Showing outperformance for second day running. Totally different market. That is the key thing. These results, it has a different feel than basically the entire year until now. Up until that was all tack and all defense. Energy up, industrials up, materials up. Lets dive deeper into todays action. Scarlet im think about the reversal you were just talking about. Choppy Market Action on the week especially around momentum stocks. And this is around the 50 Day Moving Average. Earlier we came close to breaching that short term momentum indicator p take a look at this one and half year chart of the s p 500. Arranged all the uncertainty around the macro factors, stocks stuck in this giant rage and then the more narrow ranges between the 200 Day Moving Average in blue, the longer term buyers and in yellow the shortterm buyers. Last year the s p 500 stuck in between those moving averages, then making it about the 50 day, once below and then the 200 day average once that was sliced and ugly fourth quarter. This year you can see there are periods of time when we have been above the 50 day average but it has been the range between the shortterm and longterm moving average or there might be new investors feeling the pain in this route because this etf has seen inflows for seven straight weeks including more than a billion dollars last week. Like a lot of the stock market it is a story about the reversal in momentum. By the end of august this fund was up more than 12 . Over 20 days that is the biggest gain since 2011. Obviously it goes handinhand with the bearishness in the treasury market we are seeing. Yields up across the board as investors are having second thoughts about how aggressive Central Banks will be. The fed in particular, but also the ecb, heading into this weeks meeting. Mike and the market team, thank you so much. Stay with us, now the chief strategist at Northwestern Mutual and our very own sarah ponczek. Do Economic Fund mentals matter in this current environment where we are looking at a deescalation perhaps when it comes to the u. S. China trade war, and more movement from Central Banks to consider easing strategies here . We have ppi, cpi, retail sales coming up this week, will that move the needle when it comes to u. S. Equities . I do think economics still matter. I would answer the question in a different way. We see no reason economically to actually have a recession. If you look, we are still drawing people back into the labor force. Prior to the escalation of the trade war, companies are investing and productivity was rising. The cycle was moving along. The only reason we see to actually have a recession which is the big question on peoples mind, is that the Monetary Policy authorities mess up, which we do not think they well. And we do not think they already have. Or two, the trade war goes so far it tips us into the abbess. The abyss. I think the economic weakening is pushing us to get the trade deal back on the table. I would answer with yes, Economic Fund mentals matter until we get a tweet or some other narrative that changes the day. At the end of the day, is what happens with trade and what happens with the federal reserve, which we do think they will continue to be easing, just like other Central Banks around the world because there around the globe because there is no other option. Scarlett about the ecb and we heard earlier from mark carney the bank of england governor, warning about Monetary Policy. Listen. Part of the challenge we are not in bute we are getting closer to a global liquidity trap. And that is a question in terms of policy space. But it is also a comment on where we see low black librium Interest Rate going. Equilibrium Interest Rates going. Scarlett are you worried about a global liquidity trap . Im worried about a lot of things. I guess the Central Banks have to because they do not want to find out what the other side of the equation is, is to continue to ease. Right now you have 17 trillion of negative debt. I would not hazard a guess as to what it means if we ended up if we ended up with more than that if we had a recession. I think Central Bank Policy makers are in a bit of a bind. They have to provide liquidity to the markets. There are still the ability to do so. They are creative. We were talking about qe light for the fed today. I do not think central anchors have run out of actions they can do to enhance gross. Is it at the margin . Yes but it could keep us out of recession. The big thing i think could still be happening is that there will be some sort of trade truce in the coming months, because i do think the president values three things. The economy. The markets. And getting reelected. I did not say a great china dell. I do not think that is on the table. Id think he wants some dell. Deal. Do you think investors, because the football has been pulled away a bunch of times it a great deal is in of the works and then gets blown up. Do people feel it is different this time, that there is more likelihood that this does not end with the same. I would probably say no for majority. Sarah we have played this game to, too many times. For someone from the Trump Administration comes out and says a deal is likely in the cards, coming soon, and then they can just not agree on those key issues. Theft andmes to Ip Technology transfer. Those have been the key issues. As brent was saying, it comes down to whether or not the Trump Administration is willing to settle or china is willing to settle. Maybe at this point in time, because we are getting closer and closer to the 2020 election, you are seeing a bit of a sample and the many factoring sector appeared youre also seeing issues over and china. Maybe one does come to the table. But at this point it is not looked like it is going to. And we have seen this too many times before. And never once has one actually conceded. Scarlett i like the way, brent, you outlined what the priorities are as we get close to the end of the year and as we get close to the 2020 election. For you, you had said that you are not necessarily rotating your portfolio. But what does it mean when it comes to positions overseas . In emerging markets for instance in europe . Atsure, i think you look International Markets and they are cheap. We can debate the metrics. What we look at we think those Asset Classes are cheap. They are in need of a catalyst. So for em one of the big release has been the fact that the central bank in the u. S. Is no other tightening. Though Central Banks have been able to play along. The second thing is the trade war will need to simmer down. We think that will lead to a. Em ml performance outperformance. That is an asset class we are not abandoning. Not make sexy and does headlines but diversification is still something you should do in a. Of high uncertainty. I hear people talking about uncertainty and wanting to move to the safety of one asset. To me that smells of certainty, not uncertainty. Who knows what the next five years turn out to be. Really where were are at a fulcrum point where we have things like negative rates that could become more real. We still think the world turns out were normal. But if the end of the day, we want to make to restate aversive hide. You yes i was going to ask further could use pound on how you do diverse occasion going forward. It has been easy so far this year to allocate a bunch of money to stocks, to bonds, they both go up, but they also had a nice inverse correlation. Balancing each other out really great. If we get this. Where rates are rising, and duration does not offer you the hedging value that it was offering for much of the year, how does one sort of off place, that risk . I think is more the question of what types of stocks are outperforming. Not stocks in general but the u. S. Stock market has outperformed. In the scenario you lay out theres a potential for stock markets across the pond to be outperforming. The conditions you mentioned would probably lead to Global Growth are accelerating. Thats why mention sometimes we do not look at diversification as being intraAsset Classes. But when donald trump was elected in 2016i jumped he might make diversification great again because of the deglobalization of the world. So i think those are the little nuances. On the bond side one of the things we have done because noetic specs inflation, which is interesting no one expects inflation which is interesting because underlying measures like the dallas fed mean pc they are not x decelerating their increasing. If you get acceleration in inflation one thing you may want to look at his tips. All things at the margin you can do and things that have not been working are the things that might work. Scarlett fascinating. Great diversification again. Northwestern mutual Wealth Management company. Great to have you with us. Smaller Companies Worth taking note of. Revenue still climbing 53 . It seems therall numbers have disappointed as we are down by 14 . Even this quarter. Fourth quarter overall not as had been expected and the outlet for the Third Quarter as well. Adjusted earnings per share zero cents. First quarter revenue 89 million. Perhaps not moving up to expectations for the private decree business. Stocktt also gain tumbling in afterhours trading for the videogame retailer reporting secondquarter sales aop 12 versus estimates of 9 decline. As for years adjusted eps missing estimates, learning to make at most one dollar 30 whereas analyst were looking for when dollar 37 per game soft off by 13 . That doesnt for the closing bell and for me. For whatd you miss where you look at why bondholders are worried about we work. This is bloomberg. Caroline im Caroline Hyde where live from bloomberg headquarters in new york. There a lot of rotation going in under the headlines. Joe the question is whatd you miss . Caroline apples big bet is rolled out, of rated iphones. Up,lett and china opens slapping a Foreign Investment limit and its stock and bond market. Is beijings move a sign of desperation . Concerns on the we work ipo. We work slipping below face value since the august Leasing Company file to go public in august, spooking bond investors. Is the us now to discuss bloomberg credit reporter. Some people might not realize it but there is already a publicly traded we work intimate out there that we can see every day for the first time in a while were actually starting to see weakness in the bonds. Yes the bond had been doing quite well on this ipo news. But what is that happening lately as investors are getting a little bit nervous. We work is a cash burning company typically not your usual junk bonds issue out there. But right now the bonds are down about 32 five points on this news that this wont happen. It doesnt happen what is the consequence for bondholders. From the ipo and potentially extra cash from this loan agreement, right . Youhe big idea they got if wanted equity cushion if youre a bondholder you do not want to be the one who does not get paid back. You do not would not want to be the only soccer. Equityhat if how to have. Also we work has been sending so much to grow you have to wonder where Interest Payments come in in their priority last. Where they have more debt financing, you know they have that extra cash, they will be able to make those payments. Caroline what is interesting as there now being talked of because this is a company that needs 7 billion of next four years, that they could tap the junk bond market again. Do you think that will be appetite there . Were getting a host of new issues. Her company such as we work . Definitely, this is a case where a company starts to falter like this you wonder about their access. Right now there bond is yielding more than a. 4 so they would be paying a lot to do this. They have been looking at alternatives. They talked about doing a whole business yell where they securitize everything. Caroline and they have been doing really well, a record amount being sold out. How does that work . Typically a lot of Franchise Companies use these where you put all your assets in the box your franchise agreements, intellectual property. We work potentially could do that with some of their revenue from their desks, basically. To have an idea with their cash flow needs are, chris lane had a note out where he pegged it at . 2 billion . We are definitely talking many billions of dollars per i was talking to the s p and they were saying in theyre probably ok. But the estimate that 18455 Million Dollars next year. They have very ambitious growth plans 4. 5 billion next year. To be clear newman had said he wanted to borrow or be in that borrowing space like a netflix and a couple other companies that size. But does their growth match up with what netflixgrowth was. The thing about netflixs investors are buying the story that netflix could be profitable if only it ramped down its borrowing. To find the shows. So we work is saying, we could if we needed to cut the growth and maybe be profitable. Whether you believe that story is up to you. Caroline they should not be mutually exclusive. Im sorry, but you have to have growth if youre going to end anyway way want to be possible. For sure at some point you need to make money to place her investors. You guys are so oldfashioned. All right our thanks to Bloomberg Clara boston for the update there on we work. Undercuts. Apple apple announcing its new tv plus original videos obstruction service in november for 4. 99 months, we will wrap up the new offerings from todays event. That is coming up next. This is bloomberg. Time for what stories are trendy across the bloomberg terminal users universe. Goldmans private Wealth Management which oversees 500 billion dollars says at the economy has gone through vers crises, the company has told clients to stay invested and it is too early to get out of your stocks. Bloomberg. Com has a story on for soccer, hoping to resurgence worldwide with resounding success of the world cup over the summer. The victory led to record turnout for earlyseason matches and new partnerships with espn and brewer abn bev. But the for the sport to take off they need to get serious about salaries, filling datum, antiexposure. And tictoc on twitter is reporting that in an effort to improve its image, saudi arabia is having its corporate sponsors and free trips to instagram influencers. The program is giving saudi arabia some muchneeded blessed he after the outreach over the murder of journalist jamal khashoggi, the war in yemen, and the crackdown on dissidents. The 200 students and influencers have visited be other programs of our. You can follow all the stars on your terminal and bloomberg. Com and at tictoc on twitter. Now lets talk apple because it adjust wrapped up its latest product unveiled. Tactics and pricing, the bundling of tv with the purchase of new apple devices. About allnot to talk it means for investors, caroline angela, what did you make of the price points . A 700 phone is still expensive, but it is less expensive than i was exacting. Yes us too. We were expecting the starting price point to be what you saw 9. 99. Year, 74 if you look at what apple has done historically they have been more inclined to increase prices but this is the first time ive seen them step back and reduce the price. In many respects, apple is almost acknowledging that they made a mistake, maybe last year in terms of increasing the price point on a low end device. That being said, i actually think it is a very good move for them. Lowerave gotten some a cost out of the memory side of things or have increased the memory within the phone and have are passing that to the consumer. The one negative from this lower price point is the fact that they are unlikely pricing in any sort of tariff impact. Should the trade war escalate. I think that is really the rest out there for investors at the point. The risk for investors. Im going to buy a new folk because i shattered my on the sidewalk. Is this the kind of upgrade especially with a camera getting a lot of hype, or the multicamera, it could this drive a new wave of upgrades . Or will it be like all the releases where people buy it when they are like me and they just sort of need to buy new phone . Yes i think the latter. I do not think anyone is necessarily going to run and by any of these devices to be honest. Unless you actually need to upgrade your device buying a new one. One thing apple is trying to do is to work in that trade in program that they announced today as they previously announced as well. That is a push that they are trying to make. The lower price point may help out in china where he really saw some of the issues take place at the end of last year and earlier this calendar year. Lapping easy comparables, sighing looking better for unit basis as you go into the december and march quarter. That said, i dont think consumers will run to the stores and start buying these devices. But that said, i do not think you need to see that for the stock to work. Lets turn to services, how much of allure do you think tv plus is going to be . Either send the price point i understand the price point, 4. 99, but at the end of the date is the concept a offer appeared how competitive will they be for . Netflix or hulu echo i think the price point makes sense because of the content in their library. We expected it to be 9. 99. Theyre linking it to hardware sales. You go by hardware and you get a year of that tv plus offering for free. What that does is it provides some stickiness. A year from now, i guess apple the opportunity to increase that content, spend more over the next 12 months and then those consumers any air can make a decision on whether or not they want to hold onto it. Given that it is a 499 price 4. 99 priceers point, consumers may forget and continue to hold onto that offering paid isaac it works apples favorite in apples favor to offer it at that pri