tv Bloomberg Daybreak Americas Bloomberg October 29, 2019 7:00am-9:00am EDT
no one likes negative rates. phil he's let. elites descendents out arabia for a three-day investment summit. ray dalio warns of a scary situation. s&p record rally takes a break. -- haslett. equities pause after notching this is bloomberg. ♪ erg. ♪ another record while momentum flags. old-school tech leads the way. pfizer and merck raise estimates with a slew of earnings on deck. we speak to the ceo of autonation and general motors' cfo later in the program. welcome to "bloomberg daybreak" on this tuesday, october 29. i'm alix steel. where do we go from here? we are taking a little bit of a pause. is it value or growth that will lead the way? euro-dollar a little bit on the back foot. the cable rate is definitely one to watch. exchange,or global where we bring you today's market moving news from all
around the world, from riyadh to london to new york and washington. bloomberg voices are on the ground with all of the mornings top stories. we want to start with breaking news out of london, where the labour party says it will support a general election. boris johnson will try for the fourth time to secure election. joining us now is emma chandra from london. what just happened? what is the lineup today? emma: we are seeing the pound off aftergher, paring spiking higher today. saying they will now back in early general election, saying that conditions that a new deal brexit be off the table have been met. --s is key because ivan the because even though the prime minister is asking for a general election again today, one that requires a smaller majority than
yesterday, hed still needs some opposition support for that bill to pass. we understand there will be a vote on that later today. it would set the date of a new general election. the government saying that would be to summer 12th, but there are negotiations with opposition 12,ies -- would be december but there are negotiations with opposition parties for that to be possibly the 11th. the date is very important because they want to ensure that the prime minister can't force through that brexit deal before a general election and then be able to campaign on having delivered brexit. liketheless, it does look viviana: this is "bloomberg daybreak." we are almost with 100% coming up later, the general motors c.f.o. certainty heading toward a general election after hearing that the labour party will back the prime minister's call for an early election. alix: seems like they are looking at anywhere between alix: time now for bottom line. december 9 and 12. we're looking at one company and that's beyond meat.
in london, bp delivered a profit you've got analysts that lowered beat despite lower oil prices. their on price target sending bloomberg spoke to the cfo. shares down. >> if you look at where the oil joining us is phil maloney. markets are, we arrange bound >> we're down around 20% here in between $55 to $65 a barrel. the premarket. there are clearly still the stock hit 2:40 back in july. u.s.-china tensions in terms of where the direction of the oil it's been a gap down in the price may go from here. open. it's probably going to close it is pretty stable at the this june gap which is another moment, but the team has been negative sign. it's around 85, back to may and making some pretty good calls around the structure of the market. alix: annmarie hordern joins us then 77 takes you back to may. from london. and if both those levels fail, it wasn't so good news on the call after he said dividend 73 was the high on the first day of trade. increase was unlikely this year. first level, 85. alix: the longer trend here. how big a surprise with this to wall street? annmarie: those oil prices he's mentioning there, staying this >> if we do bounce -- if we do range, is really hold the 85 level, 76.4 takes dragging down all of the super you to 91. that's your first resistance majors. level and then look at 100. a big blow for bp, because >> again. it will be really interesting trade for beyond meat. thank you, bill maloney.
they said last year they would stay firm. so we're going to take a look beat,id come in with a deeper into the loss op after but there is a big but. bp was really managing earning. phil haslett joins us. expectations. they took an unusual step a few weeks ago to flag some factors he has worked with half of all werewere impact -- that the unicorns, typically when going to impact third-quarter results. lock-ups happen and what happens really, what was the standout with stocks. phil: sure. for the results this year was this is going to be the first time for a lot of employees, going to be the refinery early investors and founders to business. sell their shares in the market. they said this was the record so this has been the six-month amount of profits, crude and anniversary of a lot of people u.s. refineries. on top of that was inside bps watching this stock go up, down, left, right. so we would expect a little oil and gas trading business. downward pressure in the stock. but a lot of that may already be priced in. these were able to make beyond meat is one of the most heavily shorted stocks in the really good calls up against a volatile market. entire stock exchange. alix: thank you very much. so we may see most of this over to saudi arabia, where downward trend is relate to the global finance chiefs are the earnings numbers instead of gathered. the lock-up. central bank policy is on the agenda come up with some wall street elite already warning of an economic downturn. ray dalio front and center with that. i think the fear was everybody
joining us from riyadh is was going to share theirs bloomberg equities reporter fully pay a chuckle -- reporter shares. at 85, is there more incentive for employees to sit tight and hope that beyond meat rebounds? phil: we had some optimistic numbers that came out from the -- is our bloomberg quarterly report yesterday. they are starting to turn a profit. this is a different story than ke a wework our an uber or a reporter. reporter: we have big nones from lyft. blackstone, -- big names from they're showing a little bit of wall street, and there's a lot stability. however, beyond meat has a lot of competters from some really of conversation and excitement well financed larger meat about aramco and the ipo in the companies and they're probably keeping an eye on that too. alix: so the story is that pipeline. a lot of people want to know more. because wework i.p.o. didn't we have more details that it happen because of uber and etc., would actually happen before the end of this year here in the saudi stock exchange. does this change the exchange the numbers for the company forever? profit stays at very high level, and then you have the beyond just the same way we saw earlier meat like the fundamentals are this year when they started to pretty good. how do you see isn't it phil: sure. it's great to see beyond meat release their numbers with their moving towards profitability, bond sales. not just growing at all costs. i think right now, we see a lot that was the wake-up costs.
of people on the ground asking more and trying to learn more when you talk about 2019 during about how this deal could affect the year of the i.p.o., only a handful of companies have really the market here in saudi arabia and the middle east as a whole, had this type of market success like beyond meat has and you have zoom or beyond meat but not and how to learn more about the 100% or 200% regret. region after the steel heavens. -- after this deal happens. maybe some of these employees alix: thank you very much. that have only seen markets go one way since beyond meat got investors are watching surprise started are finally starting to earnings from google. see maybe having 90% of my net the culprit was heavy investment worth all on one stock may not into other businesses, like cloud computing. capex is up 27%. be such a good idea. >> how do you judge how long joining me in new york is paul sweeney. these companies stay private and walk us through some of the go public? highlights in the surprise for i was looking at beyond meat funding rounds and i was wall street. surprised. they were actually founded before wework. they have about the same number paul: revenue was generally in of funding rounds, eight or line with where investors were thinking. nine. and wework had one more. the story was investment spending primarily on the cloud so they were the same boat but computing business. in terms on the length of time. this is a story we have seen t was basically to the same. some other big tech companies, microsoft and ibm, that are phil: beyond meat didn't start playing in the cloud computing business. generating revenue until four or
google is a player there. it is the number three player, five years in. so it needs to catch up. so this company took a little that is why we are seeing big bit of time to cement itself as spending in the cloud for google. management on the conference a company whereas wework was able to show those numbers call said expect even more earlier on. and so i think that might be spending on cloud going forward because they believe it can playing a role here. generate a very strong return on some of these employees have investment. been with this company for nine, the core advertising search business, that remains very 10, 11 years. strong. unless they sold shares, they've been watching this period for revenue was up 17% in the the last six months. quarter, driven primarily by mobile search. it's probably gotten them the youtube business also very nervous. it's been probably the biggest strong, called out by management roller coaster of the unicorns ost i.p.o. as a continued growth driver. lots of good stories there. continued vestment. alix: do we need take an stocks trading off a little bit interest with the stocks as premarket, but overall, the genuine or hold off and wait and stock hit an all-time high see? yesterday, so investors feel at phil: yeah. so i think if i'm an employee, i this company remains on the right track. the fund metals are there. was probably hoping that things would be steady when i woke up long-term -- the fundamentals are there. long-term, the bulls still think this morning. now that things have dropped 20%, maybe i'm getting more they have a good story was google. alix: in washington, boeing ceo nervous. you might see some knee-jerk dennis muilenburg prepares for reaction from shareholders. testimony before u.s. lawmakers,
a lot of folks that are going to set to admit that the playmaker may design mistakes on the be free trade, a lot of them are grounded 737 max. joining me from capitol hill is in the hands of folks that kevin cirilli. aren't institutional long term the fireworks are going to start. what are we going to see? short in just a few holders. this is maybe one of the biggest financial transactions they make their entire life. sometimes emotions get the best hours, boeing ceo dennis muilenburg is set to kick off two days of testimony here in of you. the senate, and tomorrow in the >> once you put all these shares out there, that attracts the house of representatives, where he will face tough questions shorts but with the institutional side having the opportunity to get in here, does about what precisely boeing new this become more of a long trade based on that alone? regarding its 77 max airlines. phil: yeah, you could see it go it is the one year anniversary either way. the borrow rates to short stock following the first of two of beyond meat was like 141% crashes in a five-month period which is absolutely insane. of the 737 max that impacted not we talk about tesla being a heavily short stock. just markets, but of course, hundreds of individuals. so what i think -- what will fortunately happen is when these the victims of those crashes, shares become freely tradeable show up, the cost of borrow will some of which will be in the hearing room, are set to meet go down significantly. with dennis muilenburg after the hearing. i don't really know which way it he is going to strike a remorseful tone, or according to will shake out. maybe they don't have to pay 12 a portion of his sho% to borrow shares. you might see some increased prepared testimony that was
pressure but i would point back released yesterday afternoon. to the numbers. some of the revenue and the income beat were decent here. so, you know, it's going to be a "when the 77 max returns to tough one. service, it will be one of the alix: and part of that going safest airplanes ever supplied. from restaurant to retail stores we know we got something's wrong. , right? we own that, and we are fixing them." phil: that's right. they're showing success in both the chairman of the senate patterns. commerce committee, roger wicker the c.e.o. has talked multiple times about the pilot that , a republican from mississippi, has said that lawmakers and regulators will not allow the they're doing with with planes to get back in the air mcdonald's and canada. until they are 100% certain that they are safe. and so we'll see what happens there. i'm excited. meanwhile, expect some tough questions from democrats, i think impossible and beyond especially tomorrow. are available now in stores in according to some of the previews we've been hearing from new york. >> i am curious about that. obviously, beyond meat has done other public a great job with regards to the partnership. but also just the positioning comments, they are not looking to question going, but also wall they have in grocery stores street investors. they are trying to portray this putting themselves in the meat is a situation where perhaps case instead of the grocery food there were some overly eager investors pressing for boeing to aisle. i still go into the grocery boost their capabilities of these planes before they were store, there's still pretty much ready. beyond meat and maybe a couple on boeing's portion, expect of other brands.
you still don't see impossible boeing to say that they have there or other potential made improvements to the markets. mechanics, as well as to the phil: yeah, it's not as computer software systems of the ubiquitous and any of these plane, and that they are working alternative meat companies will tell you competing for eyeballs with regulators domestically and in these grocery stores is a abroad. the final point i would make, it really difficult thing. it makes a lot of sense how some is not just lawmakers who are of them are partnering with asking tough questions of dennis restaurants first and go down muilenburg. it's also the department of into the supermarkets. justice who has that criminal kind of taking the tesla probe into boeing. alix: kevin cirilli, thank you approach where you're sell the very much. burgers for folks that can pay you can stay with bloomberg this morning. we are going to ring you boeing up and then you can go to the ceo dennis muilenburg's testimony before the senate commerce committee at 10:00 a.m. grocery stores. >> that's where i had my first eastern time. fake meat burger. alix: really? i haven't yet. the wildfires in california have gotten worse, and blackouts will i'm scared. continue as well. >> it's not bad. pg&e will cut the lights out alix: what are people talking about most in your world right today to as many as 1.8 million now people, the latest in a series phil: there's a lot of interest in the alternative meat space. of unprecedented power cutoffs it's been a wake-up call for aimed at preventing fires. shareholders in the private market saying as an employee of the biggest of the fires in northern california has now one of these companies, maybe destroyed almost 100 buildings. pg&e has taken extreme liquidity is not a bad idea to
take some chips off the table. wework was that canary in the measures to prevent fires after it was blamed for blazes in 2017 coal mine that maybe i'm a and 2018 that left the company 32-year-old engineer, things can with $30 billion in liabilities go down as well. that's been a helpful reminder and forced into bankruptcy. for folks but still seeing heavy coming up, much more on your morning trade and analysis in interests, mostly cyber security today's first take. this is bloomberg. enterprise as well. alix: phil, thank you for your ♪ time. coming up on "bloomberg daybreak," you're heading out, tune into bloomberg radio. heard across the u.s. and sirius xm on the bloomberg business app. this is bloomberg. this is bloomberg.
alix: time for the bloomberg first take. we are going to give you the you get the trade and analysis alix: general motors announces the last quarter owner, earnings of the markets. here with me, gina martin adams, well above estimates. vincent cignarella, and also david weston is standing by with with us is bloomberg's alex the c.f.o. of general motors. harris. let's kick it off. >> thank you. the story yesterday, you've got so there are two stories. one is what happened with the high yield.
what's going on in the curve? strike, which is now over and the underlying business. you've got record high equities. what do traders care about? how do you separate out those vincent: not brexit. two both with respect to the [laughter] third quarter and for the year? alix: the one time we don't lead >> yeah, david, i would say third quarter was a very strong with brexit. quarter. vincent: the interesting thing i the underlying business was very straightaway, the strong. and obviously, the strike had a significant impact. emerging-market story is looking it was 52 cents for the quarter and $2 in e.p.s. for the year terrible this morning. alix: meaning the trades we saw but separating that out and yesterday reversed early in the looking at the underlying morning. vincent: yes. the government announced what performance, we remain strong. >> as you say, it would have they were going to do with been even better but for the strike. what accounted for the success of the earnings in the third --. quarter? was it product mix? was it the trucks or the s.u.v. the dollar staying bid, more or crossovers? less, in the space. >> i think it was all of those. and we are in the midst for full gold is off sharply. size truck launch and light it looks like a risk off event. duties have already been that's not really ng markets acr launched and the heavy duties were in the process of launching. and if you look at the performance since the beginning of the year, we're up eight space, temporarily until we see a clear look of what em is going points from the market share
standpoint and we've done that to do, what the fed is going to with insulin with record high do, and essentially, what transaction prices as well. and all of that is certainly congress is going to do with the president thursday. alix: gina, how do you look at helping the earnings powers, and it? gina: i think it is still the crossovers are doing very well. earnings are the biggest driver and g.m. financial is noteworthy of the s&p 500. as well where we're growing that i think today is about health business and it's been care come with pfizer earnings coming out. continuing to contribute to the possibility of the company. health care has been a really >> you referred to north interesting space because a lot of us have focused on the value trade. value starting to take over. america. let's talk about china. g.m. has been pretty strong in youth think of the leadership in the value trade -- you think of china. how much of that was the marketplace overall and how much the leadership in the value was it specific to g.m. and what trade, biotech is one of the is it going to take to turn that biggest leaders in that trade. i think you also want to look at around? >> china remains a volatile followthrough throughout health care. business. i would say that the impact has when with think about rotation been felt in the industry in the equity market, with about revisions a lot. volumes and pricing pressure. health care and materials have and within that backdrop, we saw produced the best, most positive revisions over the last few months. this is pretty key to a from our new launches in q-3 and continuation of this recent continuing into q-4, some trend rally, a continuation of recent from a mixed standpoint. leadership. and cadillac is doing well in later in the week you get back china as well. we're up 11% year-over-year and to more communications. stocks certainly, everyone is
we've also been running the very nervous about whether the business with a lot of cost fed can keep this going. discipline. so the environment as you point a big part of this is the fed out is volatile but within that, and interest rates that have we're controlling the weekend. been lowered, but the yield that >> let's talk about the strike has been restatement -- that now and what it does for general have been re-steepened. motors. both this year and you had to alex: that is the big question. take your guidance down some. what can jerome powell say to how much do you really believe that you're going to have keep this going? headwinds because this year, you had ray dalio over the weekend saying that they can't because of the strike results? keep doing this. >> from a guidance standpoint, that is what markets will be looking for when they hear we rolled out the guidance in jerome powell speak tomorrow. january and if you look at the revised guidance that we're what can they say to either ensure that they can keep the sharing as to, it is consistent expansion going here and whether that excluding the impact of the strike. or not they can curb any global so we had a commitment to deliver $6.50 to $7 in january headwinds hitting them. vincent: i don't think the and we're adjusting that for $2 worth of strike impact. market is going to get what they are looking for because the fed and as we go forward as we in their deliberations has to talked about earlier, what's look at the trade situation and say, looks like we can put that going to be relevant is the on the back burner. underlying trend in the earnings that's not really a major issue part of the business and that's what we're focusing on as we anymore. move forward. >> it depends on two things. one of them is cost and margins it is not solved, but it is no
and the settlement doesn't longer a friction. so the fed goes back to where they were before. appear to help on that but the it is data dependent. other is flexibility and production. how did that trade-off work for general motors in the end? see a little pullback in gdp this week. >> yeah, as we went into this we are not seeing the wheels process, our focus was on fall off. getting an agreement that may the fed will not be as overly send workers as well as the accommodative as the fed wants business. and we think this accomplishes that from a worker's standpoint. -- as the president wants. they share in the success of the company and from a company language is going to be so important. standpoint, we retain our flexibility. we have improved our capacity cycle --this temporary utilization and our plan is to is it that we were done with this temporary cycle? continue to offset the increased i don't know they will come out cost with productivity in the indirectly say it is over, but normal efficiencies that we would drive in the business every day. he could say we are coming to the end of it and we are more so we would characterize this as data dependent. having accomplished the either way, it is going to be an business. >> you have a long-term unusual statement, but it could sound bearish to the market. strategic plan. how does this strike affect that alex: the timing is really tough and from what you've just said, it's a break-even. because the fed has to come out that is to say you'll make up an ring the middle of the week -- increased cost by increased gina: the timing is really tough
productivity or does it put because the fed has to come out general motors ahead of what it during the middle of the week. was before it into negotiations? if they say it is a midcycle adjustment and it is all over, >> we are executing our plans in terms of strengthening the core and in the ism friday falls off business and making sure that we a cliff, you've got a lot of are driving an appropriate rate volatility that could emerge from the macro picture. of return in every business that unfortunately, the fed can't delay their meeting a week. we participate in and that's what we're doing today and this i think everyone wish they could is not going to change that. so they have that extra data. we're aware of the fact that alex: i think the other issue this is cyclical business. so we do our downturn planning here is that everyone is waiting for the fed to set the table, not just on what is going to and the focus that we have today and going forward is to maintain allow them to cut rates further, if they are going to cut rates, all of that and execute our plans. >> and you need that flexibility but also the liquidity they are in part because downturns. you're also going to need it because you're going through a injecting into the repo market and the funding market. people still say year end is major transformation into electric vehicles, for example. going to be a problem because you have banks pulling back for does this agreement allow the flexibility you need to make regulatory reasons. i think the market wants to know more. electric vehicles which requires is there something more far fewer workers potentially permanent the fed can be doing? than the traditional internal are we going to get more vehicles? >> we are very excited about the conversation about a standing repo facility or not? future of electric. we know at least from the financing estimates from the we believe in an all-electric treasury, they are working with future and the investments that
the simpson that the fed is we have announced recently are a buying $60 billion a month in treasury bills, at least for testament to that between our part of the second quarter. orient plant and our detroit alix: it is a good point. plant where we talked about our ,e get a refunding announcement batter electric trucks and all of this goes towards ensuring we're put the building blocks in and everyone says it is not qe. place to win in the future of i get that come about at some point there is a path through electrification and this agreement will continue to allow the fed having to expand their us to do that. balance sheet that is going to >> so specifically, this will give you enough flexibility if influence the short end. is goingy the treasury you need to make adjustments for the different sort of modalities to issue more on the short end. with respect to electric cars that is an influence. alex: you hope. over the next four years? that is the other thing, whether >> this agreement maintains our we see this so-called portfolio flexibility to adjust the balance channel through the front end. workforce based on what's needed foreign central banks like from an industry standpoint and treasury bills in terms of their what's the realities of business, yes. reserves. >> i know it's come up a lot, i the problem is, where are you going to see that believe they're called movement/whereare they going to go transplants. temporary workers that come in. -- that movement? general motors has been a disadvantage to other automakers where are they going to go? in the united states. did that get rectified in this if that money is not in treasury deal? >> i would say overall, we have bills, it goes on to the fed balance sheet through their own maintained our competitiveness and i look it through the lens reverse repo facility. that drains reserves, so it has from a flexibility standpoint, from a capacity utilization an offsetting effect of what the
fed is trying to do and makes it more complicated. standpoint and from the standpoint of offsetting the vincent: i think this is why you economics to productivity and are seeing steepening of the yield curve. the fed is stepping into the efficiency. short end, where they belong in this allows us to get back to the first place. our business plan and execute they should be shifting into the the plan that we have laid out and that's what we're going to belly of the curve, getting back focus on. to where they can manage rates >> always great to talk to you. more easily, away from this thank you for the time. >> thanks for having me. danger zone of why qe started in >> alix? the first place. alix: thank you very much, david. that wraps up for "bloomberg that heard from yellen daybreak: americas." coming up on "the open" with this is going to be like watching paint dry when we step out of the balance sheet. john farrow, a c.i.o. will be it's hardly been paint drying. joining. we've mentioned it many times, we're not there's going to be an issue. the fed is facing that issue. they have to find a way out of it gently. we're not really seeing that it is some sort of a reverse follow through. you're seeing steady futures twist to get out of the belly of here. no doubt beyond meat going to be weighing on the equity market the curve into the short end and down over 20%. in other asset classes, paying provide that in the year end attention to what's happening with the cable rates. market, the liquidity when they need it. alix: in your world, think a december 12 for an election. conversation becomes, you have the labor party backing the election throwing out there by higher yield, so does that mean hedge funds know things we don't boris johnson. if you wind up having to vote know? gina: i think it's fine. for brexit after the elections. you can key up with that,
congratulations. 1.28 on the cable rate is where did bigger picture for the e stand. equity market is you are coming from an anomalous experience of quantitative tightening, which is a credibly -- which is toredibly abnormal in trying revert to some normalized and oil taking another leg balance sheet operation. there's going to be some lower. watch that for lack of friction, but if anything, we confirmation of the equity probably underestimate the rally. this is bloomberg. impact that quantitative ♪ ♪ tightening had on broader liquidity in the markets in general, and now a reversion to some sort of normal is probably a net positive. you are seeing it reflected in all of the interest rate sensitive sectors, the impact of a fed returning to normal balance sheet extension, which is what has happened for 50 years. the balance sheet simply expands at a slow and average pace. that is probably healthy, at the same time the short rates are coming lower. there are material impacts. you can't deny that the housing market data has been much better alix: the countdown to "the as a result of lower interest open" starts right now. rates. ♪ the rate sensitive sectors start to rally. alix: coming up, stocks hitting
you seen that across-the-board, all-time highs as investments so you've got to respect what the market is telling you. it is telling you this is a debate the worse is behind us. reversion to normal, and should fed's two-day meeting is tarting. create slight elevation in activity for rate sensitive groups. alix: very mellow here on set. night buying into the -- not buying into the hype. with 30 minutes until the opening bell this morning, good morning, good morning. here is your tuesday morning thank you for joining me. price action with futures lower. down by two points on the s&p a reminder, you can find of the 500. negative a 10th of 1%. charts we are going to use over bond market treasury yields the next two hours on gtv on your terminal. coming in at 1.83. as we had to break, here's some and muted earnings trickling out in the morning. it was really about merck and pfizer, beating and raising estimates. conoco also delivering solid numbers. this is bloomberg. ♪
into value encyclicals. with us -- value and cyclicals. with us is jeff kleintop of charles schwab. guest: i think what you want to buy in this market are what got us to all-time highs, value stocks. classic value sectors like financials, you may be underweight them in your portfolios, but growth stocks couldn't help but get there after 18 months, so these are stocks with lower valuations, but improving moment in. what we've noticed in back on the last 50 years is after yield curve inversions, we get a status take place. alix: but why now versus any other time in the last 10 years? one, i think growth stocks are a little tired. if you look at some of the sectors and the earnings
expectations, they are quite high. whenever we go through a yield , wherenversion expectations are lowest, they bit.up a little that is the classic case we are seeing right now with some of the underperformance by the tech high flyers and some of these classic value names come back into play. alix: jeff kleintop of charles schwab, you are going to be sticking with me. says that ubs wealth chaos in em could be a buying opportunity. mark haefele, ubs wealth management level cio, will be joining us. happy tuesday morning, everybody. this is bloomberg. ♪
highs in the s&p yesterday, led by visa, microsoft, the old-school companies. taking a little bit of a break here. -- down byby 0.2% 0.2%. it looks like we will have another election coming sometime in december, but you won't have a brexit deal pushed forward in parliament until that election. you can see the effect in the currency market. the dollar gaining steam in the g10 space. the curve here 19 basis points. the bond selloff yesterday continuing in asia, but now taking a break in europe and the u.s.. ubs wealth management has a plan for investing in chaotic latin american companies. a strategist from the bank noting that populist movements can be a boon for money managers, writing, "while investors need to monitor developments, we continue to see opportunities for investors in emerging-market assets in nations that strive to reform to address economic and social pressures."
go to me on the phone is the person who made that call, mark haefele, ubs wealth management global cio. the note came last week in the middle of chile, before the argentinian elections. where do you like in latin america? mark: well, i think there is an opportunity even for global investors to look at the u.s. dollar denominated emerging-market sovereign bonds. there's an index that is very the dollar, and denominated portion of this sovereign debt tends to be a very small portion of the overall debt that these countries ld. so it's got a yield of a little over 5% right now, and that is the diversified way that people can take advantage of higher yields in a region that is suffering some turmoil. alix: we are looking at the chart right now that shows those yields. is it only going to be this kind
of debt? what about em fx or em equities? mark: i think there are other opportunities to take advantage of the higher yield in the emerging-market, but we would look towards the indonesian rupiah and the indian rupee. alix: where specifically do you see the opportunity? does it need to be broad-based to offset the idiosyncratic turmoil? mark: i think we would prefer to play it more broad-based, sibley because many of the political things that are going on are very hard to predict. for example, what happened in chile was something that few people would have seen ahead of time because chile is doing very well. alix: when you have those idiosyncratic risks like chile, which surprised many investors because they have a more stable economy in latin america, you
have the argentinian elections, which was really priced in from the primaries. dips? buy those mark: the overall situation is causing the yield on things like this index to be higher than normal in a world where there are very few yields to be had. i think the most important message for investors in the even globalat investors are looking for ways to get access to the growth rates in the yields that they see. alix: do you need to have a call on a weaker dollar for this to continue to pay off? mark: absolutely not because it is dollar-denominated. dollar that a weaker would help a lot of the economies, and maybe it would earnings start
to see more growth. but that is the one thing i think about playing this, that it is not necessarily reliant on that. alix: is this also a broader conversation of rotating into value out of growth? many say that em is undervalued because of all of the idiosyncratic risk. is there a broader take away from the market? jeffrey: --mark: we are not ready to make that call yet. over the longer-term come of the valuations on things like em equities do look attractive, and asset allocators will have to over time. however, right now we think that the earnings expectations in much of the emerging markets is overvalued. alix: staying with value and a , because em is trading -- because it is trading now, what currency
is your brexit call right now? how are you positioned? mark: i think the most important brexits that a no deal looks like it is off the table, and we have been expressing that in some portfolios as overweight inthe pound, or as unhedged u.k. equities, which have a decent dividend yield. in?: is that now baked is that calibrated in the market? mark: it is certainly not as attractive as it was in the depths of despair over the we think the pound is very overvalued relative to its purchasing power parity. we think it could move higher as
some of this real uncertainty that exists around the political future gets resolved. alix: before i let you go, your favorite trade right now. what is it? mark: well, i think it is looking for yield, and certainly this dollar-denominated emerging-market debt is part of that. the emerging-market currency yield is part of that. europeent grade debt in is part of that. we think central banks are providing enough stimulus into the markets to prevent a recession so credit can work, but not enough that you can necessarily take risk assets a lot higher from here. alix: so good to catch up with you as always. we really appreciate your time. mark haefele, ubs wealth management cio. still with me is jeff kleintop of charles schwab.
to pit off of our conversation, it if you come into the bloomberg come of the white line is the ms ci all country value versus growth index. value is creeping higher. is that a green light do things like buy u.k., buy e.m.? jeffrey: most global markets are more value-oriented than the u.s. even their sector distribution. there are some us tractive value. i look at some of these that values, likelected vietnam, india, even korea, showing some signs of strengthening. they are picking up in double-digit growth, even as it is sliding in china. where i really see the value opportunity is in europe. take a look at what the ecb is doing. i know we focus on the fed this week, but the ecb has been insulating balance sheets from any of the worst impacts from declining interest rates come
but they are buying assets with the qe program. that is relief on both sides. european banks are up in the last couple of months, a real turnaround that could be a very good sign going forward. alix: that echoes what mark was talking about. you still have negative yields, so what is the case for going to buy assets when yields are burial moving? jeffrey: i think it is more than reflected in those valuations, and now with some relief, we are starting to see that lift back towards more normal, but still troublesome levels. certainly there are some headwinds, including perhaps loan deterioration, which may be isn't fully reflected their stair are -- there still are some risks, and that is why we are seeing the rebound. alix: what kind of fed to you
need to make this work? jeffrey: you want a situation where the dollar isn't rising sharply, so they have to be careful in how quickly they bring this cutting of rates to a close. we are not used to seeing the fed cut interest rates, with stocks miking all-time highs. those two kind of don't go together. it could lead to some strengthen the dollar, and that could undermine some of the value sectors that are more dependent on a softer dollar. alix: i feel like if you weeks ago, the concern was still that the market is more dovish than the fed. now it feels like maybe the market is more hawkish than the fed. what do you make of the disconnect between the two? jeffrey: i think it is time for the fed to make it clear what their intentions are. the fed has talked about this in the very short term adjustment. with the move this week, we will probably get a slightly accommodative stance.
we've got a lot of different opinions across the fed. the market is just not clear what the next steps are. i think they need to come out and make that much clearer. alix: in the meantime, as we are in the middle of earnings season, we are looking at some companies issuing fourth-quarter guidance. industrials still feel really happy, although it is the domestic market holding up. small-cap has not necessarily kept up with that. what has been your biggest take away from earnings? are you playing that theme? jeffrey: one of the things that is really interesting is the markets are really seeming to hold onto a manufacturing turnaround, and maybe a turnaround in those pmi indices that appear to be trying to make up. in the year 2020, might be able to show signs of better optimism three fourth-quarter. i think that is really key to getting cyclicals to continue to perform. alix: thank you so much.
we appreciate your time, jeff kleintop of charles schwab. now we want to give you an update on the headlines outside the business world. viviana hurtado is here with first word news. today, lieutenant willel alexander vinmen testify in the impeachment inquiry. british prime minister boris johnson may get his way. the opposition labor party says it will back johnson's call for an early election in december after the prime minister promised he wouldn't try to push through his brexit bill until a new parliament has been elected. to the state of california, where wildfires burned bright and hundreds of thousands are in the dark. pg&e will cut the lights to as many as 1.8 million people. it is the latest in a series of unprecedented power cutoffs.
aimed at preventing fires the biggest -- power cutoffs aimed at preventing fires. the biggest of the fires has now destroyed over 100 buildings. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. coming up, larry fink sees higher markets. ray dalio warns about a scary situation. we will talk about the saudi arabia investment summit, coming up. if you have a bloomberg terminal, check out tv . you can watch us online, click on our charts and graphics, and interact with us directly. check it out. this is bloomberg. ♪
daybreak." coming up in the next hour equities zen cofounder and cfo. now to your bloomberg business flash. at&t unveils its much-anticipated hbo max streaming service. the company already announced a connection -- a collection of old and new programs that will appear on it. will cost could determine how well the service does against rivals netflix and disney+. kkr is expanding beyond the mega deals they've made to buy out fast-growing technology companies. fund,kkr's second tech about three times the size of its first one. tesla founder elon musk going to trial, the case
stemming from the rescue of thailand.e lost in afterish caver filed it musk called him "a pedo guy." i'm viviana hurtado. that is your bloomberg business flash. alix: we turn now to wall street beat. first up, a wall street gathers now in saudi arabia. business leaders to send on riyadh as the summit begins. then, december debut for aramco? according to reports, the oil giant will start it's much into spaded trading on december 11 on the saudi stock exchange. and hsbc's problem with negative rates. interim ceo says the bank is struggling to keep up with the economic of europe. joining us to discuss is lanan nguyen.
there is a very different backdrop than last year. what are we learning? what a rehearing? reporter: what struck me out of the headlines this morning was the negative tone. ray dalio is talking about a scary situation for the global economy. apparently, central bankers have lost control of the economy, and he see trey's wars -- and he sees trade wars as willy problematic for the global economy. on top of that, we have bankers such as the hsbc ceo and ever core talking about a diminished outlook. ever core saying trade wars are weighing on deals. pretty negative tone. alix: but the new have larry fink saying everything is ok. no problem. ray dalio has been super negative for a long time. h -- lananh: that's true. one thing we note is that a lot of people are there this year.
, when theus last year hyde lenders had to say they were not going because of the controversy over the khashoggi murder. let's get to the second-story, staying in saudi arabia. the reports say that saudi aramco is going to trade on december 11. i am wondering what is going to change in the next eight weeks. lananh: i don't think much is going to change. aramco has had difficulty convincing the markets that a $2 trillion valuation is fair. it sounds to us like the reporting shows that they've decided to move it in-house. bring it back home, trade on the saudi exchange, and get all of this world and in the next -- all of this rolling in the next few weeks. alix: in nine months, they made $69 billion or something that that. it is some serious cash. the problem is, how much of it goes back to the government versus potential shareholders? lananh: exactly. there's no question that saudi arabia makes serious cash. this is the most profitable
comfrey in the world -- profitable company in the world. it is more about governance and trading on public markets. alix: so the local exchange, they were going to push out the listing elsewhere, but now it sounds like internal investors have to invest. domestic investors, that is who they are now going to target. lananh: they are trying to get this international legitimacy. it seems like it is all being brought back in the fold. alix: let's wrap it up with the issue of negative rates. says thaterim ceo europe needs to revert to normalized monetary economics. no surprise. a european banks as we don't like negative rates. lananh: no surprise. and of course, negative rates are the mechanics by which banks don't make that much money. the big question is what is going on with the european economy. you have mario draghi handing over the reins to christine
lagarde. she talked about the need for fiscal reform in europe, and the fact that u.s. banks did very well because we had stimulus after the great crisis. europe has still struggled to get over that, so european banks are not doing well. we have talks of cost cuts and reductions. alix: but hsbc is mostly exposed to asia. if itfair, the curve, actually matters, has been steepening in europe. in negative rates, the curve might not matter as much does in the u.s., but they've been getting a little higher yield. most of the business is in asia. at some point, if you can't make money, you can't make money. lananh: that's right. bute is an element of that, also, hsbc obviously leaning hard into its asian business, less trying to lien off of preferable businesses. nguyen, great to
see you this morning. we are going to go inside the , princessario peach, and yoshi. ♪ new mario kart mobile game has been downloaded 24 million times. endo needed a big success its entry years of into mobile gaming. of theart is one best-known franchises in gaming history. for is huge, and a big win them. they finally seem to get it right. coming up, where rates could go after we hear from the fed tomorrow. more on today's traders take. if you are jumping into your car, tune into bloomberg
alix: time now for traders take. joining me is vincent cignarella, voice of the bloomberg audio squawk. i seem to remember you on this program talking about hitting they in yields, and me looking at you like you are crazy. apparently you were right. vincent: we called the low 50% -- aboutint 1.50%. i think we are going to get something more -- i mean, we are going to get a neutral said.
that is exactly -- a more neutral fed. that is where we are. the market is more likely to see this on the hawkish side. we have a chance to brush the 2% level over the next two days. we have gdp, ism jobs data this week. but if it all shows up on the strong side, the trends seems to be going that way, we should be looking at a higher 10 year than where we are now. alix: if we take a look at the different levels, this 1.83%, if we break above it, is it a swift move? vincent: i don't think you will see a surge unless we see something incredibly abnormal with gdp or ism. once we get above, it is probably more like a 1.85 level. if we get above 1.85%'s we establish a base and easily see this trend take us up over the next three months. the numbers for the fourth quarter should be positive. it be a steeper curve and a
higher 10 year yield. alix: do traders think the conversation is going to shift into rolling back the tariffs next, or staying with the it won't gets worse -- it won't get worse scenario? vincent: if a deal is to be ustr isn chile, the more likely to roll those back. alix: benson cignarella, thank you so much. coming up next on this program, christopher wolfe, first republic private wealth management cio, will be joining us. this is bloomberg. ♪ when it comes to using data,
alix: welcome to "bloomberg on this tuesday, october 29. let's take it from the top. rep. pelosi: they will be held accountable. no one is above the law. alix: house democrats try to nullify republicans' claims that the impeachment inquiry is illegitimate. in the u.k., the opposition labor party has come to boris johnson's rescue. emma: the opposition party will back the prime ministers call for an early general election. alix: that's after the prime minister promised he wouldn't try to push through his brexit bill until a new parliament has been elected. tesla has finally figured out to make cars and deliver them. the electric car maker has cut the rate of defects by almost half. some brick and goose for you.
earnings continue to get -- some breaking news for you. earnings continue to come out. quarter, had third quite a big beat when it comes to earnings. overall, they see the negative strike effect of about two lowers a share -- about two dollars a share. they wound up coming out with an agreement. they are looking about adding $350 million to annual labor costs over four years as they deal with a faster timetable for , all ofs, higher wages that dragging down on g.m.'s earnings guidance and forecast. also, kellogg out as well. that is coming in, adjusted 1.03 a share. net sales beating out their overall, so that's not getting a pop in premarket. stay with "bloomberg daybreak."
we will have a live interview with g.m.'s cfo, so don't miss that. joining me on set for the hour, romaine bostick. it is easy to write off g.m.. but that's going to go to fort -- it is easy to write off g.m. as a one-off, but that's going to go to ford and others. romaine: you will definitely see reverberations. you have to look at the labor contract. i all objective measures, g.m. sort of won out in this. they got to keep those four plant closures, which were pretty critical for the long-term cost savings for the company. they also got some pretty decent concessions with regards to pay. over the next year or two you see the pain come but over the long-term, this keeps on track. alix: and they can handle it. ford and fiat, their margins are tighter. it is going to be a dicier
thing. the g.m. cfo joining us later in the hour. where do we go here? no where. s&p futures down by about 0.2%. the dollar gaining in the g10 space. part of that is the cable rate seeing a would be session. session. a whippy a slew of companies are out with results this morning. luke kawa is taking a look. luke: this morning, i'd like to focus on a couple of former suitable companies. i apologize if i sound like a broken market, but -- like a broken record, but let's start with pfizer. the reported with a top and bottom line beat come about what was bigger, they boosted their full-year adjusted etf's to above the highest analyst estimates. also boosted the full-year revenue outlook as well. these results were especially
strong in the core business, biofarma. that is what is going to remain after its spinoff and structured transaction with mylan. moving now to merck, we have again, up nearly 3% in the premarket. this is on some big, broad-based strengths. especially if you look at keith ata, the market-leading -- the market-leading cancer drug, it recently got approved in china, as well as the hpv vaccine. you are also seeing with that company is that not much guidance has been offered as to the ceos departure, who will but on financial guidance, we have the full-year adjusted eps upgraded to above the highest analyst estimate in this case. really changing up the picture, let's look at cummins inc., and
engine maker. yesterday, we highlighted this stock and how we can be worried about recession when stocks like cummins are at 52 week highs. you might not be able to write this off as a one-off. while the eps view was kind of in-line, the top line was light. what stands out here is it is really one of those nhl all-star game from the past, north america versus the world. international sales were down 8% year on year. this caused the company to lower its full-year revenue outlook. the ceo did say that the earnings and the revenue outlook, the sales really came in and disappointed a lot faster than expected. alix: that was just your way of talking about canada in the markets, let's be clear. luke kawa, things a lot. and i, romaine christopher wolfe, first republic private wealth management cio. recordnings provide a
rally? over the summer, ceos and cfos managed expectations down. this is a tough period because analysts are revising this year's forecast and next year's. in the short-term, you have a lot of positive trends. china resolution, a potential fed cut. i think the technical picture for the market is probably a little stronger, especially in the near-term. romaine: is this all just about low expectations at this point? when you look at what's being beat, the bar was basically on the floor. christopher: it is. the big backdrop is the consumer picture in the u.s.. consumer spending hangs in there. we can see some cracks in that armor, though. auto sales a little bit weak. default rates, etc. but the consumer is hanging in there. while buybacks have slowed down,
cash flows are improving a bit. companies showing better earnings could be a bit of a stabilization for markets. romaine: when we talk about the resiliency of the consumer, how much of this is really more about sentiment rather than about the actual ability of how much money they have in their pocket? christopher: we think a lot of it is about sentiment at this point. sentiment has hung in there, both on the business and consumer side. to the extent that keeps a lot of the machinery of markets moving, keeps the algorithms in buy mode, couple that with low interest rates and you don't have a lot of alternatives. you continue to look for stories where there are surprises. real estate, health care. that has helped to lead this value rally, although energy is lagging. alix: i want to highlight some headlines coming out here from a chinese new source. president trump and xi are set to meet december 17 in chile. it looks like they will potentially be signing something. this is in the "south china morning post."
let's pretend that happens. they sign an interim deal. you've seen the earnings come out. is this your green light for value? is it value? is it cyclicals? christopher: i think the green light is already here. the rumor is there will be great news coming. interest rate cuts, a trade deal, etc. but the truth is they have to deliver in terms of global growth next year. corporate revenue lines look like they will be a little bit light. operating leverage is come down a little bit as margins have shrunk. hard to see how eps comes up 10% or more to sustain a huge rally. we got a lot of good news built-in. romaine: you look at the reaction off of that headline, it was basically zero. two or three months ago, you have seen a significant spike in futures on that. has the market pretty much discounted either the quality of this deal or the fact that there's still a lot more to be worked out, and that maybe they will reprice once we get more
sense of what phase ii is going to look like? alix: for they would have to see a tariff rollback? christopher: keep in mind, we've been through this mill for 18 months now. it's been a very long time, and we don't get anything done. romaine: like brexit, but less british. [laughter] christopher: that's a wonderful way to put it. so markets have responded more to the fundamentals then the fact that there is a lot of liquidity in markets in the fed is cutting rates. that's been a bigger driver in the short term. that's probably for 2020. alix: but i was struck with yesterday when we had these record highs, jp morgan strategists out with bullish calls. one is we hit 3200. you want to get out of low volatility stocks. you want to get into cyclicals and value, especially if we see volatility in low volatility stocks. is this all signs of a near top
tier? christopher: i think the economy in the market are different animals. stock market is driven by earnings, 40% or so outside the united states. if anything outside the united states starts to improve, it does well for multinationals. that has been the story so far. big multinationals have done better than big caps and small caps. anything that releases pressure on multinational big cap earnings is likely going to be a positive. romaine: it is also down to the rate environment and declining rates. still pretty low, 1.8%. does that become a concern if we start to creep back up towards 2% levels? christopher: i don't think so, particularly if it is for the right reasons. inflation is quite stable, so a real premium on inflation in 10 bonds is not a bad thing, to the extent we are -- on tenure bonds
is not a bad thing, to the extent that we are. the models and algorithms people are looking at will do that more as the yield curve gets more popular. alix: later on in the hour, we are going to talk more about the mobile outlook. we will speak to the ceo of autonation, as well as the gm cfo. what they can tell us about earnings and labor costs. coming up, the fed is expected to cut rates for a third straight meeting. the question is what happens in december. this is bloomberg. ♪
out today, conference board consumer confidence, pending home sales, and the fed decision out tomorrow. the market is looking for a third street rate cut. michael mckee joins us now. still with us, christopher wolfe of first republic private wealth management. i feel like a week and a half ago, it was the market is still too dovish for the fed. tooi worry the market is hawkish. did the narrative change? michael: the narrative didn't change so much as the timing. they flipped. they are not pricing in a december move, but they are waiting to see what jay powell is going to say and what the data looks like from here on out because they can always change their mind. we went from about a 30% chance for october 2 now over 90% -- for october to now over 90%. if the market tells you the fed is going to do something, the fed does it. they don't like the idea that the tail is wagging the dog, but
if they didn't push back, we would likely have some sort of market calamity if they don't cut rates tomorrow. alix: and this is the october-december flipped in the spread. romaine: when you're looking at the data, we know that the market has been driving things. but is there really a case here for the fed to continue to cutting rates beyond what we expect at the end of tomorrow? christopher: i think the fed has indicated a couple of things. the inflation picture is low and slow. that gives them a little room. for two is full employment. that also gives them room to be more neutral on policy. i think the bigger story here is the market response function we were talking about. they are really in this moment where markets are dictating a little bit of the policy move here. to your point, we are in a place where expectations can get pretty high if they don't do something. we could be in a pretty volatile situation. do cut now, it is going to send some worrying signals.
are they cutting out of weakness? it will put more pressure out of -- it will put more pressure on future data. michael: i brought along dots function.bloomberg romaine: beautiful. [laughter] michael: what you end up seeing is there was another rate cut priced in to the december meeting come up this is fed friends -- this is fed funds futures today. it is a question of timing. they are not saying it is going to be december, but that it is going to happen. the markets still see some weakness. probably not so much in the data as in the political climate. you get the president and the president of china saying we are going to call off the trade war, you will see a big change. but for now, the status quo expects the economy to keep slowing in the fed to have to cut more. christopher: i think that's
true, but there's two consequences. one is a lot lower fed funds rate. it will be harder for the machines to think that there is a recession. that indicator will collapse in its value. the second piece, there was a piece not long ago about the monetary transmission mechanism. what happens with low rates, how they get to the general population. it is a tough thing to get from low rates to low credit card rates. the economics has a long lag to it. it is not clear that the benefit is always getting out. i mentioned earlier seeing cracks in auto financing and things. there may be a little bit of pushing on the strings as we get into 2020. romaine: i'm also curious about this idea of policy normalization. i know that the fed, we don't have qe 2 or whatever you want to call it, but we are getting these headlines every day.
the repo facilities are fully subscribed. they continue to plan it through at least q2. does that determine the interim until they sort this out? michael: it should. it is always hard to tell how the market is going to react, or as you say, how the machines are going to react. of their really part monetary policy transmission mechanism, except that they have managed to steepen the yield curve a bit. but they are really not adding to their downward pressure on rates by buying at the longer end. at this point, it shouldn't matter. it is more the volatility you have to worry about. that's what they are trying to address with the very large repo facilities. alix: the saudi arabia investment summit is happening right now. we are getting a lot of commentary from the big wall streeters. here's what some of them are saying. larry fink saying we are going to have a great year for the equity markets. ray dalio saying the economy
faces scary situations. if you wind up having ok inflation, no ramp up in trade war, you still have a sluggish global economy. how is that not a huge green light risk flashing thing? christopher: it is probably put a good for the stock market. it may not be good for the consumer. i think that is the dichotomy being discussed by world leaders. it is a bit more challenging the people realize. the corporate data is pretty decent. margins are still at relatively high level. we are bottoming out in some of the emerging markets in terms of margins. at the end of the day, a trade war reduction probably creates a bit more positive sentiment, probably lifts devaluation levels for global equities. anything that improves the outlook will raise the guidance for multinationals. romaine: one thing i thought was interesting at the future initiative conference, there was a lot of concern about the capacity of central banks to
deal with the next crisis. when you talk about how close we are to negative rates in the u.s. and in europe and asia, how do central banks prepare themselves if this is not a trial? if we do end up in a global recession, what is the ammunition? michael: that's the problem, there isn't much ammunition. people arel -- some saying that the central banks are out of ammunition and we have to look to fiscal authorities. well, the fiscal authorities are not going to help. so we are in trouble if we have a severe downturn. the fed can cut rates a little bit. the ecb can't do anything. the bank of japan can do anything. so we've got to cross our fingers and hope, and that is not much of a strategy. nobody from a central bank is going to say that because if they do, we all run screaming for the door. but they know we have a real problem. they are hoping that if we come in with a massive qe, if we have
a real recession on the horizon, you are going to have a big qe right at the beginning and try to shock people into believing things are going to get better. alix: right. of course, at the ecb, what else can you buy? equities, green bonds. get extra creative. christophere and wolfe of first republic private wealth management, thank you. coming up, we will break down ktok. i just found out about it a few days ago. i know, i know. this is bloomberg. ♪
the figure was given to financial analysts working on the company's ipo. aramco will reportedly start trading on the saudi exchange on december 11. meat falling in premarket trading, poised to open up the lowest level since may. fakeake meat may fo -- meat maker boosting its sales forecast, but investors are bracing for a selloff in early backers will finally be allowed to cash out. senator marco rubio wants to stop u.s. government pension funds from investing in chinese stocks after the board overseeing the funds put off a decision that would add exposure to china. rubio calls that unacceptable. he says he will introduce a bill to make sure federal retirement savings aren't used to fund the chinese communist party. that is your bloomberg business flash. alix: thank you so much. that also spreads through to owned by like tiktok,
one of the biggest and well-funded unicorns, $75 billion in the public market, in hong kong. they don't even have a cfo. clearly i am way behind on this one. this is a hot ticket. romaine: it is very entertaining. i was watching something yesterday, some guy, how to hack a soda machine. people doing makeup tips. they've got 1.5 billion people on this app alone. they just produce these type of apps, and they are very successful at it. the concern is you have a company that is chinese based, a company using ai and algorithms that some people fear tailor the content a little too much, and that could lead to some exploitation where they target certain people with maybe terrorist recruiting or other things that are a little more nefarious. you have a lot of concern in the u.s. as to whether this app
should be allowed to proliferate the way it already has. alix: it dovetails with senator marco rubio calling for legislation to block government pension from investing in chinese corporations. to a point, the downloads are insane. we have a chart from bloomberg intelligence. you see more downloads from two of their mobile apps than we chat and others. i finally got wechat. romaine: the kids have moved on. they just go from one thing to another. are late toe and i this on the morning. [laughter] alix: coming up, autonation beats on third-quarter revenue. we will speak with the ceo about , next.tor for autos this is bloomberg. ♪ oomberg. ♪ "bloomberg
the opening market. earnings continue to trickle out. in other asset classes, i want to highlight with the cable rates. not a lot, yet. it's definitely one to watch as it appears like you're going set a december election to break that brexit impasse. december 12 for the general election, the labor party will approve it anywhere around those dates. the curve here in the u.s., a touch deeper. the bond fell yesterday. went nowhere. it continued in asia and stopped in the asia. shares of autonation rising this morning following the company's thaurg revenue beat. joining us now, cheryl miller, president and c.e.o. thank you for joining us. super thanks for having me today. -- cheryl: thanks for having me today. alix: what do you see on your end? cheryl: we had really solid numbers. revenue was up 3%.
gross was up 5%. customer care, up 6%. in addition to that, instead of having three hikes this year, we actually had two cuts and we might get a third cut tomorrow. so we feel pretty good about where the customer is right now. >> there's also some concern that the fed is going to pause. do you worry that if the interest rate and environment were to shift back on the other direction that that would harm sales? cheryl: it's something that we think about. so customers and automotive, it's a big ticket purchase. you have to think about affordability but where we are now, we are 15 by as by -- basis points ahead of the curve and we feel pretty good about it. and affordability is decent. we are seeing some customers go into nearly new instead of new and we saw really strong used performance this quarter. >> i'm concerned about sfarblet. our family bought a new car less than a year ago and it had been some years that we've been in a dealership. and i was taken aack by prices on some of the models
particularly what you get for the money. when you look at the increase in average and the average prices on cars, particularly on new cars, do you think that gets to a point writ scares away new customers? because it's one thing that you can walk in and get 0% or 1% or 2% financing but once those rates start going up, 50,000 vehicles become a stretch for a lot of folks. cheryl: yeah, they're a lot lower than they were a year ago. so if you think about the trend, it is improving. one of the things we're seeing that's great is our customers are driving the vehicles to work. so they have jobs. the jobs numbers, you know, are pretty solid compared to where they were before. but affordability is a real issue. we offer new and nearly new. we offer a broad range. and i'll say in the new vehicles as you get to better fuel economy, so that helps when they're buying fuel for their vehicles that they opted for electric. the overall affordability
picture, they have a lot of choices and that's important in our business. alix: what have you noticed in terms of auto loans? there are some recent data that they're 90 days late or more are now at the highest level since 2011. can you give us some insight? cheryl: the comparative benchmark, we feel really good about the health of credit in automotive. customers have jobs and they're paying their automotive loans. and we seal pretty good about the structure of loans. i was just meeting with the scenario and he feels pretty good about it, -- c.e.o. and people pay their auto loans. we feel like it's in good shape. >> when about lending standard? ify time you get to a part in -- pardon the cycle, where sales start to slow down where lenders weaken to get people in the doors. cheryl: we're not at that stage and with my career, seen a number of those cycles and it's something that we keep an eye
out for. we're not at that point right now. we think the lenders are being smart with loan to values, they're being smart with the terms and we still see good affordabilities while customers are still working. alix: what was the g.m. strike which is saying we might see one before, we might see one with fiat. what was your impact? cheryl: we have 33 general motors stores. we're glad that they're back. when we think about the strike, it was six weeks. no material impacting to our third quarter earnings from the g.m. strike. so we're glad to be back serving customers. a little bit tight on the parts side but that's very manageable. so we feel good that it's back in business and look forward to moving forward. >> with regards to the trends on what people are buying, i mean what, are you seeing? there was mention fuel economy, but we've seen kind of a big -- the bigger of the vehicles the big s.u.v.'s, a lot of the pickups have been incredibly popular. cheryl: we're seeing trucks, big
vehicles continue to ring popular and you're seeing really great telematics in those vehicles. if you think about the technology in the car. it's pretty impressive. we're seeing trucks, great electronics. nd we've got some exciting electrics coming out like porsche. alix: we have a question coming in from the viewer question chat here. saying what is the average year is now 12 years old versus seven years 15 years ago. how quickly does that come to market? cheryl: so we see leasing in certain model lines. so obviously the leasing cycle brings customers back more frequently but when customers come, in they're very delighted. so if you have a vehicle that's 12 years old and you get to see the new technology, there's an affordability question but when customers are ready and they're well employed, we see a good
nvironment and good service. so we'll service the vehicles if customers are hold the vehicles for longer. alix: what about your unit labor cost and how you're managing your actual business. what are you noticing there? cheryl: it remains tight. so we have a great platform where we have 31 brands. so when you have the opportunity to move people amongst brands, when you have the opportunity to up scale people as technician, we have 26,000 associate, highly valuable technicians. it's hard to fine bit we have such a great working environment for our technicians that we're able to keep and that's very important. so we recently announced an extension of our relationship with wemo. those are complex vehicles and you need really skilled technicians to serve them. driving e, the self-
google. what car did you buy? >> i bought a buick. alix: oh, interesting. they're back. >> i know. cheryl: i like it. alix: let's get an update in the business world with viviana hurtado. viviana: president trump and china's president shi will find an interim trade deal. they will be attending the cooperation conference. boris johnson is getting his way. the u.k. is now set for its third general election in four years. the opposition labor party says it will back johnson's call for an early election in december after the prime minister promised he wouldn't try to push through his brexit bill until a new parliament has been elected. and eric canter warning of investors backlash in the weight of those vulgar remarks by kent fisher investors have pulled about $3.1 billion.