Down 24 from the peak, and apple as well. This is been a rolling story there is noday and other topic on wall street. Futures down 1. 7 and deteriorating. We will be looking at that all morning. Francine lets get to first word news with leighann gerrans. Bloomberg has learned President Trump has discussed putting up 100 million of his own fortune for his reelection campaign. It would be unprecedented for an incumbent president putting up his own money to win a second term. Joe buddens campaign and other democratic entities have been raising more money than the Trump Campaign in recent months. Joe bidens campaign and other democratic entities have been raising more money than the Trump Campaign in bismuth. Theriticized joe biden for decision that the fda, which would approve fx income is operating free of political pressure. Biden is demanding transparency from the government while it studies the vaccines. President trump is vowing to sharply scale back u. S. Economic ties with china, threatening to prevent companies who do business with china from winning federal contracts. The president also said that if joe biden wins the election, china would own the u. S. China is proposing global data for u. S. Moves on tiktok. Proposal toed a prevent foreign governments from acquiring data stored locally. The u. S. Has accused services ofe tiktok and wechat sharing information with the chinese government. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Tom . Tom thank you so much. Equities, bonds, currencies, commodities. Futures 10, but dow and stx futures have been sliding. The nasdaq 100 off the apple tesla thing, which will explain through the morning, down a solid 1. 5 . The fix the vix shows the 1. 50 , 32. 24 on the vix. Turkish lira crushed today. Fromur days, it has gone 7. 40 out near 7. 50. Sayinge bonds are not much because treasury yields are falling, but it is clear that european stocks are dropping after President Trump stoke tensions with china. Technology shares leading losses. The dollar index on gold were little changed but there is a lot going on when it comes to pound. Yesterday was a big move, and you can see sterling at 1. 3104. This is again, Prime Minister johnson saying that actually he is ok with not having an e. U. Trade deal. That is sending a bit of fx movement in haywire. President trump has vowed to sharply scale back Economic Times in china by punishing American Companies who outsourced to china. He spoke yesterday. Our. Trump we will relent reliance on china once and for all, whether it is the coupling or putting decoupling or putting in massive terrace as i have done. If they cannot do it here, let them pay a big tax to build it someplace else and send it into our country. We will prohibit federal contracts from companies that outsource to china. Francine joining us now is bloombergs chief asia correspondent, enda curran. How will they take this . Enda certainly they will respond, francine. What we had from President Trump is specific details that i dont think we have had before. American tax credits to get jobs back to america. Threatening companies that do business in china. Remember, there is a lot at stake here. U. S. Exports to china, that is almost one million u. S. Jobs. Employ aroundies 100 million american workers. The stakes are really high. Tom let me do a Scientific Study for you. I just moves, and you buy all that new stuff when you move. Of that stuff that i bought, all that garbage in your house, is made in china. Could that change . Enda that is the big question, tom. There is a competitive advantage for china, that it has been able to manufacture at a cheaper cost and export to consuming nations that buy those goods at a cheaper price than they otherwise would have. The big question comes with the automation and technology will that come at a cheaper cost . Would even create jobs would it even create jobs, given that we are in an era of automation . When it comes to the supply chain story, and a lot of people you speak to say that companies are assessing manufacturing out of china and we know that some governments are encouraging japan, for example. I think the supply chain story, i think both america and the rest of the world will be buying made in china for a while yet. Francine do chinese officials expect to have an easier time, as it were, if it was joe biden in the white house . And a code that is really the big question. As you know, enda that is really the big question, francine. A tougher, more hawkish approach to china on the chinese side, i think they are girding for a tougher approach regarding who wins. Chinas leadership once the economy to become more selfreliant. Not a newhat is policy, but they are accelerating efforts to get more demand generated by consumers at home. On the flipside, they want to make more of their technology and not rely on technology from elsewhere, for example, the u. S. On the chinese side, they have already signaled a fairly important policy shift in recent months. That is feeding into the idea that they are expecting the u. S. To continue its hawkish decoupling approach with china regardless of who wins the election. Francine tom we greatly appreciate that this morning. Let us look at tesla and apple. They are not part of global wall street. This is a huge, huge deal for returning wall street in america. 23 , 24 n 9 , down from the peak. Apple reaching that to trillion dollar point, down 2. 7 . This bears extreme scrutiny through the morning, based off the unwind of the softbank derivative strategy. They made roughly 100 , according to the ft, off a multibilliondollar derivative , aategy run out of abu dhabi really successful trade, and we will talk with andrew sheets about this because, as you unwind a trade, there is rehab and hedging going on across edging and hedging going on. Executive Vice President with a new title. That will be important. Stay with us. Nasdaq futures 1. 5 . This is bloomberg. M bloomberg surveillance good morning, everyone. One of the stories they discovered yesterday was breaking not only into the weekend but last week. Softbank, with an extraordinary derivative strategy. We are thrilled to bring you a gentleman better than good in the mathematics of the derivatives business, and that is andrew sheets of Morgan Stanley. I dont want to get you in trouble with the general counsel of Morgan Stanley, but i want to start with the trade the gamma Whale Company nasdaq will, whatever you want to call it. The nasdaqa whale, whale, whatever you want to call it. What does the Global Market do with someone that intrusive . Andrew good morning, tom. You know, i think when we look at what is going on in the nasdaq, to me it is actually about taking a step back and realizing or kind of appreciating that this is a very expensive, very well owned part of the market, and so it is always because of those two factors, going to be more vulnerable to any particular dynamic changing. I do think one thing that was kind of notable and developed over august was this really enormous correlation, positive correlation between a lot of the same trades. A lot of people expected nasdaq to go higher, they thought gold would go higher, they thought real reach would go lower. Ironically, i think people at the same time thought that those trades would almost diversify themselves, that it is ok, im long nasdaq but good with gold, or im long real rates. To be the biggest take away from what has been happening over the last couple of days is an appreciation that we are seeing a very real world stress test for what happens when a popular segment of the market gets hit, and we are seeing in real time what works as a hedge and what does not. Tom well said, and the technical studies i put this out on twitter moments ago we are nowhere near two standard deviations down on the nasdaq. There is not much carnage, although you get the emotion of tesla and apple. You are so good with this out of brown and mathematics. One of the great things is the impact on people not doing these derivative strategies. If softbank unwinds trade and the global wall street that facilitated their derivative strategies is forced to unwind their sides of the trade, how does that affect the rest of the market, other than the price decline . What is the shortterm or longterm impact of the unwind of the successful derivative strategies . Andrew i wont comment on any specific kind of derivative strategy in the market. What i would say, though, and i think this is kind of one of the more interesting dynamics that we see from a cross asset perspective, is that volatility in both equity and credit market , is pretty high. It has been high throughout this whole rally. That was one of the disconnects that you saw. Mus on new highs in the s p, certainly nowhere close theere near the lows in volatility. If you look at the vix or the ve x in europe, levels have implied have been pretty elevated. As we take a step back from this market, and again, there are a variety of things that could be behind that, but i think volatility markets are trying to price in and have been trying to price in a decent amount of risk premium. Which makes me think that further repricing volatility might not be the biggest change that we see here, given that you actually i think have pretty high risk premiums in a lot of the different kind of volatility measures that we track. Francine how much more volatility are we going to see going into the u. S. Election . Kind ofi think there is important things to focus on here. First, i do think what is in the price matters. Alreadyons market is implying a pretty high level of volatility, and we have actually had relatively little realized volatility with the last couple of days being the notable exception. So one answer would be, i think you could see more volatile markets between now and the election, and that would only just equal what the Options Market is expecting the u. S. Equity Options Market is pricing for the s p to move 1. 7 each day every day between now and early december. So i think that the Options Market is certainly price for some pickup. The end of september is a crucial time. That is when you have the first u. S. President ial debate. That is when a second cares act would need to be done by if it is going to be done. I think that is when we will have a much better idea of the impact of School Reopenings on covid cases, and that will be an howrtant weight point of the market will be in the next month or two. Francine if you look at everything going on in terms of volatility, is it Institutional Investors, and a very it a number of Institutional Investors that make up the bulk of this volatility . Andrew well, you know, i think that it is a variety of factors that are going on. I think what volatility markets ie kind of saying is what hear from a lot of investors, which is that there is still a lot of uncertainty out there, theres still a lot of uncertainty around the economic trajectory come around the election, there is kind of uncertainty about what we are looking at with the longterm effects of this policy. I do think that that is, in a supportive way, subjects the suggested that overall Investor Sentiment is not wildly optimistic, or investors are not all in on their market allocation, which i think stepping back is a good thing. I do think that the volatility market is correctly saying we are at a crucial juncture for markets as we come back from the summer, and there are scenarios where more fiscal stimulus passed, where the economic recovery turns out better than we were previously expecting, and there are scenarios where the additional stimulus doesnt come through or the coronavirus trajectory is worse than we expect, where things could deteriorate quite quickly. That is i think what i hear from investors, and i think that is what you see also being reflected in these volatility markets. So much, thank you andrew sheets of Morgan Stanley. Later today, the german finance minister joins us for an exclusive virtual conversation to discuss the e. U. s economic recovery under the coronavirus pandemic. That is 9 00 a. M. In new york, 2 00 p. M. In london. You can watch that on life go as well. On lives go as well. This is bloomberg. Francine this is bloomberg surveillance. Francine from london and new york. Lets get back to andrew. When you look at everything going on with trade the u. S. , china, the appointment of an e. U. Trade commissioner how do you play trade in the markets . Are,w so i think there you know, a couple of things to keep in mind. The first is, i think i am skeptical that the market will react much to the new headlines out of the Trump Administration. I think simply because we have had over three years of this administration, the idea that they would do something very different here, i think the market is going to be a little skeptical about. Think onee time, i constant of this election is that both candidates have articulated a relatively hawkish trade policy visavis china, so i think the one factor that might not change, more than a lot of other policy factors, would be u. S. Trade policy, visavis china and the election. But something that could change would be u. S. Trade policy visavis europe. That is an underappreciated part of the u. S. Election conversation. There is an you normas conversation about what could change around tax policy or it isment, but actually on trade. We have seen this in the Trump Administration where a president can operate relatively unilaterally. The biden team has been very different on trade and very different on Foreign Policy toward europe, and that is something that i think investors should appreciate could happen very quickly under a biden administration. You dont need to wait for congress, you dont need a large majority. I think that is an important thing to keep in mind, and as we think about the Investment Case for europe, Morgan Stanley, we are relatively constructive on you european equities versus u. S. Equities. Tom i want to go back to the gamma trade and the tail risks that are out there, which always start with leverage. Is it your perception that we are leveraged up and maybe we cannot see the leverage that is in the shadows . The many leverages that are out there, how bad are they right now . Andrew i think what is actually fascinating is if you look across the market, i think the positioning story really varies. If wef you look at look at the positioning data that we have, i think the market stocks,exposed to tech especially u. S. Tech stocks. They are very popular. I think you see among hedge funds, levels of gross exposure are relatively high, levels of net exposure have risen. There are some concentrated exposures, but theyre also plenty of parts of the market that are not particularly crowded or overexposed. Smallcap stocks in the u. S. Ional in the u. S. Financials in the u. S. Or europe are not particularly crowded or over owned. I think you have a number of segments in the market that we consider actually kind of traditional early cycle beneficiaries, and i think sectors that benefit from higher interest rates, steeper curves, where i think positioning is not crowded and valuations are not expensive. So when we are thinking about this market and my colleague mike wilson has a note out on this this morning, we are thinking about a more range bound s p 500 but with more rotation under the surface, some of those early cycle beneficiaries do better. Thank you so much. Andrew sheets, Morgan Stanley cross asset strategist. Up, we talk brexit, we talk trade. This is bloomberg. Leighann this is bloomberg surveillance. Im leighann gerrans with first word news. Bloomberg learned that donald trump is considering an unprecedented step for an incumbent president , discussing spending as much as 100 million of his own money to win the election. The president has been scrutinizing heavy spending by his team earlier this year that failed to push him ahead of joe biden. Plus bidens campaign and other democratic entities have raised more money than the Trump Campaign in recent months. Now President Trump is threatening to curb the u. S. Economic relationship with china , and he is promising to punish American Companies that do business there. The president calling on those firms to be banned from getting federal contracts. He also wants to impose tariffs on companies that leave the u. S. To create jobs in china and elsewhere. President trump said that if joe biden is elected, china would own the u. S. In california, the electricity crisis is getting even worse. The states biggest utility says it expects to cut power to 500,000 people this week to prevent live wires from sparking wildfires. Last weekly problem was a heat wave. This week california is expecting high wind to come sweeping off the pacific ocean. Kamala harris has made her first Solo Campaign trip as a democratic Vice President candidate, going to milwaukee where she can peel where she appealed to communities of color that will be crucial. Latino activists who support frontline workers. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Tom . Tom joining us now is chief content officer martin schenker. It is about politics, it is about kicking off the president ial campaign. Roundingl stretch, maybe third base, maybe second base. We have to rip up the script. Marty schenker with us, and we need to talk the nasdaq. The nasdaq whale, the gamma whale, as it is called as well. Not thes it is strategy, it is the sheer mass of the strategy. Aat softbank has done as publicly traded Company