And lisa abramowicz, im jonathan ferro. Is one of the worst charts in the world. With the Stoxx Bank Index hitting a record low, you wonder where that folds into the system. Jonathan theres a line i remember from the former ecb president mario draghi, when he turned around and said rates have to be lower and out to be higher in the future. It was 2014. They just went negative. They are still there. Will we generate an economic recovery on the continent that leads to higher Interest Rates . The answer right now is not any soon. Tom bring up that chart. It is really an elegant chart. This is the thing that we were talking about. It is the xaxis of all of this. Whether it is the european back malaise pushing back 12 years, even 14 years, it is the duration of these agonies we have to focus on. Jonathan weve just never recovered. This week, the equity benchmark , the daxurt, germany since then, we are down, we are down almost 6 . Tom how do you measure the mystery of what is going on and what . Going on in washington . Jonathan weve got it on about credit. This week, we had a change. I think we had about 40 basis points spread widening in highyield. Just some cracks emerging. Lisa the biggest highyield bond etfs saw the most drawn since the february turmoil, raising a question about what this signals ahead. Takens is just froth off the top, or a material shift given that we dont have another round of fiscal support in the offing, and we are getting a resurgence in virus cases. Jonathan and what are you getting in the treasury market . A move lower of just a single basis point on the 10 year yield. Isnt that a story . Not much of one in the sovereign debt market right now. Lisa we are looking at the data to try to understand what the next leg will be in terms of on fields, as well as economic coverage as economic recovery. 1 00 p. M. , the bakers hughes u. S. Rig count. In some ways, this is a gauge of mobility. President york fed williams speaking to a group in rochester about the prospects of entering the labor market at this incredibly tenuous time. This to me as one of the most Untold Stories of this entire recession, which is if you are a College Graduate graduating from high school, what is your prospect given that entrylevel jobs largely been eradicated from a lot of the sectors that were traditional hirers . Jonathan couldnt agree more. Lets get straight to the price action. Things picking up. Equities breaking down on the s p 500. We head towards a full straight week of losses. 0. 8 . , in Foreign Exchange the story of , stronger dollar, the strongest going all the way back to spring. 1. 20 wasnt so long ago. Now we are nowhere near it. Tom also, swiss franc goes weaker. Swissie ate euro a handle that is really profound. Turkey got their act together and stunned experts with a substantial Interest Rate increase yesterday, so turkish lira finally stronger. Jonathan lets get the conversation started with amy wu silverman, Rbc Capital Markets equity derivatives strategist. Fantastic to catch up with you. This market is not too concerned about october or november. Very preoccupied with december. Why, amy . Amy good morning. December seems to be the focus. Part of it is there is this december 14 deadline, with the state electors are supposed to submit their ballots. Obviously the conversation has gone on for quite a while that we are going to have a contested election, where the mechanics matter a lot. One nuance i would point to is this is very true for s p and vicks, which have been present s p and vix, which have been present a higher volatility for longer. This is not true in the russell. That is prettyk interesting because the market has been so much driven by this tech versus value trade that is not being reflected in those industries. In those indices. Play in big, or is it just another small factor . Amy we sort of saw the market react to some of the beta that came out, as well as health comments. If i could add a third layer to that, there have obviously been substantial option dynamics at august, and even earlier, referring to the softbank trade, as well as the retail option buying. The third sector that i see in play is also that i see this options dynamic we referred to as gamma. We saw that exacerbate the move, and we are seeing it exacerbate the move down. In mainly tech names, but as goes tech, as goes the market because of the heavy weighting it has had in the market in recent times. Lisa you talk about how 2020 volatility has largely been focused on what you call the man stoxx. Do they potentially suffer man stocks. Do they potentially suffer losses, or just underperform to the rest of the index . Amy so far, it has been very resilient. One key point that we look at two kind of look as a litmus test to that answer is how option call prices weigh over option prices. Those have all been inverted throughout the entire summer. We now start to see that change, and particular in the faang man names. It makes me think that if there is a reversion, it will come hard. Tom very simply here, are we seeing a breakdown of the bull market . Are you talking intermediate bear or outright bear . Amy from our perspective, when we look at how the options went from complete exuberance to now back to average levels, the investors expressing their views are starting to show more bearish sentiment. That is obviously on a very shortterm basis, so everything will look at in terms of the option prices are always one months to three months. But if you look at those, we went from peak exuberance to historical relationships in terms of how exuberant they are, to now even slightly bearish. As we headed to an election and we get to focus more on index trades as opposed to single stock trades, i can see that turning us into an environment where people are much more focused on hedging and focused on the downside risk. Jonathan amy, great to catch up, especially this morning. Amy wu silverman as we break down just a little bit. Process that worldwide, as we get you. For the opening bell in new york , equities breakdown 25, 26 points, down 0. 8 . Not Much Movement in the bond market, but that is not use but that is not news for you. Eurodollarrket, 1. 1639. The underperformance is very real. The character and catalyst of this selloff is so different to what we saw in the previous three weeks, when it was about a tech shakeout and basically nothing else. This is about the fundamentals now. The outlook for the economy in europe, the restrictions around the economy because of the virus, and the character of the selloff is no longer just about tech. That is a shift this week, and i would say it has dominated the conversations ive had all through the trading week. Tom no question about it. To triangulate that for you, dxy off to new strength. This is the major weighting of currencies. Is bloomberg dollar index not yet out to record strength. You do eurodollar as your data check. Eurodollar really going to test those lows of two or three days ago. Jonathan a 1. 16 handle right now. I have to point out, you and i have had this discussion about how consumers might disengage. How would they respond not just to policies how would he respond to this policies . Already, consumers starting to ration items in the way they did in spring of this year. I dont think anybody should be adding panic to the situation. The government have been very clear themselves that the measures announced this week are nothing like the measures announced in spring of this year. I think the problem right now is that many people sit here, even with calm, collected heads, and believe the restrictions in ousted this week are just restrictions announced this week are just the start. From new york and london this morning, this is bloomberg surveillance, live on bloomberg tv and radio. The first word news, im ritika gupta. Paris police have arrested one person after a knife attack that left four people wounded. It happened near the former offices of satirical newspaper charlie hebdo, where islamic extremists killed 15 people in 2015. Police arent sure whether todays attack is related. London police have launched a Murder Investigation after a Police Officer was shot and killed inside a Police Station today. Croydondent happened in , south of the city. The suspect was shot and is in critical condition. It is rare for Police Officers to be shot and killed in the u. K. , which has strict firearms loss. The last Police Officer killed in the line of duty was constable keith palmer, who was stabbed to death in 2015 during an attack outside parliament. Supreme Court JusticeRuth Bader Ginsburg today becomes the first woman in American History to lie in state in the u. S. Capitol. She will be the first jewishamerican to lie in state, and just a sec. Up in Court Justice. The first just the second supreme Court Justice. Thousands of people paid their respects. She died last week at the age of 87. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. We continue to look at solutions, and as it relates to the restaurant and broader hospitality industries, we think those industries dont need more debt. What they need is Economic Relief because they are shut down as a result of covid. More ppp money targeted to businesses that have decreased revenues would be very important to saving jobs. Treasury secretary Steven Mnuchin there on the fiscal effort. Equity futures are breaking down , particularly in the last 60 minutes or so. We are off by 0. 75 . Break down on the dax by 1. 8 percent. On the cac 40, down by a similar amount. In italy, off by 1. 5 . 1. 1633, down 0. 3 . , this conversation around the fiscal effort is absolutely bizarre. Secretary mnuchin said if the democrats are willing to sit down, im willing to sit down. House Speaker Nancy Pelosi said we are ready for negotiation. Then House Democrats are coming out with a 2. 4 trillion package. I am not sure what kind of negotiation that is. Tom well, it is a negotiation of desperation. Right now we are going to put some focus on it. Kevin cirilli knows that every vote matters. It was 8000 votes in the Third District of iowa that led to a massive upset of david young, the republican. Did i hear the knocking on the door yesterday of the speakers chambers as the congressman from iowa said wake up, lets go . Kevin i think you did. Thats precisely why democrats likely next week are going to pass this 2. 4 trillion fiscal support bill. It gives democrats an opportunity to say that they have lowered by 1 trillion their threshold, and that they are willing to have some type of negotiations. I was paying attention to senator ben cardin from maryland. He said that realistically, it is going to be unlikely that there be any type of deal before the election. 11, got my i on december when the continuing resolution expires, the shortterm resolution. So there is a fiscal cliff, so to speak, coming up in december. That is likely going to provide a lot of momentum for their potentially to be another round of stimulus because remember, the Airline Relief come the student debt relief, the Small Business relief, the energy sector, to some extent, all of those other programs that have been left over from this stimulus that people are still utilizing, that is set to end at the end of the calendar year. Tom conor lamb of the 18th the district pennsylvania, 1000 votes, maybe 2000 votes. How many are out there . Kevin that is where the economic conversation and the fiscal conversation really is on a collision course with the Supreme Court, as well as, to a lesser extent, health care and other issues that are going to come up in cleveland on tuesday at the president ial debate because for conor lamb, the economy in his district is obviously something that is front and center of many of the swing voters who elected him into office. But democrats are also trying to mobilize here. I would note very quickly that after the confirmation of Justice Brett kavanaugh, republicans picked up seats in. The senate meanwhile picked up seats in the senate. Meanwhile, democrats picked up seats in the house. Strategists feel that a Supreme Court pick helps them in the senate. Obviously it is a junkball in the house a jump ball in the house. Lisa our job is to try to distill what matters markets. Youre so good at that, and that is why we keep harping on the fiscal support package that is or isnt forthcoming. We are talking about this 2. 4 billion dollar plan that democrats put out. It is a democrats only plan, far away from the demands of most republicans. It is dead in the water, isnt it . Kevin before the election, yes. I dont like doing the estimates that the analysts do, but i would say theres about a 20 chance that there be fiscal support before november 3. Those chances dramatically increase above 50 to get Fiscal Relief by the end of the year, sometime after the noise from the president ial election settles, and before and around the timing of december 11. Even beyond that, in the First Quarter of next calendar year, based upon the conversations ive had with the Biden Campaign , as well as sources in the Republican Party, that likely around march, there would be another conversation a brown fiscal support conversation around fiscal support. The noise is loud coming from the central bank. When you hear the top officials at the Federal Reserve saying the needs to be more Fiscal Relief, that catches the attention of people like senator pat toomey, a republican from pennsylvania who was very fiscally conservative, but also could be the next chairman of the banking committee. I think those types of republicans are definitely paying attention. Congress and french hill that we talk too frequently as well, they understand the needs to be some more Fiscal Relief. Theyve just got to get through the nosy season between now and november 3. Lisa the other noise is and very trump saying strongly saying they commit to a peaceful transfer of power should it come to that. How big is this fissure right now . Kevin i was thinking about this when i was on a run yesterday because this reminds me so much of when president trump, then candidate trump, threatened to run as a thirdparty candidate should the Republican Party not fully support him in what was a very crowded 2016 president ial field. What you are seeing now i think is an opening argument, so to speak, and a preparation of sorts for republicans, as well as for the president coalition around the countrys the president s coalition around the country, that this could potentially be a very litigated election process, and both of the campaigns are preparing for a legal battle that could end up all the way to the Supreme Court. Tomorrow in the 5 00 p. M. Eastern hour, the president is set to name who you would see who he would like to see replacer Ruth Bader Ginsburg. Jonathan that is how tom and i used to prep for this show as well, go on a run together through central park. We would pop out together, go for a quick run. Get across the road, pull out two cigars and sit down. [laughter] and then we would stumble back into the building and pretend we got some exercise. Kevin, great to catch up. Get a bit of water, pour it over his head. Just pretend hes sweating a bit. Keene, does she still listened to this . Tom no, shes getting ready for kelly and whats his name. Jonathan equity futures breaking down a little bit on the s p 500, heading towards a fourth week of losses on the s p. Its a killer, especially when you are about halfway through that cigar. In the bond market, 0. 6 on tens. This is bloomberg. Jonathan from new york and london, this is bloomberg surveillance, live on bloomberg tv and radio this is bloomberg surveillance, live on bloomberg tv and radio. Alongside tom keene and lisa abramowicz, im jonathan ferro. S p, we are down zero. 7 four weeks of losses we are down 0. 7 . Four weeks of losses on the s p. Int a six basis point move 10 year. What role does treasuries have in your portfolio . In Foreign Exchange, the euro coviding the concern with restrictions coming through in places like the United Kingdom this week. Eurodollar coming down 0. 3 . Ago0 feels like a lifetime for Foreign Exchange traders right now. Tom i love what you say about portfolio construction. Into q4, that is going to be the huge story. Intangibles, tangibles, real estate whatever. I dont know how you construct a portfolio without a bond anchor to dampen equity vol. Right now, with dow futures 221, this is a joy. Bennenbroook nick ek 10 years ago was fx strategist of the year. It was a big deal. He got a red ferrari and looked great in new zealand. Then he did it the next year. That is absolutely impossible. Just ordinary extraordinary. Nick, i want you to give me a dollar vector right now. Ive got dxy out to new recovery strength this morning. Are you still looking for a weaker dollar . Nick over time, for sure. With respect to what that means we are global economy, going to get umps along the road, and we are clearly seeing a huge supply in the equity markets, but so long as we are on track for recovery, and we eventually get hold of the vaccine and covid parts, we would expect he weaker dollar. Tom we are going to work on the audio, but i look at the dollar dynamics we see right now on an international basis. Do you see tepid economic growth, or can it be china t