A trillion Dollar Company again. There is your round number. Romaine real estate and consumer staples. Youre going to bet on that or on apple . Littleht, lets dive a deeper with our markets reporters. Abigail, what are you watching . Wacky you called it earlier. I would agree. This is slightly risk off. This is a quarterly chart. Yellow is gold, white treasury futures, and those are bonds, and then in purple, we are looking at emini futures, and the main diversions point when the fed lowered rates back on july 31, old shot higher, treasuries took off. That is pretty much in play. Old is higher. Treasuries higher, outperforming the nasdaq 100 gold is higher, treasuries higher, outperforming the nasdaq 100. The First Quarter of the year when you have divergence like that among risk assets, you really want to think about it, especially considering last september, saira, with the nasdaq with its first monthly down quarter ahead of all of that volatility. The went to continue with quarter, because it really was hectic i want to continue with the quarter. Also, dislocations in the repo market. Together,ut it all here is your scorecard with equities. This is taking off at the top of the chart. As you can see, utilities up, and real estate staples, technology. At the bottom, more cyclical items, like energy. Health care continues to be hated or disliked, and i do want to point out with utilities, not only were utilities the best performing sector this quarter, utilities have actually been higher for six straight quarters, and that is the longest winning streak since 1999, so it shows you just how stressed this defensive trait has become. I spoke with a stratagem it in Asset Management earlier today, and he warned that these trades can be like rubber bands. They stretch and stretch and stretch until one day, they snap. Renita . Wto crude is down for the second straight quarter, as fears of a Global Economic slowdown overshadow the unprecedented attacks on Saudi Arabias Energy infrastructure. Oil has given up all of its gains following the attacks, and saudi aramco says it has fully restored output, over 9 Million Barrels per oil, and they say output was a little bit higher now, and this has hired way quicker than expected and higher way quicker than expected. Luke, i went to go back out when you look at the globe, the globe has underperformed massively. Whenmentioned tech, but you look at the rest of the world, do you still say stay close to home for americans . I india has a good perform story in place. Latin america, brazil can the tradeenefit from between china and the u. S. , so we are positive on emerging markets in those specific areas, which have their own internal stories that can move those countries forward. Luke, i want to look at bond yields. We started at around 2 on the yield, and we got down to Something Like 1. 43 . Now. E around 1. 68 it kind of went from one spectrum, one end of the pendulum, to the other. I am just wondering, how much are those swings driving the conversation with what we are seeing in equities and commodities . Been forhink they have quite a while, and then you get days like today that suggest that that fever might be breaking. I think people are already starting to look ahead. I saw a projection through 2020, much thinks the only positive return will come from the u. S. From now through 2020, so i think that says a lot about the general catch down secularly that people see in growth, whether or not we are kind of out of the worst of this kind of cyclical downswing we have had. People still see generally the trend. If you pull up the chart, you can see that people do not seem inclined to fight that too hard. Caroline as long as Central Banks remain in easing mode, the ecb haswe know very much still got his foot on the stimulus pedal, but where are you seeing Central Banks going, particularly in the United States with such a rich data week we have ahead of ourselves . Saira we have these accommodative banks around the world, and our fear is that they have been pushing on the gas he hard for a while, and now we see this in europe, where we are not really clear on what the impact is, and our concern is that they will continue to do this, but the impact will get less and less, and rates are low or negative around the world, and maybe we will not get the economic response we are hoping for as our longerterm concern is what is going on. A pickup in the manufacturing data and capex spending, not to be reliant on Central Banks. Luke, right when we were coming on, we got the word that Rudy Giuliani was subpoenaed, and there is the impeachment inquiry, people trying to figure out what is going on. How much and what impact you people see, if any, on the tone of trading in light of all of this lyrical uncertainty . Uncertaintylly, means to buy bonds and to sell equities, but i think a lot of. Eople have game theory well, essentially, what does impeachment meet on mean on trade is the milliondollar isstion, so i think it really a lot of guessing, but the general crux of it is uncertainty equals buy bonds, and the Market Reaction has been pretty consistent. Romaine what do you think about the market here. When you look what do you think about the market here, when you look at some of the gains over the past quarter . There still seems to be a dominance of largecap over smallcap, and i wonder, is that in balance a concern for you, or is this just sort of normal . People are generally wary when they are buying the markets, so they tend to look for largecap and quality. We did see a rebound in cyclicals and value stocks over the past few weeks. Sometimes, when you see that rebound, it can last for a quarter or two, but we do not see the earnings in place to work Going Forward, and we still see negative earnings revisions, so we do not think that trade would be sustainable for the longterm, so our general view is largecap quality is what will continue to work from here as the markets trade between this period, where they think some are moving off of the table, but really, the picture is mixed Economic Growth flat with Economic Growth, and that will make it hard for markets to sustainably make a move higher from here. Malik, putting some caution on trade. Luke kawa, thank you. That is it for the closing bell. We have the news stories, Rudy Giuliani subpoenaed by the house panels in the impeachment inquiry, giuliani, of course, being the private lawyer of President Trump, and we no sicker to give state mike pompeo took part in the and we know secretary of state mike pompeo took part in the phone call between the u. S. President and the ukrainian president. We have so much more for you in terms of political news and also weworks ipo. This is bloomberg. Live from bloomberg headquarters in new york, i am caroline hyde. Joe i am joe weisenthal. Romaine i am romaine bosket. Joe the question is, what did you miss . Caroline the Trump Administration with a report that it may crack down on chinese capital. Pulling the plug, wework. They hit a record low on the news. And not a fashion favorite forevermore. Filing for bankruptcy. Joe the Trump Administration issuing a partial and qualified denial to the revelation from bloomberg that it is discussing limits on u. S. Investment in Chinese Companies and its financial markets, and china is vowing, meanwhile, to continue opening up its markets to foreign investment. Joining us is a senior fellow on the Council Foreign relations, and thank you very much for joining us. You, the talkell of capital controls sort of becoming part of the trade war discussion . Obviously, we get this sort of partial denial, but it is clear it is something the administration has thought about. How significant would that be, were there to be some limitations put on investment in Chinese Companies . I think the answer depends a little bit on what option the administration is considering. The most narrow of the options would simply make it impossible for Chinese Companies to newly list on the u. S. Exchange. That would have almost a negligible impact. Companies could solicit hong kong. American investors could still buy those stocks in hong kong. The more dramatic option, but not the most dramatic option, someone like senator rubios delist the would already listed companies if they do not comply with all u. S. Accounting standards and the multiyear period. I think that would have more of of a badterior more effect. And it would basically Block Investors from buying stock in Chinese Companies. All that said, i think people need to be realistic about the relative importance of the portfolio, equity inflows, stocks, chinese stocks, how important that is or is not to the chinese economy. China gets about 2. 4 trillion per year from exports. It has been getting somewhere between 50 billion and 100 billion by selling its stocks to the world. The balance between the two is not at all symmetric. Romaine even though it is not symmetric, there did seem to be a bit of a freak out in some corners of the market about this idea ba out there, and i am wondering why people about this idea being out there, and i am wonder why people are looking at it this way compared to tariffs across the board. Think it is largely because we have been discussing tariffs and the impact on tariffs for a very long time. Future of theall trade war is uncertain, there is a pretty clearly defined path for tariff escalation that has been set out. You can form reasonable expectations about what is or is not likely based on that. I think people have completely forgotten that a trade war might componentsinto other of the economic relationship, in particular the financial relationship, and that in the context of a trade, the u. S. Government might be reevaluating whether American Investment in Chinese Companies is a good or a bad thing. Caroline but also, there is the potential of retaliation from iina, and this is something guess was trying to spell out to us. The issue something a guest was trying to spell out to us. The issue about treasuries, for example. Is that something we might see retaliation on, that we might see some sort of clampdown . How much more painful would that be . Ofd i think the issue whether china sells its treasuries is almost completely independent of the question of whether americans can buy chinese bonds. The most draconian option might reduce u. S. Inflows into china by 25 billion a year. Put is not enough to material pressure on chinese reserves or force a change in chinas Exchange Rate management. What i think people should be a little bit more focused on is not the bond selling but the possibility that the end of the day, we might be triggering a stocksn who owns chinas in the following sense. Right now, americans own, lets say, 200,000,000,000 of chinese stocks, and the China Investment corporation, state investment, foreignexchange owns about 200 billion in u. S. Stocks. I think what china would be more likely to do is not sell bonds but u. S. Equities, and then would basically use the money that he got from selling their equities to buy up Chinese Companies not listed now listed in the u. S. Joe so as you point out, even in the sort of draconian version, especially for the overall chinese economy, nonetheless, there is obviously a lot of Chinese Business owners, entrepreneurs, who have used u. S. Exchanges to gain equity and access to u. S. Dollars to the benefit of their personal wealth, so even if it were not dramatic from a macroeconomic standpoint, could it be effective in targeting a sort of certain faction within the sort of elites of the chinese economy that would put maybe a little bit of inordinate amount of pain on people they want to take care of . Is ani think that interesting question. If you basically block all new lists, then you will be blocking the listings of those you may want to encourage as well as those you may want to discourage. The other interesting angle is that the Chinese Government was not terribly thrilled that so many Chinese Companies were listing in the u. S. They would rather Chinese Companies list closer to home in hong kong, so in that sense, it may not be all that effective, even as a targeted measure. Caroline always great to have you on days such as these. Now, lets talk u. S. China in another capacity, because the u. S. Government has just said no, because apple was denied relief on chinesemade parts for their mac computer. It would keep some Assembly Operations on domestic soil, they still have the answer of no. Joining us is sarah mcgregor. , they had been given relief, so were you surprised . Well, you know, i guess even the Biggest Companies in the u. S. Cannot hope that every single exclusion request will be met. That being said, apple has been successful in keeping some of its most popular products off the tariff list to begin with. That is all going to change in december, as we know, as the tariffs are supposed to hit things like the iphone, but apple has tremendous lobbying power, so it is hard to know which way the administration is going to be swayed in its arguments, so some of the components with the mac pro were not allowed. This is kind of a mixed bag in terms of the apple batting average pertaining to the tariffs. Joe do we know what kind of impact this will have on the end pricing of these products . The cost of the computer and how much would be three theoretically passed along . Sarah what we do know is that highendro is a product, starting at retail at 6,000, so not a budget computer by any stretch of the imagination, and one could imagine that if apple is keeping some of the assembly in texas, there are higher labor costs of doing business in the u. S. , more expensive than china, which is why companies outsource like apple, and all of that being said, these things do add up, so on the one hand, Companies Like apple may want to make the Trump Administration happy where it can, announcing the keeping of some manufacturing and jobs in the u. S. While balancing costs, and we did see a trump tweet today, praising apple, with a weak old story from fox about keeping those jobs in texas story from fox about keeping those jobs in texas. Romaine have any other companies sort of had the success apple has had in trying to get sort of a workaround for some of these tariffs . Some companies have. Littleknown companies have had success. Some have tried their darndest to get those exclusions in. But what we do know is there have been about more than 10,000 exclusion requests put before the u. S. They have heard only some of those, about half or two thirds of those, and of those, only about half have been approved, so i guess what all of that adds up to is your chances are nothing if you put in an request, but you have to prove that you can only source in china or perhaps there is a National Security strategic interest. All right, sarah mcgregor, thank you for joining us. Plenty more ahead. This is bloomberg. Wework all right, pulling the plug on its ipo, with the coceos saying they want to focus on their core. They are putting some businesses up for sale. Joining us is a bloomberg senior reporter. All right. This was not unexpected, but at some point, you sort of have to ask yourself what this means for the broader ipo market to see this sort of pushback and to see it fall apart so fast. Reporter i think it is showing that they can be discerning. They have pushed back when the core governance was not up to scratch, and they saw a very inflated based on its financial metrics, and, yes, the pushback, the company has postponed it, coceos saying they will be a public company, but they can only ipo once. Joe in the meantime, dont they have a bunch of cash raise . Low, theyes, a record yield now about 11 , so it is kind of in distress territory. They wonder where the gap is going to be filled. We have heard that they are in talks with banks and will likely also raise some equity from private investors, whether softbank or others. Rumor thatnd maybe a some softbank executives would come in and steer this business. Just how difficult is it now to show it can become profitable, because is that what it needs to do so it can ipo successfully . Gillian that is what the Company Wants to do, so potential Market Investors feel comfortable around the model, so part of that is job cuts, which you mention, the selling of noncore assets, also the jet, so softbank executive sort of getting in there, trying to help the company identify the debts. Joe and isnt more about changing it or making it more clear . Is it more about changing it or making it more clear . Ian rebranding it from wework. See if the company sort of can rebound and get investors. Joe all right, great reporting. Bloombergs gillian tan. Pressuring interest rates. Will the fed come up with a longterm solution . That story, next. This is bloomberg. Lets get the first word. The president s personal Rudy Giuliani has been ubpoenaed as part of the impeachment mike pompeo took part in the president. The president questioned whether the House Intelligence Committee chairman should be arrested for treason. E also called the whistleblowers account of the phone call a fraud. Arlier today, Senate Majority leader Mit