Be day of angst and uncertainty, investors biting their nails, but it was met with the risk on attitude and the markets. Aroundn person votes, 100 million americans who cast their ballots ahead today. Hawaii and texas both reporting that early voter turnout has exceeded the total number of ballots cast in the last residential election. President ial last election. We wait to see if congress will be a help or hindrance. We start analyzing trading and the bet for a blue wave. Of big gains in the course theory, which doesnt tell you anything about the electoral outcome, but tells us that the markets are not expecting a massive gridlock or something problematic. If you look at the flows, there things. E interesting st voo, that is an interesting one. , also rallying. That is not dramatic, one week of flows, but that would be consistent with the election marking some sort of rotation point, which is a theme we have been talking about a lot. Romaine an interesting graphic there, joe. I also find it interesting that i am in a blue suit and purple tie today. Shoot. , i was not supposed to wear a blue suit today. I spent all day picking out my tie and i was not supposed to a blue suit. Lets bring in sarah ponczek. Everything green for the most part. Anything to read into it . Anyone you talked to spoke about connections between the action and what is happening in the vote . Sarah to be honest, it is difficult to read into. If we dig into what happened four years ago in 2016, we had a strong rally into the evening, a two day rally, actually, then we all remember what happened that night, as it started to look like President Trump was going to win. We saw a limit down futures, they cant fall anymore more added 9, only trillion in value over his term, so it is difficult to read much into today and yesterday, considering the fact that last week, we had the worst week for the s p since march. It is interesting to see that take hold over the last five days, your worst performing sectors are still Consumer Discretionary and industrials, financial, but in a different way from Consumer Discretionary, you do have to put it in perspective from last week. Caroline how are people position for any post vote voluntary as we go into trading in asia and europe . Much inike 2016 is very peoples memories. Sarah traders are bracing themselves. Traders and managers throughout the day, that they will be green lit on their bloomberg terminals late into the night. They are ready for whatever may come their way. It is interesting, when you do look at a rally like we saw today and yesterday, a colleague of mine actually pointed out this is the secondbest election day performance for the s p 500 since opening trading on voting day back in 1984, so it is interesting to see this enthusiasm placed in the markets, even ahead of an election that will certainly be like no other. There is plenty of uncertainty, if we want to use that word, and there is still a lot of concern about what this process is going to look like through the night or over the next week, how long it is going to take to get a result, whether it is contested or not. We will see that, but investors are bracing themselves, even that ine had a day like markets today and yesterday. About you think up think about the runup to election day, november 8, but they were a little more tempered and stocks traded sideways for a little bit over the next couple digests as people try to. Whats the general trend, historically speaking . When we look at how markets perform postelection day . Is the understanding it seems a little bit simple but typically, once you pass election day, once you have an outcome, once you know who is actually going to be in the seat of the white house, you see a bit of relief rally after the election. I will caution though, this one could be a little bit different. It is interesting to see that replacement trades take hold, even as we continue to see covid19 cases rise. In massachusetts yesterday, we saw mask orders. Not that this time is different are going to be different, it is important to keep in mind that yes, we will have an election and we will have an outcome, and the driver of markets all year long has been coronavirus and covid19, and that has not gone away. We could see markets react differently this time around because we have an exhaustion is factor that before 2020, we had never done this before. Romaine interesting convictions playing out in the market. Sarah ponczek theyre breaking it all down for us. We want to talk about what could potentially happen tomorrow and how investors are going to adjust to the new reality. We will discuss what to watch the the polls close with spoke investment group, coming up after the break. This is bloomberg. What caroline what a day. Day,a pretty extraordinary waiting a few hours now until we get the first pole closures. In the meantime, massive green everywhere across the board. I was looking at some different sectors. Small caps, another one of those theoretical stimulus blue wave types of things, up about 2. 8 on the day. I called it. I wore the right color. None of you got the green memo. Joe you are in favor of the markets going up. Caroline seriously, i am impressed by the amount of fervid tea about this rally. Yearsticular, when four ago, we were burned by brexit and the surprise election for many, and people wanted to go along into perhaps a biden wave, it would seem. Romaine we talk about the biden ine, but we have every seat the house of representatives, 430 five also up for grabs. Youidea is that blue wave mentioned, it would essentially move the senate from republicancontrolled to democratic control. If that plays out, may be the reflation trade will be validated and maybe they wont. Joe lets talk about one of the states that is getting a lot of attention tonight, and it is a state that is often not seen as pivotal, but things are changing in the world. I want to go to matt miller, whos in texas, to talk about texas. Haveis not a state people thought would be decisive, now it is probably one of the mostwatched states of the whole night. Matt i cannot believe we are sitting here talking about this. I moved to texas two months ago, and if you told me texas would have been in play in august, i would have laughed. But the voter turnout is huge and it is playing on both sides. It is really a tossup on the ground. You see a lot of Trump Supporters with flags and driving their pickup trucks around, but then you see this quiet biden turnout that is performing on the ground. Romaine the general idea here is that texas could potentially go blue. That has been the talk here. We have also seen some reports that certain counties have extended voting because of the massive turnout here. What do we know about that and when do we think we will start to see the results for texas trickling . Trickle in . Matt some polling stations are going to stay open a little bit later. A judge told people in harris county, where houston is, to check the post office to make sure the absentee ballots or mailin ballots that had been sent in were sent and processed on election day, which is texas law. It was expected that it would come out in the 8 00 p. M. Our, that you would see texas votes. It might be a little later than that, but texas has a good reputation for getting their vote out that night, so we should know the result tonight. Caroline matt, talk about the demographics at play here. Why there is an expectation that not this year, but next year or in four years time, the in . Cendo of blue will come matt you see people coming to texas because of the pro business environment, the low tax environment. The pandemic had a role to play , andst peoples move here certainly people from california, people from new york, people from traditionally blue states moving to texas because their companies asked them to, you can see that trend towards the blue wave. You are a journalist, pressure and no oppressi no , but are they changing the fabric of the state . And west,le from east both coasts certainly play into that. When you talk to people at the supermarket, at the store, the school, you very much get the sense. People from the east coast and the west coast are sort of quiet about it at first, because there are a lot of people in the public as well. Romaine getting beyond the president ial race here, are there any local elections within the state that folks have really been focused on . Matt there is a senate seat that is up for grabs. That is what any commercial break in the morning news cycle or afternoon news cycle, him or mj hagar, the democrat running against him. She is on the ballot, they spent a lot of money on the campaign. That is something to watch out for. Romaine corn and has been nyn has beenr around for a while, right . Matt a long time. Caroline we thank you for taking us through texas. Coverageor continued of this president ial election. Romaine and the blog. Caroline if youre lucky enough to have a bloomberg terminal, you can get in there. Live tweeting, this is bloomberg. Joe today we are watching how investors are positioning as they await the results from the u. S. President ial election. For more, lets bring in george perks. George, you are a great follow on things related to market. You also do a great job breaking down political data. What do you, in the early wave of data, when we get the first wave of closures, will you be looking for to get a sense of what the night is going to look like . George thanks for having me on. I think the big numbers are going to come out, the first numbers are going to come in indiana, kentucky, any small towns that start reporting votes. Also some good counties in kentucky and indiana that are heavily dominated by white workingclass voters who have voted democrat for the past butration or so, shifted to President Trump with some more democratic profiles. Once florida and North Carolina a little bit later on start reporting, ohio and georgia, any of those states, if the president loses any of them, he will be in deep trouble. Mathematically, there are only so many electoral votes if you. Ant hang onto those again, we are looking at big suburban counties. Carolina, there are two big ones. We would also look at union or cabarrus county, if they start to swing against the president , there are not many other votes he can pick up. That is what we are looking for in the first hour. Romaine one trend we have seen his massive voter turnout. We are probably going to top 150 million ballots cast this season, which would be a record. A lot of these people are people who have never voted before, and im curious, is there a general presumption you can make about the political leanings of this these people, or are we being too resumption was too presumptuous . George as far as election day votes go, it is totally realistic that we could get another 50 million votes. Generally speaking, higher turnouts tend to favor democrats. Generally speaking, not all the time, but across the years that has been the story. With the democrat fix that President Trump penetrated into demographics that President Trump penetrated into in 2016, it really depends on where the turnout is. If we seaworld counties deliver massive voter turnout that is based on what they have done historically, that is not good for democrats. If it is driven by urban or suburban counties that are swinging more aggressively towards democrats, that is good. Intexas, huge turnout suburban counties and what we can tell right now, texas looks pretty good for democrats. It is not certain it will flip, but early data looks that way. In North Carolina, a similar story but not quite as dramatic. Some urban counties lagging a little bit, but good numbers for democrats in wake and mecklenburg counties. It is likewise true with first time or unfrequent voters. Caroline and it is hard to tell a single story when, if you are going to get policy done, you have to have policy behind you as well. How much is the market looking at that as well . Part of this preelection theme is the steepening of the yield curve, the highest level of 10 year yields since march or second highest since todays close. That steepening of the yield curve, which implies faster, more nominal Gross Domestic Product growth, a more aggressive effort by the senate or less aggressive fed in terms of stimulating policy, because fiscal policy is taking over. That is contingent on democrats winning the senate. If they dont win the senate, there are few incentives for republican senators to cooperate with democrats on creating a fiscal package. The higher gross to mystic products, the higher inflation trade, all that goes away in our view. Our view boils down to if biden wins the presidency and republicans win the senate, by bonds. Bonds. Y about if biden wins but cannot get the senate, it is kind of a cliche, they say investors like gridlock, but what about an economy that many people believe needs more aid . What does that mean for riskier areas of the market besides bonds . George investors like gridlock up forere was a set where gridlock meant some sort of cooperation, some sort of moderation between two different parties that had to Work Together to get something done. That era is long over, and both parties are comfortable saying no, we have our ideological view and will hold out for that. Democrats would be willing to work with a Republican White House and Republican Senate. I am not sure that a Republican Senate would be willing to work with democrats in the house and a biden presidency. For the stage of u. S. Political economy we are at now, gridlock is not what markets want to see. Quite the opposite, in fact. They want to see faster Economic Growth and more stability around the economic policy. Wavehis constant, rolling of willard deal get done, wont to deal get done, when are we going to get fiscal deals, so on and so forth. Gridlock is a bad thing for fiscal deals. Romaine in the gridlock we had in the past few days here, is there a sense that some of the positioning we will see being taken, our longerterm bets about the outcome, or is this the gamblers here trying to handicap the outcome of one particular event today . Carefuli would be looking into something as big as u. S. Equity and fixed income markets. And even saying the markets are pricing acts, so the markets are x, sog w pricing the markets are pricing y. Whether it is brokerdealers, fast money type accounts that are trying to step in and still get flow between people with moneyng views or real type investors with opposing views, no one wants to come in with this super loaded with risk either way. Although skepticism all the skepticism around polling and the election, you really dont get paid to make big bets on this sort of outcome that you dont have a good feel for. I think brexit is another example that has taught markets to avoid doing that. Instead of people taking bets based on an outcome ahead of the event, they are squaring up their book and saying, i will take square risk off and get flat and see how things turn out. That is driving it in the last couple of days more than the thought of a blue wave, or equity traders are all super excited about the product of fiscal policy, so they are going to take on a bunch of risk right into election day. I think it is people getting square, flat, etc. Thank you so much for joining us. Caroline, romaine, what are you doing for the rest of the night . Caroline i am getting a take away i am going to sit and watch joe what food are you getting . Caroline i called my husband, he is expecting a big fat pizza, but he wants a salad. Joe just water for me. Romaine you are a teetotaler tonight . How do youwithout, do this . Caroline the key question is when are you going to sleep . Joe maybe under my desk, maybe at home, but that will depend on the results. Caroline we look forward to some dark circles, but certainly food for thought. Joe Bloomberg Technology is next. Romaine check out our blog for more live coverage. This is bloomberg. To Bloomberg Technology. We are about an hour away from the first peoples closing in kentucky and indiana. Reports. Live candidates joe biden and donald