.> i'm shery anh >> i'm kevin cirilli. the release of andrew brunson , president trump's midterm push. let us start with a symbol. he was still sentenced and convicted. >> he was convicted but has been freed, time served. he is now free to return to the united states. he has been detailed on alleged links to the failed coup attempt in turkey. has caused aent political follow-up between washington and ankara. trumps. president donald

double tariffs on turkey and slapped sanctions on to turkish officials. he said more sanctions would be served if the pastor was not released. these come at a time where turkey is doing with economic problems. shery: we will have to see how that plays out. we will see how the relationship evolves. let us go to john who has more on italy's budget situation. we saw that tug-of-war between the government and the e.u. over its budget. we are hearing that the fiscal outline includes a higher deficit target. the crunch time is coming. the italian government has to send it draft edger plan -- it's draft budget plan by monday. from then on, brussels is going to dissect the draft and compare on thehe e.u. parameters

different member state budgets. shery: we are seeing this chart on the gtb library, how the spread between the italian and german ten-year yields is over 300 after topping that five-year high reached on thursday. any more financial troubles for italy, will the ecb come to his rescue? , there are the ecb limited conditions under which it can intervene. the populist government would have to subscribe to those. the next threshold is 400. that is what analysts and the media is focusing on and the defianceeaders, being and saying he is sure that the spread will not reach 400 basis points. shery: thank you so much.

kevin, all eyes on where president trump and on what president trump is doing heading into the midterms. he is in cincinnati tonight. he has been on the campaign trail a lot. kevin: aggressively. he is going to be averaging four days per week on the campaign trail. you mentioned cincinnati, ohio. this is such a key part of where the republicans feel they need to bolster. it is not just president trump. , starting to hold rallies of his home -- of his own. shery: that is interesting, don jr. campaigning for gop candidates. how is he doing among voters? kevin: if you look at his social hasa, he as inherited -- he

non wing. the steve banon build a wall to between the trump organization and the political apparatus that's up rounds -- that surrounds the administration. we have not seen anything stick. he is going to be hitting the campaign trail aggressively in the heartland. there have been rumors about him for laying the groundwork for a future of his own. shery: we know that if the democrats take over, they have promised investigations into the organization. this is personal. kevin: it is. in previousback iterations of how this has gone, a divided government has been good for markets. it is not good for the type of t

regulatory reform markets are looking for. the democrats were to take the house of representatives, there are going to be more investigations. shery: talking about the markets, president trump blame the federal reserve for hiking rates. we are seeing a rebound. let us get a check of where we stand. rebound, offing a the highs of each of the major averages. each had been up 1.5% or more. the nasdaq was up 2.5%. the averages have come off those highs. to remain in control at this moment. we have had a lack of selling pressure on pace for the worst week for each of the major averages. ratesainty about raising and the big rally, too far, too fast.

here is a chart of the s&p 500 openings, higher, up 1.7%, now trailing off. .8%, not bad after losses. can the buyers hang on? you may see some traders who have made a profit on the morning take more profit chips off the table. what is going on with the technicals, this is interesting. if we take a look at the 200 day moving average, this is something traders are watching. it is a long-term turn of the s&p 500 in blue and the 200 day moving average and yellow. -- in yellow. concerns about rising rates, that is what has happened more recently. what is the running is the downside, these dollars -- the sellers taking control. back the low&p 500

its 200 day moving average, closing below it yesterday for the second time in two years to -- two years. as for the sector composition, it is bullish. we have most sectors trading higher, eight of 11, a big rebound for tech and consumer discretionary. , industrials.rgy just to take a look at a few of , salesforce.com tuit.nto it -- in can the buyers hold on for the close? shery: coming up, will the market turbulence if the republicans at the ballot box?

we will discuss that with our political panel, next. this is "bloomberg." ♪

kevin: mrs. balance of power. me kevin. -- this is balance of power. i am kevin cirilli. florida state of emergency officials say they have done a search of an area affected by hurricane michael and found no sign of widespread deaths. food and medical supplies are being brought in by trucks. state officials are using helicopters to perry in supplies to coastal towns where roads are not cleared. more than 1.5 million customers

were left in the dark across states. strongests the hurricane to strike the mainland in decades. a big source of tension between turkey and the united dates has been removed. turkish court has freed american pastor andrew brunson after holding him in prison for almost two years. the court convicted brunson of collaborating with terror groups and taking part in a coup attempt. he was freed on time served. trump administration imposed sanctions and threaten more if he was not released third. -- release. pope francis has accepted the resignation of a pastor who became entangled in sexual abuse cover-up scandals. france's praised his ally and suggested the world had unfairly become a scapegoat. is the most high-profile head to roll in the catholic church sex abuse scandal. says reachingquer

a brexit deal with the european union would improve the economic outlook. he spoke to bloomberg at the imf meeting in indonesia. >> getting a good deal is a vital part of our economic plan for the future. britain's future has to be as an highway type skill economy. that means raising our productivity performance. our challenge is productivity. the good news is we are a way behind our competitors and that is a reserve we can draw on to fuel growth. the sides are trying to reach a compromise before the european summit next week. mark: global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is "bloomberg." shery: thank you. sigh ofre breathing a relief, with averages up around

1% today, the s&p 500 up .2%. the longest losing streak for the index since president trump's election. days until the midterms, could all that dampen one of president trump's favorite talking points. we are joined by jeanne zaino and e. o'brien murray. great to talk to you again. my first question would be, can the president the couple -- decouple himself from this question mark -- from this? e. o'brien: the viewers here trade a two day. -- trade date to day. we're looking at the lowest lack unemployment. we're looking at a new nafta.

what happens with tariffs and the farm industry and so forth we said this would be settled and it is. that is what the voters are going to look at. trade on it,will no question. shery: when you ask voters what is on the top of their mines, it is not the economy. it is something like the supreme court, what happened with health care. it is not the economy, is it? e. o'brien: your question was about the stock market. the president wins that all day long. when you look at the election process now, that is different. kavanaugh is a win for the republicans. that is all heading in the right direction. shery: is the they win that he

was confirmed despite the controversy? a could lead to more women's coming to the polls? jeanne: i am going to disagree with my colleagues. win because not a of the energy it has generated on the democratic side, particularly among women. if you go state by state, it is a win for republicans in the senate. it is a loss for republicans in the house. i want to go back to the economy. the president cannot take credit when things are going well and when things are going bad, he is blaming the fed which even cut low said, they had made the right decision. what the president has not embraced is if economic numbers are good, everybody who watches

this knows we're heading into a recession and that may not hit in the next weeks. before he runs in 2020, iesco i do have -- he is going to have explaining to do. that is a problem. kevin: which is why when i talk to the folks who work with this administration, they say this is laying the groundwork to have a scapegoat should things go south. i'm going to ask you about the because the president has been attacking the central bank. i think rand paul likes it, i think the libertarian leaning wing likes it. i think it is more galvanizing than the wall street crowd. e. o'brien: to the point of the you talk about raising

interest rates. where it matters to people is the value of their homes, mortgage rates. if you can blame the fed, that gives them a scapegoat. we said it was a long-term plan. you said it was a short-term plan. i am standing next to you. votehappens, the kavanaugh and the confirmation process, ginned up the base of the republican party. thanenate is stronger before and in the house, there are issues. even the house is stronger than before. shery: president trump seems to be setting up a path towards november. we are hearing that china and the u.s. will hold a meeting at the g20 in november. how positive is it when you're seeing more trade tensions easing and better relations with

other countries? does this matter? e. o'brien: it does. i am not sure it is going to impact the election directly when matings are not held right before. voters -- when meetings are not held right before. bolt on issues, those tend to be unemployment and the economy. it does matter longer-term. kevin: let me jump in. look at polling, boulders do not like china. the democrats do not like china, republicans do not. every senator says they are stealing intellectual property. what it does is it gives the president an opportunity to meet with a foreign leader and say, you are not going to mess with us. the sources i have talked with say that plays well to

independence. he is all about what is best for the country and its future. the talking point of stock markets is day to day. the bigger issue is across the term. shery: tax cuts and how you're going to fund them. we are getting this question, how much will the debt deficit issue factor in? kevin: a great question. e. o'brien: what happens to the debt payments we have to make compared to medicare and compared to social security and defense. i do not think it happens in the next four weeks. over time, that payment is going to be substantial. jeanne: and it should matter a lot. it has in the past. we have not heard as much discussion. the president has mentioned it recently but there has not been

a focus on it. it used to be an enormous focus but that has fallen off the wayside as they have increased spending to help certain segments of the population and to have walked away from this issue. look at the budget, how much he has increased the deficit. you cannot say i want to decrease of the deficit but raise spending. the major thing, when this president was running as a candidate, the norm is no longer the norm. barack obama changed the norm. how you speak to the voters and what you believe in is different than before. the white house yesterday, with kanye, was different than before. kevin: i am a fan, i am not going there. e. o'brien: there is no norm. kevin: 25 days left to -- left.

how is is going to break down? e. o'brien: we pick up in the senate and barely hold the house. jeanne: the democrats take the house and the republicans hold the senate. kevin: you covered it all. kanye, taylor. [laughter] shery: thank you very much, jeanne zaino and e. o'brien murray. we are seeing a slight rebound. .3% and the s&p 500 still hoping that -- still holding that losing streak. this is "bloomberg." ♪

kevin: this is bloomberg balance of power. i am kevin cirilli. shery: i'm shery anh. lower todayc despite an earnings beat and weaker loan growth. joining us more -- with more is taylor riggs. what happened with the shares? a top banking analyst at morgan stanley said she is confirmed about non-interest expenses and weaker loan growth. they came out and said their 223 demand was about billion dollars. a little lower than analysts had expected, $4 billion more than a year ago. higher interest rates in part stopped the loan demand a bit. i was on the call with jp morgan and they are still expecting a 6% or 7% loan growth for the

year. regionals get hit harder. pnc struggling with noninterest expenses. are the highest since the fourth quarter of 2017. when you dig into that and figure out what is driving that, they're having increases on the personal front. is off the declines of their making in marketing expenses and other things. while it is a good thing to be , some of that noninterest expense is putting pressure on them. kevin: let me pick up a point about regional banks. why are they doing the worst? >> they are underperforming the large caps. there are underperforming the regionals, like the u.s. bank. they are more sensitive to interest rates. higher rateshink

are a good thing for banks. a can stifle loan demand and it does increase costs for deposing. -- for deposit is. they're less diversified from big banks, they are more sensitive. out,eard jpmorgan come saying we like the steeper yield curve. we want those 4% to 5%. the regionals are slower to adjust. shery: taylor riggs, thank you so much. next, after an early retirement, democrats are hoping a blue wave could crash through paul ryan's district. we will talk with a candidate trying to keep the district red.

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management agency is asking residents to hurricane michael to be patient before they return because it may not be safe. the devastation caused by the storm was enormous, but one coastal town mexico city beach nearly wiped off the map by michael. >> there is a tremendous amount of the brie brie at when you look at the damage -- there is a tremendous amount of debris. when you look at the damage, just take some time to get in and actually go through and do the search and rescue. mark: the death toll stands at 11. hundreds of thousands of people in the affected areas are still without power. the disappearance of saudi journalist -- the billionaire richard branson has suspended talks with saudi arabia's sovereign wealth fund about investing and space companies. the accusation that the saudis

were behind the disappearance are true, it would change the ability of anybody in the west to do business with the government. the agency is repairing for massive new wave of refugees likely to lead to turkey if conflict breaks out in syria. the agency is working with turkish, russian, syrian, and other officials to minimize the impact of war. syria's art is struggling to host some 3 million syrians. washington state supreme court has unanimously struck down the state's death penalty. execution was already extremely rare in washington state with only five prisoners put to death in recent decades. it converts the sentences for remaining's eight death row inmates with the life in prison without parole.

global news, 24 hours a day on air and on @tiktok on twitter powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. steil is an republican candidate in the wisconsin first district running to replace paul ryan, but he is race within a just 25 days ago. i want to welcome brian. bryan: thank you for having me on. kevin: i want to ask you about trade because the president has and yourted nafta, opponent is an ironworker and it's really aligned himself with the union workers. what do you think in terms of how that is going to play 25 days from now? bryan: we had a real step forward. the president has brought countries back to the table to negotiate trade deals for what we have seen the most recent trade deal is that in wisconsin, there was a real difficult time

getting exported into kim and have an easier time. that trade win is a win for workers,manufacturing and if we are able to trade reciprocally around the globe, that will be a win for the nation. you have any concerns with how the president is negotiating with china for example? bryan: he is bringing those countries back to the table. trade policies that are the benefits for government workers. we are taking a step forward and hopefully we will see that continue with better trade deals around the globe. shery: speaker ryan has not always seen eye to eye with president trump. how would you characterize your relationship with the president? bryan: i support the president's policies. i look at the trade reform, the tax reform, the regulatory reform, and it is having a

direct impact on the economics in wisconsin. whereare areas manufacturing is hitting hard times and we are starting to come back, people are stunning to see employment the below 3%, ofare seeing the beginning higher wages, so to continue to see job growth and continued to see wage growth. shery: just a couple of months ago when i would speak to candidates, they would talk about local issues being important. it seems the controversial appointment of justice kavanagh has thrown a national politics and babies very local elections. for example, the ub center for politics now saying that in wisconsin for social media 23% is 31% trump, beating health care, the economy, and taxes. how challenging has it been for you to address the more controversial national themes? i like what we are seeing

and it is people getting energized on the right and the left. it is time to have a conversation. what policies we want to put in place to continue to grow the economy. the engagement is positive and people are tuned into the race and how do we take core policies and apply them to washington. people are frustrated with the noise of washington and the inability to get things done. there is an ability to take my private sector background to washington to get more done on behalf of the american people. kevin: that is a great point that shery makes, the partisan issues that are making an impact. out of your district, you have a major boeing supply chain, and boeing having a huge impact in your portion of wisconsin. what are you hearing from those workers in particular, those families on this issue of trade? do they have any concerns at all? with that you are in line

the president, but when you talk to the folks one-on-one, do they have any concerns about the tariffs? get to thele want to next chapter of the trade agreement. the tariffs that are put in place, people understand where we are ads and where the president has brought people back to the table, but people want to get to the next step which is lowering the barriers so that american companies are able to trade freely and fairly. people understand where we are at an people are anxious to get to the next step, and i think we are seeing progress so that we can continue to see that economic growth in southeast wisconsin and across the nation. kevin: what do you think though the endpoint to looks for the trade negotiations? everyone, even republicans do not know what the end point looks like in particular with the u.s. china trade talks. bryan: you can look at canada

and mexico coming back to the table and made some solid progress there. we are going to see that with the other countries but what we need to do is get to the next chapter to get these barriers to trade down on the benefit of american workers and farmers. we are starting to see progress but we are anxious to get to the next step or other countries, and negotiate trade agreements. il, appreciatete your time and only 25 days until the midterms. shery: time flies. kevin: justice kavanagh was a week ago. shery: it is really hard to keep track. kevin: kanye was yesterday. shery: mounting fears over a missing washington post journalist and what it means for relations between the u.s. and saudi arabia going forward. this is bloomberg. ♪

♪ kevin: this is "the balance of power." i am kevin cirilli. shery: i am shery anh. as beenjournalist and nine days since the u.s. residents walked into the saudi consulate and has not been seen since. turkish president has said that he is getting quotes, "personally involved in the investigation." president trump has appeared reluctant to take any action. for more on this, we are joined by eli lake live in washington. and ali cinar, president of the turkish heritage organization in new york. they give her joining us. eli, there is a reason that the

u.s. has not acted more forcefully here. how difficult is it for the u.s. to take any approach against the saudis if this actually turned out to be true without weakening the strong relationship they have, especially against iran? it is a very good question but there is an out known as the global act, there are sanctions applied be with individuals who appeared to be involved in a heinous crime, but so far, the evidence does not look good. and that is without a really challenging gore diminishing -- really challenging or diminishing the fundamentals of the america-saudi relationship. there is an opportunity -- there is a way to punish individuals to more forcefully denounced the

saudi's if what it looks like is that we get the full evidence that the saudi's did this. without straining an alliance in both countries'interests, but the saudi's cannot think they got away with this with a slap on the wrist, because if they do, we have effectively given up control of the alliance. kevin: you mentioned the act, and that would mean the administration has 120 days to reply back to the senate with regards to what is happening. the president appears reluctant about this,ng particularly the $110 billion worth of arms deal. he said earlier this week, he is reluctant to take anything off the table with that, but republicans in congress have a different outlook. earlier this week, i interviewed rand paul. i've been opposed to selling

arms to saudi arabia and i have been more voting. congress is supposed to vote. even before the journalist went missing, i was supposed to arming saudi arabia. kevin: meanwhile, senator lindsey graham has also said quote, "all indicators point to saudi arabia and if it turns out to be saudi arabia, as i said before, there will be hell to pay." how is turkey responding? >> turkey is looking for response from the united states. turkey knows what happened, unfortunately, and the united states needs to step up and help turkey. turkey does not want to be an argument with saudi's, that is why the u.s. should step up. saudi investigation team came to turkey and did a joint investigation team to look for , unfortunately, but it seems that turkey is a

long. shery: this also comes at a time when american pastor andrew brunson was freed. that was the main point of friction between the u.s. and turkey. now you have the saudi's and the turks having this huge dispute. saudis have been very close to the u.s. ween both situations, could see a realignment of the different dynamics between the three countries? ali: i think they are separate issues. i do not think there should be a link between the saudi case and pastor brunson -- kevin: but they are linked. ali: they need to have an open dialogue to saudi's issues. i am glad that pastor brunson is on a plane coming back home, so it is a good news for reducing the tension, but for the saudi case,

there are other questions that need to be identified. kevin: eli, on the issue of just how much the u.s. is spending and making the business deal with the saudi's, this was the first country president trump visited when he was elected. not canada or mexico, but saudi arabia. this was a pinnacle of the jared kushner foreign policy relationship with the saudi's. $110 billion. ing that itident say would be difficult. stop this arms deal, is he wrong? the supply chain be impacted if their bottom lines are impacted and funds are cut off to the saudi's? could easilyident say i'm going to suspend an arms deal until i get a full accounting from the saudi's to pressure them to come clean. without necessarily disrupting

the supply chain and doing all of that. sales toased arms saudi arabia began in the second term of the george w. bush administration. the israelis have dropped their objections on this end of obama, even though he was critical of the saudi's and tried to reach a nuclear agreement and part with the iranians, he, too, continued the arms sales. that is been a bipartisan approach that has been good for defense, and one does have to wonder if this saudi's have the capability to use this equipment effectively without u.s. help and spare parts. but regardless, this is something that is been going on for a wild.

there are plenty of things you can do short of ending the arms says,as senator rand paul that would send a message to the saudi's, and the terror -- and deter them. shery: ali, we know that turkey and russia have cozied up when it comes to military sales and arms deals. that has infuriated nato. with the release of the pastor, will we see a rekindling of relationships between turkey and the nato? ali: there is a possibility. be more dialogue is the pastor brunson case resolves right now. i am optimistic that turkey will get closer to nato, but i do that there isght

a problem that turkey is looking for different alternatives. kevin: even how quickly this has shifted to your point, and this is a massive, massive story, particularly when you have the "fake news" element and you have the geopolitical tensions between turkey, russia, and the united states, and what is happening between u.s.-saudi relationships, and to just in the past week when you have, lindsay graham, rand paul all riticizing the saudi's for how they handled the saudi's. you have the democrats voted against the arms deal last year, how much of a wake-up call is this for the new regime in saudi arabia? eli: it is enormous because what you had was a high moon for the

crown prince where he had a really successful visit in the united a tory did not just meets and policylists maker types in washington, he went to silicon valley, he met with hollywood executives, he talked to wall street financiers, and he really tried to get a tour of the american elites. he came away with a lot of support. of that has largely evaporated the more we learn about this particular incident. it isd point out that extraordinary that you are getting the kind of unity in the republican party on saudi arabia. rand paul is to be expected and it is a little hypocritical. he is arguing for ending an alliance or topper relations with saudi arabia and trying to do his best to warm ties with russia who has done worse, let's be honest. [laughter] is never a good indicator, but lindsay graham and bob corker really does

represent the center of their publican party. you are seeing bipartisan consensus and i do not know that in the end, trump is going to be able to for him to do something on this against the saudi's that is meaningful. know now that goldman sachs partner gina powell is no longer in the runs are place nikki haley as the u.n. -- as the haley a u.s. ambassador. playing -- how important will this new person be when they take the job? eli: we do not know who it is going to be but it is a very important position. envoice about some of the hypocrisy that goes on in the u.n. and the fact that they

overlook many abuses. inside the a rot united nations system for decades. the trump administration is served well by somebody in that haley mode because she did get a lot done even though the overall iedmp approach really wear u.s. allies. she was able to get important resolutions at times as well as a re-budgeting of the entire approach to u.n. peacekeeping. shery: eli lake, thank you. and alley -- and ali cina r, thank you. serveerg will no longer as the media partner for the future investment initiative. still ahead, we will continue watching the markets. we are seeing the dow reversing earlier gains. we had seen gains of more than 300 points during today's session but now it is falling to two tenths of 1%.

we are seeing energy down as we see wti trading around $70 a barrel. this is bloomberg. ♪

♪ leslie:, bloomberg reported that china had hacked into u.s. companies like amazon and apple. i asked democrat mark warner, from virginia about it. >> i been pressing the technology community really hard, what do we know? is the story accurate? the company that were particularly mentioned, are they pushing back very very hard. so i think there is a real question here. but -- >> hear me out. spotlights need to be put

on it, absolutely, but there needs to be some level of responsibility here. i've great respect for the organization, but there ought to be a protocol. when we are talking about something that can have as much national security ramifications, and i believe that china is a real threat, that you are motherboardsips on going into cloud services and a host of other entities -- there needs to be some protocol earlier on in the discussion to make sure that the government is ist so that if this threat out there, it should not only be a race to see who can break the story, but how to make sure national security is protected. kevin: do you have any thoughts on that? e is one iadcom issu am still looking that. are tryinge is they to move to mostly american

operations and their operations are more and more into america. one of the questions i have is do they actually have ties to china? what i concerned about is whether the ceo, who is actually malaysian but of chinese -- itry, that is someone does not mean that he is necessary ties to china. kevin: my interview with senator mark warner and i got to be honest, it is not just a russia, they are talking about china. [laughter] shery: not surprising. for to thatooking and of course, if you want to find out more, the balance of power newsletter. this is bloomberg. ♪

>> from new york city for our viewers worldwide, i am jonathan ferro. yield." loomberg "real ♪ try toup, risk assets stabilize following a week of outflows. the federal reserve taking a presidential beating. still looking to deliver more rate hikes leaving most wall street strategists to curve flattening going at the 2019. we begin with a big issue. a messy week on wall street. >> we will see more talks