Defense secretary mark esper faces a number of issues and south korea as he begins a trip to asia. President trump has demanded pay five times more to host american troops. Meantime, and intelligence sharing agreement between the u. S. And japan expires in two weeks. The u. S. Saw that as a breakthrough between the frequent adversaries. Brazils capital city is playing host to this years bricks summit. Convened to discuss trade initiatives, the paris climate accord, and security. The nations issued a joint shorn of committed to multilateralism and boosting emerging markets. Thelso vowed to protect United Nations role in international conflicts. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Shery live from bloomberg World Headquarters in new york, im shery on. Amanda live in toronto, im amanda lang. Welcome to bloomberg markets. Here are the top stories we are following from around the world. Trade talks are hitting a snag. Sources tell Bloomberg China is resisting a proposal to provide targets for buying farm goods from the u. S. A oneonone conversation with david from. I sit down with the author and former president ial speechwriter to talk about Foreign Policy in the year of trump. Pot stocks are plunging. The former head of Acreage Holdings about the future of that industry. Lets get a quick check on the major averages. We are seeing a risk off tone across the markets. Treasury yields under pressure. He dow is down. 1 tech is leading the declines on the s p 500 after cisco disappointed on earnings. Those results also showing companies are holding off on purchases as we continue to see this u. S. China trade standoff. We have no more clarity when it comes to farm purchases. That seems to be another issue they cannot agree on. The nasdaq falling. 2 . Energy is another month leading the declines in todays session. We continue to see u. S. Inventories rising, not to mention opec is announcing the surplus could linger into next year. Take a look at the canadian dollar, flat in todays session, but its been under pressure all week. The weakest level in a month against the u. S. Dollar. We saw weakness after the bank of governor came out and hinted that he may entertain lowering borrowing costs. He you central away from that easing bias. We will hear more from him tonight when he speaks in san francisco. Like jay powell, our central bank also suggesting there is room for fiscal maneuvering if Monetary Policy runs out of steam. Someurse, tax cuts put cash on the Balance Sheet of some americans. Take a look at this. It shows you the interesting decline. Flat for a little while, and now declines as share buybacks do their work. Oft raises the question where do the investments come from, is their fiscal maneuvering possible for cash . Ies to offer up more this is a trend that we have seen for some time, as Companies Use the cash to buy back their stock. Shery lets go back to the trade negotiations with the in the u. S. And china. China resisting u. S. To mans on agricultural purchases, insisting the sides must agree to roll back tariffs. For the latest, lets bring in mike adorning. He is with us from washington. Sources telling us that china does not want to put specific targets on these farm purchases. Changed since the trade war started 18 months ago . We are back to negotiating with the chinese had wanted, a smaller deal. We are hitting a problem because treasury secretary mnuchin had said, within two years, the chinese will be buying 40 billion to 50 billion in year of u. S. Farm goods, which is about double what they were doing before. It is hard to see how they will do that. Publiclyse never promised to do that. Now the administration wants to put in benchmarks to move them along the way, and the chinese are resisting doing that because it will be hard to meet these goals. Time, the chinese want trump to roll back tariffs on chinese goods and return to this, and he is reluctant to do that. They are just hitting the hard nub of the argument, and they have always been far apart on that. , though, some signs that both sides want to keep going. You can see that in the concession on chicken feed. Amanda i guess the optimists would say they are down to finer points. There are some big issues outstanding, tech transfers, ip, that we have not heard any detail on. Could there be real thorns ahead . Mike that is a real born. There is a question about whether they have sidestepped that in this idea of the phase one deal, put off the hard thats until a phase two they get to later, the real underlying issues about technology transfer, state support for richard industrys. Strategic industries. Theres a lot of pressure on all sides to get something going, particularly with president trump. Are an absolutely key constituency for president trade war isis hurting those manufacturing areas like pennsylvania, michigan, wisconsin, that he will need when he runs for reelection. If he can get some easing on this, it will take some economic pressure of his supporters, so he has a big incentive to get this. Shery we had the Kansas City Fed report showing that farming communities are in pain despite the aid payment coming from the trump administration. We were expecting earlier this week when the president spoke in new york, some sort of clarity about what comes next. Couldknow when a signing take place, location, deadline . Mike nothing. We just keep hearing it will be coming soon. Was relieved are little bit because of the summit in chile was canceled. That kansas city report you mentioned is interesting. Glimpse of first what has happened to farm incomes in the third quarter, and credit conditions. Quarter, and credit conditions. It shows them worsening despite this giant trade aid package that trump signed. Amanda great perspective, appreciate it. Since becoming president in two thousand 16, donald trump has shifted the Foreign Policy landscape somewhat. For some perspective on that n exclusive conversation with david frum. It is certainly not a new cold war but it is a struggle for power. It is necessary and it is welcome. The problem with trump is not that he is doing it, but he is doing it in the stupidest possible way. The goal here is, can the rest of the world write rules for trade, environmental protection, impose them on china and make them live with them. We do not know who will build the worlds moshing machines. Donald trump was not understand that control of the washing Machine Market is not what this is all about. Amanda you helped coin the phrase axis of evil. Is there a new axis we should be thinking about . We have a new group of aggressive powers that have a false sense of how powerful they are. Russia, iran, north korea, china to an extent. China is the biggest but in a more nuanced way. When i contributed that section to president bushs speech in 2002 and i will not be vain about it but we talked about the axis of hatred. Byse countries were united their common dislike of the liberal world order. It was not to call them names or to characterize them, but a lot of people who do not seem to have much in common have the ability to work against a common enemy. Much blood lost between the chinese and russia state, but they are both trying to destabilize the world that we love. If we are going to try to preserve that world, the people that uphold the micro c and markets, will have to do better than theyve done. Amanda is all of this noise that they should look through, can they possibly avoid the fact that there are some real tectonic shifts going on . David if you are a local maker, local market, you are a risk taker. A lot of the people that i talked to have to build balanced global portfolios, and they have to think about the 30your time horizon. Positions are in a where as investors we have one might, but as citizens, we have another. Those work to mitigate risks that as investors we have to protect ourselves from. Amanda that was my interview with david frum. Coming up next, walmart reports its thirdquarter numbers and sets a high bar for retail heading into the holiday season. Why the stock is retreating from an alltime high after those strong results. This is bloomberg. Shery this is bloomberg markets. Im shery ahn in new york. Amanda im amanda lang in toronto. Reported its thirdquarter earnings before the bell this morning, and it showed earningspershare beating analyst estimates. They boosted the outlook on eps growth for the year. The stock initially shot higher on those numbers. Shares are mildly negative now. For some insight into what may be going on, we will come Rupesh Parikh from artan heimer who has a market perform call on the stock. With what you think happened today, the numbers were pretty good. Solid, obviously, that other retailers would be envious of. I think it came down to expectations. Walmart was trading at alltime highs. You look at the 3. 2 cant in the u. S. Business, but investors were hoping for more. Theda one of the things president was quick to say today was that tariffs is not hurting walmart. It is actually a genuine concern when you look at the costs for the company. Any signs that we are seeing increased cost, that it is working on margins elsewhere to offset that . Rupesh walmart has said pretty clearly, they have been able to mitigate the impact from those tariffs. Tier 4, those could have a bigger impact on the company. Walmart has pretty significant Bargaining Power with their vendors. Right now, they are doing quite well. Savings if be cost we see that tier 4 go into effect next year. Shery how important is grocery for walmart, and can they compete with amazon, who is boosting the part of their business . Rupesh it represents more than half of the walmart growing segment. Amazon made some announcements. Prime delivery will not be free for grocery members. They will also be rolling out standalone grocery stores. I think they become a bigger threat over time, but from our perspective, walmart has a huge lead, over 3000 stores, online anderies to some locations, a more aggressive push on the delivery side. We think walmart will be able to hold their share and gain some share. The krogers of the world, albertsons, they are more vulnerable to some of amazons efforts. Shery we have seen 20 one quarters in a row of consecutive sales growth. What can we expect for the next quarter . It seems they do have some difficult comparisons to go up against, not to mention the holiday selling season could be shorter. Rupesh we think comp growth will slow in q4. Last year there was a snap benefits. As you said, there is a shortened holiday season, so that will have an impact on retailers. The Market Expectations out there right now suggest a slow down in q4. I think the expectations are in the right place, but you are right, there could be a moderation in the q4 holiday season. Amanda this stock is not too far off of your target. May you revisit that based on today, or are you getting close to fully valued . Rupesh we think the stock is fully valued. They beat primarily due to the lower tax rate, a little bit on the upside in the core business. Walmart is trading at an alltime valuation now, so we dont see much upside in the next two quarters. Amanda we have a big slate of retail heading our way. What is your expectation for how this may look, how important is it that retail performs well this quarter . Sellers, wediscount think they will do well this upcoming earnings season. On the beauty side, names like ulta could be challenged. The retail season will be mixed, very retailer specific. I think walmart will be an outlier on the positive side. Shery free, next day delivery was a big thing for walmart. Will be see this trend in other retailers as well . Rupesh others would like to but im not sure that the logistics and capabilities are there. It really is walmart and amazon that can do next day. Retailers, if they want to do next day, the consumer likely have to pay for that. Shery they had a management shuffle as well. How are they doing with that . Rupesh they announced the head of the u. S. Business will be leaving to join another company. It is a big deal. The former leader has had significant success turning around the unit. But we are encouraged with the new leader coming in coming in from sams club. He has done some good innovation there. We think he can continue the momentum with the walmart u. S. Business. But we will not hear any of his plans until february of next year. Shery thank you for joining us, Rupesh Parikh. Coming up, pot stocks under pressure. We spoke with the head of Acreage Holdings about what is next for the industry. This is bloomberg. Amanda this is bloomberg markets. Im amanda lang in toronto. Shery im shery ahn in new york. After a moment in the sun, pot stocks have come back down to earth. Shares of major growers getting question day with Acreage Holdings falling to record lows. We recently sat down with the chairman and ceo kevin murphy at an annual cannabis conference. He suggested the money to spend their way to grow. I have Great Respect for vivian, and i think everyone will need to spend their way to growth in this business, for sure. From our vantage point, we believe having access to capital , and we believe that will be afforded to us, because of our relationship with canopy. It will differentiate us amongst some of our peers. In thehink the lull industry today is simply due to the fact that investors are now getting a better understanding as to the cash burn in a number of these companies, and the fact that they will not be afforded the opportunity to access the Capital Markets as they had historically, unfortunately, youll see a number of players fall by the wayside. We believe we will be one of the winners in the category. Wenkly, it is the reason why ultimately came together in this relationship with canopy six months ago. You talked previously about the currency that the canopy deal gives you, able to issue shares knowing that those obey converted into canopy stop. Obviously, the environment has changed, the share prices down a bit. Does the calculus change now given the change in share prices over the last eight months . Kevin the consistent thing about this business is it is always subject to change. If you cannot adjust to that change, youll be in harms way. ,he good news for us is historically, as executives at acreage, had experience in good times and bad in the financial markets. Just as a recap, historically, i was a money manager. , thee seen the 98s 2008s. If we dont have a clear path to the equity markets, well, we are going to access the debt markets. Our goal is to access the cheapest capital in the business, and that will be a real differentiator with the rest of the landscape. We could not be more optimistic, even when shares are at their lowest price. If you think about where we are today on the heels of the house of representatives passing safe banking, 321 votes to the positive, this is an exciting time for cannabis. From our vantage point, we will look to take full advantage of it. We believe that is enhanced by our close relationship with canopy. Should we expect acreage to tap the debt markets she would . Kevin you should expect us to tap the debt targets soon. Thinkur vantage point, i it will be the best and highest used of our activities come in the most prudent way to access capital, given where our share price is today. Amanda that was christine with kevin murphy. Just a reminder, bloomberg users can interact with the charts you have seen on the network. The function on your terminal is gtv. Recent charts are stored there, along with the analysis that backs them up. From toronto and new york, 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. Im a crumpton with first word news. One woman is dead and four others injured after Todays School shooting in southern california. The incident took place at Saugus High School in the city of santa clarita. That is northwest of downtown los angeles. The l. A. County sheriff is a male suspect is in custody and is being treated at a local hospital. Xi jinping says stopping violence and restoring order in if hong kongs highest priority. It he made remarks when he brasiliathe summit in today. His comments came after hong kongs government dismissed curfewtions of a weekend pathetic suspicions arose was a newspaper deleted a tweet saying authorities were guilt gearing up to announce widespread restrictions. Gaza militants fired rockets into israel after a ceasefire was declared. Air raid siren went off in several communities today nearly gaza strip. At least five rockets could be seen blasting out of the territory. Israel and the