Onwelcome all of you Bloomberg Radio across this nation and bloomberg television. Extraordinary Market Action yesterday, truly historic. We will get to that in just a moment with someone who has a wonderful test but a wonderful tapestry of the history of the market. First weve got to get to the news flow. Are we still doing election 2020, or have we moved on from that . Jonathan i think it may come back on the agenda, but today is as yesterday once again, just a little flavor of mondays price action. You will find it in names like amc entertainment, and the airlines. You will find it at the index level. The relative performance of the russell versus the nasdaq continues. You could drive a truck through it this morning. Russell futures are up by about 1. 6 . Nasdaq futures are negative on the session. Cyclicality starting to come back into this market. Youve got to ask yourself where the risk is in this market, and the risk for many people in this market is where people thought was safe just a few months back. That is the treasury market, big tech, and that is what the vaccine news did. It just turned risk upside down. Tom right now i am going to rounded up, 0. 9 5 on the 10 year yield. That is a lowerpriced higher yield. Lisa that is how it works. I am confused by the narrative. It is not a neat narrative at all. What i am struck by his suddenly, it is the cheapest it has ever been for Companies Close to default to borrow money right now, even though we have a high Unemployment Rate, even though we dont know anything on fiscal support, even though we dont really have a verdict on the president ial election, or who is going to control the senate. The narrative does not make sense to me. Tom the narrative is a jumble. Overnight, and you will hear this through the newsday, not just the firing of the secretary of defense. Kevin cirilli widely expects other firings this week, even today. Overnight, attorney general barr with an original treatment of federal use of the department of justice in this election process. We saw a major resignation from doj on this. This is not a small matter. Jonathan no its not, but it is not on the agenda of Financial Market participants. I find it quite amazing. I think most people disbelieve the president will work through the process and republicans are allowing him to do just that. What is going to be key for me is whether these key states will certify these results, and how quickly they do that. At the moment, a lot of people are getting them breathing room. At some point as we approach december 8, that gets a little more critical. Tom the gentleman from england get into the distinction of the matter, and this is important, the idea of certification of the elections. We havent had that yet. Attorney general barr getting out in front of the process before certification. Futures red and green on the screen. Dow futures go up 199. Erro identifies that spread between the russell 2000 and the nasdaq. Has seen l sam stovall has seen all of this before. He is with cfra. Just your single summary of how unusual was yesterday. Sam very unusual. We were up more than 5 at one point on the day, and then we closed up 1. 2 on the s p 500. When you look to closing percent changes, it is just simply a blip. We had five times this year that were even substantially stronger. Up 9. 4 in, we were a single day. So i would say it would certainly add excitement to ones portfolio, but certainly adding a lot in terms of asset value right now. Jonathan yesterday was a catchup trade. We can all agree on that. Where people thought the states have become a massive risk, you reprice the last 24 hours, done. Or is it . Was yesterday the catchup trade or the beginning of a durable trend . That is really difficult to identify, but do you have a call on that . To i think when you look the individual days, you are absolutely correct. Thehad basically 75 of near 150 sub industries in the s p 1500 in positive territory, so it was pretty broadly diversified. The s p 500 was up post 5 in a single day. Midcaps were up 3 versus the large caps, a little more than 1 . I think because investors are saying weve got 10 companies around the world that are in phase three trial of a covid19 virus vaccine, even if pfizers stumbles a little bit, we still have nine more we can work with. So wall street is looking beyond the valley, looking beyond the spike right now and saying six to 12 months from now, things will be growing. The real question is by how much will analysts be elevating their 2021 estimates. Lisa we all have to look beyond this valley just to stay upright, frankly, because this pandemic hasnt been that fun. That said, you have to start worrying about valuations. We will start reaching a new normal before new record highs, predicated on the idea that Interest Rates will stay low. At one point at what point will be offset that narrative to say we need to reset valuations . Valuations got too high for where rates may be. Sam good point. If you look on an absolute basis, basically everything looks expensive. 22. 4 p 500 is trading at times the next 12 months earnings, which is a 35 premium to its average over the last 20 years. Every sector except financials and health care are trading at doubledigit premiums. On a relative basis, however, only Consumer Discretionary and energy are trading at doubledigit premiums to the markets. So i guess it really depends on whether we are going to be seeing rotation or an actual retreat. Right now from a technical perspective, i think we have to see Interest Rates go above 1 in order for us to see a technical rotation from a bearish trend to a neutral trend, and then i think we need to see Interest Rates rise more dramatically for investors to really get scared and think that inflation is right around the corner. Lisa we now have a 10 year yield near session highs at 95 basis points, so about five basis points away from that 1 mark. Theres also a question of whether this rotation means losses for big tech or just underperformance. What is your take on that . Sam right now we are going for losses or underperformance. Nearterm losses, but more longerterm underperformance. When you look at the s p 500 growth minus value on a rolling 12 month basis, we hit an alltime high in august and again in september, meaning that, going back to 1975, the 12 month percent change for Growth Stocks minus that for value was at about 35 , higher than where we were during the tech bubble of the late 1990s. So it just seemed it was a matter of time before we saw some sort of rotation away from growth and towards value, which we are in the very early phases of right now. Jonathan this raises a really important question. Let me build on what lisa just asked. How much risk is there at the index level for passive investors just sitting and holding the s p 500, given the weightings of these huge tech names . Is there a lot of risk at the index level because of the weightings . Sam i guess so. You mentioned technology with microsoft and apple, but the new got facebook and the two share classes of google in the queue medications services. You have amazon and visa in the Consumer Discretionarys. It is not just one sector. It is spread around, so it is a largecap index, and therefore the behemoths do tend to drive the action, but interesting, back in 2008, you would have said pretty much the same thing, yet the equal weight 500 tends to fall more precipitously in the early phases of bear markets or corrections. So it is interesting, but they do offer ballast because of their size, because of their market share, etc. Jonathan sam, great to get your thoughts on this market. What a move we have had. What a week already. Places, the move continues. Netflix negative. We talked about emc entertainment come positive. Jp morgan, a huge day money. A huge day monday. We add a little more to that move. Tom amazon down as well, but amazon down because of the nasdaq weaker, or because of the eu regulation issues . I would suggest is more of you describe as the pullback in the nasdaq. Jonathan what i am trying to do, and i am really trying to understand, yesterday we had a massive squeeze. We need to think about the squeeze. Are we going to generate the kind of recovery that leads to higher rates and acknowledges banks . Or will we see more of the same post covid . Tom i would watch all of the markets, particularly the fixed income market. That brings up a really important point. You mentioned offsides. Can you explain offsides in soccer . Do we need a beverage of our choice . Jonathan not in the 25 seconds i have. I would need a serious drink to get through that conversation. Tom you put the flag out like this. Theres a blue line in hockey. Jonathan there are no flags. Tom there is a blue line in hockey. Where is the blue line in soccer . Jonathan it is a little bit different. It is about where the last man is. Tom the market was offsides. Jonathan tom keene, lisa abramowicz, and Jonathan Ferro on bloomberg surveillance. I was talking about a different kind of offsides. The s p 500, 10 points. , the eli, David Ricks Lilly ceo, joining us. This is bloomberg. The first word news, im ritika gupta. President trumps attorney general william barr will let the Justice Department investigate potential voting irregularities in the president ial election. Barr has acknowledged there is no conclusive evidence, and he warned against what he called farfetched claims. The head of the departments election claims branch resigned. The u. S. Is set to hit record hospitalizations for the coronavirus this week. Midwestare soaring in states such as illinois and michigan. In texas, el paso has more people hospitalized with the virus than 29 states. In the u. K. , the house of to removected a plan the most controversial parts of the internal market bill. Prime minister Boris Johnson immediately vowed to push ahead with the legislation that gives ministers the power to rewrite parts of the brexit deal johnson signed with the eu. European union has filed antitrust charges against amazon. That accelerates an investigation on the massive online platform. They say amazons rules should not favor its own offers or those of offers over retailers using amazons services for distribution. 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. Mr. Biden i will spare no effort to turn this pandemic around once we are sworn in on january 20, to get our schools back to to get our kids back to School Safely their economy running at full speed again, and to get a vaccine manufactured and distributed as quickly as possible to as Many Americans as possible. Jonathan president elect joe biden following the news announced yesterday. Some advancements on the science, and this market ran away with that news. Alongside tom keene and lisa abramowicz, im Jonathan Ferro. Heres the price action of this morning. Just a little flavor, a sprinkle of what we got yesterday. The underperformance of the nasdaq, the outperformance of the small caps. Once again, treasuries just a little bit softer after yesterdays massive selloff, up another couple of basis points on the 10 year to about 0. 95 . Eurodollar,on in 1. 1809. We have a forum at the ecb later this week that is worth keeping an eye on. Tom lets dispense with the formalities right now and get to david ricks, eli lilly chairman and ceo. I think theres massive confusion over all of these fancy words, particularly around vaccine, around antibody treatment. We conflate bacterial and virus therapies on top of each other. Differ fromaccine the antibody treatment you announced yesterday . David thanks for having me on. Exciting news last night with the emergency use authorization in the u. S. For our monoclonal neutralizing antibody, which is a therapy that you are to be given in this approval if you have newer onset disease, so a positive test and symptoms, and particularly if you fall into a high risk group. Then you can take this therapy, and in our studies, reduce the probability you go to the hospital pretty dramatically, by 70 . That is an important step, another tool now to help manage this disease, just when we need it most. When your body is infected with a virus, it amounts a variety of immune responses. One of them is we create antibodies, which have been much talked about in these antibody testings. These antibodies lock up the virus and dispose of it. We took antibodies from surviving patients early in the pandemic, isolated the most potent one, and now we make it synthetically and give it is medicine. Tom this is really important. Can you just suggest that this bacterial like antibody therapy, almost like a bit serial a bacterial antibiotic, could be a substitute for a true vaccine . David we are studying what we call passive immunization when you are trying to prevent spread. We are looking at spread within nursing home facilities. It is similar to vaccination in a way. When you get a vaccine, we introduce a killed or modified version of a part of a virus, and your body recognizes that it is foreign and mounts its own antibody response. Hear what we are doing is giving you the antibody response of someone else prior to getting sick. It is a very interesting approach, and if we look at other viruses like ebola even, this is a setting where these antibodies made the biggest difference. In the u. S. And around the world, nursing home patients are at the highest risk, so this would be an important positive event, and we should have that data in the coming weeks. To build on what tom is discussing, we are trying to answer the question as to whether we need a multipronged approach, not just the advancement we heard from pfizer yesterday, but he also complemented by what we are doing by what you are doing at well. One thing is how difficult it is to store, at really freezing cold temperatures. Can you speak to the developer and some that side and how difficult it will be to distribute some thing like that widely . David for the messenger rna vaccine, they are fragile molecules, so they need to be held at a very low temperature. That will likely not be a major barrier once this is broadly available in developed markets with advanced medical systems. Where it becomes a problem is ande refrigeration capacities in developing countries is going to be much tougher. That is what we have two of the leading 10 vaccines using this technology. Eight arent, and likely wont have those refrigeration constraints. I believe some of those will work as well. We will likely end up with multiple shots on goal with vaccines. None of them will work 100 of the time. We will still need medicines like our antibody therapy to help those that will still get sick, hopefully at a much lower rate as we approach Something Like herd immunity, but you will still have endemic disease, and we will need therapies. Theres many examples where this is true, including common respiratory viruses where we vaccines and antibodies that can go together. We had two important developments in the fight against covid19. I think the future is looking brighter, for sure. Lisa there are some practical concerns as all of the pharmaceutical companies try to ramp up production. I am wondering, supply chain issues especially as the pandemic worsens, the idea that all of these Different Companies are trying to go for the same thing and probably sourcing some of the same substances, as well as using some of the same staffers. How well can you ramp up production of the antibody therapies to meet demand in the next couple of months . David i wouldnt worry so much about the competition phase where we are competing ideas. I think once it is clear there are winners, we will see the industry come together to make products at scale. That has already occurred in the antibody space. We have teamed up with engine in and companiesgen to build out the supply base. I dont think we are wasting the material by competing that way. Of course, the antibodies are complicated to make, one of the most come to katie medicines we make. We one of the most complicated medicines we make. Here we are trading about here we are talking about treating millions. It will constrain that system, and we will have scarcity. That is why the fda really asked doctors to you is it in the highest risk patients to use it in the highest risk patients. Jonathan serious issues. We have about 30 seconds left. I would love for you to do me a favor on the lighter note. Can you explain the offsides rule to tom keene in about 20 seconds . Tom youre talking about in football . Of course. Offsides is when the offensive player is in front of the defensive player prior to the ball being struck. Once the ball is struck, he can run a friend. It is different from hockey, where the blue line is what matters. Tom thank you. That is very good. This is the support of eli lilly to our olympic committee, which they have been committed to for many years. I think a blue line would solve it. You dont have to make it Manchester City blue, just a nice chelsea blue line and it would work out. Jonathan there you go. Tom david ricks and his kids would like that. Jonathan weve got to get dave back to talk about sports. Therapeutics. Do you understand it just a little bit more now . From london and new york, this is bloomberg. You can go your own way its time you make the rules. So join the 2 Million People who have switched to xfinity mobile. You can choose from the latest phones or bring your own device and choose the amount of data thats right for you to save even more. And youll get 5g at no extra cost. All on the most reliable network. So choose a data option thats right for you. Get 5g included and save up to 400 dollars a year on the network rated 1 in customer satisfaction. Its your wireless. Your rules. Only with xfinity mobile. Jonathan from london and new york, this is bloomberg surveillance. Here is the price action. Negative, having a little but of a problem in the last 24 hours. Down 1. 4 . In relative terms, really underperforming the small caps in america. You see that against the russell, up 2 . Yesterday it was about banks. Banks are bid again today. The curve is deeper. 10spread between 2s and getting wider. Yields up on the long end. The curve steeper. I will finish on the fx market. Dollar weakness is the story of the last week. This morning more nuance. It is pound sterling where you find a bit of strength. Cable trading with a 1. 32