Arelit between how we seeing certain sectors very sensitive to the u. S. China trade dynamic perform. Semiconductors, which are very sensitive to that trading up on some optimistic talks from lam research. On the put side, industrials under pressure from the likes of 3m which is warning for the fifth time in second quarter. Tech is outperforming, not just semiconductors but also gains in tesla. Not participating in the mood, shares of twitter. Sales missing expectations, the company also morning that its sales growth will not be as robust as perhaps the market was looking court. Fascinating story here. Twitter basically says they were collecting data they were not supposed to be and letting advertisers use that. They fixed the bug, but unfortunately that meant a little bit lower in terms of revenue growth. They no wonder we see stock under pressure. You mention the gains we are seeing in chipmakers. We are seeing a big rebound. This is the Philadelphia Semiconductor index, higher by 2 at the moment. This chart showing that they have regained the premium over the s p 500 when you look at forward p e ratios, you can see the valuation for the Philadelphia Semiconductor index is a the highest level near the s p 500 since 2012. We had a more positive outlook from lam research, not to mention, last night, south estimates. Beating this is an industry that has also taken a hit from the trade war an ongoing tech supply chain disruptions. On those u. S. China trade tensions and ongoing negotiations, it seems mike pence continues to play bad cop. The Vice President was speaking earlier today in washington, not mincing words toward beijing. He made clear trade was not the only issue that the u. S. Has with china, criticizing their record on human rights. He also remained optimistic about the prospect for a trade deal. We will continue to negotiate in good faith with china to bring about a long, overdue Structural Reforms in our economic relationship. And as i heard and from this morning, President Trump remains optimistic that an agreement can be reached. Insight, tomre orlik joins us from washington. Lastminds me of his speech year at the hudson institute, where we could clearly see him striking a harsh rhetoric against china. What exactly did he say today, how did he tried to strike that balance when it comes to achieving a trade deal . Tom you are right, there were some important commonalities between that speech last year and the speech this year. Pencey, Vice President away from those differences in values between the u. S. And china. He hit the hong kong issue. He hit the human rights and religious freedoms issues. Areas where there is no agreement at all between china and the u. S. What was different and what i took away from his speech was that there was a clear signal of a willingness to Work Together on practical issues, and as you saw in that clip, a note of optimism on the trade deal. Speaking of which, earlier today, there was a lot of optimism because of commitment from china and a purchase of up to 20 billion worth of agricultural goods and perhaps increasing that going forward. As we have seen those purchases dwindle, it looks like that would bring the purchases back to where they had historically been. Is that anything to get terribly excited about . Tom the important thing with the agricultural purchases is not the purchases themselves, it is the signal they send. Clearly, 20 billion of soybeans, even 50 billion of soybean purchases by china, is not going to move the dial on growth here in the u. S. , will not move the dial on growth in china either. Thathat it does is signal talks have gone from a brick down over the summer to back on track, as we approach the end of the year. And the potential benefit for the Global Economy is that that takes some of the uncertainty out of the air. It is that uncertainty, more even then tariffs, which has been weighing on hiring an investment decisions. Shery what did President Trump get from delaying those tariffs on china this month . The expectation was, you delay you get 50s, then billion worth of agricultural purchases. It seems the chinese position has really not changed since the spring of this year. The substancek at of what is now on the table, it is really not that much. Theu. S. Is already delaying october tariffs, the assumption is they would delay the december tariffs. The u. S. Says the chinese will buy 50 billion worth of agricultural products. The chinese only say 20 billion. These are not macro significant numbers. Certainly relative to what was discussed in the beginning of the year, or could access, intellectual property protection, and into subsidies. The current agreement looks extremely limited. What both sides want, what they could get from this limited deal is a change in the tone of the negotiations. A change in the tone in the markets from fear of an escalating trade war, which is what we had from may through recently, to hopes of a truce. Amber thank you so much, tom orlik. From one trade story to another, u. K. Prime minister Boris Johnson has called for a snap election on december 12 as the only way to end what he calls the brexit nightmare that has paralyzed the country. Thirdill be the u. K. s general election in four years, if Parliament Gives him the green light to do so. The latestto discuss and how these uncertainties continue to weigh on business in james, theichola head of sovereign ratings from dbrs. Thank you for being with us. We saw the pound selloff on this prospect. How surprised were you that this is the move that Boris Johnson is taking, and what does that mean for the prospects of a hard no deal brexit . Course, he cannot call an election, he can just lay out his objectives. The parliament decides. I guess in terms of the timeline, what he is thinking is perhaps he can get his deal approved in the next two weeks in which would give exactly five weeks that is needed for campaigning to move toward elections on december 12. It is no way clear at the moment the that will be the course that pans out. Has the last aaa rating of the major Credit Rating agencies. Does the prospect of a general election altar your views about where the u. K. Economy is heading . The u. K. Has two uncertainties right now, the brexit uncertainty thats been going on for three years. In some ways, it will go far into the future. Now you have the addition of election uncertainty. I suppose a couple of scenarios, potentially, if a deal is a great before the elections, the conservatives leading in the polls at the moment could form some sort of coalition or agreement with some members. If the u. K. Goes into an election without an agreement, it is going to be very difficult. Either way, there a lot of uncertainties lying ahead for the u. K. In political terms. Has aposition in the u. K. Very different political agenda than the conservative party. Abour should win and Form Coalition with the liberal democrats, that it would be different. We are the only Reading Agency at the moment to have maintained the aaa rating. It is a very difficult and challenging political process. The main reason underlying that is the resilience of the u. K. Debt market. The fact that the u. K. Has a Flexible Exchange rate that will facilitate an adjustment and a variety of economic scenarios. History of calling elections because you think it will break one way is not on the side of the u. K. , going back to David Camerons decision of putting brexit to referendum, or decision tos consolidate her majority, only to end up with a minority. Does Boris Johnson really believe that this time it will work . Should investors be complacent that any elections bring any kind of certainty with this issue . It only brings greater uncertainty. Nichola of course, parliament has all th already rejected going into elections. Whether or not there will be elections is difficult. Whether or not elections will pave the way for some kind of brexit or allow the u. K. To move on and focus on domestic policies is another question. Been some say the boe has complacent during these difficult times in the u. K. Economy. Where do you see the bank of now . Nd and the measures they have taken now, especially after the 2016 referendum, and what they have done to keep financial volatility at bay . Nichola the bank of england has to look at inflation, inflation projections. We are expecting the bank of england to make an appropriate policy response to any brexit scenario. At the same time, there needs to be a fiscal responsibility. We are seeing that. We will hear more about that in the next couple of months. It is that combination of Monetary Policy and independence of the central bank that can allow an appropriate response to a variety of outcomes, and the fiscal space that the u. K. Government provides some resilience going forward, even though the outlook is absent. Shery thank you for joining us, nichola james. Southwest soars. It is the stoxx best day since january despite 737 max groundings. More on the Airlines Earnings results. This is bloomberg. Shery this is bloomberg markets. Im shery ahn in new york. Amber im amber kanwar in toronto. Shares ofk out southwest air, reporting thirdquarter adjusted earnings per share, beating estimates. But the company took a hit from the grounding of the boeing 737 max. Earlier, bloomberg spoke to the southwest Ceo Gary Kelly about his expectations to have a controversial model back in operation. We have one issue, the max. Everything else is in good shape. I am proud of our people. We are weaker working on an assumption that the max will be ungrounded in december. Based on that, we have the max published in our schedule. Joining us now is helane becker. She has a market perform rating on southwest. When you hear the ceo say we are looking at this jet being back into service in december, does that strike you as realistic, overly optimistic . How are you interpreting it . It will not be back in service in middecember. I think what they are saying is boeing has delivered everything now the faaand looks at the fix, they look at test flights, and the potential is it gets recertified in december. From there, it takes about 60 days for the aircraft to get back into service, with the idea that once the faa approves it, southwest all the airlines would have to change their operating manuals to incorporate the changes, put the aircraft back on schedule. Then they would have to prep the aircraft and train their pilots. It takes about 60 days to get that done. We are expecting, if the middecember day holds, that the aircraft would get back into midservice at the earliest in february. Southwest well has manage the content related to the grounding . Certainly better than expected, and i think better than they thought they would. Interesting, southwest is not grow this year. When all is said and done, it would have shrunk by about 2 , but load factors are up, pricing is up, so they are obviously running a great operation. When you think about that, the obvious conclusion is that they have managed to operate in an environment where demand has been very strong, and cost to inputs in general have been lower than expected. Fuel costs, for example, have been stable. That has helped them. They have not had big labor Cost Increases this year. They did have the mechanics, a signing bonus to take into account. They have managed really well. You look at how southwest is trading today, and even throw in american airlines, even thoughat they said that they were dealing with the 737 max grounding, it seems investors are looking through that. What are the catalysts broadly for this sector once they work through the boeing issues . That is a great observation. In general, the farther you get away from the max being out of service, the better they are able to handle it because they are prepared for it, versus early on in the process where they were not. As we look ahead to 2020, what we see is pretty good Industry Growth am assuming the max comes back during the year. Service datenuary will obviously not happen. We expect american and united to extend take the max out of their schedules until february, early march. So you will not get an overwhelming amount of growth that we thought they would get, in fact. We expect come in an environment where the u. S. Consumer is holding up well, so you get a good economic environment. We would expect next year to be another year of good earnings growth, especially because airlines tend to return capital to shareholders by buying back stock. Even in an environment where revenue is flat, cost might be flat, net income might be flat, you will get enough earnings because you are getting lower share counts. The catalyst for the shares in 2020 is some resumption of growth. Higher prices even 2 gdp growth environment would help the group. Shery when you are seeing solid demand but at the same time you have the ongoing boeing issues, how will this coming Holiday Travel season play out . Helane another great question. Obviously, people are booking their travel now. The closer you get, the higher the fares. Most airlines have accounted for the max being out of service, flying more offpeak. I dont know what a perfect time would be, but we think of an airline day as 7 00 a. M. Until 7 00 p. M. Instead of doing that, you may have to do a 6 00 a. M. Flight, or not 00 p. M. Flight to get to where you are going in a timely fashion. That is how they are managing it. ,hey are doing more offpeak more connecting, less nonstop. Those are the two things it is not as great a product as it could be if it were nonstop. But on the other hand, youll get to where you are going certainly for the holidays. Shery thank you so much. Helane becker of cowen with the latest on air travel. Tesla is in overdrive, the shares having their best day in more than a year. The Company Posts a surprise profit with echoes of 2018. This is bloomberg. Shery tesla shares surging at the moment after posting a surprise thirdquarter profit, its first in almost a year. Aig. More, lets bring in cr this has feelings of deja vu from 2018. The question is, will this be sustained . You are seeing a lot of analysts make that comment. Said thatam denning this feels familiar. Last year, we went into the Third Quarter with lots of concerns about, is this company structurally unprofitable . They took everybody by surprise by pulling some levers to get to profitability. I think you are seeing a lot of commentary this morning about this is a solid quarter, give tesla credit but can they sustain this. They did pull some levers that are maybe nonrecurring for them, so maybe an open question as to whether or not this is something they can continue going forward. I think it was last year or maybe the year before, elon the shortsed to burn which are pretty resilient, 25,000 shares are still outstanding. Did he succeed . 18 months ago he said that. Something that being did ahead of the attempt to take the company private. Linked. O are very much people thought, maybe he had that in his mind when he was promising to burn the shorts. This time he did it with execution. Tesla is putting emphasis on the amount of costs they have taken out of the business, have talked about applying learning from some of their mistakes in the past, the ways in which they have let cost get out of control. They had some missteps that they say they have learned from. It remains to be seen, however, whether or not they are putting off expenses that will eventually have to be made, to bring new products to market, to continue it to expand. Already talkn musk about the next factory, just as they are putting the finishing touches on the one going up in shanghai, and about the fact that they may pick a location for the next location in europe. Shery shanghai production, they have trial production now. How much will this help . Huge help, as long as they can bring down the price of the model, and they should be able to do that now that they are avoiding import duties. Amber thank you so much for that insight. That does it for us on bloomberg markets. Of our charts,ny you can check them out on gtv. Thistoronto and new york, is bloomberg. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Mark im mark crumpton. This is first word news. Boris johnson will seek a general election on december 12. He briefed the cabinet today and announced a motion will be put to parliament for a vote on monday. It will need a two thirds majority for an election to be called. If it succeeds, johnson said he mps more time to debate the brexit deal. The uu is expected to grant an extension on friday. Chinasce criticized actions on protesters in hong kong while calling for greater engagement between the worlds two biggest economies. He said their human rights record will not stop the nations from trying to resolve the trade war. We will continue to negotiate in good faith with china to bring about longoverdue Structural Reforms in our economic relationship. And President Trump remains optimistic that in agreement can be reached. Mark the