Banks in europe are having a pretty solid day as well. The frank for motor show is underway. The pound catching a little bit of a bid today. Basically, what is happening in the stock market, weve got like volume. We are seeing a rotation. Banks and autos doing well. The cyclicals are doing well. Defensive bond proxy type names not doing so well today. Vonnie we have a treat now because we are sticking with markets and the economy. Investors ought to be keeping a close eye on a series of moves from world Central Banks as recession concerns in the u. S. Grow. Lots of metrics pointing to a potential slow down. We are joined by ed hyman, evercore isi chairman, a top economist for almost 40 years now. One of the things you do that is so amazing is you have a whole series of your own indicators. You survey all sorts of industries out there privately that dont get surveyed by the government. What are you seeing from those surveys right now . Ed in general, they are pretty good, although i have to say that dorian hit retailers this past week. We got to wait and see. The storm didnt hit, but apparently people didnt shop. Aside from that, surveys are still pretty high. I will say that they dont lead, so in terms of the discussion we are having today about recession , they generally look pretty good until i recession hits, and then they dont look good. But right now they look pretty good. Vonnie we are seeing a little bit of slowdown in some of the government data, manufacturing and such. What are you seeing in terms of where we are in the cycle and whether there is a recession on the horizon . Ed first, we are obviously a decade in the cycle, and our 57 or 58Something Like when growth was at the strongest, and now they are like 52. They have definitely slowed down as the economy has slowed down and employment has slowed down. The general indicators you typically see when a recession is coming arent there. For example, we dont have a clear bubble like the housing bubble or the tech bubble. In 1990, pes were 30. They are now 15 or so. Interest rates were five or 6 . Now they are 2 or so, so you dont have that. Before recessions, often you get a bigs bre often you get a big spike in energy prices. We do have a manufacturing recession, but the rest of the economy so far still seems to be doing fine. The real weakness in the economy is outside the u. S. We have recession in germany, close to recession in japan. China is slowing. Our surveys say that china and europe are in the neighborhood are in the neighborhood of 45, not 52 or 53, so i am seeing real weakness outside the u. S. Guy ed,s Monetary Policy going to work its magic this time around . We are going to get the ecb throwing the kitchen sink at the situation. Youve got the fed coming up, likely cutting to a five basis points. Are we done with Monetary Policy . Ed well, we will find out, wont we . Because they are really going at it. We have a couple of central week, namibia and botswana, to pick a few you wouldnt normally look at. It means the financial conditions are avoiding a recession. , so farknock on wood you have the markets acting ok. Are getting a fairly positive result there. What worries me the most is that the yield curve is inverted. Guy yeah, that is concerning a lot of people, but we live in weird times. Monetary policy is doing strange things right now. 15 trillion in negative rates around the world. You were talking about where there arent bubbles earlier on. Im wondering where there are bubbles. We were looking at credit. I think there is a record for issuance. Ed the negative yields you mentioned. Is in theo me it general scope of what we had in house prices or in the tech bubble, but i dont know what to do with it because so far, bond yields are still really low, really tame, not challenging. Spike yield curve doesnt up to 3 , 4 , 5 right now i am surprised at how low they are, but that is the biggest bubble icy. The biggest bubble i see. Continue to the fed cut by 25 basis points at a time , and at what point do they stop . Ed they stop when they feel they have done enough. Obviously trump doesnt want a recession. Fed definitely wants to extend this expansion. They will keep easing until they think that theyve accomplished that goal, and up the moment, they cutoo many risks into timber. We think they will cut in october as well, so that will take you down to 175, and then we will see if the curve is still inverted. Right now they are about 160. I think the fed is definitely trying to extend the expansion to avoid a recession. Vonnie what is the potential for yield . We saw 145 in the last couple of weeks. Can we go below that . Ed i guess so. There are certain things you like to challenge, and this is not one of them. And bond yields negative some new places, it wouldnt shock me if yield got down to 1 . It is not my best guess because i think the economy is doing better, but we will see. Its not something im really trying to make a bet on right now. Guy fair enough. Talked earlier on about the inversion and how much it worries you. Do you think there is an argument for the fed getting front rates down faster . The way to go, or do you think the fed should be more aggressive in moving that front end, changing the nature of the yield curve a little bit, and kind of be more aggressive in policy action that it is delivering . For a little more aggressive. 50 basis points just to get to a point where the curve might be positive. But it is pretty clear that is not whats going to happen. They are going to do the 25 to 25 to 25 and see if they get to a better place than they are right now. You also have inflation very tame, very low, and every week theres new data on inflation being restrained. Ppi week you had the core at eight, and average Hourly Earnings that were ok and august, but slowed a little bit to a tame rate of increase. You see the trade war being resolved, this side of the election or after the election . Ed never. [laughter] ed it is going to go on, but they will reach a some point where there is a detente in negotiations. From trumps point of view, he needs to get this into a less contentious situation then it is right now. If he does a deal before the who he is running against, the democratic candidate, can say it is a bad deal. If he doesnt do a deal, they can say you are a bad negotiator , and you can say, well, i dont want to do a bad deal, so i will stay tough. Onre will be talks going that will take the pressure off the markets. Vonnie ed, stay there. Weve got lots more to talk about. That is ed hyman, evercore isi chairman, speaking with us. Guy lets get the bloomberg first word news now. The latest is renita young. Secretary of the Treasury Steven Mnuchin says the trade war was china has not affected the u. S. Economy. President trump heads to North Carolina this evening ahead of a closely watched special election for a congressional seat. Invalidated the last election because of voter fraud by a gop operative. Trump is expected to visit coastal North Carolina to inspect the damage left by Hurricane Dorian. British prime Minster Boris johnson said the u. K. Has an ideal amount of time to achieve a brexit deal with the european union. Irish Prime Minister leo varadk tosaid johnsons key demand remove the irish border backstop is not ideal for ireland. In saudi arabia, the new Energy Minister says there will be no radical change in oil policy. The energy dismissed minister and replaced him with one of his sons, the first time a royal family ever has been put in charge of saudi oil policy. He was the face of opec diplomacy, but last week he was removed as chairman of saudi aramco. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im renita young. This is bloomberg. Vonnie thank you. Still ahead this hour, we will dive into elliotts plan for at t. More with ed hyman next. This is bloomberg. Vonnie from new york, im vonnie quinn. Guy in london, im guy johnson. This is Bloomberg Markets. A quiet start to what is going to be a busy week. Going tod out what is happen. Emma chandra come over to you. Emma emma chandra, over to you. Emma all u. S. Equities up. Had turned negative, now unchanged. In europe, we are looking at more of a mixed session. Stoxx 600 down for down 0. 4 . Lets take a bit of a closer look at a sector by sector basis in the u. S. We are looking at the imap function for the s p 500. Gains being led by financials, energy, and communications. The Communications Index up by about 1 , its best gain since the end of july, really getting a boost from at t today. Elliott management has taken a 3. 2 billion stake in the company, calling the telecoms giant a Value Creation opportunity, but demanding some big changes, including divestitures, changes to the management board, and some aggressive costcutting. We are also looking at energy rising, and that means oil is doing pretty well, today rising for the fourth straight day. We can see brent crude for the fourth day, up some 6. 7 in that time. We heard from saudi arabias new Energy Minister signaling there would be no change to opec policies of production cuts. Lets take a quick look at some movers for you. , risingt netflix again by some 2. 7 , getting a bit of a boost from bank of america. The analyst sees significant react seller a in the Third Quarter. Insignificant acceleration the Third Quarter. Amgen falling some 3. 2 on disappointing data out of its latest lung cancer drug trial. A number of analysts say that will allow smaller midcap bitetitor mirati to gain a of a benefit, as it is looking at similar treatments. Vonnie thank you. We are back now with ed hyman, evercore isi chairman. We are embarking on another earnings season shortly. What is your estimate for the next earnings season . Ed i think earnings will be up 3 to 5 . The earnings quarter has been ok. Quarterabout the fourth , the First Quarter of next year, but at this point we have enough data for the Third Quarter that i think gdp is probably 2 , and earnings will be up 3 or 4 on a year on year basis. Vonnie so somewhat satisfactory. If we dont get any resolution on china, which you say we wont and obviouslye, there is other drama and europe, could that inject too much other drama in europe, could that inject too much uncertainty in markets . Ed bloomberg has a function where you can look at the number of times the word recession is used, and do a time series of it. That looks very dangerous, and any you mention brexit, you are going to say recession. Anytime you mentioned the pmis, you say recession. Yield curve, recession. Germany, recession. So theres a lot of uncertainty, but so far, im surprised to see how well Consumer Confidence has done. We had a very weak reading a couple of weeks ago on consumer sentiment, but bloombergs weekly reading last week was up at almost an upside breakout. So consumers, which are the same as business people, are looking what is happening in front of them, and it is pretty positive. Guy you brought up brexit, so im going to ask you a question about it. Our Global Financial markets ready for a no deal brexit . Ed i doubt it. It looks as though if you have a no deal brexit, it could do a lot of damage to the european economy. I dont have to tell you, but it is already weak, with germany weak and the u. K. Pretty weak. So that is definitely a risk, and i would assume that the ecb this week will take that into consideration when they issue their policy change, which we think will be a little more positive than what the market expects. Completely unrelated question, do you know the new saudi Energy Minister . First time weve got an Energy Minister from the royal family. Are you guys involved at this point in aramco . Give us your steer on what you think is going to happen there. Ed i dont know the new head, and i shouldnt comment on the aramco deal, if you dont mind. Vonnie lets talk a little bit about where you see the froth. Obviously the recession is pretty far off, as you see it, and you mentioned some froth in sovereign bond markets. Do you see froth anywhere else . Ed not really. For the economy to be growing for a decade, it is amazing theres not more froth, but you are still climbing a wall of worry. People are very worried about what is going on. I dont see, whether you look at capital spending, certainly not froth. Consumers are concerned, but not frothy by any means. I should mention that at the end of cycles, the beginning of her sessions, you have had a beginning of recessions, you have had a period where people are exuberant, but we havent had froth. Vonnie what does the ecb do on thursday . Ed i think they will cut rates, and i think they might introduce some more quantitative easing, and some more specific programs to get the cost of borrowing downs corporations of borrowing down for corporations. I think they will have a positive start for lagardes tenure at the ecb. Guy just a bit of breaking news coming back to the brexit situation. The bill basically well, in theory, ruling out the no deal brexit on october 31 has now become law. It has royal assent and has gone on to the statute book. We are expecting parliament to be suspended this evening, so look out for that headline a little bit later on. The expectation now is that opposition parties will probably deny the Prime Minister and election until after that october 31 date, but this is british politics, so who knows what is going to end up happening here . The pound has been rising for the last few days, actually getting a little stronger against the dollar. The dollar is incredibly strong and remains so. Ed, is the president right . Is the dollar to strong for the u. S. Is the dollar too strong for the u. S. And for the Global Economy . Ed we had a chart to look at the dollar. It is up, but it is not really strong. It is up a few percent year on year. Maybe you are pulling one appear. The dollar one up here. Up, but i dont find it to particularly be an issue. I dont think the dollar is playing a role in Investment Decisions or Business Decisions right now. Vonnie really . Yet, theres a lot of speculation that the president would like potentially a weaker dollar. Where does the dollar go, ed . Ed i would guess it keeps going up some. Ice by trump is on thin talking about the dollar because he cant control it very well. I think where trump is encouraging the fed to be more aggressive on cutting rates, which would tend to weaken the dollar, i think that might be a little firmer footing for him. Vonnie ed, always a pleasure to speak with you. Ed my pleasure to be on with you. Isiie ed hyman, evercore chairman and founder. Guy im getting to the age i remind itot sure of those things. Details coming up. This is bloomberg. Guy from london, im guy johnson. Vonnie in new york, im vonnie quinn. This is Bloomberg Markets. Its time for a look at some of the biggest business stories in the news right now. Apple and foxconn confirm they broke a Chinese Labor law while building iphones. They used to many temporary workers in the Worlds Largest iphone factory. It foundroup says other labor Rights Violations by Apple Partners in the past. Activist investor Elliott Management is calling on at t to sell noncore assets. One of those assets is directv. M also urged at t to quit activities. Elliott says it manages funds which own 3. 2 billion in at t shares. That is your latest Bloomberg Business flash. Guy we are going to get more on that story in just a moment. Elliott taking that stake. More next. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. Is is Bloomberg Markets lets check in on the bloomberg first word news. Here with the details, renita young. Stephen Mnuchin says that chinese officials will travel to washington next month in a sign of good faith. Mnuchin told foxbusiness news mnuchin part of the conversations we will be having with them is around currency and currency manipulation. Renita mnuchin told foxbusiness news that they are willing to continue with tariffs on chinese goods if there is no deal, and says he sees no signs of a u. S. Recession. The Trump Administration wants the uae to tighten the screws on iran. Officials are in the emirates to meet with banks and shipping companies. Iran says it wont negotiate unless sanctions are lifted. In the bahamas, the death toll from Hurricane Dorian has risen 44. Tens of thousands of people are believed to have lost their homes. Survivors are fleeing the worst hit areas of the bahamas for other parts of the island train the island chain. Investigatingis officials staying in trump resorts. It has resulted in higher fuel costs. A House Committee is also investigating. President trump says he knows nothing about it. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im renita young. This is bloomberg. Vonnie thank you. Byres of at t higher today 5 now as Elliott Management disclosed a new 3. 2 billion