vonnie: we are awaiting oil inventories number. will it be a third week of build? yes it well. 5.98 7 million barrels. seen oil drop. it is continuing to go lower. eight marketan anticipated. it was a bigger draw down the market anticipated. up tone inventories were almost one million barrels. once again, crude oil

inventories 5.987 million barrels last week. the s&p just punched through its moving average. we are selling off into the close as we see a fresh round of selling coming through in the last 40 minutes of trading. the dollar is on off this afternoon versus the euro which is trading higher. we have seen a bit of a move in the bonds as well. we are seeking fresh selling coming through the close. that could have to do with this critical level we are watching carefully on the s&p. let's look at the u.s. markets. let's look at the major averages here in the u.s.

the s&p nasdaq and dow are all solidly lower. we see solid declines once again. uncertainty around rising rates, and the trade war. perhaps a little too far too fast. investors are looking for a seat before the music stops. if you look at the s&p 500 over the last six days, it was trending lower last week. dayerday, was the worst since february with a big selloff. if we help into the bloomberg and take a look at what is happening sector wise, look at this. a sea of red. the big drag from the technology sector.

energy is down as well. there is nowhere to hide for investors. tech is down the least. if we look at the chip sector, we do see some green here. a bearish divergence to the nasdaq. you mentioned the 200 day moving averages because the stocks are well below that. chart we lookthe at 10:00 because here we are. if we hopped back into the bloomberg, the s&p 500 is below its 200 day moving average. average,ses below that it tells us the longer-term buyers are not stepping up. the sellers are piling in. earlier this year, when we had

the volatility and rates rising, those buyers did step up. it will be very interesting to see how this day plays out. that is definitely the story over the last few minutes. let's get more on today's market moves. we will bring in bloomberg's team from both sides of the atlantic. we have just broken below the 200 day moving average on the s&p. what are your thoughts? >> let's see where we close. abruptronment with an upward shift in volatility, you should lead less into my preterm price action then you would do in quieter times. means i higherty amplitude of swings.

if we close below the 200 day, that will raise the stakes a little bit. it ford to close below you can head lower. the risk will be that you see more technically driven selling if we do manage to close below. buyers have not stepped up in europe. why not? >> there is nowhere to hide. europe tells a very broad story of a selloff. the trade sectors are also selling off. they have been the punching bag for a long time now. you have the oil sector, commodity sectors also selling off now the commodities have hit a stall in the rally.

taking all of these together, that tells you that it is a a storylloff driven by that amounts to the decline on the index more broadly. >> it is all good. we are starting to get things earnings on friday and then everything will be good again. >> it may be too early to say that. foritions remain in place the broader bull market. the economy is still doing quite well here in the u.s. earnings are still strong. a little bit of hit to valuations now. i think the developments are coalescing around the theme that we are moving in to a late cycle higher volatility regime where the market can still go higher, but the swings and roundabouts are going to be much bigger than i have been in the past.

last year, the year of no drawdowns, now it looks like something in the distant rearview mirror. it is certainly an anomaly. we should get used to the idea that even though the market rallies on the basis of good fundamentals, we will have more and more of these types of dips. if monetary policy is not tight, it is not as loose as it used to be. you could argue that the business model of corporate america is coming under a big ineat of existential threat terms of the merit of supply chains have become evident. given the chip hack of supermicro. the intellectual property of some of the social media technology companies which we have seen with facebook this maybe not positive as well

as than that president had a go at the fed. that is not something you want to see as an investor in the u.s. markets. >> what does it mean for emerging markets if the u.s. is having this situation? the asian currencies are weaker for the most part but all of the other currencies are stronger versus the u.s. dollar. a emerging markets are beneficiary today because part of this selloff was a pullback in the dollar after the comments by trump regarding the fed. the key beneficiary of that would be some of our bigger emerging markets laggards in the last couple of months. that would be the rand, the lira, and with the dollar on the back foot and not necessarily anything new. that will amounts to a bit of a bounce today. the resthe fact that of the stock complex is not looking so great.

>> we have seen a rotation out of growth and out of momentum and into value over the last week. is that going to carry on? equityome extent for the operatives that is the million-dollar question. fair to say that as interest rates rise and will you increaseise, the discount factor of future revenues and suddenly you are willing to pay less for the growth names that you were when rates were lower. the value names do legitimately represent value, that it is a safer place to be. safety has much more of an appeal in a higher volatility environment. if the path is straight and there is not a lot of noise around the trend, you don't have to worry about risk by definition. you can focus on the pride -- prize at the end of the rainbow. the path becomes more uncertain, then a value proposition is a

more appealing thing. >> we have gold futures up today. 12.23.t is it a safe haven? >> today it is. large market down dress have typically seen gold perform well. it is reasonable that goldman not do as well as it has done historically given that the bond markets have rallied substantially during times of market stress. bond markets are one of the reasons for the equity market distress in terms of higher yield. we think of a high-yield environment as not being good for gold. you have to think of the idea -- these risk

even as they are forced to look great their holdings, gold will probably be part of the liquidation. basis, with the stock market going down as a trade, i guess it makes sense. i am not quite certain about it from a longer-term perspective. , how lotusquestion the s&p go? breaking the 200 day moving average is in some ways an answer to that. thank you to you both. teaman follow the entire on your bloomberg. >> let's check in with first word news. >> let me get you caught up. it was the third most powerful hurricane ever to hit the continental u.s. and it is not done yet. beencane michael has

downgraded to a tropical storm after destroying homes and businesses across the florida panhandle and in southern georgia. at least two people were killed. now the storm is threatening the southeast with heavy rains and high winds. some dramatic moments for astronauts aboard a rocket heading for the space station. forcing thefailure astronauts to make an emergency landing. nasa says both astronauts are in good shape. the pentagon has grounded the f-35 fighter jets because of a first crash ever. to inspect a want fuel to on all of the aircraft. the aircraft crashed in south carolina. the pilot ejected safely. the aircraft is built by lockheed martin. u.s. inflation at the consumer level came in less than inspected last month thanks to lower prices for used cars and

the housing market. consumer price index rose 2.2% from a year ago. officials will have two more months of price figures before the meeting again in december. global news 24 hours a day on air and at tictoc on twitter powered by moment 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's get a quick check of the markets. here is a picture. the dow is down. all for stocks are lower. afterens is higher posting prescription sales. breakthrough its 200 day moving average. it is down 1.4%. the nasdaq is down 1.1%. the vix is right up there.

it is higher than 24 now. this is bloomberg. ♪

i'm vonnie quinn. >> this is bloomberg. >> we are joined now by marty schenker. this economic news and market selloff is coming at a wonderful time for the president because it takes the focus off of other things. >> i suppose so. this seems to be something that really residents -- resonates

with this president. the president does not interfere with the decisions typically, but donald trump has decided to weigh in. presidents can talk about the fed if they want, but the fed's independent and does not have to listen. >> i agree with that. tradition that presidents stay away from the fed thinking it would interfere with their independence. justarkets suggest that is donald trump letting off steam and that the fed will stay on course and be data dependent. >> good morning. the president has used the stock market as a barometer for his success. is going up.en it what about when it is going down? >> than it is not his fault. it is the fed's fault. when he was taking all of this

credit for the stock market, we wrote stories about the dangers of doing that because markets don't always just go up. as you can tell from the situation today and yesterday, is a dangerous game to take credit for markets. president butny this one in particular. suggestion some larry kudlow wouldn't confirm or are likely to see a meeting between the president and xi jinping. is that likely to come out today as the market needs a reason to stabilize? it is interesting. the wall street journal broke the story that they reached a broad agreement. larry kudlow refused to confirm it. it is interesting to me that the month agoormally a

that would avoid the market. it seems that the market is plowing through and trading on other issues. there is not much fate that a meeting would accomplish anything. >> we are close to the midterms. it is interesting to hear larry, talk about the initial sugar high that may be delivered in fiscal form in the second half of this presidency. assuming it is a one term presidency. let's talk about that sugar high and what could come in the second half of the year. this is what the midterms are so important. >> they are. that the taxiew cut and stimulus will not be an issue in the midterms. are of these elections local elections and rise and fall on the strength of the candidate. health care is the number one of theonfronting most

races around the country. republicans don't have a good story to tell. the polls reflect that. i don't think the issue of stimulus is going to make a big difference in the midterms one way or the other. 's health care the issue that will fire off more of the democratic base or do we need something to come up to fire up both basis? >> i think kavanaugh will be a distant memory when november 6 rolls around. whether or not people feel better about their circumstance than they did two the economy and other issues is going to be the telling thing. on thef races will turn number of women who are running. women turningted out in states in districts that

were very close will tell the difference. i know the democrats are counting on that. >> thank you, marti. from new york, this is bloomberg. ♪

close athe european bloomberg markets. seems toxury slide it have no end in sight. after stocks got slammed report themed a chinese customs are cracking undeclared imports. many luxury stocks fell. apparentlyvelers are

being threatened as a result of this crackdown that we are seeing. the luxury stocks have had a fantastic run. if you look at it from the 2016 up to the highs, lvmh was up by 130% plus. we are now seeing money come off the table. how significant is the china move? are they using it as an excuse to say i have had a good run of the stock i am out. >> i think they are. lvmh said yesterday that border controls are a problem for them. of bagsit the numbers and scarves they sell. about the outlook for the chinese consumer. are blamingysts

millennials in the sense that millennials are not as interested as they might have once been. millennials ever by these kinds of luxury goods? >> millennials did by luxury goods. --y are particularly found fond of gucci. the court luxury customer will always be the older shopper with plenty of money. the potential downside could be an average of 36% for the stocks that are all down midseason. >> the broader issue if luxury are well when markets roaring ahead while we are all feeling happy and confident with the trade situation and with what is going on with share prices. that is not the case at the moment. is our right to be concerned

about the outlook for luxury goods. >> the share prices have gone up an awfully long way. let's take a look at where european markets are. we head into the close, three minutes away now. we have sold off into the close as you can see. most of the european markets now , the market closes coming up next. those are the numbers. this is bloomberg. ♪

go until 30 seconds to the close of the european markets. it has turned out to be quite a thursday. another day of significant selling.

the caps off by 1.75%. the dax is faring reasonably well but it is a sea of red out there. .his is the s&p also it has broken through its 200 day moving average. and is a significant level we did say it looks like stocks were broken at that point after which the selling accelerated below that point. i want to show you some numbers. we are down .1 .94% on the ftse. the dax is trading down by 1.36%. the ftse mid is down 11.76%.

let me show you some names of individual stocks that have been moving around today. london house prices are under pressure. bear developments is also one of the stocks. the sector was lower today. is down anding air france is down as well. let's take a look at the volumes. what we have been seeing over the last few sessions, we are seeing significantly higher volumes coming through particularly at the close. that is the projection right up

there about what the volume story will look like. another significant down like. on a significant volume. that is worth paying attention to. >> here in the u.s. we are seeing a significant spike in the vix. it is now trading 2359. gold futures are higher. 1216 right now. we have been in this range forever with gold. let's have a look at gmm really you see the equity markets are in the red pretty much the world over. are seeing some strength for the australian dollar. oil prices are higher but you

did point out that oil is off today. >> let's get another take on this market and the action we are seeing. our guest joins us from jpmorgan. what is the view? there was talk about it being a higher volatility year. we are seeing evidence of that brain much this weekend today in particular. there isn't a specific reason. cpi came out benign. readjustingmarkets to a higher yield environment on the u.s. 10 year. rereading some of the equity market pricing due to corporate that ceos arengs

coming out with. >> we are seeing a shift from growth to trade. -- value. outperforms other styles and particularly quality over the sink -- several past recessions. if we are to say that we are heading toward a later cycle in the u.s., markets are feeling weakness, the episodes of yesterday and today of outperformance of value and quality indicates that will be a larger story for the next few years. >> what happens to the curve? there or does it levels again? >> our view is that the 10 year treasury will rise because of the federal reserve interest rate hiking cycle. we expect one more next year and more next year. with that, should come a repricing of tenure treasuries,

yields we expect to be around that 3.5 mark. how it gets there might be more of a rocky path. the discussion of the yield curve flattening and ultimately inverting. we do expect that to happen. certainty.hematical we see that for the latter half of next year. it was said today that it was unclear how the central bank will affect on markets in bali. we have been preparing for this most of what could happen should be priced in. >> yes i think that preparation is key. we are talking to clients about turning the dial toward

resilient portfolios when the market is in a downturn. about large caps rather than small caps. u.s.ing about when treasuries become attractive. at a certain point when the fed has to start cutting rates which we don't expect to be this year or next year, fixed income from the treasury side becomes the most attractive. >> the italian market just entered a bear market. we are getting the final numbers coming through. stock -- see the style shift from growth to value, does that favorite europe finally? >> the thing about europe and european value is there are a lot of financials in that part of the index. that requires more work on the policy side from banking

authorities to repair the investor face -- faith in that part of the market. blindly jumpay to into european value. it will be a case-by-case story. europe is more susceptible to trade wars and discussions between the u.s. and china are having an unmet -- negative effect on the european markets. coming out of numbers tomorrow. the earnings season is starting. our earnings going to be able to keep the multiples at a level that we have seen thus far? does the relationship between yields in both asset classes write-down or doesn't get sustained by the earnings that will come through? >> we are positive over u.s. equity earnings.

we expect u.s. equity earnings this quarter in the coming quarter to be quite strong. drag starts fiscal to happen toward the end of 2019 where we would expect the euro in your not be a strong. sectors,of specific financials can benefit from higher rates but the yield curve is not a supported. it will be a case-by-case asus -- basis. >> what are the primary concerns of your clients right now? trade war? what are they asking you? >> there is one discussion which is trade tensions escalating. how will that affect u.s. consumers? will they continue to buy as much in the local stores? china into aned

more slowdown case rather than stabilization? that is the made question -- main question about trade tensions. for us, monitoring wages which unlike the february selloff this time there is not the sense of rising wages coming through too much stronger, monitoring that and what the fed does and the fiscal stimulus in the u.s. will help us try to pinpoint a time when we think the downturn would come through. that is what we are basing much of our conversation on this quarter. what are you making of the buildout of the chinese curve? what are the conversations that are revolving around that? >> the chinese fixed income or broad policy situation is

intriguing because we have seen episodes in the past were growth has slowed down. now. are multiple totals we see the chinese authorities are starting to use them. this time and looks like it is more on the fiscal side as well as the monetary side. regulation, housing market benefits and reduction. this time it looks like a monetary so that are cut that we saw recently and there are multiple affects reducing the taxes for certain types of companies. deductions for research and development. trade wars are really a discussion that is bubbling around. we are confident they have the tools to do it. >> at what level does the 10 year yield become dangerous?

is there a line the you are watching? >> in previous rate hiking cycles, that level would be higher than it is now given the incredible level of monetary policy and stem -- stimulus that we have seen. pinch for us.he for the tenure, that means a bit further than 3.5. foury be can go up to before he gets damaging. the fed is raising rates because u.s. economic growth is solid and booming. are inans equity markets a wreck environment for them to gain these earnings and give us returns in the next few quarters. >> great to see you on such an interesting day. >> a little bit of news we have

heard already. president trump saying that the market correction is caused by the fed. he is reiterating these comments as he has for lunch. we will hear about his other comments. he is also saying the fed is far too stringent and is making a mistake. you heard larry kudlow earlier saying that the president says a lot of things and has fun but the fed is an independent organization. >> authorities are now searching for survivors of the third worst storm ever to hit the continental u.s.. hurricane michael devastated the florida panhandle destroying homes and businesses. winds alsoe per hour brought a storm surge. it turned neighborhoods into lakes. it has now been downgraded to a tropical storm and is headed toward the carolinas which have not recovered from hurricane

florence. manhattan's district attorney has dropped part of the case against harvey weinstein. a judge agreed to dismiss allegations of one of the three accusers. that accuser told the new yorker last year that he assaulted her during a meeting at his office in 2004. weinstein's attorney argued that she lied to the grand jury about what happened. tens of millions of social security recipients and other retirees will see bigger checks next year. the government says the cost of living increase amounts to about $39 a month for the average retiree. that is the biggest increase in seven years. u.k.iators from the eu and are getting closer to a compromise on brexit. they are playing down the expectations that a deal is imminent. the biggest problem is how to keep the irish border open. one official says there is movement toward a temporary set up that would keep the you keep -- that would keep the u.k.

inside the eu customs rules. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> more headlines from donald trump. fire jaye will not powell. him saying that we are getting a market downturn. pal is not going to get fired by the president. u.s.d trump also says the has a powerful dollar which is not good for exports but he is talking more about the fed and saying it is far too stringent and making a mistake. dow and s&p are both down. this is bloomberg. ♪

47 minutes past the hour, the president has been addressing the issue of the federal reserve. fireg he is not going to the chair of the federal reserve. indicates that the strength of the dollar remains an issue. remember that next week there could be the potential for the u.s. to label china as a currency manipulator. pay attention to that. that can be market moving. we also heard the president say earlier that we could see a meeting taking place between him and xi jinping.

those comments may not have come from the president. let's get now to the battle of the charts. if you like these charts, you can find them on your bloomberg. hit gtv . >> you know i am going with a chart today because a lot of ink has been spilled trying to see why we are seeing the selloff area you can see a reason within the plot. that is the value buying cheaper shares have been outperforming growth and momentum shares. yesterday, and outperformed by 1%. this is the fourth time in the past nine years that this is happened. you can see how much this volatility has kicked off over the past couple years. we are seeing this again today.

this is something we will want to keep an eye on today. we had some big qantas unwinding. will wecontinuing or see this translate into broad-based selling? you can see that a gtv . mine is also a very pleasant chart. i am showing you the reaction of hedge funds. goldman sachs hedge fund industry, this jibes with what was said earlier about it being the twilight of the things. some of the stocks that are in in which hedge funds have set up stock art ivanka, at the, spotify. they've seen a major decline as head -- hedge funds pull out en

masse. you can see the chart on gtv as well. >> the two things are very much related. the shift from growth to value is represented in what vonnie has just shown you. i will let you win today. we are seeing a huge shift out from growth into value stocks. the winner today is vonnie quinn. this is bloomberg. ♪

live from london, i'm guy johnson. >> i'm vonnie quinn. we are seeing a bit of a selloff

today. where will we end the session? obviously, we will not ask you. the bears have claimed the upper hand. a look at the 200 day moving average for the s&p 500 and the wedaq 100 last i checked were below on both of those. that is important because i remember february night and my colleague wrote a piece. we bounced and that ended up marking the bottom. inre was another occasion april and may where the bounce off the 200 day moving average did mark a bottom. my colleague earlier today said it is something to watch because it has worked before in the same buyers who were there then don't show up now than that is caused to be worried.

he said if you are looking at 500,5 day low for the s&p that is right around where the 200 day moving average is. we just moved back above it. i think we will be staying with this level. if we close below it, give us a sense of how is the market position below that level? focus on thisdo and it has been important however when you look at a turning point in stocks, traditionally that has been win the 200 day average itself starts trending lower. that might be a big thing to watch. we are far away from that. terms of the leveraging and selling activity that could take us below it, it is important to know that before selling in unwindy, the vix etp

where you have the volatility exacerbated because all the funds had to buy, those funds are as big anymore so their ability to push around the market isn't as big. if you look at risk parity funds, they haven't done is badly. then if you look at target ball control funds, we will see selling from those over the next couple of days but with a laggard. >> parity and momentum took front and center yesterday. everyone we speak to talks about other factors like faang stocks selling off. it appears there are fundamental stories that might point to something negative happening in the near future. >> i think this raises and ups the state for tech earnings. ability tohown the

turn around the market and leadership on a dime or ended for some stocks. i think we could be in a holding pattern in terms of does this rotation from growth to value persists. that choppiness and unease around getting back into the would be market leaders might last until you get some clarity. turnaround in the indices as you come on. let's have a look at where the markets are right now. we are even in the positive for the nasdaq. this is bloomberg. ♪ .

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david: from bloomberg's world headquarters in new york, i am david westin. welcome to "bloomberg markets: balance of power." fed.a smiling on the brian fall from boston on the aftermath of hurricane. i will start with you. markets are up and down. the president said it was the fed's fault. is he right? i think what we can definitively say is that the fed is not going to care. they do not look at the day-to-day moves in markets. it was a significant driver in their rate decisions. we will play when they have to say in a moment. meantime, brian is then boston.