December as investors await their g. D. P. Numbers out. And that is what you need to know. David for more on those g. D. P. Numbers, we turn now to carl, chief of u. S. Economist. So we have five quarters of slim pickings. What are we looking forward to . Its growing at 3. 3 five quarters ago. Now were growing at 1. 3 which is below the feds neutral growth separate and thats problematic for the economy. Consensus going into todays number have steadily deteriorated over the course of the quarter from north of 3 , 3. 5 well say at the start of the quarter down to only 2. 6 . And i think theres a risk maybe that Consumer Spending which was the major Growth Engine in q2 could fire on a much softer level in the Third Quarter. Alix inventories. We saw it drop on the Second Quarter which is unheard of when youre not in a recession. When is the payback for that . That subtracted about 120 basis points off the headline growth figure. And the expectation was well, that will turn into a significant positive in the Third Quarter. That hasnt really materialized. So when we look at todays number, sure the headline growth number will look better in q3 as it does in q2. T is that the absence of the inventory drag . David is it a timing issue or real growth . How much of it is Consumer Spending, particularly the amazon numbers . And amazon is warning its not going to be as good. How much of that can read through . The Consumer Spending numbers are absolutely critical to g. D. P. They were the dominant Growth Engine in q2. Consumer spending has been the dominant driver. Talking about amazon and the holiday spending, itll be a decent Holiday Season in 2017. Because in 2016, the income numbers just havent turned the quarter yet and thats the other data were watching this morning is the employment cost index. Were close to full moment but were not getting the wage pressures just yet and those wage pressures are going to be what really buoy consumers. Jonathan you sound like the fefment always promising something. [laughter] its a good forecast and the right timing for that forecast. Alix final sale demand. What number do we need see in order to continue to see it taking up . So you need to see not so much final you can look at final sales or the headline number but you need to see g. D. P. Growth thats turning back towards the 2 growth rate. You get the 2. 6 that the consensus is looking for, that yearon year trend which is more important to the fed which is about 1. 3 right now should stabilize. And then start to edge higher over the course of the Fourth Quarter if we get 2. 6 now for the Fourth Quarter, then well be right on target for the feds full year growth forecast of 1. 8 . Jonathan thank you, carl. Were about 86 minutes away from the g. D. P. The backdrop of the market is a global bond routes. Treasury yields heading high. Burns heading for the worst months. Things have stabilized but whats the message. Joining us is a street gist. What is the message for you . The message for us is were going a significant change in terms of inflation or expectations in the world. Were not saying that were moving to some kind of extremely adverse inflation but were normalizing. So were moving away from this expectations of very high deflationary risk and low g. D. P. Growth. We still have a long way to grow. Weve steepened about 20 , 30 of the move of the past year. So its only the beginning of the process but i think it tells you something about it. A little more optimism about the Global Economy. Jonathan were talking about sixmonth ranges. If you go to 40,000 feet and you take the 30year approach, president draghi spoke about this. He note that the whole bonds market is south of 1 . And he noted that he doesnt think its central bank policy. Its normal yields. And then real yields crushed by demographics. And we can have a look at the demographic story and how much populations have aged. If you look at the percentage, its above 65. Were talking 27 . All the other major country, germany, u. S. , china, its all going in the same direction. Thats the savings club. The structural story is not going to change any time soon, is it . It is quite powerful and it has been with us for a while. Policymakers have certainly noted demographic issues, issues with excess savings, issues with policy, issues with low productivity growth. We know all of this. The question is have we pushed the story too far and its a reason for more optimism and thats why the markets are leaning right now. Alix but not all yield curves with created equal, at the end of the day, right . Certain ones are higher and certain ones arent. Can you explain why . This is a g10 move. Its pretty good base. Were seeing it in u. K. Yields. The story is different. Were seeing it in treasuries. Were seeing it less in j. G. B. s. Its the bank of japan is targeting 0 yield. Theres a certain amount of anchoring in japan. And if you think about bank of japan, theyre the essential bank thats furthest away from hitting the inflation target. Were not going to get to 2 inflation at japan any time soon. This relative rise in yield curve is making a complicated story in terms of the effects market. But we think the yen is the one thats going to lag. Jonathan youre looking at dollaryen and at the yen hedge cost, theyre coming into the United States and buying treasuries. Talk me through. This is a good picture of whats happened to the dollaryen. So what we showed here us the 10year yield adjusted for hedging cost by a japanese investor. So a japanese investor would buy a treasury and yield it in the forward market to avoid currency risk. So basically as the yield curve flattens, this return in a 10yield becomes less and less attractive. And its picked up nicely this turnaround point earlier this year when the yield curve started to steepen and the yields have become more attractive for japan. And the steeper u. S. Yield curve is something thats driving dollaryen higher. Its theres been a big debate over that and we said its about the 10year yield. Its about whether the yield goes to 2 or 1 . And it looks like the 2 view is prevailing at the moment. David pull back to me from the larger picture. How much of the steepening yield curve is because expectations of inflation which might be a good indication that Global Economy is growing as opposed to being tcherned Central Banks are just taking their foot off the accelerate. Its a little of both, youre right. When we look at the u. S. Story, you have headline inflation and current inflation. Its not dramatically below the feds 2 target. You have other places such as in europe where inflation is well below that, but were getting a sense that the Central Banks are running out of assets to buy. And thats causing a steepening of the yield curve. So the story is looking different but it looks consistent across the g10. Alix have a lily, great to have you. Thank you. Lets get an update on whats making headlines outside of the world. Emma chandra is here. Emma safety investigators will determine whew the plane carrying republican Vice President ial candidate mike pence skidded off the runway at new yorks la guardia airport. The plane tore up concrete before landing on the grass. Hillary clinton enters the final day with a huge cash advantage. According to government filings, the democratic candidate had 153 million as of october 19. Donald trump has 68 million in hand. Trump has repeatedly pledged he would spend 100 million or more of his own money in the election. So far, hes spent a little more than half of that. And a judge has rejected two challenges to the Brexit Process that released one obstacle to the prime ministers plan to start cutting ties with the European Union by the end of march of next year. He said it was beyond the power of the court to interfere in the process. Global news 24 hours a day, powered by more than 2,600 analysts in more than 120 countries. Im emma chandra. This is bloomberg. Alix equity futures grinding higher but the name to focus on is amazon. The story was the profit badly missed estimates and operating in margins for the Fourth Quarter could just be break even. The companys increasing a lot of white house buildout and video content and weighing on its operating margins. But Amazon Web Services was up 55 . The other big tech name that came out after the closing bell was google beat on earnings, beat on revenues. The two big numbers we always like to watch here. Fell 11 but they made that up in terms of volume. The number of paid clicks rose 33 . This is the Second Straight Quarter with 20 revenue increases. An unbelievable number when you consider the huge market side that alphabet is. And also rounding out the earning story is a. B. Inbenefit. That stock is up by 4 . It missed some sales in brazil. It is the second biggest market even before the price increases came this quarter. David who of the biggest names in tech have two different quarters. Amazon spooks investors but its a beat for google, parent alf benefit. We take a closer look at the numbers. Thats next. This is bloomberg. Alix amazon getting hit in premarket. Down over 4 on an earnings miss. Worried investors wasnt the profit margin. Operating margin would be a break even in the Fourth Quarter. At part, the issues expectations are just really high. Take a look at this chart. This is operating income at the street expects from amazon in 2017, its supposed to double. And in 2018. Its supposed to double again. Bezos made no mystery of the fact that he wants to spend to get customers but investors on the street seem to have a very different opinion. That 1. 8 operating margin for the Third Quarter. The best one for the Third Quarter since 2010. But that didnt seem to matter. The other positive part of amazons quarter, i mentioned earlier is Amazon Web Services. Its their Cloud Division. Revenue was up 55 and operating margin there was over 30 . In fact, operating margin rose in that Cloud Business even though it had competition from microsoft as well as from google. Not necessarily hurting its revenue or its margin but for some reason, investors not willing to refleck that on stock today. Besos sat design with charlie rose talk about his strategy. The thing that connects everything that amazon does is the number one our number one conviction and idea and philosophy and principle which is Customer Obsession as opposed to competitor obsession. We want to satisfy what we perceive to be future customer needs. Alix so do investors need to rerate their inspections on bezoss customer expectation . The securities managing director and analysts joins us now from california. Hes an analyst on the company with a 920price target. Neil, basically, amazon was very clear about their margins. What did investors not get about that . I think the big concern that investors have is amazon really moving into a deep investment cycle like we saw over the past few years, where margins really compressed and was over a very long period of time. And it doesnt seep like thats necessarily the case. And in this instance, amazon is making some very targeting investments to drive outsides Revenue Growth and more importantly, to drive outsides margin growth. Theyre investing in Fulfillment Centers and meeting the third parties. Very high margin business for them. Theyre investing in india. Big Growth Opportunity down the road for amazon. And theyre contenting in content. Content will really drive prime subscribers and based on our survey work, prime subscribers typically shop loot more on amazon and those are the really high valued loyal customers that amazon wants. Jonathan this is a rare Public Company where the crow doesnt check the stocks and wouldnt care. They added 40,000 positions in the Third Quarter. Theyre investing a ton of money in white houses. Warehouses. So when people speak to you about how to f. C. C. Where the stock price is going, what do you tell them . How do you model your forecast around amazon when you cant really gauge what theyre going to do at the bottom line at any given time . Yeah, its a good question. You know, what we do is we try and take a bottomsup approach. We try and think about how the different regions are going to grow, how the different segments are going to grow and we build our model that way. You know, for instance, at least for the next quarter, were looking for operating margins to come in close to about 1 , you know. And thats going to be down sequentially. But we do see a path for operating margins to improve. Gross margins have been tick up for the past several quarters. You know, in Third Quarter, it was the smallest growth margin weve seen in faux years. But as they start to build out the network and spread out the costs over time, well see that gross margin expand again. So amazon has their stock has done very well when their stock has gone to the early part of their investment cycle. Again, this may be spooked invest arrest little bit but i dont think this is going to be a prolonged five, sixyear cycle. David Performance Centers are one thing. Its related to their core business. Its selling things and delivering things. Content is a different matter. Thats not been historically something that amazon is known about. People put a lot of money into that. Are you concerned at all that theyre getting beyond their core confidence . No. If you asked me this question three years ago, i would have been concerned. But theyve taken a very methodical approach in investing in the prime video and has been the key driver for prime users to sign up for prime. You know what, theyve done is theyve taken, you know, a simple approach of just getting syndicated content and building kind of an early netflix type service. And now theyre really going deep after the original content and weve seen success. Theyve won emmys on the original content side. Theyre now moving into movies. And i think the more they push into that, they will get more prime more members signing up for prime here in the u. S. As well as in the International Markets too. For example, prime in japan david ok. Costs about 35 a year versus prime in the u. S. Which is 100. Alix neil, thank you so much for joining us. Coming up, the banking bonanza continues. A slew of european banks topping estimates helped by their debts. We will break down those numbers next. This is bloomberg. Jonathan from new york, this isdaydale. Im Jonathan Ferro. A big week for Bank Earnings in europe including u. B. S. Which reported a drop in wealth. However, c. E. O. Pledged to continue cost cutting. On the cost side, i think we ave a very comprehensive and quite ambitious Cost Reduction target with a 2. 1 in net cost which doesnt include any reduction of cost or benefits from exiting businesses or any reduction of cost you to available compensation by financial performance. The story begin in 2012. They decide to pivot away from the debt trading business and go towards Wealth Management in a big way. This quarter, that doesnt look great. But over the horizon, is that still the strategy from here . Absolutely. I think with u. B. S. , weve seen he volley in the volley volatility from the fixed income business. Where Wealth Management is u. B. S. s strong suit it and makes sense to focus on that business. The challenge for u. B. S. Is trying to reverse the steady decline in Gross Margins in that unit. The bank has been quite good in cutting costs just recently. That was a big positive this quarter. So Wealth Management absolutely remains a key focus for the u. B. S. David how do you cut cost to the degree that Sergio Ermotti wants to cut them . Cutting into the relationships that drive that wealth managing business . Its difficult. I think one of the things obviously, thats head count but also i think just being smart in terms of improving the technology, cutting or outsourcing costs. All of these things have a big part to play in producing costs. Jonathan thank you, arjun. There was a bright spot but the net new money that came into u. B. S. From asia. Most of it coming from asia. Bernstein said it might be a read across the Credit Suisse. They are trying to do the same thing with the Wealth Management side of the business. They report next week. Maybe thats a story to look out for. Lix the net inflows into asia pacific working on both levels. How do you fix that . Cost cutting isnt going to do it at the end of the day. We have the ultra High Net Worth individuals. Their margins are less. If they pull back, how do you fix it . David that is the relationship business. That is the person who is managing their money and that is longterm relationship you have to watch for. Jonathan the last quarter did not want to trade. Alix yeah. Jonathan profit was a little bit low. We will continue to cover the bank. German heading for their worst month since 2014. We go to blackrock and a postal manager for high yields bonds. Thats next. From new york, this is bloomberg. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert