President macron criticizing erdogan for his insertion a regional power. Jinping, president xi opened a meeting to map out the countries next fiveyear plan. It could push the economy passed the United States within a decade. The latest roadmap will center around technological innovation, economic selfreliance, and a cleaner environment. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie it is 1 00 p. M. In new york, 5 00 in london, and 1 00 p. M. A. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories we are following on the bloomberg and from around the world. The s p 500 heading for its biggest decline in seven weeks. Thanks to surging virus cases, the stimulus logjam, and general malaise. Virus cases rising in the midwest and the potential for fresh lockdowns already happening in europe is driving investors to sell. Sabra klein will join. With days before the president ial election, we take a look at the tax policies of both. Andidates with Alan Auerbach lets get a check on the markets. They were angry this morning and getting angrier as the day goes along. Just a few stocks in the s p 500 higher. The dow is down almost 3 right now. We are also seeing treasuries moving a little bit. 80 basis points this morning. Losses,l also adding to down 3. 3 . The chinese yuan offshore strengthened a bit. U. S. President donald trump and ise President Joe Biden hitting the campaign trail. Now frome is with us ubs. Forecast, nowts sees a 55 probability of a blue wave, where democrats get the presidency and both houses of congress. What took you to that 55 . Laura thank you for having me today. Based on the polling data and protection markets we follow, we are seeing an increased ability of a blue wave outcome. Believe in that blue wave outcome, it would be quite positive for the markets, in the sense that we could expect to see a larger fiscal stimulus package. We have seen equity markets pricing this into some extent already. Regardless of who is in the white house, we believe that once we get past the election, once we get more information on a potential vaccine, hopefully by the end of this year, the economic recovery should take hold next year, and that combined with more fiscal stimulus should lead to a positive environment for equity markets. Even though we are experiencing some nearterm choppiness today and in recent weeks, we believe the outlook is positive. Vonnie quite the statement. We have seen markets rise with an odds drive every now and then when there are stimulus talks, but today a pretty definitive statement. What is behind it . Laura a few key things at work. We are seeing rising covid19 cases across europe and the u. S. This is raising fears for the potential for further lockdowns. What i would say to that is while we are seeing cases rise, we are seeing fewer fatalities as a result. Doctors have a better understanding of the virus. We are also seeing more cases among the youth population who are better able to stand withstand the virus. We believe looking forward we will be getting more vaccine data, maybe even as early as the end of this month or into next month. I think that should also help to alleviate that concern. The other major concern is when we are going to get fiscal stimulus. It is looking increasingly unlikely that we will have something before the election, so that is adding to concerns. We also had some disappointing Earnings Results in europe. We are seeing some readthrough is in the u. S. Tech sector today. There is a wall of worry for the markets to climb and we expect to see nearterm choppiness, until at least past the election and we have more clarity on the policy front. Vonnie as part of your research, you have a look at energy, financials, health care, and so on. If you could give us a brief look at what you are recommending over the next 6, 9 months, then dealing with perhaps more stimulus, also in the form of larger fiscal burdens. Laura what we have outlined in our most recent report is focusing on the various election outcomes. The to be focus on are the blue wave outcome. In this scenario, we feel we will get a larger fiscal package. In terms of winners and losers, we should see a boost to companies with exposure to green infrastructure, more school spending. Industrials, of materials, utilities could benefit under that scenario. Our second most likely outcome based on our predictions would be status quo. We expect to see somewhat of a relief rally for certain sectors like energy, financial, even health care, where we see more concerned about potential for increased regulation under a biden outcome. Those are some of the air as we have highlighted in terms of winners and losers. In any case, whoevers in the white house, we think the driving force of the markets will be that economic recovery. Vonnie lets talk about your wealthy clients. Are they concerned about a potential biden tax hike . Say, we areld telling clients not to necessarily position for any particular election outcome right now. Of course, once we have more clarity on what a biden tax plan would look like, there are certain things that we may recommend for clients to do. I would also emphasize that the more nearterm effect we will see is going to be the progress on fiscal stimulus and also the economic recovery. That will take priority. Trying to you are protect your wealth and you are wealthy, you are going to worry about things like inheritance tax and so on. Are your clients trying to move money right now before the end of the year . Laura one area that we are highlighting on the fixed income side is municipal bonds. That is an asset class that we will see more interest in if we expect to see personal tax hikes. So, yes, this is a concern for our wealthy clients, but there are many things that we can do on the Wealth Planning side to buffer against these headwinds. Vonnie thank you so much, laura kane, ubs mobile wealth management. Intel is painting a gloomy picture of i. T. Spending. Details in our stock of the hour. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Time for our stock of the hour. Abigail doolittle is here to look at some of the damage. Is brutal inp. Terms of the german Enterprise Software company cutting guidance not only for the rest of this year but into 2021, saying lockdowns could happen and that would weigh on demand. Not all i. T. Spending may be as strong as some expected because of the virus. That is weighing on our stock of the hour, intel. Down big on the day, one of the worst for the chip sector. Relative to intel, down a third day in a row, losing 13 over that time period. Reported datael center sales were down 10 on a yearoveryear basis. Sales down forl the Third Quarter. They expect that to continue. Doubledigit declines in growth over the next few quarters. It really does suggest there could be a weakening i. T. Spend out there. Intel you would think of as a need to have. When there has been weakness in i. T. Spending, you think about the need to have anna nice to have. It could really be a tricky situation. It is bleeding into the broader markets. S. A. P. , resurgence around the virus. If we look at what is happening relative to the markets, big weakness. The s p 500 right now heading into its worst day since the beginning of september. That is the kind of selling action we are seeing. On a sector level, pretty bearish. You had tech and Communication Services and discretionary underperforming. Now tech is one of the worst sectors, down 3 . Sectorshave cyclical trading lower including industrials, materials, energy. Really nowhere to hide in todays selloff. Vonnie intel has had a rough few quarters. Intel and sap are lower. What company is benefiting from users displeasure with these two . Relative to s. A. P. , a small possibility they are using the environment to take down the guidance. They are saying specifically that they expect more lockdowns, and that will cut into their demand. They are getting ahead of that but you can see what that is doing to the stock, down 22 . Its worst dayr ever since 1995. Your question on intel is interesting because they have been missing on a couple of quarters, business weakening. They are on the worst pace since july. There is some suggestion that these two stalwart companies not doing so well right now, not falling in that need to have category. This is really putting investors and traders on alert that there are some areas of weakness in tech. Vonnie absolutely, and not helping todays dive. The s p 500 down 2. 5 . The dow down 3 . Some of those companies lower. Thank you for that. Hoping for Holiday Cheer amid the coronavirus crisis. Some are planning to spend on toys. That is what the motel ceo anticipates to where the end of 2020. He spoke with bloomberg and detailed about the mattel supply chain and operations. This is where the strength of our Product Offering and the brands that we own come into play. Barbie,seeing growth in 30 in the quarter. This was the highest growth we have seen in more than 20 years. This is all driven by great product innovation, strong Product Offering overall, effective demand creation, and what we see as strong cultural relevance. Our toys have a purpose. Part of our mission is to create Innovative Products and experiences that inspire and develop children to play. Its about quality, safety, and value. We can create products that do exactly that, and we see the results in the numbers. Our products resonate well with consumers. Our partnership with retailers in driving demand is working well. Some analysts are concerned that you are getting pulled forward demand at the moment, that it is not sustainable. Once we get back to normal, we will see behavior changing once again. Right all playing uno now, but how much longer will we be, when will children return to previous behavior . We dont believe there is any pulled forward in the Third Quarter versus the fourth quarter. Based on our own internal research, we see the vast majority of parents plan to spend the same or more on holiday toy purchases through the quarter. When it comes to the longterm perspective, the industry was expected to grow before the pandemic. Clearly there are some benefits in the pandemic with kids staying at home, but overall, the toy industry is a growth category. It always has been and is expected to continue to be a strategic category for retailers. Today, it is driven by quality product, trusted brands, and the ability of parents to offer products to children that will entertain and inspire them, and add value. Vonnie that was the mattel chairman and ceo. Time for a look at the latest Bloomberg Business flash. The Fintech Company founded by jack ma has set the prices for shanghai listings in and hong kong. They would raise 34 billion. That would surpass the saudi aramco 29 billion share sale last year. Petsmart is kicking off a junkbond offering of almost 2. 4 billion as part of a larger financing package that will separate the company from its counterpart. Group is betting that the companies will be better off on their own. The biggest problem for the Residential Real Estate market in the u. S. May be that there are not enough homes. New home sales dropped slightly in september. It suggests demand is being held back by lien inventory. 3. 5 . Dropped that is your Bloomberg Business flash. Still ahead, global coronavirus cases top 43 million. We will discuss the latest and look at the risk factors with sabra klein of Johns Hopkins. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Quick check on the markets because we saw that selloff gain steam. 3 , the worst performer is salesforce. Com. The best performer is verizon, still down 1 . The s p down to. 6 . The nasdaq is also down 2. 4 . All groups in the s p 500 are lower, led lower by in of energy index. Global stocks in the red on concerns rising coronavirus cases will weaken the economy. Cases worldwide topping 43. 1 Million People. For more, lets bring in sabra klein of a Johns Hopkins school of public health. You have some important distinctions to make when it comes to men and women suffering from covid. What have you found . Sabra the data around the world is showing that men are two times more likely to die from covid19 then women. Around the globe, death rates are greater, as are hospitalizations and admissions into intensive care units. Thisf and others interpret to mean that the disease is more severe in men, as compared with women. Vonnie i guess we dont know why yet, do we . Sabra not completely. We are starting to get a little bit of a picture. Immune responses definitely differ. Belooks like men may not mounting sufficiently early or sufficient immune responses to begin that initial control of the viral infection. Data that came out of china suggests that men are shedding more virus, so they have the greater potential to be transmitting more virus. Vonnie that is fascinating. I know you also looked at data from europe that had consequences for how women recover from the virus, and that is to say women are more likely to be long haulers, as they are called. Sabra yes, these people who have presumably recovered from covid19 but who continue to experience some of the longterm fatigue. Cts, such as there is data coming out of europe suggesting that women are significantly more likely to fall into that category. Tend toeral rule, women mount greater immune responses than men. Shis is true not just for sar is true for other viruses and bacteria as well. Immunityhat greater may be that there is more damage and some of these more longerterm issues associated with not having quite adequate recovery could be revealing themselves to a greater degree. Doctorsis it helping decide the course of therapy these days . I know we know a lot more about therapy these days than march and april, but if you are a man, will you be treated differently now than if you are a woman, with regard to therapeutics . Sabra at this moment, there are no recommendations that men and women should be treated differently. The hope that myself and others have is that we start to better understand these differences and start to apply this to how we treat individuals. We might call this precision medicine. Slightlyave to treat differently, depending on whether they are male or female, and an oral in order to protect equally. Vonnie do we see this and other diseases, even in things like the flu, men and women have a different responses . Lets start with the last point that you made. What constitutes a man and a woman . Much of what im referring too often pertains to some of our biology, our sex chromosome complement. Womenving an x and y, having two x chromosomes. Men having higher concentrations of testosterone, women having higher concentrations of estrogen and progesterone. This would constitute some of the biological differences in males and females that we believe could impact the immune response. Behavioral andbe even social or cultural factors that go into some of what we may refer to as our gender norms. 70 of healthcare workers, those Frontline Health care workers, our current heroes, 70 are women. So much. Hank you this is phenomenal information and very necessary. Hopkinsein of johns Bloomberg School of public health. G school of public health. Mark im Mark Crumpton with bloomberg first word news. And avoiding crowds. Said thaty pouch he that is what is needed in our country in order to return to normalcy. He said he favors a mask mandate. The United States had more than 60,000 new cases of covid19 in the past 24 hours. White house chief of staff mark meadows is defending comments he made to cnn sunday that the Trump Administration is not going to control the pandemic. As to why, meadows said its a contagious virus like the blue. Flu. Today, meadows clarified his statement. We will try to contain it the best we can. If you look at the full context of what i was talking about is we need to make sure we have therapeutics and vaccines. We have to make sure that when people get sick that they have the kind of therapies that the president of the United States has. Mark meadows says President Trump will not give up until all americans are safe and the virus is defeated. Amy Coney Barrett could be a Supreme Court justice before the end of the day. Thewhite house says swearingin ceremonys plan for tonight it confirmed by the full senate. That would put baron on the court one week before the president ial election and would conservative majority. She is expected to win confirmation. More deliberate blackouts in northern california. Pg e cut power to 1. 1 Million People to prevent live wires from falling into dry brush and starting wildfires. Wind as high as 50 Miles Per Hour swept through an area north of san francisco. Those blackouts may last until tomorrow. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Live from toronto, im amanda lang. Vonnie im vonnie quinn in new york. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. U. S. Stocks in the red and getting redder. The s p 500 on its biggest decline in weeks. Lawmakers struggling to reach an agreement on stimulus and so much more. Tax policies under trump and biden. We will speak to the director of the uc berkeley tax and finance center about what to expect with eight days until election day. U. S. Ew era of bankruptcies. Some creditors are left with just pennies on the dollar. Why many lenders are coming to the realization that their claims are almost worthless. As you say, we are seeing stocks tracking for one of the worst days since early september. A combination of factors dragging the weight down. Every subgroup of the s p 500 is moving lower. Leading another kleins is energy, although david wilson has just noted and you will hear more from him on radio energy is now at one of the lowest weights in the index for some time. Tech is still declining in a big way today, leading the declines in the s p 500. Industrials along for the ride as well. Boeing being weighed down by concerns about chinese actions. Head of still at the this, the pandemic is a concern. We are watching the 10 year treasury as well, interesting moves in that market. Now for azek joins us closer look. So much for these markets to be worried about. Is whattion i have had is priced in, stimulus . Is there a wait and see on the details . Is it not priced in . What do you think we are seeing today in the way of sentiment . Sarah it is hard to read. Usually when we get headlines on stimulus, we see the markets go either which way. Today seems to be more so about resurgence of covid19 in different areas of the world. In europe, we have record cases in italy, france. Here in the u. S. , another record. Over 80,000 for two days in a row. It seems to be spooking investors and traders. Backork will be rolling some plans, imposing some restrictions. We have some stronger, harsher restrictions in europe as well. If you look at the breakdown of the trade, all 11 major sectors are lower. Tech is starting to succumb to the losses. At the beginning, we saw the divergence between a stayathome trade and the reopening trade. Zoom is still slightly higher today. Earlier, we saw a more than 5 gain. Since then, we have seen them succumb to the direction of the broader market. Still, one of two names higher in the nasdaq. Amazon was also higher today. It has given in, and now we have microsoft, amazon, google lower. Not as much as the market, but these are all heavyweights. They make up half of the nasdaq, those combined. Cruise lines, airlines down today. It does look to be focused around this surgeons of fears and concerns around covid19. Vonnie are investors also getting out of the way of what could be a contested election, perhaps an election with unrest . Sarah great question. Eight days until the election. Just over one week from today. Concerns over a contested election have waned over time, much less than a month or two months ago. Still, it is a large risk event that is nearing. It will be here before we know it. I cannot believe it is already almost november. It is possible investors may of the derisk ahead election, in case we see the emergence of some good opportunities in the market. But it is also hard to get a take away ahead of the election considering such a large risk event coming up. There could just be some noise in the markets until next tuesday. Investors certainly expecting it. Everyone is a little bit on edge. Froma we are hearing corporations on their earnings, and we have seen some outsized moves when they disappoint. Intel, rogers communications. Reading into your earnings, what do you think it is doing to sentiment for investors . Sarah about 85 of companies have beat earnings estimates. That is a very high share. Companies that have beat it, on average, have seen a decline of 0. 2 in the 24 hours after reporting. That compares with an historical gain of 0. 7 . Those that have missed have been severely punished. A decline of 4. 4 . That is about double the historical average of what we see. Of course, you have to take into perspective the fact that we saw such a large runup in the past two earnings seasons. This time around, you are coming at it from a different perspective. I do want to mention s. A. P. Reporting in germany overnight. Down 20 , the worst day since 1999. This is a wakeup call on the covid19 front. They say they could see their business affected into 2021. Vonnie it is not like they havent been saying it, but investors took it to heart. Oil . About we are seeing energy lower as well. Sarah the two trade closely together. When we see oil trading lower, we will see the producers especially also heading lower. Demand has been so important to the oil price this year. Stuckude oil has been around that 40 mark. Asidel year long, but from that catastrophe, when oil prices moved low zero, since then above 40 and stuck there. We have the supply side on one front with concerns about opec and its allies producing more than hoped for to balance the demand. The demand side of the equation, it looks like last week we saw some positive numbers on the tsa front with airlines, but still so put depressed when it comes to precovid levels with airlines, cruise lines. We are not going to see demand or traveling that is going to weigh on oil prices. It is difficult to see an environment where oil gets a sustainable goose tire until there is a vaccine or covid19 is on the back burner and travel can resume. Amanda you mention text, and we are seeing some big moves, down more than 3 today in the s p 500 in terms of the subgroup. Pretty steep decline. Are there key levels we are watching in these markets . We are seeing what looks like Algorithmic Trading going on around certain levels. That has beenel closely watched day is the s p 500 200day moving average. We did break below it. It was lodged pretty closely in september. We have since moved higher. Today we not only sell to the 50day moving average but we broke through. Some traders, especially technical analysts, will say that if we close below and level that has acted as support this year, not only could it mean further losses, but that could act as further resistance. Vonnie why are we not seeing more movement in treasuries . Sarah we saw a little bit, but it is a decent move. Themthe best day for since july 23. Up 1. 3 . We are seeing a sizable move in the treasury market. A notable reversal of what we saw last week. Last week, we were talking about the 10year moving to its 200 day moving average. Finally broken through that 86 basis level for the First Time Since june. Now we see that movement back down, we see investors moving toward those save haven assets, the 10 year moving back below 80 basis points just after a week where investors were saying at what point will Interest Rates be too high and we will see it affect equity markets . That is not the case today. We are seeing a reversal in treasury markets. Vonnie our thanks to sarah ponczek. Coming up, comparing the tax plans of President Trump and democratic nominee joe biden. We will speak to Alan Auerbach. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Days to go until the u. S. Election, tax policy is in focus with the candidates proposal having divergent visions. Our next guest found millions of low income americans are locked into poverty thanks to tax policy. Berkeleybach of uc joins us now to discuss. There are so many things we could talk about in relation to tax policy. There is a lot of concentration over what would happen to middleclass families under a biden presidency. What would happen to lower income families in either case . Alan thats a very good question. Of trump plan is something certainly would effect a income people. The biden plan includes very explicit in trying to keep people under 400,000 of income unaffected. Although may be affected indirectly. There may be plans to help people at the lower end such as an expansion of the tiled credit child credit, childcare credit, dependent care credit. There are some things that would definitely help people at the lower end. It is a of all in, little bit hard to calculate. Theda meanwhile, a lot of attention and focus is on taxing the very wealthy, 400,000 and higher. The research you were a part of shows that low income americans are sort of trapped in a tax cycle. Give us a sense of what we are talking about here. What is the problem with the tax code that is crushing some americans . Alan it is not a problem that is unknown. It is sometimes referred to as the poverty trap. We have a lot of programs aimed at helping the poor, both tax programs such as the earned income tax credit, program where people get benefits such as housing, medicaid, things like that that are aimed at poor people. They all seem like things that should help the poor, but in order to limit the cost of these programs, we phase them out and them,rious tests on assets, income. If your income goes up a little bit, you work more hours, you could suddenly lose your benefits, be thrown off medicaid, no longer qualify for benefits. Becausefy these limits we want the benefits to go to the poor. On the other hand, as people try to move themselves out of poverty, they may lose a substantial amount of benefits. It could be to the point where it actually does not pay to work on a where they could lose more than they earn. This is not true of every poor person, but if you look at the population as a group among many of them do face effectively very high tax rates. Taxes could be as high or higher for additional income as what people in the very top of the Income Distribution save. Vonnie wall street is pretty convinced there will not be a wealth income tax under a president biden. Would he go through with it, could he . Alan i didnt catch all of that. Vonnie will there be a wealth tax . Alan first of all, during the campaign, it was Bernie Sanders and Elizabeth Sanders pushing the wealth tax, not Vice President biden. Of course, there are certainly constituents of his that would like to see a wealth tax. There are major issues concerning the implementation of a wealth tax, a number of countries in europe that had those wealth taxes, repealed them. The u. S. Has a special problem which is a constitutional one. There is a lot of thought that it would be unconstitutional for the u. S. To adopt a wealth tax. When we adopted the income tax, we needed an amended to do that. Many feel we would need one for a wealth tax, too. Experience with the wealth tax in other countries, as well as concerns about constitutionality, keeping in mind the evolving Supreme Court, would, i think, push them in other directions. Alan auerbach, appreciate it. One thing that is central to some voters minds. Theuc berkeley director of Robert D Burch center for tax policy and public finance. All this week, Bloomberg Technology is diving into technologys role into the 2020 our special electioneering series, 5 00 eastern, 2 00 pacific. We have seen the markets sliding today. Some of the broad subgroups in the market are down more than 3 . Some momentum to the downside as concerns about covid19 continue, questions about where the stimulus package is continue to mount. Stay with us. Vonnie amanda this is bloomberg markets. Im amanda lang in toronto. The effect of the Global Pandemic and the recession across the u. S. Has hit some industries hard. That means defaults are rising in energy and retail. In those defaults, bondholders may find themselves fighting over pennies, if they are lucky. Jeremy hill covers default in distress. He wrote a great story about this. Give us a sense of what is different here. You always get some difference of pennies on the dollar and a default. Why is it such a struggle to recoup any kind of meaningful gains of these restructurings . Jeremy right people we always expect creditors to get less money back during a downturn like mike youre seeing now, but the major difference between 2009 isnturn and 2008, the Federal Reserve has kept Interest Rates at almost nothing for the last 10 years, so that has encouraged a lot of borrowing, more than maybe you would have expected to see. That means Money Managers who need to generate returns have been increasingly ok with letting traditional debt covenants become eroded, given companies more wiggle room, letting riskier companies borrow. That is translating in the early stages of this recession to potentially lower recoveries. The way that we have seen this as i said, early days but you look at credit default swap options results, bond insurance contracts. The results in terms of the median are lower than they have ever been. We have seen a median of 3. 5 cents on the dollar this year. Was . 46. That number 2009, . 15. These are rockbottom payouts in these auctions. A lot of this can be explained by loosened covenants and an increase in borrowing overall, but there were also some structural factors at play. These creditors that are seeing very few pennies if seeing this from creditors, are they caught off guard . Jeremy it depends on what instrument you are talking about. And we are talking about credit default swaps, these options are referencing unsecured bonds, so names like jcpenney, neiman marcus, all kinds of investors that hold these bonds. Big funds, smaller more retail investors. Recoveries we are seeing not only in bond but potentially in loans as well, which are typically more restrictive in terms of who is holding these securities. Vonnie we have to leave it there. A fantastic story, jeremy. No. The first of many. This will be a rolling story. Jeremy hill on those potential bankruptcies. Lets have a quick look on markets. They were on the way down, the worst day in weeks apparently. The dow right now down 3 . The vix is actually above 30 once again. 32. 5. The nasdaq is not leading the way. It is down 2. 4 . Keep an eye on where we close. From new york and toronto, this is bloomberg. Mark bloombergs first word news. With eight days to go until election day, more people have cast ballots already than voted early or absentee in the 2016 race. 59 Million People have voted in person at Early Voting Centers or by mail. The surge comes as voters try to avoid crowded places november 3, during the coronavirus pandemic. Americans are rushing to pharmacies in record numbers for seasonal flu shots, as the pandemic brings new urgency to this years flu season. Cvs has surpassed the 9 million flu shots it gave during the entire previous season, and expects to double that number by the end of the season. Walgreens has given 60 more doses in its u. S. Stores that at this point last year. Residence inn El Paso Texas are being urged to stay home for two weeks. Officials are trying to stem a spike in coronavirus cases that has overwhelmed local hospitals. Texas Governor Greg Abbott transformed part of the cities