him -- and the nasdaq 2008. we can really show what is happening. is other daily moves. the 1% moved down. risk, itepricing of gave way to the bulls, which the s&p 500 up for the year. until you see a capitulation bottom, the bulls truly take lead to that could either gains or losses you are likely to see more volatility. let's take a look at the movers on the date. really moderating losses earlier. ge really turning around. one penny per share, the new ceo outlined a new reorganization plan that could see $3.9 billion a year. .oca-cola up 1.4% him -- finally, huge movers relative to earnings. let's look at under armour. 21% short interest, they did eat in a huge way. putting up 25 cents per share. the internet services company up 14%, they also beat and the shares upgraded to a buy. their red dead sales have surged. some bullish action here. tremendous bear selling pressure more recently. you for the rundown. we are joined by the senior editor and lead blogger for bloomberg markets. mike, at what point do earnings proceed? >> we could see a little bit now. there is obviously a lot of uncertainty about the midterms. hard for the market two sets out expected winners and losers when they do not have a keen sense on what the outcome will be? there is a sense of benefiting from these gains in the house. companies are believed to get the pricing pressure if the democrats win. highly regulated companies, banks, energy companies, would be expected to gain from a republican house that maintains control of off -- all two branches of government. him and -- trying to decide what winners and loses will actually see after the midterms. one thing that gives popping out at me is if republicans do you was ae control, there very interesting stat on this. typically, what you hear is stocks rally at the midterms. it is only true when the status quo is maintained. when the house is flipped, the next 12 months, 14% when the party maintained control. interestings an historical precedent. guy: you were talking earlier about cockroaches. once you see one, there are more out there probably. in the past,u used one disservice that -- disturbing thing, probably more out there as well. did they classify the cockroach? >> i think it is a sector, without a doubt. rising interest rates not the best environment for home prices. neither is the reduction of property taxes on the high tax states. housing large -- to a large degree is centered on the east coast with a tax version is the highest. is definitely a place where people are looking very closely for them. sector, one of the biggest and most prominent lenders in the country a couple of weeks ago reporting some disturbing news about some of its construction loans. it may be too early to say that it is running around the second or, but everyone has this out. on the credit markets. >> talking about the possibility of a trade deal yesterday afternoon, still in markets, but it did. it feels a queer still at the mercy of any headlines. >> absolutely. we saw the actual market when the news -- on the news that him -- thereing, was a lot of cross currents in the markets now. tariffs haven't gone away is one of the big catalysts. if there was easing in the trade tensions, i'm sure the market would take it as positive. guy: it can be a scary day for markets p are you never know. with the midterms coming up as point,ack to vonnie's does the month and signal anything? to be honest, i am not sure how the market will react to any of those. >> we have seen this massive drop in stocks this month. a big discrepancy between the performance of stocks and bonds. it leads you to believe there will be rebalancing from investors it like to rebalance every month. , itpressure to buy stocks is not a guarantee that the market will rally but there is a predictable higher of stocks in the market this week. whether it will be enough to stop the bleeding the market is anyone's guest -- anyone's guess but it is a very well telegraphed and much to be expected higher of stocks for the week. that is a short-term signal. i agree with you after this week, i don't know what the market will do leading up to the election next week. it will not be too surprising regardless to see a rally. early islked about wiped away. >> where is the smart money going, mike? right now, a lot of smart money is in cash. cash is a viable investment now showing a decent yield. it is not likely to stay there forever, but i do think, you know, you have to look at money market and mutual funds. not as foolish as it was a few years ago when stocks were going crazy and they were unit -- yielding nothing. question, clearly pointing us toward seven. that something we will spend a lot more time talking about as we approach that? options market, it includes an extra treasury report. that puts the chinese and the u.s. once again on a collision course. >> seven is a round number people are looking at as what has been the ceiling of the rate . i'm not sure if breaking seven itessarily will be causing looks like the chinese currency is depreciating, that is what will push, a slow creep in may be a little higher. that swift rate of change will catch people off guard. the president will have something to say. it could be a's -- a tweet storm around that one. mica joining us from the bloomberg team, markets live team. what the first word news looks like right now. kaylee is with the details. plans --ent trump as part of an effort to enter chain migration. anyone born in the u.s. is considered a citizen, even if the parents are unauthorized immigrants. the u.s. is preparing they are expected to hold reef talks next month. the announcement could come by early december. the white house is pressuring saudi arabia to wind down its economic -- of cutter. washington wants the issue resolved. the saudis are also under scrutiny ongoing military action. they raised questions about red -- whether the crown prince is fit to succeed his father. americans have been to jump the line. they say they're also allowing and new canada, japan, zealand to use electronic passports at u.k. airports. it is part of the u.k. effort to open beyond the network as they prepare to separate on the eu global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. coming up, cooling down. it's weakest in more than four years. this is bloomberg. ♪ vonnie: this is bloomberg markets. -- growingro elliott at its weakest pace in over four years. what we did have was german inflation data as well. it poses something of a problem for the ecb western europe economy team editor joins us now live. let's start off with the wider eurozone space and then the -- we will focus on what is happening with italy. german inflation at a 6.5 year high. how does the ecb in december square that circle? >> the ecb will have to decide the quantitative easing program? the data may change things a little bit. the ecb will not have to go back to the drawing board to see what it has to do. possibility that these will be much better question mark >> well yes. still's day around. probably no great jump forward. jonathan: i would be curious to get your take on this. these kinds of numbers with a very cheap euro, with still exceptional stimulus out of the ecb. how can the eurozone economies survive without one of those two factors if this is all it can produce when it has them? >> that is the dilemma. mario draghi and other members of the council, they will have to look at things and take into account the possibility of a and the noises coming from the trump administration and washington. >> let's is the italian government do now? growth in italy is no good thing. >> exactly. the time government dug in its heels. even though the gdp registered no change in the third quarter, a lot of economists are saying that is bad news and they are not sure what will go on from here. aregovernment says they going forward with their plans and there will not be any changes. >> kevin, the problem with the italian budget is it assumes a reasonably optimistic level of growth that will be generated by the italian economy. if i look at the data produced out of the italian economy, i'm skeptical of those numbers. if i am, the equation simply doesn't work. is today a significant low in terms of the budget debate? pointedy of people have out the discrepancy, saying if italy really does want 1.5% growth next year, it better get on the move. that move is just not happening. it will really give a lot of pause for thought. they may be more pessimistic. >> that is what the government says it is doing. having an expansionary budget that will encourage growth and investment. the government has acknowledged now and then that this is a moree that by having a expensive policy, that they will spur growth. a lot of experts say that will probably not happen. vonnie: thanks to kevin. the italian 10 year yield is trading at 346 right now. 346 basis points. is refittingapple some veteran products. we will look at the company's's newest hardware. this is bloomberg. ♪ s is bloomberg. ♪ guy: this is bloomberg markets. vonnie: apple is three marketing is designed in the company is revealing updates to its ipad pro and mac book air. >> the shipments happen going down low single digits. they haven't been able to figure out a way to refresh the line the same way they have done. on the iphone side, they have the -- have been able to drive up. they need something similar on ipads and max. toy just have to find a way separate the factor from the iphone. if you are a consumer, what difference does it make if you are buying iphone versus an ipad mini? the distinction has to be clear in terms of features and software and applications. that is what they will try to do. successfulave been in -- you just have to shift at a higher price. this is a serious competitor in this space. put the they do to product in a very different place. how can they differentiate themselves? >> a good point. they cater more to the enterprises p what apple really needs is an ipad line and mac that caters more towards the enterprise to drive up more off office workers and the max. that is where you have to play with the formfactor and drive up the memories according to graphics. and think of it this way, a lot of new work loads are more geared toward training. i think that is what they are trying to do. 100% recycled aluminum parts. the previous model comes in colors. will people upgrade even if they do not need to? let's look at iphone. they came up with -- they launched with x and split it into factors. the good thing is you get consumers and have different appetites. same thing could be done at the ipad. how do they make the distinction factor --een ipad that is the one that will drive up the cycle. they have to find a way to drive the cycle. that will drive the mac shipments as well. >> money around all these events, remember thursday we also have financials for apple as well. .hank you very much the bloomberg intelligence update, what we're getting from apple today in brooklyn. let's get some calls up now on the business flash, a look at the biggest business stories in the news now. let's kick it off with uber. back in a courtroom after just -- persuading a judge to keep operating in the city, the court of appeals could determine whether uber's drivers are really self-employed. staying with the car theme, volkswagen is among the many carmakers including the impact of china passes trade dispute, in europe. >> we should to better and therefore we kick our forecast for the year. it is this site for each and every customer until the very last day. that is what we are prepared for. >> the volkswagen cfo. next, we will focus on general electric pierced stock is trading down but only just right now. the call was a little bit of a wild ride i have to say. more on that next. ♪ vonnie: live from new york, i am vonnie quinn. guy: from london, i am guy johnson. this is "bloomberg markets." two hours until european markets closed. this is confusing this week. let's talk about where we are. we are down on the stoxx 600. btp are a focus list ofvonnie was talking about that earlier. we are seeing yields on the move as a result of the auction. italy,ak data out of flood gdp in the third quarter. none of that really particularly good news with a populist government in rome. there are some stories were focusing on. one of those is volkswagen. we were hearing from the cfo. the stock is up. the outlook.or bp, a real bet on the fact oil prices are going to stay high. they're going to buy the bhp shale asset and use cash. that is a bet on the idea they can generate enough cash of higher oil prices to be able to do that without putting some of that deal into shares. bp trading up. let's check in with the first word news. >> law enforcement officials are not sure whether them discover the last of the pipe bomb smell to prominent democrats and other critics of president trump. they have said the packages were staggered and more could be somewhere in the u.s. mail system. the associated press -- press is list. cesar sayoc kept a president trump to visit pittsburgh today. he plans to pay his respect to the tree of life synagogue where 11 people were gunned down during sabbath services. funerals are said to begin in the mayor said he hoped the president would delay history of to give the focus on their families. authorities say bowling led to yesterday's fatal shooting at a north carolina high school. two 16 euro male students were involved in an altercation that left one of them dead and sent dozens of their schoolmates fleeing for safety. the alleged shooter has been charged with first-degree murder. the justice department will not prosecute three former u.s. executives of a dutch bank that admitted to hiding evidence about the flow of mexican drug cartel money. the decision essentially wraps up a four-year probe in which emitted to a felony conspiracy and agreed to pay hundreds a means of dollars in penalties. the former executives could still face sanctions. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. vonnie: thank you. plenty of black dust 20 a bad news -- the company missed estimates, splitting his troubles per-unit and faces in expanding probe. jeff sprague has a hold rating on gu with a price target of $13. you asked about the need to move quickly. why is that paramount for you? >> thank you. i think -- we are not of the view the global economy is rolling over necessarily, but i think the company taking its fiduciary responsibility has to think about that, right? employees, 500 thousand retirees. the fact is, the liabilities are going up in the cash flow is going down. the company is highly leveraged. one thing we heard on the call is there could be more cash required both in ge capital in the court of ge capital and also on his insurance liabilities that have not been completely wrestled of the ground. we think the company is vulnerable financially and it is important they take steps to stabilize the balance sheet. vonnie: is cutting its quarterly dividend and also says it will need a capital raise, are you convinced? >> i am not convinced. it was worded, we are not currently planning -- it would lead me to believe that mr. colt is still analyzing the situation and trying to get his arms around the numbers. probably also like we try to get his arms around the size of the liabilities. i think the odds are quite high when we get out into the first part of next year, once this internal review is complete, that they are in fact doing something to try to stabilize the balance sheet, which could include some kind of capital raise. guy: let's talk about the power unit. it is the big drain. the green bar on this chart highlighting the disappointing performance once again from the unit. are they going to split it into. the problem is come also, and i'm sure you heard this on the call, the problems are going to be there for a lot longer than we anticipated. this is what the cfo had to say on that subject on the call. our businesses are generating cash flow in line with expectations, but clear with respect to power, the issues will persist longer in with super impact than we had initially -- deeper impact than we had initially anticipated. it will cause us to miss. guy: that was a significant statement from jamie. let's talk about with the new ceo had to say about this. clearly, and acknowledgment for him. he is an outsider as well. nearly an acknowledgment from him this per unit need some dramatic action. >> make no mistake, we know the power business has to perform better and that is what we're going to spend a ton of time on once we get past earnings today. let me bring you back into the conversation. they're going to spend a lot of time on this. they will effectively be creating a bad bank/good bank structure within the power unit. how is that going to help? >> well, it is not clear to me it will help at all. i think what they're trying to accomplish is to take out some management layer and improve the visibility into the business from the top down as they are trying to really wrestled this to the ground. this is not in any way a material fixed to the business with any short period of time. these problems in this business are very deep-rooted. this dates back to decisions made on contracts over the last several years, and very long-term contracts. decisions made on service agreements that could take years, if not a decade or more to play out. a lot of this is really baked in the cake, so to speak. they will obviously try to take countermeasures to lower their costs and improve their internal performance, but this is not something that is going to be fixed in a quarter ortwo or even a year or two to be optimistic. guy: jeff, i am sitting in london. i have european perspective on this. if what is happening in the ge power units, is it systemic to the industry? i noticed the seamen stock dropped around the same time the comets were being made about the power unit on the call. can we talk about this being an industry issue or is this just a ge power issue? issueis a power industry that is more severe at ge given their prior behaviors. suppliers, ge, siemens, mitsubishi, are the big three, clearly put into much manufacturing capacity expecting the market to be better than it has turned out to be. it sounded great from a high level. we have abundant natural gas, and expensive and clean. who wants coal or nuclear, so we will have a terminus amount of demand for gas. for 30,000 feet, that made it look -- it looked like it made sense. the fact of the matter is, demand, particularly in the developed world, has been weak. energy efficiency is taken bite. there is not great load growth for electricity demand, and the industry has too much capacity. from a ge standpoint, they were much too aggressive on bidding business and bidding on service. i also do cover siemens. their pressure on their power business. i don't expect it to be as severe and ugly as what is playing out at ge, but there is no doubt they're also dealing with substantial industry overcapacity and in the midst of a big restructuring of their own. jeff, the me ask you this, jp morgan chase pretty much agreed with you saying the power unit issues are "bad" and nowhere as near as salvageable as bulls. how does this all play out? monthsstors give bulp 12 or 24 months or do we start to see reaction immediately? >> i think very highly of clearly and i've known him -- of larry and i've known him for many years. i think it is for testing and put an outsider in this role. but i think investor patience is thin here. we kind of waited for flannery to sold-out, then we are flannery toses -- sort it out, then we are changing forces. there's only so much one executive can do in a short period of time. until the cloud is lifted over the balance sheet, there in a tough spot. this call today is -- as ugly as it was -- to me was not the final ripping the band-aid off moment and reset they can make people feel comfortable they could own it. when you don't have any earnings guidance or cash flow guidance, when you're hearing there is possibly mounting problems in ge capital and insurance, when there's due investigations from the sec and department of justice, that is just not the stuff that you can build much of an investment case around in the near term. probablyhe stock is range found at best and i would not be surprised if it drifts lower here, particularly in the or we willouncement lost instantly get a more holistic plan for mr. culp on how he wants to proceed here. vonnie: jeff sprague, thank you for your time. u.s. stocks off their highs. here's a picture of the majors. the dow is up 6/10 of a point. the s&p 500 is up. being led higher by under armour after a beat estimates, and that was a surprise, clearly. any see the nasdaq up as well. the vix above 25. this is "bloomberg." ♪ ." ♪ guy: live from london, i am guy johnson. vonnie: i am vonnie quinn. this is "bloomberg markets." guy: the robin hood investors conference underway in new york city. the event brings together the brightest and most influential voices. there and has is another great guest for us. erik: thank you so much. i am here with lauren taylor wolfe, the cofounder and managing partner of impact of capital. it is a brand-new activist firm. lauren, good morning. thank you for joining us. >> thank you for having me. erik: some people may wonder, does the world really need another activist hedge fund businessiven the fact is your business, i know your answer is obviously yes. my question is, why? >> we are taking a little different approach. the typical activist they look for short-term-oriented capital allocation changes to make. erik: you can't possibly be referring to carl icahn. anyone.not referring to our view is we think we can make companies more competitive in better position over the long run if we think about a longer-term view, a three to five-year type view. we're looking at both capital allocations specific changes initiatives,ategic operational improvements, capital structure changes, as to makeesg changes link companies on a systematic basis more competitive and more profitable over the long run. erik: what you described sounds more like private equity than it does hedge fund. >> yes. erica except it is public companies. >> our approach is similar, but we're not levering up a company were taking majority ownership positions. we are looking out over many multiyear. periods totiyear affect change in a positive way for the company so that it could drive a great shareholder return. erik: explain this esg component. the reason i'm interested -- there a lots of reasons, but let's say, esg means a lot of things to a lot of people of many of those people say, you know what? that is squishy and i don't trust it. >> you are exactly right. it does mean a lot of things to a lot of people. our view is we are taking a very focused approach to esg. the things we consideresg, one, is it material to the business we are investing in and is it linked to economic returns? link it. two wasted -- there are two ways to link it. you can access lower cost of debt. are you pursuing esg-specific initiatives that link to economic return to irr? erik: what is a good example how an activist for like you would improve financial returns? >> it -- erik: it is not easy to see. >> it is one added element. only go in and say you should spin out this division because it is dragging on your multiple or your growth -- erik: which is something you might do anyway. >> you will see an immediate response. yesterday will have a positive change and it will build over the long run. in example is, the company has a governance problem, you can convince them this -- as an example, to stagger the board. a lot of these proxy advisor firms like iss will give you negative, scarlet grades for having poor governance. if you can improve the governance at a company such that it is included -- link to you a lower cost equity, similarly if you are making an investment in energy efficient initiative within the company can assess a lower cost of debt in the form of green bonds or sustainability bonds. if you are to otherwise borrow it 5.75, you might be able to borrow at 5%. there are so much capital going into the equity side of esg sustainability and the debt side as well. erik: are you labeling yourself activism plusesg two distinct yourself from other activists? >> yes. we distinguish ourselves in many ways. we're focused on long-term systemic change, but also doing esg in a very proactive manner. some activists are looking at esg is a risk overlay. we're saying, let's focus on these esg items and focus on change. with the can you stick longer-term investment horizon? do you have more patient capital? >> yes, our capital will be more patient capital. that gives us the luxury of looking out over a multiyear period. erik: do think that is more necessary in the kind of environment that we live in now and with the kinds of expectations -- obviously, the way the market is performing in the kind of expectations shareholders have are companies? >> there's been a lot written about this, and i do think there are some public companies that have been played by short-termism entelechy. erik: so larry fink is right. >> i think there is an element of short-termism. i don't know if i can generalize it for every company, but i do think copies are very short-term focus, focus on making their quarter. it is a combination of designing the right incentives so -- where we are different from another activist is we say, yes, maybe you should make that investment in innovation or technology and that might depress margins in the next corner or two but he will drive a stronger irr over the long run and put the gap between you and your closest competitor that much further. i do think that happens to be linked to designing incentives that instead of management team to focus on the long run. management teams like talking to us because we're not asking questions, oh, what are trends for the quarter? strategic plans for three years to five years. erik: tell me a little bit about the style activism you will be practicing. you work for cliff robbins and blue harbor. cliff is it looking for a public fight. he calls himself a suggestiveist instead of what some people think of as the firebreathing -- you know, poison pen activist -- >> we're focused on using all the tools available in the toolkit. any tool that any activist ken use we will be using -- can , we will be using. we hope to go into companies and a friendly manner. i have been invited to many boards. i sit on a board where i have no ownership. i partner and i have built a reputation is very thoughtful and constructive investors. however, we believe in order to capital, we are willing to use a proxy if we need to. erik: lorne, thank you for sharing that with us. we look for to her activist campaign. lauren taylor wolfe, managing partner and cofounder of impactive capital. we have more for you. nexte: looking for to the hour. their chats for will be back with the ceo of -- their chats will be back. we look for to the interview. about what we're talking about next, the price of crude. it is getting crushed. take a look at the numbers. it is down quite sharply at the moment. i want to show you this chart as well, which is what is happening with breakevens and treasuries. breakevens continue to move lower in the united states as the price of crude is priced into that rate. treasuries have yet to follow. keep an eye on this chart. it is important. futures in focus next. this is "bloomberg." ♪ vonnie: time for futures in focus. oil extending its slide today. we want to examine why. , ted.g us there was talk about demand, how far do we see the price decline? great question. the talk today is the was might be preparing to impose that last 250 $7 billion in tariffs on chinese goods if the meeting down in buenos aires for the g20 meeting does not go well. that is kind of spooking the market a little. we have expectations for another weekly build in crude stocks. although, it this might not be as large as previous weeks. you're looking for roughly 3.7 million barrel build, but that is only 30% of what we've seen and weeks prior. we are sort of getting backed up. we have a dramatic increase of imports coming in through u.s. exportsd canadian rail hit all-time highs. so that is all caps on putting some pressure on crude oil today. at the question in my mind is, will russia impose an export duty to ease their surging domestic energy prices they're looking for through the winter? it is raising the question, does russia have the capacity to make up for the uranian or help make up for the uranian sanctions? the see what happens. a lot of what we're seeing in crude is technically driven in nature. with an obvious target below was in the form of that 200 day moving average, which also happens to be our low here today so far. that is at 65.30. it was a very obvious target. this could also be a likely area for crude to attempt see a bit of a bounce. we would have upside targets of $68 at first and also 70.50. if we can't hold this 200 day moving average, 5335 to 62 point even is where we are looking. vonnie: ted, thank you. stock of the hour is pfizer. let's find out why. look atwe're taking pfizer. scherzer laura linney but because of earnings. we have a lot going on, mainly the big headline numbers are to $53ng that forecast billion. in july, estimates of $53 billion to 55 billion. we are of a chart showing how some of the legacy drugs are actually falling. justof those old medicines are not performing the way they should be. we heard from the ceo when he was saying there is a lot of manufacturing and supply shortages going on. he hopes to correct those, at least in 2019, to fix some of those problems. vonnie: pfizer down 1.2%. thank you, taylor riggs. from new york and london, this is bloomberg. ♪ i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. guy: 11:00 a.m. in new york, 3:00 p.m. in london. from london, i am guy johnson. vonnie: in new york, i am vonnie quinn. this is "bloomberg markets." guy: here are the top stories we are covering. european stocks headed toward the close in the red. wall street a little higher. amazon is negative again. european growth sliding sharply, germany inflation rising to 6.5 year high. how will the ecb square the circle in december? bp at sign oil prices saying hi. -- that's on oil prices staying high. will use cash to buy shale assets in the united states. let's check in on the european market entry what is happening with bp right now and the rest of the story. stoxx 600 is down. we've had a number of negative pieces of news out of italy today. pretty average auction if we're being honest. we have had absolutely flat gdp growth, which is a bit of a surprise as well. none of this particularly plays well when it comes to investor confidence surrounding that country right now. there are good stories involving stocks. the german giant up by 2.6 percent. trading up by 1.6%. its numbers were good today, but making a big bet on the price of crude that it can generate cash necessary to pay for those shale assets in the united states. that is what europe looks like will stop let's look at wall street. abigail: another shaky day for stocks in the united states. a look. we're looking at gains, but each of these major averages after huge volatility yesterday and in the month of october, opened slightly lower than were sharply higher, up more than 1%, now moderating gains. the volatility we have seen continuing. lots of uncertainty. earnings reports are coming in disappointing. take a look at a chart of the s&p 500 in the month of october. you see this downward trajectory, down 9.2%. its worst month since 2009 at of the financial -- in the financial crisis. tremendous volatility. , down, up, down. we're seeing more of that today as investors don't know which way is up, searching for capitulation bottom with a sellers would be flushed out. there are not signs of that yet. more of the same may be ahead. we do have the average below. if we hop into the bloomberg, take a look at the significance of the s&p 500 being below its 200 moving day average. this year is reminiscent of 2011 where we also had huge volatility early in the year and then a correction later in the year. we see at that time the s&p 500 have been above it 200 day moving average for lots of volatility and simply slicing through it similar to this year, initially touching down to about zero on that 200 day moving average, a reflex rally similar to the summer then sharply below, down 14%. the s&p 500 down more than 20% at those lows. this year with something similar. lots of volunteer -- lots of volatility early. now slicing below it, but only 4% below that 200 day moving average. if 2011 is any sort of guide, there could be big declines at for the s&p 500, down about 10% right now from those highs. back in 2011, those amounted to 20% losses. some of the big laggards on the month come on the day, but these are the monthly losses. take a look at amazon, down 25%, the worst month since 2008. they had a disappointing holiday guide. investors wanting out of these high momentum stocks and have gone up so smart -- so sharply, looking to take money off the table. true for microsoft and apple reporting on thursday and facebook, the big tech cap money and reporting after the bill -- tech company, reporting after the bell. these are the reasons we have so much underperformance for the tech sector overall. of course, for that nasdaq, s&p 500, and the doubt, a for you to these well-known names. something oni read the bloomberg earlier about jeff bezos setting a new record for losing the most money ever in terms of a billionaire because of the drop we assume this month in amazon stock. i have to find it. it is an interesting story. thank you, abigail. we will have more on the facebook story in a moment. let's turn to the eurozone. eurozone economy cooling. growth really coming in lower than expected, absolutely flat. we did not see great growth out of italy. it was pretty much flat as well. go to frankfort. let's talk about this from a mario draghi point of view. we had two data points to focus on. you had gdp pretty flat and then you had german inflation at a 6.5 year high. -- if you'reret mario draghi, how do you square that circle? >> you would be relatively easy. the main mandate of the ecb is inflation. they have been looking to restore inflation in the euro area for years. now inflation seems to be starting to be here. mario draghi will have an easy answer and say, we will look at inflation. solation is finally there there is no reason for us to change course. startseuro area growth to cool and draghi says, let's see it is only a to bury slowdown, there was no fundamental change in momentum, then of course it will be a big problem with high inflation and slowing growth for could be a big problem for the ecb in 2019. a for now, no reason to change course. vonnie: what are the outlier calls in terms of the forecast we will see an december? >> the ecb will have new forecast in december. most likely, given what we are seeing for this quarter, the growth for 2018 and 2019 is going to be revised down. for now, the inflation outlook seems to be on track. big also growth in 2019 if it turns out the third-quarter was mostly temporary, for instance, german car was low. if this rebound in the fourth quarter, the ecb could still be on track for growth in 2019. vonnie: what are the black swan events that could take place next year? outliers, things that could impact those forecast such as brexit, for example, trade deals with the united states. how is the ecb modeling that? think theight now i main thing that is on the minds of policymakers of the ecb is italy. not so much if there is an extend off of the european union, but as we've seen growth was a flat in italy, if rising yields, rising spreads, low growth start to impact banks and banks start to choke credit on the economy, this could become a self fulfilling program that the ecb would have to look at given italy is the third-largest largest economy in the euro area. is a risk, butt the ecb and european union have been saying it is mostly going to be a risk for the u.k., not so good for the european union, but will be manageable. the real it will be on the u.k. and there is protectionism. for now, on the u.s.-eu side of the trade war seems to be on hold. if this changes, especially for targets car companies in germany, this is going to be a big problem for the european economy. to then i take you back beginning of the conversation i talk a little about the ecb? shot clock trichet them and you point out there is a single mandate, he used to talk about a single needle in his compass and that was inflation. that cost him to make a policy mistake and a raise rates. it damaged the credibility of the ecb as a result of that. i'm sure mario draghi is aware of that policy misstep and will be considering it when he talks about in that from exceptional stimulus being delivered right now from the ecb. bute is a single mandate, how is the ecb going to factor in this growth story? because there is a danger it makes a policy mistake at this point, if this slowdown is not, as you say, temporary. >> absolutely, absolutely. mario draghi was there as the governor of the bank of italy in 2011 when the ecb raised rates and then had to reverse when he went to had the ecb as president of the ecb in late 2011. mario draghi knows this well. this is why it has taken the slowest possible way out of extraordinary stimulus for the ecb. he has been slowing down purchases and quantitative easing very slowly, only in the end of december will they completely stopped. he has pledged to keep reinvestment's going and said the rate hike won't come before through the summer -- it is a bit unfair what this means, but it doesn't mean any time before september of next year. that might even change. remember thiswe lesson, he is been extremely prudent not to pre-commit and not to jump the gun on normalizing ecb policy too fast. this would probably be the job of his successor. let's do forget, mario draghi leaves the president of the ecb in late october 2019. guy: certainly chatter about an extension of the program. i think one spanish bank were talking about earlier on today. contribution your to the program and are coverage as well. vonnie: let's check in on the first world news. americans have been given permission to jump the line at london's heathrow airport. previous the reserved for europeans, the british government now says it will allow citizens of canada, australia, japan, new zealand to use of electronic has more gate at u.k. airports. it is part of uk's effort to open more broadly be on europe. it prepares to separate from the eu in bulgaria, authorities say they have busted a criminal ring run by state officials who sold fake documents to foreigners seeking to obtain bulgarian passports. it would grant buyers the right to live and work within the european union. more than 20 people were arrested all across the country. technology executives are warning that a digital services tax proposed by the european union would hinder and hurt economic growth. in a letter to finance ministers come the leaders of 16 tech companies say the measure would undermine the union's goal of a digital single market and harm the businesses that make the biggest impact in the region. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more 120 countries. this is bloomberg. up, a busy day for earnings. headliners include bp, lufthansa, volkswagen. we will dig into some of those european earnings next. this is "bloomberg." ♪ vonnie: from new york, i am vonnie quinn. guy: in london, i guy johnson. this is "bloomberg markets." let's look at the european earnings season. struggling for direction today. next corporate results i guess is the best way of putting it. mixed corporate results i guess is the best way putting it. we're joined now by director of research content and european equity strategist for bloomberg intelligence. let's start off with today. what is the take away? yes, is like bp and volkswagen, lufthansa's numbers were not quite good. his today instructed as to what it is telling us about the european story? >> we can hope so. if you look at bp and volkswagen in particular, they are pretty good results. volkswagen has bucked the trend from other auto's. they've got the right positioning for china in terms of mainstream autos with their mass-market, being about 15% market share. not only did they beat this quarter, but if china actually drops the tax there talking about on new car purchases, it plays a straight in volkswagen. so you have a couple of good things there, current results plus forward. bp is just not going to proverbially out of the park, going back to the u.s., sorry. but they not only had very good their costsults, but containment and are capital discipline continues to be extremely robust. and because there's so many projects that are coming on over the course of the next six to 12 months, yes some really good visibility there. so there is too big bellwethers they give us a little bit of sire relief. and what otherwise has been, as you had said, rather mediocre earnings reporting period so far. vonnie: what is the flavor of this european earnings season? in the u.s., there's a lot of talk about how revenue growth is quite healthy, but earnings per share perhaps not so much. what is the future of european earnings more generally as opposed to it is craddock stories? >> good question. so far, it has been, i would say, lukewarm. sales growth has been pretty close to in-line, slightly better if you were to look specifically -- we're talking mid-single digits expectation in a couple of tenths better so far. we're only about one third of the way through results in europe, as well -- as opposed to well beyond have in the u.s. on earning side, little disappointing. we've had notable disappointments in autos and on the consumer stables front, which is a big sector hear from the european vantage point. on the flipside, we have had robust earnings in energy and a really good luxury goods sales. there has been a couple of these stories that have been progressing that we are just seeing more evidence post-of overall, if our to characterize it, i would say it is pretty much the definition of mixed results at this point. guy: it is interesting in terms of expectations on where we are, i'm just going to throw this chart up your that was put together by the team. expectations coming into this reporting season in europe versus expectations coming into this reporting season in the united states. kind of compare and contrast that with multiples. where are we? >> this gets to the crux of the issue. the u.s. raced ahead into all-time high levels, if you look at the s&p 500, it has rallied since late may quite sharply. europe has been faltering progressively. 3q was setup coming into i have to be better than expected. and that hasn't quite played through. gina adams in u.s. is concerned about what is going on with profit margins, which can be an early sign of something to worry about in terms of earnings progression. and don't forget, we have a very tough comparison being set up in 2019 for the u.s. because you had the big boost from tax cuts this year. in europe, we have been looking q,r so-so earnings in 3q, 4 even into the beginning of next year. the multiple was much lower here, so setup was not nearly after matter. monica what are expection -- vonnie: what our expectations now? >> from the european vantage point, it is interesting. forward estimates, so far through the reporting period, have continued to take a little higher. this all assumes we don't have a trade war that spirals out of control and that we don't have an exist until crisis -- existential crisis with euro or from italy or brexit or whatever the case may be. so set that aside, we should see moderate global growth feeding into actually and accelerating earnings picture for europe as we get into midyear and beyond. and we are still sing positive earnings revisions. so that is a good thing, especially at 12.5 times earnings. vonnie: thank you , 10craihead - - tim craighead. this is "bloomberg." ♪ live from london, i am guy johnson. vonnie: this is "bloomberg markets." we want to talk facebook. researchdirector of with us, paul sweeney. this is the next bellwether. we are waiting on apple, but facebook is going to tells about the direction of advertising in the u.s., the direction of social media platforms. we're not really anticipating facebook will do so well this quarter, are we? >> the stock is down about 35%. it was a very disappointing quarter for foreign investors in the stock is taking it on the chin. i would argue this is one of the more important earnings announcements for this company since it has gone public simply because there is that concern about the fundamentals, i.e.'s growth slowing in an apartment with a copies warned of terror expense? there's a repertory overhang -- revelatory overhang which facebook has been on the front lines for as a punching bag will stop there is all of those issues overhanging the stock. i think one of the ways to kind of get past that is to put up a very strong quarter with maybe a little better than expected outlook. that is kind of what this stock needs. guy: to that point, is the stock now a the proxy the founders of the startups, that a hard time integrating themselves into a larger organization. we offended at microsoft and off a bit and now facebook. i think what is important is the founders tend to stay two or three years to try to help with the integration, if you well. to the extent they leave afterwards, it is not that big of a deal. if you are facebook, it is a question of are you creating an environment that smaller start of digital companies that may have a technology that you don't have worn expertise that you don't have, or they capital selling themselves to your company? vonnie: we will get the earnings report after the bell. thank you to paul sweeney, director of research for bloomberg intelligence. staying on tech, amazon shares 1.1%, continuing five weeks now of tech selloff. this is "bloomberg." ♪ vonnie: ibm down 1.8%. it will buy back $4 billion worth of shares. ibm buying back $4 billion worth of shares, the board has approved it now and just yesterday we learned of -- st aking her legacy on that $33 billion red hat deal. guy: let's talk about european markets. coming up to the flatline in the last hour before the close. we are starting to follow action being generated on wall street. bcp's continue to remain in -- remain a concern. not great option today out of italy. two decent barrel others -- bill weathers producing a story today. remember, europe does not have a great deal of tech. and tech seems to be suffering a little bit on wall street right now. so it does seem like maybe europe is benefiting from that. but coming up into the close, one hour to go now. vonnie: ok, quick look at the vix index, because it is elevated, but nothing to really give out. good for those who like volatility. strongerollar index is as well, but not because of the mexican peso. that is weaker. the mexican peso under pressure since an airport deal was canceled after a referendum. and we have a weaker yuan, 6.9730. and global macro movers, you can see it is a patchwork quilt across the g20. up 2.8%. and look at the sovereign bonds, italy slower. 10 year yield higher. in italy, iting would seem, although i cannot see any reason for that right now. guy: i kind of am with you on that. but day by day it is hard to judge that. let's join michael bell from jpmorgan, an asset manager joining us in london. i when i get into the technical story right now, because i do not know how you trade right now, but talk about strategically where you are and what you guys are thinking about right now. for the last few years, if i had seen a dip like this, i would've bolted. does that work now? michael: it is becoming less clear right now. the way we are thinking about it, you are in the late stage of the economic cycle and you are going to get continued devices coming through and at some point that over tightening poses a risk to the u.s. economy, particularly when you get rates going to the next half of next year. the risk comes when you get that fiscal stimulus fade perhaps beyond the end of 2019 period, and with monetary policy with interest rates -- for the economy. obviousous look -- the question for the market, if there is a risk for the economy when you look beyond 2019, and the market can look up to a year ahead, it becomes unclear whether you're talking about a risk that the market will price at some point quite soon, or it will price at some point over the next year or two. guy: let's talk about the late cycle in the states. ok, i think that is what you're talking about. and in europe. i saw data today suggesting in slow down here as well. michael: less in europe, although it is notable, when we talk about the late cycle we are talking about unemployment rate below. we have it at the lowest levels since 1969 in the u.s., some other story for japan and in europe it is much higher. but that said, despite the fact it is higher here, you are comeg wage growth through, so we have skilled labor in the eurozone and not quite as early cycle as suggested otherwise. the key risk in the eurozone is you have some pretty concerning numbers coming out of the new export orders, the components of the bmi surveys, that is linked to trade concerns, perhaps a brexit concerns. and the risk for me is does that feed through into consumer confidence, because as a moment consumer spending is holding the economy up. if that starts weakening, that is the risk. vonnie: what are you advising managers? are you looking at emerging markets, domestics, what are you looking at? my view, it makes sense for the state of the cycle to be shifting portfolios gradually. not panic moves, but shifting them closer to a neutral allocation in equities. and i think what is interesting, if you are starting to think about being in the late stage of the economic cycle, i think it makes sense to be also getting close to neutral and other ways. so for example, not being overweight with growth stocks, which has done well over the last nine years, until recently. and getting closer to neutral, that probably means for people who are overweight growth, adding a bit to value. and the other thing is from a stall perspective, the quality stocks tend to be defensive if the markets are selling off. so adding quality stocks makes sense. and when you look at it from a style perspective, we think that if people are overweight small caps and mid caps, it makes sense to dial it back down closer to neutral, because if we are getting into the late stage, the market could at some point in the next three years start to turn down more seriously. and you do not want to have those stocks at that time. vonnie: what do you mean by quality stocks these days? what is a quality stock? explain it is easier to a low-quality stock, that that has high amounts of debt, negative free cash flow and aggressive accounting practices. quality stocks would be the opposite. y: let me see if i can get some of the stories that have done well, or badly in the of cw function on bloomberg. -- fcw function on bloomberg. isis this where i am starting to see money flowing into? the big story on the upside has the momentum, the tech stocks have been a prime component of that. am i flipping, if i take a look at these styles, one from the bottom to the top? is it simple as that, or is it more nuanced? michael: if you look at the last downturn, you saw it a lot of financials in the value index, and you expect the value stocks to underperform in that situation. 1970's, back to the what you see is actually the majority of the time growth stocks underperformed during downturns. so if you think we are getting into the late stage of the economic cycle and you do not think the next crisis will be a financial crisis, but a more normal recession, i think it makes sense not to be overweight growth stocks, because if you take that period in the run-up to the dot-com bubble, the strong performers were growth stocks, now a similar period of that recently, not to the same magnitude but directionally, so the risk for me is that 2008 was the outlier and actually during the next downturn it is looking similar to the downturns prior to that, and you see value stocks outperforming during a downturn. it may be early to be going overweight value at this point, we're not sure you are at that point yet, but i think it makes sense to be getting closer to neutral, so not overweight in growth. michaelrt and sweet, bell, thank you for coming to see us. remember, you want to see the factors like fcw on your bloomberg. vonnie: we want to talk about ge. down now 8.1%. drop is worsening as the day continues, because an accounting probe now is marring the new ceo's debut. getting off to a rocky start. probe lookingding at a $22 billion charge in the power equipment unit. we know that the company talked already today and that had a reaction from most analysts. we just spoke with jeff earlier on his says he does not think it will be something that will improve the situation at ge in the immediate term. so we will keep an eye on that. now first word news. courtney: several republican leaders voicing their support for president trump's proposal to outlaw birthright citizenship's in the u.s. lindsey graham tweeted a short time ago that he plans to introduce legislation on the same minds as president trump's planned executive order. and mike pence says that birthright citizenships can be a loophole for immigration, however most experts doubt the president will be able to implement this change. the president is set to visit pittsburgh today, following the worst instance of anti-semitic violence in the u.s.'s history. he will pay his respects at the synagogue were 11 people were gunned down during services. the funerals for the victims are set to begin. the mayor had said he would hope the president would delay the trip to keep the focus on the family's. and authorities say that bullying led to a fatal shooting at a north carolina high school. two 16-year-old students were involved in an altercation that left one of them dead, and sent dozens of schoolmates clean for safety. the shooter has been charged with first-degree murder. and in italy, at least 10 people have been killed over two days, heavy rains pouring down and highways pounding the country -- high winds pounding the country. one does it a woman who was buried by mud. and a firefighter was struck by a tree while responding to the emergency. three quarters of venice is said to be flooded. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. donahoe.ney this is bloomberg. guy: thank you. do not forget to tune in to bloomberg radio. i like to listen to the cable show, which is coming up with a jon ferro at 5:00 p.m. london time. it is available on london digital radio in the london area. that is coming up. i at 5:00 p.m. this is bloomberg. ♪ vonnie: welcome. guy: time for our global ballot -- battle of the charts. you can see all of this, get a great shot of what were going to v.ou on gt >> halloween is around the corner. we have some candy here, but i also want to talk about something that is spooky, october. look at my chart and we see global stocks have lost about $8 trillion this month, the most in 10 years going back to 2008. they lost about $9 trillion then. but there has been a lot of green since then, so investors are wondering why in the middle of a bull market? emerging markets have been putting a drag on things. look at the index and we see it is down about 20% year to date. and we cannot blame it all on e.m. we also have spots in europe and the u.s. it has been a scream of for investors. have a happy halloween and you can find this chart in our terminal. guy: take a look at the losses we have seen. vonnie? vonnie: i have nothing so entertaining. it is a weaker yuan. and obviously, we have been speaking about this a lot, but inching closer and closer. at 6.95 right now. we know that they get uncomfortable at -- and the seven mark could be the place where we see some kind of intervention or some kind of language from other countries, as well. you can see that chart on the bloomberg. guy: i am, to be honest i think that vonnie's is the best story out there in terms of riley markets. for theive it to jenna simple reason it is halloween tomorrow, and in terms of the losses generated by global stocks absolutely is terrifying. i think that vonnie did that quite well. anyway, find these fantastic charts, and if you want to watch that again you can do that on your gtv function as well. you can see it down here, that is where you need to go for the tv.ic charts, g plenty more still to come. this is bloomberg. ♪ live from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. under armour headed for its best day, the shares at least, in more than a decade. this after results indicated that the turnaround plan is finally working. kailey leinz has more. i was genuinely surprised. the shares got rewarded that much for a good quarterly performance? >> it is because the turnaround has been long-awaited. management said the strategies would pay off and the results are showing that maybe that is the case. revenue beat $1.4 billion, above estimates. epsthe company listed forecast this year, the fourth straight quarter that they have gained on results. but a bigger jump today than in previous quarters. it is because a lot of the strategies, for example, reducing inventory. we have a chart we can show you, growth has been in the double digits, but they have been cutting about 40% of their products and sales focusing on the high sellers. so producing the glut that was making them have to do discounting, for example, and that was weighing on growth. the company also cutting costs. they announced the elimination of the 400 jobs last month, so that is working. but they need to work on domestic sales. they were sluggish this quarter. guy: is this a trend? are there things that still need to be done, or is this story and progress? >> domestic sales is where they need to focus. those were down 2% this quarter, consistently sluggish. international sales did make up for it, but they are still on a downtrend. and our own in-house analysts saying this quarter showing that operationally the company is doing well, with those cost cuts and reducing inventory, but it is that sales growth that they have to focus on going forward, especially in the international market. the ceo saying that they are proud of what they have done so far, but they are not declaring victory yet. vonnie: kailey leinz with the stock of the hour, thank you. an investors conference throughout the morning, bringing together the brightest and most intellectual voices in finance and technology. erik schatzker joining us. he has another special guest. erik: thank you. , the ceo westley moore of robin hood foundation, so congratulations for pulling this together. ofis a superhero roster people you have put on stage. ray dalio, ken griffin, larry robbins and the list goes on. you have heard almost all these presentations, what stuck out for you? wes: we heard a variety of different opinions on where people think the markets are, where people think we are right now, and where we are going. i think that one of the things that sticks out, being the ceo of robin hood, is what does this mean for the community that we end up serving. i remember hearing the conversation yesterday from mohammed all area about the impact of global markets and where he sees some of the biggest threats in global markets and the impact it will have on different communities. so i think being able to hear ofg-time supporters robin hood, world-class investors, giving endeavors opinion. erik: i would say on balance, a little dark, right? wes: there are some bears perspectives. but we have been on a lawn bowls cyclethat i think -- bull that i think people understand we have had a very good run and streak, but when you are talking about underlying fundamentals, but also understanding how it really works to individualize communities, that is where people are saying that there could be tough road the head. erik: for people who do not know robin hood, this is the largest poverty fighting organization in new york city and you have a fascinating resume. you served as an army captain, you were in afghanistan, you served in the white house under condoleezza rice, i want to know more about what you are trying to do, how you are you involving with the mission, and the strategy of the organization? wes: the evolution of the organization, it really works with poverty, because the truth is that robin hood -- erik: how much has poverty changed in new york? wes: when you are looking at 1.8 million people still in poverty in new york alone and you look at the past 10 years, the poverty rate in new york city over the past 10 years has fundamentally not moved. the number of people who have moved out of poverty permanently, that number is a stubborn. erik: have they been left behind by monetary policy, but quantitative easing and the impact it has had, or is it a failure of government? wes: i think the answer when we talk about a fundamental breakdown is yes, yes -- erik: yes to everything? wes: yes, because it is impossible to talk about people in poverty who have been pushed by these policies, impossible to talk about wage stagnation that people have experienced. so the thing that we are trying to understand and really center liftork on is how can we families out of poverty, measurably and sustainably. there is a fluidity of people falling in and out and that is something we can address. erik: many people equate robin hood with philanthropy, but as you know one of the most interesting trends in this philanthropic world is the idea of investing in philanthropy you need to create business models that help those who need the help the most. and if the businesses generate a profit, that is ok, too. wes: that is one reason we are so excited. we have launched a partnership the lynns first and organization to show how these organizations work together to create a platform. one contribution from robin hood is how do you take investment principles into the philanthropic world. data matters. so when we look at the organization that we invest in, whether they are nonprofit or businesses that have a social mission or double bottom-line impact, we have to be what he used the data and what the metrics are telling us to be was and not just make our investment thesis, but then to track and understand what progress is being made in our larger mission that we hope to accomplish. erik: thank you for having us here. wes: great to have you. the: that is westley moore, ceo of robin hood. they take from the rich and give to the poor, you heard it from the man himself. vonnie: cannot wait to read more about it. erik schatzker with the robin hood ceo, wes moore. and with the midterm elections rapidly approaching, be sure to stay tuned to "balance of power," coming up next, including guests like jeh johnson, the former u.s. secretary of homeland security. and tune in to election night coverage at 7:00 p.m. one week from today. so, the market bump is gaining steam. the nasdaq is up more than 1%. as ep 500 is up. and -- and the s&p 500 is up. dow up as well. and the dollar index is getting closer to 1.97. this is bloomberg. ♪ david: from bloomberg's headquarters in new york i'm , david westin. welcome to bloomberg's "balance of power." reports president trump will change the rules of citizenship. paul gordon from frankfurt on disappointing economic numbers. and from st. louis, scott wren, who helped make the news today when president trump quoted him in the stock market. we have the president saying he thinks by executive order he can change who a citizen is in the u.s. can whether they are born here. is he right? >> it depends on who you ask. i am hard-pressed to find somebody in the aftermath of this interview released for hbo earlier today, that the president would be able to somehow roll back the 14th amendment. meanwhile come on capitol hill, lindsey graham, the republican from south carolina, already echoing what the president has said it is saying he would be an