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tv   Bloomberg Markets Americas  Bloomberg  November 1, 2019 10:00am-11:00am EDT

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i don't want to speculate, to be honest. the fact that we are in phase one is itself a big breakthrough. that was a concession by president trump rather than go homehe entire grand slam run. better to look at it in that was a change in the president's thinking committed to him by the trade principals group, and it came from successful negotiations with the chinese were here a couple of weeks ago. my view on these things is not to try to predict long term. my view is let's stay right here and now and look at what's in front of us on the phase one agenda, which i have done my best to outline to you. i don't want to speculate on the long run. negotiations, if you've
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ever been involved with them, good things beget other good things, or vice versa. doingy i see it, and i'm my best to report this to you without divulging too much, the mood music is good. the negotiations are going well. thought.e let me give you one additional thought. the official statements from china, let me repeat this. back, andt, going i've been here almost two years, doing this nonstop, many times we had a more optimistic view, but then we would get statements and commentaries from officials in the key chinese ministries that suggested not so much optimism. this time around, regarding phase one, please note how
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optimistic the comers ministry, the foreign ministry, the finance ministry, and their leaders, how optimistic, how positive and constructive they have been. i used that as a leading indicator, jonathan. i don't want to get ahead of this story. i don't want to predict. all i'm saying is the phase one talks, which are here before us and which represented a change in the entire framework of negotiations, those talks are not complete, but they are going well. ,onathan: the ism just out 48.3, downside surprise. , 12ty much every industry out of 18, reporting contraction in october. can you see how this tension between the united states and china is starting to bleed into the manufacturing segment of the u.s. economy? mr. kudlow: i think there have been impacts. my own view is that the impact on the u.s. economy is minimal.
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the impact on the chinese economy has been much, much greater, for a variety of reasons. perhaps four times as much. on the manufacturing numbers, the market ism was a better number than this ism. today's jobs report, by the way, when you adjust for gm, actually showed a 24,000 increase in manufacturing jobs. that's the best number we've had in quite a while. one of our problems, though, is european recession. volume ofa huge manufacturing related sales to europe, and erupt, as you know, is in a recession. that has hurt us a lot. course, as we've discussed, the headwinds from severe monetary tightening, particularly last year, i think have hurt that sector.
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monetary policy, fortunately, has finally turned around. it is moving in the right direction. the target rate has come down. the yield curve is normalizing. the balance sheet and the monetary base are expanding. those are pluses. we've gone from extreme tightness to a somewhat more accommodative position. that's going to help manufacturing. it's going to help everything. the european story is a drag on ,anufacturing, but my hope here and again, these jobs numbers, 300 the thousand blowout jobs numbers today, i think our economy is stronger under the service than folks think. i think business investment is going to be on the way back. i think on trade, where there is uncertainty, i grant your point, china looks better. usmca still looks good. the reports from capitol hill are very good on usmca.
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canada and mexico, obviously, are gigantic markets for our manufacturing exports and so forth, so that is going to be very helpful as well. so let's see. let's play this thing a day at a time come a month at a time, and so forth. jonathan: most people would say the european economy is slowing down because of what has happened between the tension between the u.s. and china. fiat chrysler and peugeot announcing a merger this week. by aot is 12% owned chinese motor corporation. has the united states taken a look at that deal? mr. kudlow: not yet. we will, obviously, look at it very carefully, but not yet. jonathan: but has the president said? mr. kudlow: the president has not commented on that deal. jonathan: do you think it is worth having a look because of the sensitivity around chinese owned companies? this is one of the big detroit
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car companies in the united states, part owned by a chinese motor corporation, because of its ownership of peugeot. mr. kudlow: we will take a careful look at it. we want to do business around that it isproviding to our benefit, the united states' benefit, and i presume the other country, too, but president trump is here to defend the u.s. economy and the american workforce. with respect to the chinese story, we obviously are alert and on guard. we have to make sure that whatever china business develop its occur do not occur to the detriment of not only our economy, but our own national , hence the idea of having sensitivities. as you know, we have export controls. we have an entity list. now this automobile deal
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probably won't be part of that entity list. i don't think that would qualify, but i don't want to speculate. that's a commerce department decision. signatory ross himself will be looking at that, so i don't want to go too far. we welcome a good deal. we hope it gets more production in the united states. and workers and employment in the u.s. with respect to the chinese angle, we will take a very careful look at it. jonathan: larry, always good to catch up with you. appreciate your time. we know you have a busy one at the white house. your economic council director there, larry kudlow, joining us from the white house. a quick check on the markets following that ism report in the united states. equities still looking solid, up 0.8% on the s&p 500. in the bond market, treasury yields shaping up as follows. on the 10 year, up a single
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basis point. muted price action, just looking at some of the levels. unchanged on dollar-yen. euro-dollar, $111.57. from new york come of this was the countdown to the open. this is bloomberg. ♪ vonnie: i'm vonnie quinn in new york, along with guy johnson in london. welcome to "bloomberg markets." that was larry kudlow, economic council director. we are joined now by ellen zentner, morgan stanley chief u.s. economist. an optimistic larry kudlow, which you might expect. before him, rich claret on. he was also -- rich clarida on a. he was also very optimistic.
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where do you see the u.s. economy given that some of the data are disappointing, including the manufacturing data today? ellen: i thing it is a mixed picture of the u.s. you have a very strong domestic economy. the gdp report yesterday showed how much the consumer is there to support the economy. that is absolutely necessary because all of the sport related, externally exposed sectors are weak. the employment report didn't change that view. what it did was provide optimism that we haven't lost labor force growth yet. the domestic economy is strong enough to support a certain , a certainb growth level of consumer activity, but the ism survey today showed that manufacturing is still weak. we are waiting for a bottom there. we haven't seen that yet. we still got more data that is going to be affected by the gm strike. so i think you've still got his
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big divergence between domestic and external parts of the economy. vonnie: fed vice chair rich clarida said, "i don't see a crack in the consumer. income gains are strong and housing is can to being for the first time in several months." however, he wouldn't really be drawn into the trade question. he did say it is input they are considering, but it involves exchange rates, profit margins, and visual instances of tariffs. how are you modeling the current situations into your forecast? ellen: our sumption is that a phase i one deal is signed, and that we avoid the december teams tariffs. we do not assume that the -- the december 15 tariffs. we do not assume that the december 1 tariffs will be rolled back. it would surprise positively to the upside, and we would probably gain back some of that manufacturing activity over time.
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the december 15 tariffs are a big deal because they hit consumer goods, and consumer goods that we are most sensitive to in terms of, think 20 years ago. your cell phone was not a necessity that you could not live without. now it is, so you are still going to have to buy that cell phone, but you would cut spending elsewhere because the prices going up. that is why the december 15 tariffs are so important. so trade is still just as much of an uncertainty weighing on business confidence, weighing on capex. the fed has tiptoed around that very carefully. on july 31, what did chair powell say? trade has moved back to a simmer. on august 1, we announced a whole new round of tariffs. so they have to be very careful about not pinning the outlook for monetary policy on trade alone because they just don't know what will happen there. do you think the strong
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numbers out of the u.s. economy right now are going to be enough to encourage the president may be to get a bit more aggressive on trade? he's got the u.s. economy with wind in its sales right now. the rates have declined much less than people have anticipated. you fear that could be his reaction to this? ellen: it's an interesting question, and we get this question a lot. the fed has cut interest rates when the president has pushed the envelope on trade, so does that tell the president that he just needs to push the envelope on trade further in order to get further cuts? it's a fair question. i don't know the inner workings of the president's tactics or what his endgame is. surely his endgame is to be reelected. but right now, what i tell you is that he should be confident that he has a good economy despite the drag from trade. if you want to have the economy even better performing, with
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more balanced growth into next year, then trade would need to stay on a better path, a better tone around it. so i can tell you that if i were advising the white house, which i certainly don't, that that is the part of the economy still being held behind, so you would want to do something that ensures you lift that. guy: just putting trade to one side, do you think the u.s. consumer is currently strong enough to allow the manufacturing sector to decline, bottom out, and then recover without causing a recession? ellen: that's also a great question. the consumer is 70% of the economy. we can see that manufacturing related to the domestic activity has not weakened as much as the areas externally exposed. in prior manufacturing slowdowns , and we have a good five or six historical episodes 2.2, it did not lead to recession -- , it did notpoint to
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lead to recession. even if trade is not on a much better tone year, but we are able to avoid the december 15 tariffs, that is going to result in companies still having to do some modicum of investment, even if it is just replacement rates. so we are on track for better investment numbers next year compared with this year, unless you assume that trade devolves into something much worse. vonnie: larry kudlow just talked -- lastst year be year being a case of severe monetary tightening. is that the case? did the fed manage us into this part of the cycle? ellen: the fed has a job to do. they can see the economy is growing at 3%. they can't have that. if their job is to extend expansion as long as possible, it also includes not allowing the economy to overheat. so they are out there doing their job. they hiked four times. we can argue, and will continue
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to argue for decades, whether they should have done that final hike in december. at the time, they felt they had reached neutral. that monetary policy was not too tight, nor too easy. but the problem is that doesn't really exist. it is like being in purgatory until you know which way you need to move. if neutral does exist, you are not there for long, and changes in market conditions can easily drag the fed away quickly, and that is what we saw happen after that last year. theye: do they feel like have more power over the likes of the fed, the likes of even the administration, than maybe once before? right now, the 10 year yield in just one week has gone from 1.86% to 1.69%. ellen: it is always going to feel like the market leads the fed because the market reacts intraday, and the fed makes
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low-frequency decisions in that high-frequency world. it could be that when the market views incoming data and risk correctly, and the fed agrees, the market is always going to have reacted ahead of time, so that is why it always looks like we are leading the fed. one fear that investors have had that has come through under powell's leadership is that it would be a time of volatility, and more volatility because we haven't been able to fit him into a box, into a nice framework, so that we can guess exactly what the fed is going to do. that has created a lot of volatility. but we also see that he is able to steer a committee that can react much more quickly than in the past. these may be actual insurance cuts that work. what he gave us on wednesday is a nice framework now. i like it very much. he's told us exactly how high the bar is for the fed to hike all onand pinned it inflation and inflation excitations.
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that will tell you how long it will be before the fed could hike again. our view has remained very consistent here. we thought they would cut three times, that october would be the last cut, and they would remain on hold through the end of next year. that is exactly where the markets are now positioned based on how powell communicated on wednesday. guy: are you surprised the curve is flattening? ellen: the curve can flatten for quite a few reasons. the curve can flatten because markets think that the fed is making a mistake. the curve can flatten because other areas of the global economy are attracting the longt away from end -- or sorry, driving investment into the long end of the curve. i don't think it is flattening today because the markets have assumed the fed has made a mistake. you know, if i were powell, i would have done a fist bump after the employment report today.
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they sent a very strong message of confidence on wednesday, and now we've gotten a round of data that has proven that. no one likes to see the ism move below 50, and it has remained below 50. it is a little different than what we are hearing from the market pmi, another survey trying to get at the same conditions across manufacturing. i will also note that ism manufacturing is heavily weighted towards large, multinational companies, and that is where the biggest drag is. so i don't think it should be surprising that ism is going to probably for quite a few months going into the end of the year before stabilization. we are looking at global growth in our forecast ottoman in the first quarter, and that is when you should expect ism numbers to bottom. guy: where do you expect the dollar to go? ellen: our chief fx strategist has a view of a weaker dollar. at times, it is difficult to argue that because folks tend to look at the interest rate
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differential, even though the fed has been cutting rates, but rates are still higher than others. so what is going on with europe and brexit makes a big difference as well. the fundamental factors are there to drive the dollar weaker, and that remains his view, but i think in the short term, you will continue to get looks, especially if data good, that will have support for the dollar. vonnie: we are going to come back to brexit and other fiscal matters in just a few moments. i love what you said about smaller businesses, because we have the same in china overnight with the manufacturing pmi, coming in better than the more official manufacturing reading. ellen zentner is staying with us. we will come back to her in just a few moments. let's check markets first with emma chandra. emma: we are looking at a risk on tone for markets, both in the u.s. and in europe. the unexpectedly strong jobs data helping out equities. the s&p 500 trading at an all-time high.
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the nasdaq putting in a gain of close to 1%. the stoxx 600 in europe also taking around 0.7%, significant leg higher when we saw that jobs data in the u.s.. if we switch of the board, we've got a nice chart which shows that if today's games hold, we are looking at the fourth consecutive weekly gain for the s&p 500, and the second gain of more than 1%. that is on some tougher trade headlines in the u.s. this week. in earnings news, i wanted to point out exxon and chevron, both putting in some strong results. production in the permian really bolstering both exxon and chevron. chevron in the red, whilst exxon is in the green. chevron the only one of the oil makers to miss estimates on profit. of course, those gains in the permian helping to offset lower oil prices. we are looking at them edging higher today, but headed for the biggest weekly loss in a month
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for oil. in the week that we were supposed to see brexit happen, i wanted to point to the pound, looking at a gain of more than 1% this week. this after october proved to be the best month for the currency since april. sterling trade is now focused on that general election on the summer 12th. guy: aren't we all -- on december 12. guy: aren't we all? any moment, more on the data out of the united states and the commentary that comes with it. at noon, david westin speaks with house speaker nancy pelosi following the impeachment vote yesterday. this is bloomberg. ♪
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♪ guy: welcome back. you are watching "bloomberg markets." vonnie quinn in new york. i'm guy johnson in london. let's talk about our weekly etf segment.
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here to discuss, bloomberg intelligence etf analyst. how do i get exposure into the housing sector? reporter: we are looking at two housing etf's today, housing construction etf, and homebuilders fund. these offer exposure to the u.s. housing market, which has really outpaced the broader equity market this year, and it really is a rate story. we are looking at the 30 year fixed treasury rate back near multi-decade lows, close to 3.2%. that is really spurring demand for new homes. we are seeing other fundamental factors really contribute, and consumer strength is such a tailwind. it is so rare we see this consumer strength in a falling rate environment. vonnie: yes, it is interesting. even rich clarida bringing up
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the strength of housing in the last month or two compared to previous months. what about the difference in the funds' returns? fund has just over 60% exposure to the homebuilders group, so that was among the most beat up last year, and has done super well this year. they are overweight in the homebuilders segment that is really contributing to their close to 50% return this year. i also what to bring up another fund that launched this year. it is a little more diversified across the u.s. home market. housing reads, mortgage lenders, home improvement retailers. vonnie: all right. morgan, thank you for joining us. that is morgan barna, bloomberg intelligence etf analyst, joining us from washington, d.c. guy: still ahead, a new phase of the impeachment inquiry. the latest from capitol hill is
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coming up next. at noon eastern time, we hear from house speaker nate to below see just one day after that impeachment vote -- speaker nancy pelosi just one day after that impeachment vote. we also need to talk about a changing of the guards. christine lagarde's first day on the job at the ecb today. she has a long list of challenges. what will the road ahead look like? the stoxx 600 here in europe got , 399.86.y close we nearly got to 400. that is a key line in the sand that everyone is watching. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." yesterday, house speaker nancy
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pelosi launched a new phase of the impeachment inquiry, but with an unclear timetable and a lot of political uncertainties. we need to figure out what happens next. here to do that for sr chief white house correspondent -- here to do that for us, our chief white house correspondent kevin cirilli. kevin: that is really the conversation on capitol hill among senior sources to republicans, who have told me they are fully anticipating that wise,ould open hearing get started ahead of the things giving holiday. here at the white house, president trump's remaining steadfast, as well as really having business as usual. he will continue to hit the campaign trail over the next couple of days. meanwhile, i'm also told from the reelection effort, that they are doing this as an opportunity to fund raise. from the democratic perspective, they also view this as a time to get serious, a time to really
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kickstart this effort to be more transparent with the american people. also, we should note it comes at a time in which the 2020 contenders, many of whom are senators, are hoping to get this tied up for the iowa caucuses in the first quarter of next year. a lot of politicking going on behind the scenes and increasingly more public. it is going to be really interesting to see what david westin has to say with house speaker nancy pelosi this afternoon. vonnie: yes, exactly. kevin cirilli, thank you. for more on the impeachment inquiry, be sure to tune into "balance of power" at noon eastern time, house speaker nancy pelosi down with david westin. let's get back to the broader economy. potential implications from all of these political much nations and movements. we are joined once again by ellen zentner, morgan stanley chief u.s. economist. i'm reluctant to ask if there will be a direct economic impact
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from these proceedings, but the fact that legislation will be held up because of the amount of air being used by these impeachment proceedings, that could impact the economy, correct? ellen: yes, whether it is impeachment proceedings, a very close election or contentious election, we can look back at past election cycles. we can follow things like the economic policy uncertainty index. it shows that, especially in contentious and close elections, it can dampen this in this activity, household activity, certainly confidence. oftentimes, we could say we don't feel so good and we are still out there spending come about confidence would first show signs of cracks. the 2016 election was the first time we really started parsing party affiliation within consumer confidence surveys. you saw, after president trump won the white house, sentiment among republicans was at record
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highs and democrats was record low. again, it didn't really see spending falter during that time, but those are the more high-frequency things we would look at to see. the households feel ok. are they uncertain? are they worried about their jobs? whatever that is. if i point to one thing we can watch in the retail sales report that tells us whether households feel ok or not, it is dining out. that is the first thing we cut out if we don't feel good, no matter what is going on. political backdrop, economic backdrop, or otherwise. that would be what i would watch. it has increased for nine straight months. vonnie: that is very exciting to know because we will take a look that immediately as it comes up month by month. rich this morning also pointed -- rich clarida this morning also pointed do that is a bit of a crack. what if a democrat takes the
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presidency? no matter which of the democrats we are listening to right now, each has a tax plan that maybe would be hurtful to business. ellen: it is interesting because, from a market perspective, at the base of it you can look back and say, ok, markets tend to love republicans. markets tend not to like democrats. from the policies that have been bounced around, maybe wealthier folks are more nervous about a democratic win, given all of the suggestions for a wealth tax. i would say that if there is one big strong bipartisan agreement, it is the deficits don't matter. i would say won't count out more stimulus spending, regardless of which party wins the white house. would the fed have an issue cutting or hiking rates close to a u.s. election? because would say no they would find the underlying conditions, and they would have to be very convinced about those underlying conditions that would
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require a rate hike or rate cut. on hikes in particular, we have plenty of historical evidence where the fed has hiked during an election year. we also have historical reference to when they've cut in an election year. for instance, there have been election years when the economy has been in recession. so politics really don't play into it. can i tell you that probably, they would love to not have to be a part of the story next year? absolutely. but does that mean that policymakers that have an overarching dedication to extending expansion would not act appropriately just so that they wouldn't be accused of influencing the election? that's not the case. they don't bring politics into it. but i can tell you, chair powell raised the bar very high on wednesday for there being a case for hiking, or a case for cutting. i think the strongest case he made was for the fed doing nothing next year. that would probably be the best outcome in terms of not being
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accused of influencing the elections. a few minuteslow ago talked about the euro zone recession as being a significant factor behind what is happening with u.s. manufacturing right now. is he right? therefore, how important is the performance of christine lagarde over the next 12 months? ellen: u.s., exports from the u.s. have been hit basically from all directions. not just europe, not just china, although we don't export a whole lot to china. but a stronger global economy is what matters most in order to help manufacturing in the u.s. begin to repair and move forward. so it is not just europe cutting , but demand for u.s. goods a european recession certainly would matter. it would matter to the global economy. it would certainly matter to emerging markets that export
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into europe quite a bit. i think lagarde has a very tough job to do. she is coming in at a time when the ecb is providing more easing , and has been set on a path of further easing, so she has to make her own assessment. was that the right course for draghi to set the ecb on? does she want to maintain that course? how far does she want to take it? it is an extremely tough job to provide more monetary policy easing when rates are already about as low as they can get. vonnie: just to finish off in the u.s. and on the stock market, obviously we are at 3060 right now, and up another 0.75%. appetite today for risk. rich clarida talked about us being midcycle, which he couldn't define, but said we are definitely not late cycle. what do you make of that? ellen: it's been hard for people
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to understand what to make of the midcycle comment. goaded into that make more sense. if you want to take it literally, then by saying we are midcycle, you would be telling investors that we have 10 more years to go, and it just doesn't seem believable. they are called business cycles for a reason. they end. are we late cycle? yes, but how long are late cycles? we've had late cycles, like in the 1960's, that were very long. we've also had late cycles that were very short. if these rate cuts work, you do extend a late cycle economy. that's the way i would characterize it. trade is going to play into that. the election is going to play into that. i think it is right for the fed to maintain less ability. -- to maintain flexibility. but otherwise, i hate to use
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their phrase, we seem to be in a good place. i agree. vonnie: a great place to end things. ellen zentner, thank you for your time today. ellen zentner is morgan stanley's chief u.s. economist. let's check in with the first word news with ritika gupta. labor market.s. was on excitedly resilient in october. ayrolls rose and the symptom or figure revised up. chief economic's advisor says he is working on tax cuts to the middle class. larry kudlow told bloomberg the proposal would be announced before next year's election. kudlow also said trade talks with china continue, and president trump is optimistic. democratic presidential candidate elizabeth warren has fleshed out her medicare for all plan. the proposal would redirect most employer-based health care spending to the government. the plan would be paid for by
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imposing a wave of taxes on large corporations and the wealthy, plus event spending would be cut. it was a chaotic halloween in hong kong. police used tear gas while scuffling with protesters and partygoers. many were wearing masks in defiance of a ban on face coverings. meanwhile, communist party leaders in beijing signaled that they may be taking tougher security measures. hong kong courts have approved church and's on online posts aimed at inciting violence -- curbs on online posts aimed at inciting violence. 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. guy: thank you very much indeed. coming up, more on the trade talks between the united states and china, and larry kudlow's comments on them. that's up next. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." time for our's stock of the hour, looking at alibaba. investors digesting the latest earnings report. emma chandra has the details. emma: alibaba beating on all metrics in that earnings report. top line sales coming in 40% higher than a year ago. what we are actually looking at is a continuation of slowing revenue growth, despite those numbers. analysts and investors largely cheering today's report, noting that what it shows is resilience among chinese consumers, and especially online spending in
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china, even as the economy there slows. commercebaba's core business remains dominant, if we switch of the board here, you can see how dominant that is. we've got a pie chart that will show you core commerce making up some 80% of their revenue stream. take a look at the pink comedy cloud computing stream. that now accounts for about's -- the pink, the cloud computing stream. that now accounts for about 7% of its revenue source. hit has doubled its contribution in the last three years. alibaba really pushing into cloud computing as a way of diversifying its business. these initiatives have helped widen the gap between alibaba and its arch foe tencent. we can take a look at those shares this year. the white line is alibaba, the blue line is tencent. we are looking at a big gap between them. alibaba gaining some 29% in 2019.
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tencent just about 2%. alibaba's biggest day of the year is still ahead of them, singles' day, on november 11. last year it netted more than $30 billion of sales in just over 24 hours. that is your stock of the hour. vonnie: thank you for that. let's get a reset on trade now. white house economic visor larry kudlow telling bloomberg that president trump is optimistic that talks with china are continuing on a phase one trade deal. mr. kudlow: the chapter on agriculture is forced truly completed -- is virtually completed. the currency chapter is virtually completed. the intellectual property chapter, we've come a long way on that. i don't think it's been completed. it is still under discussion, but we've made very good progress. the deal is not completed. vonnie: for more on what we know about where talks stand, let's
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bring in bloomberg trade reporter shawn donnan. larry kudlow obviously sounding very optimistic on these metrics , or verticals, if you like, but overall, where does the u.s.-china trade relationship stand? jobn: larry has done a good of always sounding optimistic on china trade, and i think that is something we need to keep in mind here. there is no doubt we are getting close to a phase one deal. the big wrinkle now is where exactly donald trump and xi jinping are going to meet to sign that phase one. we should remember, this is a fairly narrow deal. the agricultural chapter that kudlow was talking about there is really a purchase agreement, or laying out a timeline of purchases from china, to resume at first purchases at pre-trade war levels and go from there. the intellectual property chapter is something that was there in may.
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the currency chapter was something he talked about that was kind of nailed down in the early part of this year, and they were talking about in february. all of this stuff is coming together now. they are going to wrap it up in a bow. the two leaders are going to sign it. they need to find a place to sign it. we may get some news on that today. robert lighthizer, the u.s. trade representative, is getting on the phone today with liu he, the chinese vice premier and their top trade negotiator, to see where they are and try to take things further forward. we will wait and see there. the uncertainty now is when and where will the leaders meet, and that is important because that is going to set the deadline for these talks. trade negotiators are negotiators, and therefore, they like to negotiate up to the very end. they need that deadline. guy: talking of which, is there talk that the stronger economic data the u.s. is producing at
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the moment may encourage the president to take a slightly harder line? shawn: that's entirely possible. at the same time, this is kind of mixed data. we are seeing weak manufacturing data today, the ism down at 48.3, slightly lower than expected. that is and has been the main sector people have been focusing on in terms of trade war impact, in particular, how that sector is looking in swing states going into the election next year. so yes, he's got some encouraging jobs numbers. the president clearly excited about that. but when he looks around the swing states, there is a slightly more nuanced picture, and his advisors, including larry kudlow, are aware of that. vonnie: one of the things larry said in response to a question is that the effect on china is much greater than the effect on the u.s. he even said maybe four times greater than the effect on the u.s. whether or not that is true, it would obviously influence the president.
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would it influence the negotiators? shawn: i think for the negotiators, the question is what will their political masters bear in terms of economic pain and political costs. that's where these economic numbers come in. it is hard to figure out not just how much damage there has been on both sides. some of this damage is hard to disentangle from broader economic trends. in china, people talk about a rotation in the economy, and the effect on growth of that, as well as the trade wars, but the question becomes how much political pain can you absorb. in the u.s., there is certainly a much shorter political cycle than there is in china. guy: does the latest on impeachment make usmca harder or easier to pass? shawn: i think both sides have done a very good job of keeping the usmca debate isolated from the impeachment debate. i think president trump has
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tried very hard to force the pelosi,democrats, nancy and i guess we will hear from her shortly on bloomberg television. she has done a very good job of maintaining her line that she once to see changes on labor enforcement and so on. yesterday she said she thought they were very close to something on usmca. the reality is they need to be close to something on usmca because they are running out of calendar days in this year, and no one thinks that usmca would have much of a chance passing next year in an election year. guy: always good to get an update. thanks indeed for joining us. shawn donnan. vonnie: still ahead, we will hear from house speaker nancy pelosi. she is sitting down with david westin to talk about the economy and impeachment. you don't want to miss that. it is coming up at 12:00 p.m. eastern, 4:00 p.m. london time. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." time now for futures in focus. joe, we saw the employment number. it was much stronger than in passivity did -- then anticipated. what are the locations of that for the markets? joe: in the fixed income markets, you've basically seen at the curve has flattened. bottom line, short-term fear has kind of been alleviated somewhat because the consumer is still strong in the united states. that is reflected in the jobs numbers, especially that we saw 128,000. with the uaw strike, we thought that number could be about 50,000 less then what came out. the bottom line is you could see a growth number around one at
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17000, 200,000 -- around 5000, 200,000. that has taken pressure off of the upside on the bonds. you can see the equities have really taken off because of that. guy: where do you see the dollar going? are we going to retake 98 on the dollar index? we've been flirting with 97. it's going to be tough to say. again, i still think that the story being told right now is that the consumer is so strong in the united states, you're seeing some positive numbers out of china, and if we get that trade deal done, i don't know if you will see 98 too soon. but any disruptions in that discussion -- we thought we were going to get a deal signed at the apec conference. it looks like that is not going to happen. i think the dollar is going to stay at this level. i don't see it challenging 98 in
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the near future. guy: great to get your take, joe cusick joining us from the cme. vonnie: it is time for your latest bloomberg business flash. exxon has joined its peers by outperforming expectations in q3. still, analysts had been lowering estimates the last few weeks as the outlook darkened. the so-called super major energy companies are facing investor skepticism about next year's cash flows. the world's biggest maker of insulin raised the lower end of its sales forecast. hasnew diabetes drug obtained blockbuster status. it hit $1 billion in sales and pete analysts for the latest quarter. the world's biggest banks have been cut out of europe's biggest deal of the year. havechrysler and psa turned to small advisory teams, working with a french boutique, and fiat using goldman sachs,
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the only wall street bank in a leading role. they will divide up $90 million in fees. that is your latest bloomberg business flash. let's check this rally now in u.s. markets. we have the s&p 500 firmly sticking above the 3000 mark. it is up 0.8% right now. the dow and the nasdaq up 0.9% as we finish out a week of earnings, federal, and jobs today. guy: let's take a look at where we are in europe as we head towards the close. ftse is bouncing back, dax up by 0.8%, cac up by 0.7%. got within shouting distance of 400. didn't get there. this is bloomberg. ♪ erg. ♪
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guy: a strong jobs number. payrolls come in above expectations as the labor market holds up. larry kudlow tells bloomberg the white house wants tax cuts for the middle class.
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we have reaction from fed vice chair rich clarida. he tells bloomberg the u.s. consumer has never been in better shape. and house speaker nancy pelosi will join us in the next hour with one year to go until the 2020 presidential election. how will the impeachment process impact the vote? live from london, i'm guy johnson, with vonnie quinn in new york. this is "bloomberg markets." ♪ vonnie: we are seeing some risk on sentiment here in the u.s. to finish off a week of a pretty trepidation's week. , and ofuring data course, more trade talk. 3061.the s&p 500 is at the 10 year yield


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