Snub. Stocks drop as astrazeneca after the vaccine trial the tests fail for one subject. The groups u. S. Shares fall in extended trade. The longest losing streak since may. Amid fears ajump Brexit Agreement is becoming unlikely. 7 00 a. M. In frankfurt. The fundamental question is this. Have you received a jolt in terms of the astrazeneca virus being halted . Has the equity market rally been questioned and undone . Tomarie there is a lot digest in terms of the vaccine. For me it is really about what happened yesterday in technology. Is this a healthy pullback . Is it the start of a correction that has further room to drop . This time last week it was like stocks going to infinity. Now the s p 500 is in nosebleed sections. Asian equities under pressure this morning. Csi 300 down 1. 5 . Msci asiapacific down 1 as well. European equity futures in the red. Softer but relatively flat. Nasdaq futures are higher. Yesterday the nasdaq did dip into that correction. We are seeing contagion across other risk assets. Below 40 perdown barrel on brent. Opec meeting last week. Refineries in asia excepting from saudi arabia. There is worry about the demand side. The pound, i have been tracking this like every other american in london. 129. The trifecta of news run britain. Social gatherings as well as brexit headlines. Story, our top market that is the selloff in u. S. Technology shares picking up steam despite futures regaining their footing. Investors fled the high flyers for the third consecutive session. Adding to the turn in sentiment, the report that astrazenecas vaccine has been halted. To walk us through these market moves is dani burger. it seems the threeday weekend did nothing to soothe the nerves. His chart showing the s p this shows you how this was a tech driven selloff. S p fares better over three days then the nasdaq. Concentration in the s p 500 has become so heavily tech. Tesla did not get included. It is in the nasdaq. 21 ,inly a drag falling its biggest oneday selloff, adding to the negative sentiment there, that gm invested in one of its rivals building electric trucks. Really, this might be more backdrop taking the froth out of the market. It does take usually about three days to see the high valuations,. J. P. Morgan Asset Management for concerns be if the election or coronavirus. One thing is clear. Some of the contagion moving across markets, fridays selloff was notable because havens did not move. This time they certainly did. A bid to u. S. 10 year yields. The u. S. Yields move lower so the bond itself getting a bit there. Even though the s p 500, coming back a bit this morning, still seeing actions. Still seeing oil moving lower. Demand is a concern with one of the leading vaccine trials being put on pause. Matt manus some days you just cant beat the classics. Our guest host this morning, a tough job. She is the head of fundamental equities at robe a coat robeco. Are inndlach says we nosebleed territory on the s p 500. The tech generals on the battlefield, their leadership is are we in jolt territory . Risk territory of the market coming undone . Great to be here. We are in the territory we have been talking about for some time. You remember last time on the program in the end of july we talked about tech stocks being richly valued. The pullback has finally come. Do not expect it to last the key for investors is whats going to come next. The start ofhis is a rotation of the market into more cyclical stocks. Re were definitely discounting the growth rates we saw during covid going forward, in reality, was to start looking at the possibilities in the second and Third Quarter of next year, the costs become much more difficult. We will see growth rates coming down. You have a flood of stocks out there, more cyclical, which are benefiting from an improvement in the Economic Activity pickup, which has been underperforming significantly. I think investors are going to start thinking more from those stocks. A correction, not a collapse. It is going to be interesting what investors buy from here. What names are you looking at . We generally dont talk about single stock names, but we slowlyen discussing, starting to take profits from i. T. Stocks in the u. S. Clearly the fundamentals are very strong. We started to put some of the money to work in more cyclicals, particularly industrials in the u. S. Specialty materials in europe. We particularly like to the European Market because of it had lagged until now. Discount. Really we continue to like north asian stocks. We have put more money to work there. Matt when we talked to you manus when we talked to you in july you said im at the beginning of that rotation mode. Blackrock said this narrative was overdone. In terms of the rotation, where is your top in cyclical . We like industrials at this point. Particularly in europe. Specialty materials. We actually have continued to have a good weight in consumer staples, which we find much more reasonably valued in europe than the u. S. Those sectors remain our top. The other thing we have been doing by the way is not only a matter of sectors. We have seen the same bifurcation we see among sectors, also within the same vectors. A lot of time we have started taking profit from the high flyers in one sector and put it in companies that still have strong fundamentals in the same sector being hurt to some extent. Last but not least we are increasing the sustainability profile of our strategies. Nasdaqe we should note, september futures now are rising above 1 . Astrazeneca has paused a late stage trial of its Coronavirus Vaccine. The drugmaker said the decision was intended to allow researchers to examine. It could delay the oxford vaccine, one of the leading candidates to provide immunization against covid19. Boris johnson is set to tighten lockdown rules. All social gatherings of more than six people will be banned, down from the current level of 30. The government is becoming increasingly concerned about rising cases of the virus. Teslahas seen shares fell the most ever on tuesday after the company missed out on being included in the s p 500. Valuation. Billion of best has been the second performer on the nasdaq amid strong earnings reports and speculative fever that rose bullish bets. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Bloomberg. Thank you very much. Off tendencyisk yesterday. The dollar went bid. The eurodollar back between the longest losing streak since 2017. The euro advance looks hard to stop. Cable sub 130. The longest slice and dice since may as negative rates build the narrative. Up, they have been failing when they hit the real world. Hear more from our weekly show, etf iq europe, 9 30 a. M. Today. The correction is concentrated in a few stocks. They have accounted for the gains of the s p. You are going to have it on White Knuckle headline risk numbers. Quarters, the path for tech is still higher. We would call selective cyclicality the way to be positioned. This is a shorterterm disruption for the markets. Of there in the middle suggestion i would say for the street in terms of the different option positions we have seen for large institutional investors. We are advising investors to look at sectors like industrials or health care and to not sell the market off altogether, but be more pragmatic. Significant volatility in the markets. Selectionthat was a of bloomberg guests talking about u. S. Stock and how to trade it. Netflix down just under 2 at yesterdays close. Netflix has done well as the pandemic forced people indoors and in front of screens. Money managers see the streaming giant benefiting. That is due to a seasonal phenomenon. More people are able to couple up and watch movies together. Than 190as more million subscribers, but where does the company go next . As the pandemic disrupts production, the companys cofounder and coceo spoke to bloomberg about those issues as well as the companys unusual leadership set up. An unusual situation, but if family, therevery are generally not to ceos running the family. Two ceos running the family. The pandemic in many ways has played into netflixs hands. You are in a perfect position for this moment. That said, production has come to a halt. Projects are backing up. It is getting harder to find something new to watch every night. How do you think the Entertainment Industry looks different when it emerges . Challengeefinitely a from a lack of production, particularly in the u. S. And europe. Asia. Much of in the u. S. It is still quite slow and challenging. Effect going to have an much more next year than this year. Not only for us, but for our competitors also. Everyone is figuring out how to make it work just like if there is a Writers Strike or other things that have happened over the last 50 years. Term, covid is a historical footnote like the 1918 pandemic we read about today. You said there is the space for any streaming services in the market. I know you have been impressed with what disney has accomplished, hbo max launched a new. How many of these services have the potential to reach 100 million or 500 Million People . Will there be consolidation . Who is left standing . It is a huge difference between disney plus, which is over 60 million subscribers in the first year, and hbo max, three or 4 million. One of those is really incredible. I would not have guessed you could get to 60 plus million in the first year. We will see depending on what the quality of the services are. There will be additional , which has proven to be great for disney. Consumers want fewer brands that give a wide range of entertainment rather than too many. Annmarie how many how many years are left before netflix has to think of something new . Would you be open to a bay acquisition . Video games, social media . We try to keep an open mind. My first company, we acquired a lot of companies. We have kind of been through that. Mostly, we want to make our Service Better. There are about 20 years of growth really focused on making our Service Better and better. We always added new types of programming. For example, starting with series and expanding into film and nonfiction and now animation. We will just continue to expand. That was netflix cofounder Reed Hastings and you will hear more from the man behind netflix tomorrow. David rubenstein in the latest episode of the David Rubenstein show. In the United States, congressional leaders are hardening their stance on fiscal stimulus. Mitch mcconnell introduced a proposal for a slimmeddown package expected to cost between 500 billion and 700 billion. That is a far cry from the two point 2 trillion of relief democrats want. Meager they have is so it insults the intelligence of the american people. It does not solve the problem. We know we have to compromise. We know we have to negotiate to reach an agreement. We all want an agreement. Make no mistake. But get real, mitch mcconnell. Fidelity bby anna fabiana from robeco is still with us. She mentioned how fed leaders signaled Fiscal Relief is needed. Do you think Fiscal Relief in the United States or without Fiscal Relief that the economic recovery we have seen will be halted . Fabiana we do need Fiscal Relief. We need this package to come out. The market need this package to come out. We have seen democrats and republicans at opposite ends. 3. 4 trillionth dollars from the democrats and 500 million from the republicans. We are now closer i think. Steve mnuchin talked about 5 trillion as possible on the republican side. This is probably the minimum we should expect from a deal. As Congress Comes back from recess, as we get closer to that september 30 deadline, we need a deal and that has to be at least 1. 5 trillion to help markets continue to do well. I want to go back to one of the words you used in your notes. You talk about scarcity premium. I want to get a sense from you, we just heard from the netflix ceo. Is there a matrix for you when it comes to scarcity premium . Where is that allocation . When i talk about scarcity premium, i was referring to the fact that there is a very good reason why the tech stocks did so well during the pandemic. Because they were the only stocks actually showing good growth and at the same time, the growth rates were increasing for obvious reasons because there is a Digital World we can look within. Live within. There is only so much my 80yearold neighbor can learn about. There is so much more in terms of Online Shopping she can do. Most of that has happened. Covid is not behind us, but it is being dealt with better. Onlyity of growth is not for tech stocks, but also other stocks. That is the scarcity premium i was talking about. Unless we have a second or third covid wave which brings us to a complete halt of the global economy, i think the premium is certainly not warranted anymore for the i. T. Stocks. Manus we will dig into some of those geographical regions. Fedeli stays with us. Teslas shares the worst oneday slump ever. The stock that had defied gravity and has perhaps come to earth. Is bloomberg daybreak europe. Chinas consumer inflation moderated in august due to the slowdown in food prices and the comparison to faster inflation for last year. Juliette saly has been checking from singapore. Bloomberg economics says you need to look at the core inflation. That may mean households are not spending as much. That means we could see the pboc act again. When you look at the month of rising two number point 4 following a 2. 7 gain in july, that was in line with forecasters. 2 compared to the 1. 9 estimate, in terms of pboc policy, though, we have actually heard from the chief economist of nomura say he does not expect china to act in terms of the rrr cut or a cut to the mlm in response to the data. It will be more wait and see. You can see the effect on the bond market where we have seen chinas 10 year yield fall from its highest level in a year and the yield premium of the u. S. Building. I also want to take a look at what we have seen in terms of the reaction from wall street. Specifically what is happening in the tech space. Chinext, which is really heavy in terms of biotech on track for its lowest earned since july 6. Annmarie coming up we hear from germanys finance minister, an exclusive conversation next. Yes European Headquarters in the city of london. This is bloomberg daybreak europe. Teslatocks collapse with having its worst single day loss ever. Correctionullback or with further to go . Astrazeneca hits the brakes. Phase three testing is on pause after a participant falls ill. Anotherres and british social band. This on top of brexit jitters and pressure to the pound. Good morning. There is a ton to digest, isnt there . We do see nasdaq 100, many futures above 1 . A bit of a reprieve after the selloff. They did their bigresearch note saying what we see over the past few years, that is going to end. Goldman sachs may have a different view. You have the Deutsche Bank view which says the most overvalued since 1800. Crisis, which is where we are at the moment, the nasdaq the cash, because of position, because of the balance, because of the valuation, it has ripped through the markets, have a look. 3347, euro stoxx 50, roll overcome a have a look at the rest of the markets this morning. You begin to see oil and cable on the move. What carnage in the oil market yesterday. The longest run of losses since may. Of 1 . Ive eighth eurodollar 11780. On the touchline, pretty rabbit railing on the downside. A number of years. Thats the state of play of the markets. Annmarie i want to move onto germany. They need to take on significant debt to fuel the recovery of europes largest economy. Scholz sat down with Francine Lacqua hora for an exclusive conversation. We will find a solution. Activity,ng a strong starting a strong activity this year, taking debt of big size this year, it is necessary we would continue the next year. Would come i hope we back to something more similar to thesomething next year, there will be a lot of strong activity. Francine how do you see this . If you look at what is needed in terms of stimulus, do you need the recovery to be completely in place in order to balance the books . Year,much longer than one two years . Does it take four years because you also want to transition the economy . Min. Scholz we are working on the transition of our economy. We would do a lot of things which are important for creating neutralmy that acts co2 in 2050. That means a lot of decisions are also related to future questions. For instance, and the questions of Renewable Energy in the questions of Renewable Energy, electrifying of our mobility. This is also part of the package we decided on in germany for developing our economy into this direction. What do i think about further development . Just compare it to the situation after the last crisis of 2008 and 2009 and the bankruptcy of Lehman Brothers and all the consequences it had for the world economy, and also for the one. An and european we were able to increase our debt to gdp ratio from up to 80 at that time. Justved it down to 60 before this crisis now started again. It is absolutely reasonable to think that we will be back on 60 at some time with the growth of our economy. Francine if authorities dont help clarify the situation regarding the poisoning of alexey navalny, should the nord stream 2 project be canceled . Min. Scholz navalny has been poisoned. This is definitely clear. This is something we will not accept. It is against all the legal ideals we have. It is something which is absolutely impossible. There is always the necessity for having the chance to oppose your own leaders. This is democracy and the way we think democracy should be run. And so, you could imagine that anyone of us is absolutely sad about this situation. We are happy that we were able to help him to recover. Hopefully, this will be successful. No one knows at this stage. Toare working very hard now discuss about the consequences. This is why we asked the russian government to give an cancer and cooperate in understanding why this happened and to find out what happened exactly. The is why we discussed outcomes of our research is together with our partners within the European Union and nato. And as i already said before, it is now the time where it is the European Union that has to discuss about an answer. It is not about a bilateral question between one and the other nation. It is europe that has to understand what is necessary now. Francine of course. But you, would you block it if you didnt have satisfactory answers from russia . Min. Scholz the big problem of the world we are living in is that there are a lot of governments that are not following the ideals of freedom and democracy. We are following democracy we are following. We have to act within this framework, supporting those who are fighting for their right to be free and to live as free citizens. Manus great conversation there with Francine Lacqua speaking exclusively to the german finance minister, olaf scholz, on the risks. Is our guest host this morning. You have this narrative which is about north asia, followed by europe. Europe comes in squarely as your number to destination and the usa sort of lags behind that. Ascendant,pe in the in your opinion . What is the core for the ascendancy there . Valuations are clear reason behind that. The market has significantly underperformed the u. S. Market. As we see the recovery from a macroeconomic viewpoint, europe has a lot of cyclical stocks that are fundamentally very sound. They just had a short term hiccup. Thats why we were talking earlier about industrials, specialty materials. There are a number of stocks. For example, stocks that are more geared towards sustainability, renewables. Thats another area that we like very much and the European Market offers a lot of opportunities there. I, like many other individuals living in the u. K. , are waking up and we are going to get this ban today from Boris Johnson about no more gatherings of six people or more. Do you think the markets in europe are pricing in a potential second lockdown into the winter months . You look at where valuations are now, the markets andarly pricing in along how long is pricing in how long will it take to get out of this Economic Activity low . We will not have a vshaped recovery, that is clear. Shaped recovery is very much possible and thats what we are banking on. If we were still to have a continuation of some of the lockdowns, these will be limited. They will not be to the extent of the ones we saw in april in may and still will allow the economies to improve. Manus ok. Fabiana, thank you so much for joining us. She is the global head of fundamental equities. Lets get your first word news. Paused a late has stage trial of its Coronavirus Vaccine after a participant became ill. The drugmaker said the decision was a routine action intended to allow researchers to examine safely data. It could delay or derail efforts to deliver the socalled oxford vaccine, which is seen as one of the leading candidates to provide immunization against covid19. Boris johnson is set to tighten lockdown rose in england. All social gatherings of more than six people will be banned. Police will have new powers to disperse and fine any offenders. Tesla shares fell the most ever on tuesday after failure to be included in the s p 500. Nearly 300 ared this year, making it the second best performer on the nasdaq among strong earnings reports and speculative fever that drove bullish bets in options markets. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Manus, annemarie . What an incredible story with tesla. If you look at the threeday declines, yesterdays record decline ever for the company, yet how much they have grown over this entire year. , 82stood out for me million wiped off in one day. Thats basically the value of Morgan Stanley and caterpillar. Manus it is gargantuan. Was it the snub from s p . In other words, they didnt go into the s p. Or was it that gm went for this huge, scooped up a big stake in the maker of the badger pickup. Bloomberg intelligence, they question the earnings. They are saying its all about regulatoryability, emissions. Thats the risk. Certainly is. Coming up, we are going to stick to another story coming out overnight. Astrazeneca put the brakes on its vaccine trial. Researchers are reviewing safety data after a participant became ill. More on that story next. This is bloomberg. Manus it is bloomberg daybreak europe. Manus cranny in dubai, Annmarie Hordern alongside me. Astrazeneca pushed the pause button on the vaccine trial. The company will stop giving its experimental coronavirus shots after one subject became ill. Investors,n jolted sending u. S. Shares of astrazeneca lower. Dani burger has been tracking the pace on the pause. Doubt ais is no setback, but the severity of that setback depends on whether the illness is related to the vaccine itself or something separate. If it is something separate, it could just be that, just be a delay. We certainly see markets pricing that a little bit more today as we saw a bounceback in the nasdaq futures and s p 500 futures. If this illness is related to the vaccine itself, it threatens to derail the effort for astrazeneca, which is a leading candidate right now for a vaccine. If it is a delay, we are seeing these Drug Companies speeding to get it done. There is political implications, of course. The u. S. President has touted a vaccine ready before the november election. We have seen it be downplayed by experts in markets. One Clinical Trials expert from scripps laboratories in san diego said that there is a strong likelihood that this is not related to the vaccine and that it is just a delay. Ussing that out. We want to stick with that story. Drugmakers have pledged to avoid shortcuts as they face pressure to rush a vaccine to the public. The chief executives of the nine front runners said in a public letter that the safety and wellbeing of vaccine needs individuals is their top priority vaccinated individuals is their top priority. The usda is trying to protect the vaccine from political pressure. Trump said a vaccine could come as early as october. Joining us now is severine bersauter, cfo of biogroup. I really want to get into what your lab is doing. You are really ingrained in this space. I just wanted to get your take on what we saw overnight from astrazeneca and how quickly do you think, and what you are hearing from the medical community, how quickly could we see vaccine . Severine thats the question of the day, i would say. Honestly, i dont have the answer. Even if we have a vaccine, to be able to deploy too many people to many people. Manus no problem. I think the world is waiting for that. Anthony fauci plays down the possibility of getting a vaccine before november. Good to see you this morning. We are all attempting to be epidemiologists. We are all turning into well read people. What i want to understand from you is, what has been the biggest outcome of covid for the Laboratory World . Have productivity rates gone up . Has your capacity to deal with the volume and scale changed . Give me a sense of the change in your world in the covid times. Severine yes, i think looking at it for now, for sure we face today a huge demand in volume, huge demand in covid19 testing. Just remember what we have gone through over the last few months. Biogroup is mostly in france now. Itself,he lockdown. Here was no testing what was very crucial at this time and what was very important is that we needed to invest massively in new testing, new equipment. To payed to be able upfront for the equipment and take the decision to invest whatever will be the future. This was not something that disappeared during the summer. What whiskey for the industry what was key for the industry was the ability to invest. It is the reason why consolidating the industry is very important. You just made severine yes . I just wanted to get to this acquisition you made in belgium. You were quite tiny in france and now you are growing. Do you see more consolidation in this space . Severine i think consolidation was obvious and france in france at the beginning. We are representing a significant part in france. To alignhe opportunity with a very Interesting Company and we are happy to do so. Diversify our geographics. This industry is also based on national regulation, so it is important to share that practice and learn from the different systems and how different the systems are organized in the countries, because its quite different. Cfo of biogroup, severine bersauter, thank you for joining us. One industry really hit by the pandemic is of course the airline industry. Manus absolutely. Time to tap the bond markets. Ryanair holds its first eurobond sale since 2017. The man with the numbers, Michael Oleary, joins the bloombergs team today. This is bloomberg. Manus it is bloomberg daybreak europe. I am manus with Annmarie Hordern in london. Airlines have been hardhit this year. Lockdowns, travel restrictions, grounded flights to a pretty halt. Earer h near ryanair with its first bond eurobond sale since 2017. Michael oleary, the ceo. So timely to come to the bond market. The question is, who has got the appetite to lend to the airlines . Youve got to be a big believer. Good morning. Matt good morning. Looks like there is a lot of appetite out there. I believe 850 million eurobond offering and they have gotten 4. 4 billion euros worth of orders. So it is five times oversubscribed, 3 issue over the next five years. I guess investors just want to find some yield and they are willing to take the risk that is necessary to get that yield. Ryanair is having to shut down locations over the lockdown and over travel restrictions, so it is a difficult time, which is why it is raising the money. But investors are willing to give it to them. What is also interesting to me is outside of them tapping the bond markets is of course the fact that it feels like every week, we just get new travel destinations added to the u. K. Quarantine list. It is one of the reasons i am not traveling this summer. The latest being the greek islands. I wonder what this means for him and his fleet. Matt you have also got a brandnew show on internationally broadcast television. Thats a good reason not to travel very much. But yes, the restrictions also. It is something that we will definitely be asking him about. Capacity is a question for a lot of these airlines. This is the biggest Lowcost Airline in europe. Can they fill up their airplanes . Do passengers want to sit on airplanes that are completely filled up . Are they going to want to deal with more of a Skeleton Crew . These airlines are going to have to fire a lot more stuff. You will have staff. Ill having fewer people to remind you to put the mask on. Michaelets see what has got to say about the bond offering. Give him our regards. Matt miller and anna edwards on the European Market open. Well said, matt. Annmarie hordern, youve got a whole new show. Why would you want to take a day off . Why would you want to leave me . Thats true. Every day with you is like a vacation, manus. Im so happy to be here. Manus thats the right answer European Equity futures pointing downward. Euro stoxx 50 down 0. 2 . Nasdaq 100 up 0. 9 , manus. A bit of a reprieve. Manus lets see if there are any today. Thats it for us. We will leave it to anna and matt with Michael Oleary on 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. The big events are back. Xfinity is your home for the return of live sports. Anna good morning. Welcome to bloomberg market european open, im anna edwards alongside matt. Matt today the market says its not over yet. European futures point to modest losses as the u. K. Plans to reintroduce coronavirus measures on social gatherings but the big deal is the slump on the nasdaq. Here are your top headlines