Crude getting wrapped into all of this. We get inventories coming out at 11 00, all of that wrapping into the story that maybe we arent that good at dealing with the virus again, despite what happened in the spring, and how that narrative will feed into your equity and asset allocation. The other story we are following his Morgan Stanley, the last major big bank to report earnings. Really wrapping out a winning week for wall street trading desks. The highlight was fic revenue rising 30 . That helped drive revenue above estimates. Also, equity underwriting fees came in double more than year before. Very solid. Now the question is, can it continue, particularly when it comes to the visibility of the election . Joining us now on Bloomberg Television and radio is jonathan pruzan, Morgan Stanley cfo, as well as sonali basak, bloomberg wall street correspondent. It is good to have you. Killer numbers, particularly when it comes to fic. What visibility do we have now for the Fourth Quarter . Jonathan happy to be here only show. It was broadbased across all three businesses. We continue to see elevated activity levels, elevated volumes, and the first couple weeks of the quarter, we continue to see a very constructive market. In terms of the future, we will have to see, but we have seen very strong technicals, good liquidity, high levels of engagement. Assuming we have open and functioning markets, that generally bodes well for a good backdrop for ourselves in trading businesses. Sonali we are a few weeks away from the election. How is that impacting markets now . Jonathan whether it is an election, the virus, chinau. S. Relations, or clients are looking for advice. Our bankers are intensely engaged with our clients as planned dialogue creates market function abilities. Forward to what the quarter holds. Sonali you and your peers have put in strong numbers, but it is not showing in any of the stocks yet. How much are people worried that the gains we have seen will drop off after november . One, people are generally focused on financial services, so i think the uncertainty of the economy plays into that. As you just said, we have had record to date revenues and return on the back of 2018 and 2018 record years. We have shown strong and consistent performance, but i think people are clearly focused on the outlook. We have a lot of risk events i talked about. As these things tick through, if the markets stay constructive, i think you will see continued good performance. Guy you mentioned very engaged clients. Thing we are watching what could be digitally change if we see higher taxes . Jonathan retail clients currently have about pony incent of their assets liquid fixed income securities, shortterm or cash. I think our client base is reasonably conservative, but they have been the plane capital. I think if you look at the underlying fundamental picture around the globe, it is solid. We are at the start of a new business cycle, and assuming that Economic Growth can continue, i think that will drive earnings and a constructive market. Alix if you rewind eight months ago, we would have said President Trump could be better for wall street than president biden. That narrative has quickly changed. I am wondering what your clients were thinking. You said they have a good amount in liquid assets. Jonathan i think it best outcome is a quick outcome for the election. The markets dont like uncertainty. I think the blue wave is out there. I think that is priced into the market, and i think that is a regardless of the outcome of the election. When t a question of excuse me, not a question of if, but really a question of when. Policy makers have been very supportive. I think markets are expecting continued fiscal stimulus to help improve the economy. My favorite statistics about Morgan Stanley is that it is the biggest prime brokerage on wall street. Even that, what are hedge funds doing in aggregate now . Are they looking to deliver a little bit . Where do people stand . Jonathan as you mentioned, we have the largest pb business in the world. We have a pretty good sense of what investors are thinking about. We have seen the Long Short Hedge Fund community relet or relever back to where they were. Longshort hedge funds re levered, quant funds havent. Sonali we love to talk about leverage, and your debt underwriting numbers were actually down at a time when we have seen Capital Raising pretty strong. What happened there . Jonathan as i mentioned on our call, there was less event activities. We are not as big and some of the Flow Products as others. We have seen a really nice pickup in the leverage finance market recently. Obviously on the back of the increase in the announcements of m a. We have seen a lot of sponsor activity, and we would inspect to see better results. Clearly the invest grade issuance has slowed down a little bit, but still very active. We feel very good about that franchise. Guy the ipo market has been strong. You benefited from that. How much of that was front run into the election . What does the calendar look like next year . Jonathan the ipo price line is quite healthy globally. It has really been focused on health care, tech, more growth he names more growthy names. It is really around growth and specific sectors. The pipeline is very healthy. The markets stay constructive. I would expect this to continue to see good ipo results there. Backs whatut about spacs . Jonathan what about them . They are another ipo vehicle. There has been a significant increase in the volumes. It is not a big is in us overall. A big business overall. It has clearly grown significantly over the last couple of years, but it is just another product. Sonali what about m a here . We have seen goldman say significant backlog. Are you seeing ceos want to come back with big deals through the end of this year . At this point in time, you are number one. Jonathan i think we are seeing more confidence with ceos, a high level of board engagement. The pace of announcements has clearly picked up. It is broadbased in terms of sponsor activity, as well as corporate activity, and our pipelines are quite healthy. I think people would like to do strategic transactions just like we have done them. I think other companies would like to do them as well. The pipeline is healthy and the pace has accelerated since august. Sonali the last three years, goldman was able to eke ahead of you in terms of deal volume. Do you think you can eke ahead this year and got on top . Jonathan we had one of the premier Global Investment banks of the franchise across all of the products. The m a franchise, the Capital Markets franchise, fixed income. We are very competent in our abilities. We have been taking share. We have been taking advantage of an increase in the while it. Clearly activity levels are high , and we are but is abating in that, so we feel comfortable about our positions, and i am really proud of our franchise. Guy you have just delivered the. Econd highest profit ever given the background that we face at the moment, are you surprised by that, and is it sustainable . Jonathan again, the future outlook i think we are pretty constructive on. Markets are constructive. We feel good about our positions and our business. But it really gets down to our unique Business Model. We have a worldclass integrated investment bank. We are the largest wealth and Investment Management business. That Business Model is very wellpositioned. We have limited exposure to net interest income, and limited credit exposure, which has been a highlight for us. Our results have been quite strong, and i think that is driven by our Business Model and the positions. Guy we really appreciate your time today. Thank you very much, indeed. Jonathan pruzan, Morgan Stanley cfo, and sonali basak, thank you very much, indeed. Lets carry on the conversation. Joining us for more now, marty mosby combining sparks director of beckett already mosby, marty mosby, viningsparks director. In terms of gearing to a recovery out there, it is doing well right now. It is delivering right now. Will it continue to deliver in the future . Martin what you have to consider, but we are talking about here is the secondhighest alltime in profitability. Disruptionven by the in the financial markets, and everyone having to restructure portfolios, redirect their investment theses, allocating funds. Capital markets obviously is hitting on all cylinders and activity level, so that will pull back. But when youre looking at Morgan Stanley producing 15 , 16 return on this equity, when youre looking at the returns it is generating at these high levels, that is more than what of whenred in a sense you look at valuation and all of the other pieces of the puzzle. So are the position best . Yet. They dont are they positioned best . Yes. They dont have the credit risk. They are wellpositioned. Will they continue a step up from here . Thats probably a little more difficult task ahead of them. Alix so Morgan Stanley shares falling the least among all of the big banks, right . Get happens if we do stimulus, we do get a vaccine, we are in 2022, we see steeper yield curve, etc. Does that mean Morgan Stanley loses the most . Marty it doesnt mean it loses. Everyone else gains more. So what we are saying is they are negative from those two things you just talked about. Credit gets better, Interest Rates go up. They are not going to benefit from that is much as everybody else. So everybody else kind of catches up to where they are at. Everyone else is at a much bigger discount. Super regional banks and Community Banks perform much better in that kind of situation in a catchup trade. Guy in terms of where we are right now, do you think the market is correctly valuing these businesses . They are delivering, but the backdrops and the risk certainly surround them. What do the banks have to do to get that gap to close . Marty what we have been dealing with for the last decade, since 2008 to 2010, was banks got in such trouble in the last financial crisis, they lost the confidence of investors. But when you ask are they trading correctly, they are trading correctly in the world of this discount of fear and anxiety that we end up back where we were. The issue is underneath this, fundamentally, capital and liquidity has been built, so we will not get back to that position. What we need to do to get them to move past 2008 is performed during a recession. The banks are leaning into this recession. They are not asking for help. They are not needing bailouts. After you do that, investors will reassess real positioning in the real risk profile of this industry. As that happens, the valuations will all shift higher because of that reassessment of risk. The risk profile had been focused lower, the Capital Profile has been built, so that will happen, but you have to experience recession. Alix when do you think we are going to see some rewriting or a potential catalyst some rerating or ame potential catalyst . Marty the dividend yield is high enough to attract incremental investors, given that Interest Rates are zero to 1 and these banks are paying dividends in the 3. 5 to 4. 5 , some even higher than that. Sustaining them is going to be the real pressure point. Those banks that cant do that, most of them can, that will be the proving point that there has been a reassessment of risk, and that will get that next push off. Repurchasing shares, you really have to see the clarity of loan losses, and that is for the regulators to get comfortable. That is middle to end of next year because of loan recognition and all of the fiscal stimulus that the furlough payment has pushed out those losses until 2021. So as that gets clear, and the back half is where the Share Repurchases kickback in. That will i think give us the clarity that the regulators need to step back in and begin to redistribute some of that excess capital. Marty, thanks a lot. It is really great to get your perspective. Already mosby of viningsparks marty mosby of viningsparks. President trump is speaking on foxbusiness. He is willing to raise the stimulus offer above 1. 8 trillion, but says it is going to be very difficult to do anything with House Speaker nancy pelosi. He does see the chance for a stimulus bill with pressure on pelosi. He also reiterates that the u. S. Will not be doing anymore lockdowns, and says we are doing down. It might be welcome news for the democrats, but the issue is going to be senate republicans, even bulking at 1 trillion, so there is still a gap to consider on capitol hill. This is bloomberg. Ritika lets check in on the bloomberg first word news. President trump and joe biden will be on Live Television tonight at the same time in competing town halls. This is to be the night of the second debate, but President Trump rejected the plan to make it a virtual one. The president will appear on nbc starting at 8 00 new york time. Biden will be on abc. Senate democrats are all that powerless to keep Amy Coney Barrett off of the Supreme Court , so they used their final day of questioning at the Comfort Mission hearing to grill her about statements bayed by President Trump. She declined to answer whether president has a right to delay the election and an absolute right to pardon himself. Be banned from mixing with other households indoors. A new rule starts this weekend. British primus or Boris Johnson told eu leaders he is disappointed by the slow progress of exit trade talks. Johnson says he will decide after an eu summit this week whether it is worth continuing to work for a deal. Previously, johnson threatened to walk out today if there was no clear agreement insight. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Guy thank you very much, indeed. Still ahead, we are going to look at the strength of the consumer and the impact of the deadlock in the u. S. Stimulus talks. Discover ceo roger hawks child d joins usochschil next. We have numbers from the reporting season that credit card spending is picking up. This is berg. This is bloomberg. To londoners and all who work in our grade capital, i want to say thank you for what youve done to suppress the virus once. We now all need to play our part in getting the virus under control once again. Guy British Health secretary matt hancock speaking in the house of commons a little earlier on. London will move up to tier two. It looks like some other areas will move into tier three. Elsewhere, the virus continues to have a major effect on european politics. Within the last couple of minutes, ursula von der leyen, president of the european commission, coming out and saying she is leaving the summit that is taking place in brussels. She is leaving the European Council and going into selfisolation, saying that a member of her frontoffice has tested positive, though she herself has tested negative, according to what has been released over the last couple of minutes. The questions are winded she test negative, how close has she been to this person who has tested positive in her frontoffice, and who has she been in contact with within that Council Building because obviously, the european leaders are coming together. Alix it is just going to make it longer and more complicated to get anything done on the brexit front. It could buy a little but of time for more negotiations, but you cant deliver anything. European stocks still around the lows of the session. This dovetails with headlines we got that kamala harris, the Vice President will candidate for the democrats, is canceling her travel plans until monday. She had two individuals and her staff that took a couple of days off, came back, and tested positive for the virus. She has not tested positive, but will go into isolation as well. It raises the question, how to get things done whether you are campaigning in the u. S. , trying to come up with a brexit deal as the virus spreads to the upper echelons of the government. Guy absolutely, and with some any critical questions that desperately need answered, and also the broad management of the virus. These european leaders are coming together at a time when their countries are really facing considerable pressure. Imposel macron having to a curfew in a number of french cities. Here in the u. K. , britain facing this tiered system, but such pressure coming through at the moment. I can dream ember a time when we had this kind of fractional story developing here in europe and within regions. It is amazing to watch. The fact that leaders are now exposed to it potentially is another risk that we now face. Alix it raises the question, do we really have a handle on the virus the Second Time Around . All of that is leading to stocks in the red. European equities are underperforming, particularly european stocks. What do you do . Matt maley will be joining us. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Alix welcome back to bloomberg markets. A really risk off tone today in europe, spreading to the u. S. , although the u. S. Is holding up better than european equities. Here to dig into the action is scarlet fu. Scarlet since 9 30, there has been a paring of losses in the United States. Europe came off its lows, but the stoxx 600 is still right near its lows for the session, and down sharply as we enter the final hour of trading. All 20 groups are lower by at least 0. 7 . Energy, auto parts, and insurers leading the way. Every National Major market in europe is in the red. The exception, a couple of Eastern European markets like slovakia and latvia. Mass locked down, so it is a very piecemeal approach at the moment. In the u. S. , the absence of any additional fiscal stimulus is giving investors little reason to go long this market, when valuations are still fairly rich. Fomo at the same is still a pretty big driver. My colleagues put this chart together that shows the difference between the puts and calls on individual stocks in the white line, and on the index on the blue line. What it shows, optimism on single stocks, skepticism on the indexes. Is this stockpicking . Maybe. It is certainly a more targeted approach given the macro uncertain. Coleman strategists including goldman strategists including Peter Oppenheimer say it will favor a temporary rotation into value, and laggards will outperform at the extensive technology. The vix is higher at the moment. The flight to safety continues as the dollar gets bid up. Gold is moving inversely to the dollar. Macquarie sees it stuck in a Holding Pattern until the end of the u. S. Election. Guy thank you very much, indeed. Lets bring in miller tabak chief Market Strategist matt maley. How important is todays action . ,att the pullback here today and really over the last couple of days, is not a surprise. I understand why it is happening, but we had this huge rally over the last couple of weeks, the end of september into early october, and the market had become overbought any shortterm basis. On monday at kind of pushed higher, and the bond market was closed. There were some artificial things going on in the options market, so it was kind of ripe for a pullback anyway. The pullback over the last couple of days has been rather benign. I have been cautious on the market until recently, but really, the breadth hasnt been very bad. The volume hasnt been very high. Mild,ms to be more of a normal, healthy pullback from a rally rather than something that is going to really turn into a much bigger decline. We will still have to wait and see the next couple of days. I think they will be key. I like the fact that today, the market seems to have seen its bottom in the morning. We saw back in september the market would open lower and trade lower. More recently on the down days, it opens lower and closes well off those opening lows. If we see that again today, that will bode well for next week. Alix are you buying the dip right now . Matt the next few days are going to be key, but what i am really looking for is individual groups. You just mentioned how Goldman Sachs is talking about rotation. I have to agree with that, especially in the mega cap tech sector. But rotating to some of these other areas like the banks, that is a good idea. Number one, you dont want to dump all of your mega cap tech stocks. But if you want to pare back a bit of that exposure, thats great. But also look to rotate within the tech sector. I think cloud computing, we are in the very early innings of a longterm rally in that group. Guy which markets are you looking for within the sector story to tell you about how the market feels as we run into this election . Which sectors will you be watching most closely . Matt the number one sector has to be the chip stocks, the semiconductors. They have been the greater leading indicator. They have been a great leading indicator for the market for decades, but really in the last two or three years, it has been incredibly strong. They made a new alltime high. If they can continue to rally, that should be a very good sign that the market will rally into the election. If instead they pullback, that is going to be a problem for the overall market. However, i am also looking at the dollar. Hasinverse relationship been a great contrarian indicator for the market since may. It is almost tick for tick now. We are seeing a strong dollar today, and that is causing the stock market to pullback. Thatnk most people agree the dollar will head lower over time, but the short positions in the dollar are still very high, so keep a close eye on the dollar. It could rally further. If that happens, we have more downside. The next three or four days should be very important how the market trades between now and the election. Alix it feels like the market for the most part seems to be ignoring any stimulus headlines. Earlier today, President Trump saying he could see a deal over 1. 8 trillion, put some pressure on pelosi to get it done. Markets literally did not move. What is up with that . Matt i think it is a little bit of fatigue as investors. They are getting a little tired of listening to these politicians. You know, just the opposite was taking place a couple of weeks ago. Every little move or noise we heard about the fiscal thing, everybody reacted to it. Are like, the boy who cried wolf. I am sick and tired of hearing this. These politicians are ticking me off, no matter what side of the palooka while you stand the political aisle you stand. It does not bode well for the market postelection, but we will see what happens. I thing it is more to do with d. C. Ue with washington, alix really good to catch up with you. Perfect for a day like today. The nasdaq rolling down by almost 2 . Coming up, a different angle from discover, saying it sees credit card illiquid sees pickup and the second half of the year. We will get a good read on where the consumer is with roger hochschild. That is coming in next. This is bloomberg. Alix weve been seeing some u. S. Banks cut limits on credit cards, plus tighten standards, particularly as the stimulus wears off and the u. S. Standards are now higher than during the 2008 financial crisis. Going is now is roger hochschild, discover financial ceo, and bloombergs sonali basak. Discover is in the quiet period before their earnings, but we will have you back to drill down on those. How are the consumers doing . Roger first, great to be with you this morning. The consumers, it really is a tale of two cities, and i am a believer in the case shaped the kshaped recovery. The last numbers we reported come at illiquid sees, people behind on their cards were lower than the same time in the prior year, which i think is stunning. On the other hand, there are huge sections of the economy that are really struggling. Sonali are you worried about unemployment here . I know you have talked about this before. To what extent do you think these unemployment issues are really going to bleed over to other part of the economy, particularly whitecollar workers . Roger i am really worried about unemployment. We have seen seven straight weeks with claims over 800,000, and i do feel like it is spreading more to whitecollar jobs. Is one of our big concerns going into the fall, especially the fact that it is combined with a second wave of covid. Sonali are you worried that banks will really start to really start to tighten their lending . What kind of access to credit will consumers ultimately have in the next couple of months . Roger i cant really talk to other banks, but for us, we havent had to make any changes since the first ones we made at the beginning of the crisis. In fact, even at that time, we didnt change our policies around credit line decreases,. Hings like that i think what you sign in the first half of the year is most of the banks putting up big reserves to get ready for the losses to come, so at least for us, we feel like we are now wellpositioned. In, as alix said on the way lending standards are being tightened. Does that mean you are changing share at this point . Roger we do feel like we have been gaining share. We started tightening lending standards around two years ago, and just with a feeling that it was late in the credit cycle. The other thing is we have always been conservative in how we lend. That has given us the ability to loans in all of our lending products, and we believe we are gaining share in this environment. Alix if you are tightening your standards, and you are also worried about unemployment and that spreading to whitecollar workers as well, arent you all competing for the same small pool of better capitalized individuals . Roger the credit card business is always competitive. I think what you see now is some of the banks that were more focused on spend based consumers, the real higher end, as opposed to hours, which is a lend focused model. They see big challenges as overall sales, and that has really given us the strength to continue marketing and booking what we think are very high quality new accounts. Sonali how do you describe what is going on here as the stimulus talks continue to waiver . How in need are people of more money now . Roger i think it really depends. There are a lot of consumers who really need money, and i think if it were up to me, i would take the risk of too much stimulus versus not enough, especially if you believe, as the experts do, that another wave of covid is coming in the fall. If you can get money to consumers, they can keep spending. They can keep paying the rent. They can pay their other bills, and it keeps the economy going. If that starts to unwind and we see increased whitecollar job losses, i think we could have real further pain in the economy. Sonali when we talked to scott meyer of guggenheim, he said even with a stimulus package, he sees that lasting six to eight months. Would you agree with that . Roger i think it is really hard to tell. It depends, quite frankly, on how quickly a vaccine is developed, how quickly consumers can go back to their payments. For some sectors, in particular travel entertainment, it can last a long longer. At some point the Government Support will have to shift from pure stimulus payments to efforts around job creation to keep getting those unemployed back to work. So we dont have the same come along recovery that we saw with the last great downturn. Of the areas that stimulus could focus on is the airline sector. I spend a lot of my time talking to airline ceos, and they have been securitizing the loan programs. I am curious, where do you see the miles card going . Is there a future . A lot of people i know have been switching to other cards rather than trying to gain points and miles they can use to redeem against flights. Roger i think that is a great point. Theres a couple of areas where discover was wellpositioned coming into this. One was on the Customer Service side, where all of our centers are here in the u. S. , so we can react quickly. Other is the focus on cash rewards that can easily be redeemed. While we do have a miles card, it isnt associated with any airline, and you can actually redeem the miles at pointofsale, and amazon and paypal, which is really useful for customers. So we think we are one of the beneficiaries even our. Eadership in cash rewards consumers saying, maybe the last thing i want right now is another frequent flyer mile. Support,ning to the guy was talking about stimulus for the airlines, for the broad stimulus, it seems like the can sit this is we will get the consensus is we will get some type of blue wave. What do you think as ceo of a major Credit Card Company . Do you think that story is true . Roger i sure hope it is true. I think as with many others, i am very disappointed in what i am seeing out of washington. You would think that the parties could get together and really work to help a country that is truly struggling. I do think at some point, sanity will prevail and we will see a stimulus package. Hopefully they will be ready to provide more stimulus and other programs to support after that. Washington can work well. A big difference between this downturn in the last one is the support the fed has provided for credit markets, the liquidity we are all seeing. You have seen some good action, but i am very disappointed in what is going on on the stimulus talks. Sonali how do you explain what is going on here . What i am hearing is that you are leaning toward the better capitalized consumer, but as we know, a lot of people have lost their jobs. A lot of people have shown to be working in areas or living in areas that have very little access to credit. So what is going on with this divergence in this economy here . Roger part of it is the business we are in. We are not a subprime lender. We lend to the prime segments, and we are keeping that going. But the other thing i would point to is we are doing a lot to support customers. To the extent that our customers are struggling, they have lost their jobs, they cant meet their payments, we have a lot of different flex double programs come weather on the student loan side were with their credit cards, to help them through this really tough situation. Alieve that if you are discover customer, you are a discover customer for life, and we want to stick with you through tough times. Sonali how can you come into this market and maybe take advantage of the opportunity to gain some share here . We are marketing aggressively across all channels with a very simple message. It is not just the rewards. People are excited about the digital functionality we have. No annual fee really resonates these days as people look at their budgets and think about where they can cut back. So we are putting our products out there, and we are very excited about the reception we are seeing. The consumers are saying i think it is time to make a switch and go with discover. Guy just on the competitive side of things, what impact is the new capital one walmart card having . The market is pretty competitive in this space. Roger i think it is rare that you see a single product have that big an impact. A while ago, you would have asked about the apple card. Certainly capital one is a formidable competitor. Chase and others are as well. Any product appeals to a specific segment, but we invented credit card rewards. We have been at it for a long time. I am very confident our products stack up well against anything that is out there in the marketplace. Alix i would love to take a 10,000 foot view for a second and talk about the Corporate America world versus individuals. We are seeing borrowing costs continue to come down for public companies. Some in the highyield market are having trouble raising cash, but a lot arent. As a ceo that straddles those worlds, how do you plan your business . Roger we serve consumers. We dont really serve corporations. We are different than most banks out there. So we really want to be out there helping them anyway we can. Ourarticular, all of thousands of Call Center Reps are here in the u. S. Many of them are struggling as they deal with the crisis, as may be their household has lost income, so we feel like we are probably a little more aligned with main street and wall street, as you look at banks out there, and we want to make sure we are providing the products to support anyway we can help people in this incredibly challenging situation. Sonali one takeaway, if you had something to take away about the consumer over the next six months, what is . Roger the consumer has held up surprisingly well so far. I think it shows the resilience of the u. S. Economy, and frankly, the u. S. Worker and consumer. But they cant keep it going forever. The additional stimulus package is really badly needed before a bad situation gets even worse, as we go into the fall, as we go into the winter, and as we face this second wave of the covid virus. I really hope for some action out there to support the consumer. Guy roger, we really appreciate your time today. Thank you so much for it. Roger hochschild, discover financial ceo. This is bloomberg. Guy from london, im guy johnson. Alix steel in new york. This is bloomberg markets. Time now for futures in focus. Today we are looking at european volatility, which is starting to pick up again a little bit. Could be on the cusp of an upside breakout. Bloombergs Sarah Ponczek is joining us now. Sarah thats right. 50, itg the euro stoxx had been really testing its lower bound, right around the 22 level. The idea was that we had the ecb backstop. At the same time, there were hopes that we would not see further lockdowns, hopes of further stimulus. However, now those hopes are fading. Inhave some record increases european countries. Restrictions in paris and london. As you can see on this chart, it does seem as though we are seeing a pickup in volatility and an increase in that v2x index, possibly on the cusp of an upside breakout. Alix what does that mean for vix futures in the u. S. , prepping for a contested election . Sarah we have seen the vix curve flattened as contested election fears have declined. We can see that vix futures for october, november, and december did peak. Those have all coalesced around the same level, just below 30. To be fair, we no longer see the vix arch, as uncle purpose as Michael Purves called it. But this is still very volatile , andred to a vix below 20 average over the last two decades. It is to be expected, considering the election is 19 days away. Guy is there any virus pricing in the vix curve in the states . Sarah it doesnt seem like it. There have been some disputes over whether or not the vix curve was pricing in a contested election or odds of no fiscal, or what it meant for the virus and the odds that we could see another wave in the United States in the back half of the year heading into 2021. Now that that has reconciled, it does seem like at least if you look at the United States vix curve, it doesnt seem as though volatility markets are too concerned that we will see an uptick in cases to the point where we see further lockdowns that then hamper the economy and thereby profits and stocks as well. Alix Sarah Ponczek, thank you for updating us on that. Just talking about where we are in the markets, the nasdaq is off by 1. 5 . It is really the selloff in europe that is the most dramatic, with european stocks off by almost 3 . The yields coming down to 60 basis points on the german tenyear. All of this also on the back of brexit. Ursula von der leyen leaving the Eu Commission due to some aides testing positive for coronavirus. We will speak to carsten nickel, teneol carsten nickel, managing director, and ben page of ipsos mori for more. This is bloomberg. Guy from london, im guy johnson. Alix steel is a new york. We are now to hounding we are now counting you down to the european close on bloomberg markets. London faces tougher restrictions as the virus surges across europe. Paris faces an overnight curfew. Brexit talks on a knife edge. Eu leaders start their summit in brussels. Frances Emmanuel Macron says it is possible we wont have an agreement. The irish sounding more positive. Ryanair slashing its schedule as it looks forward to bookings in november and december dropping sharply. Lets check the markets. European equities significantly underperforming today. The stoxx 600 is down by 2. 2 , falling sharply and then trading in a relatively tight back, picking up a bit as markets