You have under armour coming in down by 1 . Founder is actually stepping aside as head of the company. Started in his grandmothers basement. Willnder armour president become the chief executive officer on january 1. Theres a huge restructuring that planck has been under over the last few years and this is really a change in strategy. Looking for distribution and longterm growth strategy. Kevin plank stepping aside after 23 years at the helm. Procter gamble beating and raising. Ups also coming in a little bit stronger here. Its earnings view as well. Crushes it on earnings and revenue. Solid numbers. Ly we were worried everything was going to be terrible. Bloombergo will be on balance of power. Time for Global Exchange where we bring you todays market moving news from all over the from london to zurich, toronto and new york. We want to kick it off in london where Orest Johnson will find out this evening whether he has any chance of getting his deal through parliament. Juncker told the Eu Parliament theyve done all in their power to ensure an orderly brexit. In truth it has to spend so much of this mandate dealing with brexit when i have thought of nothing less than how this unit could do better for its citizens. Waste of time and waste of energy. Alix walk us through what we are expecting in the next 12 hours and then what. What youve got to watch out for at 7 00 p. M. Local time is the vote on the second reading. Its the first chance for mps to vote on the implementation bill that would enact Boris Johnsons brexit plan and then crucially program notion. This sets out the timetable because the key issue is the government wants to get this through very quickly. Three days to scrutinize a lot of legislation. Theres been a lot of anger over that limited time to get through these very complicated issues that are going to set a precedent here in the u. K. We could expect mps to vote that down for it to take longer. That would make it difficult to deliver by october 31. Critical day for Boris Johnson. Ubs Wealth Management assets reaching a record high with rich clients adding nearly 16 billion in the quarter. Still very Challenging Market conditions but im glad we were able to bring a solid performance in this difficult context. Zurichoining me now from s patrick winters. What have we learned from ubs . I would say its a minor wind for ubs today. Wealth Management Unit better than expected. The Investment Bank was once again a bit of a disappointment. Because the trading businesses underperformed. Job in theed to cut Investment Bank. Its not quite the same level as a socgen or deutsche bank. There will be a 100 million charge in the Fourth Quarter later to that. Ubs hasr news is that from crediter suisse. Hes being tasked with a review of Wealth Management and im sure there will be some news to come after that. Turn now to to canada where Justin Trudeau has won a second term but lost a majority in parliament in the popular vote. Who voted for our party, thank you for putting your trust in our team. Usnk you for having faith in to move this country in the right direction. Alix Jon Erlichman joins us from toronto. Now what happens to Justin Trudeau . Its anyones guess at this point. You are right Justin Trudeau and the liberals wake up back in power. But there were casualties in last nights election. Like his father before him he begins his second term as Prime Minister with a minority a lotment we know he has of fans on the global stage the last four years. Ofers in canada grew tired ethical scandals and broken promises and he saw that play out in the vote last night. While the liberals were very toronto, ontario and the oilrich providence province which has been hardhit, we saw a landslide for the conservatives. We saw a resurgence for the left for dead block can require quebecois. Its up to him to find some friends in parliament. The athletes could be the ndp and the block. Alix thank you, Jon Erlichman. We are getting a slew of earnings this morning. When he five Companies Reporting 25 Companies Reporting. We have biogen through the roof right now. They are seeking fda approval for an early alzheimers Harley Davidson also beat estimates. You can watch the s p futures right now on the news turning positive slightly. Wex heres another story are watching. Softbank has offered to take a majority stake in troubled startup we work. Thats a fall from the 47 billion valuation we work obtained from softbank just last january. J. P. Morgan is offering another rescue plan that involves junk debt. Jetblue also in the spotlight here. These earnings are good unless you are hasbro. Are i about 7 beating adjusted earnings as well as operating revenue. Hasbro totally different story. The tariffs actually cut into toy sales. We are waiting for the tariffs to affect the consumer and in terms of hasbro it appears it is finally moving into that sector. Tomorrow on bloomberg daybreak americas, im going to speak to the jetblue ceo. We will have more on your morning Trend Analysis in todays first take. This is bloomberg. Alix we are giving you the news to get the trade analysis of the markets. Joining us is vincent cignarella. Gina martin adams and also with us on set, mattie desk there. And iy i start on brexit turn to this. Im not going to do that this time because earnings are actually really good. There are beats and raises happening. What is this . Pretty good start. Im not going to count my chickens before they hatch. We are still less than a quarter of the market cap reported. Today we have a few raises to expectations. Alix especially we were assuming we were going to see downgrades. The ones we are getting, the transportation. Nobody would have thought that was coming. Do have to acknowledge his expectations were very low here. Huge not expecting a bounce back into 2020 for some orientedternationally lt nationals. Actually a very positive sign but also we want to pitch our commentary. If we get a widespread swath of grades and its a very strong signal. Is one or two organizations so far. Many people are commenting and suggesting we are going to get this massive downdraft and expectations. This looks nothing like 2018. We are not seeing enemy earnings strings so far. I agree. Thats why the market is reacting so positively. Weve had such dour expectations. 200 billion out of these. Fixed income. Nto investors have really ratcheted down expectation. If we see some quieting in the trade negotiation be we are looking for better earnings for 2020. Im curious about the hasbro earnings. I thought moving the tariffs out supposed to help consumer and it seems to have helped hasbro earlier than we expected. Alix they say the threat of enactment of tariffs the threat in an and. I had the same question. There is a trade to be made and we talked about this two weeks ago. The expectations for the consumer are the one over bloated probably positive segment of the general outlook. Andyone piled into consumer not thatades hasbro is the poster child for consumer. I think one of the risks you watch for in this earnings the earnings outlook are high relative to the rest of the index. Nobody wants to touch all the industrial oriented cycle stuff. Theyve piled into things they think are safe and what they think is safe is the u. S. Consumer. We started to see evidence that maybe the u. S. Consumer isnt completely bulletproof. Leg tond of the last fall. Its very positive where you start to see rotation out of the defensive plays. The consumer has a last leg in the sense we are seeing Mortgage Rates fall. Consumers will start to see more equity in their home. Those are the consumers that have a lower marginal propensity. We do see that with the homebuilders. Them beatrting to see expectations. You would normally see that rotation. Everybodys going to buy toys in the recession. Versus the housing market. Those toys cost more . Is this the beginning . The numbers weve seen from real average earnings are lower disposable income and thats the sector of the Consumer Market that spends and props up the consumer. If we continue to see higher inflation of his or lower earnings numbers and the earnings continue to shrink that undermines that leg of the Consumer Sector supposedly Holding Things up. Are we really looking at higher costs here . One of the things we have started to notice is stronger pmis out of Southeast Asia away from china. Companies are starting to shift their supply chains which means maybe we dont have to make everything in china. We can make things in malaysia and taiwan and indonesia and other places and keep their costs as low as they have it in the past and we dont impact the consumer with higher prices from imported goods. Alix i like that you brought up moving your supply chain. Theres a great article that says lower rates dont help you move your supply chain. Youre going to have the fed cutting, the ecb this week. Go ahead and cut but thats not going to help you move to malaysia. It apparently does. If the costs are lower you can facilitate that move through lower financing costs if costs were higher and you had to pay more to borrow debt to get that cash on the books, it would be somewhat restrictive. It is inherently supportive when rates are lower. That makes your cost structure lower which is going to help. It doesnt create the movement, but it does help fund the movement. Shortterm so to move from one place to the next is just when the rent is due. You carry on and move somewhere else. Exit i have to bring up because we have to. You come in. Youre a traitor. What are you thinking . There are basically two votes. The first one is a binary outcome. Do you favor the bill or not. It should be the only vote but of course politicians, it wont be. That vote fails then came over. There is no other vote. Exit is done. Expected, youve got to watch the optimism because you are going to get the second vote of the timetable of when this happens. Very difficult to get this through in three days. If you get amendments attached to the bill in the likes of looking for a second referendum, who probably it wont even be voted on. Boris johnson who probably he wont even be voted on. Alix im already exhausted. I get that a lot alix hope we Start Talking about is what is the new trade deal going to look like . At the end of the day you need some clarity. Investors need to know those kind of things. You are right on needing the clarity. It doesnt make sense to try to catch a falling knife. Not ale trades up thats great thing for the expert oriented equity markets. We are thinking about do you dive into u. K. Equity or wait until you have more consistency and assurances that you know where things are headed as opposed to deciding now that now is the time to jump in. We just dont think were there yet. Game. Hink its a latency the thing i worry about with trade is theres two real stories going on here. Policy and tariffs specifically over a broad array of goods and then theres tech and whos going to be the ultimate leader in technology. Are we going to have two worlds of Technology Develop in east versus west technology and this is a big story for the tech sector specifically which is still the biggest market sector in the s p 500. Very weak 2019. Even if you get a modest trade deal related to agriculture, you still have this weight of uncertainty with respect to tech. Much a latency kind of phenomenon. Probably do have to see a migration of supply chains to other parts of the world. You have to see summary on onring some re shoring. Alix they have a huge position that got completely decimated after the primaries in august. It does go to show that what we thought was going to be an interesting trade in emerging markets like a year ago is that it is indeed not true. Argentina, the strikes in chile. 100 year bonds in argentina, what could go wrong with that . Alix people are buying it. There are a couple deals coming up that could add a lot of uncertainty. Plans to give a speech on china. The last time, fire and brimstone. The wheels fell off everything. Just an announcement of the speech so the markets pullback. We have the senate and the house against china in favor of the hong kong demonstrators. Not likely to be taken well by beijing. Those three instances could totally undermine all of the positive risk. I dont think he cares about emerging markets. Thanks for the conversation. You can find all the charts we use and more on g tv. This is bloomberg. Youre watching bloomberg daybreak. Under armour founder kevin plank is stepping aside as ceo. Hes promoting the executive brought in during a painful restructuring. Executive become chairman. In 1995 he started the Athletic Apparel company and his grandmothers basement. A new analysis of data from failed Clinical Trials showing promising results. Citingk and amazon federal lobbying records. They are responding to more businessto their practices. Amazon spending 4 million. Its the most a company has ever spent in a single quarter on lobbying. Alix heres another sector worth watching. American homebuilder stocks havent been this high since 2006 and we all know what happened not long after that. The story oflls the housing bubble burst. It took years for the markets to recover. Boom has beensing driven by low Interest Rates, not how has high house prices. Bottom line for him is there are reasons to worry about the economy but u. S. Housing isnt one of them. People kind of buy into the stocks that were unloved for a while. The ubs ceo warns of a challenging environment for european banks. Ahead of Mario Draghis last meeting at ecb as ecb president we will see even more rate cuts. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. We have earnings coming in and a lot of them are better than expected. Not just in terms of earnings beats but in terms of actual revenue guidance. Look no further than United Technologies and Procter Gamble. In europe, Technology Sector doing one of the outperformance. Also in other Asset Classes the story is that you had the pboc injecting 250 billion yuan into the system. We get a sizable auction today. We have seen a substantial rise in rates. We have Lockheed Martin also coming out and talking about raising guidance. On theull net sales highend. Thats coming more than they had seen before by about 2 billion. Their net sales also wound up beating estimates and their earnings for the full year will also be higher than estimated. They are taking a look at the stock in premarket. The beat no surprise after companies their outlook for the Third Quarter. Ubs shares are rising in european trading. Investment banking revenue disappointed. Sergio ermotti blames conditions. Market very Challenging Market conditions. Im glad we were able to bring a solid performance in this difficult context. In terms of the Investment Bank you announced a restructuring. What does that mean . The last conditions in few quarters have been very challenging. The marketey are not conditions also favoring our strategic choices. We are much more skewed towards europe and asia and this is still a business where the u. S. Is dominating both in terms of calendar, Business Activity and Client Sentiment is a little bit better than outside u. S. What cost savings will you get and is it going to mean job losses . I think we expect in the 19 million a year and i think its going to give us an opportunity to refocus our activities for example in the markets business we will really focus on our execution and structuring and financing businesses. Leveraging all the Technology Investments we made in the last few years. Onbanking we will focus fewer industries and more on a global basis than a regional basis. Alix that was ubs ceo sergio ermotti. What do you think about european banks . Right now we think europe is challenging. Gdp is coming from export oriented economies so investing right now given the trade issues and the global slowdown in the economy, we would much rather focus on u. S. Securities as well as emerging markets which we think potentially could have some upside. Emergingre are markets . Southeast asia is an area we could see some lift given shifting supply chains away from china towards areas like malaysia, taiwan, indonesia. Areas where we could see some benefit from the trade negotiations impacting china. Alix the curve is getting steeper and i say that because 31 basis points is steeper. Off the lows of yields, at what point do you have to get interested . We are off the lows but the ecb is back in the market. You are going to see some of the anchor on the long end of the yield curve. We are now in a negative net supply situation. While we think the curve could steepen a little bit its not going to be a significant as it needs to be to help the Net Interest Margin lenders that we see in european banks. We would prefer to stay away from that for now. We dont think its going to provide as much of a lift given that we see an overall slowing in the manufacturing economy. You are not going to be able to stimulate something slowing as europe is. Alix part of the conversation was fiscal stimulus and germany feeling like they were doing something. Talked aboutian recession indicators for germany. Im not sure the Global Economy is bottoming out. If anything i think we could of downward round revisions in imf forecast. We are going to have europe in recession next year and that is not priced in fully yet. For the eurot year zone. Alix do you agree with that . We do. Aboutnow if you think what european banks are facing, we just think bumping along for still see trade negotiations between u. S. And china potentially we could see a positive lift from the consumer given that we are starting to. Ee more mortgage lending still exposedis to the manufacturing section of the economy. Alix there was a report talking about most of the banks are actually too weak to survive any downturn. They wrote we believe we are in the late Economic Cycle and banks need to make old moves because they are not in great shape did i thought banks in the u. S. For example were in good shape. What do you think about banks here . If the consumer is in good shape, banks are in good shape. The yieldiven oriented exposure that you get there still is a lift from an investment perspective. I think when you are investing in the u. S. You are mostly leveraging that growth. Financials will always have a place in portfolios given the growth in the u. S. Consumer. And not you are a bank investing in technology, you are going to be so far behind. Where do you think that sector is headed . Tech . Ery sector become i think its about data. Its about understanding the data and who you are lending to, how you are lending and we Seek Technology Companies Moving into finance. We see finance Companies Moving into technology. These sectors are blending together. Is a place fory increasing the exposure to technology and improving their capabilities that way. If you are not doing that you behindely getting left given the need for a younger consumer to consume their Financial Products using technology. Nobody wants to go in and speak facetoface anymore. We need to understand buying behavior. Is alsothat big data very important for Financial Companies so they know where to position products and strategies for the next generation. Actual job irom my never want to talk to people. Thank you for being with me. Onwant to get an update whats making headlines outside of the business world. Today Boris Johnson will try to ram legislation on leaving the eu through parliament in three days. Low markers will vote on the general principles of his proposal followed by a second vote enacting his fast timetable. He is still trying to get the deal done by the october 31 deadline. Canada voters giving Justin Trudeau a second term. Overcoming a number of scandals claimed what he calls a clear mandate. His liberal party lost its majority in parliament. The most likely partner for a Coalition Government is the prolabor new Democratic Party. President donald trump raising expectations the u. S. And china could sign next month and initial trade deal. The president says china indicated negotiations over an agreement are advancing. He says beijing has begun buying American Farm products. Global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Alix you are looking at a live shot of the u. K. Parliament where the debate on the withdraw bill agreement has started. The vote will start at 2 00 p. M. New york time. Thats when Prime Minister Boris Johnson finds out if he can get this brexit deal through parliament. We are going to have coverage of that vote. We want to update you on earnings as well. You are looking at lockheed beating estimates. You have hasbro really getting hurt when it comes to tariffs. They talked about that hurting their products. Ups numbers did look good. The revenue was a little bit light but their guidance was solid. Their coo is resigning. For weup, a lifeline work. Softbank offering a majority stake to the startup. Have a bloomberg terminal, check out tv. Interact with us directly. This is bloomberg. This is bloomberg daybreak. Coming up later today, kevin plank under armour ceo and founder and the under armour president and coo. Now to your bloomberg is this flash. U. S. Bank will cut several thousand workers at its branches. Its part of the digital push by the bank because customer behaviors have changed. The bank has about 3700 branches. Gulfstream wants to build the Worlds Largest private jet. Its making a roomier version of its flagship g6 50. The new one will cruise at just under the speed of sound. The list price, 76 million. In new york, two london Investment Bankers have been charged in an International Insider trading ring. Bankers worked for centerview partners. Wont say if either one has been arrested. Alix we turn now to wall street beat. Softbanks we work control. Softbank has offered to take a majority stake in the custommade which would value the start of less than 8 billion. Private equities professional pay. A new report reveals a dive and why its so hard to be a traitor. Its my interview with Dwight Anderson. Details of the evolution of the Portfolio Managers world. Basak. Me now is sonali they were running out of cash and now they might have a very nice closure to this deal. Theyve been wanting softbank for at least the last week or so. That they wills have a lot of patience to be able to carry out this restructuring plan. Alix is it good for softbank . You are facing a plunging valuation. Share indicating is this is better than bankruptcy. This plan will hopefully give them time to turn things around and they believe its better. Han paying that 15 yield alix the criticism becomes istbank isnt set up this a whole different skill set they might not have. This is absolutely fair. Adam neumann edging out so they are really clamping down control. They are getting criticized really heavily from a lot of people. Not like an 8 billion dollar valuation. Lets move to private equity pay. It was a new report that came out. What was the highlight for you . The highlight for me is that last year pay expectations were somewhat stagnant and now we are seeing Bonus Expectations and base pay go up but not by a lot. Seeing that this grandsons of money falling from the sky. Before the crisis we are at the very late stages of a cycle with a record fundraising at all these big private equity firms. You are seeing pay rise but at the lowest levels of what it could potentially rise at. Only a very few amount of people are becoming very rich off of this, but they are still getting paid a lot of chatter than what they are seeing from their banking peers. Alix is that a good thing . If you are paying those that make less more, thats a good thing. Or is it indicative of we are just not at the place where you can get these bananas returns. Theeople criticize financial industry so much for this really ostentatious pay. If you look at the worlds top manyonaires komal not that billionaires, not that many are financial professionals. Money better than the Banking Industry that doesnt mean they are making this big tech money. Alix totally fairpoint. I sat down with Dwight Anderson. He has been trading commodities for decades and now has a hedge fund. I talked to him about the difference between now and the last 20 years in terms of trading commodities. When i started it was much more of a cowboy world. Idiosyncratic, a bunch of people, undisciplined companies. The hedge funds got a little bit more institutionalized. You lost some of the colorful personalities. Now its the takeover of the machines. Theres very few discretionary risktakers left. The only way around is having some duration. On the basispete but we dont have any judgment that has higher accuracy. The changing investment Risk Appetite creates smoother returns but lower returns. Alix your exit strategy. Has that changed, to . Too . For ourselves who enter positions over time, it hasnt affected as much although probably more breakage. Alix for me what was interesting is we just cant trade it. You can have a macro view you want and be wrong every day because of it. You learn that even the machines messed up. Even the ones that are betting on technology are not perfect. The big names to the best. Taking longer durations. That is very classic late stage behavior from a lot of had funds and a lot of investors are looking at hedge funds right now and saying we want you to do what youve always done and so they get scared when they start to go into private equity. Not of them have done this with a lot of success. We have seen a lot of investors not able to take their money out at the end of the day. I asked specifically about how do you look at copper or oil. Hes like, i just dont. You have to look at whats it going to be like next year and make that trade based off of it. You have left volatility. Thank you very much. Appreciate you being here. A star really if you are wars fan. We are going to head to a galaxy far far away. Coming together. Alix hollywood could use a hero now. The latest star wars sequel comes out in december. Its called rise of the skywalker. Needs a needs a 17 jump in box office revenue. Bloomberg intelligence is skeptical that even a star wars blockbuster could be enough. I already bought my ticket. December 20. Wins aup, Justin Trudeau second term. How the loonie is reacting. Radio on bloomberg sirius xm and on the Bloomberg Business app. This is bloomberg. Alix joining me is vincent cignarella. You can listen to him on the bloomberg starting at 9 30 every day and you are looking at the loonie. We had the elections overnight so thats out of the way. Outlook of Canada Survey is one of the most important looks ahead of the bank of canada Rate Decision coming up. Not expecting anything for the numbers. We look at the Canadian Dollar and see a new range. We have broken below that support level. Now likely seeing this 131. 5 range. I would expect it to trade to the downside. This is what a lot of the talk has been going on lately. We in the currency markets follow flows of capital and the flows of capital have been exiting the Canadian Dollar which is why they saw the weakness. Good quarter for flows going into the equity markets in canada. Canadian dollar once again. Over the last month those flows are exiting again. A shortterm positioning shaking us down. Watch to see month flows. We willcontinue to exit go back to the topside of this dollar and then we will see whether the um t8 gets through. Alix how much of that is oil . A bit. When you look at the canadian thats where the Real Movement comes in. Alix vincent cignarella, thank you. You guys love the loonie. We never call it the loonie. Securities and the bunsen group cio and managing partner. We are getting a lot of earnings that are betterthanexpected with their outlook. This is bloomberg. Welcome to bloomberg daybreak. Im alix steel. Comealds the latest to out with numbers. P g and United Technologies. U. S. Sales up 4. 8 . That mrs. Estimates dragon down the stock despite the fact that global comp sales were better than estimated. A domestic number really weighing on equity and the company. More on that in a second. Here is Something Else you need to know at this hour. Here list to get from the top. Further delays would be bad for this country. His Boris Johnson puts brexit deal to a vote. Vote on first chance to the implementation bill. You will first day on the principle followed by rapid timetable to push the bill through all stop through. Added in newllion money last quarter. The Wealth Management unit did better than expected. A record two point five join dollars. Ubs posted quarterly profits that the estimates but the bank says it will be there 100 million charge in the Fourth Quarter to restructure its bank. , Justin Trudeau overcame scandals to win a second term and his liberal party lost the majority in parliament. He will probably join forces with the prolabor new Democratic Party. And the first time in 30 years, the emperor was completed today in tokyo. He was the first to be educated in the west. Dont forget about earnings. S p is treading water at the 3000 level. Some earnings strong and some earnings not. Yields down by about two basis points. Joining me now for the hour, romaine bostick. Your takeaway . Romaine this is what we were waiting for. Definitely what i was waiting for. You want to get past trade noise in politics and get down to fundamentals. The bar has been set pretty low but we see a few names this morning. Across mcdonalds just the wire. A little disappointing. Still decent sales growth but people are looking for the growth story. You are getting the story about stability. That will not be enough for the market, 20 times multiple. To me, if youre raising guidance, that should be a positive thing unless you are hasbro. Romaine i dont know. You cannot make money selling toys to kids, i dont know what the problem is. We have a lot of marketing issues. They have nothing to do with they are very idiosyncratic, as he would say. I think hasbro would ride the wave with their releases coming out in big blockbusters. My little pony. If you have a five euro girl, you know what im talk about. I want to start with you. You own mcdonalds. What was your check your take . It was one of only two down stocks up in 2008. Stocks have tripled since then. It is one of the highest returning stocks in American History all in line with dividend growth. The things that are somewhat transitory order of record affected impact numbers never really affected us must much. Trade 15 used to times, now 25 times. It is expensive. Have the Company Growing dividend 80 per year for 50 years. We like that management has done a good job riding through a difficult decade. One of the reasons why the multiple when it was because of all of the changes made particularly to automation. Anyone who walks in mcdonalds in recent years can see the change. Three or four years ago, i would not want to stay and therefore more than a few minutes. They are immaculate now. Have the kiosk they can order without going up. This brought a lot of customers to the store. Im not sure with the growth rate is needed. To continue to get organic growth and the continue to have great global expansion. Chipotle had a good year but years ago, the idea was young people would never go to thenalds again angela lays coolest thing. Mcdonalds went up edge palu and down 7 . My point is they cleaned up the stores, and they simply are not relying on only millennial hip urban customers. Inyre very diverse of ride their customer base. Financials told story. Tell the story. The dividend is telling us the reason to buy it. It is a wellrun company with very disciplined financials. Is real estate cheeseburgers, organic growth, a global story. A lot to like about mcdonalds. Like it will open down a bit today. Still an amazing story in the last few years. They pulled a new breeds and some of the other companies. It seems to be a big risk for a lot of these chains. Other chains full on embrace the delivery model like burger king and others and mcdonalds was a little late to the game. Mcdonalds held up their margins a little better by being late to it. A lot of companies are doing well with food service companies. Alix to broaden it out, if you look at mcdonalds and that premarket, and then it ones of updating its fullyear out look, is it not as safe as we thought and you have to take on exposure . I think the rotation is starting already. Closing the gap with the russell 2000, probably tighter with the positive toboth are make above the leadership has changed. Is the tone around u. S. China trade has stabilized. Participants we need to get out of momentum what hasd and find out been moving. We are starting to see that. You have got tech in real estate toward the top of the leaderboard. Next 10 out toward the months, are we getting a broadbased rally taking as well over 3000 or will it be concentrated in those pockets . Time its is the second has broadened out. The first group that really took the charge was financials. Gap for example closed the with the s p 500 this week. Lows, was significant. Yes, we will see different groups and leadership. How do you look at where we are in the safety rotation . Is safety still safe . I view this from a bottomup standpoint. Alix that is why you to get along so well. Two get along so well. Financials, jpmorgan, unbelievable financials. Just this morning, two names we own. Mcdonalds is down and Procter Gamble is not a cheap stock either. It is pricey and continues to form. To shine inifficult a market rewarding all comers. Were in a bottomup stock market. We will be here at least 10 months out. Romaine does that benefit some of the companies that were laggard for some time. You see the Pricing Power they have. The 2019. P from it is up like 80 . A company that was left for dead. Multiple expansions for organic earnings growth, reorganization, and Procter Gamble is one of the truly great dividend growers of all time. Alix we were making fun of hasbro, but what they said about tariffs, they said the threat enactment of tariffs increased expenses and delivered product to retail. Is this like the beginning you are laughing. Sorry. Tying in with something even smarter than what i would say. I said at the beginning of earnings season, anyone would blame it on the trade war. The matter what. Huge factorr is a but hasbro had a terrible execution quarter. Of course you have to talk currency and trade war tariffs. I do not think it is the bottomup act factor. Romaine this will be the quarter, if you will hear trade war tariffs and uncertainty, this is a quarter you will hear it. It is also the quarter were the tone on a trade is reflecting better. Think how bad we were at the month of may when everything blew up the trade in every other day, up and down 1 . Thing. A good we are in a better place on trade. To your point, you can write that off if we can stabilize and get a small deal done and work our way to next year. The current markets have stabilized a lot. In august, there was so much uncertainty as to exactly what not only china would do with currency but what the treasury retaliation would be. President trump was saying erratic things are on the currency side. That part has stabilized and is making for an easier right now. Coming up next program, Boris Johnsons final push. Is it final . I dont know. Vote will start at 2 00 p. M. New york time. I feeling they were saying final push for six months. Coming up next. This is bloomberg. Alix u. K. Prime minister Boris Johnson will find him two hours of there is any chance of getting his brexit deal through parliament. Walk us through the tictoc of today. Vote at set the debates are going on now. It all lies on the voting lobbies at 7 00 p. M. Chart for Boris Johnsons his brexit plan. The government wants to get this through very quickly. Three days, to be precise. This has created a lot of attention. Pages toof peyser scrutinize the stuff. They say they need time before we cast our votes. Probably just got the most for the second reading but it will be that Program Motion that gets really interesting. Romaine this has been 3. 5 years in the making. We know it Boris Johnson wants with barlett meant parliament wants. What does the public want . The issue is we dont really know what parliament wants. They have been good at telling us what they dont want. They have not come to a conclusion. The public is the same issue. We had that vote and a lot of people decided they wanted brexit but those people wanted a different kind of brexit. Many parts of brexit as there are people who voted. They really have to coalesced around something if they get it through. The other issue is fatigue. Pretty sicketting of talking about it and they want to move on and be up to focus on the country on its own. Gets get it done and lets something through and then we can move on. This is just stage one. There will be so much more to solve about the you ks future relationship with the eu. Brexit is far from over. Alix an excellent point. Overhead implied volatility, you are still seeing people in the market playing the short term. Here with us quite the chart there. Alix i product that chart specifically to be like, to you do you trade brexit . What do you do . It is impossible. Is there a possibility this will get accomplished or will we have to go to the eu again because we didnt have enough time to read a 500 page will and make a logical decision. If this fails, there is an equally weighted chance there will be a call for a second referendum. Is the case, i think there is a better than 50 chance there is no brexit. We see the effect on the u. K. Asset markets. So far, it seems to be to the u. K. And small you trading partners. We spent the entire year concerned about the trade war. You think about a hard brexit happening and how bad that would be for the Global Economy, that is much larger than the two larger economies. I think this would not be priced in whatsoever. Thisme point in time, would get accomplished and there would be a hard brexit. That is not the case as of yet. I think it is not priced into the market. Collects i dont think there would end up being a full brexit. How do you bottoms up . We have to asset allocated our clients. We are still having to select Asset Classes across alternatives and those weightings are very much depending on macro up down events. I go back to when brexit passed in june of 2015. The markets were down 1000 points in 48 hours. The markets have been up 500 points the week prior. Week later, markets were up 1000 points. It literally lasted three days. Trading rangethat and i dont believe markets would panic at the idea of a hard brexit. Elevated volatility, sure. Fundamentally, the markets are littlef the chicken conversation that never seems to come through. They can get a deal done. You neverply believe need to be afraid of going long freedom. This is an ideological, but ultimately, the u. K. Is much better off on the other side of this. The interesting thing with the pound, when you saw the reactions and it looked like it would be a done deal, there was almost a springboard affect, pentup energy. Yuan will see the same thing in the u. S. With regard to trade. The market just shoots up. There does seem to be pentup energy. See the energy, does that give you hope for the longterm trajectory that even if it is not perfect on some of these issues, it would carry the market higher. Revel have positive resolutions on both come with the market be higher . Of uncertainty has kept bad Business Decisions like spending money. Cap excess beat last summer. Somee extent we have had Economic Energy release into the certainly to earnings. Capex is the same in the u. S. It is although i think the deceleration is far more trade oriented than the exit is even in the u. K. We have been monitoring very closely, i think it is the biggest event going on in the american economy. An incredible move up with his expenditures. When a Trump Administration began, he lost all of that are on the trade war. They went from 3 gdp trading growth. In the u. K. , how much of the cap thats slowdown is brexit related . They were slowing down before brexit. They are sorting through economically. I stand by those words as long as you have me on your show. I want to get to some breaking news. Down. Ewman will step what an unbelievable shift. Lets say it is true he steps down. Presumably hearing toward a softbank takeover. Pentium evaluation, about it billion, andt 8 according to this dow jones report, newman will get 200 billion out of this to effectively walk away. You are talking about a shift in valuation that is not only astonishing but raises a lot of questions about softbank and how it was i guess propping up some of the valuations. Some othero question evaluations they had. It makes you wonder about this space of private capital. Alix we will talk more about that next. The board . We will work on it. All right. This is bloomberg. Some breaking news. We have a little more detail. He will sell 1 million worth of stock to softbank and will get 185 million consulting fee from the company as well as a 500 million line of credit from softbank. Still with us, art hogan. What does this tell us and what are we learning right now . Do not agree that it says anything about maybe all private markets. There are incredible alligators of capital and private equity. Lot abouttells us a this particular deal. It is shameful. He will be the only person who walks away a profitable winner. Debacle. Be a jpmorgan will miss the opportunity and a hot, this is a great day for jpmorgan. Final think they wanted to win the deal when all is said and done. It is not ending well. One thing we get asked a lot, during an ultralow Interest Rate environment, if there are bubbles being created, it is probably the uniform world. Those valuations have been rationalized quickly. We were not able to go public. A very rational decision by these are the other ideas. And office real estate, which is the sector the unicorn was in. They were saying they changed the landscape. How much money has to be spent on lobbies . The capex commitment is so high. It has not only been proven to forhan in not hostile investors but it sets the tone for the whole space. Us te of caution consciousness he was selling. As we had to break, speaking the u. K. Armament, the government was selling preparations for no deal brexit. That is next. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Alix this is bloomberg daybreak. I am alix steel. Micro, wecro, we have have a lot happening in the market. S p trading right around 3000. Up. 1 . You have the good, united technology, the good like Procter Gamble, than the rough like hasbro into mcdonalds, all of that duking it out. Cable rates, volatility rains. Boris johnson speaking in parliament, talking about the brexit deal, unleashing a tide of investment to the u. K. And still pushing the acceleration of the timetable and saying it is in the interest of the entire u. K. All of that said, you are seeing buying in the bond market. Nonetheless, a little bit of safety being sought as well. Oil markets up. 6 . Y i had the benefit of speaking to Dwight Anderson, a legend in the commodity world. One of the few survivors in an industry that has forced other big traders out of the business. He now runs a 1 billion firm, osprey management. I sat down with him and asked about the current state of the oil market. Market that is moving into surplus. You have two quarters of seasonal deficit and the Balance Sheet looks heavy, barring the seasonal pickup of demand. There is a huge amount that could come offline. They haverial said for decades if you try to keep rto out of the market we will keep other peoples oil out of the market. There is real tail risk in terms of advanced crude. At the same point, the mobile outlook is negative. Alix what does that mean for a range . Many people used to say it was 55 or 65. What we think is the probability of 40 crude or 45 crude, 70 crude is way more probable. We need a low probability event to cause a spike in crude. You have a in geopolitical issues that causes a much heavy price. We think that is more probable that an event risk, but not something that is enough to compensate you for that tail risk. It is one of the reasons we are hesitant in flat price crude. You do you sell them if own them, or not buy anymore . Long onwe have been some of the mps for quite some time, which was wrong. The market has completely devalued them and they are given no terminal value. They are so cheap. Some of this is the issue of having tried to build and replicate the assets on our own. Phenomenal assets you cannot replace, even if you were given that at twice the price where they are trading. Needositive catalyst you comes down to further consolidation, corporate activity. Alix does real consolidation happen . At this point you own and you hold onto it and wait . At what point you have to wait that you have to make that call . Dwight the valuations are so ofap, and the probability consolidation, we are holding on. If youve not had something happen by february of next year, we need to reassess. Alix that was part of my interview with Dwight Anderson of osprey management. His fund is up 30 year to date. I will have more of that interview on commodities edge on thursday at 1 00 eastern. Still with us our david bondsman, art hogan, and romaine bostick, my cohost joining me on set. What i found interesting from the macro point of view as you have the value part and the macro. You cannot get a bid no matter what happens. We still of investors that have massive ptsd from the last cycle where things went terribly wrong and are treating the same Companies Like the companies from 2015, where the Balance Sheets better this go around. The problem is technology has gotten so much better at extracting hydrocarbons from the surface and getting into the places where it needs to be when demand is coming down. The call is coming from inside the house, and that is one of the issues that is happening. It is hard to live that group. Even when you see the spikes and energy prices, saudi arabia loses half the production for a week and the group barely botches for a day. Romaine when you talk about the technology, that is also raising the cost come and you are starting to see some of the bigger producers fill the void. I am wondering, how does this industryhe u. S. Energy , particular because shale has been a huge driver for the economy. David a lot of the factors you are talking about is why we chose to play it with the integrated versus coming in midcap. For one thing, the Balance Sheet and diversified revenue lines. I am a huge believer in the infrastructure story. I believe we are a full generation behind where we need to be. There is more Political Risk domestically when you have a leading president ial candidates talking about banning fracking, banning liquefied natural gas. These are stories that could be Economic Growth drivers. They are up in the air politically. I do not believe that will happen. Beis hard to not have that headwind over the space. With a very favorable Trump Administration to the sector, it has not been able to get that rewriting we thought would happen. Romaine longterm that is something that will have to be reckoned with. In the shortterm, you still have demand issues. You have from opec to imf to individual banks cutting their outlook for demand globally. Thoses something companies can weather over the short term without getting into too much trouble. Dwight we have a simple rule about this when we see david we have a simple rule when we see forecast and demand is suffering, we wait for the things to be redone in four months or six months. The on this point of conversation, breaking headlines. Saudi aramco is it to be pushing to complete its ipo this year. It will way of takeoff announcement within the next few weeks. This has been it on and off again ipo. It was supposed to come to market in the Saudi Exchange on sunday. That got pushed back. Now we are getting the headline it will compete its mammoth ipo this year. It does raise the question, would you buy it . Arabia, you know saudi will need and want to hire oil price, but it comes with so much other risk. Disruption barely move the price. What is happening in chile, barely moving the price. Art we used to joke what is going to happen first, brexit or the saudi aramco. Alix that was a joke . At this and say how much of the company are they selling, what percent of the components will be available to the public, and if you were to say the valuation would be rational, than this might be a great investment. To be ont is too small the water. Romaine investors will find ways to add breaks to this . David it will be heavily dependent on sovereign wealth. Alix do you sell your integrated positions . David absolutely not. I believe there is no way they bring it public. I avoid the Operational Risk of their play and stick with my chevron and exxon mobil. Romaine youre not concerned about saudi aramco sucking air out of the room . David i am not. We are longterm holders of chevron and exxon, but these things are already priced singledigit multiples, so i do not think there is much air they can suck out. There is great value in chevron energy. That is one sector that is good value. Has to do withit global growth. Bloomberg economics said 70 of oil move had to do with weak demand. Where are we in the cycle . Are we bottoming . Is there more to go . Art i feel like global pmis are not planning. It is important rationalize all of those things are surveys. Whatsurvey is dependent on tone feels like around several macro things. If the tone gets better around u. S. China trade, manufacturers feel more confident about their supply chains and those tend to inflect higher. That is where we are. Could that get reversed with one tweet . Perhaps. I feel like both sides are little more desperate to get something accomplished in the nearterm and that will help the manufacturing surveys. What aboutmaine some of the conflicting singles on demand . We have a story about more tankers headed toward china than any time in the last two years. There is still an appetite for crude. Chinas issues may be stockpiling ahead of some of the other issues in the middle east. The demand is there. If we get resolution to some of these trade issues, does demand go back . David i also think the demand analysis begins on timeline. They are not factoring in fiveyear needs i think are undersupplied for emerging markets. We talk about china, but not nearly enough about the rest of the e. M. Universe. I have not read anything that struck me as intellectually credible to suggest demand will not exceed expectations five years out. That needs to be the thought process. We do not have the Energy Infrastructure in the u. S. To meet that demand. We are the marginal producer on crude. We need to get ready for that obligation and be prepared to export our liquids to the world. Alix great conversation. Art hogan and david monson. Talking tanker rates . This is a match made in heaven for me. Lets get an update on first word news. Viviana today Boris Johnson will try to ram resolution on leaving the eu through parliament and just three days. Parliament will vote on the principles of johnsons proposals. That will be followed by a second vote. Johnson is still trying to get the brexit deal done by october 31 deadline. In canada, voters gave Prime Minister Justin Trudeau a second term. Trudeau overcoming a number of scandals, claiming what he calls a clear mandate. Ll, his liberal majority his liberal party lost its majority in government. The most likely partner, the prolabor new Democratic Party donald raising expectations the u. S. And china could sign and initial trade deal. Says negotiations are advancing and beijing has begun buying American Farm products. 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. I am for vienna hurtado. This is bloomberg. Alix thank you so much. A couple of headlines to recap. The first comes from saudi aramco. Apparently the company is still on track to unveil its mammoth ipo later on this year. It apparently will be weighing a kickoff announcement within the next few weeks. I also want to track what is happening with the cable rate, extending its drop on a report the u. K. Government would pull the bill if there are delays. Apparently, this comes from a bbc reporter that says of parliament votes for a delay by voting down the motion the eu offered until the end of january, we will pull the bill. Cable extending its declines. Program, we this works adam neumann is stepping down. More on that in todays bottom line. Remember, bloomberg users can interact with the charts shown on gtv. This is bloomberg. Viviana this is bloomberg daybreak. Im Viviana Hurtado in the hewlettpackard enterprise greenroom. Coming up on bloomberg markets, eric firewall, magenta ceo. Now your Bloomberg Business flash. Hundreds of thousands of californians again face the prospect of another deliberate lack out. The bankrupt utility pg e is considering shutting off more than 200,000 homes and businesses, shutting off power. It will happen in the northern part of the state. The company trying to keep its power lines from starting wildfires. In the race for the Worlds Largest private jet, gulfstream wants to takes the lead. It is unveiling plans to make a roomier person a roomier version of its g6 50. It will be able to fly 700 nautical miles and crews under the speed of sound. , 76 million. Shares of biogen searching. Drugompany will ask u. S. Regulators to approve its experimental therapy for alzheimers disease. A new analysis of data from two failed critical trials showed promising results. I am Viviana Hurtado and that is your Bloomberg Business flash. Alix 76 million . I am saving my pennies. Romaine, you are also looking at biogen . It romaine there is no treatment for alzheimers. A lot of companies have gambled the farm on finding the holy grail to treat this. Biogen spent more money than anybody else. Data show thethe efficacy was not there in trials, you shop shares plunge 25 . This is a stock that has been bound in this range. They had nothing in the pipeline. They are dependent on those multiple sclerosis drugs which are aging out. Alzheimers was the next future. The fact that theyre able to turn this around, who knows what is in the data. They are willing to go back and get this approved. If that is the case, youre talking about a multibilliondollar stream of revenue for the company and that is why you are seeing shares up this morning. Alix huge down. Romaine and the gap up we are getting today was recouping what we have lost going back to march 21. Alix it is time for bottom line. Well take a look at Companies Worth watching. The first is wework. Adam neumann will be stepping down from the companys board. Joining us is sonali basak. Stepping down but getting payouts from softbank . About 1. 7 million about 1. 7 billion. This is basically an unwind of his stake in the company and his connection overall, right . Sonali they are asking him to please leave. It seems to be a nuanced wrap in a bow. They have been running out of cash. It has been reported that a softbank executive would be taking over as chairman of the board that has not been announced yet, but that is the expectation. It is between 60 and 80 of the company with him at the hound. It is softbanks turn to lead. Alix please leave. The Second Company we are looking at is ups. Brooke sutherland is here with us. I thought they were good earnings with the exception of the revenue, but that is not with the equity market is telling us. Brooke that is not with the equity market is telling you. It must seem like a good showing for ups. They raised their operating margin, they kept their Profit Guidance impact, they are curtailing Capital Expenditures which has been a Sticking Point with investors concerned about the degree of spending and whether or not you are getting the payoff. They would seem to be checking all the boxes fedex failed to check a month ago. There are little niggles around the edges. When you drill down into those profit margins, unit costs were down, but so were revenue per package. This Third Quarter at a huge surge from amazon. Fedex cut off its amazon business and shifted to ups. You can see the yield coming down on those packages. That raises the question of did ups make the right decision, is this a Good Business to hold onto as amazon becomes a competitor. Muchne it is amazing how amazon becomes a wild card for these companies after being the tailwind for so long. How much does the departure of jim barber factoring to the share reaction . David it adds brooke it adds to the jitters, but for me this will probably a probable a positive step. The ceo has made a number of steps to bring in outsiders. He has hired a pepsi executive to be a cfo, the chief marketing officer came from outside. It is a sign that upss traditional culture of bringing people up through the pipeline was not the way the company needed to position itself moving forward in a changing world with amazon as a competitor. This creates an opportunity to bring in more people from outside, which will only help the company in my perspective. Another sharp contrast with fedex, which only recruits people from inside. Two different storylines for fedex and ups. It is a relative duopoly in terms of some of the long haul package delivery. When you look at what we are getting on ups, is this one are disco quarters and everything will be back to normal . David brooke that is the question. You do get that additional operating leverage. We are getting into the allimportant holiday core door which will be a key test . Romaine if she would get her unicorns over from china in time. Alix it is very important. Alicorparently called ns. Brooke sutherland of bloomberg opinion. Romaine bostick, thank you for joining me for an hour. Coming up, do not forget about earnings. We will take a look at jp morgan, biogen, and Procter Gamble today and technically speaking. If youre heading out, tuning to Bloomberg Radio on sirius xm channel 119 on the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Though maloney joints me now. Listen to bill on the bloomberg. Youre kicking offer me with jp morgan. Bill lets start the morning out with a couple of breakouts. We talked about jp morgan how 120 was your resistance. We finally had the breakout yesterday, way above the 120 level. You have this uptrend since december. A clear break above resistance. 120 is your support level on jp morgan. Alix what is your top . Bill unlimited, theoretically. Alix we were just talking about biogen good huge gap down earlier in the year because of the alzheimers drug, now seems like will be going through and having a break right down the day. Bill the stock is up about 35 . A clear trading range after the gap you just mentioned. The first resistance level, you want to look at around 305, which is the february and march iss, at the top of the gap 320. 305 and 320 are your levels in biogen. Alix how quickly can you make it back up if you break out of the first resistance level . Bill it depends on the price action. A lot of analysts are going backandforth on the data. The first levels 300, 305, and then 320. Alix Procter Gamble be and they raised. Similar to what we have seen with United Technologies. Also a safety trade. That is a nice channel uptrend. Bill stocks up about 4. 5 . Clearly uptrend from 2018 lows. Maybe some resistance around the alltime highs. It will gap above the 50, but of the above the uptrend, the stock looks good. Alix bill maloney, appreciate you looking at some of the stocks with uptrend. Coming up on the open with jonathan ferro, barry knapp will be joining him. In the equity market, as in people able to hold onto that 3000 level. Above that yesterday. Seeing volatility in the futures market. Part of that will be earnings. Procter gamble on the upside, mcdonalds on the downside. The upside, mcdonalds on the downside. Always taking a look the action in the cable market, down. 4 . Apparently there might be a bill withdrawal if conditions are not met. Some buying coming into the bond market. Yields lower. Happy tuesday, everybody. Happy brexit, everybody. This is Boris Johnsons next last chance. Watch for the vote at 2 00 eastern time. This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan adam neumann stepping down from the board of we work. 30 minutes until the opening bell. Here is your Tuesday Morning price action. Equity futures firm or four points on the s p, up another. 1 . In the fx market, the euro weaken the dollar stronger. Treasuries bid. Yields lower, down four basis points to 1. 76 on the u. S. 10 year. Lets begin with the big issues. The u. S. Versus the rest of the world. The fundamentals in the u. S. Have justified the strong outperformance of the u. S. Versus international markets. Of the euromentals zone are significantly
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