Open. The cash trade an hour away. Here are your top headlines from the bloomberg terminal. Brussels shuts the bar as early as the virus resurgence accelerates in europe. France reports a record daily number. Emmanuel macron warns of further restrictions to come. Kamala harris slams the president s Pandemic Response in a largely eventempered debate with mike pence. Polls show joe biden widening his lead in battleground states. Futures push higher amid signs nancy pelosi is open to an somene relief will, but warned a bite and win would be modestly negative for u. S. Starks. We are an hour away from the start of u. S. Equity cash trading. We do have green arrows. In terms, modest gains of futures contract with ftse 100 futures basically unchanged right now. Percentook at the mispriced, you do see gains indicated at this point. Take a look at u. S. Futures, also showing gains this morning, a little bit stronger, the gains. About. 4 across s p, dow jones, nasdaq. Anna breaking news coming through from london. An update from easyjet, talking about where they see their fullyear Group Headline performance coming in. They predict a loss report tax pounds 845ion Million Pounds for the full year. Recommending be payment of dividend, which is possibly a bit drastic, though i wonder how much expectation there was for one. They see themselves flying around 25 of their planned capacity for their First Quarter of 2021, which is some interesting early guidance of just how much capacity will be in the air. It would not be appropriate to provide any final guidance or Financial Guidance for 2021. They will continue to review their liquidity. Of course, they already have raised money in these markets. Lets get to the gmm and see where the Asian Session has been taking us. We see positive performance coming through on the gmm for asian equities. India, japan, indonesia, south africa to the upside. The emfx is moving to the upside. Ofy do seem to be sort broadly risk on when it comes to stimulus. Maybe after the election is where the markets focus is, an increasing focus on the polling advantage joe biden seems to have, particularly in battleground states, and there was not anything that really changed the battleground narrative around that from the vp debate last night. Slightly risk on picture for equity markets and other assets overnight. Laura wright is here with our news update. Laura senator harris and mike pence faced off last night in their only debate of the election cycle. Harris condemned Trump Administrations handling of the pandemic, calling it the worst failure in u. S. Government history. Pence hit back at the democrat tax plans and questioned if they wanted to pack the Supreme Court. President trump has announced his intention to authorize regenerons emergency use and provided free to americans. The president added his brush with the virus was a blessing from god because it gave him firsthand experience. The wto has whittled its choice for next director down to two candidates. They will likely be formally announced today. The double to has never been led by a woman in its 25year history. Despite the brinkmanship, the u. K. And eu do seem to be lurching toward a deal. The eu has dared the u. K. To walk away, and the u. K. Says it will do just that, but in private, officials are far more upbeat. They sell they tell bloomberg that despite differences, discussions will likely carry on. Well news 24 hours a day on air and at bloombergquint pick, powered by more than 2700 in 120ists and analysts news 24 hoursorld a day on air and at bloomberg quicktake. Matt u. S. Stocks in the grain as investors consider encouraging signs for joe biden in the president ial election raised and the outlook for stimulus as well as talks with nancy pelosi seemingly continue. Lets get to the market with our bloomberg analyze macro strategist. Whats the deal . Trump seems to cancel stimulus talks. Now it seems like pelosi and mnuchin are still discussing parts of the deal. What should markets expect or what are markets expecting . Ethic markets are telling us they are forwardlooking, so despite the recent rhetoric around the potential for a package thats unlikely to happen before the election date, clearly, they are looking more towards the fact that postelection, we are going to have a significant fiscal package in play. We may look at what markets are telling us. We saw the 30year yield retrace its recent declines. We are seeing risk segments buoyed by these ongoing stimulus hopes. Its unlikely to be the case we will see a broad support package in the near term, but certainly, markets are just ending their hopes on kind of the longerterm outlook that we will have some kind of deal eventually. Anna to what extent do you think markets are front running a blue wave . Is that what were seeing here . If we were, why are we not seeing Technology Stocks be more impacted, given with the house panel suggested in terms of regulation and the possible separation of some of these assets . Laura it is the case that perhaps markets are getting ahead of themselves because we dont actually know in terms of the tech sector how certain regulations will play out. We dont know how the potential increase in corporate taxes could actually weigh on fact that wethe are seeing just stocks continue to rally on the back of this Infrastructure Spending hopes, the potential for this reflation trade to come back clearly, that is not in markets purview at this stage. At the same token, we are seeing that when we look at kind of theet thinking around potential for credit clean sweep, if we look at betting markets, the odds of a biden presidency now sit at around 65 , which is near the top of the range that they have in. We are also seeing biden continue to Gain Momentum in National Polls with a significant lead across key swing states. It does point to the fact that we are going to see a blue wave, but if we look back to 2016, polls are telling us something similar back then in terms of the democratic take away, but clearly, that did not happen. Perhaps there does still remain a degree of uncertainty ahead, so it is likely to be the case that markets may be getting ahead of themselves, at least in terms of the yield front, kind of yakking on this large reflation trade staying cemented, and thats not get clear at this stage. Matt while we are on the blue wave assumption, and i will remind everyone, who im sure is aware that we thought Hillary Clinton was going to win as well. Donald trump can surprise us, but while we are on that assumption, what does it mean for a Green New Deal, as mike pence was talking about yesterday . What does it mean for green bond issuance . Laura certainly, just a fact that we have seen green bond issuance accelerate quite rapidly this year, we saw it top 1 trillion for the first time after record issuance in september, so it is clearly the case that we are seeing this pandemic renew awareness on climate issues, and that alongside this sensational investor demand for places to put money in terms of safe assets is really driven this robust appetite for green bonds, and that is unlikely to be a trend that is going to fade any time soon, but there is a risk that we do need to see this actual funding goes toward these environmentally friendly projects instead of just being earmarked for the projects and then used for other sources without any accountability for the actual outcomes, and that is clearly the risk around this new wave of green bonds, but clearly, governments are taking environmental factors in stride, so that doesnt seem to be the way of the future in terms of looking at Recovery Fund allocation. Anna the Green New Deal, the extent to which democrats are committed to that or not, we look forward to more clarity on that front. Thank you very much. You can get in touch with the team at the markets live blog, also the tv team. Coming up on the program, markets after the bp debate. Toders pay close attention the sparring between harris and pence, but how did markets react . We have found a little reaction for you. Dani burger will break down the details. This is bloomberg. Now, joe biden and Kamala Harris would put us back in the Paris Climate Accord. They would impose degree new deal, which would crush American Energy, would increase the energy costs of american , and literally would crush american jobs. S economic plan moodys, a reputable wall street firm, has said would create 7 million more jobs than donald trumps, and part of those jobs will be about clean energy and Renewable Energy. There are no more hurricanes today than there were 100 years ago, but many of the climate alarmist use hurricanes and wildfires thank you, Vice President. Green new deal. Joe has seen and talked with farmers in iowa whose entire crops have been destroyed because of flood. Joe believes, again, in science. Matt Vice President mike pence and democratic vp candidate Kamala Harris on Climate Change and Renewable Energy during the Vice President ial debate last night. Traders overnight paid close attention to the debate with u. S. Election quickly becoming one of the biggest drivers of volatility in financial markets, but how much of a difference did the vp showdown make in the direction of global assets . For that, we bring in dani burger. Dani this was supposed to be the debate where we did get some decisive movement. Because there was less interruption, we could get more policy stance, but really for the markets, the big take away was that the narrative has not changed. That is this narrative of this development in the markets up perhaps more stimulus regardless of who is president and the widening gap when it comes to the polls. As one trader put it to me, all all all of all, love kamala needed to do was not screw it. The debate happens around here, we still get that holding onto higher yields in the long term and the dollar falling, so that is a clear sort of reflationary trade, but it was not all the same. I was able to find one instance where some policy discussion certainly moved markets in a decisive way. It came from comments from Kamala Harris over foreign. The president s trade war with china he lost that trade war. We lost it. What ended up happening is because of the socalled trade war with china, america lost 300,000 manufacturing jobs. Farmers have experienced bankruptcy. Its been no secret that the trade war has been one of the big tail risks looming over markets, and some hope that if there is a biden presidency, that would disappear decisively sent stocks both in the cash session in japan and u. S. Futures higher. Heres where she made the comments. You see the tick higher in these equity indexes. As one trader put it, both vp candidates certainly had a message of protecting America First or really just america in general, America First being the Trump Campaign slogan, among hem, but it was Kamala Harris comments that made them seem they would be less aggressive toward china, less combative, and the market did like that. Anna thank you. Lets get a Bloomberg Business flash for you. Here is laura wright. Laura citigroup is paying a 400 million fine and must seek government approval on any major acquisitions after regulators issued a rebuke for consistent problems with its risk control. Officials also reserving the right regarding changes in Senior Management. The u. S. Is exploring restrictions on tencent over concerns that difficult plate difficult payment platforms threatening u. S. National security. The movement infuriating china and threatening to disrupt an ipo that maybe the Worlds Largest ever. A disney investor wants the company to not pay dividends and instead invest the money in its streaming service. Matt thanks very much. Laura wright in london with your business flash. Coming up, brussels shuts the bars as buyer various cases hit records in spain and france. Brussels shuts the bars as spaincases hit records in and france. This is bloomberg. Anna welcome back to the European Market open. 40 minutes until the start of cash Equities Trading in futures point to the upside with the bank focusing on the possibility sideimulus, maybe not this of the election, maybe a small amount this side of the election, maybe more afterward. France and spain have posted record increases in coronavirus cases for a single day. In germany, the infection rate has had the highest since april 10. Brussels and bucharest became the latest european capitals to impose restrictions on nightlife following berlin, madrid, and paris. The credit space has started to react to the increased risk with spreads in European Corporate slowing for the first time in months. We speak with the head of credit at bank of america. From your perspective, what would happen with the virus, but then you have to watch the policy response, and i suppose your market may be seeing cushion from the reality of the virus by the policy response. Will that continue through the winter or not . I think it has all been sort of buffeted by the policy response. In march, there were over 1200 policy measures announced globally across monetary, fiscal, to head off the covid crisis. That is an unprecedented amount of stimulus, and it took all markets up. Credit spreads went tighter, equities went higher, etc. I think the problem for markets in q4 is its going to be difficult to repeat that stimulus we had in march. In august, for instance, we still had policy measures, but thats why i think markets in this quarter you were right to point out that markets wobbled, but i do think in credit markets, you will see a market that feels like its lots this mojo a little bit. Its mojolike its lost a little bit. Matt is there a risk of default being worse than we expect . I was reading a story earlier about bank loans, and a journalist at bloomberg pointed out if there is another lockdown, that means another trillion in loan losses. They said in the unlikely event, but i would think another lockdown is pretty likely. Yeah. I think you are absolutely right. Defaults is perhaps the most miraculous story of this crisis for credit markets. We are at 1. 7 default rate in european high yields. Not only is that historically low, its low on a global scale compared to what you see in the u. S. , but its low given the destruction of gdp we have seen in many european economies, and it begs the question why is it so low . What europe did well in this crisis, it did not quite go the full speed that the u. S. Went in terms of discretionary fiscal spending, but we were very good at providing state back security to companies, and data shows that might have found its way into the sector which is the backbone of europe. This is the thing we need to keep an eye on do those policies get extended and rolled over . If they do, we may well continue to see incredibly low defaults amid a second wave and amid a dip in the economy, but if there is political pressure to pull them or not to roll them over because, lets say, concern about fraud and the usage of them, we may see, perversely, a rise in defaults next year just as the economy begins to recover. Governments in europe could decide it is better to throw money at these companies and prevent a day of reckoning of defaults and higher unemployment, but there is a political cost to keep that game going. Anna you talk of a day of reckoning. Banks lead talked about bracing for impact. I want to know if that impact will come, if that reckoning will come if we do see extensions of supports from government. Where is the cliff edge that you are mindful we are approaching . Well, we have a little bit of a sense of that a few months ago when we began to see this wave of fallen angels being downgraded to high yields. Looking again at that cliff, that cliff has not disappeared ratese you had lots of and credits being downgraded. Im cognizant of the rating agencies. You can see from their behavior, they are also standing up and taking notice. The recent vshaped recovery in the macro data, but certainly, they took the notice of the enormous cash raise companies in europe have done and they are giving these companies the benefit of the doubt. My concern is that if the macro vshaped recovery wobbles a bit, you may see regions go back to this cycle and theres still a large amount of debt that could make its way into high yield, and that is a pressure point. That could cause indigestion. Matt do you prefer looking at i mean separating the debt in which you invest by region or by industry . I think the important trade for Credit Investors this quarter is to keep an eye on the macro data in europe. It does feel like we are heading into a twospeed kind of economy. Consumersis causing to retrench already, and that is causing the surface side of the economy to dip back into contraction, whereas manufacturing is still expanding, and that will be helpful for french and german credits because it means china will continue to import, etc. , but for the periphery which generally now is made up of lots of Services Types of companies, and theres greater credit risk in my mind for the remainder of the year, so i believe the right way to think about credit investing now is by region, but also as a reflection of the fact are many of the companies Old Industries and manufacturing types, and many of the peripheral issuers tend to be serviceddriven companies. Anna really good to speak to you. Great to get your thoughts. Head of european credit at bank of america. For joiningry much us. Kamala harris slams the presid