Happened. The bears breathe a sigh of relief. But is it all over as soon as it started . The cash trade is just an hour away so lets see if this has legs. Here are your top headlines. With thes a big blow nasdaq down almost 5 . The s p severs it steepest drop since june. And suffers its deepest drop since june. Bill ackman tells market jitters the National Bank to challenge santander. So, a lot going on today, as well as german factory orders. They are now out. Ofth over month, the gain 2. 8 not nearly as much as a survey, which was 5 . Over the prior number, which was 27. 9 . Yearoveryear, its a drop of 7. 3 , which is worse than the survey drop of 6. 0 . And a slight improvement from 11. 3 on the prior numbers. So during factory orders german factory orders not shining light on this. Just under an hour away from the start of cash equity trading. Futures are down in europe. And remember, yesterday we were looking at gains on the dax of more than 1 . Then we closed losses of more than 1 . Now we see ftse futures down. 5 . Dax futures i guess you can call that unchanged, as well as euro stoxx 50 futures. But u. S. Futures continue to trade lower with nasdaq futures up more than 1 . What do you see on the gmm . Anna let me get to breaking Corporate News first. We got that from ryanair. We heard late last night they planned to raise 400 Million Euros in shares. Well find out if they planned to meet that target. They priced the offering at 11. 35 euros per share. The reason was tactical raising from companies around europe and beyond trying to shore their way through the lockdowns, essentially. The aviation sector has been beaten up. They also want to shore up their Balance Sheet and take advantage of Growth Opportunity should they emerge. The placement of Institutional Investors has ryanair add flights since the pandemic suppressed costs. Thats the optimistic line from ryanair. Well see how that plays out for them. Let me get to the jammin gmm. Asia really catching up with what we saw on wall street last night. The Australian Market down, hong kong weaker. A lot of this had to do with tech sterling. Thats where the momentum has come from, the driver has come from. Yesterday in the united states. What is interesting is what we dont see. We dont see enormous flight or extensive flight to the havens this morning. Yesterday, we dont see a huge move into dollars or swiss franc or yen. Gold is up, but only by a little. Well continue to see what drove the selloff. We will get back to that story and continue to analyze it. Lets do that now. Global stocks fall and nasdaq futures continue to slide. Thats as the rotation away from rotations gain steam among valuations. Lets get to the conversation with laura cooper. Laura, good morning. Have you worked out what it is the text selloff of yesterday tells us . There are many theories as to how specific this is to tech, how much of this tells us about the vulnerability of stocks overall. What is your assessment . Laura ultimately, what it tells us is there is no obvious count catalyst for the selloff. There were some laura sign warning signs that it was warranted. Warning signs the it was warranted. It could have been some profit taking ahead of the payroll print today, or just investors not wanting to carry risk into the long weekend. But the selloff is largely concentrated in u. S. Tech. I think it tells us there was some neat to skim some froth off these valuations. Ultimately, i dont see this as a sustained rush for the exits, notably not just in tech, but more broadly within this global risk on environment likely to prevail. Matt what does it mean to you id onwe didnt see a big b safe havens, treasuries, gold, yen . Not a lot of money flowing into those. Laura ultimately, conditions are still there to support broader risk appetite. Its goldilocks conditions where Monetary Policy is accommodative. Investors still expect fiscal packages to come through in the u. S. Were already seeing that in europe. We are seeing central bankers continue to talk about accommodative conditions continuing. The fact that we arent seeing this broad risk off environment shows its concentrated in the concerns of frothy tech valuations or frothy equity valuations. When we look at the european price action, we did see relatively downbeat, but it was contained. And its given limited exposure to the tech sector. Anna and laura, i know the markets live team, youve been asking this question today, how long until stocks regain record highs . I wonder what responses youve been getting. Because what ive been hearing is further selling before we get back to those levels. An ruskin at Deutsche Bank saying how the s p could fall 10 . The s p could fall 8 . Also, nasdaq stocks still looking vulnerable in their view. What are you hearing on the markets live this morning . Laura i think if we look at yesterdays selloff, and nasdaq in particular, it only brings us back to the levels we saw a week ago. Overdues correction was and certainly there is a reality check needed when we look at the exceptional gains in equity markets in the summer. I think Going Forward its a case of the technical momentum indicators clashing against what were seeing, as well as the fundamentals [no audio] so which of these will win out to point out the risk off remains to be seen, but ultimately what we have been seeing is this by the drift mantra. Its likely to be tested but more likely than not, we are going to see more support for equities just given the fact that ultimately the Financial Market conditions havent changed that much. They still remain highly accommodative to support this risk off backdrop. Matt for the sake of Retail Investors, i hope youre right. Laura cooper, thanks very much for joining us. Were going to get back to the markets, but right now i want to do your first word news stories. For that, we go to laura wright in london. Republicansrats and Work Together to avoid a Government Shutdown before the president ial election. House Speaker Nancy Pelosi and treasury secretary Steven Mnuchin made this informal agreement tuesday. They dont want a stalemate. Prime minister Boris Johnson is facing accusations of hypocrisy after speaking to a packed room of tory mps. At least 50 people were crammed into the meeting despite only 29 are allowed in due to social distancing. Minutes after it finished, they had gatherings of more than 30 people of are illegal. France may extend its furlough. Speaking on french television, the finance minister Bruno Le Maire indicated the government is ready to spend more than 100 billion euros it unveiled earlier in the day. If the crisis gets worse and they need to do more, they will. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Matt, anna . Thanks very much, laura right here in london. Big topic of conversation is the text selloff. Havens have hardly budged. Is the selloff just eight stocks issue . Is a tech issue . We talk that next. This is bloomberg. Valuations for the Technology Landscape got into some pretty extraordinary levels. So, i think its not a surprise. The discrepancy between growth and value stocks has been on the table for a while. Seemed toent seen be able to hold a significantly where they stay in favor. As a stock prices continue to go up, volatility goes up, too, which is not a normal relationship. Its normally inverse. 20, 30t that we upended years of that relationship and are starting to get that, that made me nervous. Theres been a lot of free money everywhere. You had some latecomers, the craziness in this 2020 summer of love for investors was getting out of hand. Then theres the robinhood shenanigans that have been going on. It wasnt a surprise. If you have too Much Technology in your portfolio, this is the time to take a little bit of it off. A lot of money has been made in tech, so not surprised there was more movement here. It is the beginning of a healthy correction. We havent seen a dramatic pullback. It will move markets. Matt those are some of our guests reacting to the selloff in tech stocks in the u. S. , the nasdaq severing its biggest slump since march. Despite the drop in equities, moves into haven assets were muted. So maybe investors were just holding cash. Treasuries and the dollar steadily gain. Gold ticked up slightly, traders see little risk for now that the weakness is anything more than froth coming off an overheated market. Were joined by esther racial, fx strategist at commerce bank. There wasnt much of a safe haven bid, right . That something that would be clear to you in the fx market. Esther absolutely. Not in the traditional safe havens, swiss francs, any reactions. Yeah, even the dollar didnt appreciate further. Anna it didnt. And you do expect the dollar to go down, so this is in keeping with your longterm strategy. Voices you one of those backing that dollar lower trend . Esther because there has been a Material Change in the Monetary Policy strategy of the fed. They wont stay lower for longer and they shifted their focus more to employment, away from inflation, and the indicated that they are accepting higher inflation. Policy by monetary the end of ecb all along and nobody will talk about normalization of Monetary Policy in the years ahead. Has known that for a long time. Great, although we heard the yen divide was saying youve got to get back after this crisis normalization. And we dont expect much from the ecb in terms of more extraordinary policy action in this coming meeting, do we esther . Esther we dont. Because theres possibility to ease Monetary Policy further. Weve seen measures they took in march at the heart of the crisis. It doesnt make sense to cut Interest Rates further. There is also that much impact of further extension of quantitative easing. So if they can do more, the forer keep the situation where emergency measures are necessary. Right now, its more to maintain the recovery. We are not in emergency mode anymore. Anna do you see signs of an fx were growing or in progress all war growing or in progress already . I read about skirmishes among central bankers. For example, the ecb and new Zealand Central Bank indicating theyre open to do more to support their economies, to byproducts that can be a weaker currency. Esther clearly. This is a discussion in weaker moves. It has impacts on the real economy and thats certainly not notthing we want, at least in that not as a dampening factor. And they are looking at the euro. The euro is having an impact on the economy. This discussion fired up again. With thei still think g7 Central Banks, they target rates. Its a fight that only knows losers. I dont think anybody, particularly in this situation, would really consider direct market interventions. The ecb can basically only accept this. Theres not much they can do about this. Matt exactly. 118. 45. T theres not much more the ecb can do. Jerome powell manages to stay dovish, get more dovish, whats your focused forecast for eurodollar . Esther we are expecting eurodollar to move about 120 for the end of the year in a sustainable measure, sustainable basis. We actually expect zero dollar to continue the most in the next year. On the one hand, its monetary policies. On the other hand, its inflation. We do not see if the ecb manages to revise inflation in a substantial manner, and you know, Central Banks dont counteract it, low inflation is actually going to be supportive for the currency, in particular if you expect on the others that the fed will manage to get to higher inflation and wont do anything. This will not automatically result in higher rates. Had in our opinion that it favor zero dollar now. Favors eurodollar now. Anna esther, thank you very much. Stay with us. Esther stays with us on the European Market open. Coming up on the program, its jobs day. The u. S. Labor market is seen extending its rebound. We got mixed clues in yesterdays job data. It dropped below 10 for the First Time Since the pandemic struck. Well get analysis next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Looks like 39 minutes away from the cash equity trade. European futures have been bouncing around a little bit today but were now looking at substantial drops on ftse futures of7 , dax. 2 after we saw european stocks drop yesterday, and then the plunge in u. S. Stocks came, of course, after the european close. Speaking of the u. S. , were going to see a jobs report. Bloomberg economists expect gains in payroll to continue, but at a slower pace. Employers added 1. 3 5 million august. In we asked some of our guests what they expect. Janet says recent labor market data says the pace has slowed. We expect an increase of 1. 5 million. Dominic says participation could have increased in august. Increase a 1. 6 million in payrolls. Another says a number is likely to come in close to consensus, but also up around 1. 5 million. All of these forecasts above consensus, and yet the whisper number is only half of that. Esther is still with us. Esther, what do you expect from the number . Esther we also expect pace of recovery to slow. It doesnt matter much for Monetary Policy because even at 10 , Unemployment Rate slightly below 10 , we are far below maximum employment. So its limited. Anna the impact from the dollar is limited. What is the longterm link from the u. S. Dollar and unemployment story . Because the fed has always had a dual mandate. But we heard more when we heard about inflation targeting. We heard about how theyre going to treat the new labor market. Is there going to be a link between the jobs data we get and what happens to the u. S. Dollar . Esther actually, i would expect this link to weaken, because its not about deviations but about shortfalls. Are notng as we significantly advanced, significantly past the maximum implement target, it is clear theyre going to stick to policy and consider easing. The general dampening of the u. S. Dollar, it will only become much stronger if we are getting closer to the inflation target and if we were we are at levels considered to be maximum employment. Matt i want to bring you back to the u. K. Before we lose our time with you. I can understand a stronger eurodollar if you look at fiscal union. We crossed the rubicon into shared debt this new rescue course, the fed is doing what it can to put the dollar side down. I dont get the pound. It was at 135 last week. You got the coronavirus issues, what seems like a lot of confusion in the government and then brexit quickly approaching agreement insight. Why is the pound so strong . Esther something weve looked at repeatedly since the brexit referendum, that pound sterling traders are staying quite calm for a very long time, even as a events are approaching. Thet now, also due to experience of brexit negotiations so far, everyone expects at some point a deal will be made or they will prevent a hard crash at the end of the year a real brexit negative forll be the eu as well as for the u. K. They will come up with something. Rooted. Something deeply although we have risk factors with brexit, its not manufacturing right now. Matt thank you for joining us, esther. Matt welcome back to Bloomberg Markets. This is the european open, 30 minutes until the start of cash equity trading. Well see what happens after u. S. Stocks lost a heck of a lot of ground yesterday. The nasdaq fell 5 . Plunge fell its biggest in nearly three months. Tech shares took the brunt of the beating, knocking down the biggest flyers of 2020. Back in london, to put this in context, is dani burger. What do you make of yesterdays rout . Dani its just all really about tech. You can see it clearly, the trend is your friend until its not. Over the past month, really since the march low, we have seen the nasdaq, which in my chart is the green bar, leading on the way, much better than the equal weighted in blue and the s p 500 in white. When something is on the way up, it becomes high beta. On the way down, he mentioned it was down 5 . Look at the equal weight in blue. It did nothing like that, down around 2. 5 . Its really a head scratcher why this happened yesterday. Tech valuations had been a concern for some time. Maybe it was september. People were back for their august holiday. But it wasnt just tech. It might be more concentrated than that. If we look at the next chart, you can see the names that took some of the biggest beatings. Its what barclays called the biggest concept stocks, things like tesla and zoom. I included apple. Look at zoom. Its the bottom one, falling nearly 10 . Where did the money go to . It certainly didnt go to havens. The yen not really budging. This is in a Broader Market risk of. I know you and i were talking about if it didnt go to havens, where did it go . Money did go to some cheaper stocks. Carnival, the cruise ship operator, gained more than 5 yesterday. And United Airlines gaining more than 1. 3 yesterday. There were some up stocks and it was in the less love to sectors of the stock market loved sectors of the stock market. Anna that interesting, if you take your money into something undervalued and put it into stocks really deliberately beaten up because of the coronavirus. What are analysts saying about the next move . Dani i think because of that concentration, analysts arent too concerned. Barclays say they think markets will be able to continue to climb the wall of worry. We heard from socgen, saying the volatility built up was to protect investors for upside risk. One note of caution comes from pepper stone. They said we had this upward trend in u. S. Futures. And what happened yesterday is it breaks out of that trend. Thats a very bearish signal for technical traders, especially given the fact we have the risk of the u. S. Jobs numbers today. It gives us a bearish set off and we do see those futures still off this morning. Anna, matt . Anna thanks very much. Well keep an eye on those futures. The selloff in tech stocks. Lets get back to the basics. Drugmakers made big promises for vaccines. The moment of truth is almost here. According to air affinity, three Companies May have data before a key meeting in october. Astrazeneca will be the First Company with results on a phase three trial. If pledged 30 million doses to the u. K. Government by the end of the month. Moderna are likely to follow. Were joined by the ceo of air affinity. Good to have you with us. I wonder if you could give us the benefit of your expertise following daytoday, minute by minute testing going around these vaccines. Which of them looks most promising . In terms of being ahead of the others in the timing of the trials, but also rentech, which makes you most around tech, which makes you most excited . Just taking a quick step back, it looks into the details of these trials to get accurate forecast as possible. Two things. First of all, when can we expect interim readouts and when can we expect final results . What you refer to, thats really interim data. Thats the first time we look at the socalled black box and get an invitation of will these vaccines actually work or not . But we have to wait for the final results. Its interesting to come out from midnovember until the end of december when we expect the last trials to have been finished. The important question to ask yourself here is where the regulatory authorities in the u. S. And elsewhere base their decision on these interim results or will we have to wait for the final results to make that decision . I think thats really a key point when you look at the vaccine as it is now. There was aow, tragic vaccine incident in the 70s in the u. S. When they thought a vaccine was coming and the vaccine turned out to have more negative side effects than the actual disease in the first place. Can we be sure to avoid Something Like that this time, a vaccine attempt, a trial with very bad side effects . That is one of the big risks with vaccines, as you point out, and i think thats why one has to be cautious of doing emergency Regulatory Approvals based on interim data. When we look at this data, its just extraordinary. They work really well. There might be a case for saying they need emergency approval. People are dying from the disease. But i think more likely is well have some in line with expectations and their, i would say theres a reason. It will be a fairly small data point. If we look at the actual number of whats called endpoints, how many people would be prevented from getting the disease . Thats what this trial is setting out to prove. Were looking at numbers in the interim around 5060 cases. Thats quite a small number to basis such an important decision on. As you also point out, there are other safety concerns. Not all of the safety issues might have been resolved in a readout. Thats white it might be good why it might be good for a final readout. There is an important tradeoff regulatory authorities have to make. Its going to be very interesting to follow. Anna really interesting to follow the societal decisions and science. When it comes to the timescales here, we understand in the u. S. , some states have been put on alert to prepare for a vaccine. This could come as early as november 1. Given what you said about approvals, does that mean you would have to approve a vaccine after the interim readout to enable it to be ready by november 1 . Esther from our data from our data, thats the case. The fda meeting on the 22nd, i would expect that to be based on readouts. This is the key question. Anna is there any precedents for that . Yes, its not unusual to do that. If you have a trial thats successful, its not unusual to say lets go ahead. Thats why you do the interim readout. ,ut most often, we look at data we need to complete the trial. We have to wait and see what these readouts say before we make adjustments, but its not unprecedented to do that. Matt are you concerned that there will be big antivaccination, i guess, protests, and really action in terms of this vaccine . Yes, that is think one concern, but i think the other concern is that it seems like some people in the markets think this vaccine will be in the pandemic the Silver Bullet in the pandemic. First of all, the efficacy of these vaccines, the goals by the fda or 50 . Ofeans 50 of the vax people who get the vaccine are still at risk of getting the disease. The other word of caution is, from a production perspective, this is a real big challenge. We did a detailed forecast of one can we expect one billion vaccines to be ready . We saw the number was the end of 2021. And of course, a billion is not enough to solve the worlds problems. We need more than that. Its aalso why many step in the right direction, but it will be the Silver Bullet that ends it all. Thanks very much for joining us on a topic that i think is important to everyone, the ceo of airfinity talking about the vaccine, the race for vaccines that his Company Continues to track. Up next, dealmaking in the crone h. Two corona age two. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. 13 minutes from the start of cash equity trading, and futures are pointing down. We are not seeing the losses we saw in the u. S. Yesterday. Bill ackman told bloomberg the market uproar on the nasdaq and the s p was not a surprise given the uncertain landscape and high valuations that the u. S. Is still facing. Not the beginning of the end, but i would say we are coming up on one of the most uncertain. In american history. Divisive american election, followed by a virus that has had a huge impact on the economy. The market has been huge, so its not surprising. Valuations, the Technology Landscape got to some pretty extraordinary levels. So, i think its not a surprise. I dont think its any indication, but markets dont like uncertainty and we have an election in 60 days, where its a tossup who is going to be the next president and what policies, whether trumps second term or bidens first term, what it means for the country, corporate america, taxation. These are uncertain issues and uncertainty is the enemy of markets. Said it wouldnt change your investment position no matter which person was to be president for the next administration. Are you changing your results on that now . Do you think if there were widely different policies, if there were a Biden Administration rather than a trump second term . I dont know if thats complete noble. I think biden and his choice of Vice President suggests a more moderate, as opposed to more Progressive Democratic administration, to the extent that biden is sort of the winter. But i do think they are going to have different policies for taxation, business, etc. Although i do think Biden Kamala Harris is in the more moderate camp. Than a biden warrant administration. But do want to push you, doc you find down 10 . Is that closer to the real valuation for the company, or a fair valuation in this environment . Could there be a lot more to go . Bill i dont know enough about either of those businesses to know whether thats fair or not. Speaking of valuation of some of the highflying companies, a lot is predicated on what will happen in the future. Interesting is a world with almost 0 Interest Rates, you use to discount the future are very low. Companies which are growing very rates, low discount rapidly growing companies can get a high valuations. The problem is small changes in your assumptions could lead to a very different outcome in terms of what the business is worth. Those small changes and assumptions can relate to someones confidence and its hard to pick the future when you have a political environment, and just the inherent uncertainty about the virus. Preparey, cdc had to for a vaccine november 1. If there is a real vaccine that distributed in scale before the end of the year that has a meaningful impact, there isnt one until the second half of next year. I just think its not known today what those outcomes are. And you factor in your risk up when there go is more uncertainty. And the risk premium relates to the discount rate. Plus what you discount in the future. Many rapidly growing companies, you cant justify the value placing a multiple on next years earnings, many of the more mundane businesses. You have to make certain expectations without the company to become profitable, the eclectic values of revenue that comes with trading. That leads to more volatility when theres uncertainty. That was bill ackman of Pershing SquareCapital Management talking about valuations in these markets. Lets get a Bloomberg Business flash. For that, we go to our studios here in london with laura wright. Laura they want to hire workers to handle the holiday search of packages. The career has added thousands of workers to keep up with demand, as consumers are more and more online due to the pandemic. They are expanding sunday delivery to 95 of americans. A new way to lure Office Workers back to shops, a subscription service, offering as many as five coffees a day for 20 pounds a month. It launches tuesday and customers will be given the first month free. They announced they cut 2800 jobs. That your public Bloomberg Business flash. Matt, anna . Anna laura right here in london. Lets talk about m a, specifically in spain. Two of spains biggest banks are exploring a merger. They are considering an allshare combination. It would be one of the biggest deals yet in the Banking Sector. In a country particular hardhit by coronavirus. Joining us now is finance reporter, Charlie Devereaux. Good morning. What is the logic of this merger . Why now . Charlie good morning. Yes, Spanish Banks were already struggling before the pandemic due to the low Interest Rates environment and the pandemic has exacerbated that. So this really makes sense from that point of view, from a geographic point of view. It also makes sense because youve got cash a bank and bankia, it would make it probably the biggest bank in spain. Got to ask you the question that we ask every time theres banking m a, or even a width of it. What might this mean for banking consolidation across europe . Charlie well, banks across europe, this probably presses further deals. Weve seen the ecb really pushing for banks to consolidate and weve already seen, for example last week, Deutsche Bank ceo saying that he thinks the pandemic is going to accelerate this process. Charlie, thanks very much, Charlie Devereaux talking to us about this possible spanish bank merger. Interesting indeed, making it a big challenger to the biggest banks, santander and bbva. Up next, inovio and ryanair seek to raise a combined 1. 4 billion euros in fresh capital. Those are some of the stocks we are watching, as well as the bank stocks. This is bloomberg. Anna come back welcome back to the European Market open, keeping a close eye of futures in europe. We could see a down day for global stocks because the nasdaq futures are down 1. 25 this hour. In terms of individual stocks, lets focus on some of those. Dani burger is with us. Interesting lines from ryanair. Talk about shoring up the Balance Sheet, but also giving themselves some cash to give themselves Growth Opportunities should they arise. Dani its really interesting for ryanair. They announced the Share Offering to raise the money for Growth Opportunities to pay down some of the debt. They did it late yesterday after European Markets had a pretty ugly day. Interesting timing on their part. Its just 400 Million Euros worth of stocks. This is a modest fundraising. But it does send the message that shareholders are confident enough to commit new capital. As always, it is a diluteive event, so we are seeing dilutive event, so we are seeing ryanair down. Matt and vinod via is in the news. Which should be watching for . Dani same thing, another share sale, but theres is going to be one billion euros, so much bigger than ryanair. Weve already seen them down about 3. 5 . Again, same reason, a dilutive effect. Theyre announcing it for a similar reason to ryanair. They say theres Growth Opportunities they want to pursue, and 11 them to pay down some of their debts. Guestwe heard from one that we would see a change in the style of the money being raised going from emergency Balance Sheets to more opportunistic. What are we hearing about the housing sector because there seems to be irregular tory issue in the u. K. . Regulatory issue in the u. K. . Dani four different regulatory builders after concerns they violated protection laws. They pointed out these four. Evidencesed on the that leaseholders may have been unfairly treated, so things like misleading them on the cost of converting a leasehold to a freehold and buyers may have been exposed to unfair tactics. They did say that they are committed to putting its customers first and will continue to cooperate with regulators. Still, look for some red in these home builders. Matt . Matt thanks very much, dani burger with a look at some of these stocks. Youre going to want to watch, really the market will be fascinating after the slump we saw in stocks. We saw some big drops. In fact, apple fell 8 , which is a huge drop for an over 2 trillion company. The drop in apple market cap matches almost half of teslas total market cap and tesla took a serious beating, as well. Coming up, its the market open with futures pointing lower. Go until thee to start of cash equity trading on this friday morning. The big retreat. Supercharged tech takes a big blow with the nasdaq down almost 5 . Futures. 2 more declines. Surprises. The bill ackman tells Bloomberg Markets that this is to be expected considering corporate valuations and the close proximity of the president ial election. We will hear from our exclusive interview. It third big National Bank could be created to do challenge santander. Matt . Matt we are looking at futures falling lower 10 seconds ahead of the open. Futures arexx 50 now down. We are looking at a drop of 0. 6 on ftse futures. Lets see what happens when the cash trade starts. It starts now. Straight out of the gate, the ftse, which has had one of the weakest futures trades drops 0. 3 . We did see some equity indexes trading higher with futures still, including the ibex 35. That is the madrid index that has opened a little bit up. Corolla opens up down. The ftse continues to move lower. With the expression of the spanish index, it looks like we will see a lot of red arrows in the lefthand column of the global macro movers screen. Slidewill continue the that we saw yesterday in european stocks and then really accelerated in the u. S. Lets get over to dani burger to talk about that. This whole year, when the u. S. Has been up, it has been up more than europe because they are heavy on tech stocks. Is when the u. S. Is down, it down a lot harder, right . Dani absolutely. Has become so concentrated in these tech names. The momentum behind it is all about tech. If you look at the gains over the past month or so, the green bar is the nasdaq. It leads the way more than the awaited and the s p 500, which is in white. You have this really strong trend people are lopping onto and not just institutional traders, but you also have the robinhood retail community. When we get the selloff, it is a selloff in high beta names, which also happens to be tech. One of the more interesting features of this is where most of the pain was concentrated. It is what barclays calls the new concept stocks. Tesla, zoom. Zoom is the bottom line falling nearly 10 yesterday. Also have ase names lot of call options. Apple is included as well. Apple is in the blue. Tesla in the white falling 8 and 9 respectively. Analysts look at this concentrated nature. Barclays says u. S. Stocks will continue to climb the wall of worry because it was a frosty Market Driven by retail traders. That is what we saw knocked down. We did not see havens move. We saw some value names do toter, but it really seemed be concentrated in apple, tesla. Matt, anna . Anna thanks very much. Dani burger with a look at the tech phenomenon and what we saw in the selloff yesterday on wall street. Just a quick word on what is going on in europe. The outperformance of the ibex and a lot of that to do is with the spanish Banking Sector, and day. Up by more than 7 in the early part of the trading session. We do see the ibex outperform. That in ame to moment. First, lets get the technology themes. Bob parker joins us. Have youry good to insights to guide us through the m a and Spanish Banks and the text selloff. On the text selloff, do you think this means something for broader equities or for other indexes or is it very much concentrated around big tech names that have come so far so fast . Bob if you look back over the last few weeks, we had a number of warning signs on what potentially could happen in markets, so i would highlight the recent increase in the vix. We go back to june and early july and the vix was trading well below 20. Recently, we have seen the move up to the mid20s. Yesterday, you had a further drop. Warning sign number two was also the very narrow rally we have had. The heavy concentration in the rally in the nasdaq or more specifically in the leading tech stocks. That narrow rally i think was giving us a warning. Haduld also argue we have very concentrated positions in the nasdaq. Notably from Retail Investors. That again i think gave us a warning. Markets were looking against the background of valuations being very stretched. We look at the valuation on the s p. We have been in the mid20s, but lets not forget that the last time we were here was 1999 when the priceearnings ratio reached a peak of over 25. So, a number of warning signs. Where do we go from here . Is this the start of a major bear market . I think the answer to that is absolutely no. Will we have a mini correction . Yes. Nswer is probably these reversals in the tech sector i think do continue. There is momentum in this reversal. Ofn we have a period consolidation, which is my central case for the rest of this year. In on thent to focus comparison between what we are seeing now and 1999 because you think this reversal has some legs on it. You think we could continue to see a selloff. On the other hand, there are some real difference between the tech leaders we see now and those in 1999. Most of the Biggest Companies are very profitable. Almost all of them have a ton of cash. Billion, 200g 100 billion dollars in cash. That is a little bit different then what we saw in 1999, right . Bute are growth companies, also safe havens, in a sense. Comparisons making between now and 1999 is completely wrong. If you look at priceearnings ratios of many of the internet ,ompanies in 1999 priceearnings ratios were independent. The correction that we had when the bubble burst in the First Quarter of 2000, we had a correction in Global Equity markets of 50 plus. Are we going to have that sort of correction . Absolutely not. Companies which have seen the correction in the last 24 hours, as you correctly say are very profitable. They are under leveraged. That has been one feature of the tech sector over the last couple years. Very strong cash flows and improving annual profitability. Not 1990 nine, but that does not prevent us having what i would describe as one of these many corrections of 5 10 over the coming 23 weeks. Bob, thanks very much. Bob parker stays with us who the program. I just want to get to the grr function because we have a really interesting move in the sector perspective. The spanish Banking Sector is saving us from worst losses today. By more than 9 . Is a lot of talk about what is going to happen to the spanish Banking Sector. Downside, weve got technology as the second worst performing sector. Real estate also in there. We have seen some Capital Raising coming through and that is something the market is mindful of this morning. Matt . Matt all right, coming up, lets not forget with all of this market turmoil, it is jobs day. Is u. S. Labor market extending its rebound. Could see the Unemployment Rate dropped below 10 for the First Time Since the pandemic struck. This is bloomberg. Welcome back to Bloomberg Markets, this is the european open. We are looking at drops of about 0. 5 on the big three equity indexes. We see almost all European Equity indexes big and small falling this morning, with the exception of the ibex 35 in madrid, which is up 0. 9 as bank stocks rise. Is down thislse morning. Head of this nonfarms payroll report this afternoon, bloomberg economists expect a gain in payrolls and the game continues at a slower pace. So, good news, but tempered, i guess. 1. 3 5 million workers were added in august. Type whsee that if you i. S. Go your bloomberg terminal. You can even put in your gas and if you win, you will see that you have beaten all of your peers, which is pretty cool. Bob parker joins us. He is still with us. I wonder about this slow recovery we are seeing, especially in light of government aid programs ending, a series of impending corporate layoffs. How important is this number . This number is very important indeed and it gives us a good guidance as to what extent the u. S. Economy will continue to grow over the next couple of months. The first point i would like to make is the huge divergence in forecasts for growth for the Third Quarter of this year. Quite closelyllow was the atlanta fed gdp now index. That model is showing Third Quarter growth annualized could be as high as 28 . In contrast, if you look at consensus numbers, the consensus is about 15 annualized. In the rangeence of forecasts for the Third Quarter. My own view is the Third Quarter probably comes in annualized at about 20 . 30 plusg the big collapse. Growth probably comes out annualized at about 5 . The overall theme if you cut out the noise of the shortterm data is that we have had this Third Quarter rebound. Most of the rebound was in july and early august and i think there are clear signs that the recovery in the u. S. Economy is now starting to moderate. I wouldnt use the word slow down, but the pace of recovery is more moderate. Anna how important or not is it that we get fiscal stimulus coming through in the u. S. And is it likely . Bob i think it is likely. , congress wentck away for the summer vacation, there was a big difference between the democrats and the republicans. You will recall the democrats a 3 trillionfor stimulus program. The republicans were talking about a one trillion program. It looks as though we will probably end up in the coming weeks with an agreement that probably at around 1. 5 trillion. We will get a program that will be supportive for the labor market, but the degree of support is obviously less than amounts we have seen in the past. One theme worldwide is that fiscal programs are being extended, but clearly budget deficits are now reaching alarming levels. Fiscal expansion has to be wound back somewhat. Matt i have a total non sequitur for you, but i want to get your take on European Banks before we lose our time with you. We are looking at reports, all share merger, 17 billion deal. How important is it that we see European Bank consolidation . Youve got a very interesting situation whereby the European Markets are cheap relative to the u. S. Within europe, the Banking Sector, if you look at priceearnings ratios is supercheap, the cheapest sector across the whole of European Markets. Within that, spain is one of the cheapest markets. Undervaluation is not surprising that that is prompting bank consolidation, but given the squeeze on Bank Profitability and the need to cut costs across the european Banking Sector, i think we will see further, and a activity. That is a function of market valuations and pressure on profitability. I think that if you look at other markets, i think we will see further consolidation. Thanks very much. Really interesting. Ertainly having an impact bob parker, Investment Committee member, thanks for joining us. Bob will be continuing his conversation with us on Bloomberg Radio at 9 00 a. M. U. K. Time. Coming up on the program. Pressure mounts on Angela Merkel to drop support for nord stream 2 after the poisoning of russias Opposition Leader. The latest on that next. This is bloomberg. Welcome back to the European Market open. Tradinges into the session that comes after the selloff on wall street on tech stocks in particular. Nasdaq futures are still weaker. We see the stoxx 600 to pulling back from earlier losses. Banking, and day is part of that story. Ibex up by 1. 3 . We will show you the movers and you will see why. Some movement in the spanish Banking Sector. Listing in the spanish Banking Sector. Barrett Development Also in focus. The competition regulator in the , enforcement action against many in the sector, but barrett is listed as an example of the move we are seeing lower. Tapping investors, we have seen as sharesing this trade lower. Matt . Matt german chancellor Angela Merkel may be waiting for russias response on the poisoning of the Opposition Leader before deciding how to react. She is also facing pressure to drop support for the controversial nord stream 2 gas pipeline. Joining us on the phone is bloombergs germany editor. Here . Re merkels options how heavy is the pressure to drop nord stream 2 . I think it is going to be interesting to play out. The interesting thing was not repeat herid case that nord stream 2 and the case should be separated. She had made that position as recently as friday and the fact that she didnt repeat it yesterday raises questions about whether it is indeed on the table. If it is on the table, it is open to what they are going to do. Kind seem likeme what they are pushing for at least on the german side. Interesting change in tone. How worried should russia be about the response . The german side and across the international community, they have been pushing for hard response. Blame, sort ofed pointing the finger on germany. They are claiming he left russia without any poisoning and then arrived in germany with poisoning. The key question for germany on where this goes next is merkel has clearly said she wants a coordinated response with europe and that is the interesting question. The biggest economic project that combines europe and russia ht now is the nordstrom nord stream 2 project. That has been on hold because of sanctions in the u. S. And it is not particularly popular outside of germany, so there could be pressure to drop the support of it. And see where they go. When iou know, chris, listen to people defending the nord stream 2 project, they say it is really key to Energy Security for germany and for europe. What is so key about this nord stream 2 project . Been supporting it for so long as she confronts putin about so many things . Her germanysput Energy Policy in a bind by exiting coal and nuclear at the same time. Strategy is to go to wind and solar as the main source of energy. That takes a lot of time and the needs to be investment in the network, there needs to be a lot of investment and generation capacity, so the reliable alternative is gas for the time being. Other sources of gas decline over time or are declining at the moment, that makes them even more dependent on russian gas than they would be otherwise. That is the situation that germany is an in terms of Energy Policy. They have put themselves in a position where russian gas is the only alternative. For merkel to sort of dodge this the pipelinelaims is an economic project. She has tried to depoliticize that, but given the situation now, that is becoming harder and harder to justify. See whethersting to the gap is closing. Thanks very much. Matt, lets check out the markets right now. Things moving fast this friday morning. 25 minutes into the trading session. We are now trading flat for european stocks. We had anticipated more selling this morning. We got that straight out of the gate as european stock markets opened to the downside and now we see a bit of a turnaround. Intoee the cac is just positive territory now. Function. At the grr up by 1. 7 today partly because by 32. 5 because of all the talk and the plans they have to explore options around m a. Matt up next, the worlds richest tech moguls some billions of dollars evaporated from their Bank Accounts yesterday. We will talk about the drops that we see on rich go. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. Matt welcome back to Bloomberg Markets. This is the european open. We are 30 minutes into the trading day and we are seeing a bit of a turnaround. Actually, an actual turnaround. The stoxx europe 600, the broader benchmark in europe, we went down at the start of trading after the u. S. Posted huge losses yesterday, 3. 5 on the s p 500 index, 5 on the nasdaq. Big tech drops. But now we have recovered substantially. The stoxx europe 600 back up into positive territory. Grrou take a look at the screen, the group ranks returns, you can see that banks have been leading the rally. Lets get the bloomberg first word news. For that, we go to laura wright in london. Hopeful joedential biden hopes to draw an explicit contrast withpresident trumps visit to kenosha. He had a conversation with jacob blake, the black man shot by police, and promises sweeping changes if he is elected. He says the country is ready to make progress. Prime minister Boris Johnson is facing accusations of hypocrisy after speaking to a packed room. Sources tell us at least 50 people were crammed into the meeting, despite a sign saying only 29 are allowed in due to social distancing. Minutes after they finished, the office said gatherings of more than 30 people are illegal. German chancellor Angela Merkel is being pressured to drop support for the nord stream 2. Germany says it is unequivocal that russians Opposition Leader was poisoned by the novi chok nerve agent. There are reports from italy that the former Prime Minister has been hospitalized after testing positive for coronavirus. Premier fromld was the mid90s to as recently as 2011. In the polls split ahead of local elections in at just over two weeks. Global news 24 hours a day, on air and at Bloomberg Quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Anna laura, thank you very much. Laura right here in london. A list of the 14th richest tech villain owners tech billionaires. Over 44 billion of their personal wealth was shaved off. To join us is bloombergs wealth reporter. A nice job to have. Lets talk about what is going on with the latest news. Can you talk . Us through the losses who has been can you talk us through the losses . Reporter jeff bezos, being the richest man in the world, suffered the biggest decline, 9 billion yesterday. He was followed by bill gates at about 3 billion, Mark Zuckerberg at about 4 billion, and so on down the list. But i would not feel too badly for them because bezos is still up about 83 billion for the year. Think the do you effect has been of Retail Investors . The robinhood story has played such a huge part in, for example, the incredible gain of wealth for people like elon musk. Reporter it has really been quite a phenomenon. I think that back in april, there was a window when a lot of Institutional Investors and a lot of hedge funds really withdrew from the market. They went to cash and for some strange reason, that is still being studied, they piled into platforms like robin hood. But i think institutions all went back in and traders went back in. Clearly, it is the big institutions driving the action now. But the retail guys are still there. It will be very interesting to see what happens with this new generation of Retail Investors as they suffer what may be their first really big hit in a 24 hour period. In before they got the Institutional Investors this time, but it reminds me of the first time i played poker. I one 700 then lost every week for the next six months. Thanks so much for joining us, Edward Robinson talking about rich is a great way to look at billionaires wealth. You can see the moves. Check it out on the bloomberg. The turkish lira has weakened to a record low, and the currency downsizing is taking a toll on turkeys inflation outlook. Ae lira has fallen victim to campaign of stimulus that has consisted of deep Interest Rate fiscal surge in spending, and a government sponsored credit push, all the way down to a record low. Turning to politics in the region, tensions between turkey and greece continue as the small island becomes the flashpoint in the countrys competing claims for Energy Resources in the mediterranean. We spoke with turkeys Foreign Affairs minister, who says the nation is ready for dialogue with greece. Has a critical place in this mediterranean issue. Why . Because greece bases its maximum arguments on this very island. Of 10sland has a size square kilometers, and only two kilometers away from turkey, from my hometown, and 580 kilometers away from the mainland of greece. Claim adiculous to 40,000 square kilometer maritime jurisdiction area for this very tiny island. This is the reason for the problems. When i explain this to all my colleagues, including the colleagues from the European Union, from the eu member states, they all agree with me. And some of them are saying that turkey is right. If turkey is right, why are you giving unconditional support to greece . Greece is very counterproductive and not very constructive. That is why we have not been able to reach an understanding. Meanwhile, of course, we showed our goodwill and president erdogan accepted the proposals or the ideas, and we stopped our activities temporarily, of course. Or suspended our activities temporarily. But greece signed an agreement and this is the sign of greeces real aim on the aegean issue. Turkey has been ready for dialogue and to sit with everybody around the Eastern Mediterranean to negotiate for equitable shares. But greece is not ready for claimsecause of these in the Eastern Mediterranean. On the other hand, this island status,litarized established by the Peace Agreement. Which Peace Agreement . 1947, the paris agreement. Any additional troops is an greecesn of actually disrespecting behavior in the region. As turkey, weng, made it very clear that we will not allow such provocations in the Eastern Mediterranean or in the aegean sea. And if greece continues such they will be the ones suffering most. This is another threatening language. Messageactually a clear that instead of provocations greece should be open to a genuine dialogue with turkey and with other countries in the region. That was turkeys Foreign Affairs minister speaking to bloomberg about tensions with grace. Coming up, how fragile is the economy . We look at how food poverty has worsened in the u. S. During the pandemic. This is next. This is bloomberg. Welcome back to Bloomberg Markets. This is the european open. We are 41 minutes into a session where stocks have turned from red to green. Lets get the Bloomberg Business flash laura right in london. Laura fedex plans to hire about 30,000 Seasonal Workers to handle the surge of packages. That is up 27 from last year. They have already added thousands of workers to keep up with demands as consumers order more online due to the pandemic. Fedex is expanding the delivery to 95 percent of americans by midseptember. Two of spains largest lenders are exploring a potential merger. They are looking at a combination, but no deal has been reached yet. They would compete for market share in a country dominated by santander. Way to offer a subscription service. It is offering as many as five copies a day. Customers will be given the first month free. Last week, they announced they are cutting 2800 jobs and are closing 30 stores. That is your Bloomberg Business flash. Matt, anna . Matt laura wright with the business flash. The u. S. Is expected to see the improvement in the number of people back in employment for a fourth month in august. We will get the payrolls data later. But the recovery data is tentative and the situation is still dire for many people in the u. S. During the pandemic, food poverty in the worlds richest country has shot up, with 1 10 of american households reporting they have not had enough food in a given week. For more of this, our Bloomberg Quicktake reporter joins us out of new york. The situation out of the u. S. Is really shockingly dire. Reporter even though the jobs report may signal that many people are still managing to stay afloat, the recovery is still really uncertain and not quite equal spread out. What we are seeing right now is experts are calling this crisis a crisis unprecedented upon another crisis that is unprecedented. The disparity between who gets to eat, who gets to eat well, and who gets to eat at all is growing in the u. S. What we have learned, about a 10th of american households have said they have not had enough food to eat throughout this pandemic. That number has more than doubled precovid figures, and it is the highest the government has seen since reporting began in 1995. The irony of this whole situation is we are living in a time of historic food production, not only here in the u. S. , but globally. Farmers and the people who work for them are really struggling to figure out what to do with this food, especially with the financial costs that come with distributing it. But as a result, Many Americans are having to rely on aid and food aid and food banks, especially given that so many of them are facing unemployment and lower wages and reduced work. Especially as we have seen throughout this pandemic, minorities and women are disproportionately being affected. That is notable with what we have seen this summer following systemic inequality. Many food banks are concerned that as this pandemic goes on, many of the unserved and underserved communities will only struggle even more. Help is really needed right now. Seen plenty of reporting in europe on similar issues. Has is a phenomenon that plenty of residents thrown into stark relief and plenty of residents in other parts of the world as well. Reporter it is even more concerning when we look globally. 100he last report i saw, a 32 million more people this year could go hungry 132 million more people could go hungry this year. We are seeing that more and more people in these developing countries are not even able to afford healthy food. The asiapacific director at the u. N. Said needs to happen. Really tied people over on a temporary basis with a basic income that comes as part of a fiscal stimulus package, and then you use that to really bring in and introduce a longerterm social safety net. Scheme,nt guaranteed insurance scheme, and other longterm programs. But otherwise, people are going to starve before the virus gets to them. Reporter that was kanni wignara ja. More peopleted that could die this year from hunger than covid19, which is a stark and concerning number. The u. N. Is projecting this crisis is longstanding and the impacts are going to be seen for quite some time. It is not just the hunger that is a concern, it is also what happens as a result. Malnutrition. Obesity is a result of that. We have mobilization of many food organizations and charities coming together, but the need far surpasses what they are able to do. We are far from turning the corner on this pandemic and the impacts of it. Matt hopefully the more we know the more we can do about it. Thank you for joining us. Our Bloomberg Quicktake reporter on the hunger story. Coming up, the u. S. Labor Market Recovery is said to continue, but likely at a slower pace. We will look at a jobs report today, nonfarm payrolls, next. This is bloomberg. Particularly the Technology Landscape, have gotten to some pretty extraordinary levels. I think it is not a surprise. The valuation discrepancy between growth and value stocks have been on the table for a while now. They have not seem to be able to hold on a significant lead and stay in favor. Tech stock prices in continue to go up, their volatility goes up too, which is not a normal relationship. It is usually in versed. It is usually inversed. The fact that we have upended that relationship and are starting to get that, that made me nervous. The craziness in this 2020 summer of love for investors is getting out of hand. Then there is the robinhood shenanigans that have been going on. It was not really a surprise. If you have too Much Technology in your portfolio, this is the time to start taking a little bit of it off. Money has been made, so it is not surprising it has an upside, Downside Movement here. We are looking at a rotation out of the outperform most. We are actually looking at pc stocks. It is the beginning of a healthy correction. We have not seen a dramatic pullback. Anna those were some of our guests reacting to the selloff in tech in the u. S. Was it just a oneday event . 0. 25 . Nly down a quarte our reporter joins us from the markets live team. There have been some clues this could come. Values on the nasdaq have exploded, particularly in smaller sizes. It suggests a day trader interest. Do we still see signs we could see more selling, more entrenchments in tech stocks . Reporter good morning, anna. I wrote a piece on stocks wellight, and i think as in jobs, i think it is worth focusing on unemployment, and specifically looking at the job support programs that have been enacted. I think in the coming months, the continuing uncertainty in the employment markets will mean we need a big dose of stimulus. Since the spring, we have had a huge move for stocks. Economic data has also improved in a big way. I think it is due to this monetary and fiscal stimulus. Banks have been improving it. Despite this, unemployment remains too high. In europe, it looks like this is going to happen. Jobany announced its support program this week and is backing extra spending into next year. France this week unveiled an additional 100 billion euro spending plan for the next years. This seems to be an indication that the situation remains precarious in europe. Central bankers are seeing this, but policymakers, not so much. I think the election cycle in the u. S. Is making additional stimulus hard to deliver, and the u. K. Is in the process of ending its various support programs in the next few weeks. This makes the outlooks difficult for stocks. Stimulus got to where it is now, but more is needed before any stocks. Output in matt you have a great breakdown of the fiscal stimulus we have seen, how much, and where, because it is hard to keep tabs on this. 9 point out to point trillion 2. 9 trillion in stimulus in the u. S. There is the European Union package of 750 euros. As someone who follows fx for a living, what is a big fiscal package due to a currency . We see such strength in the euro and lately such weakness in the dollar. Reporter i think that is an interesting point. The thing is i think the euro really starts to gain some momentum, mostly against the dollar, but that momentum was gained once this recovery program, the 750 barely in europe 750 billion euro program, was started. That is when people realized europe was serious about taking the physical impulse and adding it to the fiscal impulse. The prognosis from the market is the more you get joined up thinking between Central Banks and fiscal policy makers the better it is for the economy and probably the better for the currency. The ecb has pushed back against euro strength, and we know why they do that, but in general it is a good side for the economy. Anna thanks so much. Richard jones in berlin for bloomberg. Stocks in europe up 0. 5 , doing nicely. M a in the Banking Sector. Nasdaq futures still point lower. Matt and i are off to Bloomberg Radio. This is bloomberg. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Francine tech tumbles. The nasdaq closes down almost 5 . U. S. Futures suggest a calmer session today. Turning to the jobs report after u. S. Unemployment gave a mixed reading of the labor market. Today, we will be joined by larry kudlow. Valuations and cuts to the president ial election. We will hear the position. Good morning, everyone. Welcome to