And bogota. We begin in hong kong. Police fired tear gas in the after Central District the shooting of a protester increased tension. Chief executive carrie lam warned of violence leading to a point of no return, and to restore calm. Still anyf there is Wishful Thinking that by escalating violence, the Hong Kong Government will yield to pressure to satisfy the socalled political demands, violence is not going to give us any solution to the problems hong kong is facing. Alix 20 me on the phone from hong kong is joining the on the phone from hong kong is caringly is karen leigh. Walk us through what happened over the last when he four hours. We heard carrie lam warning that violence isnt going to help their goals, signaling that she will not bow to demands after five months. Of the most violent days weve seen one of the most violent days since protests started. There were clashes between protesters and police, a protester shot by a live round. That triggered a day of violence with these violent images we havent really seen so far. We saw a man set on fire, although the details about who he is and how that happened remained a bit unclear. We saw clouds of tear gas hovering over the Central Business district. Business people and tourists fleeing at lunchtime. Really taking on a new dimension. Business is sending people home midday. Theres a real theory since hovering over the city theres a real eerie sense hovering over the city. Alix thank you so much for your great reporting. Now i want to turn to what could be the biggest ipo ever. Saudi aramco unveiled some key risks in its 658 page perspective. They range from terrorism to government interference, Climate Change to global currency exchange. Global financeur reporter. What were some of the standouts to you . Reporter i think what we learned from this perspective is the ipo is going to start on december 17, but curiously on november 17, but curiously missing is what stakes are going to be up for grabs for investors. They will be looking at some of the risk factors highlighted by aramco. Key is Climate Change and how that will affect investor sentiment. Obviously, saudi arabias position within opec means that production is dictated by the government, so it doesnt have much ability to pull those levers itself. Theres also risks around just a around those able to file suit against sovereign entities which are linked to governments they accuse of sponsoring terrorism. This is obviously a risk for aramco. As it mentioned as well, there is this peak oil concern as well. Aramco is alluding to the fact that we could see Peak Oil Demand coming as soon as in the next 15 to 20 years, not necessarily a bad thing for aramco. Aramco sees its position as one of the low cost producers, may be able to grab market share in that scenario, but a concern for investors looking at investing in aramco. Alix great insight. Thank you so much. Staying on aramco, it was all of the talk at one of the biggest annual Energy Events in the middle east. The ceo onpoke to the idea. Everybody knows saudi aramco. I think that is a good story. Is an additional partner in the market. I think they are progressing very well. Not just in technology, but we know them very well. I think that leads to a very successful story. Alix join me from abu dhabis cranny. Anny is manus walk us through whats happening on theund area ground. [indiscernible] but what this comes down to is whether you believe that they have the capacity to really scale up this business. Hes got the cost advantages, but there is a credibility issue from the analysts. As for wall street, they are suffering a massive credibility gap. Ive got people saying to me its not worth more than 1. 5 trillion, and on the other side of the offer, people on the 2. 6 trillion dollars. The issue is this is a company which is the most profitable in the world. Return on capital employed in this country is up in the double digits. The question is, what will the appetite be to take on those additional well, to quote unknowns andwn unknown knowns. Baker hughes ceo did walk past me. He said youve got the gig in rome, not me. Disappointed this morning. Alix [laughter] all right. He is in florence. Now we want to head to spain, where there is a political deadlock yet again. Srime minister Pedro Sanchez plan looks to have backfired. Maria tadeo joins us with more from madrid. It was a gamble to begin with, but what are we left with . Maria that is the question today in madrid. This was supposed to be the election that would end the deadlock, the fourth in four yea rs, but it is probably only made it worst. The socialists won the election come about lost seats, and have no past to a majority. There is speculation the country could be headed to a grand coalition with the traditional rival, but if you listen to the words of the party leaders, they say they want to continue to stay in the opposition. Overall, when you look at the state of spanish politics today, it is a mess. You are seeing a lot of political fragmentation, nationalist forces entering the congress, and a very frustrated country. Alix thank you very much. Bolivia,we end in where south americas longestserving president avoid the violence after election irregularities led to weeks of clashes and eventual intervention from the armed forces. Morales claims he was the victim of a two. Joining us on the phone of a coup. Joining us on the phone is bloombergs latin american editor. What happened . Reporter as you said, morales quit yesterday. This came after early yesterday monitoring of the election said that the vote had been marked by serious irregularities. Morales originally agreed to hold a new vote, until the armed forces made him quit. Theres been violent clashes that continued last night. Saidlas said morales hed been the victim of a coup. He was an ally of cuba and the venezuelan government of nicolas maduro. Some other governments have said this, including mexico. It is unclear what comes next thebolivia best because Political Violence has been serious in recent weeks. There have been clashes between morales supporters and the opposition. They just want to bring peace in the short term. , thank youew bristow very much. One other story i am checking out this morning, alibabas singles day promotion setting a record, and there are still a few hours before it ends. Chinas Biggest Company broke through last years mark of 37 billion about 2 3 of the way through the day. It has really become an indicator the Chinese Consumer health and one day of shopping within china, basically worldwide, beats black friday, thanksgiving, all the way through cyber monday in the u. S. We are still about 31 billion. That number could ratchet up by the end of the day. Coming up, much more of you morning trade analysis on the markets in todays first take. This is bloomberg. Happy monday. Alix time for the bloomberg first take. We are to give you the news. You get betrayed and analysis of the markets. Joining us is Vincent Cignarella , voice of the bloomberg audio squawk, Damian Sassower our, Bloomberg Intelligence chief emergingmarket credits registered, and michael mckee, bloomberg chief policy correspondent. Do you buy into value . Do you buy into cyclicals . Do you buy into europe . Vincent you buy into the dollar, actually. We keep talking about how em should be bid, how latin america should be bid, and everyone who sells the dollar ins up with a bloody nose. You were talking about what is going on in bolivia, and spain, and hong kong. All of this consternation around the planet, and despite trump, we need to get into u. S. Assets, at least for now, until we settle on where things are Going Forward. Damian except for one, the china you on the china yuan. Its the only one that has appreciated against the dollar. Last nights data was way lower than you wouldve expected, even for the seasonal downturn, but if you just take last weeks you probably see more cuts in the triple prime rate through the end of the year. They are doing anything they can to stimulate their economy, but andyuan through seven 26. 90, i dont see it, either. Vincent nothing they do for Monetary Policy has ever worked. Nothing stimulates the economy. Michael it is a ground up economy, from the provinces up. Cutting the lending rate with the shadow Banking System in the way they finance things through lamb sales doesnt help all that much through land sales doesnt help all that much. But theyve tried to clamp down somewhat on debt accumulation, debt accumulation, so they are not stipulating the way they have in the past. China seems to be getting through all this, but the question is whether it creates a growth scare for the markets. They start worrying about china, and then worrying about other markets, and then we start to cut rates again. Damian if you just look at some of the ip data which just came india, we kind of expected this. To see the shift from growth to value, you need to see manufacturing bottom, and we are not seeing that globally. Alix on friday, we thought the whole world vincent on friday, vincent on friday, we thought the whole worldwide recession thing was over. [laughter] cant reallyy you do anything. Trump is speaking tomorrow. I dont think hes going to sit in front of the Economic Club and say the world is going to hell and a handbasket. Hes going to say once again china wants to make a deal. I expect it to be a little more upbeat than over the weekend. He may close with we dont have to do the deal if we dont want to, talk about it both ways. Thehow, navarro came out of closet. We hadnt heard from him in a while. When you dont hear from navarro, you feel good about the economy and trade. When he comes out, you feel the opposite. I was kind of wondering why he was even allowed to speak, to be perfectly honest. Things were going so fine, and that he comes out and pours water on everything. We will see whether or not trump can turn around tomorrow in his speech, and powell on wednesday. Michael not just powell, but wednesday is also the european car tariff day. To see how the president addresses that. Alix juncker is a fully informed man. He says there are no tariffs. Michael thats going to be an interesting question to see. We also get cpi on wednesday, so big day. U. S. Consumer prices, the president tomorrow probably giving us a hint where he goes with the car tariffs, as well as china, and then the Federal Reserve chairman. Theres 10 or 12 fed people speaking this week, and nobody is going to care about any of them after powells Opening Statement because he will probably say we are on hold. Alix a headline breaking here on brexit. Nigel farage says he wont contest 317 tory seats in the u. K. Election, which basically means the brexit party is not going to fight the tories. The cable rate is up by 0. 8 . We talk about the political whipsaw and it comes to brexit, but the idea is, what is and what is not priced in . When you have a head like a headline like this, and you have upside to cable . Vincent i think what is priced in a little too aggressively is a soft brexit, that the conservative party will win, will negotiate an exit with europe. What is not priced in is what takes place next. Theres a year before they physically leave the union, and theres a lot of issues that need to be a debated, a lot of trade that needs to be negotiated. That is going to weigh on the u. S. Economy on the u. K. Economy. That is not priced in. It is likely to be a bank of eglin rate cut if the economy slows down. This is all negative for sterling, so all of the negative i am seeing all of the upside i am seeing here, i would fade this. I think we see cable much in lower. Michael we will see cable up and down as we head towards the elections. This was never a political party. It was a oneman movement with an idea behind it. They didnt ever have a full slate of candidates coming to the ballot. It is really a question of does labour and the liberal democrats decide to hold their nose and splitogether, or do they and leave the conservatives with a narrow majority . The latest from the betting halls is that the conservatives win a narrow majority. We can talk about this as we get closer, but if you look at the polls for brexit, the polls were generally accurate. It was the bettors who were wrong, the interpretation of the betting that was wrong. It will be interesting to see how markets react to headlines about what they are doing. Alix it does take a second referendum off the table, but also brings us to how cable is an emerging market currency, basically, because it is hard to get a good read on it. What you do with emerging markets when you have all of this with the action, and looking at a dollar bull to my left . Damian the fact of the matter is, the stimulus, we have get to see evidence it has taken it out of a funk. You cant even look at the cpi because it is all pork prices. For me it is about the total social financing data. They cannot seem to stimulate their economy. If you look through the end of this week, weve got mexico, egypt, more Central Bank Stimulus coming, and this whole england, spain, bolivia, hong kong. Its not going to be like last year. Theres not election overhang in places like argentina and others, so that might be a relatively good thing for currency volatility. Vincent the one place it is not going to go away is brazil. Damian and developed market europe. Michael also in brazil this week, there are Countries Holding a summit. The idea is that bolsonaro is going to try to convince the russians and chinese to stop supporting maduro in venezuela, which would be a major developed if that were to happen, and have impacts on stability throughout latin america. That is something to keep an eye on. Alix will that actually happen . Michael it is hard to know at this point. What is the benefit to the russians and the chinese . If bolsonaro is somewhat synthetic to them and makes friends, maybe he can make the kind of progress that donald hasnt been able to make. Vincent that is a good point. It is beneficial for russia and china to see the maduro regime venezuela become a capitalist market they can take advantage of because it is wide open. Alix this is what we do on first take. We take you all the way, and end up in brazil, china. [laughter] alix thank you very much. Any charts we use throughout the next two hours, if you go to gtv on the terminal, you can browse them, check them out, and save them. Gtv. This is bloomberg. Reporter this is bloomberg daybreak. Its a milestone for tesla. Elon musks company has unveiled its first cars built in china. The first model three sedans came in blue and had the tesla name in chinese characters. They were built in the new factory in shanghai, starting price about 50,000. Chinas government is confident brazil will choose huawei to build its five tmobile network. Its 5g mobile network. Bolsonaro and xi jinping meet again this week in brasilia. The u. S. Has warned countries against relying on huawei for its 5g networks, saying it would make it easier for beijing to spy. Bloomberg has learned that xerox is willing to give hp four weeks for the companies to examine each others books. The cash and stock offer was worth 27 billion dollars before news broke on the potential deal. That is your Bloomberg Business flash. Alix thanks so much. Heres another story that caught my eye. A starling figure from the Federal Reserve about the wealth divide in america. The richest 1 of people in the u. S. Now hold almost as much wealth as the middle and upper classes combined, and this really shows, the white line if the sheriff wealth held by that 1 white line of the share of wealth held by that 1 , keeps going up. The others keep going down. They addressed this on 60 minutes yesterday. I think the wealthy are getting wealthier too much in many ways, so middleclass incomes have been flat for 15 years or so, and that is not particularly good in america. Alix in theory, he said he and his rich buddies what to do some thing about it. According to the latest irs data, you have to make at least 500,000 a year to be part of that 1 . Coming up on the program, the defensive strategy unwinding as investors rush to catch up with the equity rally. We talked to Christopher Zook, caz investments cio next. In the market, the bond markets are closed for today. The bond market in europe a little bit calm. Equity futures off by 0. 4 . Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Alix this is bloomberg daybreak. Happy monday, everybody. Friday,d at a record on record for tech, record for industrials. Now we are coming off of that. European equities down by about 0. 3 . In other asset classes, im watching what is happening with the bond market in europe. The bond market is closed in the u. S. Spanish elections, but where you show peripheral risk tends to be in italy. The selloff continues there, yields off by about five basis points. As equities roll overcome a part of that could be a supply issue. Oman says they do not see deeper cuts in the next opec meeting. Investors should keep buying cyclical stocks because the latest rally is just the start of the defensive unwind, according to jp morgan strategists. The larger rotation i real Money Managers will likely happen only after the phase one trade deal is signed. The rotation should continue during the seasonal q1 value and small caps inflows. Joining the from houston is Christopher Zook, caz investments cio. Do you agree cio. Do you agree . Christopher good morning. Value is very cheap relative to growth, so we have seen some flows coming. That could continue for many different reasons, trade being one of them, so i would agree with the statement. Alix how much of that to give you is going to be real buying versus chasing performance to the end of the year . Credit suisse says hedge funds have to cover their shorts. They havent even gone long. Christopher i think you could see a little bit of the chasing whats moving kind of trade. I think theres been a lot of short covering. People are not willing to take a stand because this is very strong. We are hitting new highs in spite of bad news after bad news, but earnings were pretty good. It looks like we are going to get a trade deal done. So i think you could see that. Im not sure that value is where they chase performance. I think that could be in the higher beta names. Alix so what is the trade to make here . Where do you chase . Where you want to sell . Christopher its a wonderful question, and its something where i think momentum is going to carry forward, so things are acting well today. You believe the market is going to rally in the year end. Ive would go with what has the momentum right now. That is most likely what is going to be the case, and from a selling perspective, i would say anything that has gotten more sensitivity to potentially a slowdown in the economy could actually be more negatively impacted here, particularly if the trade deal continues to waffle back and forth. I think it is a momentum trade to the yearend. Alix we have apple closing at a record friday, tech and industrials closing at a record friday, is that where you want to be . Christopher probably, its going to be more in tech and higher beta names. Industrial names are much cheaper, but you also have to make the statement and the opinion that youre going to see Federal Reserve accommodation and you are going to see this economy not slip into a slowdown or recession. You dont have that as much with apple as you do with a deep Industrial Company that is going to be much more gdp sensitive. Alix you also mentioned the other part of your thesis is where you may have some risk as we waffle back and forth on trade. That indicates to me that small caps would be a no go, so it is hard to have conviction on any rally if small caps are not going to be able to sustain and keep up. Christopher i think small caps are very dangerous here. I think they are very expensive. If you look at where the sensitivity is to gdp, if the Federal Reserve is cutting rates because they are concerned about the slowing economy, that is going to affect small caps much more in the short run then basically anything else. I think thats why youve seen small caps leg up to this point, and they think small caps lag up to this point, and i think they continue to lag. Alix at what point do we Start Talking about reflation, breakevens moving higher, premiums moving higher . When does that shift for you . Theres no magic number, but i will tell you it is hard for me to believe we are going to see this all of a sudden spurt in the economy, with the election coming up next year, the uncertainty of trade, the definitive slowdown in the economy, and basically, Profit Margins at alltime highs without room for expansion. So i dont see this massive growth rate that is going to cause rates to spike from here. I think it is more likely we see rates soften as we get into the uncertainty around the 2020 election. Alix do you want to be buying the selloff in treasuries . Christopher i just dont like treasuries at all here because i dont like getting yield at this level. I think theres better places in credit to participate, particularly in the private markets, and in some of the more specialty players. Plainvanilla treasuries is not some thing we are very fond of right now. Alix where do you like . Where are you willing to take on the risk, and where do you want to go for safety . Christopher we think theres this massive dislocation that has occurred in liquidity. Theres so little liquidity in the marketplace outside of treasuries. When you look through the way the banks are not involved that much anymore, not doing what they used to do, what we are seeing is this massive amount of index fund related fixed income. What we see is opportunities for investors, traders who really understand when a bond trades from 97 and 92 just because the money flows, that is where we what to invest with specialty managers who can take advantage of dislocations when they occur because they are going to be much more prevalent because so much money has to be a buyer or it has to be a seller, all at the exact time, for no reason other than money flows. Alix that is a great point. Last question before we get to oil. If we wrap up in terms of oil, in terms of em, does that mean you dont want to buy . Christopher i like e. M. I see a big valuation advantage in emerging markets compared to developed markets. I do like emerging markets, but i want to make sure that everybody understands, you dont have to chase it. You can be patient. I think youre going to get better entry points. If you are inclined to do so, sell puts, and by those at cheaper prices. Alix Christopher Zook of caz investments, stay with me. We want to get an update on what is making headlines outside the business world. Sebastian salek is here with first word news. Thestian we see one of most violent days in hong kong since protests began in june. Fighting between police and demonstrators left downtown paralyzed. Police shot and wounded one protester. Another man who disagreed with protesters was set on fire, currently in critical condition. The former u. S. Ambassador to un you in says to the says john kelly and Rex Tillerson tried to undermine president trump. Nikki haley says the two resist the president , trying to save the country. Oil demand may peak in the next 20 years, according to the forer to the perspective saudi aramcos ipo. Edi isle, the ceo of optimistic taylor is optimistic. Everybody knows saudi aramco. They know the technology. I think that is a good story. As an additional partner in the market, i think they are progressing very well. Really advanced in terms of not soechnology, but also we know them very well. I think it is going to be a very successful story. Sebastian aramco is preparing for a share sale early next month. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im sebastian salek. This is bloomberg. Alix thank you so much. Still with me, Christopher Zook of caz investments. What are your thoughts on saudi aramcos ipo . Christopher it has an amazing market position in the oil markets, so i think it is a situation where it is a great landmark investment for somebody who wants to be invested in energy. Theres a lot of very unique negatives for saudi aramco. Theres a lot of unique positives for them. When you balance that out, its going to be a pretty good way to invest in energy as an overall asset class. Alix if you were invested in energy, when you went to sell other majors to buy saudi aramco, or would it become part of your Energy Portfolio . Christopher i think it becomes part of your poorly a, but you could see your portfolio, but you could see some repositions. This is a massive company. You could write a 100 billion check if you want to into this company and get that large a position. They have unique advantages over some of the other majors in that they dont have to compete for acreage in the way that others necessarily have to do, particularly in the middle east. So low cost producer, great market position, wellrun management team, but it is so large you will not see a lot of growth. But it is a great cash flow machine. Alix in some ways, you may have more dividend security than you would otherwise. They have more debt they can take on. But with that comes more government difference, with the way opec and saudi aramco goes. How do you look at that is a risk compared to the likes of exxon and chevron . Christopher those risks are very concerning because they are things you cannot predict, cannot control. I think you are going to find a lot of investors who are willing to take those risks for the certainty that is going to be given. That said, theres a lot of devil in the details in that we dont have any idea of the valuation. We dont know how much its going to be sold. We dont know what the payout ratio is going to be. There are so many things we still have to learn, but all in all, it is a Great Company with great position in the markets. Alix so we think energy is deep value at this point. What position would you want to take at this point in the overall sector . Christopher we love energy at the right time. Today it is kind of either way. I wont say it is going up from this level, but we are not really cheap and not really expensive. Longterm, we think theres good cash flows to be given, but at the same time, theres no real telling entry point in the public markets. We prefer some of the things happening in the private markets, where theres a lot better discounts and valuations. Still not bad, and we still like it longterm. Like whatsls happening is the Energy Sector is getting a very big discount because of the risks to peak oil oilClimate Change, and Climate Change, etc. Do you subscribe to the view that you need to have a discount on these equities because of that, or is the market getting a little ahead of itself . Christopher i think the market is a little ahead of themselves. We are a long way from peak oil. Theres a lot of stuff to happen between now and then. What i can tell you is that investors are to mandate for the first time in a long time actual returns on capital, absolute returns on equity as opposed to just spend for growth. We need to see these companies show some discipline and generate some real returns for shareholders, which theyve not done during the shale revolution. That is something that is going to change, and i think the market has discounted that, but i think theyve overshot a little on the downside. Alix could to catch up with you. Thanks for getting up early with us, Christopher Zook of caz investments. Coming up, the apple cards alleged gender bias. How a tweet opened up an investigation into Goldman Sachs credit card practices. Just on tv. Interact with charts and , check if you missed anything. Just go to tv under terminal. This is bloomberg. Sebastian you are watching bloomberg daybreak. Iran claims to have made a major oil discovery. They found an oil field in southern iran that contains the equivalent of 53 billion barrels. They are struggling to overcome the impact of u. S. Actions on its oil industry. The highest price ever for a wristwatch in auction. It sold for 31 million at a charity sale in geneva. The previous record was 17. 8 million for a rolex by actor paul newman. And hsbc is staying the course. We spoke to the banks chief operating officer. We are the community bank, and we are super committed to hong kong. To help thef Things Community in the meantime, but we cant control the political situation. Sebastian he says he lived in hong kong and would love to see the situation get back to normal. Im sebastian salek. Thats your Bloomberg Business flash. Alix thanks so much. We turn now to wall street beat. First up, goldman probed on viral tweets. A series of posts about apple cards alleged gender discrimination leads to investigation into Goldman Sachs. The ceo of Investment Banking is leaving the executive board, adding two months of turmoil. Plus, dont mind a few bombs thrown my way. Thats what jamie said thats what jamie dimon said after being targeted by senator elizabeth warren. Joining me is bloombergs cinelli vasek bloombergs sonali basak. What did you make of this . Sonali it was a really fantastic story written by my colleague. What happened is we had the creator say he was getting 20 times as much of a credit limit as his wife was getting despite comparable credit metrics. Then it really blew up when Steve Wozniak got involved. Remember, steve was a cofounder of apple itself, saying he was getting 10 times as much as his wife. So this is about goldman, but just as much about apple. Both of the osborne hours said apple should have been taking more responsibility for this. The worry here is, and this is from hansen, no one wants to live under the capricious rule of an algorithm. Alix thats why we should regulate algos, because clearly they have things wrong with him. They said this was one of the most successful credit card launches ever, and this is one of the ways they are planning to diversify to consumer. Something that is a big deal for goldman, rotors reported this morning goldman, reuters reported this morning that they have this target anyone leak, but they need to be bringing in revenue. They said they will be diversifying targets a bit and look at efficiency and profit ability. Goldman. Ove, how are you going to be investing while also showing investors you can rake in the amount of profit that will compete with the jp morgans of the world . Alix lets get to the secondstory, which is Credit Suisse, replace and their Investment Banking head. I see the headline, like ok, wall street reshuffling. Sonali but this is a big deal. Credit suisse is not normally the big issue here. Deutsche bank has a lot of shakeups. Ubs has had a lot of shakeups. Something interesting people forget about Credit Suisse is they are one of the top 10. They are one of the top 10 in m a. They are one of the top 10 in Leveraged Finance pretty consistently. That said, 2 3 quarters this year were not great. This is looking like a pretty defensive move. It is the third major executive to step down from a major position this year. The head of wealth steps down, the coo stepped down. Whos arriving . David miller. David miller was the global head of credit. Hes been a Leveraged Finance executive, one of the big growth areas for Credit Suisse, and they compete to net with everybody else they compete and with everybody else they with ever buddy else. Do see some people going from rival to rival, but also see a number of people going to hedge funds, which are building a Bigger Capital market debt. However, even though spots are quite limited, so youre not seeing these executives go there. Alix for now. Lets get to jamie dimon talking on 62 minutes. On 60 minutes. Heres what he had to say. Anything that vilifies people, i just dont like. I thing most people are good, not alls. We shouldnt vilify people who work hard to accomplish things. She said the system is working great for the wealthy and wellconnected, and jamie dimon doesnt want that to change. Im not going to comment on anyone in particular. But shes commenting on you. Youve become a target, whether you want to respond to it or not. Your her target, and you are cortezsa ocasio target. I understand i will be a target in this day and age, but the idea that i am not a patriot, that is dead wrong. My view, lets all work together. I dont mind if a few bombs are thrown my way by anybody. Your tough. Im not that tough, but i know how to get through it. Sonali i thought it was a surprise that jamie said he wasnt that tough. Its a really timely discussion of jamie dimon, who did bring in the secondmost pay hes ever brought in at the end of last year after a record year. Jp morgan is only getting bigger by the day. Theyve had a lot of room to grow under this administration. It is a timely discussion. It is a year of record pay. It is a complicated discussion. Remember, jp morgan banks the consumer, but they also have a big Wealth Management division. Obviously they do have a reason to protect the wealthy. Alix but talking and action is going to be different. We see a lot of ceos banding together at Business Roundtables, saying, we need to care about more than just our shareholders. We need to care about our workers, the community at we impact. But then you actually have to do that. I feel like some of the conversation has been changing to, weve really got to fix this. This is actually bad. Sonali thats the real problem. Jamie dimon was head of the Business Roundtable when they made that proposal, and said things need to change. Even in the interview, he did say income inequality is a problem. But what are the tangible ways to fix that . What type of taxation makes sense and doesnt . Where should fingers really be pointed, if not to you . Alix or should be the responsible the of ceos or the uber wealthy to say we are not going to say we are going to change this if the government cant . Sonali she did ask him if he would cut his own pay. He said it is up to the board. Alix is he still the chairman . Sonali i think he is still the chairman of the board. [laughter] alix sonali basak, thank you so much for joining. In todays women of all streets, we are going to feature women moving and shaping the world of finance, but today we look at tmentan sachs commit twoputting women in higher minute at Goldman Sachs commitment to putting women in higher management positions. The big challenge we are overcoming is getting more women through the system into important jobs, and giving them the skills and keep abilities and the roles and taking risks with them like we would with men to let them flourish in their careers. I think getting the system to appreciate that is the direction of travel is a challenge, but we are making good progress. Alix that i before, john waldron was honored at lincoln center, and wanted only to fema performers only female for programmers only female performers. I heard it was amazing. Joining me now is Vincent Cignarella, voice of bloombergs audio squawk. You are looking at a half looking at aha. Vincent someone pointed this out to me this morning, the onemonth forward hong kong dollar leading to its highest since basically the asian crisis. We often talk about, how do you trade political and socioeconomic issues . Normally, most people would say you cant. But in this way, it looks like traders are basically taking a hedge in dollars against hong kong. Its moved across the curve, but the onemonth was striking. You can see the line, we havent in 1998. E these issues we talked in the earlier segment, where are people going . I think this is an exclamation point on the dollar being a haven until all of these issues calm down. Brexit, latin america, what is going on in hong kong as well. Alix what is the best way to trade that . Vincent i think you probably stay long dollaryen. People are saying the trade issues, yen is a haven. Yen is a haven something because the bond market is one of the largest in the world, and people move freely, investing, get in and get out. I think the trade issues go to summer at work go to simmer at worst, may become off the table. We will see about tomorrow. If the trade issues go away, or become somewhat resolved, even just a handshake will do, we could see 1. 125. Alix and you breach that 200 Day Moving Average for dollaryen. How quickly could traders take that . Vincent it depends. If we get a real positive outcome from trade, either tomorrow with what the president says, or in the next week, people are going to want to get on the straight very fast. Alix especially when we have 100 days or something until the end of the year. Vincent in the year before the election as well. Alix Vincent Cignarella, thank you so much. On the terminal. He will talk to you all day. Coming up, saira malik, nuveen head of global equity, will be joining us. In the markets, heres where we are set up. We obviously wind up having a shortened day here. Treasury markets are closed. How seriously can you take the equity action . S p futures are down by about 0. 4 . Tech, industrials closed at a record high friday. In other asset classes, if you look at the barometer of safety, take a look at what is happening with thebund with the bunds, nothing. Spanish elections really leading the country nowhere. Sitting justn below its 200 Day Moving Average. Crude rolling over, along with global equities. It is monday. You woke up. Congratulations, you made it. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome to bloomberg daybreak on this monday, november 11, veterans day. Im alix steel. Lets take it right from the top. Not goingiolence is to give us any solutions to the problems hong kong is facing. Alix hong kongs chief executive vowing not to cave in following violent unrest. Weve seen one of the most violent days during these protests. Alix police and demonstrators battle, leaving downtown paralyzed. [indiscernible] alix another record breaker for alibabas singles day. Investors see these blowout numbers as an important indicator of alibaba is a company, as well as the health of Consumer Sentiment in the country. Alix the shopping promotion roque last years sales mark of 30 billion about promotion broke last years sales mark of about 30 billion 2 3 through the day. Nigel farage says he will not contest seats of the conservative party, but will try to keep labour from winning seats in parliament. Aramcos ipo getting a strong endorsement from the head of eni. They are preparing for ashares sale early next month. Got tech,kets, youve industrials. Now we are just taking a break. Yields going nowhere because they are closed in the u. S. Europe, not going anywhere either. Is s clearly you are talking about going. Reporter out today, news that the European Union is stopping the clock on its investigation. I have to wonder what impact the 737 max is having here. Are we having a rethink of how consolidated the Aerospace Market is . Alix arent airlines pushing back on the 737 again now . Brooke American Airlines and southwest say they dont see this coming back into their schedule until early march, almost a year since that plane was grounded. Alix wasnt it supposed to be q3 . Brooke we were originally talking about a couple of months, and it just keeps getting pushed back. They can wondering if get those planes back before the pilots are recertified. They are running out of parking space at their current facilities. They have to start looking for other options. Alix where can you house a plane . Brooke do you have space at your house . Alix i dont have any space in my twobedroom. The question is, do investors keep buying cyclical names, value stocks, or do we see defensive unwind continue . A j. P. Morgan strategist writes, the first leg of the rotation limited. The larger rotation will likely only happen after the phase one trade deal is signed. Rotation should continue during the q1 value and smallcap inflows. Joining us for her take, cyber take, saira her malik, nuveen head of global equity. Buyby value do you value . Saira we think you buy value for a while longer. Things look better. Earnings were better than expected in the third quarter. The economy is stabilizing. Some progress on tariffs. All of that should lead to this value leadership continuing, but going into 2020, we still see low to mid single digit earnings growth. We just dont think earnings in this economy will be where you need to be for value to work more than a few quarters. By the i was struck emerson ceo talking about a challenging environment for the next 12 to 18 months. Do you agree with that . Do you think the president ial election and all of these uncertainties keep things tough for that long . Saira it will keep things volatile for sure. We dont think the market has priced in different results for the election. We think the economy is stabilizing, but a lot of growth from here is uncertain. Mid Single Digits growth rates will not be enough to boost us in that lower for longer environment weve seen. Alix does that mean you want to quarters,als for two and in that is it . Saira kind of a reversion of the mean trade. There is upside for value from here. You do want to make sure you participate in that. There will probably be selloffs in other areas on the value trade. After you start to see everywhere normalize, you want to look for quality growth consensus stocks not as dependent on the economy. Brooke what area for defensive one area in particular for defensives is aerospace. Alix we are going to talk a lot about planes. [laughter] finances, machinery. Really getting going. I wonder how much longevity there is for this aerospace cycle. Long. Been so good for so you see a lot of money flow into these stocks, and i you start to see some cracks. Saira i think theres still some legs to it. Its always been an attractive area. Theres some cyclicality, some defensiveness to it. We are generally positive on it. Other areas we like that are pretty beaten down in the value space, you look at more retail Oriented Companies going into the Holiday Season. Companies like walmart and lowes are pretty interesting from here. Alix what about energy . One of the calls from j. P. Morgans they like the deep value energy names. Saira as a sector, we dont love energy right now. First, demand has been pretty weak because of the tariff issues. Supply, why lets been declining , still, with opec uncertainties, we are not confident that supply and demand get to the right balance. We are bigger fans of energy more like secondhalf 2020. Alix because of a growth pickup . Saira mostly because of weaker demand. We just dont think energy will be there we dont think demand will be there for energy for the next year. Enoughust not a good balance for probably another 12 months. Brooke to circle back to retail the you like about those . Saira we like those companies, their strategy on retail is really good for them. Walmart has already done a lot of spending their. We think youre going to see the fruits of that spending coming through with stronger sales growth, better margins. We like walmarts grocery business, about half its sales, which gives used ability. Lowes is a little further behind. The ceo from home depot, we think youll take that playbook and emblem at that at lows, which will be positive and implement that at lowes, which will be a positive. Alix jp morgan small caps. On the terminal jp morgan likes small caps. On the terminal, you can see the growth for smallcap, midcap, large caps. Obviously, small caps rolling over. What do you think . Saira first of all, the largecap quality weve been interested in for a long time is somewhere that we still think is very attractive. We think some of these largecap cyclicals, as tariffs move out of the way, largecap multinationals will be some of the ones that could outperform really well. Small caps, and more of a risk on environment we are seeing, small caps should start to perform better. With think they are reasonably attractive. They tend to be more to mystically focused, so more domestically focused. Brooke once you see tariffs get out of the way, how does the growth play out . Alix also, to your point, what does tariffs going away mean . Literally they are all rolled back . Brooke is it some of them . Alix is it just december or september . Saira the market primitively starts to hope we see easing with our tariffs. They dont ever get out of the way totally because this is going to be an ongoing issue, even through this regime and may be Going Forward as we continue the discussions with china. We would like to see more easing, less pressure, but it is going to be an underlying theme. We feel like the market is still bouncing back from being overly pessimistic, but it looks like it will bounce back to a normal level and maybe not to what people might hope, a really high growth, very bullish environment. Alix which raises the question, what do you do with europe and em . , they wereg opinion writing just that. You cant necessarily justify the move into em and europe with the shortterm indicators. What do you think . Saira cyclicals are working. It is positive for europe in some ways. We are seeing some stabilization of data in places like germany. Brexit has been moving a bit forward in fits and starts. It could be a positive for europe that is somewhat more attractive in its global cyclical recovery. Emerging markets has always been pocket. You can look at places like brazil when you have a nice reform story. We like areas like brazil. Showing some signs may be of bottoming. That is positive. You have to be very selective in emerging markets. Brooke so much of it is idiosyncratic risks in different spots. What do you thing about india . Saira and we generally like. Another underlying strong story. We are more looking for those countries that have their own levers to pull, so less impacted by macro. India tends to be more internally focused. Historically, india within em has been the defensive play, somewhere you can hide a bit if emerging markets are tough. Alix does any of this mean you have to have a weaker dollar . Saira i think thats very helpful. Emerging markets tend to be stronger alix if you are a largecap, sixmonth out call . Saira i think thats always been a tailwind. Think u. S. Economic growth is still going to be overall stronger than the rest of the world, which will be good for u. S. Companies. Brooke is most of that still carried by the consumer, or do you start to be a bottoming out . Could we see it more from the industrial side . Saira we still think consumer is that leg of the stool that basically carries the cycle Going Forward. All of that is very positive for a healthy consumer. Dont need industrial to pick up for the cycle to play out as we see it. Capex pickup, i think you would get that cycle that would make this upturn much more sustainable than we expect it to be. Alix basically, she doesnt think our sectors are going to be good. [laughter] alix not as excited about planes and oil. Saira malik of nuveen will be sticking with us. Coming up, markets focused on jay powells testimony on capitol hill wednesday. This is bloomberg. The consumers been solid. The revenues have been solid. Profits have been pretty stable. For many, more than what they expected at the beginning of this year. What theyve told me is that they are expecting that to continue on into 2020. Alix that was atlanta fed president Rafael Bostic giving his read on the state of the companies in his district. It is going to be a busy week of sped figures. Eric rosengren speaking today in oslo, and Federal Reserve chair jay powell testifying on capitol hill. Joining us for the breakdown, michael mckee, Bloomberg International economics and policy correspondent. Saira malik of nuveen still with brooke and i as well. What was your longterm take away from that conversation . Michael the fed is on hold into 2020, and that is going to be enough to keep the economy growing at about where it is. Everything else depends on donald trump and whether he continues the trade war. If that continues or escalates, things could deteriorate in the fed would have to rethink. Aced on what they know now, they dont need to do anything else. They think they stimulated the economy. If the consumer keeps spending, we will stay where we are. Brooke i know the china ppi numbers today were pretty weak. Theres concern about whether that filters into the u. S. And europe and depresses inflation here. Is that something we should watch for the fed . Michael its not just inflation. Its also a sign that the economy there is weak, which then brings back that whole global recession story that we all thought had gone away. That is something to keep an eye on, whether or not the chinese react immediately by cutting rates or doing Something Else to try to stimulate the economy, get the markets attention. Donald trumps speech tomorrow on trade policies is going to be very important. The beginning of jay powells testimony on wednesday will probably wrap it all up, but he sees from china, what he sees from the administration, and whether he thinks the fed is going to have to act. Once we hear his Opening Statement, we have a pretty good idea. Having at we were also conversation about, mr. Bostic was saying companies in his district were still having labor problems and having to pay up. How does that compare to unit labor costs . Weve been near peak margins for years. Is that starting to worry you . Saira with think it actually is. Labor costs have been greater than expected. That is our yellow flag with the labor market, which remains very strong. If this continues, we could see more of an inflationary picture, which is interesting because i dont thing a lot of people are talking about inflation right now. You could see inflation start to overheat, and you get to an Interest Rate increase type of environment. Brooke do you agree with the fed policy for reassessing the not accelerating the not accelerating unemployment . Do you think that is a good way to increase wage gains for that portion of the population . Saira we are trying to make sure we dont end up in a period of constantly declining rates, inflation that never picks up. A disinflationary environment would not be good for the economy, so some kind of period with reasonable inflation where it does not overheat would be a good philosophy. Michael the question you have to ask is how low is too low. The fed is talking about going to a range instead of a 2 target. We seem to be doing just fine where inflation is right now as long as we dont go lower, and that is where they are right now. As long as we have seen with the general curve, the curve in general, as long as that is happening, the fed will feel that they are ok. They dont need to do anything else to try to boost growth. They want to have that margin in case there is a recession. Right now, it is a question of, is 1. 7 good enough . They seem to think it is. Brooke talk about the bets on the breakeven rate, its been a favorite for wall street lately. Can you talk about that a little and why that is so attractive . Michael well, you dont want inflation too low. Theres no reward if inflation is too low and breakevens fall. But at the breakevens continue to fall lower, that lowers the socalled neutral rate at which inflation starts to rise, so the fed has Interest Rates lower and has no room to fight recession. What hasnt happened that everyone expected is an acceleration in wages. Weve seen them go up, but not at a faster pace. That is what the fed would like to see. They are settling now for the idea that more people get jobs, and the more people that have a paycheck, the more retail sales can continue to rise. It is all kind of this is good enough, maybe because we are late cycle, maybe because there is so much uncertainty about trade wars. Its good enough that we are seeing wages around 3 . We cant do a whole lot more. I would expect that to be jay powells message wednesday. Alix i feel like i am jumping the gun a bit, but when you look at the jump we seen in term premium, rise and breakevens, some guilds now positive in europe, at what point do you feel that is a negative for the markets . Saira usually you dont see it as a negative in the u. S. Until the 10 year is above 3. 5 . Alix we are not there. [laughter] saira you did see yields cross 3 not too long ago. It is not some thing we are worried about now, but it can happen pretty quickly. It kind of depends where we go from here. We dont see it happening. We think we will be lower for longer. But it is something to keep an eye on with wage numbers looking stronger than we thought. , what is the point rhetoric of when you have real rates actually increasing too much . When it does start to hurt. When you go to resize for refis for to mortgages at a lower level. Michael does the cost of borrowing affect anybodys decisions . It did, because we saw a rates intoin the market go gyration, and it was a slow fourth quarter. Whether that was due to Interest Rates or Something Else, we dont know, but it helps put weight on the scale that the fed cant raise rates too much at this point. Brooke is there a risk that keeping Interest Rates lower for longer starts to inspire risky behavior . Think about the walgreens buyout, the biggest lbo ever. Saira it can. You can see people not spending money wisely, taking on too much debt. It is not something we are seeing right now. There arent any huge bubbles where concerned about for the short and mediumterm, but that can become an issue. Even rates going up. We are not worried about rates going up because the economy is strong. Again, this 3. 5 level, if we get there again. Rates are lower, we we find. Alix thank you for joining us. Saira malik will be sticking with us. Coming up, more on uncertainty. How do you view that as an investor . This is bloomberg. Sebastian this is bloomberg daybreak. Alibaba has set another record for its singles day promotion, and there are still a few hours before it ends. Chinas Biggest Company broke through last years mark about 2 3 of the way through the day. It has become an indicator of Chinese Consumer health. Hpox is trying to win over for that takeover offer, giving four weeks to examine each others books. The cash and stock offer was worth about 37 billion before news broke of the potential deal. The violence in hong kong has rattled the business community, but hsbc is staying the course. We talked to the banks chief operating officer. We are the community bank, and we are super committed to hong kong. Weve done a lot of things to try and help the community in the meantime. We cant control the political situation. That is beyond us. Sebastian he says he lives in hong kong and would love to see the situation go back to normal. Im sebastian salek. That is your Bloomberg Business flash. Alix thank you. Still with Brooke Sutherland and saira malik of nuveen. How do you look at hong kong, election drama and the rise of nationalists in spain come u in spain . Saira from a market point of view, it is usually avoiding that area in terms of investing because it is very on per double very unpredictable. We usually wait until some of this is out of the way, and step in once the clouds have cleared up. In the past, these things used to become Global Market equity problems. They stay more localized, and the rest of the world operates on its own fundamentals. Brooke with Something Like hong kong, where it is not really showing signs of going away, how do you play a market like that . If that something you write off for years . Saira i think you would write it off until you have clarity on where it is going to go. At some point it can kinda become the new normal for some of these areas, Something Like brexit, where you find value in the u. K. While this is going on. You just have to be careful that if youre going to own companies in these regions, they would not be as impacted by the consumer or something that would be more impacted by what is going on. Alix how do industrial ceos look at some thing like this . Brooke Something Like hong kong is not necessarily going to hit the industrials. They are probably concerned about what is happening in china, making sure demand holds up, but hong kong is a little isolated for the Industrial Companies in particular. It is much more of a Financial Center that you are not concerned about the impact on factories. Alix coming up,tis the season for shopping. Retail sales this Holiday Season are excited to grow. Now weve got to talk about black friday. Steve sadove will join us, former saks ceo. Tech and industrials posing at a record on friday, giving back some of those gains. Bond market in the u. S. Close, but still seeing some movement in spain and italy, seeing some risk off there. This is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines. Mix in lines of unlimited, and switch it up at anytime. All with millions of secure wifi hotspots. And the best lte everywhere else. Its a different kind of Wireless Network designed to save you money. Switch and save up to four hundred dollars a year on your wireless bill. And save even more when you bring your own phone and upgraded your network. Thats simple, easy, awesome. Click, call or visit a store today. Alix this is bloomberg daybreak. I am alix steel. Happy monday, everybody. Happy veterans day. 4 l seeing equities off and the bond market is closing. You can see what action we are seeing in europe. Italian yields rise. Some selloff there. And in spain, that election the nationalist gained some steam. Still quiet in the market. We want to highlight retail because we are kicking off the Holiday Season. We have to take a look at u. S. Retail sales. We are expected to see a solid performance to 2019. Holiday sales are expected to grow 3. 1 this year. Jonah yes is a man with deep knowledge of the retail sector, steve say dov. Saira malik is still with us as well. 3. 1 . Where will it be spent . Stephen i think it will be spent in stores, online, and it will be a healthy Holiday Season. 3 is a healthy consumer but not as long not as strong as it was a year ago. Last Holiday Season we were closer to 5 . A healthy but slowing consumer. Alix to what extent are tariffs playing a role . Think we havet seen that much of a dampening role yet. Next year we would start to see more of an impact. The impact on the consumer goods, the apparel, the footwear, the electronics wouldve been happening now or the beginning of next year. You have inventory flow that would tell you it would probably not of had the consumer part yet. One of the things i think is interesting is the question of two different americas. Do you think that plays out at christmas time . Will it be a great christmas for some consumers and less for others . We think overall it will be a strong Holiday Season, may be better than expected. Retailers that win will be the ones with the right strategies in place. Even with the brickandmortar ones, the ones with the right omni strategies in place will be the ones with the right retailers. Therell be a success with retailers. Overall, all levels of consumer will participate. It may depend which type of retailer they are stopping at. I think she is right. This will be the story of winners and losers. The winners with the ones that have the scale, the ability to use the analytics. You are seeing bifurcation in the marketplace. It is not a geographic winning and losing. It is also categories. You asked what categories are doing well. You will probably see Slower Growth in the apparel world. Very good growth last Holiday Season and apparel. Apparel will be more or less flat. Jewelry is holding up reasonably well. You will see a decent jewelry market. Luxury has been slowing. You see a slower performance. It is declining a little bit. Department stores have had a tough run. Expect to see that continuing to decline. Brooke why is jewelry doing so well . Are more people getting engaged . What is happening . Steve jewelry and accessories are way to express yourself. Jewelry has held up well. Brooke you should tell that to my husband. Alix tiffanys a different story. If you are still running sax, how would you set up this Holiday Season . What with the best strategy be . Steve Inventory Management is so critical for all of these retailers. You had an example and nordstrom this past spring so tight on inventory there were missing a lot of sales. The problem is you buy too much inventory and you will be sitting on a lot of markdowns. This is a balancing. You want to keep it a little low on inventory because the risk profile is so high. My guess is that coming into the Holiday Season, the retailers are wellbalanced on inventory. I do not think that is a major problem for the sector coming in and the 3 to 4 type of growth we are talking about. The consumer is healthy. Retailers will hold up pretty well. What you are finding is a shorter Holiday Season. Remember there are six less days this year than there were last year. Online becoming increasingly important. 15 to 20 over the last year two on the internet business. That is not slowing. You have a forecast of another 16 growth. Gravitating to this by anywhere anytime they want to be getting the product. My guess is inventory is not an issue but you do have to be company specific. Alix i want to update you. Kkr is said to make a formal approach to walgreens on a record buyout and walgreens stop is up 7 in premarket because of that. Brooke, we were talking about this last week. How would you even do it . Own . Kkr on their it would have to be in a normas buyout. Brooke i would think they would need some sort of help. You can make the math work. My colleague in europe did an interesting analysis of you can make the numbers work. What is the longterm strategy . What are you going to do with walgreens once you take a private . Alix at some point you ipo. How amazing the ipo has to be, otherwise what is the point . Brooke talking about retail, one of the problems is amazon. You order things from amazon you are not buying in the drugstore. I would be interested to see what you guys think about that. Do you feel like that causes a structural shift . Retail will end up being a bunch of haves and havenots. You give the customer what you want when they wanted. Drugstores are challenging. You have the prescription model and the regular goods and services. That can easily be replaced by Companies Like amazon. It is a challenging Business Model so be interesting to see what kkr can do with it. 90 of retail is still being done in a physical store. People are going for the experience, for selection. There are opportunities. Whether or not kkr goes after walgreens, im not speaking for mastercard, i think you have a lot of private equity money and the deals are getting bigger and bigger. Butcan make the math work, your question is a good one. What are you going to do longerterm . All of these businesses have to grow. The physical store is there to stay. It goes back to the winners and losers. It has to do with scale. Scale makes a big difference because you have to invest so much in capital. You have to invest in the infrastructure and the analytics the free shipping. Amazon is putting so much resources into fast shipping. Unless you have the scale, it is hard to play. Saira when you talk about the shipping time brooke when you talk about the shipping dynamics, this is the shortest distance between thanksgiving and christmas since 2013. You have a lot more investment into the one day were two day shipping and a lot more products available online. You also have a lot more planning that has been happening. Earlier start. Black friday deals are already happening today. Alix i just bought some black friday deals on friday. Steve everyone is anticipating the shorter season. It started earlier, it is starting deep. The consumer will come out of this well. You will have a good Holiday Season but not as good as last year. It is going to be healthy. Thinking about private equity and logistics, we have seen a lot of private equity money go into logistics. Steve warehouse is the hottest thing private equity is buying right now. Alix how you look at that sector . Is there an opportunity for an Equity Investor to get involved in logistics or shipping . Saira i think it is an interesting space. I do not know if there is a ton of opportunities for us to get involved beyond the traditional largecap retailers. I agree with steve that retailers will learn from their mistakes. We know it is a short season. They can do a better job. You do not have such demand this year you did last year. I think we will have a better outcome. Isra is there brooke there risk there is a bubble in the warehouse asset . Alix whenever you hear that you wonder private equities again . Saira these are high fixed cost businesses. Whenever you need a certain level of capacity to make the operating model work, you are running a risk. Hotels, all other large Real Estate Companies have learned that over time. Steve you have cycles and all of these businesses. What you do have his underlying demand. If the Internet Penetration today is only 10 across all of the sectors, there is a lot of growth to be had. It goes back to location, goes back to the nature and structure of the individual deals. You will have cyclicality in the business. If you are starting a Retail Company today, would you started online or would you buy a traditional brickandmortar . I do not think there is a onesizefitsall in any of these businesses. So much consumer fragmentation that direct can consumer digitally native barehands are doing well. Everyone of the digitally native brands wants to open a physical store. Caspers opening lots of stores. You name it. What you have is this convergence going on because you have to satisfy the consumer demand. The consumer wants it anywhere and anytime. You look at the companies that have been investing. I am talking for myself. The walmarts of the world have done a great amount of investing in the omnichannel experience. Buy online and pick up in the store. That is what the consumer wants. The digitally native consumer wants to have the store experience. It may be a popup store, it might be inside a Department Store or inside a mall. You have to provide all of those experiences. Retail is a tough business. It is a business that has a lot of opportunity and it goes back to understanding your consumer. If you understand your consumer and have unique product and a unique experience, then you can win. That is why i like the analytics companies. I am watching big retailers investing in enormous amount of money in analytics and im seeing them get terrific results. Several hundred basis points improvement and growth by better understanding the specific customers for the products. Alix great conversation. Thank you so much. Steve saito of of mastercard and saira malik. Kkr is said to make a formal buyout build for walgreens. That stop is up 7 . We want to give you an update on headlines outside of the business world. Sebastian the former u. S. Ambassador to thesebastian the. Ambassador to the u. S. Says x white house chief of staff john kelly and former secretary of state Rex Tillerson tried to undermine president trump. Nikki haley says the two told her that when they resisted the president , they were trying to save the country, according to her new book. Peter kings probably quit after 14 terms. The new york republican is the 20th member of his party and the house to plan an exit next year. Johnsons. , Boris Conservative Party has switch the focus on the Election Campaign to one of its strong suits, the economy. Conservatives estimate the cost of the labour Party Spending plans at 1. 5 trillion. The chancellor of the exchequer blasts the proposal. Spending 1. 2 trillion will be absolutely reckless and will leave the country with an economic crisis within months, not years. Within months. Sebastian labor says the estimate is fake news. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Alix thank you so much. Coming up, peak oil and what that means for saudi aramcos gigantic ipo. Remember, go ahead and check out gtv. Save the charts and check out the features throughout our program and save it for reference. Gtv. This is bloomberg. Elon musk company has unveiled its first car built in china. The first model three sedan came and blew and had the name in chinese characters. The new factory they were built in the new factory in shanghai with a starting price of 50,000. Chinas government is confident is ill will choose huawei to ring to build its 5g network. That could put president bolsonaro on a collision court with the u. S. U. S. Officials have warned against relying on huawei for networks. Clause atnt a londons harris Department Store will need 2500 shopping. The christmas product is available only for the stores rewards team members. Complementary shots complement your slot make up less than 4 of the total. That is your Bloomberg Business flash. Alix i cannot believe it is like youre getting income inequality and santa inequality. Brooke are they giving out free toys . Alix you have to buy 2500 worth of toys. Brooke i do not know about that. Alix i am watching Goldman Sachs and apple. All of the buzz. Does the apple Goldman Sachs card look into gender discrimination . It is not the first problem we have had in the space generally. You can look at criminal law or other biases. This could be a big issue for goldman and apple that wants to diversify, and europe. Brooke the issue is these black box algorithms. You can program them to replicate what the countries are already doing. Biasesis expose inherent people were not aware of . Alix when you have steves when you have Steve Wozniak calling for regulation, that says a lot. Brooke you also see the new York Financial regulator looking into this, as well as united health. Alix what are you looking at . Brooke i am looking at this walgreens buyout. Isare now learning kkr formally exploring an offer and exploring what they would need to put this kind of deal together. T would be a huge stretch Steve Schwarzmans of blackstone said as much last week. It will be interesting to see kkr taking the leap. It raises the question of who they will partner with and whether blackstone will set this out. Alix we were talking about this on break and who would kkr wind up teaming up with and what opportunities today see where schwartz was no way, no how . Brooke i think you can make the mathworks but what exactly is the strategy . How will you make walgreens a more Viable Company than it is now. Brooke the Third Company alix the Third Company both of us are watching his saudi aramco. Mark rosanno joins us on the phone. Lots of risks labeled. Some we are used to, we are looking at big oil. Others we were not. That is opec rules what you will do with your oil production. What was your take on the prospectus . Mark a lot of different pieces about the prospectus that have not been focused on. It is the royal rate that is piggybacked to the saudi government. It will be what does the growth look like . Realistically you are looking at something that is still state owned and will still be beholden to your royalty taxes. As we look away toward what is the oil demand look like, where it peak oil go, and is this a move to move further down the supply chain and focus on more refining and does this play into the hands of the russians . My Bloomberg Opinion colleague noting the final pricing is happening on the same day as the opec meeting. What does that mean . Mark i think there a lot of things happening at the same time. I ran found 53 billion of oil. Russia all of this is happening at the opec time. These are things where they are competing against each other. We are supposed to see some sort of cohesion, some agreement, but they are playing their own angles. I think this points more toward a view there will not be any nearterm cut and they will keep things status quo. And continue to bleed oil into the market. Longerterm there are two ways to look at it. Saudi arabia will have to continue to cut and support valuation for saudi aramco, and the other is this leaves a lot of control with iran and russia to say sallys, you have to do this, and we have the power because now you are subject to this ipo. Mark exactly. Saudi aramcoime, and saudi arabia are looking to diversify away from oil. The thing is, they have a lot of oil, so you cannot diversify too far. That is why the deal was so important. Ringing more refiners on. That is because they are trying to go down the curve and collect the margin so they are not as beholden to russia and iran. There is a bigger issue of foot and i do not think the gcc countries and saudi arabia will have the same type of leverage they have had in the past. Brooke can we talk about the dividend for second. There is talk of expanding that 80 billion. Is that sustainable . Mark sustainable based on the cash flow they are guiding towards. You think about every dollar change in their cash flow increases by 1. 5 billion. If you think about where they are in terms of their outspent, it is a 30 billion per year which will most likely go up as they go back down. There are problems with the other side. As the Oil Price Goes up, you have the royalty rate increasing, which means you have to pay the government more. As oil increases, you do not gain the same amount of money as you would at an exxons chevron, some of these others. Why wont you by exxon or chevron at 7 or 8 and you do not have the same type of geopolitical risk. Alix that is the question everyone is asking. Great to catch up with you on this monday. Mark rosanno and Bloomberg Mark southwark mark rosanno and Brooke Sutherland. Thank you for joining me. Brooke we covered all of the hotspots. Alix is basically made for brooke. Coming up, alibaba sets another single day record. That is coming up next in todays technically speaking. If youre jumping in your car, check out Bloomberg Radio on sirius xm channel 119 and the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Bill maloney, voice of bloomberg equity squad joins me. You can join bill on the bloomberg by typing in sqa. Bill right now tesla is up 1 in the premarket. Years,o back five basically and this massive trading range. If we look at a one your chart, this big breakout after earnings. Aroundesistance today 342, 343. If he gets above that, you will to january highs. Cisco getting a downgrade to neutral. What are you looking at in terms of 200 Day Moving Average . Bill just go down 1. 2 of the premarket, directly below the 200 Day Moving Average. It has been in this range since august or so. First round 48, which is a 50 Day Moving Average. Years, you canve see it is still in an uptrend. The trading range within an uptrend. Fun ofe make a lot of the fact that it is free press for alibaba, but the idea is they are making so much money on singles day, more than we would make on black friday. Bill new record for alibaba singles day. Down the premarket. Down 1 . The first report was 184, the september high. If we can get a bid, resistance own 188 to 195. Alix thanks for helping us get our trade set up for monday. That does it for us. Coming up with jonathan ferro, jonathan golub, Credit Suisse chief u. S. Equity strategy. The bond markets are closed. U. S. Equity softer. Down. 4 . Still a selloff in the bond market. Not a lot of movement happening as the bond market is closed for veterans day. Happy monday. This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, five weeks of gains for equities. Investors hoping macro risks were receipt. Desk of the biggest players in the Global Economy taking center stage later this week and saudi aramco publishing the prospectus for what could be the largest ipo in history. 30 minutes until the opening bell. Good morning. Here is your monday morning price action. Futures 12 points on the s p 500, down. 4 . Eurodollar 1. 1038. In the treasury market, we are closed for veterans day. Your 10 year Government Bond in germany unchanged at 26 basis points. Lets begin the program with the big issue. What is the primary driver of the global risk rebound . I do not think trade is the driver at the moment. I disagree. Fundamentals or more driver. It is all about trade. Trade is becoming a secondary issue