Still have a crack at taking the senate, but with biden inching to the white house, what policymaking is the market baking in . Biden hasy rains, but taken many by surprise. Joe the real winner this week, not biden, not trump, the good old 6040 portfolio. Everybody had left it for dad not long ago. Theof the best weeks for 6040 portfolio in a long time. End of election volatility. We are not likely to get a big stimulus. The diversified investor wins again. Romaine another big winner on the week was anyone shorting volatility. Most volatility measures started to pick up. The idea that we were going to get a contested election, at least today it looks like we may get a result here. That seems to have settled the market a little bit here. Some clarity as to what congress will look like. Your main measures of market volatility, and bond market volatility, all moving forward. Keyline diversification is and Asset Classes for the year that have beaten all of them, crypto. Who would have thought the election week would have made people look a little bit more . We are now at 15,000. Is how we rallied in bitcoin. Seems diversified right now. Romaine you thought she was going to save the pound or something. Joe furthermore on this weeks market moves, lets bring in Bloomberg Cross assets reporter katie gry failed. Mentioned in the intro that youve seen everything rally this week, which is crazy when you consider that we are currently in what was supposed to be the Worst Nightmare for markets. We dont know officially who won the president ial election and we wont see democrats take both houses of congress. There are still some runoff races to get through. Bein, this was supposed to the poison to the stock market. We are probably not going to get as big of a fiscal package as we hoped. Still you are seeing the nasdaq 100 up more than 9 this week. This is the question ive been asking since tuesday. What is going on . How do you justify this rally . It seems like the explanation is that gridlock is good. We are not going to see that huge increase in taxes. Probably wont hit s p 500 earnings as much. Not to mention a fed that is prepared to buy bonds as long as needed. Caroline who is more important right now to this market, donald trump, joe biden, or jay powell . It seems like jay powell. We just put out a story on the terminal that at the end of the day, we dont know who the president is, but we know that jay powell is ready to step in to markets at any point. You heard this week from policymakers that they are thinking about shifting purchases further out. When you think about the Ripple Effect in the stock market, that is great news for the winners, tech companies, growth companies. We could see the fed try to tamp down longerterm rights. That will help justify lofty valuations in the tech space. Caroline i brought up bitcoin earlier. People think it is rallying not because of election uncertainty but because of covid. It almost feels like weve lost that train of thought. What about covid and what about the need for further fiscal stimulus . Im not quite ready to call bitcoin a haven, but the point about covid is very important. 100 having its best week since april. Two Percentage Points ahead of the s p 500 weekly gain. This is a trade that has benefited during covid. Sheets, theseance are the type of companies that would continue to fare better than others should we see an environment of slowing growth, which it is possible we are heading to if we dont get that stimulus deal, and not to mention the numbers we have seen in terms of case counts. Another scary headline out of new york city. That has been the underappreciated bogeyman in the back of markets. Covid is still a real issue. Romaine the market looking for cues wherever they can get it. Powell ijerome guess we should put some powell flags or something. Have a wonderful weekend. A wild week here in markets. We will continue this conversation about the wild week in the treasuries market. We saw that trade bubble up, then we saw it dwindle. We are going to break it all , chiefth our next guest fixed income strategist, joining us next. This is bloomberg. Talking aboute the Market Reaction to this weeks historic election, historic turnout at least. Markets placing their bets about where they think things will go. Joe, maybe you were too busy trying to unlock your bitcoin wallet, but there was a huge move this week in treasuries. Joe what are those . Thats right, treasuries. They did have a very impressive week with that election. You know that peak on the third, that was right at the beginning of the vote when it looked like it would be a blue wave. Ever since, they have come back down. The downside move that we saw in rates this weekend, explaining why that portfolio did so well. Caroline Bloomberg Barclays grovel credit 1. 5 . Why, when to wonder, they are still tentatively hung on what happens with georgia. Joe very strange. For more, lets bring in Jenny Montgomery scotts chief fixed income strategist. What is the driving force . What is driving direction of treasuries . We are probably not going to get any negative stimulus anytime soon. On the other hand, jobs report came in better than expected. Down below 7 on the unemployment rate. Back to something resembling full employment sooner than expected. Which force is stronger . I think you really nailed the two sides of the scale, the push and pull sides. On one hand, we have presumably lower supply. , rumor is that mr. Biden and mr. Mcconnell have had a good working relationship, but im assuming the odds of a large stimulus package are lower. The odds of a large Infrastructure Spending package are also lower. That means a lot less lower longduration. Weve got bubbling economic low. H from a cycle as we approach that, you would rise nterest rates the Interest Rate rise hasnt been taken off the table. Romaine i am curious if you could talk more. We have focused heavily on stimulus and treasury issuance. There has been a bet about where we are in the Economic Cycle, whether this is a new Economic Cycle or just the tail end of the last Economic Cycle and i guess where we stand in that picture seems like it would drive some investment decisions. Certainly. In the long run, the u. S. Government represents roughly 12 of the u. S. Economy in the united states. Here is thatint there is lots of Economic Growth. While the nature of this Economic Cycle is extraordinarily different than any weve faced in the united states, we are starting from a low point with weak unemployment, and over time it will hopefully hold growth up. Weve never had quite so many forces aggressively align. We need to have some humility as to our ability as an economic society, but nevertheless, weve never had so many forces pushing in that direction. Amusede you kept me yesterday throughout the Federal Reserve decision with all things bart simpson. Nevertheless, there was a serious case today. How much do you think that will be hit . Yesterday, the changes were pretty subtle. Maybe extending treasury purchases. That is maybe 2021 issue or concern. Reserve, i dont want to say they are out of ammunition, but they have laid out what they want and that is really the first time the fed has outright pushed to drive inflation higher. Monetary inflation is probably one of three components of inflation, but theyve never been in this position. It might not work, but also it might. Reemerge, calles it 50 basis points at a minimum. Joe you are the chief fixed income strategist at a time when people are wondering, why allocate anything to fixed income, given how low it pays, given how it serves as a portfolio hedge what is appealing in fixed income right now . Completely agree. Lowes no way to get around absolute returns. It is also a great source of cash to reallocate. Generally where we are guiding clients is toward shorter duration and a little more aggressive in the credit spectrum. Economic growth is towards the bottom of the cycle. I would expect risk assets to do pretty well over the next six to 12 months. Romaine is there any case to be made about going a little longer duration . I understand all the logic behind the shirt or duration call, but if we are in an upswing, if we can count on jay powell and company to keep rates at bay, why not go a little longer . Im not as committed to the expectation that the Federal Reserve will seek to squash any increase in longterm interest. If we actually get Inflation Expectations rising, if we get Economic Growth resurfacing in a more consistent way, i dont think the Federal Reserve has any incentive to squash down on rising rates. I dont think theres a need to longduration, but one area or asset class that i think is valued longer duration, wider spreads. They are relatively cheap in comparison. Joe appreciate you joining us on a friday. Coming up, fighting for that senate majority. The balance of power still out there. We will talk next. This is bloomberg. Caroline we still await the results of the u. S. President ial election. Leaders from both parties spoke earlier on the path to a new stimulus, indicating continued division between the two sides. Swiftly for ae new coronavirus will leave bill. We want the republicans to come back to the table. Senator mcconnell and President Trump and secretary mnuchin and i and others, we would like to negotiate a package. It would still be a targeted package to specific areas. We are not interested in two or three trillion dollars. We are communicating with senator mcconnell. By all accounts we are going to hold the senate and pick up seats in the house so we think we are in a strong position. Caroline it feels as though neither are dialing back their focus and neither seem to be willing to compromise for the meantime. Joe it is possible we will get something. There does seem to be a little bit of interest. But after this acrimonious election, it seems like a long shot. On the other hand, supposedly if biden does end up pulling this out, he has a history of perhaps working with the other side. Maybe could get that next stimulus through the door. Joe for more on this, lets bring in andy blocker. Andy, thanks so much for joining us. We dont know who is going to win the presidency. We dont know who is going to control the senate. Suppose we get a situation with divided government one way or another. In your view, should investors completely write off the prospect of further stimulus deal, or could we get a miracle and the sides come together for a compromise . Andy i think that is the question and i think the answer is, if joe biden is president , that is your best chance. I think that given the comments of mcconnell and pelosi, there may be a way to get a down and if biden is president. He is used to working across the aisle. He has a great relationship with mcconnell. But it has to be agreed to on both sides. They just have to work it out. Aboutne can you talk what the tradeoffs might be . Andy theres a lot of issues out there, but the key issue on the republican side, liability. If they are going to reopen, they dont want to get sued. On the democratic side, i think it is about state and local funding. Agreementn come to an about giving each other a little bit of what they want, not the huge trillion dollars the democrats were asking and not complete immunity to businesses no matter what they do, i think they can potentially get something done . Romaine the general sense is that if this does drag out past january 20 and into the next congress, republicans are going to have an incentive to maybe become deficit hawks once again, no incentive to work with a democratic president. I am curious as to whether this becomes an impediment for the budget Going Forward and the spending measures that a lot of folks say are desperately needed to keep this recovery going. Andy i think you are spot on. Republicans in the senate have already started reclaiming their fiscal responsibility credentials. That is not only going to rear its head on any covid19 relief, but also on any potential infrastructure stimulus and any other spending that biden and democrats want to do. Joe what else is there . We talk about everything being spending. One million, one point 5 million, maybe less. The government in theory does more than that. Questions, regulatory questions, taxes. What should investors be on the lookout for under the next administration . Andy there are a lot of areas where both parties have indicated a willingness to work together. Theres retirement, financial retirement packages that have bipartisan support in the house and senate. And on health care, not pricing what is it called, building, theres a lot of things out there they could get agreement on. Romaine and while we are speaking to you, some headlines crossing the wire. This is according to dow jones. Gensler set to tap gary to be wall street oversight advisor. Referringhat must be to the post that would be coming out of the treasury. Sourced through dow jones. Interesting. I think it is too quick to start thinking who is going to be in certain positions. Are your perspective, what the key oversight changes going into the next four years . Andy that is the right question. Personnel is policy. I think ive heard that on this show. I think treasury will send a clear signal on whether the administration will be in a moderate or more liberal tone. Chairmanship is going to be important. Energy, the epa administrator, theres a lot of places here where it is going to be very important. National economic council, council of economic advisers as well. Caroline thank you. Invesco head of u. S. Government affairs, helping drive us forward. Romaine just a reminder to all of our viewers, you can subscribe to our weekly podcast, all the wonderful people weve interviewed in this fancy little audio package. A lot of great ceos. A lot of great people. Definitely check out that podcast. Yesterday, you said you took sleep in 45 minute increments. I wonder if you are going to get anything longer. Joe i raided my medicine cabinet and found everything i needed to knock myself out last night and i did not do that. Im looking forward to one day when im certain this will all be over and we can just talk markets and economics for the rest of our lives. No more politics. Caroline that is all from whatd you miss . Joe Bloomberg Technology is next. Romaine have a wonderful weekend, everyone. This is bloomberg. Ok there longer anything one way right off the pot for you there all together by my friend. Joe biden is credited that your best chanceiden is credited thar best chance votes being counted slowly but surely. In the statenges at large. Nevada, pennsylvania, North Carolina and georgia still in play. The question remains will we have a president tonight or