We bring you todays market moving news from around the world. Our bloomberg voices are on the ground with this mornings top stories. We want to begin with china. The government has agreed to cut import tariffs on a wide range. F goods joining us is stephen engle. Break down what we know about the tariffs, why now, etc. Stephen this comes fresh after a trade one agreement a phase one trade agreement. A gesture, yes, to show its lowering trade barriers, but it also wants to spur domestic spending for those 859 products he mentioned, from smartphone parts to food, in particular, frozen pork. All of these products will enjoy lower tariffs, and it comes as china hosts a critical trilateral summit this week that has already kicked off in beijing between china and japan. South korea will also take part. Trade, territorial disputes, military maneuverings, of course, exacerbated by north thoses posturing, and all historical animosities still persist. So those talks should be welcome. Been korea and japan have feuding again for more than a year over wartime reparation disputes, and japans retaliatory export restrictions of key tech components to south korea. It is going to be a fascinating week. Abe and xi already meeting tonight. Eve, moonchristmas jaein, the self to recent the south korean president , will meet with shinzo abe. Alix thank you for that. Now we turn to india. Prime minister dzumhur indra modi Prime Minister Narendra Modi defending his citizenship law. Modid Prime Minister speaking earlier. What did we learn . How was he addressing the protesters . Is trying toi distance himself from the controversy over the law. He tried to say that there was no plan to implement a nationwide citizenship restriction following the law, but hes been called on out because his powerful home minister has said many times, including in the parliament, that that is exactly what is on the government agenda. His party lost control of the mineral rich eastern state and regional poll results that were just out. It is the second such election he has lost in the past few months as they try to manage an economy growing at its lowest rate in six years. Protests are continuing this week, and there is no sign of political resolution on the horizon. Wiley is trying to distance himself from this controversy, some are asking already if his ruling party is as invincible as it once was. Alix . Thank you very much. Moving to saudi arabia, a court has sentenced five people to death for the murder of journalist could Jamal Khashoggi of journalist Jamal Khashoggi. Reporter there was a sentencing of five people to death. Three people were sentenced to long jail sentences. What the court also did was exonerate two very senior officials of being responsible for the murder of Jamal Khashoggi. The key is that it basically who has crown prince, been accused by some of being the one who ordered the murder, the court says there is no evidence of that. The court is saying that the murder was not premeditated. There was no plan, which runs counter to some of the leaks and reports that the you in has published that the un has published that suggests there was at least some premeditation. Critics of the crown prince will accuse the courts here of covering up, anyway, the responsibility of the crown prince. In out port on twitter healing saudi justice and the exoneration of these key officials. Alix alix thank you very much. We turn now to germany. The nord stream 2 gas pipeline is expected to be completed by next year. Joining me is bloombergs germany and western european editor. It is reportedly about u. S. Sanctions now on companies that help build the pipeline. Reporter of course, this standoff has been going on for months. We knew the sanctions were coming. We werent sure what impact they would have. Takes billion project russian gas through the sea and lands only about two hours north of here in berlin, and is transported throughout the country. It was due to come online in a matter of weeks. Now we know it will be in the second half of next year. We also know, at least, according to the chief transatlantic coordinator for keep anel government, eye on how much additional money are we needing to spend to get that pipeline done. Another german lawmaker told us today that he expects that theian ships will finish pipeline after the Swiss Company that was laying the last bit just south of denmark pulled out over the weekend. Those are the latest developments. Later, pricier, but it will get done. Alix thank you very much indeed. Him suisses to john t thiam suisses tidjane once again exonerated in a report by the bank. What is the latest, and how long can Credit Suisse stay behind the coo . Reporter the coo left the company a while ago. Whats bad for Credit Suisse here is they said this was an isolated incident since the first buying scandal came out. Coo andme the former say that they were lied to, the bank, but it doesnt look good. Or the bank steps, we will see next finishwe will see the regulator take a look at this. They will want to avoid a repeat of these spying scandals. Alix we rounded out in washington. Documents show President Trump asked about withholding aid to before his phone call to ukraine. What broke over the weekend . Kevin its only going to embolden calls on Senate Democrats to have folks from the office of management and budget, including the acting chief of staff and former director of that agency, testify in the Senate Impeachment trial. However, it is not likely to change the dynamics of Senate Majority leader Mitch Mcconnell trying to have a swift trial in the republicancontrolled senate. You mentioned those emails 90 minutes after President Trump hung up the phone, ukraines president aid,sky, that military 400 million, was frozen to ukraine. Either way, the president now entering 2020 with fresh calls from democrats to have folks testify during that senate trial. Alix thank you so much. One more story im watching this morning. Maybe potential green shoots. The drop in south koreas exports actually looks to be tapering off. Early trade figures for december show monthly exports could decline less than double digits for the First Time Since may. 6. 2 ,nts in japan rose putting them on course for the the first gain in more than a year. Potentially some green shoots coming in and stabilizing trade in the region. Coming up on the program, much more on your morning trade and analysis in todays first take. This is bloomberg. Alix time now for bloomberg first take. You to break it down is our inhouse team of wall street veterans and insiders. Incident cignarella, voice of the bloomberg audio vincent cignarella, voice of the bloomberg audio squawk, gilly initial guilt ava audio sqawk, elaine initially to ava audio sqawk, yelena shulyatyeva, and also joining us is sarah hunt of open Woods Capital investors. Aboutt this is not International Economics or being a nice neighbor and rolling back tariffs, etc. This is about domestic consumption, trying to boost their own consumption because they are definitely having issues with u. S. Tariffs. Chains are going to change, both for u. S. Companies and china. They are just trying to get ahead of this because they are going to lose business. Theyre going to lose opportunities as much as the u. S. Alix i will do the glass halffull. You get south korean exports that might not be as bad as we thought. Then you get the pboc saying we are going to maybe do another cut. I dont know. Is there a green shoot narrative around here . Vincent Central Banks arent going to support the issue. If things start to waffle, they will come in at some point for sure. But south korea, i wouldnt get too excited. Alix you are bumming me out. [laughter] optimisticare not as as some people are. We still think that a lot needs to happen for Economic Growth globally to really take off. Uncertainties have not been removed. We still have to see the brexit deal. We still have to see the phase i one deal finalized. None of these things have been finalized yet. We know a lot could go wrong. But you know, uncertainty is a big deal. It could help Economic Growth next year, but it will take time for sentiment to shake it off. Sarah i cant disagree with any of that. Year ago, it was right before low, andt made a dire. Looked kind of the market is certainly reflecting a lot of good news, and i think we have a lot of things we have to do, but Central Banks still have our backs. You have a reasonable consumer, reasonable complainant reasonable employment. People end up being put into equity markets because they dont have a lot of choices. Vincent we did get some good news last week that spending was up for the consumer, and the better part of that news was incomes. That gives us an opportunity perhaps to Carry Forward into the First Quarter, but you want to up that those who forecast the end of the world last december that are now forecasting nirvana are not wrong once again because this could be an unwind the opposite of what we saw last year. Yelena things could go right next year. Things should go a little bit wrong in the beginning of the year. You have this bullying impact. Buoying impact of up to 1 , just from boeing halting the production. Theyve been adding to inventories, and that has been adding to Economic Growth. With them halting production, that would just continue that will discontinue. We will see a little impact of that. Seasonalityto the issues with First Quarter growth in the United States. Alix but youve been warning about, you brought growth into the First Quarter from the fourth quarter. But in my mind, wont investors just look through that . It is going to replenish once they start production. Or am i still glass halffull in a bad way . Vincent that could be up to six months away, and that is a long time to wait. We will see how aircraft orders have impacted. Will behe things that secondquarter, maybe even third quarter, we will get tax cut to point out. It will be tax cut 2. 0. It will be a middleclass tax cut. No wood will vote against that in election year. But the first half of the year might be very challenging. We will see which way things go. How much they can do to support that is another story. Sarah i think thats where you start to see about after the end of year, i think people are going to pause a little bit at the beginning of the year on the investment side and say, where do i allocate . How do i allocate . There may be some quietness and not this continuous move weve seen over the last month or so. The beginning of the year could be touch and go, and you will companiesto see what say for going into 2020. You will get those year end earnings in january and february. Alix alix which is sort of what we heard from vanguards chief economist. Nancial risk its Financial Markets run the risk of getting ahead of themselves. Exactly. He said typically it is 30 . This year, it could be 50 . What is actually priced in . How much is being compensated for . [laughter] 50 that they do meet 50 that they could be. If you want to look at that aspect of it, as a former trader, we are going to start the year close to record highs, if not at record highs. I never want to follow a guy who made more money than anybody else. Hurdle. Real social me what someone has done in 2019 say, that was a great trader. Show me the guy in 2020 because hes starting up here, and that is a tough job to do. I totally agree, theres going to be a lot of wait and see in the First Quarter because you dont want to jump into the pool right at the top. If you start with a bad position, it is tough to dig out of. Alix but you also dont want to sell if you get confirmation that things arent terrible. Vincent which makes it really hard to do. The First Quarter is going to be a tricky time for traders and investors. Yelena i will be watching Economic Growth as an economist. I think that we just need to get growth from anything we possibly can. Personal income is accelerating a little bit, but overall, Consumer Spending is slowing. If we get a little bit from agriculture, we can do that. If we get a little bit from government spending, that would be awesome. Overall, we are expecting growth in the vicinity of 2 . It will not be a disastrous year, but it will not be a great year either, i think. Alix which is what we are seeing. You can still see some upside for the s p, but obviously not looking at doubledigit gains. Sarah, what is actually priced in . Where is risk appropriately allocated . Sarah that is a tough one, too. Interest rates have gotten a little better. The curve has gotten a little more steepening. That is going to help the financial sector. With think you still have, the way global debt is priced, youre still pushing people out of debt and into equities. The question is, what are those multiples looking like . They are looking like they are higher because rates are lower, but that is sort of reinforced by Central Banks. Low because banks have made them so low, so it is easy to say this is a time to be putting more here because you need to do that. I think people are going to keep paying up for growth. We see that all over the place in different sectors. See an enormous amount of multiples expansion. What we can look for next year. But i think the beginning of the year is going to be a little quieter than the enthusiasm we have come into. Vincent as one outlier for what both of you are saying, what we havent seen is capex. We havent seen businesses invest. If they get involved, that is things go. Ee where they invest is word will be able to invest, and you can piggyback on that. Alix i will leave it there, guys. Conversation. Good conversation. I dont feel better, but thanks. [laughter] alix sarah hunt of alpine woods is sticking with me. Use gtv under terminal. You can browse the features, check it out. This is bloomberg. Viviana this is bloomberg daybreak. Credit suisse is again blaming its former coo for a spying incident. They say he used a contractor to spy on the companys ex resource. They say he acted alone in surveillance on another top manager. Credit suisse says there is no indication ceo john tr were any Board Members ceo tidjane knew or any Board Members about either case. Offer bump in the joint values japans leading messaging service at about 5 billion. Softbank founder Masayoshi Son plans to compete with global rivals like google, amazon, and tencent. That is your Bloomberg Business flash. Alix thanks so much. Another story we are all watching is boeing. It finally successfully landed its new star liner spacecraft in new mexico on sunday, but that flight was cut short by a Software Glitch during the unmanned vessels assent that forced it to scrap plans to dock with the International Space station. The star liner will now undergo several weeks of reviews. It is unclear whether nasa will do a secondng to flight without a crew, which would push back the timeline of putting actual people in the shuttle by years. Boeing, notign for to mention it comes on the heels of having to cut production for the 737. , as we look and sit at record highs on the s p after a big run up this year, who is left to actually buy the rally . Yields going nowhere. Currencies go nowhere. , soft tradinglume after quadruple witching on friday. This is bloomberg. [ dramatic music ] this holiday. Ahhhhh ahhhhh a distant friend returns. Elliott. You came back and while lots of things have changed. Wooooah woah its called the internet. Some things havent. Get ready for a reunion 3 million light years in the making. Woohoo yeah alix this is bloomberg daybreak. We are sitting at record highs, was s p futures trying to eke out another gain. A little bit of softness in germany in the dax. In other Asset Classes, not a lot of trading, not a lot of volume. We get a healthy twoyear auction coming out later today for the twostens spread. It had been steepening, and is still quite superior to just a few months ago. Oil not moving now, but we have a potential reopening of the neutral zone between corate between kuwait and saudi arabia. We are in the home stretch of 2019, and this year, returns for almost every asset class outpaced averages. Now traders and investors are apprehensive about what 2020 is going to bring. I wanted to highlight some of the top. Movers with you. First off, you have the 20182019 average. The arent far as what we saw in 2019 returns. Everything crushed it. Thats the best way i can say it. Large caps well outperformed. Small caps as well. International stocks, emerging market stocks all performed really well. In other Asset Classes, switch of the board, and it is the same kind of thing. U. S. Bonds, high yield bonds, gold all performing better this year. If you bought everything, how much will you actually make in 2020 . One area that was fascinating is what we saw when it came to negative debt. 17 trillion about this year. Art of that is you are seeing floor in terms of bottoming. Banks are getting tired of negative rates. The swedish bank the latest to hike to zero. They are no longer a negative rates. That will potentially lead to a steeper yield curve and financials that can last. The third part has to do with what we are seeing in the highyield and investmentgrade market. It is unbelievable the move we have seen. Even if you go back for 10 years, it is a huge move. Youre seeing the outperformance as spreads continue to tighten. Even highyield. Cccs have been performing well without the energy class, meaning maybe you dont have to go up in credit quality. Maybe you can buy the laggards because you still have easing central bank policy. Sarah hunt of alpine woods is still with me. You saw everything did well. In that respect, what is the best allocation today headed into 2020 . Sarah it is interesting because people talk about whether it will be a stock pickers market after the move to passive funds and every thing else. If you see any real correction, i think people will start being much more interested in individual stockpicking as opposed to running through indices. Right now, it has sort of been a self fulfilling prophecy where you have more and more people go to a more passive strategy. I think youre going to have to look for things that are specific companies within industries and not just thinking industries anymore, and looking for the folks that have some sort of competitive advantage. Disruptive, oris some mergers in the payments industry. Stocks along those lines. It is things where you have a continuing increase in people making transactions. It means you can continue to grow and what could be a slowing economy. Alix what didnt hold up in the last couple of months, specifically faang stocks. The top panel means we havent reached the peak we saw in 2008 with the s p. Did we take away anything, or is it just they over performed, and were taking money off the table into the end of the year . Sarah i think thats where everybody being in something is where that becomes problematic. If there is any kind of thought of lets take profits off the table or put a little back before we get to the end of the year, they outperform so much when they went down last year relative to other stocks that i think there was some looking at, lets take this off the table and put this on instead. Theyve become such a big part of the indices now that they tend to move with the indices a lot more than they used to because it is just the size of them. Alix which begs the question, who owns what, and he was actually buying . I mentioned this on break, that is there anyone left to buy . If the Short Covering has been covered, you make the expectation that theres no one else to go in and buy the market. Our hedge funds fully allocated . Money managers . Sentiment is so high. Who is the next buyer . Sarah its always a question of is there cash on the sidelines. Who has cash on the sidelines . When equities were underperforming at the end of last year, some of that money was probably slow to come back because it moved so quickly. Now you have people saying i am not earning very much here, and even to your point, except for energy, there are some places where things are tricky. Can i continue to refinance all the time, even if rates are low . You look at the retail space, some of the struggling aspects the retailers have had, and there are probably some places where the fact that spreads have come in so much is probably not wise. There are probably some places where you could see issues there. Alix you can come out of those areas that you see problematic, potentially, and move into other areas . Sarah i would look at where some of the distressed debt is and say, do i want to stay here . Are spreads narrow enough that i want to put that money somewhere else . I think we are underpricing risk to the degree that some people are going to have trouble borrowing money. The question is who, and that is much more on a casebycase basis than industry, except for energy, where nobody wants to put any money. Alix so do you buy into the whole reflation trade . At what point is that a bad thing . You want a steeper curve, ok. But at some point, isnt that bad for companies that you need to refi, that now have to do it more expensively . Sarah if you start to see people pricing that out higher right now you are not seeing it yet. To me, when i look at that, i think about some of the things where, in energy, you are just not seeing the cash flow. That sector is, even though you got oil back at 60, people are saying, this is a sector i just dont want to touch right now. Theres probably some very good places to play in energy because of that. People are still reaching for yield. I think this year is going to be one of trying to pick out folks that can really deal with a somewhat slower economy, continue to grow, and dont look like they are promising you the world right now. It is a very difficult thing to find. Alix is it going to be value in banks . The highlight, the reflation trade. Is it going to be that area finally, or still idiosyncratic within value . Sarah value stocks have done better in the last year because people were looking for someplace to go, but a lot of those are still having trouble performing. Theres a little bit of value trap aspect to that. I think if they can start to show any kind of growth, it would make a big difference because things that are just stuck in this flat forever, people have stopped expanding the way they were willing to in the last year or two. I look at some of the stuff like Consumer Staples. Those multiples are awfully high. At the same time, that stability is what people are willing to pay for. I was just looking at some of the different places and thinking, that is going to be kind of difficult in this environment. I think Balance Sheets are going to be a key aspect going forward. Low, you wantstay to make sure whatever you are investing in has valances sheets that can say love. That can stay low. Alix how do you thing about emerging markets . Part of the conversation is if you have rotation to value, maybe you go into u. K. Or e. M. Is that something you would agree with . It sounds like if you are concerned with the balance sheet, you dont want to be going and buying, say, chinese equities. Sarah i think youve already seen some rotation into those. European indices have surpassed some of their old highs. Also, to the degree youre worried about cash flows, a lower dollar that we might get is not so easy for folks who are u. S. A lot of sales in the , to take that money back to other places. There are issues with how that currency is going to move as well. We tend to be very basically focused on the u. S. , but i think you still have better growth in the u. S. The stoxx have run, but the economy the stocks have run, but the economy hasnt caught up yet. I think theres some room, but a lot of those stocks have run, too. The question is, what am i paying for . Am i going to get any growth that is going to be sustainable . Sarah, always a pleasure to catch up with you. Now i want to get an update on what is missing headlines outside the business world. The vr hurtado is here with first word news Viviana Hurtado is here with first word news. Viviana new documents show that President Trump asked about withholding a to ukraine before his call with the ukrainian president. The administration ordered a hold on aid just after the conversation. That july call is what ultimately triggered the impeachment investigation. Findingarabian court eight people guilty in the brutal assassination of journalist Jamal Khashoggi. He was killed last year at the saudi consulate in istanbul. The incident continues to strain relations between the kingdom and some key allies. Saudi arabia says five people will be executed for the crime. Another three will be imprisoned for 24 years. Indias Prime Minister continues to defend his countrys religion based citizenship law. And the capital of new delhi, modi accused opposition parties of making up lies about the event meant. He is urging protesters to avoid damaging homes and property. The death toll from violent demonstrations in the country has risen to 23. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Alix thanks so much. Coming up, Tidjane Thiam exonerated yet again. Credit suisse says the ceo had no knowledge of the second spying scandal. And if you have a bloomberg terminal, go to tv. Watch us online, click on charts and graphics, interact with us directly. This is bloomberg. Alix viviana youre watching bloomberg daybreak. Tesla secured more than 1. 4 billion in financing from banks for his shanghai factory. An announcement will probably made as soon as this week. It builds on recent momentum as it prepares to begin deliveries made model three sedans. Reportedly exploring and overseas ipo, according to reuters. The delivery arm of the chinese ecommerce giant is in early discussion with banks to raise up to 10 billion in its bid to go public. Company goingng public. Kings reaching an agreement with Gaming Technology diamond eagle acquisitions to combine the firms into one company. In the first half of next year, the deal is expected to close. Im Viviana Hurtado. That is your Bloomberg Business flash. Alix thanks so much. We turn to wall street beat. First up, Credit Suisse is for a secondxcoo spying scandal. And then, t. Rowe price is a rare winner in the long bull market. For wall a tough year street investors. Joining us now is bloombergs sridhar natarajan. The Credit Suisse scandal is incredible to me. How much longer are we going to be able to say as a ceo, i didnt know about it . Sridhar this is a wild saga. This is a tiff that started between two neighbors and became an International Banking scandal. Alix unrelated to the banking. Sridhar completely unrelated. He left, there were spies chasing him in the shadows of the swiss alps. That was one case. That was embarrassing. Before you know it, just a few months later, we are talking about another spying claim, and another. We have three claims. So they come out and blame the fired, buto, who was where does the buck stop . For now, Credit Suisse seems to say it stops short of the ceos office come but they better hope there are no more claims coming out of the woodwork. Alix totally. Which is worse, that you have all of this going on and your ceo and the board doesnt know, or that there is tacit approval that this is accepted . Just go do your thing, your trusted. I dont know what is worse at this point. Sridhar there is no good answer here. Whichever way you look, this is just a bad look. Havetutions and investors governance. G on they have been going out and saying spying is not a part of our toolbox. Right now, it is not a good look. Its a terrible look. Alix it is part of your toolbox. You did it three times. Lets get to the second story. Over the last 10 years, t. Rowe price has actually grown its assets under management tremendously, from or hundred billion dollars to 1 trillion. But i thought that whole business was dead. Sridhar the question is, can you beat markets and do it consistently . T. Rowe price is a company that goes back to the 1930s, so if you can survive a world war, you can probably keep up with changing trends in the markets. They really made their name back in the day. Idea ofularized the growing industries, focusing on industries, at a time when stocks were focusing on cyclical investment. They had their second best year in the last decade. They are holding the ground, but what happens over the next decade . Can you still do it at a time when we know that index trucking mutual funds and etfs have surpassed active funds in terms of total assets they manage . Has beenpany that focused that has not focused on passive investing, can they still hold onto their strength at this point . Alix which also begs the question, how exposed is the market to the passives . Even if they might make up a smaller slice of the overall market, if you have a crisis or some kind of fleeing for the hills kind of thing, they are worried about that exacting. That exact thing. I wonder if we will ever see that. Sridhar that is a big question. Hasave seen index trucking gone into the credit market, and people have been worried, what happens when everyone flees at the same time and head for the exits . Weve been worried about a possible crisis sparked by a phenomenon like that. We havent seen something. For now, that future is still in the distance. Alix lets get to the third story, which is ipo bankers. We had a lot of ipos that came to the market that were good, and then we have the flops, and once that never happened. If im an investment banker in the ipo world, and i happy . Sridhar you are probably not getting a great bonus. [laughter] sridhar but some have gone out there and said, look, the death of tech ipos is greatly exaggerated. The market sort of repays their fate, but the stats are not great. If you look at all the tech ipos this year, on average, they are down about 3 . The market is up 30 . Look at all ipos in the u. S. On average, up 11 . That is still not good. Youve talked about the big ones. Uber, lyft, pellet on, smile right. Arguably, the biggest ipo story of the year was the ipo that never even happened, wework. So you had a few big hits here. This was also the year of beyond meat. It has lifted at 25 , and even that has come back down to about 75 a share, still three times what it listed, which is great, but just not where it was. Alix fair. The other biggest ipo of the year, saudi aramco, which bankers got pennies for fees, basically. Sridhar it was this big pot of gold for Global Investment banks. You are talking fees and hundreds of millions of dollars. Youre talking about a company that has a 2 trillion valuation, but is that even really reliable when you have 1. 5 of the Company Listed . That is all that you have to go out for. This was supposedly the crown jewel of the ipo market this year. That is not how it turned out. Alix bloombergs sridhar natarajan, thank you very much. And bank of america is the leader in leveraged loans. David westin has an exclusive interview friday. Overleveraged companies tend to have problems when the world slows down. That is economics 101, or Credit Underwriting 101. We have the right amount of debt turns. Alix he also added that Certain Companies with too much leverage in their system are concerned because they usually reverberate back to banks. Coming up, credit slowing, but risk is holding steady. Does this call for cautious optimism . Thats todays traders take. If you are jumping into your car, tune into Bloomberg Radio on sirius xm channel 119 and the Bloomberg Business app. This is bloomberg. Alix time now for traders take. Joining me as vincent cignarella, voice of the bloomberg audio sqawk. Youre looking at this really cool chart, the credit impulse in the s p. What is it showing . Vincent i found this from a good friend of mine about the credit impulse, the flow of money on a yearoveryear basis into the economy. We always hear about what the fed is doing and what the banks are doing, but where the money is actually flowing into the economy is where it works. The blue line is the s p. As the flow of funds, which is the histogram, declines, we see some declines in the equity market. As the full of funds come back into the economy, as you would expect, the s p rallies. Its been a nice rally, as weve seen from the post financial crisis, as pretty much the flow of funds to the economy has been relatively steady. We had a decline in 2018. We saw that drop in december with the s p. Now the credit impulse is back, the flow of the economy is back. We see the stock rally. But it has actually been declining. The moving averages on an uptrend, but the nominal numbers are starting to decline. It will be interesting to see what 2020 shows, whether the funds continue to flow into the economy and support the equity market. Alix i love this chart. Vincent it is kind of interesting. You can just type in credit impulse and you will see the bloomberg credit impulse come up. You can follow that, and it does lag a little bit, of course, but it will give you the trend, and you can follow the trend. Alix this is quite overextended in relation to the actual credit impulse. You have to wonder, what is the lag, and what brings that down . Vincent if you thing about monetary policy, it does lag as it comes into the economy come about at the same time, it is a trend of it going forward. So far, the trend has been positive from 2018, but on a declining basis, if it continues to decline, it is going to roll over and perhaps pull equities down with it. Alix fine, i will give credence to the glass halfempty. [laughter] alix vincent cignarella, thanks so much. Picks for 2020. This is bloomberg. What are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Alix welcome to bloomberg daybreak on this monday, december 23. Heres every thing you need to know at this hour. Lets take it from the top. China cuts import tariffs on 389 billion. This comes fresh off of phase i agreement with the United States on trade, so china is cutting import tariffs on a wide range of goods, a gesture, yes, to show its lowering trade barriers, but it also wants to spur domestic spending. Alix china also unveiled measures to open up and support revit sector growth as the u. S. And china inch toward signing a trade deal. [speaking in a foreign line which] in a foreign language] 23 killed int protests in india. Prime minister Narendra Modi defended the citizenship law. To distancetrying themselves from the controversial citizenship act that has punted protests. He also tried to distance himself from a plan to start a National Citizens register. He basically tried to tell muslims, the minority of the country, that those still in india had nothing to fear from the bill. Pres. Trump i think germany is making a tremendous mistake by relying so heavily on the pipeline, and i think it is a term of this mistake for germany. Alix the u. S. Sanctions the nord stream 2 project which will send gas to europe from russia. Im inspecting that President Trump is going to sign that, so it does not camesa surprise. Its been around for over half a year that something will be coming soon, and now it is happening. Alix the 11 billiondollar project is weeks away from completion. Credit suisse is drawn deeper into a spying scandal as another employee was spied on after leaving the bank. When Credit Suisse said thisthis year kathy year that the spying matter was an isolated incident, they were making a statement in good faith, and the subsequent allegations which they have admitted to of the hr chief were new to them. Alix the firm again placed the blame on the former coo and says there is no indication that others knew of his decisions. A Saudi Arabian court found eight people guilty in the murder of journalist Jamal Khashoggi, killed last year at the saudi consulate in is simple. Five people will be executed for the crime, another three in for 24 years. In the markets, steady as she goes. We saw a last turn at the end of the session on friday. We are still at record highs for the s p 500. Currency market and the bond market paned. Crude not going anywhere either, soft into the home stretch of 2019. Traders are much more worry about what next year will bring. This year, returns for almost every asset class outpaced averages for the previous decade, from large caps to small , from emerging markets to gold. Joining me from boston is denise managementfidelity here in newegy, and york is michael liss from American Century. In the work that you have done, where are we too allocated . Where is there too much money . Denise i think it depends on your risk tolerance level, in terms of what has been the critical drivers over the course of the year. We have seen a big backandforth. It hasnt really been a trending market year to date, so much as a lot of classes have been up over the course of the year. I dont think that has been true in any given quarter. What we have seen during the last quarter is a clear rotation back to economically sensitive sector, where technology and financials have been leadership, and Consumer Staples and technology have been and others have been lagging. I think it has been driven in part by, and will continue to be driven in part by the value disconnect. This is true in the overall risk of the market, when you talk about credit. What we have seen his defense be really expensive, and the top percentile of its range since 1970, coupled with the fact we are seeing global stimulus that has been put in place, historically turning green shoots, which would be a positive for cyclically oriented sectors. Now we are just starting to see what i would call statistical green shoots for earnings. We have seen the oecdlei accelerate on a sixmonth basis for the better part of a year, but now in a Critical Survey survey,watch, the nfib it nexts affecting year. I am pretty constructive going into 2020 on equities. If we see earnings acceleration that continues to play out in the data, 90 odds of an equity market advance and at least 60 to 70 of cyclical sectors and economically sensitive sectors leading the market. Alix do you agree with that . First, great to be back, and happy holidays to you. We had a slow down, but weve avoided recession. The trade war really put a chill on global trade. It really manifested itself in manufacturing slowing down, but the Services Side stayed pretty positive. And led the u. S. Economy drove it forward. Later market labor market was pretty strong, and will continue to stay strong. Hourly earnings are up, and are prettyess claims positive. Therefore, we think Revenue Growth is going to go in the mid Single Digits for Corporate America because people have money in their pockets they are going to spend. Think operating Profit Margins are going to be flat. We think that sophia is a little high as aself that little ahead of itself. We think with midsingle digit Revenue Growth and some buybacks, we think corporate earnings will grow about bid Single Digits, 6 to 7 . We think that will help valuations a little bit, but at earnings, we are trying to find highquality companies in cheaper parts of the market. That means energy and financials, and within the health care sector, pharmaceuticals and industrials. Alix to focus on financials for a second, if you come into the bloomberg, the white line is value versus growth, and value has been outperforming since september. The blue line is banks versus the s p. The same thing, banks outperforming. Is there a specific financial or bank that you like that can take advantage of a steeper yield curve . I put that in quotes because 27 basis points isnt exactly steep, but better than it was, and better than inverted. Mike you have the bond market saying things are not going into recession. Yes, yield spreads are tight by historical measures, but if we look at a bank like jp morgan, we think the are very well positions. They have great capital levels. Very diversified revenue model. Not only are they making money on spread income, but on fee income is well. Those are a couple of banks we really like. Alix for a sector perspective, how much more do you think there is in financials . Denise i think theres a lot of opportunity and financials. What is really unique if they are back down to the fourth percentile world whose pe, which is led to odds of outperformance. As much as we focus on the yield curve being flat, and that might impair earnings, when you look at even inverted yield curves on a go forward basis, the topperforming sector is most often financials. You put those two things together and what it tells me as i strategist is that at this point in time, it typically is that the bad news is priced into financials, and at these valuation levels, it looks like history my play out the same way. I still think theres opportunity as we enter 2020. Alix what do you thing of tech . Tech . T do you think of if we come into the bloomberg, this is the story of faangs. Have the laggards rallied enough that you want to be buying this discounted big tech names . Denise i think technology is seeing a bit of a rotation in it away from growth in into the value sectors. Industry semis as an really benefited. When i look at that, they are at levels that you havent seen in 20 years as well. Again, some advance, but despite the fact it is usually correlated to the isn manufacturing indices, it is juxtaposed. It hasnt correlated this cycle because it was already the downtrend, headed to be priced in. Much as it doesnt technology as a sector doesnt have the same set up as financials and industrials. We have depressed indicators toch most often are you want look to get higher performance at the same time youre seeing valuation support. Juxtapose that with technology, which is still the only sector below average valuations, but well above average in terms of ebit margins. That is the only sector that still looks like that, so theres opportunity as we have seen here for things like growth, technology, and financials. Alix is there anything in tech that fits that profile for you . Mike there is. We are trying to pick a response within technology. Spots withinr technology. One company would like is cisco systems. They have a solid balance sheet, high market shares, and a consolidated market. They hit some headwinds in 2019, i. T. Spending, and we think that was a consequence of the chinau. S. Trade war. But we think with a truce, i. T. Spending should start to pick up slowly going into 2020. These guys have some real cyclical tailwinds. They have a change in revenue model, moving from hardware to relying on recurring revenue model of services and software. We have a very strong position in securities software. The leaders are continuing to consolidate that area, and it is going well for them. Goingve from 4g to 5g is to help drive demand for their product. They are trading at a pe of 14 and a dividend yield of three point 25 . Think it is a pretty good riskreward. Liss of American Century and Denise Chisolm a fidelity management, you will be sticking with me viviana this is bloomberg you will be sticking with me. This is bloomberg. Alix what are your top calls for 2020 . Taking a look at value, be taking a look at health care taking a look at energy. With me is mike liss of American Century. Mike Cardinal Health is one of my top pushes. It is a drug disputer. Theyve had some headwinds, certainly. The Opioid Crisis has hurt them, and generic drug pricing being negative has hurt them as well. We feel they certainly have some responsibility for the Opioid Crisis and will have some kind of liability. It is terrible when anybody has a disease like drug addiction, so we understand. Alix do you feel like it is priced in of this point . Mike we think it is priced in, and some of the worst Case Scenarios thrown out is not toevant or in proportion their involvement. We think that any reasonable settlement paid out over 10 or 20 years, which, again, we feel it they have responsibility, they can handle that. Drug pricing has started to stabilize. Normally it goes down 3 to 5 a year. It is starting to get to that range after being really. Levated by historical measures we think they can grow in a normal price decline environment. Alix wrap that into the Overall Health care sector that also has potential headwinds from a 2020 election. How is the price . Denise i dont see the clear odds in terms of leadership as i see in technology and industrials. But there is certainly opportunity in health care. I try and lock in on where signals have been predicted in the past. Health care as a sector now has two screening signals, which is beta, or risk, is as cheap as it has ever been, even more so than 2008, and value spreads are as wide as they have ever been. Just as mike was talking about, the odds of things being priced in, whether it relates to elections or it downtrend in margins, again, higher odds that things like that are priced in and health care performs. I think the opportunities are unique in terms of value, so from a factor perspective, and risk are the opportunities to really explore from a sector basis. Alix lets move to energy, then. Like, as one of your topics. Like conoco is one of your top picks. Mike they have top geographies not just in shale, but in africa, and the middle east, and canada. They have a very nice balance sheet. Theyimportant than that, are making very shareholder friendly moves. They have agreed to return lots of cash to shareholders in the form of dividends and stock buybacks. Theyve also agreed to limit their production to mid Single Digits, and that is significant. They could choose to grow their production 10 to 15 , but they would be not generating any Free Cash Flow. At 5 , we think they can oferate a terminus amount cash flow. Alix is it going to be enough to bring in other investors off the sidelines . No one wants to buy energy. Mike right. [laughter] alix like, for stop. Mike thats what i do for a living, by things that are outoffavor. We think in the energy sector, there are a lot of companies now that get it. Its taken a lot of beatings over the head to say you need to stop putting every last dime into the ground and start returning cash flow to shareholders. Companies like conocophillips and chevron, even Service Companies like schlumberger, they get it. They know they need to return Free Cash Flow to shareholders. Alix so why isnt energy value trap . Denise when i look at the data, i have concerns about the sector overall. I think the clear lessons from the 1980s and 1990s is you can do things like increase operating margins and returns, but you are offset with multiple compression in is apply situation. What you are really looking for is the vast majority of valuation indicators being in the bottom quartile. That is what gets you 80 odds in energy, and that is when you start to look. The problem is we are not there yet. We are only middling in terms of Free Cash Flow, yield, or any earningsbased measure. We are only halfway there to the point at which i think you want to look. As much as we talk about it being a value trap, i dont there yet, att least on a longterm data perspective. Alix so what do you think of that . Ate what denise is looking is trailing indicators. We are looking at company by company. Shes looking at the whole sector. Shes right. Some of the Companies Still dont get it, so it doesnt show up as positive on Free Cash Flow. When we start to look at some of the leaders that get it, like to ,own, conocophillips, chevron they have Free Cash Flow yields that are competitive. More importantly, they are sustainable. They have best in class returns. We think they can grow in the mid Single Digits for the next five to 10 years because they have lowcost assets. That precash flow yield starts to compound. Pretty soon you are up to doubledigit Free Cash Flow hold the you dont stock price up. They are going to end up paying back all of the stock, or all of their market cap in terms of returning cash flow to shareholders. The rest is gravy from their. We dont think that all of a sudden, we will demand is going to fall off a cliff. We know electric vehicles are coming. We disagree with the pace at which we think it going to get adopted. Our heads are not in the sand on this. We understand it is coming. Alix fairpoint. Both of you are sticking with me. Coming up, boeing ending an epically bad year with a space dead. We will discuss the outlook for the company, coming up. This is bloomberg. Viviana this is bloomberg daybreak. Credit suisse again blaming its former chief operating a new spying incident. A statement from the bank says he used a contractor to spy on the companys exhuman resources chief. They allege he acted alone in ordering surveillance of another top manager. They say there is no indication that ceo Tidjane Thiam or any board memories know about the spying case. A deal valued at roughly 130 million, which would not include a significant premium for harwoods closing share price. The deal is set to be announced to the london stock exchange. On sunday, boeing successfully landed its new star liner spacecraft in new mexico. That is your Bloomberg Business flash. Alix thanks so much. Mike bliss of American Century mike liss of americans injury still with me. Do you still want to of American Century still with me. Do you still want to own boeing . Mike we do, but not at this price. We are waiting for a cheaper price to invest. Alix fundamentally, why would it make a good addition to your portfolio . Mike it is a great company. It is a duopoly. It is them and airbus. It is hard to challenge them. This is a product in a growing area that we think is just going to continue for decades into the future. Alix what is your interpretation of why the stock hasnt gone down as much . We get negative headline after negative headline, and you are right, it is still not even at the lows we signed in the beginning of 2018. Mike it is very stubborn. We are a little perplexed ourselves. It is a good business, a duopoly, with high barriers to entry, but what they have done has really surprised us. We are surprised the ceo is doing his role. We are wondering what the board is doing. It must be interesting to be a fly on the wall for those discussions. It is amazing to us that when that product is that important to you, that the oversight has been is lacks as some of these has been as lax as some of the stories suggest. Know that engineers are working hard. We understand that. But when this is your major product and main growth driver, it is really surprising to us, some of the stories weve heard coming out of boeing. Alix do you own any of the industrials and suppliers . Mike we do, and we like industrials. Mscwn a distributor named industrial. Invent is another one. One is a british fluids theyacturer im sorry, drive fluids through a system. Those are three names we really like. Alix mike is sticking with me. Coming up, we are going to talk about a rough ride postipo for uber and lyft. What next year could bring for the group. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. We get durable goods in a few seconds. The movement in the market is not a lot. The s p is up. 2 and hanging onto the read from earlier. In other Asset Classes not a lot of movement in the bond market or in europe. The currency market is flat. Millione two year, 40 dollars worth of treasury coming online later in the day. Durable goods dropping. Transportation, durable goods came in flat. Overall, durable goods orders down 2 . That is a pretty decent mess. That is a pretty decent miss. Capital good shipments also down. 3 . The Chicago Fed National activity index barely using anything in positive territory. The previous month was revised lower. These are not the best numbers for durable goods, 2 . When you take a look at these numbers that can be volatile or lumpy but do speak to inventory and the production in the u. S. , what is your take . That is theweak and time you want to be looking at the industrial sector. If you look at the loosely called manufacturing recession, if you look at the ism being under 50, Industrial Production being negative, and you are seeing inherent durable goods orders also negative in terms of the core on a year on year basis. If you look at every time in history that has occurred, that is usually the only time you actually get alpha from the industrial sector. You are at that point in terms of that part of the cycle where you want to be looking at the exact team time as we are seeing it potentially even priced in as measured by the odds of outperformance on forward pe and easy to fails which are strong valuation support. There are strong opportunities in the sector despite the bad news. Alix orders for u. S. Capitol equipment barely lifting. Mike liss, weigh in on that. Do we need to see ceos spend to feel more constructive about certain equities . Mike i think denise hit the nail on the head. We liked industrials. There are good rewards. We think it is going through your bottoming process. We will not get hung up on one number. Tmi has started to bottom and turned slightly positive in the u. S. And turned slightly positive and to the extent you can trust the numbers in china directionally they look correct. Europe is starting to get less worse and this is the time to be starting to look at the industrials. We think the rewards are starting to look a lot better. Also you have the trade war. We think that is going to help from the manufacturing side and that give ceos more confidence. Alix when youre taking a look at this is the time to buy because the capex spend is low, when is the pickup . When would you say six months down the road is when i need to see Real Investment happening . Denise investors need to be cautious because outperformance comes two ways. One is in the shape of performance, whether it be capex or earnings or sales growth or multiple expansion. We could be sitting here next years debating whether it would vshapedu, or recovery. That is what you might see in terms of the trade war. Maybe it did not have as much of an impact on fundamentals because its tail and slowly. Maybe it might not have as much of an impact on the fundamentals as we enter 2020, but it may have an outsized impact on the multiples in terms of cyclicality versus defense in any kind of economically sensitive stops or sectors in the market. Alix denise and mike will be sticking with me. We want to talk more about what will be 2020 and terms of ipos, ridesharing services, and we want to look at how those performed after a tumultuous year. Joining us is mandeep singh, Bloomberg Technology analyst. You do such great work on uber and lyft, they were the most hotly contested. On a fun a mental basis, who is doing better . Mandeep we just did our 2020 bothok, and our view is will hit their 2020 profitability target, uber will get there first. Ebitda margins an of 20 . It is all of the subsidies they are using for scaling their feet eats business. They just got out of the south korean market and are planning on getting out of the indian market. That is the clear sign they will speed that when it comes to profitability. Lyft is relying just on sales and marketing cuts. That is the difference. Uber has done well when it comes to bringing down their insurance costs. Lyft has not done that yet. They are just relying on marketing cuts. Alix it sounds from your town that is not a good choice for lyft. Mandeep there is a lot of scrutiny around ridesharing in the path to profitability for these companies. If any company was to get there first, uber is in a better position. In any marketplace business, scale and at work matter. Scale and network matter. Lyft is focused on the u. S. Market, yes it has higher average prices, but that does not change the fact they need more leverage on their insurance and marketing and they still have a long way to go. Alix what about the food delivery world . What is the Growth Potential and how you make money . Mandeep food delivery is a bad business. That is what we are realizing. The margins are razor thin. We had grubhub, which was profitable, but because of all of these entrance, even they are struggling. Food delivery has a tougher time to profitability and that is not changing anytime soon. At the end of the day youre competing for the same careers. With ridesharing, at least it is a consolidated market, large market. Food delivery is not a large market. People will change their habits. Will sees that mean we more consolidation in that space in 2020 . Mandeep yes. We have started to see that already. We think it will happen in the u. S. The u. S. Market is very fragmented. I just mentioned grubhub, uber eats, and so for the Unit Economics to get better, consolidation is a prerequisite. We will see that in the first half of 2020. Alix is the valuation going to be high . Just get a lot of bids . Mandeep there was. Thatiew is for companies were geographically wellpositioned, they will probably hit two to five times multiples. For the u. S. Market, grubhub multiples have already come down. They will not get a high premium. Alix mandeep singh, thank you so much. You should read his stuff on the terminal. Good analysis. Investors and some of the largest ipos are not that happy this year. U. S. Listings gained just 11 on average and tech ipos have done worse. Denise and mike are still with me. Mike, when you hear that, is froth is being taken out of the market . Is it a good sign or a bad sign . Mike certainly we work was assigned of the froth getting taken out of the market. Investors are starting to Pay Attention to value. As a value investor, it has been a frustrating three years. It has not been since september 1 we had any kind of recognition that valuation matters. Kind of like playing a Football Game without any rules when youre not paying any attention to valuation. It is kind of fun, but it makes things out of control. The result on the other cited is not very fun. Alix denise, you look similarly that wework was a turning point or will this just be a pause . Any onei do not know stock is a turning point for the stock market overall. I agree we have not seen traditional excesses we have seen in prior pool markets or equity market advances. I think what is critical is is there a shift back to value in the market creating a floor where we get broader sector participation. Technology has been dominant in terms of the ability to outperform on up consistent basis. To the extent we get other sectors, whether they be value in terms of classic value to join the party, i think that is a positive as we enter 2020. What is key for any nonearnings company is not necessarily the level, it is that change. Is notstudy history, it the levels predictive about performance, it is going from decelerating to accelerating. That is the change investors should be looking for in terms of nonearning Companies Potentially joining the party into 2020. Alix mike, if you take a look at the companies that do not have the earnings but have a lot of growth in sales potential, when do you buy them . Or never . [laughter] mike i think the answer is never. I leave that to the growth people. I will not say growth is not a good way of investing. It is what you are comfortable with. I own some growth funds. I will let the growth people handle that. I will look at companies that are mature, that have stable returns on capital, highquality discount trading at a to their fair value for transitory for temporary reasons. Your like it is ok, you do that. Appreciate you catching up with me today. Liss, chisholm and mike thank you very much for being with me. I want to recap the durable goods numbers. Quite disappointing. Durable goods down 2 . The headline number was pressured by decline in orders of commercial aircraft, which was interesting because boeing reported it received 63 orders in november, more than expected in october. The headline number was down. If you backout transportation to zero growth, and capital good shipments if you backout air spending was down. 3 . The netnet is growing. There was a lack of appetite for u. S. Companies. Keep in mind this is a volatile number and might not be an indicator of what will happen next year. You are seeing buying and the bond market, yields are coming down, and u. S. Equities picked up in the futures market, a little higher, but nonetheless the bond market seeing buying into it. We want to give you an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Is cutting import tariffs on a wide range of goods. Ofist of 800 59 types products include parts for smartphones and food consumer items including pork. Beijing is continuing to lower trade barriers. An outbreak of african swine fever has caused shortages of pork. Bloomberg has learned israel hopes to conclude a freetrade agreement with china in early 2020. Since 2015 the two have been in talks, but the latest round coincides between heightened scrutiny over cooperation between china and israel. The u. S. Is cautioning israel to be cautious. The ongoing political deadlock in jerusalem is slowing negotiations. John bolton says the Trump Administration strategy toward north korea has been a failure. In an interview, john bolton suggesting the Trump Administration is not fully committed to stopping north Koreas Nuclear ambitions. He believes the u. S. Could be doing more. Sanctions on the north korean economy could force the hand of kim jongun. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am heavy on hurtado. This is i am Viviana Hurtado. This is bloomberg. Alix coming up, our exclusive interview with Brian Moynihan, bank of america ceo, and his thoughts on how to manage Overleveraged Companies. Check out gtv come all of the charts we are using throughout the show. Gtv. This is bloomberg. Viviana this is bloomberg daybreak. Im Viviana Hurtado. Thethan the viviana chinese premier says the government will continue to lower bank reserve ratios. Beijing plans to reduce overall borrowing costs for smaller firms to reduce this as it seeks to boost the broader economy. Tencent wants to boost its investment in europe to more than 10 billion a year. The tech giants german cloud cheap said in a Business Interview with german media says the Company Hopes to create 10,000 jobs on the continent. Tencent scenes germany as its most prominent market besides china. Market the two often move in opposite directions. Some traders see gold next year at 1550 announced, but some traders suggest 1850 may be in reach. Alix bank of america tops the lead tables for u. S. Leveraged load issuance and the lenders have dominated the market for a decade. When it comes to potential carnage from leveraged loan stress, ceo and chairman Brian Moynihan spoke exclusively to david westin about china stress. The exposure on your books is relatively small, especially given the size of our loan book. If you go way back, we have found the Company Secured lending on the consumer side is a bigger part of the total lending on the commercial side. That is how you manage risk. You go back to the question of what could go wrong. We view everything could go wrong or anything could go wrong. You manage the risk by having diversification. When you think about leveraged finance, it is not necessarily on our books. The question is Overleveraged Companies tend to have problems when oil slows down. That is economics 101 or Credit Underwriting 101. We have done the right amount of debt turns. You hear us get concerned when the market moves away from the the majorl levels Financial Institutions to find higher levels from other providers. We get concerned about that because it reverberates back. The concern is there too much leverage in Certain Companies or do they have trouble with that impact economy. That is the question on the table you hear people talk about. The Net Asset Value and the fund will go down in value. That happens all the time. The question is it enough of a market share that will impact the economy. On awful lot of negative Interest Rates and debt. Isnt it inevitable people will borrow too much . Almost compelled to . It is free or better than free . Brian the federal government and State Government or companies, you always worry about when you go back and look what hasverage been interesting is when people are talking about the biggest asset class for consumers has been very well structured for a long time. When the economy has grown , from 14 trillion in size to 21 trillion, youve seen the Home Mortgage loan totals just barely get above what they were. As a percentage of everything you think about over 15 years ago, you can see how inflated they were. We feel the mortgage structures are good. We feel the credit card lending structures are good, we bill the auto and the prime business is good. Even though the volumes are high and low rates seem to be lower, which is the reason why the fed uses low rates because it stimulates the economy, the reality is it is always a question of how many debt turns a company can have and that is why they keep their underlying standards and try to keep the market to that. On the consumer side it is the same thing. These are prime borrowers we are very comfortable. It does not mean there might be somebody trying to do some different. Alix that was Brian Moynihan exclusively to david westin. Coming up, we will take a look at how this years best and worst performing stocks in the s p in todays technically speaking. If youre heading out and jumping in your car, tune into Bloomberg Radio heard across the u. S. On sirius xm channel 119 in the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Joining me is bloombergs abigail doolittle, who in a former life was a technician on the street. Youre looking at the best in the worse of the s p. Abigial a med tech cardio company down 50 on the year. The worst stock for the s p 500, heading for its worst year since 2002. Sometimes those stocks bounce back but this chart suggests there is more work to the downside to be done. We are looking at a tenure weekly chart. You can see the longterm uptrend. The buyers are in control. They love the stock. You can see this pattern started to confirm to the downside, slowing growth and negative letter from the fda and it is still confirming we will see a measured move to the downside equal to what has been 300 to 400, actually a little bit more. We will see the stock consolidate down to about 100 per share. It looks like the bears will have a good time with this one in 2019. Alix that is on the downside for the s p for biotech. Lets get to one the performers. Andy. Semis amd. Semis doing well. Ready to breakout . Abigail this year up 139 percent, the best year since 2015, at that point up 230 . It looks like the bulls may have more work ahead to the upside. Goingttom panel is amd back to 1980 on a quarterly basis. Take a look at this years move up. We could see consolidation toward 30, but the biggest point i want to make is take a look at the breakout relative to the s p 500 outperforming going all the way back to 1980 relative to that downtrend. This would suggest even if there is consolidation ahead, netnet the bulls want to take charge of this one. Perhaps 2020 could be choppy but overall it looks like the bulls want to continue higher. Alix lets get to apple. One of the biggest growers. What you see . Abigial this is a weekly chart. What we are looking at is a range. Apple buyers and sellers are reliable over the last decade. Back in 2012 and 2013 you see the big move up and then the big move down on margin issues, and then the big move up 2016 was the first decline for revenues in about a decade. This year in 2018, the overall volatility for the market guided down for the first time in such a long time, keeping back out of the range if history works the way it has in the past it looks like the sellers will take over quickly, especially considering how overextended is relative to the 200 week moving average. Take a look at the weekly rsi, very much overbought. One sector turned down. That is a good signal for apple bulls. It looks like 2020 could be a little bit rocky for apple. Alix interesting chart. Thank you very much. Birds abigail doolittle. That does it for me on bloomberg daybreak america, but coming up open i will be joined by jay pelosky. You have the bad durable goods number four november, and other Asset Classes the changes in the bond market. Yields moving lower in europe by one basis point, also in the u. S. You are seeing longterm yields moving lower. That curve flattening by 26 basis points. Commodities and currencies and equities hanging in despite durable goods flat for the month. This is bloomberg. Alix from new york city for our viewers worldwide im alix steel in for jonathan ferro. The countdown to the open starts right now. Up, stocks on track for their best returns in a decade. Strategist looking for another year of gains in 2020 but the rally may not look that familiar. China facilitates the open economy. The country targets 859 products for lower tariffs. Apple shares trading near an alltime high. Analysts getting bullish as the tech giant gets ready to roll out its first 5g phone. We are 30 minutes into the opening bow. Equity futures are hanging on to gains. Fact that thehe Capital Equipment barely increased for november. A dismal durable goods that dropped about half an hour ago. Bond yields down two basis points. Potential breaking news. Boeing is now halted. We are waiting for news pending. Boeing stocks halted into the open. We will update you on any breaking