Strong. The risk off fee here is tangible. The sap inp germany. What if you bought shares friday . Francine we understand that it could probably infect or touch the european stocks. We have the october german business confidence, 92. 7. Lets get to the bloomberg first word news in new york city with ritika gupta. Ritika House Speaker nancy pelosi says the chamber could pass the pandemic relief package this week. Still, a deal with the white house remains elusive, and the republican led senate may not act before the election. Both sides accuse each other of moving the goalpost on the legislation. President trumps chief of staff theymeadows is says will not control the pandemic, that the government response will be on vaccines and treatment, not containment. As president mike pences chief of staff and two other staff mirrors have tested positive. Staff members have tested positive. Amy Coney Barretts nomination to the two republicans are being accused of using political power before election day. British government is saying it is optimistic about a trade deal with the european union. The latest round of trade docs trade talks has been extended into e later this week. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom thanks so much. Equities, bonds, currencies, commodities. Risk off feel, those are s p futures, 32. Dow futures 2. 65. The dow, 27 927 as well. I will let francine chat up sap. It. 81 . , make. 81 on the 10year yield. Dollar strength it is all correlated up. Lira off an incredibly difficult weekend for mr. Micron ofd mr. France. I have not done the chart work there, but that is long convexity to a fairly well. We need to look closely at the erdogan spat with the french. First of all, Coronavirus Infections continue to climb. It is difficult to see how government in europe are handling this, and whether we will have to go into a lockdown. Investors also doubting that d. C. Lawmakers will reach a stimulus package anytime soon. And German Software maker sap plunging within 20 after cutting revenue forecasts come also saying that the pandemic will continue to hurt business. That is filtering through to a lot of the dax and some of the other european stocks. Lets get straight to the e foe institute. Ininess confidence fell october, pretty much in line with estimates. If you look at business confidence, it came in at 92. 77, off the estimated 93. Mr. Fus come always great always great to speak with you. When you look at the number of infections, what are the chances that we get a doubledip recession . The risk is certainly rising. What we see is a very heterogeneous impact. I think we see a continued recovery in manufacturing. The question is, will this go on with these rising infection numbers. But certainly as strong blow to services. So for germany, we dont see a doubledip yet, but the risk is rising. What makes you worry about the coming weeks and months . I know we are eight days until the coming election. How does that change the fortitude of german carmakers and european exporters . Clemens i think the u. S. Elections are tremendously important, but the intern the impact in the shortterm is limited. Of course the mediumterm outlook for carmakers does depend on whether trump is reelected or not, but the democrats are not so much protectionist. So this risk remains. What is worrying at the moment is the rise in infections. It is unclear what could stop that. That will have an impact on the recovery. It is a completely unfair question, but youre such a trooper, im going to ask it anyways. Pandemicise of the sap view is there more of that to come in november . i think it is clear that we are going to see revisions in many businesses. The question is how strong they are. Im no expert on the i. T. Industry, but can the id can the i. T. Industry insulate itself from this shaky situation . I have to say i doubt it, but it is hard to make traditions. It is hard to make tom it is hard to make addictions, but look at the industry. We have the same issue in america it is hard to make predictions, but look at the industry. At the seam issue in america. Clemens there will be a strong impact of the Current Situation on everything that is called social consumption, but for germany, for instance, we are talking about 6 may of gdp, so if that declines, the impact is limited. We have also seen that reestablishing the value chain has worked quite well in manufacturing. So i think we should be overly pessimistic. But it is clear. These partial shutdowns we are seeing at the moment do not help. My hope would be that a lot of businesses have prepared are now ready to deal with the situation and to operate under more difficult conditions. Francine what are companies telling you would be the correct way of dealing with a virus . The number of cases are going up. Is it no lockdown or full lockdown because you get out of it quickly . Clemens im afraid there is no consistent answer here. My view is that we need a stronger lockdown measure, but differentiated ones. And measures that enable us to do things rather than preventing us from doing them. So more testing, masks are very important, face masks. And we need to keep the economy going under these conditions. Toncine when you speak Manufacturing Companies, do they have a different view . Where is the divide on what Companies Need and what they are asking of the government . Clemens i think the Manufacturing Companies would be worried if there was not another closing of borders. To stopwould have operating for services, it is different. Many Services Companies are aware that some of their operations, everything related to services with high contact risk will be affected. Tom what did you see on trade front . What did you see on germany on the mood of the export juggernaut . Clemens that is driving the recovery. Exports from germany to china are at about last years level. So that is very positive. Border crossing, value chains, trade is recovering quite well, because manufacturing has recovered in all countries, so it is rather positive. Tom thank you so much. Clemens who used joining us from the phone from the ifa institute. This specs to the you have to believe there are other headlines afterwards. Ubs, switzerland, fixed pay and cutting bonuses and compensation revamp. I immediately went to a number of stories in 2011. I recall very clearly Andrew Sorkin writing this up. A lot in bloomberg writing this as well. This has been tried before. Francine it has been tried before. We need to understand why theyre doing this. It could have something to do with the bankers left on whether they were able to pull back to bonuses. It is a different story to what we saw in 2008 and 2009. Something we would need to keep an eye on. I dont know whether we can go. Ack 10 years ago tom should we do a data check . Francine there is only one story in town. Tom a Technology Earnings note, francine, please. Francine she is edna miller, the firstborn of our nephew miller, who is off this week to be a father. Matt miller, anchor and father, tom. Gotainly our congratulations to him and his lovely wife. Tom this is great. Seven pounds, six ounces, and of course named after the richest grandmother. Brilliant. Brilliant. This is bloomberg. Good morning. We dont even have the bill yet because nancy pelosi and i know shes coming up and she can speak to this that we continue to make offer after offer after offer, and nancy continues to move the goal post. Politico we are waiting for the final definitely hello seco we are waiting for the final. We are making concessions, too. Tapper on cnn with Speaker Pelosi. Barrett in the headlines this week and, Speaker Pelosi has made clear that she will buried in the headlines this week, Speaker Pelosi has made it clear. She is 80 is old and she is spirited, as many are older than that. Joining us now, not 80 years old but feeling 80 years of political anxiety we have all gone through in the last number of weeks, Rupert Harrison is with us. Portfolios managers political expertise, his Public Service to the United Kingdom is noted in this political season. Your observation of a u. S. Election eight days away. It certainly looks distinctive from 2008, from 2012, and certainly distinctive from 2016. What is the character of this election that you see . Rupert in terms of the result, we dont feel like we have an edge, but the polling is very different from 2016. And there are high probabilities attached to a biden presidency. I think the difficult thing for investors is that it is not really just about the presidency. Almost more important is what happens. If youre looking ahead to the macro impulse coming out of the u. S. Economy, the impact on the global economy, the difference between a biden presidency with the democrats and a Trump Presidency with publicans, is extreme with the republicans is fiscal policy. That is the key margin for us. If you get a blue sweep, the fiscal impulse in the u. S. Could be the trigger for quite a big reflationary wave around the world. You can see assets like emergingmarket equities that have lagged, starting to see those flows based on those expectations. If it is a republican senate, youve got to assume there are going to be obstructive is fiscal policies coming out of the senate, and that is a very different world. Tom i cannot imagine the number of meetings that you have been in with mr. Osborne and the others over the special relationship. How will the special relationship change . Rupert i dont think it will change that much. I think you always get a lot of personality based speculation about, does Boris Johnson hope secretly that donald trump will win . Is he going to have a difficult relationship a joe biden . I think the speculation almost always turns out to be wrong. People said bill David Cameron find it difficult to get along after having a strong relationship with gordon brown, and they got along extremely well. I think most of the time the u. K. Prime minister and the u. S. President will find a way to work it out. I would aim off for any predictions of difficult relationship over the next few years. Press, orthe u. K. Certain people in the you hate press in the u. K. Press, say withthey are buying time e. U. Because with a biden presidency, more concessions will be given in the e. U. Because it is highly likely because they will get a better deal with the u. S. And the u. K. Moving forward. Is there any truth in that . Rupert i dont think so. I dont think the timing works. Is e. U. Brexit deal will get done in the next few weeks and i dont think there will be enough Smoke Signals for a new president or for a reelection of President Trump to guide those negotiations. The reality is, i think everybody close to this, a u. S. U. K. Trade deal will be determined largely by what congress signs up to, and that will not be hugely affected by this president. I dont think that is the driving force. What is determining the nature of this end game is the in the brexit negotiations is the theater, all about how you present this final deal as a great deal for the u. K. I think the shape of that deal is pretty much determined. Tom what does this francine what does this all mean for equities, but in general asset classes, what do you buy right now . Rupert we are still broadly classes e on asset unreal equities. One of the things we are focusing on is bringing down trying to flatten out by buying cyclical value, even buying european banks, which has been a pretty much unloved asset class. That has not necessarily worked in the last few weeks, but we still feel there are significant upsides. , we dont events think the virus will knock that off course. And then there is the position for potential upside. We are going to get very Important News in terms of efficacy with these vaccines from phase three trials coming through in the next few weeks. I dont think you want to be caught on the wrong side of that. Tom how do you position in terms of Asset Allocation you and others are doing . What are you actually doing in the equity bond mix, and particularly the sector mix . Rupert i can speak to the portfolios that i manage. I think on the equity bond mix, it is a different world. The correlation has been much lower. The volatility on government bonds has been so much lower that i dont think you can inspect government bonds to provide this in kind of cushion. Little bit think a more about diversification. At the same time, im quite happy Holding Treasuries and government bonds because the Downside Risk seems pretty large. I dont think we will see a big spike in yields because the central bank when it comes to within equities, as i say, i think we are looking to buy, to flatten out what has been an underweight to value, and certainly underweight to cyclicality. I think we have been buying sometime in the last few months, homebuilders, industrials, european banks. That is where it seems to us that the value of trade could be. Of course, there is this big binary event coming up with the u. S. Election, and historically, the evidence is for the big risk events, there is a premium on holding risk. You dont want to derisk because that is when you get a lot of return historically. Will continue with us. Francine is threatening to talk about brexit and fisheries off the coast of the north sea. Rupert harrison, expert on the fishing log channel in the north sea and the i receive as well. Coming up, a look at currency and the linkage into the market. A difficult day. Risk off, futures and 30. This is bloomberg. Ritika this is bloomberg surveillance. Impose unspecified sanctions on lockheed martin, boeing, and raytheon come after the u. S. Approved a 1. 8 billion arms sales to taiwan last week. Carlyle group is in talks to buy siemens mechanical business for 2. 4 billion dollars. The sale of the german Engineering Firm unit could be announced this week. They make gears and transmissions used in everything from cement production to beer making. That is the latest Bloomberg Business flash. Tom lets do a data check. 31 on spx. Three basis points on the 10 year bond, putting it at. 80 1 . Still a higher yield regime. The pullback is very much centered tendency off the trading range of all of september, and all of october as well. We leap into november here in a bit, and we do so flat, flat, flat. Dollar a little bit of strength here. Gets my point 87 attention. As i mentioned earlier, a very difficult day for a weaker turkish lira. Francine . Francine on to november, and on to november 3, tom. Only one game in town and that is the election. We look at the polls at the impact on the sectors. European stocks are dropping, a number of infections and coronavirus continue to climb. There are a number of restrictions that came in over the weekend, and then s. A. P. , the German Software maker, plunging 20 . And then a story about cutting pay and fixing bonuses. In the next hour, we speak about green initiatives with a former unilever chief executive. This is bloomberg. It is difficult to see how europe can gain grounds from where it is today without a itsificant shakeup of system. Be the u. S. Is still not to undervalued, underestimated, because, it has always been able stronger fromw any changes in administrations or politics. Tom good morning, everyone. Francine lacqua and tom keene. The gentleman exiting ubs, mr. Ermotti. There will be a special talking about mr. Ermotti and his tenure ate ubs. Look for that this weekend. Also, a headline given the challenges out there, they had a great chart up in francines earlier hour of the decline in the bank index in europe. 39 , i believe, is this tested thick the statistic, yeartoday. Futures, 31. Francine and that is partly to do with a number of cases increasing around the world in terms of covid and partly to do with the fact that markets are just not expecting a stimulus package out of the u. S. Lets get back to Rupert Harris of blackrock. I amit comes to brexit, looking at the latest report saying that covid has dragged 2 million more u. K. Adults into financial troubles. What would be the elegant way to to make surexit covid does not put too many people in distress . Rupert the overwhelming incentive on both sides is to get a deal. As you said, covid provides a backdrop that there was some speculation earlier in the year that while the impact on the economy from covid is so bad that therefore the additional impact from a disruptive no deal on these trade deals would be hidden and therefore they could get away with it i do not think that is how they thinking. Also, if you look at the details of how close the two sides are, the remaining details around fisheries and state aid, these are relatively small differences. There has so much that has been agreed. All of the incentives are now heading towards a deal on both sides. Francine what does it mean for how the government steers the economy afterwards . Are we going to see tax hikes, tax cuts . There is a huge attempt going on at that, so we have just seen a trade deal signed in japan mostly replacing what was in place from the e. U. But with some tweaks. I think there will be huge amounts of focus on technology and investment in technology and infrastructure in the u. K. I think the government in the u. K. Will be committed to this leveling off agenda, which is politically salient, of trying to bring up regions that have been left behind. But the more important thing is the chancellor is continuing to p last week, he had to tweak his parttime work scheme in the face of worsening virus problems, in the face of increasing restrictions on the part of the economy, we still have a very generous fiscal situation as a result, supporting income. Across europe, that is a crucial issue, even if we get beginning that goes into the winter period , the fact that the government is supporting income and businesses should limit the knockback. Tom to me, it is so important that the great bargain here down from thi