Time now for the global exchange, where we bring you todays market moving news from around the world. From hong kong to jerusalem, washington to new york, our bloomberg voices are on the ground with todays top stories. In israel, Prime MinisterBenjamin Netanyahu is facing a rare challenge to his lead. I am not sure i would see this day come. Reporter that is very true. Significant. Be it would change israels Political Landscape for the past kud itss and give the li first win in 20. They would have a better chance of forming a government after the third election of the year come march. David thank you so much. To turn to commodities. Oil is extending its gains as u. S. Inventories decline and optimism over a partial u. S. China trade deal grows. Youre right, those are the two drivers hitting oil this morning. Broken throughe a level on trade deal optimism, partially on risk assets. The santa claus rally really helping oil out. Another big story is the inventory decline. If it is confirmed on fridays reports, there are growing concerns about another supply glut for oil, so all eyes are on fridays data. David thank you so much. Now we are going to turn to retail. Holiday shopping sets records, apparently. Thats bring in Jordyn Holman on the telephone from chicago. Initial response of returns are pretty positive. Ordyn there are signs that the holiday was really good for retail sales. They went up 3. 4 percent, and it was online sales that grew the most. Retailers should have a lot to cheer about. David thank you so much. We will be talking to her a little later in the program. Now we will go to hong kong. A flashpoint for protests over the holidays, with more rally set for today. Winning the is bloombergs annie lee from hong kong. It doesnt sound very pleasant. Sorry, we are having technical difficulties with any lien hong kong. News over the big holiday. Senator Lisa Murkowski expressing concern about how Mitch Mcconnell is proceeding with impeachment in the senate. A little bit of a crack in the republican wall . Kevin good morning. Yes, precisely. Senator Lisa Murkowski of alaska telling an nbc affiliate she is concerned for how Senate Majority leader Mitch Mcconnell has navigated through the impeachment trial process. Remember, House Democrats have been pressing for leader mcconnell to accept the testimony of Mick Mulvaney and john bolton, two Top Administration officials who they say have Key Information regarding that ukraine phone call between President Trump and ukraine president zalewski from last july. Lastesident zelinsky from july. 3 of the senate is needed to remove the president in an impeachment trial, which is unlikely. With one republican signaling they have concerns over the rules, that could be interesting to see if she is able to pull over other republican senators like susan collins, mitt romney, and a host of others that could slow down the approval process for those rules. Remember, this is the final point i will mate, senator murkowski opposed the confirmation of justice cavanaugh. David certainly that trial would get a lot more interesting if you had those few republican senators switching. Another story in washington is very much in the news right now, and that is boeing. Eing placed their ceo to before the christmas holiday, but now we are told theres a new probe of documents that was handed over to investigators on the hill that we did not know about before. What do we know about that . Kevin boeing has said these documents are sticking with their transparency effort to make sure that they are having a transparent investigation. Suggest those documents that were handed over to the faa and the House Transportation Committee suggest another development that has raised concerns amongst regulators and lawmakers, all adding to speculation of this new effort for the new ceo, david calhoun, in order to try and readdress some of those concerns with regulators and lawmakers. No doubt, those documents, which have not been released publicly yet, are going to be asked about and talked about when lawmakers return from the holiday break. Boeing has released a statement. They say that these documents are not consistent with the company they need to be or the company that they are. Theres some new details and those documents that are going to be perused over. David it feels like boeing is really trying to make a turn when it comes to dealing with regulators in washington. Thank you so much come our chief washington correspondent reporting from the white house. President ump spent christmas in florida, whe he threw Christmas Eve party at maralago. Also attending, alan dershowitz, who was seen chatting with the president , which only fueled eculion th he could join the president s legal team defending impeachment. Hes been an outspoken defender of the president during the miller investigation and impeachment proceedings. The white house isnt conversation on that. Coming up, more on your market trade and allowances in todays first take. This is bloomberg. David now for the bloomberg first take. Here to discuss our yelena shulyatyeva, peter coy, and from state street, marvin loh, global macro strategist. I want to start out as we go into 20 20, theres a lot of concerned about whether the s p and other things are other bought. Does the underlying economy support the markets . The markets are looking pretty good at the end of the year. Yelena the economy is not looking that bad, but it is not looking that great, either. We do expect some slowdown going into the next year. Growth next year, slowing down to 2 . Consumers continue to support growth. It will be stable growth. We might see some slowdown in the first quarter, but going forward, it should be ok. Sub2 growth rate support where markets are right now . The markets are quite robust. Marvin animal spirits are high. Thats for sure. We look at what we thought at the beginning of this year, in terms of trend growth and below trend growth and secular stagnation, we really pushed that aside. With the Central Banks pretty much asymmetric at this point, they are not going to hike. They have a proclivity to cut if need be. As animal spirits can remain pretty boy and. Prettyty poignant buoyant. Marvin how much of it is the Central Banks david how much of it is the Central Banks . Peter a lot of corporations want to clean up their balance sheets. A lot of foreign Central Banks have demand for dollars. Theres this worry that we are going to have a dollar shortage at the turn of the year, so the Federal Reserve has been pumping a lot of money into the system for that reason. It is a technical operation, but its money. It is liquidity. That alone can buoy the markets, so i think that is a factor. David is the fed doing more than they are letting on to deal with this dollar shortage . Yelena i think just taking care of what they are supposed to take care of, and handling it really well, so i think what we see right now is really what the fed is supposed to do. Next year, we will probably hear less about policy rates, less on that front. It will be all about strategic review. We are going to hear about the inflation targeting review. We are going to hear about the new dot plot. That is what we will focus on next year. Marvin i would just say that i that disagree with yelena they are doing things her the right reason that they are doing things for the right reason. But a lot of things can happen just in the next few days, so stay tuned to bloomberg tv as this thing develops. There could still be we saw it happen in september, there was a huge spike in repo rates up to 10 . The fed did not have things under control. So believe they now do, but it remains to be seen. Thats what happens over the turn of the year. Marvin the amazing thing with that is it cost 500 billion to get us to a point where things are functioning, and the fed didnt even think there was a problem was there. I do view that as a version of qe, and that is supporting the markets. I know its controversial. David the fed has said it is not qe at all. We are just growing the balance sheets. Marvin but it is liquidity that is making its way to the system, and we have seen how important that is to asset values. David did we make a mistake with the repo facility . Repo facility which puts a cap on the funds rate and repo rates and so on, the whole complex of shortterm rates, if you had standing repo facility, it would do that. I think jay powell has been under a lot of pressure to do that from people on the street. He hasnt done it yet. It seems like a reasonable idea, but he probably knows a lot more about it than i do. He may have reasons for opposing. David moving beyond the dollar liquidity issue, weve had a very strong year in the markets by and large. Had three rate cuts from the fed. Now we are talking about no rate cuts in 2020. Theres a delta there. Are the markets going to continue to grow when you dont have three rate cuts coming in . Yelena i think so, as long as the economy stays on the right path. But remember, the fed always says we are going to do whatever it takes. If something goes wrong, they will jump in. They can still deliver some rate cuts. They dont intend to. By the way, the bar is rates so high for them to cut next year just because of the election. So it is very unusual for the central bank to do anything new to change the course of Monetary Policy in the Election Year. David marvin, how much of the robustness in the markets is a matter of stopping beating your head against the wall because of trade . We had the threat of trade that continued through the year. Now it appears theres may be less of a threat. A phase i agreement seems fairly limited, frankly. It is just a matter of we will relieve you from that pain. Marvin i think what we learned about the u. S. Economy through this trade discussion is that the u. S. Economy is much more resilient that a lot of people expected, particularly how quickly things deteriorated. What a phase i deal does, even though i think it is limited, even though i think it will have a limited impact on economic data, is it might allow businesses to get back engaged, which they really have pulled back from this year just because the unknown was so great. When you are talking about growth that is maybe a bit above trend with employment where it is, and engaged consumer, and businesses maybe starting to tiptoe back in, we could look not bad as we head into 2020. Yelena i want to disagree a little bit. I think it would take much more than just removing some uncertainty on the trade deal for businesses to jump back in and start investing. There are a couple of things, particularly in q1. We member, boeing is having issues. That will weigh on economic growth. That will weigh on Capital Expenditures. And we actually saw a slowdown in corporate profits, so businesses need money to be able to invest. Extentll also affect the to which they can do that. Peter you said earlier the consumer will continue to be strong, but if Business Investment is weak, there comes a point where consumers rely on businesses for their incomes, so how long can the consumer expansion continue if Business Investment is weak . David also, you need productivity. Traditionally, Business Investments where you get productivity. Where are we now on Business Investment and Capital Investment . Marvin it certainly is cyclically low at this point. It is one of the questions that remains out there as we go into next year, that productivity needs to increase to maintain sustainable growth. Over the next two quarters, i think it could be somewhat supportive to the story and the animal spirits that are out there right now. David one of the questions i have is the relationship between the u. S. Economy and the chinese economy. Have become quite entangled. Let me ask you, marvin, at the end of 2020, will they be less entangled than they were at the beginning . Marvin no. I think that when you talk about two economies as important to the Global Growth picture as youve laid out, as well as with the conversations around trade, which are going to continue for many years, the interconnectedness is going to be even greater. Actually would disagree. I think what we are seeing is disentanglement, not to an extreme degree. Chinese investment in the u. S. Has fallen off a cliff. It is harder for u. S. Companies to invest in china. On the investment side, you clearly see some backing off. Weve seen the trade deficit, the tariffs and so on. It is a matter of degree. I am not saying the two countries are going to become isolated from each other, but just comparing from a year ago would say sure, at end of 2020 versus the end of 2019, i think there will be a departure of the two countries. David david going back to the u. S. Economy, how will it be affected by the answer to that question . Yelena i would say it would be mutually beneficial for both economies if we see some easing in trade tensions. We saw china lowering some tariffs on certain consumer imports. That would be beneficial for them. Some easing of trade tensions would be beneficial for the u. S. Economy. Pickup inl see some Capital Expenditures and Business Investment. That is what we see going into next year. David what is the main thing you are looking at in 2020 in terms of the of us economy . What will determine whether it goes well or badly . Peter i would go back to Business Investment, which in turn is related to confidence, which ties into some things we talked about 20 trade deals and someone, tax policy, the election. All of these things will affect business confidence, which will affect Business Investment, which will of course affect all of us. David same question to you, marvin. Marvin i do czink it comes back to i do think it comes back to help businesses approach a potentially more stable environment when we come to trade discussions. Is consumer is about engaged as they can be. It will be about how businesses choose to retrench get more engaged again. David we havent talked much about the fact that it is an Election Year. Is that relevant, irrelevant . Yelena i think it is very relevant for central bank policy. If you look at the past election cycles, you see that the central bank never changed the course of policy. If they were on hold, the remain on hold. They were hiking, they continued hiking, and if they were cutting during the great recession, the continued cutting. It is very unusual for them to change the policy course, but will be very interesting if the economy requires such a change. What will they do . David is there a greater risk of recession or inflation for the United States in the next 12 months . Marvin i think recession is still a greater risk. Not that that is my base case at all. Again, it is the fact that we are 11 years into a cycle. Long andtting the twos in pretty much any of the measurements the u. S. Has. I think that is what frames this asymmetric approach from the Central Banks. David many thanks to yelena oflyatyeva and peter coy bloomberg. Marvin loh of state street is going to be staying with me. You can find all of the charts we just used and more by running gtv on your terminal. You can browse recent features and even save our charts, all by running gtv. Now lets bring you live pictures from london. Markets are closed there for boxing day, the day after christmas. The u. K. Is counting down to a potential brexit at the end of january after Boris Johnsons big election win. The country has inflicted unnecessary damage on itself, and would be welcome back to the eu at any time. This is bloomberg. Viviana you are watching bloomberg daybreak. Boeings grounded 737 max on a new batch of messages boeing employees sent around. The documents were turned over the samea on monday, day boeing ousted its chief executive officer. The jetline was grounded in march after two fatal crashes. This year, last minute shoppers helping to push overall holiday sales higher, according to per limitary numbers from mastercard. It estimates sales rising 3. 4 from last year from november through Christmas Eve, much of the growth coming from a surgeon online orders. The Holiday Shopping season was six days shorter because thanksgiving fell late on the calendar. Chinese imports if u. S. Soybeans rising to the highest in 20 months. More american shipments clearing customs ahead of the signing of a partial trade doing january. Last month, chinas inbound shipments from the u. S. Surging to 2. 6 million tons. From october, that is up more than one million tons. Waivers fortariff firms to buy american soybeans. David thank you so much. Since carlos ghosn left the helm at nissan and renault, weve gotten a better sense of how important his role was there. Ince he was arrested november 2018, insiders at the company say the two partners have been engaged in a bitter fight. The discord is hurting both carmakers at a difficult time of transition for all automakers. The share prices of both nissan and renault have dropped by 1 3 since ghosns arrest. Coming up, how companies are adapting to the rise of esg investing. More on that next. This is bloomberg. David this is bloomberg daybreak. Im david westin, in for alix steel day. Equity futures are up across the board, specifically the nasdaq. The nasdaq has had 10 days up in a row, nine days of records. Even the smaller caps are going up nicely. Unchanged,argely pretty much flat at 1. 9 and a bit. The pound is up against the dollar. In the new regime of boris johnson. Gold is up over 1500 an ounce now. Oil is also up on news of reductions in the inventories, as well as hope for u. S. China trade, which could lead to Global Growth. One of the themes of 2019 has been the role of capitalism, with the Business Roundtable issuing a revised statement of principles enforcing that corporations have a duty to all of their stakeholders, not just shareholders. Democratic candidates for president have been debating whether they should be fundamental changes in the economy to shift resources from the wealthy to the needy. Philanthropy plays an Important Role in this debate, and the head of one of the largest and most influential foundations, Darren Walker of the ford foundation, brought up a new approach to giving that goes beyond charity to promote social justice and his new book, from generosity to justice a new gospel of wealth. I sat down with him to talk about what is different in his apart from that of carnegie and walker valley. It is a fascinating book, a provocative book in some ways. What prompted you to write it . Darren ive always been inspired by intercarnegie, and by his seminal essay the gospel , upon which they built their foundations. Morgan, rockefeller, ford, mellon. Ive always been interested in the history of these great men and what they created, and how lucky i am today to lead the foundation created by andrea and ethel ford. By henry and ethel ford. David they did great things with their wealth. A lot of good has been done, but you quote Andrew Carnegie at one point in your book in a very condescending way. Of course, we need to give away the money because we know how to do it better. You say thats not necessarily the right way to do it. We shouldnt assume that we know better than the people who are in need. Darren carnegie believed that men like him and rockefeller were endowed with special qualities that gave them the right to decide what the priorities for the public should be. Insightthem a special on how to actually solve these problems. , 125 years later, we know more about the problems and solving the great challenges of the world, and part of what we know is that if we are to actually solve these problems, need to listen to and get we need to listen to the communities and get closer to them. David another perspective is having humility in our giving. Darren it is that we approach our giving with some sense of humility that we dont have the answer, that just because we may have been successful in business or in some facet of life and become wealthy or become a donor, that we actually are endowed with a special insight. The insight is that we need to know what we dont know as much as what we do know, and sometimes, the privilege of wealth allows some to believe that they know more, they know better than others who are actually closest to the problems, or may have expertise on the issue. David that was Darren Walker of the ford foundation. Still with us is marvin loh of state street. There are various aspects, the public aspect, private corporations, but there is a claim or across the country to rethink the way we relate to one another, the growing income inequality, and environmental and social governance goals. Marvin absolutely. Certainly, esg has taken roots over the last several years. If there is one constant ive experienced this year right every single meeting ive had with every institutional investor, it is this esg concept. Theres a wide range of what you g investment, but the fact that we are talking about it, and investors are talking about it from the perspective of putting their capital at work that way, means it will continue. David as you say, theres a wide range of views about how you define it. Can we really make progress on it if we dont come up with some accepted standards for what is and isnt legitimate esg . Marvin as the market evolves to a point where it becomes an asset class that people invest in, certainly, but we need to start taking steps in those directions. I firmly believe that. David what are Institutional Investors looking at as possible measurements . Coming up withe their own standards. Do we need one standard, and even for maybe government authorities to say that is the right standard, not to impose it, but more like gaap, to say we endorse that . Marvin there are so many out there now that it is kind of this broad, nebulous concept that you cant categorize everything. We will need more standards, though. I think there are a lot of different types of measurements in my firm of being one of the groups out there that is going down that route. Theres a lot of good brainpower being devoted to trying to hasne it in a way that both returns and the social returns, if you will. David you say investors routinely raise this question with you as a look to invest their money. What is your response . How do you say yes, i can do this for you, and show you the returns on your investment . Marvin marvin it certainly isnt my area of expertise. I have the luxury of talking to a lot of smart people. We have a group within state street that focuses on esg, and we have tools that we make available to our Institutional Investors as a way to ultimately justify the types of investment they are looking at. The resources are out there. They might necessarily they might not necessarily be for me, the. David one of the questions is going to be is it going to be government, is it going to be private industry . We also have some Democratic Candidates for president who think they will take care of this, thank you very much. The federal government will come in and start dictating things. Marvin i am a capitalist at heart. I think the government has proven their inability at times to allocate capital in a kind of efficient manner, so i hope the Business Community and the investors get on top of this and we solve the situation ourselves before we ultimately allow the government or force the government to get involved in a very major way. David it doesnt end at our borders. I hear conflicting reports. Some people say this is becoming more prevalent around the world, the insistence on esg. Others are worried they will compete with us by making more money by not being esg contenders. Marvin i think we live in a global society. We have to take a lot into consideration when we start going down this route. Everything is interconnected. Weve seen some of the strife that has arisen around the world around populism and aspects like that, which for the most part tie into the broader discussion youre having. David when we talk about politics going into 2020, hong kong has had demonstrations, you have chile, we have col ombia, in france we had the yellow vests. Marvin we forgot about them. Its been quite some time. But certainly, the populist is expressing a lot of the concerns the populace is expressing a lot of the concerns they have. Things have been fermenting and bubbling for a while, certainly. David the interesting thing to me is it isnt one simple cause. Chile was increasing the costs transportation. India is having protests on sectarian issues, with hindus and muslims. Marvin i dont think we are going to see a decrease of any of these as we go into next year. David so as an investor, how do you protect yourself against those sort of risks . Marvin i think it is a function of looking at economic fundamentals. Latin america, in terms of a region, has been having problems the better part of this year. From a currency perspective and performance perspective, we have ultimately seen that. Other markets have fared better because the underlying data supports this broader concept. There are good things that might come out of chile, that might come out of colombia. It certainly is a function of getting the message out, and having governments that are listening. David marvin, great to have you with us today. That is marvin loh of state street. Now it is time for an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana disturbed by majority leader Mitch Mcconnells stand on the Upcoming Senate impeachment trial. This is by alaska senator Lisa Murkowski. Mr. Mcconnell promises total coordination with the white house. This is a rare dissent in a partly that is largely unified behind President Trump. U. S. Military officials are preparing for potential election interference from russia. The planes would target Senior Leadership and russian elites, though likely not president vladimir putin. That is considered too provocative. The Intelligence Community warns russia will try to meddle in the u. S. Election. Partys governing likud is holding primaries, the first serious internal challenge to Prime MinisterBenjamin Netanyahu. This despite the shadow of corruption indictments hanging over him, he remains popular among likud members. Over to hong kong, where moralities are being held in the areas shopping malls. Protesters say they hope forcing malls and stores to close will attract attention to the cause. On christmas day, Police Firing tear gas to disperse protesters. Two dozen people were hurt. This comes at a bad time for hong kong retailers viviana i have seen their sales hong kong retailers. They have seen their sales plunge. 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. David thanks so much. Keyng up, Warren Buffetts investment deputies phone now deputies will now lead the second largest auto insurer viviana to check out the charts auto insurer. To check out the charts and interact with us directly, head to tv. This is bloomberg. Viviana you are watching bloomberg daybreak. In the runup to christmas, tiffanys reporting a rebound in sales, a welcome develop it for french luxury conglomerate lvmh. It is acquiring the american brand for 16. 2 billion. According to preliminary results, sales rising 1 to 3 . Shoppers in china leading the growth. Tiffany has been expanding in that market, with a revamp of a Flagship Store in shanghai. Piracy Monitoring Group recap says it is concerned about the rise of maritime crime in the Singapore Strait. The group is urging Law Enforcement in the area to increase patrols. The latest incident happening christmas day, would Officials Say six unauthorized people were found in the engine room of a tanker. 30 incidents, including piracy and armed robbery, have been reported in the Singapore Strait this year. Travis kalanick is cutting the last ties to the company he founded, stepping down from ubers board. He sold all of his were manning shares in the ridehailing giant. He says he was to focus on new business and philanthropic endeavors. 2017s ousted as ceo in following months of chaos and controversy. Analysts say his departure could help uber stock price. That is your Bloomberg Business flash. David thanks so much. We turn now to wall street beat to cover three things wall street is buzzing about this morning. First up, a Municipal Pension fund pulling about 13 million. And Berkshire Hathaway names its key investing deputy as ceo of geico, on top of his current role. And foreign demand here to stay. The benefactor of u. S. Corporate bond markets isnt going anywhere in 2020. With us now is bloombergs shree bloombergs sri natarajan. Two legs to this move. Not just performance related, but they want to see a fee. For a competitor, that is not necessarily good news. Theres a lot of pressure to take this inhouse. They are trying to cut costs, improve returns, and they have been trimming ties with outside managers. Bmo competitors could be waking up and see this as a good thing. Known as being a relatively high cost provider . Go back to the missable retirement fund, they already flagged them as underperforming its benchmark. I think the goal is to outperform. There is this broader pressure of having to cut costs, and it is not just the Illinois Fund that is doing it. Ago, capital was one of the first ones that said it was getting out of hedge fund industrials. There are various pressures out here. There are pressures on the fund managers, pressures on the french and puns on the pension funds. If you are not providing a good rate of return, it is going to be trouble. David lets turn to Berkshire Hathaway, and one of the two deputies for making investments. Hes got a new job. Sridhar hes one of the morstan figures one of the most important figures with buffett, one of the key people responsible for running berkshire. If you look at warren, there are four or five key people, and he is one of them. The former Hedge Fund Manager has been with berkshire for almost a decade, increasingly being given a larger mandate. Hes played a key role in the whole Health Care High up between jp morgan, buffett, and amazon. Geico, the second largest car insurer in the country behind state farm. Hes been doing really well. One thing i would like to see, is he going to change their mascot . Every time they come on the screen, i tend to look away. [laughter] david is that right . You dont like to gekko . What is interesting like the gecko . What is interesting to me is this is an operational role. Might they be grooming him for something . Sridhar he is 48, so you have to thing about him as a possible viable candidate for berkshires ceo, so it is understandable why his role would be expanding. David what is going to happen in 2020 . Sridhar a great story today talks about the u. S. Investment grade market and how a lot of Foreign Investors are flooding into this market. There was a great quote from the bank of america strategist who said this is the only game in town. Where in thetime past year, we have seen more than 90 Interest Rate cuts across global Central Banks. When Interest Rates are down and you have something in the u. S. , thatmentgrade markets seems like a good bet. How have they performed this year . The market give you 15 returns, the best performance in a decade. Dont expect that to continue. You dont get into the u. S. Investmentgrade market for the 15 return. But still, it is promising. If the same trends continue next year and you have negative yielding assets elsewhere, you can expect at least high single digit returns. David a positive number is better than a negative number in general. [laughter] david many thanks to bloombergs sri natarajan. Many are being criticized for attending a Music Festival in saudi arabia. Stars were on hand for the beatsfest inng mdl riyadh, facing backlash for attending the event despite saudi arabias human rights oford and the murder journalist jamal khashoggi. Coming up, we are going to take a look at your position in 2020. If you are heading out and jumping into your car, tune into Bloomberg Radio, heard across the United States on sirius xm channel 119 and on the Bloomberg Business at. Live from new york, this is bloomberg. David it is time now for our traders take. Going to me is bloombergs alex harris. What do you have for us today . Alex one thing to look at is this chart of the 10 year. I think what people are going to be watching is if we do get a break, what does that mean for the twostens curve, and are we in a continue steepening . Weve hit your highs just the other week. David what is the cause of this . We were talking so long about, oh my goodness, it is going to invert, and now it is steepening again. Alex i was talking to an asset manager not too long ago, and he said take a look at the s p dividend yield and where it is in relation to the 10 year yield because if that dividend yield is sitting above the 10 year, you could see an exit us out of fixedincome ash you could see s you could see an exodu out of fixed income. People are may be feeling a bit more comfortable moving out into duration. These are all possibilities. Maybe the idea of the fed potentially buying short dated coupons in addition to the Treasury Bills as part of their Asset Purchase Program right now. Theres a few factors, but i think right now, risk assets probably be the big driver here. David are we assuming right now the fed isnt going to do anything in 2020 . Alex i think everyone is in wait and see. What is driving it is what the fed decides to do with those asset purchases. What is the Treasury Bill supply going to be . It is going to be cut. Treasury tends to move negative as a seasonal factor with tax receipts, and people are going, well, if the fed is going to buy 60 billion a month in Treasury Bills, will they have enough to buy . Will be one of these opportunities for them to move into short dated coupons . David what about supply. We continue what about supply . We continue to borrow at a very fast rate. Alex it all depends. With the fed coming in and buying it, it gives the treasury a bit of breathing room so they are not having to increase the supply as much. People were making calls about, by the end of next year, we should see treasury early having to expand the supply, but i think right now the fed gives them a bit of breathing room with these asset purchases. David but dont call it quantitative easing. Alex exactly. [laughter] david what about inflation . Does it affect the curve at this point . Alex not really. It is muddling along, but it is really hard to say. Everyone is really taking it one data point at a time. Just keep an eye on the risk assets and how the fed handles its buying program. David so it is really a comparison of the risk assets as opposed to other Central Banks, other sovereign debt around the world . Alex i think so. Everyone is sort of in the same boat here. Theyve put in accommodative policy, and we are just kind of watching it. At this point, as risk assets continue to rally, we continued to get maybe some sort of positive news on the trade front. Thats where the trade is coming from. Alex but we are not talking about david but we are not talking about inversion or recession. That is good. Many thanks to bloombergs alex harris. Up, Thomas Digenan, ubs Asset Management head of u. S. Intrinsic value equity. 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. David how bad can it get . First boeing replaces it ceo, now it turns over internal documents about how it handled the 737 max certification. Republican senator Lisa Murkowski of alaska expresses doubt about the way Mitch Mcconnell is proceeding with impeachment in the senate. And equities continue to climb, as does oil, as does gold. Does this set markets up for new highs in the coming year or a coming correction . Welcome to bloomberg daybreak on this thursday, december 26th. Im david westin. Alix steel is off. Lets start with the nasdaq. The nasdaq has had 10 days up, nine days of record. The s p and the dow also up in the futures. The pound continues to climb against the dollar. Good news coming out of the u. K. Ounceow over 1500 an. Crude is up on lower inventories, as well as hopes from u. S. China trade negotiations and Global Growth that would come in its wa ke. Romaine bostick joins me now. Now, because rally starts the santa claus rally starts now . Romaine it is basically now through the new year. Eve, i was working, and it was just horrific. Then this year, you have the concern that a lot of the gains we are booking for 2019, that this might be stealing a little bit of the mojo we would have in 2020. I think a lot of people are still concerned about what direction the market is going to be over the next year, so they look to some of these artificial markers like the santa claus rally to see if this might be a little to faith. David thats talk about where the market is likely to go in the new year. Equity markets continue to push up, and we are now joined by Tobias Levkovich, citi chief equity strategist, and from chicago, Thomas Digenan, ubs Asset Management head of u. S. Intrinsic value equity. It is maybe overbought, the s p. Do you think . Tobias in the near term, you could maybe argue that. When we look, it is neutral. It is not euphoric. Investors are still doubting, for a variety of regions, on a variety of reasons, on issues that have not been resolved. We just did a survey that our clients publicist survey at our clients that we published last week, and they are not very bullish. We think you are more likely to see it when he percent correction that i20 percent rally. They are concerned maybe its gone likely to see a 20 correction than a 20 rally. They are concerned maybe its gone too far. David have we seen enough of the rally already . Thomas i dont look from a perspective of overbought or underground. I look from a valuation or underowned. I look from a valuation perspective. You still have segments within the market that are trading you know, financials are trading around 10 times earnings. You have solid Companies Trading at 20 times earnings. In this interestrate environment, i still feel like equities are underowned in general, and they are still attractive. Tobias not as attractive as they were last year. Last year, everything was on sale. Romaine lets talk more about those valuations. Some people look at the s p and trading at 18 times 2020 earnings, even when you get into some specific sectors like industrials and elsewhere. They are also talking about valuations that seem to suggest a very high degree of profit growth. Profit growth that we havent seen in the third quarter. We are not necessarily expecting to see it in the fourth quarter. How confident are you that the market hasnt gotten to ahead of itself . Thomas is what gives me a bit of a backstop. If you look at the 10 year treasury, your Earnings Growth, assume it is zero. People are willing to pay about 50 times earnings for that. That is pretty safe earnings. They know they are going to get it. If you are paying 50 times on the 10 year treasury, seeing 18 times for companies lets say you are paying 20 times for unitedhealth. I know theres political concerns, most of which are overblown, but i still think the overall market in this interestrate environment is really attractive, and we have gone through about five years where investors still cant believe the Interest Rate environment we are in. But it is real, and isaac multiples should be attested. David tobias, what does your survey tell you about expectations for Earnings Growth in the new year . Tobias the consensus numbers showing almost 10 Earnings Growth expectation for 2020. Over 70 of investors dont believe it. Basis,ink on a weighted it will grow 20 next year. We are looking closer to 5 . So we get some positives from earnings, and as a result, a better market. I agree on the evaluation on the valuation. We try to normalize earnings through what is called cyclical adjusted pe, and take the fiveyear forward contract for the 10 year yield. What do markets believe the 10 year yield will be in five years . It is generating a mere 90 probability of higher markets in the next year. I buy into this. I quibble a little bit forgive me, i know it is the day after the holiday. [laughter] will have a little boxing match, but it is boxing day, so perhaps we should. [laughter] tobias look at him. The guys from chicago are ready to put up the fists in no time. I would argue that part of the offset to the bond yield being so low is a higher risk premium. Investors still cant believe it. One of the reasons bond yields are so low because of fear that we wont great enough growth and enough inflation to offset some of the low bond yield aspects. So valuations could move higher where we are today in the discount rate, but i think investors are probably going to need earnings to convince them and bring them over the hump. The 10 year1. 9 on right now, there is a general since the fed isnt going to do anything. If it does do anything, it would probably be on a bias downward. Im assuming thats what the market is expecting. Tobias again, survey work suggesting the fed is not doing anything until 2021. The fed has said pretty clearly they are not going to raise rates on this raise rates unless there is a sustained period of inflation. The economy should be better next year, that the fed is not going up or down. If the bond yield edges up a little bit, that should help financials as well. Of thethe same side point as tom here on financials and health care. David is there any danger we corporatesesting, are not investing is much as they have in prior cycles that could down the road hurt us . Thomas i think it could hurt us more in the shortterm then in the long term. We went into 2019 with overblown fears of a recession because of an inverted yield curve that was really inverted not because of economic expectations, but because of low Interest Rates globally. Then we went through this whole trade cycle, and all it created was uncertainty. Had a big pause in capex, and i think what happens is and this is where i am a be like tobias, a little skeptical of the 10 Earnings Growth you kind of get Earnings Growth off of capex. We havent had as much as we should have in this type of cycle. In the short run, that could prove difficult, but if anything, coming into the second half of the year, especially next year, as you get more certainty, you should see start to return you should see capex start to return. I dont know what you will see with the political election going back and forth. Romaine im curious how that plays into it, without getting into the actual politics of itself. Any electionyear where you are trying to decide between a relatively strong incumbent and a field of democrats who are presumably would take the country in a slightly different direction come up doesnt that create a degree of uncertainty that some businesses might decide, lets just wait this out and see what happens after the election in november . Where i still think the trade was a huge impact on companies and uncertainty. They dont know where they are going to manage supply chains, where they are going to place plants. Once that is gone, whether there is a republican or democrat, it is not as big of a deal. One of the big things on trade type issues, the democrats cant really go lighter than trump. They got to stand firm there. The one area where you have opportunities, you can see it anytime Elizabeth Warren went up in the polls, unitedhealth and managed care, the whole sector sold off. I would say take those as buying opportunities. Even if someone with that political focus is elected, they are not going to be able to pass as and will pay her system. I would say be opportunistic about the political ups and downs. David im a little confused about this quietude in trade. Done have a phase one deal yet. It is coming, they say. We havent gotten to europe yet. Either way, theres still argentina and brazil. Theres a lot of uncertainty on trade still. Tobias i think the bigger one is china, and that is the one people are focused on. There are things around the auto imports from europe that have been pushed out. I think the tension with china is not just about trade. It is about china challenging u. S. Dominance in world affairs. I dont think that is a republican or democrat issue. Thats an American Issue that is going to be there. Trade is one aspect, road and belt. Whose sphere of influence is greater is going to be there well be on trade. But china is the greater focus. Argentineu. S. Relations on trade, not that big a deal. In that sense, certainly usmca is probably more important in terms of the Major Trading partners of canada and mexico. I think we have to assume that the tensions we are looking at today are going to continue, and the one thing i would say about capex and the elections is as we get closer to elections, our business is really going to sit on their hands and say, weve got 60, 90 days. We will figure it out then. We can defer anything that is discretionary. They are not going to do that in january. But as we get closer to polls, they will make decisions. Citi Tobias Levkovich of and Thomas Digenan of ubs Asset Management will both be sticking with us. Coming up, we talk holiday sales next. This is bloomberg. David its meant to be the most wonderful time of the year, at least for the retail sector. I talked to bank of america Ceo Brian Moynihan about what he was seeing in holiday sales. Brian we look at the consumer. Last time we talked, we were talking about the yearoveryear growth rate for consumers being 5. 8 . It is closer to 6 now. Holiday spending is up double digits from last year through last friday. Youre seeing it now for cyber monday, and you will have discussions about how many days there are between christmas and thanksgiving. Even halfway through the period, you are seeing the growth rate up at 6 . Theres a lot of spending going on. We feel very good about the consumer in the u. S. , and that is 2 3 of the u. S. Economy. Those are big anchors. In europe, the consumers are spending also. It big part of the World Economy is solidly moving forward. David that was brian moynahan, bank of america ceo. Still with us are Tobias Levkovich of citigroup and Thomas Digenan of ubs. What about the u. S. Consumer . It seems to be holding up rather well. Tobias they are. From mr. Ne distinction moynahan, actually, real u. S. Consumer activity is about 52 of gdp, not 2 3. David we always hear 2 3. Why is that . Care isbecause health 16 . For some reason, i cant understand it come of the bureau of Economic Analysis puts that into Consumer Spending because the government spends on behalf of mr. And ms. Is jones. It is a little bit overstated because of the health care component, but nonetheless, have of the economy, and it is pretty good. I always joke around and say as a canadian, i didnt understand the u. S. Consumer until i married one. [laughter] amazed by theways resilience of the u. S. Consumer. Romaine give us your thoughts on the American Consumer here. You were talking about all of the uncertainty with regards to businesses, but we really didnt see any real skittishness this year with regards to people like you and me going out there and spending. Thomas no, we didnt, and we shouldnt have expected to. The economy is pretty strong. The strength of the u. S. 2010mer through the 2008 period really showed how resilient the u. S. Consumer was. I wish i talked to tobias earlier. Braces fore included the Christmas Gifts for my kids. [laughter] tobias that would have gone over really well. Romaine what about the credit side of this . We go out and swipe those cards and dont look at those bills for another month or two. Is the credit side of this equation at a healthy level, where we dont have to worry about some of these consumers being overextended and not being able to pay those bills . I think its always a concern. The credit quality is going down, but it is still pretty strong. I think the big winner in this season wasnt just the amazons and the retailers. We can get to what type of retailers, the discounters. It is really credit card companies. That ise a moat widening with online penetration. David when we look at the consumer, what could get it what could give it pauls . What could give it pause . Will we keep seeing a strong consumer . Tobias for now, i think we will. The one thing is if you look at debt service as a percentage of income, it is way down, back to the 1880s timeframe. David lower Interest Rates help that. Tobias absolutely, and so does, unfortunately, some people lost their homes and had to move to paying rent. That Service Number renders somewhere else. What could hurt them clearly is some job growth slow down and concerns around that. If there is one data point we worry about, it is the hiring data from the National Federation of independent business. It tends to lead by about 12 months, and we are probably looking at the best Unemployment Rate we will see this cycle. It probably edges towards 4 over the next 12 months. Do people get everything out that . I dont think the average person knows the Unemployment Rate if you live in a particular area. You may have a different number. David what they know romaine what they know are there wages and the stability that they expect to have that certain job. I think what they know is how many of their family or friends have jobs. That is the way they gauge it. David to wrap this up, is the thing you look at more than anything else perhaps the umich survey . Thomas i think it is a good survey to look at because the underlying consumer, as much as we talk about what level the s p is at, they spend based on, do i thing i will have a job six months from now . Right now, the consumer is pretty confident. Dignan of ubs and Tobias Levkovich of citigroup will be sticking with us. Coming up, we take the pulse of the broader industrial sector, not just boeing. This is bloomberg. Viviana this is bloomberg daybreak. Without the leadership of carlos ghosn, the partnership between nissan and renault is starting to crumble. Ince he was arrested november 2018, insiders at the companys say the two partners have been in a bitter fight. The discord is threatening the viability of both carmakers. Since the arrest, the share prices of both nissan and renault have dropped by 1 3. Russia may finish the nord stream 2 gas pipeline in the foreseeable future. The criminal and says it has what it needs to complete it. The nord stream 2 is a system of Natural Gas Pipelines from russia to germany. U. S. Sanctions wont prevent the completion of the project. Very disturbing picture of max, thisbout the 737 from a House Committee aid on a batch of new messages between boeing employees. They were sent to the faa on monday, the same day owing ousted its ceo. The max was grounded in march after two fatal crashes. David thanks so much. Lets stick on the subject, and we are going to once again by Tobias Levkovich of citigroup and Thomas Digenan of ubs, and bloombergs Romaine Bostick is here as well. What do you look at in determining where industrials will go overall, putting aside boeing . Earlier we talked about capex. When people talk about the recession last year, which didnt occur, what people missed is we already had a recession in autos and industrials. If anything, there should be a bit of a pentup demand. If we get any type of instruction any type of infrastructure spending, that should be a tailwind. Romaine with the length of time that it takes to get some of these orders in an outcome is these orders in and out, does that provide any security . Tobias it does and it doesnt. There have been many cycles within the broad industrial space. One of the things we watch carefully is commercial industrial surveys. They really tightened up in january last year or earlier this year. Im already in 2020 my head. Of course, i will be writing checks in 2019 until about june. [laughter] tobias it takes about nine months for those credit adjustment shifts to make their way into the economy. But i we got to september in october, we started seeing things like the ism below 50. In april, Credit Conditions improved, and continued into july. Bumpshould give us a that will help industrial activity, help production, and i think it is more of a de inventory phenomenon. You can lift production, and that will improve the supply chain generally. At least we will have the veneer of an improving industrial economy. David how sensitive are the industrials to Global Growth, and where do you see Global Growth and 20 Global Growth in 2020 . Tobias i think they are thomas i think they are hypersensitive to Global Growth. Europe is still kind of lagging, and structurally they have some issues, so i dont think we see in a dramatic change in Global Growth. What you will look at is, on the Global Demand side, look at the Global Demand for oil and energy. Energy was beat up, even of the industrials, it was the hardest hit. Any industrial with any kind of exposure to oil services, they are not getting any credit for that asset at all. To the extent you have opportunities where they can either get rid of those assets or trade poster to a market multiple, you will see a big uptick. David many thanks to Thomas Digenan of ubs Asset Management. Tobias levkovich and arming vasek will be sticking with us. This is bloomberg and Romaine Bostick will be sticking with us. This is bloomberg. David this is bloomberg daybreak. I am david westin in for alix steel. Fairly quiet across the board. ,he dow, the s p, the nasdaq they have had 10 days in a row up. Even the russell 2000 is up. Switching to the cross as a board. We can see the 10 year remains flat. A little above 1. 9. The pound remains up against the u. S. Dollar. Gold over 1500 an ounce and crude is up. Now we have vika data. Initial jobless claims. 222,000. Last month it was 234,000. Not a dramatic change. Lets bring back in Romaine Bostick and Tobias Levkovich of citigroup. Tobias i will not quibble. David historically that is a low number. It is not spiking. Tobias we had a spike around the auto strike and that is backing away. We are back to a tight labor market. The number one issue facing businesses is finding quality labor. We have tapped out a lot of the most talented people. We have tapped out the highest skilled people and we are trying to drop people back in, which drives wage costs. We should point out continuing claims also fell to just under 1. 70 2 million. The previous week it had reached a high for the year. In the context of the last five or six years, still relatively low. I know it is a healthy job market right now, but from the fed perspective is this something where they think they could make it healthier . Tobias i do not think so. Most people would say we are pretty close to full employment. The issue is Labor Participation rates. I have seen studies done by Federal Reserve banks trying to understand what it we have more Labor Participation. This is something structure and cyclical. There is an element of pay increases that have not been big enough to drop people back into the workforce. If we start to see some acceleration in wages, which probably the fed does want to see, then youll will have fresh workers coming in because the differentials were not big enough. David we tend to look at historically the United States that weve gotten back to where we were in 2007. If we look geographically, there are other countries that have much higher participation rates than we do. Tobias there is some question is this a function of the aging baby boomers. You hear terrible stories of people in their 60s who want to work and cannot get jobs because people are afraid to hire them. You are not allowed to do age discrimination, but people get around it. There is concern about that. Rates that have fallen. One of the areas you have the greatest participation pick up is in older workers. I think in many respects they need the money. David Tobias Levkovich of citigroup will be staying with us. Time for an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana next month the turkish government will ask its government to authorize deployment of troops to libya. President erdogan saying the north african country asked for help. Reporter says they would be erdogan said they would be a deterrent not an active fighting force. The bank of japan government are urging Business Leaders to pay their employees more. Telling companies boosting wages would help strengthen the countrys economy. Japans week wage growth has been a hurdle for longterm price gains. This year wages rose an average of 2. 1 . By mitch disturbed mcconnells stand on the lisaing senate trial from murkowski according to the wall street journal. Mitch mcconnell promises total coordination with the white house. Unifiedy has largely the hind president donald trump. 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 viviana hurtado. This is bloomberg. 2019 was not a particularly kind year to hedge funds. Looking forward to 2020 they will have an Election Year in the mix as well. We welcome file you fabio savoldelli. Funds we talk about hedge , should we be concerned about politics as we look at the fate of hedge funds . Fabio it is one of the things most under considered in the course of the economic outlook. When we look at how badly hedge election,in the last it seems to me you are setting up for the same situation. Implied volatility in the s p futures around that time of the election is not massively higher than it might be elsewhere. The same thing with things like the mexican peso which was a lucrative trade at that time. It still took days for people to realize it is not a joke, he is the president. Tobias mentioned this, if youre looking at trump versus biden you will have one thing, but biden will still have a left, his Vice President will be no joke because he has to get the base out. You will look at a much more bifurcated choice versus a clintonian view of the world we had before. That volatility is underrepresented in the markets for where we are. Fabio makes a great point about 2016. Could we ever have as much of a swing as we had in 2016 . Could we have that radical of a possibility on the others . Tobias people were suggesting a few months ago that irrespective we will have volatility. Reelectionrump wins i know it is hard for people to imagine an unbridled trump. Thinks they liked what i did, they reaffirmed it by reelecting me, does he double down on trade issues . That might be taking a negative. Is, youre democrat probably looking at higher taxes and more regulation. The Business Community may not be thrilled about either choice. If you look at the shape of the yield curve over the last 30 years and you layer on the vix as your measure volatility, there is a two year lead that suggest we should have more volatility by the end of this year. I think the elections are part of it, could also be the economy. Volatility is likely to go up. Fabio i would agree with that, but i would also take the other side and say if you look at only only 19 of democrats say trumps economic changes have made conditions better. Madef the changes he has to the structure of the reductions david we have a chart we can show. The dramatic difference between how republicans perceive the economy and democrats perceive the economy. Fabio exactly right. Only 19 of democrats think anything trump did economically is worth doing. 40 of democrats think the economy is worse, and 42 of democrats think the economy is equal. If you look at the increase we talked about, it has been carried entirely by republicans. 80 of democrats think it is worse are equal. If you get that flip around, and a lot ofge the policies, some of which may commit his economic sense, have no support. Romaine how much of some of that bifurcation is because some of the policies targeted areas where supporters of trump or the republican of party. Take Something Like the deduction we eliminated, you saw drop in the polls in the state affected by that because that is what they were voting on, that one issue. They felt all the other broader Economic Issues do not get the same the same waiting in their mind. Fabio the issue on that was the adaptability of state and local taxes and trumps chance of winning california went down from zero to zero and in new york from zero to negative zero. He did not care. That will not influence how we do it, which is the electoral college. The omb calculates the 23 billion effect how that is calculated is fascinating. If tomorrow morning the faa band flights and trump comes in and makes it legal, how much does the omb calculate the impact of that to be . To cost of sending the fax reopen. They do not take into account the massive economic disruption that we have no airplane. In reality, shutting down 176 regulations chucking all of that out and having the party come in and only 19 of them think any made any difference at all is a much bigger shift than people think. With theharlie Cook Political Report will tell you 35 to 40 of the people will vote for trump because they like his policy, and 40 to 45 will vote against him. That gets to the chart youre looking at. It is about a visceral dislike of the president that then shows up. I buy into this percentage data. If we look at national polls, they do not tell you much because probably democrats are trouncing republicans in new or 50nd california by 40 percentage points. What is happening in kansas and pennsylvania will be far more important. David if there is more volatility in Election Year, is that netnet better for hedge funds . Tobias is a falsehood. Hedge funds have done dismally. The hfr Hedge Fund Equity index is almost inconceivable to. 97 per year over last 37 months. The s p is down 40 . You have to up 40 . There is something not working in that model. Thething ive looked at as performance of hedge funds in high volatility periods. Hedge funds will tell you theres not enough volatility as if you are trading away. Look at the performance when the vix goes up. Hedge Fund Performance drops off like a stone. The upside, downside capture ratio is not that good. I think it will get better because you are getting less hedge funds being lost. Donutsfired from dunkin is not launching a hedge fund. There was a time where there was too little client chasing too few traits. Tobias levkovich of citigroup and fabio savoldelli, thank you so much for being with us. Areergers as merchants telling their christmas sales, we get an early lead on how to map. Bloomberg users can interact with the chart shown on gtv. Catch up on key analysis and save chart for future reference. Live from new york, this is bloomberg. Viviana this is bloomberg daybreak. Im viviana hurtado. Week, filings for u. S. Unemployment fell to a three week low. The u. S. Labor Department Says claims declined by 13,000 to 222,000. The numbers indicate the labor market is bouncing back after some seasonal volatility earlier this month. Jobless claims surging unexpectedly, likely due to the late timing of the thanksgiving holiday. A stock swap offer. Ofues of Retail Business ages richest man at 34 billion. Stakeholders in Reliance Retail can exchange four shares for one share of the Parent Company alliance industries. It is designed to help in the runup to christmas, tiffanys reporting a rebound in sales. It is a Welcome Development for french luxury conglomerate lvmh that acquired the american brand for 16. 2 billion. Results last year, sales rose 1 to 3 . China leading the growth. That is your Bloomberg Business flash. David time for todays bottom line, where we look at Companies Worth watching. It is not just tiffanys we are looking at, is all of retail. Just before christmas i talked with brian moynihan, who said things were looking pretty good. Brian i do not think they do it because of the consumer. Last time we talked we are talking about the yearoveryear growth rate for consumers. It is closer to 6 now. Holiday spending is up digital up double digits from last year. You are seeing it through cyber monday. Great discussions about how many days we are up to in christmas and thanksgiving. Even halfway through the period, we are seeing the growth rate up 6 yearoveryear. Theres a lot of other spending going on. We feel good about the consumer. That is two thirds of the u. S. Economy. It is as big as chinas economy. Those are big anchors. You put that together, that is a big part of the World Economy moving forward. You have a Vantage Point that maybe nobody else has. When you look under their you seeconsumer, do over performance or socioeconomically . ,rian wages are growing especially in the Median Income area and lower, growing faster. That is good because you go back to what the fed was trying to do, they are trying to see the tight labor market translates to peoples income growth. That has been true from janet yellen to chair powell. That is a good thing. That means there is more money to more people and more people are spending. That is a good thing. You see that translate into broadbased economy. There is difficulty about spending on things versus spending on experience. You are seeing them both remain strong with additional emphasis on experiences and electronics and things that are not necessarily a car things like that but things people can consume. David from what you see at bank of america, can we keep this going with respect to the consumer specifically . Economists say you have to have more people working or higher productivity. Growth is not as robust as it has been. Brian this is a great question. Your denies equilibrium where job growth has been enough to more than absorb the population and youre seeing the population you are seeing the underemployment rate coming down. Those are good things. You hear the experts talk, there are still a lot of potential slack. There are a lot of people who could work who are pulling back in. The question will be you will run out of the people at some point. An Unemployment Rate of mid threes and going to the south with an underemployment rate coming down also. Question about immigration, getting a bipartisan, structural thing that feeds the immigration into into a population growth and away from the other type of things it gets tied up in. David that was bank of america Ceo Brian Moynihan. We welcome from chicago Jordyn Holman who covers retail for bloomberg. We are getting for luminary numbers. What do they tell us . Showstercard spending retail sales went up three per overall and the bright spot was an ecommerce sales which went up 18. 8 . The same struggles the Department Stores had, you still see that, but with online sales it is still very strong. Romaine one of the big concerns heading into the season is a lot of retail sales were concentrated on a handful of big retailers. Did we see more of that wealth spread around some of the other retailers as well . Jordyn the Holiday Season is an important season. They have all the promotions. You did see some of the wealth spread in that way, with specialty apparel as well. Electronics, appliances. What is interesting is the ecommerce numbers. The omnichannel, someone is buying online and picking up the store and that is helpful. Later on as youre grabbing the items were not expecting to buy. David was there a distortion because the season was so short which may be caused people to go more online because they did not have time to get to the stores . Jordyn that came into play for super saturday, the saturday right before christmas. Of 34. 4a record sales billion sold on saturday. A part of that is attributed to people thing at their calendar and realizing on i only have three days left to buy some of the stuff. Malls becausehe they ran out of time to buy online. David we have any sense romaine we have any sense as to how much discounting played into the slump in sales . What will we see will we get the profit report . Jordyn all of the Department Stores say it is the most emotional time of year for them and they looked at their calendars and would put out promotions that hopefully aligned or balanced out. We will not see how much every individual store light on promotions until january. David are the early numbers from mastercard reliable . As i recall some years it has gone up and down. Some years it was good, some years they revised. Jordyn these numbers from mastercard are in line with the estimates they had in november. They estimated 3. 1 growth. Now they are saying 3. 4 . There might be numbers that come out later. This Holiday Season has stayed in line with the estimates. David bloombergs Jordyn Holman, thank you so much for joining us from chicago. Thanks also to Romaine Bostick, cohost of what did you miss. , the levels to watch for semi conductors in todays technically speaking. If youre jumping in your car, tune into Bloomberg Radio heard across the United States on sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. David it is time for technically speaking. Abigail doolittle joins me. Aboutrstand it is semiconductors. Abigial and technology overall. We are starting with semiconductors. Doing well, up 60 . Take a look at the chart. In white is the Philadelphia Semiconductor index. 60 gain on the year, on pace for the best year since 2009. A piece of this has to do with trade war relief. Another piece has to do with the idea the sector is bottoming out because memory pricing is bottoming out. What we are looking at in blue is the memory pricing. It is hard from a technical basis to make the case there is a true bottom. You want to see it go above the last high. Some of these analysts might be getting ahead of themselves. If so, watch for consolidation back toward 1700 or 1600. David overbought . Abigial probably so. Anytime you see a parabolic uptrend, physics takes hold, it will probably come back in. David abigail doolittle, thanks so much for being with us. , the open coming up next with scarlet fu. This is bloomberg. Scarlet from new york city for our viewers worldwide, i am scarlet fu in for jonathan ferro. The content of the u. S. Equity market open starts right now the countdown to the u. S. Equity market open starts right now. Arelet coming up, we looking ahead to what could be a year of two different halves. Then the United States versus the rest of the world. Is it time to fade american resilience . Tesla shares trading at a new high. Wedbush raising its price target on the stock by 100. We will hear from the analyst behind the call later this hour. 30 minutes to go before the opening bell this morning. We sought s p futures get a little bit of a left. It was right before the jobless claims numbers came out. We will talk about that later on. The eurodollar little moved. Slightly higher. Just below the 1. 11 handle. Fx trading during european hours thin. Expect more of the same during u. S. Trading hours. Nymex crude holding at 61 a barrel. An Industry Report showi