . Emily you do have a lot of lawmakers right now currently working on the impeachment inquiry, but you have a number who arent. They are not sitting on the committees, and that is not what they are working on right now. You do have a group of lawmakers that is working to make sure the government can be funded beyond november 21, the current deadline. That is when funding right now runs out. It looks like at this point they are debating whether or not to extend government funding either into december or to potential he do it all the way into next year, february or march, to give the impeachment a cory time to wrap up, for the house to vote, and for them to ticket over to the Senate Impeachment inquiry to wrap up, for the house to vote, and for them to kick it over to the senate. Vonnie when everything starts becoming public next week, will they start to be officially worried . Emily we will have to see what is set at these hearings, and how the American People respond to them. From the start, the white house and many republicans have been very confident and very firm in their messaging that the president did nothing wrong. I think at this point, they are looking towards the American People to see what they are taking away from these public hearings. Guy inasmuch as the president s lawyers cannot be involved at this stage, is this a good indication of how the final stages are going to progress once we get into the last bit, as we approach the final vote . Im wondering how the process is going to work and where the surprises come. Isly right now the process with the intelligence committee. They will have the public hearings next week. From there, they kick this over to the judiciary committee. They are going to be the ones to decide whether or not they are going to write the articles of impeachment, and if so, what those are going to look like. Thats the point where the white house is going to be able to become a bit more involved in the process. Everyone in d. C. Is learning very quickly exactly how this process is going to work and going to go forward. We are just sort of waiting for things to play out with the public hearings, and then to see what happens with the house judiciary committee. Vonnie Emily Wilkins, congressional reporter for us, thank you. Lets take you to the white house, where moments ago, President Trump spoke to reporters. Pres. Trump im not concerned about anything. The testimony has all been fine. For the most part, ive never even heard of these people. I dont even know who they are. You have some never trumpers. It seems that nobody has any firsthand knowledge. There is no firsthand knowledge. All that matters is one thing, the transcript, and the transcript is perfect. Mark levine last night on television, a great constitutional lawyer, broke it down. He said what trump said, and he was respectful, he said President Trump, what President Trump said was perfect on the transcript. What he said on that telephone call with the president of ukraine was perfect. He said nothing else matters. What he said was perfect. He analyzed every line, every paragraph. It was not complex. It was perfect. Nothing else matters. That being said, everyone of those people canceled themselves out. What they do is they go all over washington. Lets find the 10 people that hate President Trump the most, and lets put them up there. In some cases, they really turned out to be very much in no casesair, but ive been hurt. In no cases i feel have i been hurt. [indiscernible] what do you say to people who dont believe you . Pres. Trump they shouldnt be having public hearings. This is a hoax. This is just like the russian witchhunt. This is just a continuation. When you look at the logger for the was a blower, i thought it ended when the the lawyer for the was a blower, i thought it ended when they found out he was a bad guy. This is just a continuation of the hoax. It is a disgraceful thing. In the meantime, weve got the best markets weve ever had. The stock market. We have the best unemployment number weve ever had. We have the best employment numbers weve ever had. We have almost 160 Million People who have never been even close to that. But unfortunately, you people dont want to talk about that. Mewith china, can you tell whether a tariff rollback is in talks for phase one . Pres. Trump they would like to have a robot. I havent agreed to anything. Not a complete rollback because they know i wont do it. But we are getting along very well with china. They want to make a deal. Frankly, they want to make a deal a lot more than i do. I am very happy right now. We are taking in billions of dollars. China would like to make it much more than i would. Will you endorse Jeff Sessions . Pres. Trump i havent gotten involved. I saw he said very nice things about me last night, but we will have to see. Have you ever given him [indiscernible] i dont even think about it. What would you say to the millions of people who just dont believe you . Your transcript shows that you did something wrong. What you tell them . Pres. Trump its a very simple thing. I had a very good call with the president of ukraine. I assume thats what you are talking about. The call was perfect. After, i have a second call that nobody knew about, and i guess they want that call to be produced also. Youve heard that, john. So i have a second call. I had a second call with the president , which actually i believe came before this one, and now they all want that one, and if they want it, i will give it to them. I havent seen it recently, but i will give it to them. But i had a call before this one with the president of ukraine. I understand theyd like it, and i would have no problem giving it to them. I have no problem. Bidens, did you ask bill barr or anyone injured a part of justice to investigate the bidens anyone in your department of justice to investigate the bidens . If not, why did you ask ukraine to do something you would not even ask euro Justice Department . Pres. Trump we are looking into corruption. We are giving hundreds of millions of dollars and we are looking for corruption. All you have to do is take a look at biden and you will see tremendous corruption because what he did his quid pro quo times 10. And let me just say be quiet. Quiet. Quiet. Quiet. Did you ask the doj . Ready . Rump are you i never spoke to them about anything. Bill barr can do whatever he wants to do. I saw the same tape on television, and the tape shows that joe biden is a crook. Hes 100 crooked. And the fake news, which is you and you, you dont want to do anything about it. His son walked out with millions of dollars from ukraine. Millions of dollars from china. He doesnt know anything. He walked away with a stash. Its a corrupt deal. Its a corrupt enterprise. There, the president speaking at the white house, traveling to georgia for a couple of events later today. You heard what he was saying about ukraine, about the public hearings, which he said they shouldnt be having, referring to the democrats. This is a hoax. This is just a continuation of the pressure hoax. It is a disgraceful thing. He did take the opportunity to mention that markets are high. He downplayed the idea that there was progress on tariffs with china, the rollback of tariffs we had been anticipating might happen in order for a phase one of the deal to be signed somewhere. He actually told reporters that he hasnt agreed to rollback some tariffs, and that he wanted to sign any phase one in the United States. That actually caused markets to take a little leg lower. , but lower0. 3 nonetheless on a little bit of disappointment there. Also Something Else coming out of those remarks, that President Trump was going to raise the age for vaping, bringing out a bill on that, or legislation on that very soon. There was a little bit for markets to rep their heads around took wrap their heads around here. Guy the focus guy the focus very much on what is happening with the public hearings and the impeachment story. Just a couple of comments from the president on what is happening with the trade narrative. Hes also indicated, as you said earlier, that he doesnt want to sign it anywhere else than the United States. I find it fascinating that the market went down a little bit and pretty much came back up. There certainly seems to be a sense at the moment that a deal is still in the offing. The fact that the president is talking about a location for it being signed probably gives some credence to that. Anyway, markets, as you say, down a touch. It does seem as though we have a little bit of asymmetry here. The markets go up more when it comes to a positive piece of news, and down a little bit with a negative piece of news. Have we priced in a deal one . I dont know, but a phase one deal still seems to be in the cards. We will come back to this. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is Bloomberg Markets. Blackstones Real Estate Group is one of the biggest and best performing franchises at the nearly 600 billion terms of asset manager. I think it is the biggest landlord in the world now. It is now run by two people, ken kaplan and kathleen mccarthy. Bloomberg sat down with kathleen. To figure out what is happening in the economy and peoples preferences, and how we put that any real context, in addition to what weve been doing on the back of ecommerce, ucs investing in innovation cities, both in terms of office, as well as rental housing. These are the place is more than their fair share of population and job growth. Seattle, for example. Seattle, vancouver, los angeles, san francisco. In europe, place like stockholm or berlin. Beyond housing and office, we also look at global travel. We think there is a real push for people to spend more on experiences rather than just things, and that has given us more conviction to invest in highquality hospitality assets, particularly in coastal markets. It makes sense he would be chasing these Knowledge Centers or innovation cities, may these experienced based opportunities you described. What about the stuff being thrown out with the bathwater while that takes place . Are some of the secondary and tertiary cities, for example, in the United States getting cheap enough that it becomes of interest to blackstone early on valuation . Some of those cities are really interesting places for more yield oriented investing. Places where you still see good fundamentals, but maybe not the rate of value appreciation in the biggest gateway cities. Those are the kinds of places we look to find yield oriented thesis. Believed that Interest Rates were going to go up with the accelerating economy. The economy accelerated, but Interest Rates went down. If you had known that ahead of time, what would you have done differently . I think the performance of our portfolio today says we probably wouldnt do much differently. You just got lucky. [laughter] i dont know if it is luck. I think they relate to one another. We try to invest in themes we thought would grow faster because we felt i, in a higher rate environment, we need to rising growth and Interest Rates, but it turns out the thesis is good for an environment we are in today, where there is good pressure on growth. We are in the Asset Classes we think are really going to outperform. So the same stuff, logistics, experiences. High consistency. I think 2020 be high consistency. Blackstones big on the importance of scale. Is sort of seems selfevident, but particularly in real estate, how is scale a differentiating factor . I think in real estate, just like any industry, information is really powerful. The scale we have has allowed us to access much more information than people who may be operate in a single sector or marketplace. We feel like we can really see a lot more information to tell us what the next investment should be or how to drive value most effectively and what we own. Is what we are doing working or not . Our scale has been really powerful in terms of access to information. It is also powerful from a competitive standpoint. In a Real Estate Market where assets feel fairly fully valued in a lot of places, where we can compete for the largest and in the most complicated situations means there is less competition, so as a result, we can differentiate ourselves not only on price come about things like speed and certainty of execution. That sets up Better Outcomes for our investors. Such a thing as a real estate deal that is too big for blackstone . I would like to think no. We approach every day like everything is possible. We look at transactions really more about what can we drive in terms of performance. I think the quality of the transaction is not measured or limited by size. So the sky is the limit. Potentially, yes. Mccarthy,een blackstones global cohead of real estate, speaking exclusively with bloombergs erik schatzker. Vonnie time for our stock of the hour. Disney is up almost 4 . Shares popping higher, on pace for the best day since june, on a solid corley report. Joining us a solid quarterly report. Joining us for more is abigail doolittle. Abigail of course, disney is a big deal, too. Addressing the quarter, they beat adjusted earnings by 12 . Relative to sales, the beat wasnt huge, but the Revenue Breakdown very positive in terms of the contributions from studio entertainment and media networks. Plus, sales grew by about 34 . That is expected to continue for a couple of quarters. Now intingly, next year, their fiscal 2020, it is expected to drop off because this year, strength is coming from the avengers, star wars, frozen 2. That will be an issue going forward, but right now, investors put positive on that. Operating margins could also be an issue. If we go into the bloomberg and take a look at what is happening here, we are going back decades on their operating margins. For a Media Company with very solid operating margins, just a few years ago they had an operating margin in the high 20s. This last quarter, the operating margin is 12 , so not quite as much, but not surprising lay, that comes for the spending for disney . Guy is this about beating significantly lowered expectations . I appreciate that this is a beat and everyone is pretty excited about it, but nevertheless, you take a look at where the market was 12 months ago, and the market was certainly expecting a lot more. The fox assets have not delivered in the way everybody was expecting. This is a nice beat, but is it really that great . Abigail thats a great question. It could be a lobar quarter. But nonetheless, a beat is a beat, especially for a company that struggled out of the last eight quarters. The stock has responded in a bullish manner only six times. Traders and investors taking what they can get. There was also relatively solid. I think the other thing going on here, vonnie was talking about whether it was earnings were disney , a lot of analysts are saying they are looking past this, and it is all about disney , which launches next tuesday. Bob iger is so focused on this, he gets up on saturdays and sundays to watch their shows to make sure they are up to par. Vonnie oh, that is so hard. I have to get up to watch some disney shows. Abigail still, it could be 20 million subscribers, i with verizon doing very well. Disney is doing quite well right here. Vonnie i guess it is not just passively watching. Well,interesting as streamers are taking revenue collection upward significantly with the news that netflix and various others will be cracking down on password sharing. Abigail doolittle with our stock of the hour. I do want to point out that Bloomberg Businessweek this week has disney as our cover story, so get your hands on a copy. Guy dont mess with the mouse. Dont mess with bob. It is time for a Bloomberg Business flash. We just been discussing one of them. Morgan stanley could be facing a 28 million fine. A market regulator has accused it of manipulating european bond markets. The Bank Allegedly was trying to avoid big losses on Government Bond trades. Morgan stanley denies the allegations. The parent of cartier signals that a bid for tiffanys is unlikely. Richemont posted weaker than expected earnings and a slowdown in quarterly revenue. The company says it is accurately defining acquisition targets. Lvmh has offered 14. 5 billion for tiffany. Honda has cut its forecast on sluggish global demand. Hondas quarterly operating profit beat estimates, and it announced a 915 million share buyback. That is your Bloomberg Business flash. Vonnie still ahead, bond markets on the move. Investors trying to price in President Trumps latest comments on trade. The take from the cme, next. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. Is is Bloomberg Markets lets go to chicago now. Its time for futures in focus. Paul, the president was speaking a few minutes ago about china. He said they would like to have rollbacks. They havent agreed to anything yet. Equities briefly dipped, and then bounced back. Why the kind of benign reaction to the president s comments on the fact he hasnt agreed to this trade deal that weve been getting excited about all week . Paul well, stop me if youve heard this one before, we had a trade deal eminent, and then something changes. This is probably the eighth or ninth time weve been down this road, and i think the markets are kind of getting tired at this point. They are pretty fully valued here. Unless we hear a complete breakdown, i dont think youre going to see stocks go sniffing lay higher or lower unless both walk away from the deal go significantly higher or lower unless both walk away from the deal. They are still talking on relatively good terms, so not a lot of reaction. Guy but we have seen this week is a fairly big bond market selloff. Are you backing up the truck, or do you think theres more to come . Paul i think it is more of a correction. We saw a huge move down and yields. The fed has stepped away. The ecb is in the background. The bank of england kept rates unchanged. I think what we are seeing is a little bit of a correction in the bond market. We are not ready to step in and say we go significantly lower, but i dont think we are going significantly higher either. A little bit of a backup here, but not enough to really start backing up the truck on yet. Guy paul, have a great weekend. Thanks for stalking by for stopping by. Vonnie coming up on the unicredit groups chief economist eric nielsen joins us. We are counting down to the european close. He will be joining us in a couple of moments. Lets take a quick look at where we stand. The s p is down two points, the dow down 47 points, and the nasdaq is up 0. 1 . Some earnings movers today, as well as trade headlines moving markets. This is bloomberg. Vonnie guy trump isnt on board yet. The president says hes yet to agree to roll back tariffs. Stocks drop, but not that much. Is rm because valuation work the 1. 7 trillion the crown prince is looking for . Greece and italy are hit hard again today. Is this a rational repricing or something more . Live from london, im guy johnson, with vonnie quinn in new york. We are counting you down to the european close here on Bloomberg Markets. Vonnie we have the s p 500 grinding backup towards flat. We are off our highs for the week, but there are a few hours to go in the friday session, so we will see what emanates from the market section. 10 year yield back down to 1. 90 , reversing some of the selling during the week. A couple of these stocks on the move today include disney, as you might expect after earnings yesterday, up 3. 7 . Investors waiting
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