Alibaba. Single day after a scorching start as consumers around the world look for bargains. Kathleen lets get to u. S. Stocks and how they ended. You can see the gains on the board are not large. However, go straight to the middle line, thats the s p 500. Another alltime high. 3093. It was a week of dueling trade headlines as chinas Commerce Department and white house Economic Advisor said yes, a phase i deal will involve a phase in tariffs. Tech stocks gains as well. Anything that is good for a trade deal. Global growth certainly helps. Tech shares, the nasdaq closing at another alltime high. 8475. What is interesting is on saturday, President Trump went out of his way to say wait a minute, i have not said yet anything about tariffs. Im not going to get rid of all tariffs. He did not say he would phase in some tariffs reductions. I think he is trained to tell us the deal is not sealed. Im the final say on what is going to happen. We will see how the markets deal with that today. At the end of the week on friday, it was all signals, green light for stocks. Haidi yes. The question for the brandnew week is looking for the next catalyst whether positive or negative when it comes to trade talks. Look at our asian futures setting up for the trading week. We are looking narrowly mix. Mixed. Nikkei futures down by 3 10 of 1 . Positive. Looking more in sydney, and upside of four tons of 1 going into the start of cash trading. New zealand, flat to kick off the week. A big week for more data as well. In particular, expecting the barrage of domestic activity. Indicators from china to add to the future of the economy that is continuing to be driving lower by the trade tensions. Lets get you to first word news with su keenan in new york. Su thank you. We start with the cleanup in hong kong. It is clearing up after a 24th straight weekend of unrest. Once again, tear gas was fired at a Shopping Mall and subway services were disrupted. Six months of protests have undermined hong kong. The city has fallen into a recession for the First Time Since the Global Financial crisis. The latest data shows Economic Activities fell more than 3 in the September Quarter and is expected to have fallen further since then. In spain, elections are being held for the second time this year. For the fourth time in as many years. The Election Results are unlikely to break the political logjam. The Prime Minister is expected to win, but his socialist party likely fails to gain an outright majority. Sanchezs decision of an election in the aftermath of the jailing of the cattle on separatist may have driven some of the voters from the far right box party. Money spitting money spinning single day enjoyed a scorching start. There were more than 16 billion of orders in the first 90 minutes, an estimated 500 million op million shoppers around the world are expected to take part in the sale with alibaba recruiting taylor swift and chinese superstar. They will also also operate the picture of the strength of consumer demand in china in the slowing economy. Meanwhile, in australia, they are bracing for more deficit in fires. The risk has reached the catastrophic level. Three people were killed and more than 150 homes destroyed in New South Wales as bushfires burned through areas that were rendered exceptionally dry after a twoyear drought. Cooler weather eased some of the immediate pressure but the situation is expected to worsen as the weather turns drier this week. A court in malaysia will decide on monday if the prosecution has made its case against former Prime Minister measuring for a sock in the one mbd scandal. He does nice any wrongdoing he denies any wrongdoing and the judge will rule on when the charges will be struck out or if the case will proceed. Prosecutors say he was part of a criminal breach of trust with some billions of dollars from one mbd. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Haidi thank you. Rapid rising food costs has tumble pricing is threatening chinese policymakers. This as President Trump sows doubts about the prospects of a trade deal. Tom mackenzie joins us now from beijing for more. This is an inflation dilemma that policymakers find themselves in. Tom it is. What we are seeing is a greater divergence between Consumer Prices driven largely by its pickup in fault prices and Producer Prices where we are continuing to see those costs at the factory gates fall. I will break it down for you. Consumer prices, we saw 3. 8 . That was a sevenyear high that was for october. 3. 8 for Consumer Prices. A lot of that is down to port prices. Those rose 100 year to date. Those port prices are leading to higher prices for things like beef, lamb, chicken, other proteins of course as chinese consumers switch up because of the swine fever that is impacting the whole population. That is the Consumer Price number. Producer prices, this is where the source of concern is according to bloomberg intelligence. Producer prices fell 1. 6 for the month of october. That is a fourth straight month. What that means is it makes it that much more difficult for these companies to generate a profit. Part of this is in put prices have weakened. Also the demand picture is very soft as well for these factories and producers. Profits are expected to be pressured on the back of this. And the ability to invest in that is key for the broader growth picture. Bloomberg intelligence is saying this will be the focus, the Producer Prices. We saw the be boc cutting that mediumterm Lending Financing by five basis points. They expect additional cats. They say the pboc is focused on easing, but of course, the Consumer Price rises we are seeing in terms of the pork prices and overall the 3. 8 percent makes it that much more difficult for policymakers to enact stimulus to address those Producer Prices. There is that going on. It does pose something of a dilemma for officials, particularly as the trade concerns bubble up to the surface. Kathleen thats just it. Just when you think you have enough problems on your plate, maybe you have a phase one trade deal going on, President Trump manages to muddy the waters on the trade talks again. Reminding the pboc that this is not over yet. Tom absolutely. We had a week of positive News Headlines when it comes to the trade talks and then as you say, President Trump coming out and saying hang on a second, i have not agreed to remove all tariffs. Take a listen to what he had to say. Pres. Trump they are moving along, they are moving along. Theyve moved slowly, much too slowly for me. But they want to make the deal much more than i do. But the trade talks with china are moving along very nicely. If we make the deal we want, it will be a great deal. If its not a great deal, i will not make it. Tom President Trump saying the chinese want the deal more than he does, that he has not agreed to remove all tariffs. He did not rule out as you pointed out removing some tariffs. Larry kudlow had said earlier on in the week that if you were going to get a deal, there would be concessions he set around things like tariffs. From the chinese side, they said to awo sides had agreed phase removal of tariffs. The location for any signing of this phase i deal if we get to that point is up in the air. President trump saying it was going to happen in the u. S. , there were doubts toward the end of the last week over to whether it would happen over it would happen outside the u. S. It looks like a lot of work still to be done to close the gap around what is going to happen to these tariffs if they are removed in phases. We are looking for any time, any date in terms of when they may try to set up this meeting between the two president s to sign off on the easiest part of any trade deal. Kathleen seems to me there is a winwin with those phases. We shall see. That is Tom Mackenzie in beijing. Lets bring in Asset Management chief Market Strategist, all over persia. Thewere trading on watching screens and listening to these things. By friday, it looks like the games were not big and stocks but the rally continues on trade optimism. Donald trump says not so fast. Where do you think we are now . Oliver i do get the sense that we are very close to a trade deal. President trump saying that so fast, it is about getting the spotlight back on him. I think he was surprised that president xi went ahead and may those announcements that came out of beijing and took the spotlight away from him. Given the political situation in the u. S. , he wants to have the microphone and be able to dictate positive minute narratives and trade is positive for him. Shocked. Completely i think we started their weak the week on a positive note. Kathleen when you have the s p 500 and the nasdaq both hitting yet another record, they are both at alltime highs, is this stock market valued in such a way . Is the economy showing a strength in such a way that this rally can continue . Oliver we dont expect there to be meaningful new highs by before year end. But that is not to say we expect anything to be a material out turn. At the end of the day, the economy has performed better than most feared. Corporate earnings have performed better than most feared. And given the fact that the Federal Reserve and other Central Banks are kind of back to easing mode, it justifies these valuations. If you get a little bit of positive news from trade in a global macro picture, that is the catalyst for things to move another 5 higher or so. Haidi how long is not a positive catalyst before it turns negative . Isnt the danger that phrase one is priced in, we dont have the details of a deal, we dont have a location, dont have it signed yet. Does that suggest that Market Participants are looking at phase two and three as being closer to prices and they will be disappointed . Oliver that is the risk. Also, we dont know what the phasing phase reduction of tariffs looks like. There is a risk of disappointment there. At the end of the day, what Market Participants on what we are looking for is is there going to be a 2 Economic Growth number 42020, or are we going to come in much lower than that . Just a few months ago, there was a lot of talk about recession toward the end of this year into 2020. That talk us has largely gone away because the economy has performed well in the consumer has been there and continues to be there. You are seeing it with alibaba single day, the consumer around the world continues to be strong. There is reason for optimism. That is what you want to look for. You want to look for underlying Economic Data that is positive or at least apprising on the plus side. That will drive corporate earnings and ultimately valuations. Haidi as you said, the earnings has not been great. It has not been as horrible as some may have seen. But as but is that because we have low expectations and it was met or beaten those expectations . Oliver yeah, yearoveryear we are down on earnings. We are not down nearly as much. The Research Firm at the beginning of the quarter and end of the Third Quarter had expected a yearoveryear decline over 4 for corporate earnings in the u. S. We are coming in around 2 . Possibly going to be a one handle. That is much better than feared. Again, some people were expecting much worse numbers. You are seeing relative outperformance. The risk with that is of course that you still hit a stumbling block in at the end of the day, numbers are not great, which is why the Economic Growth story is important, why the market reacted positively last week and the expectations that a partial trade deal would get done. Kathleen when you look at markets around the world, you have interesting positions. You are neutral weight jeff hamm stocks, european stocks, and you are underweight emergingmarket equities. But you still see some attractive values there . Oliver yes, valuation and emerging markets continues to be attractive. And they have been. Our view is that it is a little bit of a value to trap. It is perpetually underperformed. Right now, investors around the world are still preferring per further growth story over the value story. Such a has continued to underperform. You see that in u. S. Markets if you look at the defensive sectors. They have underperformed. So heres is up 18 or today. Nasdaq, up 27 yeartodate. That is a big delta between the two. You are rewarding growth, emerging markets is a value story. Right now, value continues to be not favored. Kathleen you are overweight fixed income. You think bonds should do ok in this year going into next year. Global see our story bonds selloff persuade some investors to buy the dip, the 10 year up at 1. 94 . A lot of people are saying, maybe it is time to dip into the water. At least the auctions went well last week. Oliver we made the call on fixed income late last year. Around november, december timeframe. It certainly worked out. A lot of my colleagues thought we were on the crazy side. Expecting fixed income to get near doubledigit returns. And here we are with treasuries and municipals having done very well and highquality corporates have done having done well also. Treasury is0 year not exactly a highyield for 10 year treasuries. Given the fact that the fed is going to continue to stay loose and is more likely to decrease Interest Rates at the next turn then increase them, not to say it would be in the next meeting, we are pretty comfortable with that call. Haidi final word on japan, we have had five weeks of gains for japanese stocks. Things are looking positive. You are underwhelmed by that market though. Noter again, look, we are going to get every single call exactly right at the exact right time. On a longterm basis, we continue to favor u. S. Markets over japanese and asian markets as a whole. The japanese story is always changing, and it is good to see them succeed in some of their monetary and fiscal policy steps. We are happy about it. It is not that we are sitting here saying we missed one. Look, it is a decision we made an a question of where you deploy capital. Right now, we think on a riskadjusted and total return basis, overall, u. S. Fixed income and u. S. Largecap equities are going to continue to do better than other areas. Haidi great to have you. Asset management chief Market StrategistOliver Pursche joining us. Still ahead, we will discuss the aramco ipo. The outlook for oil. We will be joined by our gas later this hour. Kathleen , we will be live in madrid for the latest on the spanish election result. This is bloomberg. Kathleen now for a check of the latest business flash headlines. Alibaba has had alibaba has added them to its upcoming hong kong listing. It is said to have inviting a chinese bank to include the team with a decision expected on monday. Alibaba plans to start taking investor orders on friday and will price the offer the following week. The timing of the secondary listing may still change, but it could raise as much as 15 billion u. S. Dollars. Haidi tencent aims to name aims to make more console games with its partnership with nintendo. Publisher of call of duty. Tencent is also aiming to step up its dominance of the chinese gay market and it is planning others to younger female players. Socialist party look set to win the greatest number of states after the forced general election in four years. Fragmented results could mean weeks of negotiation on forming a government. Lets go live to madrid. Ben sills joins us. Great to have you. There is a great deal of uncertainty in that result and what it means for governments in the coming weeks and months. Ben yes, exactly. The politicians going into this were scratching their heads about how they were going to resolve the issue with the parliament looking so fragmented. And there has been no real shift in this result to point the way forward, which is bad news for the acting Prime Minister. He has got the most votes, the biggest number of seats, but he got the advance that justified the gamble he has taken. I think he is under pressure actually come tomorrow morning. Kathleen the fourth election in four years, he does not have a majority, the farright thirdplace party is now vox. Everybody seemed to run on this on them of cracking down cot elan independence movement. Where does this leave the president . Hes guilty for allowing this surge of nationalism. He triggered this election because he could not get the terms he wanted from his potential partners. And he triggered it knowing that there was going to be a series of events on the front of that would potentially and rage both the catalan separatists and the spanish nationalists. Also at the same time, he was digging up general franco from his grave outside madrid. Both of those things it seems has pushed it towards the extremes. A moreaves sanchez with complicated political situation to manage. Haidi it has been more than half a decade since any Major Economic reforms have gone through. With the political stalemate, are we starting to see the cracks show in the Economic Data . Ben thats the big question. The economy is slowing. The rest of europe is slowing more. Germany has been teetering on the brink of recession. There is obviously the trade war going on between the u. S. And china. The u. S. Co