Moving news from around the world, from hong kong to new york to d. C. We start off with the latest in trade. Larry kudlow im a white house Economic Advisor, signaled the u. S. And china are close to signing phase one. We are coming down to the short strokes. We are in communication with them every single day right now. Joining me on the phone from hong kong is enda curran. Does china agree with this assessment . Musiccertainly, the mood from both sides now is that they are on track to reach some kind of agreement. Mr. Kudlows comments came only a day after china agreed yesterday to lift a ban on poultry imports from the u. S. They started to buy u. S. Farm produce again last month. Clearly some things are coming together, but there are outstanding issues. We still dont know where either side are on tariff removal. That is something of a redline on the chinese side. There are still other areas, like ip protection and the like. Still dont know when any agreement will be signed. Separately, there are signs of pressure partly due to the trade war, but no signs of panic from policy makers yet. We saw another sign of how disciplined the stimulus was when there was an injection into the Financial System of about 30 billion u. S. Dollars, mostly to color a tax payment system, and said it wasnt a time of turning to stimulus, but much less will depend on when or if a trade agreement can be reached. Alix thank you very much. A fifth straight day of roadblocks. Roadblocks and vandalism in hong kong protests. Going me now on the phone is Bloomberg Markets asia anchor. What does that mean in terms of a crackdown . Rishaad nobody actually does because there was talk yesterday at the state run go global Times Newspaper the state newspaperl times that there was going to be a curfew. This trade war is of course taking its toll on the economy as well. The hong kong economy is excepted shrink by 1. 3 this year. To the rest ofn the city. The government also downgrading its forecast for gdp here expansion for the second time this year. They were rather optimistic 1 nking they would go up to growth. This is what weve had with the chief secretary outlining plans that hong kong may well see more decisive measures. We got scuffles taking place, quite today has not been as rough the far from previous days. New lastagain flare a week after the death of a student. We also saw the death of a 70yearold man earlier today. The police are investigating it as being a murder. We have citywide school cancellations, and also have carrie lam and her government denying reports of any further measures in terms of a curfew, as i mentioned before. The subway system remains partially under lockdown. Tunnel we have three tunnels in hong kong but the central tunnel across harbor tunnel has been ransacked, and the tollbooth set ablaze. This has made traveling through the city rather difficult. Alix thank you very much, bloombergs rishaad salamat. Fed chair jay powell telling the House Budget Committee on the hill that rates are in a good place, and there are no elevated risks to the economy. Chair powell theres nothing that is really booming that would look to bust. It is a pretty sustainable picture. I pointed out the risks, and those are in manufacturing. Manufacturing is declining, but not sharply. Manufacturing is more sensitive to cycles, so it does decline. Alix here in new york is michael mckee, setting the stage also for some data today. Michael yes indeed. Futures this morning suggest no bust inside, but are we really booming . We will find out when we get a report on consumer sales, retail sales for the month of september. Weve been seeing a deceleration in the one strong part of the economy. September data for retail sales was negative, at least the headline. The retail control numbers, the part that goes into gdp, that was flat on the month. The forecast is for a bit of a rebound, and the fed would certainly like to see that. As the fed chair said, manufacturing has been in something of a slump. We get data on that 9 15 this morning. Unlike retail sales, manufacturing has been in a recession on a quarterly basis. You can see the blue line there, mostly below zero, where retail sales has mostly been above. We are expecting another decline for october. The question now, does strong consumer demand or rebounding consumer demand pull up manufacturing, or does manufacturing hurt Consumer Confidence and drag down the economy . Thats for the fed to watch. Alix you will be joining me in the next hour, bloombergs michael mckee. Intelligencehouse committee continues its investigation into the impeachment inquiry. Joining us for more at the white house, kevin cirilli. What to expect today, kevin . The former ambassador set to testify before the committee as lawmakers in both parties indicated their side of the story. Democrats led by House Speaker nancy pelosi said that essentially, but the Trump Administration has orchestrated was bribery to ukraine officials, withholding aid until they investigated into the bidens. Republicans say the president , like other president s and previous administrations of both parties, had asked sibley for a Foreign Government to look into corruption. All of this comes during what is becoming an increasingly intense situation on capitol hill, and which both sides digging in. I can tell you here at the white house, they are working very closely, republican numbers of the house intelligence committee, and lockstep on messaging. As of this morning, they do not feel they are at risk of losing any republican support. Alix thank you very much. Something else i am watching. I dont believe that Elizabeth Warren can execute all of the plans shes talking about, but i think the fact that all of her plans dont make economic sen. Warren tax in america. [applause] for that is a new ad Elizabeth Warren. It calls for a wealth tax. Thatfein said on twitter vilifying the rich is bad for the u. S. Maybe tribalism is just in her dna, a possible reference to her one time claim that she was part native american. Cooperman says she rep is ins the worst in politicians, trying to demonize wealthy people. Esther day, as you were hearing, i talked to billionaire sam zell, who also turned his thumbs down on warren and her campaign. He said it doesnt make any economic sense. Coming up on this program, more on your news and your morning top trades on todays first take. This is bloomberg. Theres a trade war. Theres a technology war. Theres a geopolitical war. And there could be capital wars. That is the nature of the environment. How that is approached is going to determine what our futures are like. Alix that is bridgewater founder ray dalio speaking last night at the National Committee on u. S. China relations. Obviously, trade the big focused of todays first take. Joining me from our inhouse team of wall street veterans and insiders, damien sass our sassower, vincent cignarella, and yelena shulyatyeva. Im reading this from an article we wrote. Is this a chip shot to the green or a nerveracking final stroke of a painter . I love that analogy. Vincent they left out the part where we are probably still in a sand trap. Alix so like my fiveyearold drawing a dinosaur. Vincent i think we are closer than people think. ,hen people said the other day there are snags with the agricultural agreement, the snag is not a nag purchase, but rather not an ag purchase, but rather how much can china buy. We talked about this yesterday, if you look at china food and inflation prices, it is really steepening. They do need to import food to squash that inflationary scenario. Have to feed the people, essentially. It is just a matter of the amounts cant seem to be agreed on. That is going to be sorted out. It is not going to be something that is prolonged. It may lead into next year, but it will actually get done. Alix are you bullish into the weekend . Vincent i would be slightly risk on going into the year. Damian i am going to take the jack ma, ray dalio on that and think that the trade war is going to last forever. When you look at u. S. China yield differentials, if you look last year, it was at 35 basis points. Now it is 138 basis points. That is a massive move. You know what tracks that . Dollaryuan. I am probably a bit less optimistic than vince, and the little less pessimistic than you. To me, what it means is what really happens to the u. S. Economy Going Forward because of all of that. One,re, we can get phase but does it mean that uncertainty is removed and businesses start investing . Remember, we still have some tariff spending in december. That is a huge amount of money. Taken together, the delayed october tariffs and what is coming in december, more than what was imposed in terms of the share of economy back in 2018, so for the u. S. , its a lot at stake, and i am not that up to mystic. Vincent i think not that optimistic. Vincent i think, realistically speaking, you have to bet on the fact that the to summer tariffs do not happen, but the december tariffs do not happen, because if they do, all bets are off. The economy needs to stay improving, if not at least back to trend growth, 1. 5 to 2 , going into the election so it is not yet another distraction. For that to happen, there needs to be not necessarily a grandiose trade deal, but simply an end to the trade war, or lets just say a truce to the trade war. This is going to go on for a very long time, and it will be fits and starts at different levels, but something needs to get started on both sides. You look at chinas economy, what they are doing, it is just not plan well for both sides. Alix to that point, overnight in w the cbrc stepping the pboc stepping in. You can make the case that it is for a slowing chinese economy. Damian it was perceived as kind of hawkish by the markets. Basically, it could be tax but whathich is why, it tells a lot of the practitioners is that they may which cutting from 3. 75 , is what people have been expecting. But they definitely need to stimulate their economy. One thing it may mean is that china is trying to focus on corporate longterm lending. If you look at the recent data, theyve had trouble spending corporate loans longerterm, infrastructure loans, more capital projects. But i think if you take a step back, youre going to need more stimulus from china. The three things i would mention, i think the most like the outcome is that china yields are too high. Alix which also leads us to the data in the u. S. Overnight you got that, and then you get u. S. Retail sales. We are going to make a big deal about the consumer today at 8 30, but how much are we really putting stock into it in reality . Yelena i think it really matters. You just mentioned the consumer is the key driver of Economic Growth. Any shock could really mean bad for the u. S. Economic growth. But it is so interesting to see todays numbers in terms of what to expect in the Holiday Season. Holiday season its a big deal for retailers. It is a big deal for Economic Growth because it is the time when we go out and spend all this money, and the momentum as of late has been quite weak, i would say, and it is not a good harbinger coming into the Holiday Season. Damian one thing that ive been focused on, i dont know if you have any thoughts on it, really defected if you look at retail sales, savings in the u. S. Household 55 years and older has risen, with unemployment at historical lows. This is the world of negative yields. We are stealing returns from the future to fund returns today. That means people have to save more for their future retirement. Yelena i would add to that, savings is one thing, and it has been creeping up. Income growth has been creeping down. On top of that, we need to watch consumer sentiment. Startse three things really flashing red, that is going to tell us that Consumer Spending is slowing down. Vincent savings aside, real spending, the real average earnings for the consumer has been holding up. It is not growing. It was on a decline. It is flatlining. The last reading was pretty much flat from the month before. At least the decline has stopped. We will see how that proceeds Going Forward. But as consumers have more disposable income, they will spend that income. They are not going to save it. That will hold the economy up Going Forward. With the tariff scenario and the delayed to december, we still growth from the First Quarter into the Fourth Quarter as people accelerated spending and inventory builds . We wont know that until march. I do think we will see a prosperous Fourth Quarter and see the consumer hold up into december. By concern is that in the First Quarter, we see a deflated bubble and drop back down to that 1. 5 growth rate, and see where we go from there. Alix i want to introduce Something Else from Bloomberg Opinion, the one chart that explains everything in the market that doesnt have to do with trade. It has to do with liquidity and developed markets, and liquidity in emerging markets. Innet, you have liquidity emerging markets going up, and in developed markets, going down. That is why you are seeing all the movement. Thats why you see tightening liquidity in em. Vincent the problem with that is that is the result of a strong dollar, and i dont think that will continue into 2020. Alix alix hes turning into a little but of a bear. Vincent ive been on this ride for two years. Youve got to get off eventually. It makes emerging markets very difficult. To throw shade on the chart, but that is some plea where the strength of dollar lies. That is not a matter of liquidity being drained out of em. If the trade war subsides, you will see emerging markets and evokes markets start to pick up aggressively and velti markets pickup and developed markets start to pick up aggressively. That notwithstanding, that is a major issue Going Forward. Damian it is going to cause different regions within em to integrate far more deeply than they otherwise would have. You are seeing that in asia right now with some of the Different Things coming through. You see thailand, and in asia, malaysia all moving closer together thailand, indonesia, malaysia all moving closer together. Can they do that without leaning on the dollar and the u. S. . We will see. Alix whenever going to know that answer . That is a really good point, where you are seeing more gross and all of that. If you get more integrated, that is going to be a game changer. Damian the reliance on the dollar is not going away. If you look at the number of transactions, the notional value of transactions, it is all dollarbased. Vincent that will always be the case come up at the dollar being transactional based doesnt have to do with the funding issue. Comes, the link that feeds the trade, investors are going to move away from the u. S. They will move away from europe. They will move into southeast asia, latin america to some extent. Things need to calm down there a little bit. But people will go toward nations where trade comes from, essentially. Alix em equity funds had the largest inflow in 41 weeks in the past week. 41 weeks. Vincent cignarella, damian sassower, and yelena shulyatyeva, thank you. Any charts we used throughout the two hours, go to gdp go goer terminal go to gtv < on your terminal. Kailey ritika this is bloomberg daybreak. Hedge funds increased their facebook holdings. The social media giant fell 8 during the three month stretch. Meanwhile, netflix was down 27 . Shares of the streaming service were snapped up by Maverick Capital and d1 capital partners. File ais going to lawsuit challenging the Defense Department decision to award a 10 billion Cloud Computing contract to microsoft. Amazon says the process was tainted by bias. Some lawmakers question whether President Trump unfairly intervened. Hes been at odds with the amazon ceo jeff bezos, who also owns the washington post. Qantas did it again. It flew a test flight for the worlds longest commercial service, this time from london to sydney on a boeing 787. 19 hours and nine minutes. Last month, its new york to sydney flight was three minutes shorter. Qantas turned both planes into flying laboratories. Scientists trying to figure out the impact of such long flights on the crew and passengers. That is your Bloomberg Business flash. Alix thank you so much. Im all for it. Another thing i am keeping my eye on my European Investment bank is taking a quantum leap in fossil fuel financing. It is a lending arm of the European Union that is going to increase support for clean energy projects. It is not going to consider new financing for fossil fuels, including natural gas, after 2021. The decision could deprive polluting products from financing, a broader shift with the new head of the European Union commission to make a push into green and make a crossborder carbon tax on the table as well. Coming up on this Program Comedy 10year yield wellington basis points this program, the 10 year yield falling 10 basis points. Gene tannuzzo, columbia threadneedle deputy global head of fixed income, will be joining us. This is bloomberg. Alix this is bloomberg daybreak. You made it to friday. It was a really interesting week. Equity futures going nowhere. It may bit of optimism by about 0. 25 . It is may be on trade. Larry kudlow seeing a short stroke to a deal. You have some whippy action over headlines. In other Asset Classes, we did see a big move into equities, and also bonds. At the same time last week, a big move into European Market stocks as well. You are seeing some buying in the market over in italy, which just got totally hammered this week. Spreads thend btpbund spread widened out as w