To a weaker dollar and higher yields across the globe. Time now for global exchange. We are going to bring you todays market moving news from all around the world. Our bloomberg voices are on the ground with this mornings top stories. We want to start with the breaking news in the u. K. The pound is strengthening against the dollar on brexit optimism. Francine lacqua is live at westminster. Give us the lay of the land as we start trading this morning. Francine i have to say, you are absolutely right. You have to look at the currency. Theres this renewed optimism after a lot of ministers say they will be able to pass this first, we dont know whether Boris Johnson will be eight able to push his deal once again through a vote in parliament. Cow in the past has said no because this is the same deal. We could have various moments forcing the Prime Minister to ask for a referendum or forcing the u. K. To stay in the customs union. If it gets amended, word on the ground is that the Prime Minister will pull his deal, and what comes after that, we are not sure. We are waiting for the eu to say yes to the extension that the u. K. Asked last saturday. Alix what is the probability that there will be some kind of extension . Francine it was interesting. The mood of the music last thursday at the eu brussels summit was first, the European Commission president Jeanclaude Juncker saying we will not extend. Then you had macron saying they would extend. I would see it very difficult for the eu to say no because they will be blamed for a hard brexit. From what im hearing on the ground in brussels, thats the last thing they want to be blamed that. Alix thank you so much. Sort of a rowdy set there at westminster. In asia, we are seeing signs of how the trade war is eroding the Global Economy. Exports in japan, south korea, taiwan extending declines. Selina wang joins us from edging. Walk us from beijing. Walk us through the data and give us the perspective. China appears on course for this tentative deal. We are not seeing any momentum in trade risk. Exports during the first 20 days of october falling when he percent falling 20 from a year earlier. Of course, in addition to the u. S. China trade war, south korea is hurt by trade with 21 . , dropping a whopping inans exports dropped september, also pressured by week. Overseas. Demand that is extending the longest line streak since only 16 since 2016. Not to mention the tie exports the thai exports dropping, as well as in taiwan. Alix thank you so much, bloombergs selina wang. Now to canada, where elections will be held today between interest year and Justin Trudeau between Andrew Scheer and Justin Trudeau. Reporter the question is whether any party can get a majority. It looks like Justin Trudeau will probably end up with the most, but he will have to gather the support of a leftleaning party. He will likely expand his forecast deficits if he governs with the support of a left leaning party. Alix if there needs to be a coalition going forward, what will you have to give up to get that done . Reporter its a good question. One question would be the pipeline he bought. They are still trying to build that. His most obvious Coalition Partner doesnt want it built. Candidates usually dont do formal coalitions. They tend to take it vote by vote, and trudeau might do the same. But we dont know. It looks like theres some late momentum in his favor, so its possible he could get a fairly wide margin that would be more comfortable, but the narrow minority could get a little more unpredictable. Alix thank you. Emergencya state of has been declared as protests grow violent against government plans to increase subway fares. This really came as a shock to the International Community that things would get so volatile so quickly in a country that looks to be stable in latin america. Reporter i agree completely. It took everybody by surprise, especially because the protests started mostly by students jumping be turnstiles in the metro. They would use social media to coordinate the events before, and then just run into the subway, and it was a disruption, and they would leave. Wouldter saying they tough and security and call a state of emergency, this has gone violent way too fast. Ht now, theres the port theres reports of between eight and 11 people dead. More than 300 million in damages to the metro. The images out today are of people trying to get to work, the subways working only partially. There are buses crammed with people. They have been two nights with a curfew. Helicopter sounds during the whole night, reports of vandalism. You seen the images. Have beents attacked and burned, and some banks as well. Came as aast night surprise because it was much noe belligerent, with mention of the word dialogue to try to appease the situation. He said that chile is basically at war, and either you join us or you are against us. He spoke of an organized opposition or an organized violence group. This has caused some people to react. Copper worker unions are announcing strikes for today or stoppages for today, and maybe even a strike in the rest of the week. Several sectors criticizing the speech that he gave, even after he suspended the subway fare increase saturday evening. Alix eduardo, thank you very much. Those pictures are just unbelievable. Another story we are all watching this morning, even some diehard trump fans say the president went a little too far, and i may have been one of the reasons the president reversed his decision to hold next years g7 summit at his doral resort. Mick mulvaney, acting chief of staff, discussed it over the weekend. , he still considers himself , he at the end of the day still considers himself in the hospitality business. He wanted to put on the best show, the best visit he could manage. Alix now Mick Mulvaneys career could be in jeopardy. Coming up on this program, much more on your morning trade and analysis in the markets in todays first take. This is bloomberg. Alix time now for bloomberg first take. Inhousee from our panel of wall street veterans and insiders, Gina Martin Adams , and alsot cignarella here on set with us, marvin loh, state street global macro strategist. Vince, what do traders do this morning . Vincent pretty much just play the flows, i think. The decision is not going to come today. The decision is not likely to come tomorrow. We are still when a trading range for sterling, but probably base,g at 1. 28 at the 1. 30 and i have on the topside. If someone comes in them wants to buy it, you buy it. If someone wants to sell it, you sell it. Marvin absolutely. Weve got the ranges. We saw the high 1. 35 over the summer when it looks like there was a deal coming. Heavy lifting is still forthcoming. This just gets them to a point where they can actually negotiate a deal. When do you think the market starts to focus on what a deal looks like . Alix we forget that actually has to happen. Marvin mid2020 is something people need to start thinking about because you need to put stuff on paper to get things done by the end of 2020, or else we start looking at another delay. Everyone is gina already sort of position for nothing to happen. If something eventually does happen with brexit or trade or with any sort of policy resolution, it could create a pretty volatile reaction and all Asset Classes. I do think its really difficult as an investor at this particular point in time. U. K. Stocks are the cheapest in the world. They are going to remain the cheapest in the world yet. Everyone is chomping at the bet for when i will have a resolution because at that point, ive got to consider this a component of my global portfolio. That does bring in what morgan said, that you basically want to get into stocks. This brings a rotation into european equities. They are overweight european banks. Too soon or smart . Vincent thing about where everyone was maybe a month ago when we talk about it on the show. Its all garbage. Now we are at 1. 30, and you feel like you misty boat. You havent. There is still a long way to go. Get really choppy 25. Around 1. 3 but at the end of the day, you would think we have to get to an end game eventually. At that end game, u. K. Assets or the place to be. They are the cheapest ones. That goes for real estate in london to u. K. Stocks to gilts, etc. Marvin certainly from a valuation perspective, that thes a lot of sense, but economy as it exists, whether we are talking about the u. S. , talking about the world now versus six months ago is a very different place. Certainly it has punted Central Banks to do what they felt they needed to do, but there are headwinds out there. Dealing with brexit and dealing with a freetrade agreement when your whole world is slowing down, like we heard from the imf and all the finance leaders last week, is just another challenge. That comes into the discussion ultimately. Alix but is it the earnings weve seen but the earnings weve seen havent been terrible. It could have been worse, and clearly we are going to get a lot of read through this week. I think you make a really good point. You have to hedge because we are just at the very beginning of earnings season. Some tech and industrial and Health Care Companies that have reported, and across the board, beating expectations. But then again, and what earnings season do they not beat expectations . Honestly, last week was really interesting because even though most of the financials beat Current Quarter expectations, the future reporters yet to come through continue to pummel forecasts. They keep pushing down where theyre going to go so that they can beat expectations. When you look into 2020, nothing has changed. About managing expectations for Third Quarter. Weve got to come in better than what we suggest we will get. Is a lot of manipulation in the short term. What we try to get is a readthrough. Are you actually going to see a justification in sales . We just havent seen any change. Alix people on the Conference Calls were not talking. We are not going to give you 2020. We are not saying anything. How do you deal with that . Thats nuts. Tough. Ts as an equity investor, you are of a slew looking for forward forecasts. Currently, the sell side forecast is clearly not what the Investor Base is expecting. I think you have to balance that. If you should just we are getting 10 Earnings Growth, no one is invested on that premise. You can see a decent amount of downward revision estimates and not have significant down pressure on stocks. That said, if you start getting commentary that we are not going to get that singledigit growth, that is the risk that comes out of this earnings season. If there is a place we are going to see it, it probably is the companies in the world most exposed to overseas risk and dollar strength, which is been the story for most of this year. Marvin i think investors have most certainly been position for that Global Growth slowed down. Estimates around tdb continue to come down around the world, and just in terms of how Sector Performance has worked, anything that has international exposure, anything more trade focused because we still dont have any resolution on trade has not percent has not dissipated to the same degree. Vincent i would worry about the next one because of the trade situation, the delays of the tariffs to december. I feel at that has brought Fourth Quarter growth into the first quarter. Industrial markets and corporations bringing product in and bringing up inventory so as not to have the tariffs weigh on their profitability. If you bring that it to the third and Fourth Quarter, it has to come from somewhere. Alix how do you have a model for that . Vincent you cant. You can watch and wait out the industrial sector because eventually, the inventories will go loss, and then you have to rebuy and build up again, but depends onat lasts how it is coming off the shelves. Gina we put almost 30 growth in the s p 500 in Third Quarter 2018. That comp gets a lot easier going forward. Dont end of the first quarter, you only have to be at 0 growth. I think you have to consider this in your general view. Look at where weve been and how much weve comped going forward. Analysts are, forecasting 5 . I think you want to consider where the sequence of Earnings Growth has gone, the fact that we just came off a peak. Alix what i find really everyoneng is how glum winds up pounding, but no action. With the facts in plain sight and the need for policy changes all too apparent, central bankers have some little sense of urgency and even less signs of action. The world could be stumbling into the next global recession. Youre laughing. Vincent im laughing at the unhinged administration. [laughter] alix but no one is doing anything. You can wax poetic about all the issues. Vincent you are not going to hear it from the Central Banks. I imagine draghi will give us the truth, but you will not hear from central bankers now because they do not want to cause a panic. Alix but yet, we have seen yields climb higher. I feel like that would have been ridiculous a few months ago. Gina if you think about where we stand, the anomaly in this cycle was really qt. When the fed started tightening the Balance Sheet, that was unusual. The Balance Sheet tends to increase over time. To go through quantitative typing restricting growth in the flow of capital was pretty anomalous. We came through it smelling like roses. What is normal in an environment where weve got this Balance Sheet that is enormously inflated in the first years of the cycle . Now we got to normalize that Balance Sheet, so theres a lot of volatility in the bond market as a result. Where the Balance Sheet has upward status is a pretty major victory for Central Banks, where six month ago we were talking about, we are in an inverted curve. Such low growth expectations and have upward sloping curves to me as a victory. Marvin theres so much in that change of the curve and centralbank policy that went into the s p this year. Over the last two years, s p is up only 4 , 5 . All certain degree, we are traders. Weve us to that 20 , effectively put into the market seven to eight rate cuts, going from three hikes in the beginning of the year, and then for pricing. If central bankers actually start to push back, are we back and another situation where the volatility and Interest Rates have driven a lot of the risktaking we seen so far . The fact that we got these geopolitical sermons, how do we model . We dont. We dont know how to. Ultimately, we take a position, but we are just one tweet away from a complete change. Its way into data and we have more clarity on what Interest Rates are going to look our, what we will use in models, we will adjust accordingly. Alix really great morning conversation. Gina martin adams and vincent cignarella, and marvin loh estate street will be sticking with me. This is bloomberg. Viviana youre watching bloomberg daybreak. Shares of wirecard are rising. The Digital Payment company ,ired kpmg to conduct an audit the latest attempt to calm investors rattled by reports of accounting irregularities. Boeing says it told u. S. Regulators many times of changes to Flight Control software on the boeing 737 max. That software was later linked to two fatal crashes. The faa had criticized boeing for not revealing negative comments about the software from pilots. Alix thanks so much. It was a flight for the record book, qantas flight from new york to cindy. It lasted 19 to sydney. It lasted 19 a half hours. There were only a couple of passengers on board. They made them do exercises and regulated when they could eat and sleep. Coming up, recession fears on the rise in the u. S. Yields are climbing higher. We will look ahead this week. This is bloomberg. Alix this is bloomberg daybreak. Its really all about the news flow with brexit devising whats happening with the equity markets. S p futures sitting on the 3000 to push above it and sustain it. Aboverate just pushing 1. 30. Across the board, youre seeing yields move higher, curves move steeper, not dramatically, but nonetheless. Are almost certain the fed will cut rates at the end of this month. Policymakers have done little to the spell the notion to dispel the notion that cuts are coming. Heres what Larry Summers said when he spoke to bloomberg friday. A 35 percent chance of a recession having started by the end of 2020, that feels in the neighborhood of right, perhaps slightly optimistic relative to my guesses. Youve got the prospect of the decline in confidence as people start to see a recession, and that becomes a selffulfilling prophecy. Theres a sense that policy cant do a lot about it. Alix marvin loh of state street is still with me. Do you get the feeling we are at 35 chance of recession . Marvin i still think recession is in the back of peoples minds. Hases no doubt the data deteriorated, but the jobs market and the u. S. Consumer is still engaged, so it will make the process longer and probably a bit narrower. But we should be thinking about it because the risks of the world is certainly in a recession. Alix have you learned anything so far from earnings . This week we can industrials come but really we get discretionary. Vincent discretionary marvin discretionary and a lot of the more international companies. I think we will learn a lot. I find it interesting that the whole game in terms of lowering and then beating has gotten to the point where weve got very large beat numbers come about the marginsrs, but are very narrow. For the most part,