president obama and clinton. the fishes devices were also reported at governor andrew cuomo and at cnn's manhattan offices. in florida, investigators are investigating a suspicious package at the home of debbie wasserman schultz. these incidents are being treated as acts of terror, the told -- mayor de blasio reporters that this is a painful time in our nation, there is a lot of hatred in the air. people, wee a few don't know who they are today, but they are trying to tear us apart through acts of violence. it is imperative that we ensure that they fail. it is imperative that we act as a good and decent people. this is a moment in history that is painful but it will pass. this too shall pass. the governor adds that

terrorism only works if you let it work, what they are trying to do is scare us and destabilize us. throne inbehind the saudi arabia is calling the killing of jamaal kush of the aa heinous crime. it has been suggested that the his deathce ordered in turkey. he said that the criminals responsible for the killing will be presented to the courts. the crown prince also said that -- between the saudis and the turks. japanese prime minister shinzo abe is promising to increase cooperation between japan and china. he says both countries are responsible for the region's peace and prosperity. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. i am mark crumpton, this is

bloomberg. shery: live from bloomberg world headquarters, i'm shery ahn. amanda: and live in toronto time -- toronto, i am amanda lang. here are the top stories we are following from around the world. slump steepen's, a look at why investors with equities are seeing the lowest it has been in a while. and financial companies are happy to support diversity programs during good times, what happens in a bear market? and tesla electrifies investors,

expectations are running high after companies move earning results up by a week. we have been talking about has led, the expectations seem high, or at least the hopes -- we've , thetalking about tesla expectations seem high, or at least help, i wonder if there will be any disappointment. shery: given that they want to report earlier than scheduled, you would not come forward if you did not have good news. some rallying 13% at yesterday, today gaining ground in bucking the broader trend in the market. we are seeing the dow fall and the s&p 500 losing ground for six consecutive sessions. we have a mixed bag of corporate earnings, and the nasdaq is also near correction territory. we are also seeing the dollar index now at the highest level of the year.

here in canada we saw an interesting move by our central bank. take a look at what has happened to the canadian dollar after the central bank raise rates again, the fifth time the bank has done so since a year ago in july. 1.75%.now at it was not the level that. attention, -- that got attention , it was the language. the governor said we reserved the right to not go every other meeting. we may go at the next meeting. we are seeing that priced into some of the instruments. take a look at ups, this was a sign of how unforgiving investors are. ups is offering an earnings as a low-end disappoints and of the high-end it beats the consensus forecast, but the low-end would miss. the street is saying that is not

good enough. a halfs a three and percent move on the stock. and at least it -- and of course the economy is doing well. shery: let's talk about market moves, we welcome stephen. it's great to have you. in your opinion piece today you talk about how it's important not just to see how the market moves but what investors are willing to pay when it comes to earnings. seeing the 12re month pe for the s&p 500. this is that the lowest since 2016. what's the problem with this picture? >> the problem is that most people are focused on price, and declaring when we are in a correction or bear market. but what matters more is valuation, what investors will pay. it gives you a better insight into what investors believe will be coming next.

they pay more for stocks when they think there is stability or a quick rise. with valuations we are close to a bear market. yesterday we were down from the peak in december at 17%. today we are down more like 16% because we rallied after the low . this means investors do not have a healthy outlook for the market or the economy. >> i want to ask what you make of the fact that that certainly seems to be true for big investors, we have seen institutional outflows, but retail investors are picking up the baton. is that a late stage warning sign? tiedthink retail is more to the market because of indexing and so it's hard to read. but generally, if retail thought this was a market trading at 16 times, it is almost 16 times. this was great

they would be rushing in. sign -- buy siby gn. amanda: we did all his sense that once there was an alternative in the form a fixed income earnings the stock market would drop off. is this a healthy adjustment to keep things interesting? >> id. think it's just the bond market. -- i do not think that it is just the bond market. interest rates have either fallen a little bit or they are not going up anymore and so i don't think it's just interest rates. i think it's a mixture of concerns about political situations, the fact that out what was baked into the stock price was a lot of growth coming out of republican tax cuts, and we have not seen that much growth. year, buts boost this

next year's earnings will be about the same as what people expected before the tax cuts happened. comes to then a valuations falling and dropping could the good news be that we are closer to the bottom? >> that is the good news. 17%, saw the thing i think that is the most important thing to think about is to change the mindset. for a long time we have been in innate -- in a good economy and expensive market. this is not an expensive market, we are in a good economy or a cheap market or a bad economy and a reasonably priced market. it's no longer what we have been seeing for a long time which is a good economy and an expensive market. shery: i love that you call the same roche. .hank you -- a mirage

thank you. let's talk about diversity. this is an idea that financial companies love to invest in and promote when times are good. but what happens when markets turn south? some are pushing for it to be a key priority through bull and bear markets. story to here with the tell us about how challenging and risky a time we are in. a bear market, what happens to these positions that are supposed to be there and people who are supposed to have these companies better reflect to be bought or population of the united states? nowight now that -- right diversity and inclusion is part of the bull market phenomenon, in a bear market companies shift their priorities that they used -- the funds they used to help -- bring in this

quote, diversity and inclusion is a bull market phenomenon, the minute we had a bear market it doesn't go away but the intensity goes from 10 to one. we are talking about a senior wall street executive acknowledging, and one thing you pointed out in your story that i found alarming was that it's not just that companies stop investing in these things, it's that the more diverse population gets fired first. is that true? a ghost of the phenomenon of last hired first fired. -- it goes through the phenomenon of last hired first fired, it has been a struggle to recruit and maintain black people, latino people, and women. what carla is saying is that we need to keep it a priority, and keep the money and resources in the firm even if we had a bear market. take us through what

financial institutions and diversity looks like now when the market is good in the economy is good. >> there are a lot of programs when it comes to going to , internshipcruiting classes are starting to look like the u.s. population, and some banks have diversity on a scorecard for managers. are judged by diversity metrics. it is the structure -- if the structural thing stay in place, economy turns, the managers will still have to keep the women and people of color they brought in on their teams. are seeing increasingly, not quite regulations but rules around recording diversity and diversity efforts, does this change the scenario a little bit? in bad times you'll still have to say this is what the story is. >> i think that helps. once you have these disclosures,

once you have bank saying this is how many women we have and this is a program we are doing it's hard to take away. i think being open and keeping the conversation helps. that's what carla said, we have to keep talking about it. you need to follow through on the action no matter what the market looks like. amanda: thank you. coming up, one big bank is gassing up ahead of the earnings call after the bell. we have more on that ahead. this is bloomberg. ♪

is bloomberg markets, i'm shery ahn. lang.: and i'm amanda tesla gets a green light from morgan stanley, the electric car company's early earnings report

is most likely a good sign. they are expected to report third-quarter numbers today. .or more we have david would you agree with that analysis? early means good news? >> i think so in this case. theyll of foer like this have good news to report. i have to believe they have good news, they went through a lot in the third quarter to produce a profit that elon musk predicted. we think they will come through with good news. shery: if they show a profit, when will they need to go back to the capital markets? we will have to digest and dig into the earnings report. we will be looking at what is the gross margin they were able to achieve on the model three in the third quarter. they were guiding towards the midteens, around 15%.

and what is their cash flow? this determines how much cash as they actually producing that they can use for their capital expenditures and to keep the company running, so they don't need to go back to the capital markets. that is what elon musk has been forecasting, with model three production ramping up they will not need to go back to capital markets. , and theing report conference call and financials that have come forward will be very telling. we have seen some , i dots turn positive wonder, what about the broader challenges of the auto industry, including tariffs, and flattening demand. when we look at the auto

industry, and tariffs have impacted tesla in a big way when it comes to sales in china, they have essentially fallen flat. we have higher interest rates that will affect consumers across the board. we buy cars on credit in the , and there is an impact on consumer demand. in the u.s., as far as it comes to u.s. sales, we are past peak auto. the thing that tesla is going for now is that they are the new and shiny thing. andrew left pointed out in his report the booming sales right now. there are a couple of years of pent-up demand. lat -- naturally they have incredible sales numbers in the third quarter, and probably into the fourth quarter as the demand is met. amanda: when i look at my terminal i can see the shortages on the stoxx, still at 26% of

the float. does that suggest that if you get positive prices you could see a big squeeze? >> you could. we will see. we have seen in the past where there has been these pronouncements, we have the email that came out when elon musk proclaimed on the last day of the quarter that if we really goodout, we will have some news to announce and they pulled the earnings announcement forward. there's a lot of excitement going into this, but we see the stock fall off after these earnings as the data comes out and the reality comes in. potentiallyd news, to come out about the model ande in the third quarter, maybe a profit. but there are a lot of problems that remain, long-term and even near term. those: and some of

problems are not just the many antics that surround elon musk, and ongoing issues around that but losing key personnel and board changes. when he to be done to reassure that this is operationally running on four wheels? >> you would like to see the brain drain stop at some point. but there is some kind of consistency, or steady-state leadership at the top supporting elon musk in that leadership team. but we continue to see executives leave. and also, coming back to the financials, the liquidity and sustained profitability is key. we going to see a third quarter where the model three probably sold at an average price of 55 to 50,000. they need to make a profit at that level.

they have announced a mid range rearwheel drive that will sell at 46,000. they will start selling those lower margin vehicles. they frontloaded higher-margin vehicles in the front more -- the from quarter. it will start delivering lower margin vehicles, and they need to show that they can build at volume profitably, and they have to clean up these service center issues and delivery issues. the logistical delays in delivery and show that they can operate like a real car company. .hery: thank you coming up, earnings a season is offering some hints at how companies are handling the u.s. china trade disputes. we will hear how companies are adjusting their future plans. this is bloomberg. ♪

shery: this is bloomberg markets, i am shery ahn.

amanda: and i'm amanda lang. it is earnings season and analysts are scouring reports for any hint of how the ongoing trade war is affecting business. one comment that is emerging is that companies are getting ready to relocate supply chains out of china. sarah, in terms of talking about are doing, i'm curious for your take on how much of this is amusing and how much of it is real. people are saying the labor costs are already going up, and they are thinking hard about it? >> this is really the first period where we saw tariffs take . fact, these -- effect so this really is where the rubber hits the road. for that president trump had threatened the tariffs, he said he would put them in the place -- into place. seen them take effect. what we are seeing from companies now is a real

reaction, and there is a harder the about less about uncertainty, but more about how they are planning ahead. there are a lot of companies that are really looking and saying where can we find low cost production that isn't china? they're looking at vietnam, bangladesh, india, those are some of the things they are talking about on earnings calls. shery: do they have capacity to move outside that isn't just talk? >> it sound like they are assessing out the situation. there is not a lot of talk of we .re going to do a, b, and c but there is some expiration, a plan b if the tariffs take effect on a larger scale or they start to cut into profits. there is an appeasement to investors on some of these calls, but i think if we are digging in for the long haul of the trade war, there is really no end in sight. i think in quarters ahead we can look forward to these plans

being unveiled as companies feel the pinch. there was always the understanding that labor cost would rise in china, and inevitability of growth of globalization and economic growth, will there be enough locations with cheap labor to keep inflationary pressures from adding to the friction possibilities? of ceosis what a lot were bringing up, this trend has been in the works for five or 10 years as china has moved up the production chain, labor has become more expensive, and production has become more expensive. companies were already looking outside of china. so it's not necessarily a dramatic shift, it's not that they had to come up with new plans so much as they had to dust off the ones they had in the works. shery: thank you. part of the economy,

an industry that is really interesting that you would not have thought that chinese tariffs would affect, baseball caps. apparently the world series kicked off last night. there were 26% more expensive caps because so many were made in china, and the grit -- and the make america great again caps were also made in china. shery: 89% of caps come from china, apparently. amanda: you can find all of our news on the bloomberg with the function tv . this is bloomberg. ♪

caroline: the federal reserve has issued its -- book. scarlet: this is bloomberg markets, the close. let's take a look at the markets ahead of the headlines,

caroline: yields are coming down, and we are searching for flirting just below the all-important 207,000 market, while money goes into the u.s. dollar and we have the beige book headlines. scarlet: overall, fed growth is steady amid a tight labor market with trade concerns, the majority of districts reported modest to moderate economic growth. we have heard these adjectives for quite a number of months and that continues. firms as pressures on the fed said several districts indicated that there are rising materials and shipping costs, which is backed up by what we have heard during companies earning seasons. they are also facing uncertainty with the trade environment and difficulties finding qualified workers.