Strong. The risk off fee here is tangible. The sap inp germany. What if you bought shares friday . Francine we understand that it could probably infect or touch the european stocks. We have the october german business confidence, 92. 7. Lets get to the bloomberg first word news in new york city with ritika gupta. Ritika House Speaker nancy pelosi says the chamber could pass the pandemic relief package this week. Still, a deal with the white house remains elusive, and the republican led senate may not act before the election. Both sides accuse each other of moving the goalpost on the legislation. President trumps chief of staff theymeadows is says will not control the pandemic, that the government response will be on vaccines and treatment, not containment. As president mike pences chief of staff and two other staff mirrors have tested positive. Staff members have tested positive. Amy Coney Barretts nomination to the two republicans are being accused of using political power before election day. British government is saying it is optimistic about a trade deal with the european union. The latest round of trade docs trade talks has been extended into e later this week. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom thanks so much. Equities, bonds, currencies, commodities. Risk off feel, those are s p futures, 32. Dow futures 2. 65. The dow, 27 927 as well. I will let francine chat up sap. It. 81 . , make. 81 on the 10year yield. Dollar strength it is all correlated up. Lira off an incredibly difficult weekend for mr. Micron ofd mr. France. I have not done the chart work there, but that is long convexity to a fairly well. We need to look closely at the erdogan spat with the french. First of all, Coronavirus Infections continue to climb. It is difficult to see how government in europe are handling this, and whether we will have to go into a lockdown. Investors also doubting that d. C. Lawmakers will reach a stimulus package anytime soon. And German Software maker sap plunging within 20 after cutting revenue forecasts come also saying that the pandemic will continue to hurt business. That is filtering through to a lot of the dax and some of the other european stocks. Lets get straight to the e foe institute. Ininess confidence fell october, pretty much in line with estimates. If you look at business confidence, it came in at 92. 77, off the estimated 93. Mr. Fus come always great always great to speak with you. When you look at the number of infections, what are the chances that we get a doubledip recession . The risk is certainly rising. What we see is a very heterogeneous impact. I think we see a continued recovery in manufacturing. The question is, will this go on with these rising infection numbers. But certainly as strong blow to services. So for germany, we dont see a doubledip yet, but the risk is rising. What makes you worry about the coming weeks and months . I know we are eight days until the coming election. How does that change the fortitude of german carmakers and european exporters . Clemens i think the u. S. Elections are tremendously important, but the intern the impact in the shortterm is limited. Of course the mediumterm outlook for carmakers does depend on whether trump is reelected or not, but the democrats are not so much protectionist. So this risk remains. What is worrying at the moment is the rise in infections. It is unclear what could stop that. That will have an impact on the recovery. It is a completely unfair question, but youre such a trooper, im going to ask it anyways. Pandemicise of the sap view is there more of that to come in november . i think it is clear that we are going to see revisions in many businesses. The question is how strong they are. Im no expert on the i. T. Industry, but can the id can the i. T. Industry insulate itself from this shaky situation . I have to say i doubt it, but it is hard to make traditions. It is hard to make tom it is hard to make addictions, but look at the industry. We have the same issue in america it is hard to make predictions, but look at the industry. At the seam issue in america. Clemens there will be a strong impact of the Current Situation on everything that is called social consumption, but for germany, for instance, we are talking about 6 may of gdp, so if that declines, the impact is limited. We have also seen that reestablishing the value chain has worked quite well in manufacturing. So i think we should be overly pessimistic. But it is clear. These partial shutdowns we are seeing at the moment do not help. My hope would be that a lot of businesses have prepared are now ready to deal with the situation and to operate under more difficult conditions. Francine what are companies telling you would be the correct way of dealing with a virus . The number of cases are going up. Is it no lockdown or full lockdown because you get out of it quickly . Clemens im afraid there is no consistent answer here. My view is that we need a stronger lockdown measure, but differentiated ones. And measures that enable us to do things rather than preventing us from doing them. So more testing, masks are very important, face masks. And we need to keep the economy going under these conditions. Toncine when you speak Manufacturing Companies, do they have a different view . Where is the divide on what Companies Need and what they are asking of the government . Clemens i think the Manufacturing Companies would be worried if there was not another closing of borders. To stopwould have operating for services, it is different. Many Services Companies are aware that some of their operations, everything related to services with high contact risk will be affected. Tom what did you see on trade front . What did you see on germany on the mood of the export juggernaut . Clemens that is driving the recovery. Exports from germany to china are at about last years level. So that is very positive. Border crossing, value chains, trade is recovering quite well, because manufacturing has recovered in all countries, so it is rather positive. Tom thank you so much. Clemens who used joining us from the phone from the ifa institute. This specs to the you have to believe there are other headlines afterwards. Ubs, switzerland, fixed pay and cutting bonuses and compensation revamp. I immediately went to a number of stories in 2011. I recall very clearly Andrew Sorkin writing this up. A lot in bloomberg writing this as well. This has been tried before. Francine it has been tried before. We need to understand why theyre doing this. It could have something to do with the bankers left on whether they were able to pull back to bonuses. It is a different story to what we saw in 2008 and 2009. Something we would need to keep an eye on. I dont know whether we can go. Ack 10 years ago tom should we do a data check . Francine there is only one story in town. Tom a Technology Earnings note, francine, please. Francine she is edna miller, the firstborn of our nephew miller, who is off this week to be a father. Matt miller, anchor and father, tom. Gotainly our congratulations to him and his lovely wife. Tom this is great. Seven pounds, six ounces, and of course named after the richest grandmother. Brilliant. Brilliant. This is bloomberg. Good morning. We dont even have the bill yet because nancy pelosi and i know shes coming up and she can speak to this that we continue to make offer after offer after offer, and nancy continues to move the goal post. Politico we are waiting for the final definitely hello seco we are waiting for the final. We are making concessions, too. Tapper on cnn with Speaker Pelosi. Barrett in the headlines this week and, Speaker Pelosi has made clear that she will buried in the headlines this week, Speaker Pelosi has made it clear. She is 80 is old and she is spirited, as many are older than that. Joining us now, not 80 years old but feeling 80 years of political anxiety we have all gone through in the last number of weeks, Rupert Harrison is with us. Portfolios managers political expertise, his Public Service to the United Kingdom is noted in this political season. Your observation of a u. S. Election eight days away. It certainly looks distinctive from 2008, from 2012, and certainly distinctive from 2016. What is the character of this election that you see . Rupert in terms of the result, we dont feel like we have an edge, but the polling is very different from 2016. And there are high probabilities attached to a biden presidency. I think the difficult thing for investors is that it is not really just about the presidency. Almost more important is what happens. If youre looking ahead to the macro impulse coming out of the u. S. Economy, the impact on the global economy, the difference between a biden presidency with the democrats and a Trump Presidency with publicans, is extreme with the republicans is fiscal policy. That is the key margin for us. If you get a blue sweep, the fiscal impulse in the u. S. Could be the trigger for quite a big reflationary wave around the world. You can see assets like emergingmarket equities that have lagged, starting to see those flows based on those expectations. If it is a republican senate, youve got to assume there are going to be obstructive is fiscal policies coming out of the senate, and that is a very different world. Tom i cannot imagine the number of meetings that you have been in with mr. Osborne and the others over the special relationship. How will the special relationship change . Rupert i dont think it will change that much. I think you always get a lot of personality based speculation about, does Boris Johnson hope secretly that donald trump will win . Is he going to have a difficult relationship a joe biden . I think the speculation almost always turns out to be wrong. People said bill David Cameron find it difficult to get along after having a strong relationship with gordon brown, and they got along extremely well. I think most of the time the u. K. Prime minister and the u. S. President will find a way to work it out. I would aim off for any predictions of difficult relationship over the next few years. Press, orthe u. K. Certain people in the you hate press in the u. K. Press, say withthey are buying time e. U. Because with a biden presidency, more concessions will be given in the e. U. Because it is highly likely because they will get a better deal with the u. S. And the u. K. Moving forward. Is there any truth in that . Rupert i dont think so. I dont think the timing works. Is e. U. Brexit deal will get done in the next few weeks and i dont think there will be enough Smoke Signals for a new president or for a reelection of President Trump to guide those negotiations. The reality is, i think everybody close to this, a u. S. U. K. Trade deal will be determined largely by what congress signs up to, and that will not be hugely affected by this president. I dont think that is the driving force. What is determining the nature of this end game is the in the brexit negotiations is the theater, all about how you present this final deal as a great deal for the u. K. I think the shape of that deal is pretty much determined. Tom what does this francine what does this all mean for equities, but in general asset classes, what do you buy right now . Rupert we are still broadly classes e on asset unreal equities. One of the things we are focusing on is bringing down trying to flatten out by buying cyclical value, even buying european banks, which has been a pretty much unloved asset class. That has not necessarily worked in the last few weeks, but we still feel there are significant upsides. , we dont events think the virus will knock that off course. And then there is the position for potential upside. We are going to get very Important News in terms of efficacy with these vaccines from phase three trials coming through in the next few weeks. I dont think you want to be caught on the wrong side of that. Tom how do you position in terms of Asset Allocation you and others are doing . What are you actually doing in the equity bond mix, and particularly the sector mix . Rupert i can speak to the portfolios that i manage. I think on the equity bond mix, it is a different world. The correlation has been much lower. The volatility on government bonds has been so much lower that i dont think you can inspect government bonds to provide this in kind of cushion. Little bit think a more about diversification. At the same time, im quite happy Holding Treasuries and government bonds because the Downside Risk seems pretty large. I dont think we will see a big spike in yields because the central bank when it comes to within equities, as i say, i think we are looking to buy, to flatten out what has been an underweight to value, and certainly underweight to cyclicality. I think we have been buying sometime in the last few months, homebuilders, industrials, european banks. That is where it seems to us that the value of trade could be. Of course, there is this big binary event coming up with the u. S. Election, and historically, the evidence is for the big risk events, there is a premium on holding risk. You dont want to derisk because that is when you get a lot of return historically. Will continue with us. Francine is threatening to talk about brexit and fisheries off the coast of the north sea. Rupert harrison, expert on the fishing log channel in the north sea and the i receive as well. Coming up, a look at currency and the linkage into the market. A difficult day. Risk off, futures and 30. This is bloomberg. Ritika this is bloomberg surveillance. Impose unspecified sanctions on lockheed martin, boeing, and raytheon come after the u. S. Approved a 1. 8 billion arms sales to taiwan last week. Carlyle group is in talks to buy siemens mechanical business for 2. 4 billion dollars. The sale of the german Engineering Firm unit could be announced this week. They make gears and transmissions used in everything from cement production to beer making. That is the latest Bloomberg Business flash. Tom lets do a data check. 31 on spx. Three basis points on the 10 year bond, putting it at. 80 1 . Still a higher yield regime. The pullback is very much centered tendency off the trading range of all of september, and all of october as well. We leap into november here in a bit, and we do so flat, flat, flat. Dollar a little bit of strength here. Gets my point 87 attention. As i mentioned earlier, a very difficult day for a weaker turkish lira. Francine . Francine on to november, and on to november 3, tom. Only one game in town and that is the election. We look at the polls at the impact on the sectors. European stocks are dropping, a number of infections and coronavirus continue to climb. There are a number of restrictions that came in over the weekend, and then s. A. P. , the German Software maker, plunging 20 . And then a story about cutting pay and fixing bonuses. In the next hour, we speak about green initiatives with a former unilever chief executive. This is bloomberg. It is difficult to see how europe can gain grounds from where it is today without a itsificant shakeup of system. Be the u. S. Is still not to undervalued, underestimated, because, it has always been able stronger fromw any changes in administrations or politics. Tom good morning, everyone. Francine lacqua and tom keene. The gentleman exiting ubs, mr. Ermotti. There will be a special talking about mr. Ermotti and his tenure ate ubs. Look for that this weekend. Also, a headline given the challenges out there, they had a great chart up in francines earlier hour of the decline in the bank index in europe. 39 , i believe, is this tested thick the statistic, yeartoday. Futures, 31. Francine and that is partly to do with a number of cases increasing around the world in terms of covid and partly to do with the fact that markets are just not expecting a stimulus package out of the u. S. Lets get back to Rupert Harris of blackrock. I amit comes to brexit, looking at the latest report saying that covid has dragged 2 million more u. K. Adults into financial troubles. What would be the elegant way to to make surexit covid does not put too many people in distress . Rupert the overwhelming incentive on both sides is to get a deal. As you said, covid provides a backdrop that there was some speculation earlier in the year that while the impact on the economy from covid is so bad that therefore the additional impact from a disruptive no deal on these trade deals would be hidden and therefore they could get away with it i do not think that is how they thinking. Also, if you look at the details of how close the two sides are, the remaining details around fisheries and state aid, these are relatively small differences. There has so much that has been agreed. All of the incentives are now heading towards a deal on both sides. Francine what does it mean for how the government steers the economy afterwards . Are we going to see tax hikes, tax cuts . There is a huge attempt going on at that, so we have just seen a trade deal signed in japan mostly replacing what was in place from the e. U. But with some tweaks. I think there will be huge amounts of focus on technology and investment in technology and infrastructure in the u. K. I think the government in the u. K. Will be committed to this leveling off agenda, which is politically salient, of trying to bring up regions that have been left behind. But the more important thing is the chancellor is continuing to p last week, he had to tweak his parttime work scheme in the face of worsening virus problems, in the face of increasing restrictions on the part of the economy, we still have a very generous fiscal situation as a result, supporting income. Across europe, that is a crucial issue, even if we get beginning that goes into the winter period , the fact that the government is supporting income and businesses should limit the knockback. Tom to me, it is so important that the great bargain here down from thisrom brexit, horrific natural disaster, is the idea of a greater Great Britain, of a Great Britain global reach that used to have versus the fear of a little britain. How is that bet going . I still think the instinct of most reddish politicians british politicians and institutions are internationalists. I think we will see continued emphasis on britain and the world. I think we will see an assertive Foreign Policy as the u. K. Works hard to demonstrate it is not taking a step back from the world. I think we will see a big focus on trade deals, to the extent that those can be done. It is not a great Global Environment for trade deals, to be honest. That will be the focus. There is a domestic political agenda around reassuring the public, around immigration and agration, will continue to be focus, but they will work hard them,w it is not distract that the u. K. Is open for business. Tom can the new labour party do that, maintain a labour heritage domestically and a global reach . Rupert that is a very interesting question. That would certainly be the ambition. Totallythe answer is different under jeremy corbyn. Jeremy corbyn would have put a foreignpolicy that would have put the u. K. Totally out of line with the rest of the western world, particularly when it came to russia and the u. S. I think peers dahmer is trying to pull the labour party back. I think the labour party now is more of a traditional leftwing party. More spending, more redistribution, high spending. I do not think you would see a foreignge as far as policy. Francine there is so much news coming out from different sides, but china is always out the forefront of big changes. Debt concerns and relief. With the new growth plans, could become a bigger economy than the u. S. In the next decade. How do you play china . Rupert it is a very tricky one, particularly with the u. S. Election. We have a binary outcome when it comes to the presidency. If we come out with a biden win, you get a big relaxation of some of those tensions, in the short term. You will not see the tactics that we associate with a Trump Presidency. Even if the underlying pressure within the u. S. Political system coming out of congress is pretty stuff is pretty tough stance on things like intellectual property and so on. So you could see a big relief rally from some of the assets that have been particularly affected by the shortterm tensions. That is something we are looking to position four. More broadly, chinese bonds continue to be something that is potentially an attractive ballast. Situation is macro relatively benign. There are certainly sources of earth in china. Francine and alere a weakening lira weakening past eight per dollar. Is there any incentive to go back into turkey . Rupert i still see this as a bit of a slowmotion car crash. The government continues to take an approach that i do not think will resolve as easily. We could end up with a pretty difficult situation for the turkish government and potentially the involvement of the imf down the line. As an investor, it is expensive to try to play this from the short side. It is a very difficult market to play. At the same time, it does not feel like this will end well. Francine Rupert Harrison, strategiesultiasset for fully manager. Now lets get to ritika gupta. Ritika House Speaker nancy pelosi and the white house accused each other doing the same thing when it comes to pandemic relief plans. That is living the goal post when it comes to what is in the actual legislation. Quepasa bill this week. Still, an agreement with the white house is not certain, and the republican led senate may not act before the election. Coronavirus cases are surging at the two countries in the center of it in europe. Italy is strengthening lockdown measures and spain is of amending new measures, including a curfew. We declare, once again, a state of emergency. It is the most effective way to contagion. He ritika germany will consider its next steps today. Joe biden calls questions into his sons business deals a smear campaign. And the release of documents allegedly belonging to his son may have been part of a russian disinformation campaign. His claim has not been substantiated. Blackouts inberate Northern California to prevent live wires from falling into dry brush in preventing wildfires. The blackouts may last until tomorrow. 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. Im ritika gupta. This is bloomberg. Tom thank you so much. A lot on american politics. A lot of good guests to begin the eight days to the election. On a pandemic and a really challenging news for ireland. Conversations. 32, dow futures 256. This is bloomberg. Francine this is bloomberg surveillance. Lacqua in london, tom keene in new york. We know the virus is continuing to ravage the west. Spain launched a national curfew. Global infections are over 43 million. Joining us now is andrea ammon, the European Center for disease prevention and control director. There are many questions people have the first one, is this a second wave is it a continuation of the first wave or is it less deadly than what we saw back in march and april . I think there are different philosophies how to call it, but in any case, its a surge of cases. Whether it is first, second, third, it does not matter. What we are seeing is that, due to the expansion of testing, the amongty of new cases is adults or people younger than 50 who have less risk of severe disease. So the reason why the hospitalization rates and intensive care unit rates are still not as high as they were in the spring is due to the fact that it is now a different tested andthat gets is diagnosed positive. However, we see, in several countries, that the rate in the elderly is raising. Admissionsalization are rising, and also that the mortality is increasing. Serious increase in transmission in the country. Francine andrea ammon, do we have any sense of how much of the population has already had the virus and cannot catch it again, and does that dictate how we should be dealing with these restrictions and lockdowns in europe . Dr. Ammon a lot of questions around the immunity are still not answered. But from what we know from studies that have been done, the assumption is that, overall, it is about 15 of the european polyp relation population has been exposed to the virus. Keene in newn, tom york. Good morning. We just assumed that the germans get it right, whether it is orman engineering automobiles. What is your single message to Continental Europe and to a united dates a United States embarrassed on how to get organized to get this contained . Dr. Ammon a very difficult question, because i do not know colleagues ine the u. S. Are approaching this. The e. U. N say that, in , that countries have followed measures insing of may, june, have followed the expansion of testing and contact tracing. Thever, apparently, some of easing of the measures was a bit too enthusiastic, so we are dealing now with an increase in cases. Tom what part of your original research was on the chronic condition of the liver . Tell me about the chronic condition of people who are younger and the belief of many in america that they are discrete and separate from old people with this virus . If there is a lot of young people getting sick, what does that mean for the older people that are still alive . General, thell, in people below 50 have a lower risk of having severe disease, getting admitted to hospital, or dying. That does not mean that they cannot get severe disease, go to the hospital, or die. So i think we have to be very, very careful here, to say that someone who is below 50 and gets safe. S automatically we have, also, among younger adults, cases who have no underlying disease and who die. Francine thank you so much for, of course, the grim update. Coming up in the next hour, we continue tracking covid19 with Johns HopkinsBloomberg School of Public Health vice dean. That is at 6 30 in new york as we still try to figure out exactly when a vaccination would, and figure out to what extent this will affect some of the younger population as well. This is bloomberg. Tom bloomberg surveillance. Francine lacqua in london. I am tom keene in new york. The distractions of a u. S. Election. Collapse ofo the turkey with the turkish lira at 8. 03, the litmus paper of a system under stress. Our driver of turkish coverage joins us what i see is mr. Erdogan playing to domestic politics, including with his meeting with the armenian patriarch. Explain the domestic pressure mr. Erdogan is under to play to his core constituency . Onur i think the pressures he of pressurethe kind facing politicians around the world. He is facing the impact of coronavirus on the economy, which is already not great, to say the least, before march. His effort to jumpstart the somewhat resulted in a backlash, setting off the lira. So he is at the top place. Raise the economy. Needs tome time, he treat it carefully because the lira is not behaving well. It has implications for the entire population in terms of Living Expenses and peoples ability to pay debt. Francine when you look at what the central bank can do, what are their options right now . Onur the central bank was very whatexpected to continue appeared to be its return to orthodoxy last week, but it i appears to have disappointed markets when it went to another backdoor channel where it can continue to tighten its policy without really resorting to an outright rate hike. A closeow it is keeping eye on the lira and is very much uncomfortable with the current level, but whether or not it is ready to do what it did in september in terms of tightening , he remains to be seen. A very unfair question, but i will take a stab at it. Do we have an understanding of the degrees of freedom mr. Erdogan and his central bank have . Do we understand what is in the piggy bank in crisis or their ability to reach out to, say, the International Monetary fund . Heard many times that they do not feel the need to go to the imf. And to be fair, they have lasted a lot longer without imf help than what people thought they could do without imf help. But in terms of the freedom of choice, what the central bank has to do, it is a tough question. We know a lot of people question the Central Banks ability to act, but it did at some of the most uninspected times, yet it did not act just last week when everybody was expecting it to act. Very difficult. Unpredictableery bank in terms of what it will do next. Tom onur ant, thank you very much. Istanbul bureau chief. The turkish lira just did a fancy study of lira depreciation back seven years, and it is shockingly on trend of just the persistent depreciation from under 2 lira per dollar to 8 lira per dollar. Francine what is interesting is if you juxtapose what is happening with the economy, with the currency, and the fact that it does seem that resident erdogan is becoming more erdoganent president is becoming more belligerent, it is something that could really be at the crossroads between Foreign Policy and things getting ugly between europe and turkey and the impact as a way of looking like the strongman back home. Tom again, turkey a nato member. Futures had deteriorated. It has become 34 on spx futures. The vix right out to 29. 95. Big figure move there. 0. 81 . Come in hour, eight days until the election, carl weinberg. Tom this morning, forget second and Third Wave Fund entries. Simply, the opening of societies has not worked. Ireland in lockdown. A grim week for Continental Europe. El paso intensive care unit at full capacity. Sunday. Had 12 deaths on there Vice President has five aids infected. Markets, while they give way, risk off. Tech earnings later this week, apple and amazon. And they are eight days a week in this election week, both trump and biden, biden and trump no, its not enough to show i care good morning. Tom keene in new york. Francine lacqua in apple in london, i should say, not far from apple on abbey road