Over the last few days. Joe there you go. Russell outperforming. Caroline does happen occasionally. Carolyn was as talking about we had quite a bit of volatility at the start of this Fourth Quarter so i wanted to look at gold because it is a safe haven. It is gaining more than 1 today, feeding off of more signs of economic weakness. The latest data shows u. S. Private companies payrolls rose less than forecast. Hiring in august was downwardly revised. And a stronger dollar and occasional indications of a possible thaw in the trade war have actually pressured gold lately, but gold is still up to close to 17 so far this year. With this recently unexpectedly low data, economic weakness could push the fed to cut Interest Rates, likely setting investors to gold. This is a second consecutive day of gold rising after u. S. Manufacturing gauge post the weakest reading in a decade. Am taking a look at the stocks index. It is actually outperforming the Broader Markets, only off about 1. 6 even though the s p closed lower by about 1. 8 . This is a little unusual. Typically when we get concerns about trade and Global Growth would see some of these chip heavy sectors really underperform the markets and create a selloff given big exposure to international and china. Today that is not the case. Talks have been up around the 1600 level. The 50 Day Moving Average has created a bit of a support line. There is a lot of push pull today within the soft market. Going forward as we relate this back into the s p 500 i wanted to take a look at a longterm chart of the two. The big concern is the stocks have peaked twice for the s p 500, then the s p 500 rolled over. There are still big concerns he had that if you do not see strength in these chipmakers, it is really hard to make the case for the Broader Market to move higher. Abigail not surprising that was stocks selling off today and yesterday, we have a bit of a rally for bonds. Yeara look at this, two down giving up 20 basis points to 10 year 14 basis points. Investors bidding up the short end. That of course has the effect of steepening the yield curve. A top i i ranked Technical Analyst would be encouraged by this. He joined us a couple weeks ago and presented this chart. Two year spread going back several decades. Every time it has gone below zero, we are inverted on a monthly basis, it has gone sharply below. With the one exception he theled here in 1998 along longterm capital crisis where there were a couple blips to the upside risk. Spread on asee this monthly basis at the end of september close above zero we could see a similar situation right now with the two tends back to 1011 basis points. Even though we have volatility to the downside today there will be more risk on volatility up and down in the weeks and months ahead. Joe thank you. Anthony ands is cameron. Anthony, i want to go back to you, because before we got this recent bout of volatility, one of the stories had been early signs of rotation. Maybe we are still seeing that. Seeing some pain and some of the previously love sectors, like tech in particular, some love for financials and energy. Setting aside the recent ructions in the market, is this rotation still something you would . Expect to see continue . . Anthony i think that is a great question. When we met at the end of september to redo our tactical allocations, we brought things closer to home. Overall from a sector perspective we think you can still ride some of the winners, information technology, real estate, Consumer Discretionary names. I think they still have Growth Potential if we continue to stay on track in the economy. However, we have balanced some of that cyclical exposure with more defensive allocations to health care for Consumer Staples which we saw can today continue to be those leadership sectors when investors get nervous about what lies ahead. I think from a broader allocation perspective you need to be neutral on your government fixed income exposures. You probably need to reduce some of the risk and highyield and emergingmarket debt and lean into alternatives. That way you can balance your portfolio and mitigate some of the risks. The u. S. Y the u. S. , has been the cleanest dirty your shirt out there. So we have allocated much more to the u. S. At the expense of areas like europe and japan are just the outlook is a little bit darker than here in the u. S. Scarlet e trade is a u. S. Stock, etf and options commissions, joining Charles Schwab and Td Ameritrade in doing so. This is all in a bid to gain market share. E trade not moving that much in after hours mainly because the shares along with its rivals have plummeted yesterday following the Charles Schwab announcement. How do you think about this . Is a deal between e trade and Td Ameritrade inevitable, that they will have to join forces to survive this race to the bottom . Anthony there is definitely fee compression going on in the Financial Services industry in the Asset Management business definitely. Think you have to be smart and nimble. Think you have to be smart and nimble. The investments and what you can charge for those investments is getting lower and lower. At least from our view at america, how you put packages together, how you allocate a glias c lients portfolio. It is a tough game and they will continue to struggle in a fee compression environment. Joe go back to want to what abigail was showing us. Perhaps factoring in more expectations for a fed rate cut or monetary stimulus. You wrote a great piece earlier as to why bad news is bad news sundays and why bad news is good news other days. Why today is bad news good news bad news is bad news . Cameron the primary argument is the reason the ifn is going down so hard is not because the cost of capital is too high. It is the trade war. The ism itself is very blunt on the subject. Is the uncertainty engendered by trade policy. The level of Interest Rates, no matter what the president or anyone else says, is the primary reason why manufacturing is struggling. Reallynterest rates going to solve the problem as long as there is uncertainty . The answer is probably no. Joe we are making a big point of the fact that we are still only 4 up off alltime highs. On the other hand we are basically where we were in january, 2018. The other view is we literally have not gone anywhere. So could that be able argument that as bad as it looks or as high as it looks, we have actually just stalled for a long time. Cameron if one is willing to accept the premise that we are fairly valued in january of 2018. That is a difficult premise to accept, given how much optimism in terms of the tax cuts and what have you where in the price back then. Scarlet how do you think about fixed income . Where is the value in bonds right now . Anthony it is tough to find value anywhere in the market. I will shift joes comment a little, as i would look at how resiliently market has been with all this uncertainty thrown at it over the last year. Bonds act as a ballast in a portfolio. When you look at investment in government bonds, maybe there is not a ton of upside in the bond prices going forward, but on days like this you want to have fixed income and your portfolio. And what we have really been in vies and clients to do is stay up in credit quality. This is not the time to stretch for yield, this is not the time to stretch for risk in your portfolio. Make sure that that stable part of your portfolio actually acts stable when markets are moving down, particularly on the equity side. So, we favor equal weight on government, we would like investmentgrade corporate, and we would stay high on that credit quality. Caroline will the other havens remain . Yen and gold . Anthony yeah. I think obviously if there is a risk off sentiment out there, then things like gold and the yen and government bonds play a good upside role in your portfolio. I would think too that the markets have been very resilient, and if we get just a pause in the trade tensions next week, that may be enough to change some of the sentiment in the market. And we are in the most favorable time for the markets, october to december is generally the best time after. A 20 rise in the first quarters of this year. The set up from a seasonality set up is pretty good. If we can just ensure that the consumer is in good shape and these trade tensions are not going to escalate in october through the rest of the quarter, we may see positive gains in the market for the final quarter of the year. Scarlet people cannot forget what happened last year at this time. Cameron,s well as thank you both for joining us today. That does it for the closing bell and for me. Next we will have more analysis on the stocks selloff. Declines of at least 2. 5 to 3 for all three indexes so far this quarter. This is bloomberg. Is is bloomberg. We are live from new york. How u. S. Snapshot of stock markets closed down once again today they were start to a quarter since 2009. The slow down and the slide. U. S. Stocks join the global selloff as growth concerns amount. Trump heading back calling the impeachment inquiry a hoax. The state department may be looking to punish those who cooperate with the inquiry. E u. K. Prime minister outcome say and no deal october 31 . Signs of a slowdown. The u. S. Economy you losing steam, prompting questions over how slow it can go and still avoid crashing into a recession. The s p had its worst start to a quarter since 2009. Harvey,h us is cam professor of finance at duke. Along with sara. Cam, thank you for joining us. It is important to note that it was your research that is the whole reason we talk about inverted yield curves. Cam i cannot believe we are still talking about my dissertation. Joe you really are to blame. [laughter] so, obviously 30 years ago you observed this phenomenon of inverting yield curves preceding recessions. We have had some curves still inversion. 210 is positive. When you look at the structure of the curve right now, how serious of a warning do you see for the economy, even ignoring the data we are given . Cam importantly, my 18 third 986 dissertation looked at 10 year threemonth. Two quarters of inversion. At the time of my dissertation i had a 44 record and people were skeptical because they were only four observations. I hadards to my surprise, inversions before the next three recessions, and no false signals. So that is important. Seven for seven, no false signals. Now we are code red, we have an two quarters. It is hard to ignore. Romaine some would argue it is not code red. Does that have to be a signal of a recession itself . Can it not just be a signal of Slower Growth or at least of some growth level that people can wrap their heads around . Cam excellent point. Romaine can i be on your next dissertation . Cam you are like one of my committee members. It is not just an empirical observation. There is Economic Foundation in the theory behind it that this look of the yield curves is linked to future Economic Growth. So obviously low growth is often associated with recession. Empirically this model is seven for seven in terms of predicting recessions, but if we dodge a recession, if we have a stopped landing and lets say growth slows to 1 , than the model has given an accurate signal. So whether we are inverted or flat, it does not matter. It suggests Slower Growth. Importantly it is not the only indicator that is suggesting Slower Growth. Scarlet there is data backing it up as well. Caroline analysts writing up. To that end whether or not it is a recession it is certainly some suggestion if we get to just 2 growth we can suddenly nose in some way and there are worries the u. S. Is not the haven we all thought it would be in a global slowdown. They were pointing to the dollar turning low instead of higher. Through all of this the concerns have been about Global Growth feeding over into the u. S. And you have not seen too many cranks and the foundation here in the u. S. But now after this ism number, you look at the adp employment numbers, they missed. If you look at the five month average it is not the lowest since 2010. You are starting to seek racks in the foundation stateside in the u. S. But some people are starting to ask, is the u. S. Actually the safe haven that we thought it was all along as we have been talking about global recession fears or Global Growth slowdown. Can that feed over into the u. S. , or are we already seeing it emanate here . Say thingsysayers like it is different this time because rates are so low globally that everyone around the world is buying u. S. Treasuries to find a little bit of yield. Is this all familiar to you . Like, lee last three times we had inversions, where their people all those times saying there are other factors . Cam i hear this all the time. Every time is different. It is a trivial statement to make. So the question is, is it different enough that it renders this a false signal . And i do not think that it is that different. The qe, that had way more influence over the curve in the 1960s and 1970s. The size of the bond market today is so dramatically larger, it is harder for them to mess it up. On top of that, it is conveniently omitted in the discussion that the feds Balance Sheet has been decreasing in size since 2017. And that should actually lead to a steepening of the yield curve. So given that we have the fed Balance Sheet decreasing in size, given that we have the yield curve inversion, it is even more powerful to me that this is probably a true signal rather than a false one. Romaine an argument a lot of folks will make his once the signals appear there is still a long lag time between when you get to a recession. Cam that is a good thing. Romaine a lot of folks say this is the time you want to get invested. Ride it out, and if you are crazy enough you jump off at the last minute. Cam this is interesting. This time is different. In 2006 when the yield curve inverted, nobody took it seriously. But after the Global Financial crisis, people thought, this indicator is seven for seven. So it is getting much more attention today. And i think that if we go into a recession next year, it is not going to be a surprise. It was a surprise in the great recession. You know what happens any surprise . Slashing of employment and it makes things worse. Given we have these indicators well in advance, people can plan. They can do risk management. We will not bet the company on extra debt for a new project. Consumers to be more cautious, because all of these signals are suggesting heightened risk. So i think all of this could mitigate the severity. If we had a recession it could be very shallow, and ideally we avoid a recession of Slower Growth and socalled soft landing. Caroline do you worry that your dissertation has deemed us into a situation of a self fulfilling prophecy . That the yield curve inversion means we get a recession. Cam it is very simple. There is no Federal Reserve in the model. It is not a causal model. This idea of all the publicity the yield curve gets turns it a self filling prophecy. What i am arguing is that is a good thing. It actually helps corporations plan. Why wouldnt you use information that is relevant about future Economic Growth in your planning . So, given that we have got the ability to hire quality forecasting of what is going to happen in the economy, this helps firms plan. And you do not get the surprise and you can mitigate the severity of a recession if it occurs, or maybe dodge it. On the idea pick up of folks being less surprise, you are seeing more defensive positioning in the markets. A lot of people say that is a good thing because it means folks will not be caught with their pants down like they were last time. Sarah you could argue investors are more prepared. If you go back to january of 2018, the s p 500 is gone nowhere. If you look at the Real Estate Companies and utilities, they are both up more than 20 . That shows you just how much demand we have seen for these bond proxy areas of the market, for these more defensive areas of the market. However, we do hear a good amount of people now warning of crowding. Having a look at utilities at record high valuations. So that could be a concern. Joe this is bloomberg. Romaine the impeachment inquiry into donald trump moving forward. Several House Committees getting briefings today on documents related to ukraine. Earlier President Trump pushed back on the democratic chairman of the House Intelligence Committee patriotism. Joining us is eric watson. I dont even know where to start. This was a wild day. The ig report or briefing with lawmakers that was supposed to take place today. Eric that is taking place right now and we are rating for one of the members of the Judiciary Committee to brief us. We believe it was about the ukraine matter but we dont have confirmation on that. As you said it was a wild day. President trump issued a lot of barbs. Key takeaways was despite all the rhetoric he said he would cooperate with the house investigation. The House Committee said they would issue subpoenas on friday at the white house does not cooperate. Reading between the lines trump may be surrendering some documents. Joe do we have more clarity on the specific path ahead for pelosi and the house . There are all different kinds of committees and so far it doesnt look like anything of the clinton impeachment. Will it get more focus in the days ahead with specific impeachment hearings, and a clear path to an eventual vote . Aik congress is away on twoweek recess so we wont see the kind of public hearings the. Envoy toencore ukraine is coming in tomorrow morning to brief staffers. We will see a former staff are also coming. That was will give key details t