Actually also at the top of the leaderboard. At the bottom of the leaderboard, a lot of health care names. To be clear, this was a pretty even trading range. The smallest range since december of 2017. Romaine lets dive deeper into the action with all of our market reporters. Abigail i am looking at an area of outperformance, the emerging market index. Here it is over the last six months, up about 9 . Huge outperformance. Up eight of the last nine days. We also see that this recent action takes it above highs. We are also seeing a breakout. Forould be the new hot area 2020, but the breakout is not convincing. High back intime 2007, then down in the financial crisis. It basically stock in this range. The breakout that was so impressive on the year, not as impressive on this longerterm chart. Bowls have some work to do. Renita i am looking at eli lilly, which was up to its april high earlier today, which has since paired some of the gains. Revenue is expected to grow. Bloomberg intelligence says this is a rather conservative outlook that is consistent with its practice. Bloomberg intelligence also says that eli lilly has a good chance with the variety of Growth Drivers it has planned. Bloomberg intelligence also confirms that the Margin Expansion will be at play in 2020, which is what they expected. I am looking at high yield spreads. Robert kaplan earlier at the reserve bank of dallas was saying what keeps him up at night are these spreads between iuble b and single b credit wanted to take a look at a chart i am showing inside my terminal that indicates how tight credit spreads have gotten. That, 326ou take basis points, the tightest since right before that Big Christmas eve selloff the year ago. Similar thing going on in investment as well. The lowest going back and almost two years. Thatcularly within highyield market, it makes officials a little bit nervous. Fedex has come out with results. It had offered weak guidance in september. Apparently was not weak enough. Second quarter eps missing the lowest analyst estimate. 2. 50 was the reported bottom line number, 2. 78 on average. Revenue missing the consensus. Operating margin, 3. 9 . Analysts were looking for 5. 3 . In terms of the outlook, it does not look like it gets much better. To 11. 50om 10. 25 per share. It looks like the average analyst would be 12. 05 if we are comparing like with like. The company talks about a year of significant challenges and changes for fedex. The shipping season, four days fewer than on average for the time between thanksgiving and christmas. Romaine we will dive deeper a little bit later on the hour. Some breaking news on the u. K. And brexit. Outlook tosing the negative. That aa rating confirmed. Again, the outlook itself being raised to stable from negative as well. Still with us, the City Private Bank global chief investment strategist. Steven, you mentioned negative rates earlier. Heading into 20 20, you have to worry how negative rates will impact potential returns for investors. If you are someone, a client, who has a fixed income seeking goal, how do you manage . Steven it is very important. We have had, globally, over 8 fixed income return. The highyield spray spread chart was very interesting. The reversal last year came because of fed tightening. You cannot have the kind of Capital Appreciation in bonds that we had in the year past. We want to look at a particular subset of equities. You talk about all the ones bouncing back because there is no recession. Affordout those that can to pay current dividends and can grow those dividends every year . That type of strategy has outperformed in each and every down year since 1990. 1990, orok since during the late 1990s, they are generally less volatile, higherquality income oriented shares. But it is not looking at the highest yield. It is those that are specifically raising dividends. Worksnk that this globally and this is the higher probability of longterm success rather than just playing the ounce back. Scarlet i remember, not so long ago, everyone kept describing the economy, the cycle, as late cycle. Luke you hear it a ton. People look at highyield bonds, they say, this is classic late cycle behavior. 24 months ago, this tight 60 months ago. Have we figured out that it was not late cycle then so it not be late cycle now . I think more and more people are starting to buy into the idea ,hat we had a midcycle pause and be more willing to buy into stephens view. Ways asy can cut both the austrian 100 year bond showed us. Romaine there are people who think we are not out of the woods whether it is the equity market or the economy itself. Are you hearing from folks that the profit forecasts will go up or at least maintain where they are right now for 2020 . People expect the regular calendar affect to begin. Russell the midcap and 2000, 12 month forward earnings estimates, those have been in a very kind of sliding trajectory. Over the past month, those have stabilized and turned higher. Fundamental support for some of the catch up trades, that is one that you might be seeing right there. Scarlet shares falling after a disappointing quarter. Do you see this as a canary in the coal mine for global trade, for the broader economy overall . Steven i am doubtful that this is very close to it global trade proxy. General, weon in would like very much to say, this tells us what the economy does. Again, a lot of things are depressed. We have to remember, we just did have a legitimate business sector downturn. Consumer spending has been growing. It could slow a little. Todays production numbers, we said they are good. Around the world, it is contracted. They will be a lot of areas where present fundamentals are not as good as they will be in 2020. That is my more optimistic view. Importantly, this is what 1 , 30 equity years are about. It is very clear that equity markets are predicting an upturn in fundamentals. I think we will see confirmation of that and that is why we will continue to divest and still get some return in 2020. Luke this is what joe would have highlighted today if you were here. You had the index beat spine. That was the biggest since we had the rotation in november. A lot of those trades are still working. Romaine joe is finishing up his shopping he will be here tomorrow once he is done finally. I think he got you something nice, scarlet. Scarlet i hope so. For thethat does it closing bell. Whatd you miss . Is next when we will take a look at the pound. Election rally. This is bloomberg. From bloombergs World Headquarters in new york, i am romaine bostick. Heres a snapshot of how u. S. Stocks closed. The dow, the s p, and the nasdaq all closing at record highs. Signed and sealed. Fedex delivering and earnings miss as amazon escalates is war on the shipping company. And Boris Johnson spooking the markets by putting the threat of a no deal brexit back on the table. We speak to roger baker of strat for on the biggest risks for the Global Economy in 2020. Scarlet we start with developments in the u. K. Prime minister Boris Johnson a no dealhance of brexit back on the table. He is changing the law to make sure the brexit phase does not last until past next year. Reaction, the pounds investors were taken by surprise by what he said. Were eu leaders similarly suppressed . The short surprised . The short answer would be no. It,s saying, 2020, that is i am not extending, if we do not have a deal, we just leave wto terms and that is it. With athe election majority so he is in a position to play hardball, but also because his whole political mantra is getting brexit done. So, in the eyes of the eu, this is the start of a negotiating position. They would tell you, we want a Good Relationship with the u. K. , a good trade relationship with them. The timeline is very challenging to get this done. Fromthe more he moves away regulation, the more difficult that trade war that trade deal will become. Romaine the original deal that Boris Johnson struck, it kind of severs that relationship. ,s there any expectation that as these negotiations go forward, we will see something remarkably different to what he already agreed to with brussels . We dont know at this stage what kind of relationship he wants with the eu we dont know what kind of future relationship he wants to have with the eu. At this point, he could go both ways. He could say, i want to stay very closely aligned with the eu. I want to continue to have a close relationship with the eu. If that is the case, a trade deal could be done easily. The problem is that he could also say, actually, i am not interested in that. Want quotas or tariffs on u. K. Products. At that point, the u. K. s concern is the yous concern is that they do not want to be undercut by a u. K. That has those rules. Romaine all of that Political Uncertainty is weighing on the pound. Sterling erasing postelection gains and struggling the most since january. Lets bring in the global head of currency strategy at brown brothers. Lets start with sterling. A pretty decent rally after we got the election results. What is the general outlook for sterling Going Forward . It is all about positioning. As the polls are showing more and more likelihood that mr. Johnson would get a good majority, people are buying sterling, taking it higher and higher. We are looking at some sort of by the rumors, sell the facts. That was intensified by a bit of a curveball by mr. Johnson. Majorityon winning the paved the way for a negotiated by january 1, talks over this year, and an extended negotiation period. A leaves they can complete comprehensive trade deal by the end of the year. I think the base case, we get the brexit divorce agreement, but the terms will be negotiated and probably extended beyond 2020. During the extension period, the eu still has benefits of the customs union, will have to up by have to abide by the rules and regulations. To me, that is the best case scenario. To come crashing out of that comedy u. K. Basically reverts to wto rules. They lose tariff access to the eu. It is a risky gambit. Were thinking that press johnson would take a more reasonable route of action. Given that, he seems to be drawing a line and ready to play hardball. How do you see people positioning now Going Forward . I think the markets get much more neutral. The market was overweight sterling going into the election. It is an uncertain period. Markets hate uncertainty. I think it is a much more twoway risk now. To me, if we step back, the fundamentals are for even weaker sterling. I think we could theoretically go back to the earlier lows of the summer, around 120. A lot of this brinksmanship, i have no doubt mr. Johnson is trying to try hard line and get a better deal, but the eu has no patience. They will take a hardline as well. Im 65 chance of an extension beyond september. 10 chance that they actually deal by percent chance of a hard brexit. To me,. 5 is not significant. 25 is not insignificant. Romaine oil, fixed income, one of the Common Threads we have seen is this idea of the direction of the dollar and how that will play. Where you see the direction of the dollar . The persistent strength that has been the hallmark over the last few years . For most of this year, if you went long dollars, you are pretty much golden. As we have seen other things happen, you have the rest of the world perhaps looking better. I myself, and i think i am in the minority, that i am looking for a strengthening dollar. Not massive strength, but to be bearish somewhere, you have to be bullish somewhere else. I just cannot get excited. Theeu may be better with even that isl, but suspect. Scarlet that means always calls about em and the rest of the world doing better kind of falls apart because it is all centered on the idea that the dollar is going to weaken. The strong dollars really concentrated in majors. Em, i think the ratcheting down of the u. S. China trade tensions, there is some room to get traction. Our view is relatively optimistic. But iraging bull market, think enough with growth rates, e. M. Can do ok. To me, strong u. S. Dollar, still overall good for the Global Economy. Continuation of 2019. Win thin, appreciate it. This is bloomberg. The sugar between the u. S. And china is starting to fade. Why he thinks trade uncertainty is here to stay. Trade issues with china are going to go on for years. I think most businesses are adjusted to that. These issues of intellectual property, transfer, the much deeper issues with china, will be going on for a long time. It does not mean there wont still be trade uncertainty. Another thing you sort of pound the table on, it is not impact of thee trade war on the economy, it is more about the hits on businesses, uncertainty, and what that means for investments. Youi also conclude that think that means that uncertainty is not going away with a trade deal, phase two negotiations starting immediately . Robert if it was just about the trade dispute with china, i think businesses could manage that. ,or most businesses i talked to i think it is the broader trade uncertainty. Withreatened mexico tariffs. That would have had a substantial effect on Logistics Supply chain management. The threat, if we have a National Strategy that uses strategy, economic tool, most businesses i talked to are not canceling product checks canceling projects im a they are just putting them on projects,ng lets they are just putting them on old, saying lets slow down. Romaine a lot of other big Interest Rate decisions up this week. Boj, indonesia as well. Scarlet bank of england as well. Of course, now they have a new wrinkle to deal with after Prime MinisterBoris Johnson put in place this idea that they will come out of this situation with or without a trade deal. Romaine coming up, we talk about trade tensions and clinical risks. This is bloomberg. With im Mark Crumpton bloomberg first word News Senate Majority leader Mitch Mcconnell is setting a course to quash democrats attempts to extend the impeachment trial of President Trump by calling new witnesses. Leader mcconnell is pushing toward the goal of a swift trial that ends in acquittal. The leader criticized his colleagues call for testimony mickof chief of staff mulvaney and john bolton as a fishing expedition. Schumer responded this afternoon. This is a political process. There is nothing judicial about it. The house made a partisan political decision to impeach. I would anticipate we would have a largely partisan outcome in the senate. Anyone in america watching this would draw the same logical conclusion that the president has something to hide and republican senators, too many of them, our intent in helping him hide it. It appears that leader mcconnell , after going on fox news, has already made up his mind about the Senate Impeachment trial. That senator mcconnell wants to use the senate to help participate in a coverup. Tok in a fiery letter today House Speaker nancy pelosi, President Trump accused democrats of perversion of justice and abuse of power. President hasmer been sentenced for treason. He was convicted of unlawfully declaring emergency rule while in power. He has lived in selfimposed exile in dubai for three years. He seized power in a military pakistan999 and ruled until 2008. His attorneys say he will appeal. Suspected tornadoes ripped through the deep south late monday. Downs smashed buildings, trees, and left a trail of destruction. Global news 24 hours a day on air and at tictoc on twitter, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. For globale outlook growth looking a bit brighter after the u. S. And china finally agreed on the first part of a deal. The team at stratfor is still weaving the caution flag. Joining us from austin, texas, is rodger baker. Walk us through some of the areas where we might see localized crises that come on their own, might not be a big deal, but if they happen simultaneously, could be something that destabilizes the Global Economy and global world order. Rodger one place we are looking at is argentina, people are used to crises and default, but we are optimistic in looking at argentinas ability to avoid default this year. Through north africa and the middle east, there is a combination of social and economic instability on the rise, places like egypt and turkey where we could see more of these issues, where the government is working to manage some of the social issues, but could lose control of that in a fairly rapid way. Tog kong, we expect in march see the protests pick up again. Stretching right across that lower part of the globe, places that could pop up into these crises. Romaine what about north korea . Obviously, this was a big story. The tensions seemed to die down. Of late, we are starting to hear more disagreements with regards to the missile test. Rodger the North Koreans argue that the United States has given them nothing during the years that the North Koreans have largely refrained from long range missile testing. They have set a deadline for the restart probably of satellite tests or longrange missile tests. It looks like that is going to ramp up. Seeingsame time, we are the chinese and the russians coming in, trying to ease some of that pressure and lift some of the sanctions. South korea is working alongside china and russia. The United States is standing against that. The unified ability of the United States to hold the International Community seems to be flipping right now. We would anticipate a pretty big action by the North Koreans into the First Quarter or at the end of this year to raise those tensions again. Scarlet maybe we should be talking about the interest of the u. S. To do so. Talk about how the u. S. Has kind fromtrenched and withdrawn immersing itself in some of the crisis spots around the world. What countries may look to take advantage to that . North korea would be one of them but i would also imagine iran would look to provoke. Rodger the United States has conflict long cycle of internationally, starting with the world terrorism. It is starting to pull back and redefine what its Strategic Focus is. Look atsaid, we need to china. Isthe same time, the u. S. Heading into a very contentious election cycle. An impeachment process is underway. So there is a lot of internal focus inside the United States. Other companies are looking and saying, do we act and take advantage of internal focus or the prospect or likelihood of change to come out. We would expect an increase in aggressive behavior by iran. China is looking to demonstrate path of a maybe the managed economy is the better path for a lot of the rest of the world and they will look to take advantage of the current moment to shape world systems. Romaine turning to europe, you obviously will have a passing of the torch in germany, you have the french president dealing with labor issues. Is it possible we could see a major shakeup in european politics, different than what we see now . Rodger i think europe is at risk of real change, the constant struggle between the paneuropean nests and paneuropeanists. Baker, seniorr Vice President at stratfor. Coming up, shares of fedex tumbling after cutting the forecast. This is bloomberg. Fedex reporting earnings after the close. Second quarter disappointed on both the bottom line and top line. For the full year, it has reduced its outlook once again. Inex shares dropping 6 afterhours trading. Us more, thomas black joins for some context. The Company Blames week Global Economic conditions, increased costs for expanded offerings, the loss of a large customer, i more that is amazon, and a competitive pricing environment. How much of this is fedexs own doing . I would say most of it. You have to do a comparison with ups, which has stabilized its margins and had a pretty good quarter. All with theame it economy. Romaine what is sort of the way out for fedex . Smithe heard ceo fred talk about the trade war. Like you said, ubs has found a way to navigate this. How does fedex right the ship . His fed is fred smith the right one to do this . Thene thing is fixing european acquisition they did in may of 2016. They are still grappling with it. It has been a headwind. They did have a cyberattack in 2017 that set them back on this. They are also spending a lot of atey to get more Efficient Home deliveries. Right now, it is painful. Is impressed, and they are spending more. They severed ties with amazon. How does fedex respond . Has it put the wheels in motion already or is it scrambling right now . This really started in june when fedexld noteach a de with amazon to deliver a contract. Ground business also fell through. This is kind of windowdressing on that. The break is almost complete now. Customers on walmart, target. Amazon is also a competitor. Efficient. Et more these Companies Really focused on commercial deliveries for a long time. A bunch of packages to one building, it is much more efficient. You have to go house to house, that creates a lot of cost. Romaine onto another headline. Amazon announcing thirdparty merchants no longer use fedex ground Delivery Network this holiday season. It can do a surprised sellers, but not to those inside amazon who know the man behind the decision. Then, youvery now and and your colleagues write a story that reminds me that amazon is really not a Retail Company as much as it is a logistics and shipping company. You profiled this man they call the sniper, behind this decision. Behind the buildout over the past several years of amazons logistics operation that allows them to have alternatives to delivery providers. This is the goal of amazon the best several years. Dave clark has been at amazon over 20 years. He started in their warehouse, rose through the ranks, and now overseas operations globally. This would be vance, planes, warehouses, robots, hundreds of thousands of people who get the packages to us. What amazon is doing now is vertically integrating. They do about half of their own deliveries now from warehouses to the doorstep. This is lessening reliance on partners like ubs and fedex, allowing them to set their own mandate on what the performance metrics are going to be. Scarlet consumers may not know about it this is something that rivals tend to do. How big as this grown . Spencer it is still fairly small compared to fedex or ups, but has grown quite quickly. Fully committed to amazon. 20 of us around the cut 20 hubs around the country. It allows amazon to fulfill pledges to two day, one day delivery. Logistics now, having me inventory, that is an advantage that amazon has, a retailer and amazon provider. Fedex that ups and they have to rely on the retailers. That is where it will be tough to match amazon in terms of delivery speed. Romaine in terms of amazon doing more managing the delivery chain themselves, what is the cost to them. Is the cost higher to do it for themselves . Spencer right now, they are in investment mode. Aboutors are very leery this cost. They are building something that really does not exist now, to handle this level of capacity to peoples nose. The original models, downtown to downtown with some Home Deliveries thrown into the mix. Amazon is predominantly right to your doorstep. That is an infrastructure that did not really exist. The hope is that if they get to scale, get sufficient volume, that they can do this efficiently and profitably. Scarlet investors have proven that they will be patient with Amazon Investments as well. Coming up, congressman Roger Marshall of kansas will be joining us and telling us how the new usmca agreement will benefit farmers in his district. This is bloomberg. Romaine a couple of big house votes are coming up youve been out representatives for the christmas break. Thursday, the house will take up a usmca trade deal. Our chief washington correspondent joins us right now with the republican member of the house add committee. We are here with Roger Marshall, a republican from cantors from kansas, and the largest farm district in the country. Rep. Marshall that is right. We are agriculture 24 7 in kansas. Usmca, it looked like there were some lastminute clinical hiccups with mexico raising some concerns but it looks like it is back on track for a vote tomorrow. Rep. Marshall absolutely. This is a huge win for the president , huge win for america. Thousands of jobs in kansas, hundreds of thousands of jobs across america. It will mean the ability to plant a crop next spring, keep the fifthgeneration farm and their family. Help me understand what the biggest differences are between usmca and the current structure of nafta. Your soybean farmers, all the rest. Mexico and canada are number one and number two partners for all products. Probably more in line with what we had done on the technical side of things, bringing agreement into the 21st century. The internet was not even invented when we did the nafta trade agreement. More importantly, it gives us certainty. So much electronic transactions, so many in the system. Utilizing the rep. Marshall todays , at the same time, they are buying grain, buying in a longterm price, and it is all done through technology now. Doing those transactions with technology. On pen and paper, allowing them to be more consistent and spread the risk. One tradeina, phase deal agreement reached. Oflions of dollars worth agricultural purchases that china says they will buy from states like kansas. How can they make sure that china actually follows through. Rep. Marshall we literally have mountains of grain sitting in kansas. Now we have a place to go with them. What Bob Lighthizer has done is almost miraculous for quick enforcement. If china does not honor the commitment, he can slap those tariffs back on. Trade a lot of faith in ambassador lighthizer, making sure all the is are dotted and ts crossed. Big and vote vote tomorrow on impeachment. What will you have your eyes on . Rep. Marshall the biggest frustrating thing about impeachment is that it has kept us from getting this trade agreement done a long time ago. I think a lot of us have made our minds up. I dont think the president did anything wrong. Im going to go in there and vote no on impeachment. I think the dye has already been cast. We covered it all. Usmca, u. S. China, impeachment. I almost forgot, you guys are going to keep the government open by the end of the week, right . Rep. Marshall absolutely. The house passed both those pieces of legislation today. I am very concerned about our deficit going on, the prey to the price tags on these. Im very glad that we are keeping the military going and there is some funding here for the president s wall, which is very important as well. , rissman Roger Marshall, think congressman Roger Marshall, thank you. Scarlet coming up, dont miss this. The numbers for inflation in the u. K. Come out tomorrow. Romaine in the u. S. , General Mills and micron reporting earnings. Scarlet house of representatives will be voting on impeachment. That does it for whatd you miss . Bloomberg Technology is next. Romaine this is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. 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 local xfinity store today. The rigs in San Francisco for emily chang, and this is Bloomberg Technology. Coming up in the next hour, goldman to the rescue. Whatd you miss . Gets financing. We will have the latest on the credit lifeline. Plus, proposed tariffs pushes apple to the forefront of the u. S. China trade standoff in 2019. The relationship with President Trump may have helped the