Billions of items shipped, tens of millions of amazon devices sold, so the echo. , for example the echo dot, for example. And busters Holiday Season for amazon. Chad morganlander, Washington Crossing advisors portfolio manager, joins us. How would you characterize 2019 for u. S. Equities . Chad for u. S. Equities, we think it was just a gangbusters year. The reason behind it, though, was not vibrant economic or Global Growth, but rather it was Interest Rates across the curve across the globe that went down, and accommodation from monetary the u. S. And the ecb. Yes, someone like 90 Interest Rate moves. Does that mean we are looking at not as many next year . Chad there has to be a transition period. Capital spending starts to kick higher in the United States and across the globe. Without that, we dont anticipate the expectations for for 2020arnings of 10 and Revenue Growth of 5 to 6 to come to fruition. We think that will have to be. Brought down. Overall, in the short run, we think markets could continue to make higher highs due in part to this accommodation by Monetary Policy, and also the kick the can of uncertainty on trade down the road for the next two to three months. Vonnie are you at Washington Crossing a little more secure in the direction of the major Central Banks from here . A you anticipate there is clear direction, whether it will be easing or tightening . Chad overall, we believe that the Federal Reserve wont be raising rates anytime soon, obviously. The anticipation, though, is that the fed will come a later next year, reduce rates. We think that also varies. Theres got to be a transition transition period. We dont think trade is entirely resolved. Thised will be surfing news flow in 2020, and that may indicator that they will be watching. Vonnie the interesting thing is that with all of the headlines we got on trade, particularly intellectual property, huawei and so on, the sox index is up more than 60 your to date. Will that continue . It seems like even though daytoday stocks were watching these headlines, maybe they werent overall as if it did as we thought they might be. Chad valuations do matter at one point. You have an earnings yield for withyear of roughly 5. 7 , a 10 year at 1. 9 . Anticipating, even within these segments like semiconductors, that they are going to have muted turns in yes, 5 to 7 overall, market multiples can continue to expand a bit. But valuations, we believe, are somewhat stretched. Vonnie where are you placing your money these days . Chad great question. We have a 2x weighting right now in industrials. We would look at Companies LikeGeneral Dynamics and illinois tool works. We also are overweight health care companies. Are companies that we rise in our rising that we own in our rising dividend portfolios. Consumer staple companies, we would also be dipping our toes there. Vonnie what makes you so bullish on the industrials . Chad our base case is that global gdp growth will be roughly around 3 . We are not looking for this gap pmis, but overall, we think the evaluations, if you have a viewpoint of three to five years out, valuations are attractive, and many of these companies are consistently growing, consistently profitable , and critical to this whole idea of buying industrials, you want to buy the industrials that dont have a lot of debt on their Balance Sheet. Vonnie right. And the health care stocks, would you be looking to get into that shortterm and maybe get out again if the election goes a certain way . Chad funny, our viewpoint is that we are looking 24 to 36 months out at holding these companies overall. Our viewpoint is that yes, you could have a mild amount of underperformance over the course of the next six to nine months, but overall, we think youre going to get handsomely rewarded if your viewpoint is a little bit farther out. This seems to happen often within health care, when you go into an election. They underperform, and then they outperform in a drastic manner. Look no further than the bill clinton years for evidence of that. Vonnie you do still have u. S. Recession odds at 30 . It seems like in recent weeks, prettyon odds went from substantial to almost nothing. What is the 30 accounting for . What are you looking at . Chad the average is always around 15 going into any given year. The reason for a modest elevated recession odds is due in part because of our dashboard of Economic Indicators that we look at although they are not blinking red lights, you can see that Global Growth has moderated. For 2019 early on was 3. 8 , and now we are a touch 3 . That could continue if emerging markets growth does not start to actually get a big boost. We are not anticipating a massive Fiscal Stimulus Program out of em countries, i. E. China, and 2020, hence why there is a moderately higher pub ability ever session. Vonnie are you looking to provide a hedge or some sort of opportunity . Chad we do have an overweight weighting in gold at this point. We took off some exposure to highyield based off of valuations and spread. We think that investors are not getting properly rewarded regarding the highyield market at this point. Thats where we have more of our hedge debt. We are in 2020 looking at the emerging markets. We do have a drastic underweight there, and we may move that bit higher, but overall, we are looking for more of a fiscal response out of china and more accommodation. Vonnie vonnie chad, thank you. We will speak about that more than a time. Chad morganlander of Washington Crossing advisors joining us from new jersey today. Lets get more on Global Markets today. Heres abigail doolittle. Abigail it may be a holiday shortened week, and like volumes, but we have more record highs, at least for the s p 500 and the nasdaq. Take a look at major averages in the u. S. Up nasdaq pretty solid, 0. 5 . A record high for that index and the s p 500 as investors try to tiptoe into the end of the year. The s p 500 headed to its best year since 2013, confirming the fact that stocks are higher and making this a risk on session. We have haven bonds lower. However, superlight volumes. As we go into the bloomberg terminal and use this function, we are well below what is typically the case over the last 20 days. 52 below the average volume for the last 20 days. The last couple of days has been like volume, too. Lots of investors and traders on holiday at this point. The vix does confirm that risk , at there on the year lows for the year. The question is whether 2020 will see a spike higher. Sometimes when you have a bottom like this out of complacency, you can see a big jump higher. No doubt right now, near yeartodate lows for that boat for that fear index. Here are some huge outside movers. Its worst day since 2002 on the news that their lung cancer study missed the goal. We also have shares of keygen plunging of qiagen plunging, not as much as spectrum, after the company reviewed various strategy alternatives and decided to go it alone and focus on their core business. I think some traders and investors were looking for m a action. The bulls really helping out those major averages, amazon up 2. 2 after they reported a record Holiday Season. Vonnie yes, 5 million new prime members. Do remember the function gtv on the bloomberg allows you to browse all of the recent charts featured on bloomberg tv. Catch up on key analysis and save your favorites for future reference. This is bloomberg. Vonnie live from new york, im vonnie quinn. Bloomberg marketsbloomberg iskets this is. This bloomberg markets. Lets check in on the bloomberg first word news. Heres mark crumpton. Senatoraska public and alaska republican senator Lisa Murkowski says she is disturbed by majority leader theh mcconnells stance on upcoming impeachment trial, a rare dissent in a party that has an largely unified behind the president. In hong kong, more rallies are being held today in shopping malls. Protesters are hoping to attract attention to their cause by forcing malls and stores to close. On Christmas Day, police fired tear gas and dispersed demonstrations inside a mall. Two dozen people were hurt on christmas eve. This comes at a bad time for hong kong retailers, who have seen their sales plunge over the past six months. The turkish government will ask its parliament next month to authorize the deployment of troops to libya. President erdogan said today that the african country has asked for military help. The troops would be sent to train fighters loyal to libyas Prime Minister. President erdogan has said they would be meant as a deterrent and not as an active fighting force. It will soon be harder for california businesses to treat workers as independent contractors. Beginning next week, a new law will restrict the use of freelance labor. The legislation is aimed at addressing inequities created by the growth of the gig economy and improving employment practices, but critics worry the legislation could hurt smaller firms that use contractors due to budget and staffing restraints. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Vonnie thank you. Israeli Prime MinisterBenjamin Netanyahu is defending his leadership of the likud party today after twice failing to form a government this year. The challenger to his 20 year run as party leader is former cabinet minister idiom cabinet minister gideon saar. Hes won a number of key endorsements from politicians, police, and other leaders in society there, but does he stand a real chance in the actual race . His supporters have been saying that they think he has a chance. Analysts think he only has a slim chance, given that in general, likud is always loyal to its leader, and in general, netanyahu has a very strong following. He has created a narrative around which he is besieged, and people are waging a witchhunt against him. Ofhas quite a good chance his loyalists, of which there are many, coming out to vote. It is a very nasty weather day out there, and at last count, only 20 of the 100,000 people who can vote in the primaries had come out. Each side is very worried that this low turnout might work against them. They are calling on people to come out. Vonnie almost another five hours to vote. Polls close at 11 00 p. M. Local time. What kind of differences do they have in terms of policies . On the palestinian state, they have the same position. What differentiates them . Gwen at the moment, it is primarily that the Prime Minister has a federal indictment over his head, and he has failed the last two times to form a government, with the rival blueandwhite party saying they will not form a unity government as long as Bibi Netanyahu is at its head. Saar is the head of the likud, we might end up with a unity government. Vonnie if he wins, there may be a better chance of a government being formed march 2 onwards. If netanyahu wins, what happens then . Wins, peoplenyahu are really concerned that it is going to be the same thing we have seen in the past few elections, that it is going to be a stalemate again. This is one of the main problems, that blueandwhite, like i said, will not form a government with netanyahu. Saar is counting on, he is calling on likud to vote for him so that there is a government in which likud takes part in. However, loyalists believe in their leader, and believe that no matter what, he will come through. It is really quite interesting, and it could be a very sad ending, and a very interesting ending. Vonnie Market Reaction wise, we are not seeing huge reaction. Obviously the shekel is tied to the u. S. Dollar anyway. Gwen the shekel is always very strong. The israeli economy is usually quite resilient to political chaos, to security problems. Has almost been expected. We might see some Market Reaction should we have a change , such as gideon saar taking over the likud, but that would be on sunday because markets are closed on saturday. Vonnie thank you to bloombergs middle east Senior WriterQuinn Ackerman coming to us from jerusalem. Still ahead, our Federal Reserve rate cuts stoking trouble . Our exclusive conversation, next. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is bloomberg markets. Boston fed president Eric Rosengren is concerned that the central bank has been overly accommodating with its rate cuts. He spoke to bloomberg. We are pretty close to our inflation target. Core pce is up. The Unemployment Rate is still quite low. Gdp is growing roughly at what we would expect, which is around potential. In terms of economic data, the outcome has been quite good. Chair powell said last week the economy is in a good please. In a good place. Would you agree with that characterization . Eric i would. We didnt expect consumption to be quite so strong. With the imposition of tariffs, the global slowdown resulted in exports and Business Investment being weaker than we would have forecast. Consumption picked up and has been quite strong, and we expect it could to continue. Michael would it have been that way without the rate cuts . You dissented on all three of them. Eric one of the challenges i think is thinking about what the side effects are of very low Interest Rates. There are two side effects that i am particularly continuing to worry about. One is how much room we have if we do get an actual slowdown as opposed to a concern about a slowdown. In that case, we dont have that much room before shortterm Interest Rates hit zero. The second concern is that right now, the stock market has been doing quite well. Other Financial Markets in some areas have been quite nebulous. Is this the stage of the cycle that you want to have a little more push to Financial Markets . I would argue i am not so certain that is necessary. Michael you made a major point of both of those in a speech last week in oslo. Let me ask you about the first. You are basically saying the fed is almost out of ammunition. Eric i am saying we dont have as much room as before. Prior to the last three easings, the fed funds rate was pretty close to what i would expect to be as neutral. Since then, when we reduced by 75 basis points, given the level that we were at, that was a substantial amount of easing. So both Monetary Policy and fiscal policy are accommodative right now, so i am not so sure we need quite so much accommodation at this time. I am a little bit worried that we have less room than we otherwise would have if we were to have a big negative shock, and i would say does not just the short end of the markets in the long end of the market. It has been fluctuating between 1. 5 and 2 . That is a lot lower than what we were experiencing prior to the last recession, which will have some limited effect given that that could quite easily get back to zero. Michael so what do we do . Eric i think we will need fiscal policy at that stage, and in a very low Interest Rate environment, fiscal policy becomes a much more important tool. In the talk that i just gave, it also highlighted that we should be thinking about buffers, including buffers for capital ratios for banks, and in general fiscal policy, you would like to have a bit more of a buffer in state and local government. You would want to have enough that they can weather the storm and not have to cut back if we have a recession. Michael if you take a look at washington, theres no guarantee you are going to get any fiscal policy. What happens then . Eric we would have a longer recession then we would prefer. Vonnie vonnie that was boston fed president Eric Rosengren speaking to bloombergs michael mckee. Checking markets now, we are continuing the rally we have been seeing all year. 3235 p 500 up 11 points at. Volume is lower, but there are still people trading out there. The nasdaq just hit 9000, up 0. 5 . In the s p, the best performer is amazon, up 2. 4 after reporting a record holiday sales period. Oil companies also doing well. The 61. 65 mark. This is bloomberg. Vonnie live from new york, i am vonnie quinn. This is bloomberg markets. The story is getting worse for boeing. Messages between employees are picking a disturbing picture of concern. Those are the words used by House Committee aid. The disclosure came on the same day boeing ousted its chief executive officer. Lets bring in brendan case from dallas. What is in these messages . Will the public ever see them . Brendan we do not know what is in them. The public has not seen them yet. The public will certainly. There is an early batch of messages in october that was publicly disclosed. This latest collection has been described as disturbing by a congressional aide. Still do not know the details about that. I would suspect we will sooner or later. Obviously we are trying to learn as much as we can about them. Boeing hadappears turned them over to the department of justice but were keeping them out of the faas hands. Why would that be . That was the cases for the earlier messages in october. Boeing had disclosed those messages to the Justice Department months before. Maybe because there is a criminal investigation into the 737 max situation and that may have had an influence on boeings decisionmaking. Dennis muilenburg is gone. How culpable was he in dragging out the investigation or not knowing what was gone, for misleading shareholders and the pu