Big move. Key under performer is the small caps. Watching . Hat are you we had a small decline for major averages. For the s p 500, three down days. First time since early october. Lets put in context of the technical part we have been looking at for months. All, with the rsi going appropriately from overbought to oversold, then the range everyone was talking about when the range was breaking out, we have this multiweek melt up, but today, we have these three small down days. We may see the s p 500 move down toward its but 50 day moving average. Supporting a pause or consolidation. But there is an area here where it lifts up and down. We may be starting a new higher range. Speaking of higher range, a big day in oil markets. The most active west Texas Intermediate Oil contract, rising 2. 5 . Lateis the highest since september. Futures up 1 or more across the entire oil curve. The brightucers are spot today. Exxon mobil up 2. 5 . Xle, sp, you have , they arerry and mlp among the biggest gainers. Oil and energy etfs up even more. Part of this is being attributed to optimism about the trade talks and what that means for the economy going forward, but there is talk among analysts that is giving a lot of fodder for the bulls. West texas intermediate could test its highs. Its estimates for brent and wti. A lot of people talking about the opec meeting coming at the beginning of december. Some even saying opec fed institute further cuts in production to keep prices rising. I am taking a look at income oriented investors. If you are one of those, you are predicting growth or high paying dividends. That is a question that Citigroup Global strategists tried to answer this week. If you take a look at this chart, they are recommending dividend momentum strategy, saying that in the last three years, it was all about stocks looking at high Dividend Growth rather than dividend yield terminal charts. Return comparing a 51 relative to a 28 return in and decks that tracked higher than yielding in shares. Citigroup saying go with the dividend momentum strategy. Scarlet thank you so much for setting that up. Still with us his chief Investment Officer for Deutsche BankWealth Management in the americas and across asset reporter. Mike was talking about Energy Stocks and how they are catching a bid for the second half they are still the worst performers. We saw oil prices picking up here. And is your outlook on oil Energy Stocks . They are deep value stocks. Notwithstanding recent price movements, we have a be nine outlook. Benign there is a concern opec might not extend its cuts when they meet in december. We expect another round of oil into the marketplace from nigeria, norway, guyana. There is a lot of supply coming into the market. We will see a sustainable uptick in the price of oil given where the demand is and our outlook for growth. A good rule of thumb we have gdp growth, subtract 2 , that is oil demand and that tends to be significantly positively correlated. You are looking at a 1 Global Growth in demand for crude and given this one Million Barrels of supply coming on board, dont expect a sustainable rally. Ofing said that, the parts the Energy Complex we do like, refiners would be one. Especially saying that we need to use highquality crude going forward. That might create some demand for refining capacity. That might help the refiners. Credits inwhat the this space have been doing. Bloomberg highyield u. S. Energy index was up double digits total return in april. It is now flat on the year. That gives you a sense of how the smart money has been feeling on energy. A downcast of you for quite some time. Caroline meanwhile, lets look at breaking earnings news. Ys in a lackluster nordstrom thirdquarter revenue, a be the highest estimates, still down 2 year on year. The estimate was 3. 58 billion. We are seeing account staying steady. Growth staying steady. An improvement and they are pulling out the fouryear adjusted earningspershare expectations. That is a slight improvement. Some retailers are doing well and some are doing badly. You cant just say retail apocalypse. Cant they all just do the same thing so we can have a cleese a clean narrative . I just want a clean story that affects every company. Caroline do you get a rate of the consumer from these numbers or do you look more at the economic numbers . We look at them, but our thesis has been, if you are a u. S. Investor, we are asking investors to focus on domestic stocks. Stocks, look at those sectors and industries that taylor to consumption rather than business spending. The third one would be to look at those there is a little more cyclical, so we do like Consumer Discretionary space. Eight lululemon for example. The underlying premise would be focus on quality. I know it is a broad term, but we are looking at companies that have operational models that have predictability of cash flow, dividend paying companies. Someone expanding their dividend payout ratio. Then, not too much leverages. If youre looking at a slow growth environment, you would rather do well to avoid the Leverage Companies and sectors. A moment ago, we were talking about oil. So much of oil rides on gdp. What is happening in your view with the global trough narrative . Is that intact. It has been, what is it, 10 hours . I think if you think about what has been happening since september, sickles, commodities get off their lows. Buts partially trade talks, it is Second Derivative on Global Growth. You need that to continue to be confirmed. If that story goes the other way, it was really only one print that got us into that story again. You do need confirmation from the preliminary numbers. That will be one thing that does help guide action and treasuries. Scarlet we will be getting numbers in the u. S. On friday. To wrap things up, are you of the mind that as we see Global Growth stay in these low singledigit numbers, that it might be time to look at overseas markets because they have potential for catch up in a way the u. S. Has maxed out on . I think the first thing we are trying to do is not get tentative to invest in the market. It is very tempting because the markets have had a tremendous rally. That on the fixed income side, you dont get much yield. Investorsity side, are concerned. It has been such a strong rally. It is highly unlikely that we repeat 2019. Cash becomes a very tempting asset class. Tacticalanding some position, i think the first thing to do is be invested in globally diversified. Do your point, it does make sense, especially with this historical precedent. Up,ever pmi starts to move they tend to outperform the u. S. We are seeing policies from pboc, cutting primates. I would not be surprised if for the time being, the focus shifts from outside the u. S. Into these markets. I look at our 12 month forecast. It is high single digits. With emerging markets doing slightly better. Scarlet perhaps em and international first. Chief Investment Officer for Deutsche Bank wealth investment in america and Bloomberg News across asset reporter. That does it for the closing bell. Romaine bostick is stepping in for whatd you miss . Where we will be looking at schwabs plan to buy td ameritrade. This is bloomberg. Scarlet we are live from bloomberg world headquarters. Caroline heres a snapshot of how u. S. Stocks closed down on the day. Joe the question is, whatd you miss . Caroline Charles Schwab capitalizes on the industry with offers to buy a key rival. Cautious trade deal optimism. Chinas chief negotiator could be closing in on a trade deal even as violence in hong kong divides between the u. S. And china. Investors remain nervous. A mixed bag for retail. Reports on earnings while macys adds concern. The latest coming up. Joe lets get right in with the big story today. Charles schwab tightening its grip on the retail brokerage industry with talk stuart acquire td ameritrade. The deal has not been announced. Jmp is a Senior Analyst at securities. Thank you for joining us. Here . S the opportunity obviously, scale, but without scale, what can they do without . With that . At a high level, consolidation occurs because it makes sense. There are huge expenses in these deals. Also revenue opportunities. You have got schwab as the largest custodial platform. 25 of market share. Ameritrade is the thirdlargest. Combining two of the largest platforms. They can do more with the assets, get them for a better price. On the retail side, a lot of opportunities. Best active options trading platform. Schwab has not historically had a Great Success there. Schwab has a great retail platform and they can do more. Ultimately, you have the expense opportunities as well. Romaine talk more about the advisory side. When schwab was heavy in proprietary funds in a feebased brokerage, it looked like they could ride that for a while. We saw costs come down to next to nothing. Why am i supposed to believe that the advisory side will be different longterm . We talk about the advisory side on interest. These firms have continued to widen the mode between what they offer for what they pay. There is virtually nothing on their platform. They give up tons of service, technology, and they keep 100 production. The other competitor platform, those platforms are keeping a fair amount of the production. It is a very compelling economic offer to the advisors. The question is, now that youve got a bigger combination where there is economics that are likely to improve for both firms, can they give away even more to advisors so that will further widen the offering for them . It is pretty compelling from that side and on the retail side, this was not the deal that people thought would happen until we all woke up into her surprise. It was more about buying e trade. That created a lot of conversation today, but at the end of the day, consolidation in this space makes sense. That might drive more consolidation down the road. The milliondollar question we are getting, you still have the schwab and ameritrade, where timing may get pushed down. From they could buy a regulatory perspective, they could be three in one . It is a fair question, a question we are getting a lot from clients. Schwab being a large firm has 8 investable assets. These firms are going after all investable assets. Not just selfdirected trading. You have to look at it from that perspective and the perspective of the customer. Customer has been the big winner of pricing cuts. Consolidation continues to help going forward. That is the big question between if schwab and ameritrade get together, do they cut even more on options or give better cash or better terms on balances . There is a lot to consider, but the end customer is one of the biggest beneficiaries. Joe is this the plan all along when schwab announced that it cut Brokerage Commission to zero . Schwabs own stock took a hit. It would be much more painful for its rivals. It has so many assets, it is so robust and the other is a feebased advisory. Do you think this was sort of the idea all along . It put competitors in a position where they had to sell . Im not sure if the cuts occur just to do this deal, but they definitely go together, meaning that taking commissions to zero remove a barrier to consolidation. Schwab is not going to want to pay for revenues. They know that they are taking them lower over time. Now that those revenues have been removed from commission side as we have gone to zero, they are reflected in the stock prices. It does remove that barrier and you have to think about in some ways, ameritrade has always been a premium in terms of price and now ameritrade is at zero on equity commissions just like schwab. Ameritrade has a premium platform, so youre not paying a premium to get it. Their growth the last month and a half has been better than others. In some ways, schwab created a stronger competitor and that might be playing into the assets here. Caroline always great to have you. Thank you for making the time on what has been a busy day im sure. Lets get you some breaking news. Remember, the chief executive announced they would be stepping aside. Missing overall earnings. The lower end of the range remains, but we are seeing a pop up after hours. Romaine we are seeing breakdown. Banana republic down 3 . It gapped down 7 . Old navy was the one bright spot for the company, down. We will see what kind of turnaround is caroline around. Caroline from new york, this is bloomberg. Joe we just want to recap earnings from nordstrom. Not all of retail earnings have been that bad, although many have. Nordstrom surging 9 after hours, the employer adjusted eps beating expectations. Eps beating expectations and so forth. A lot of retail names bad, but nordstrom bucking the trend. Romaine another Key Department store out there, shares may be falling after his chain cut its profit outlook. Ceo telling investors the company is locked and loaded for the fourth quarter. Sera fromg in washington. I have read through this press release, listen to the conference call. One thing that stood out was this idea that some underperformance might be related to location. They are not doing all that well. They did mention lower tier malls were a drag. That is important because it calls into question a major strategy of macys, which is that it wants to keep open these stores. This raises the question of whether that is a good idea. Considering ao be more aggressive store closure program. These results bring that to the four. Joe some of these big unicorns that went public, people get very interested in marginal unit cost. I wonder if we have to sort of do the same analysis with a company like macys where it is trying to figure out which aspects of business are still profitable and thriving. Macys and isg at the reversion out there where it can be consistently profitable . Macys does have valuable real estate. 34th street Herald Square is a great example of that. Monetizing real estate by spinning it off. That is one way it can become healthier. At the end of the day, sales are key and it is struggling. Ecommerce results were a good example of that this quarter. Years, first time in 10 have lower than double digit growth in ecommerce and when you consider the market overall growing 15 and retailers like target and walmart putting up 30 digital growth, we have got to say to yourself, what is macys missing . Caroline pretty damming that it is going to become a Real Estate Company if it makes things work rather than a retailer. They said they are locked and loaded for the next quarter. It seems as though they are trying to say the past is behind us, we are now in check and going to make the most of the holiday season. We have heard that from macys before and they thought they had promotions locked and loaded last year. They didnt. Loyaltye change their program a bit in the last couple years and are trying to figure out how to make that work in the framework of the holiday season. I have no doubt macys will be pulling out all the stops. One thing you have to give it credit for is it is pulling many levers. Offpriceng the business, renovating stores. It is dabbling in rental and resale and consignment. It is throwing a lot of spaghetti at the wall. The problem is, when you look at the top line numbers, it does not seem to be working. To gete always great your expertise. Thank you. More capitalout scaling back its business. The firm announced it will return money from three flagship funds. Bacon himself is effectively quitting the business after three decades near the pentacle of global finance. Are in the line of fire. He will apparently be focusing and sports oriented properties. I dont know what those are. Romaine i assume that means buying a sports team. You saw the writing on the wall after the crisis. They are trying to capitalize on that shine they had. 2012, we that back in were talking about Charles Schwab. 10 basis points index and get 24 per year. That is a lot of savings. Joe i would rather own a sports team. [laughter] coming up, china cautiously optimistic but will the continuing tensions in hong kong change the process . This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Mark i am Mark Crumpton with bloombergs first word news. Testifying on day five of the impeachment inquiry along with dave holmes, fiona hill, the former National SecurityCouncil Executive was questioned by lawmakers on what former National Security advisor john bolton meant when he told them that Rudy Giuliani was a hand grenade that was going to blow everyone up. That what mr. Giuliani was saying was explosive in any case. He was on television making incendiary reports about everyone involved. He was clearly pushing forward issues and ideas that would probably come back to haunt us and in fact, that is where we are today. Mark hill says the discussion with bolton centered on what could be done about giulianis alleged smear tactics against former u. S. Ambassador to ukraine. House minority leader Kevin Mccarthy because the attempts by the democrats to impeach the president a political hit job. Mccarthy told reporters i dont know how many more people they want to try to bring forward but every time they do, it goes right back to the case that the president did not make conditioned. When you pause for one moment, is a different than any other hearing we had . We are talking about impeaching. We are talking about removing the highest elected person and changing the fabric of democracy. We should not take that lightly. Alexander hamilton warned us about this. Mark recalling the testimony by gordon sondland, u. S. Ambassador to the european union, mccart