Since at least early 2016. King dollar continuing to shine. When we came in this morning, we had that big story overnight out of hong kong come out of china with the markets there taking a dive for the worst. Didnt appear to be any real news, any catalyst, but the structure of things going on in terms of the economy over there, as well as the geopolitical situation in hong kong. Guy lets talk about whats been happening here in london. There has been an incident within the last halfhour thats taken place on London Bridge. The scene of a major terrorist attack couple of years ago. It is about 800 yards away that way from where i am standing right now, right on the edge of the city, the financial district. Not much reaction in the british pound. Financial markets have sadly become used to such incidents taking place. The police are telling us a number of people have been injured and a man has been detained. This comes as we prepare for the general election, which is going to take place in less than two weeks. Remember, the 2017 election was affected by terrorist incidents, so whether or not that had an impact on the outcome i think its probably extremely debatable. In the markets, very little reaction to what weve seen over the last halfhour. As we get more details as to what has taken place, we will of course bring it to you. Romaine lets focus in on the u. S. Economy. A big day in the Retail Sector as consumers hit the stores, as well as those online websites, looking for black friday deals. Joining us now is steven blitz, chief u. S. Economist at ts lombard. Happy thanksgiving. Thank you for joining us. For most of this year, i think the big story has been the consumer, the resiliency of the consumer is the only thing standing between us and a recession. When you look at Consumer Spending trends and how that spending is taking place, are you confident that is going to keep us away from an economic downturn . Steven yes and no, which is always the official economist response. Through the year, what happened was you have to go back to last december. As the equity market cratered, retail sales cratered, saving rates shot up. As the rest of the year wore on and the equity market stabilized around its highs, you saw the consumer basically spending down , as precautionary spending well as employment continued to grow and they were spending. The reverberation from that is done, so going forward, youre going to have spending which is positive, and will be positive for the economy, and will be more inline line with much Slower Growth rate in employment and income then we had a year ago. Odd jobsng 100,000 versus 200,000 month. It is still positive for the u. S. Economy. A positive for the u. S. Economy as it once was, but still definitely a positive. The risk is over the last 10 years, household Balance Sheets are very much overweight towards Capital Market assets. So as long as the equity market is positive and going, they will keep spending. Romaine are there any risks with some of the spending hinging on the availability of credit . Guy thats the most interesting thats the most interesting part of the last several years. Credit card debt has been the consumer is. Ar from overleveraged guy good morning. Can the consumer hold up while we see the industrial sector decline, bottom out, and recover . Yes,n the short answer is and that is sibley because the equity market is going to hold up. It is going to be buying about 70 of net new treasury issuance , and that is a lot of liquidity coming back into the system. Risk markets are usually on in this environment, and that is one of the reasons why since they announced in midoctober, the equity market has done well. As long as the equity market holds up, the consumer will hold up as well. Obviously, we are also assuming here 100,000 plus in employment, and theres no reason to expect that to really move dramatically from those levels. Ok that the equity market just holds their . Do we needed to increase . This year has been driven by multiple expansion driven by the discount story coming from the rates market. Steven obviously you want it to continue to go up, but as far as the broad consumer is concerned, i think it is more important that the equity market doesnt collapse, which is what we saw last december. So as it supported Consumer Spending, it is more important you dont see things just drop off, and as long as it turns look, the economy looks to me, you mentioned manufacturing, as if manufacturing is at least bottoming out. This quarter, probably next quarter, youre still probably sub 2 in terms of growth. By the second half of the year, all this easing thats been put into the market begins to lift real Economic Activity as well, and you are seeing the lead of that the housing sector picking up and being a positive contributor to gdp in the Third Quarter for the First Time Since the end of 2017. Romaine is there a case to be made for a thinker nice Global Growth story, or is this more fragmented over the next year or so . Steven this time around, i think the real question mark is china. I am far from a china expert. We have great ones that ts lombard. They talk about slowdown in china and the fact that Chinese Government is using the trade war as an effort to help deleverage that system a little bit. I think the risk here in terms of a global increase really rests a little bit on china, but us far as the u. S. Being a bit of a locomotive and helping things go, and assuming china comes along as well, by the second half of next year, not a rocketship type of thing, but i think global synchronized growth year from now is, barring the unforeseen, a very likely story. Romaine sit tight. We got a lot more to talk about. Steven blitz, chief u. S. Economist at ts lombard, staying with us. Guy lets talk about what weve got coming up next. Lets get a first word news update with ritika gupta. Ritika repeating that breaking news from london, police say several people were stabbed in an attack near the London Bridge. They contained they detained a man. Witnesses reported hearing gunshots. According to sky news, police shot the apparent attacker. A couple of thanksgiving day surprises from President Trump. First he flew to afghanistan to have dinner with u. S. Troops. He also met with the afghan president and said that peace talks with the taliban have resumed. The president is pushing the ceasen to agree to a fire, and says the u. S. Will keep reducing its Troop Deployment in the region. How will china hit back at the u. S. Over hong kong . The Foreign Ministry gave another warning today. Beijing is unhappy that President Trump signed a bill bucking hong kongs protesters. There is speculation it could lead bill backing hong kongs protesters. There is speculation that it could lead to retaliation. As weve been reporting, it is a make or break time for americas retailers. Black friday kicks off the traditional Holiday Shopping season. Her Department Stores like macys or kohls, 1 3 or more of annual revenue is captured in the Third Quarter. Retail sales rose 1. 3 for the first two weeks of november. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Indeed. Nk you very much still ahead, more on what to expect from black friday. What is Consumer Sentiment looking like . We will find out with tom mcgee, ceo of the International Council of shopping centers. This is bloomberg. Guy from london, im guy johnson. Romaine from new york, im Romaine Bostick. This is the european close on bloomberg markets. Standing by his taylor riggs. Taylor lets start with the broad averages. The s p 500 continuing to clock in record highs. Today we are coming off those record highs just a little bit in the u. S. Over in london, you have the ftse 100 off about 0. 5 . We are hearing some reports about Police Activity over at the London Bridge and a potential stabbing there. Equity markets under a little bit of pressure today, though it is light volume given the holiday. Despite all of this, i want to take a look at a chart in my terminal. Within the u. S. On the s p 500, we are having our best month going back since june so far in november, as we continue almost everyday to clock in those record highs. We are up about 3. 6 for the month. What this means for volatility, lets pull up a oneyear chart of the vix. We are closing near the lowest vix level we have had in more then ar today year, today rising a little bit. Ago on christmas eve, we had a huge market selloff and a big pickup and volatility, so at least for now, nowhere near those levels. One other loser as i wanted to mention, energy. We were speaking earlier about how the energy index is one of the worst sectors in the s p 500. Today it is off about 1 . We were hearing just a few minutes ago that u. S. September crude output rose to a record 12. 4 6 Million Barrels a day, according to the eia. Rising output, as we know, means falling prices. Guy taylor, thank you very much indeed. Still with us, steven blitz, chief u. S. Economist at ts lombard. Lets talk about what the growth story is going to look like next year in more detail. Do using the u. S. Economy downshifts to a 1 handle or moves to 80 handle to a 2 handle . Steven i think it is a tale of v. O hal the story shifts to the second half of the year as the tightening of financial conditions from a year ago start to dissipate in terms of its impact on real Economic Activity. Is 75 basiss place points of fed rate cuts, plus 480 billion increase in balance sheet. The risk on you are seeing in terms of benefiting risk markets, financial markets. Towards the second half of the year, i think you back down, by the end of the year getting a little bit about that. The pattern is never quite neat in reality, but that is a good way to thing about it. Guy have you got any fed rate cuts priced in for next year . Steven no, i think they are done. Remember, they said material change. What would constitute a material signs ofr the fed is recession. I dont see that occurring, or something that woulds emanate from a kick down in the equity of theirrespective liquidity there pumping in. We can all think of political and global risks that can do that, but it is a hard thing to forecast. I would say no, i think the fed is done. I think the real question comes in july when they are done adding all of this liquidity into the system. Do they just stop cold turkey . It . Hey taper i think that is something they will deal with as we see what the world looks like come next spring. That is the biggest policy question in my mind. Romaine on that, though, you still have a bond market that seems to be testing the idea that the fed would stand pat through the next year. You have concerns about where the neutral rate is. You have concerns about market rate bumping up against either the top or bottom of the band that the fed has set. Does the market pressure become a factor, where maybe the fundamentals, the economic fundamentals may beget diminished a little bit, and the fed has to respond to what the market is asking for . Steven thats always a possibility, but i think in the coming year, less so because by the fed putting this much liquidity into the bill market, they are anchoring the short end of the market basically below the twoyear. Having the three months to two year spread positive, and i know its flattened out a lot in the last week or two, but as good Economic Data starts to roll back in, you get the consumer pick up in the next couple of months because the equity market is strong. So as that starts to come back in, you will see that curve steepen back out again, and they know that. The question is, will they respond to weaker inflation next year and weaker wage growth next year . My guess is they are going to let this effort that theyve put in run through. I think the only thing that would really kick them back in is really an equity market event that is beyond normal volatility. Romaine with regards to all of the liquidity theyve been pumping in, any concern on your part with regards to potential asset bubbles . Steven i think the asset bubble, so to speak, is the equity market. Multiplesou have is expanding, as guy mentioned. Profit margins have been tricking. The last time that occurred was really in the late 1990s. That was because of tech mania, and at the very end, it was fomented by easy money. If we look today, this spread has really been created by the mania for yield, which is totally fed. So the fed owns this spread and equity market, and that is one of the reasons why theyve acted to put this liquidity back in the system to keep the equity market afloat. Guy im assuming that youve probably got baked into your model a phase one trade deal. What happens if we dont get it . Steven you hit the nail on the head. We talk about Global Political risks hurting the equity market, and that is risk number one. I dont think anybody really think that phase one is the summation, or it may even unwind next year in some way, shape, or form, depending on how the election turns out. But if there is a complete collapse and you get another ratcheting up of tariffs, and you go down that avenue instead, obviously a lot of what im saying goes back at risk again, and the fed is going to have to reconsider. Perhaps that is what powell told trump at the white house, that everything is up on a silver plate for him for the economy next year, and he just has to bring it home with at least some sort of trade deal, and i think trump understands the value of that for himself, and for the economy, which, in a reelection year, is one in the same. Guy steven, great to see you. Thanks for taking the time to join us today. Steven blitz, chief u. S. Economist joining us from ts lombard. Still ahead, we are seeing fierce competition that has gripped the european etf market headedek, with two firms for the exit. We will dig into what exactly is happening. This is bloomberg. Romaine live from new york, im Romaine Bostick. Guy from london, im guy johnson. This is bloomberg markets. Lets talk about etf friday come our weekly segment. Fierce cup edition has had the european etf arc it hard this week, with fierce competition european etf market hard this week, with two firms headed for the exit. Here with us is tom sarah fig us psaris tom is tom ofagis. This is about scale in europe, and it is really competitive. Vanguard, ishares comedy ws have been cutting fees aggressively. I think bm oh saw it would be i think bmo saw that it would be too competitive. An remover, they are canadian. I thing it just makes sense to focus on their market. Romaine do you see this as a sign of overcrowding in their market . Seenasios when you products close, i think that is a healthy sign. Reevaluatinglways their lineup, constantly rationalizing and closing products. What i think needs to continue to stay is issuers need to keep launching products. This shows there is a continued healthy lunch of products coming to the market. As long as there is still that side of the equation that holds up, it is not a sign of oversaturation. I think it is just a very competitive market. Howine how does guy does what happens in europe compared to the United States . Psarofagis because a lot of trading here is done over the counter, the Market Makers are really aggressive fighting the cells. So it gets aggressive here in europe even more so than in the u. S. So i think that scale, being able to offer competitive hasnt been just able to capitalize. Other firms have really pushed them out. Us to see you. Tom psarofagis joining us from bloomberg intelligence. Romaine time now for a Bloomberg Business flash. Mercedesbenz parent daimler plans to cut thousands of jobs worldwide by the end of 2022. The personnel chief tells bloomberg more than 10,000 positions are likely to be eliminated. Dime list is trying to revive Profit Margins that have been squeezed by heavy investment in electric and self driving vehicles. Rivals bmw and volkswagen have already mapped up similar cost cuts. Saudi aramcos initial Public Offering has drawn total bids of 40 billion so far. 4. 9 Million People applied for shares. The saudi government plans to raise more than 25 billion by selling a 1. 5 stake in the oil company. That is your business flash update. Still ahead, more on saudi aramco as it has drawn more than 44 billion in bid for that ipo. We are going to take a look at those numbers. Thats coming up next. From new york and london, this is bloomberg. Romaine live from new york, im Romaine Bostick. Guy from london, im guy johnson. This is bloomberg markets. Happy thanksgiving. Lets check in with the bloomberg first word news. Here with the details, ritika gupta. Ritika more on the breaking news from london. Police are treating the incident as terror related as a precaution. Several people were stabbed in an attack near London Bridge. A suspect has been detained. Witnesses report seeing a man shot by officers. President trump made a surprise visit to troops fighting americas longest running war. He had thanksgiving dinner with soldiers in afghanistan. The president also met with afghanistans president and said talks have resumed with the taliban. The u. S. Hopes it can get the taliban to agree to a ceasefire. North korea may be its relationship with President Trump. Twojonguns regime fired short range Ballistic Missiles and maybe planning a bigger move. North korea has threat