The democratic nominee holds a 52 to 42 advantage. Support for each candidate is getting more solid as voting day approaches. Meanwhile, the survey also says that biden has a six percentage point lead in a Battle Ground state with confidence. In hong kong, protests have resumed after Police Arrest hundreds of people. Among other things, demonstrators were protesting the decision to delay Legislative Council elections for a year because of coronavirus. Worlds newcome the coronavirus epicenter, and it has surpassed brazil as the second worst hit country. Cases forrted 90,000 the second day in a row. Unlike the u. S. And brazil, indias caseload is still accelerating fulltime in the u. K. , british Prime MinisterBoris Johnson is gambling on a no deal brexit. Johnson will tell the European Union today he is willing to walk away rather than compromise on what he sees as the Core Principles of leaving the block. He has set an october 15 deadline for the deal. The big Sticking Point is the issue of Northern Ireland. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Francine it is labor day. All the u. S. Stocks are closed, but this is what we are seeing elsewhere in the markets. European stocks are climbing. Analysts speculate the market to be relatively resilient as asian and u. S. Markets start pounding back. Euro, 1. 3194. You is stepping up preparations for trade talks to fail. As time runs out to reach a foreignre is the secretary, dominic raab. Dominic we have gotten to a position where there are only two Point Holding us back. That we cannot accept that the you is going to control our laws. No other country goes into free trade negotiations with e. U. Or anyone else on that basis. Francine joining us now is Stephanie Kelly. Stephanie, great to have you on the program. I dont know how you look at these brexit negotiations. Does the Johnson Administration one a no deal, or is this a negotiating tactic . Stephanie it feels similar to what we had at the end of last year, in particular around the idea that there is real drama. Realistically, given that there are a number of weeks to go, it is very much u. K. Trying to offset this idea that there is even if you want to get to a deal, you want the other side to think that you would be willing to walk away. So i think this is very much a kind of a we are just back on the roller coaster again. We know that the brexit roller coaster last year is a good guide to how it will go this year. Francine which means what, that we will get a deal, or is it all up in the air . Stephanie i think it is most likely that we get a deal. The incentives are all still there to get a deal. Thee are new incentives, independence, for example, over the last couple of months, as well as the government dealing with covid, and the fact that things are just getting back to normal. I think all of those are incentivized, getting a deal. We can survive that. I think realistically there are a lot of political pitfalls in the path that we have to go down for the next couple of weeks and we cannot discount the risk of no deal. No deal, if there is a does Boris Johnson become more popular on the back of it, or is it very dangerous because of the economy . Stephanie i think it will be quite a divisive move that will take place. Clearly there will be parts of the electorate and parts that getting brexite done, whatever that looks like. Bearing in mind the numbers are arrange for in particular the cost couple of years, support levels, there get a deal. Political spin is always crucial to how these things play out. Francine what about on the e. U. Side . How keen are they to get a deal or not to be seen to have derailed this . Stephanie well, on the european side there big concern is ensuring that the Single Market is solid and that there is consent for members to be part of the European Union rather than not. That is what has always driven the diversions of views between the u. K. And the e. U. , the e. U. The u. K. Government saying the e. U. Is asking more of the u. K. Than any other country it does trade deals with. The u. K. Has been a member of the you and there is really the issue in Northern Ireland in a world where you do not get a trade deal. Francine how do you deal with Northern Ireland if you dont have a trade deal . Stephanie i mean, very problematically. There has to be a degree of alignment of northern on of inrn ireland with the the action of doing checks in potentialyou run into trade law issues with custom checks. A significant existential political threat. It is also worth saying that although we expect a deal, that narrow freetrade agreement that you hear everyone talk about is nothing close to the level of Market Access at the moment. My concern is that people are not really thinking about the fact that if you get a deal, it does not get you the kind of access the u. K. Currently has for crucial sectors like the Services Sector but also smooth supply chains. Francine how different lets say there is a no deal brexit. How different will the u. K. Economy look like in three or four years . Does it need to go on to lower taxes, or what are we looking at . Stephanie i think probably in that environment where looking at a series of political choices that try to caution the blow. They might be things like low taxes, state aid to programs that are required. But ultimately it is difficult. The geopolitical issue of dealing with Northern Ireland in that environment is very difficult, and the kind of realities of being able to trade with the largest export partner is really significant. You are looking at a number of years of real uncertainty and challenges for business, but also longerterm, real uncertainty about the future of the u. K. Economy in terms of its openness and its openness to which market. Francine how quickly can they sign a deal with the u. S. . Stephanie that is a source of debate. If you read president trumps tweet and the conversations he embarked on in the past, there reality with the u. K. , given the smaller partner, there are Agricultural Products included in their. In there. Particularly Agricultural Products would be really hit because theydeal would go up to close to 30 . That is a really significant jump. On top of that, the u. S. Would be pushing for more access, selling into the u. K. Market. All of that is quite problematic politically. It is not a done deal that you can just do a deal with the u. S. That will be net positive for the u. K. Economy. Francine stephanie, politically, what does covid actually do to the European Countries . Ofit sowing the seeds populism in 1, 2, 3 years . You think about the drivers of populism in general, we know that the marginal in contact the ,argie the marginal impact with covid, where poor populations and ethnic minorities have been hit harder, but also in the recovery phase because wealthier people who own assets tend to do better earlier on in recoveries, while those that are of low income tend to suffer longer. I think if you look to European Countries in question whether populism is likely to be, italy is always a clear source of strength. Also spain to a degree. Even countries like germany have a clear right wing kind of support base, and you can see levels right there, particularly it is not just about inequality across countries, it is also inequality within regions and across regions within these countries. It is certainly something we are watching not just in the three or four years as in the next three or four years but 10 to 15 years. That is how long it takes profits to grow. Francine Stephanie Kelly, thank you for joining us. She stays with us. Coming up in the next hour, we speak with sebastian galy. That is 6 00 a. M. In new york, 11 00 a. M. In london, and this is bloomberg. 8. 4 unemployment is really the headline story of this massive jobs improvement report. We had of course a strongerthanexpected number this morning. I thought you would start to see some leveling off of the rate of improvement. This number is impressive. We are broadly in the same range of where we thought we would be. When the unlock occurs, you will have a very major move down. I think the really important point in there is the number of permanent job losses, which has now gone up to levels we have not seen since 2013. The claims of the labor market, where 1. 6 Million People each week are having to file for Unemployment Insurance because they have lost their jobs, this is not a sign of a healthy economy. What do we take out of this report . Inline or better than expected i think it speaks to a dynamic economy, but not dynamic enough given the shock it has received fiscal and Structural Reforms have to act. Now we are in a paradigm where good news is bad news and bad news is good news, because good news potentially means less support from the fed, less support from the fiscal side of the house. We have much more work to do. We are not out of the woods. We have too many people unemployed. Even though the numbers have improved radically, we have more work to do. There is still way too many unemployed. Francine those are some of the guests reacting to those betterthanexpected u. S. Jobs reports numbers. We are back with Stephanie Kelly , senior political economist. One thing that could move the markets is volatility ahead of the election, and then the u. S. Election, the aftermath of the election. Does the jobs number sway an election . Canhanie i think it really have quite a significant effect, not just the job number itself, but the reality of the on the plumbing environment the unemployment environment people are living in. The economic success or any administration i think if you have lost your job in recent weeks, you feel like you blame the administration or the government in general for failing to keep you at work. Your vote. Ffect stephanie, it is almost impossible to call it, because two months is a long time in u. S. Politics. What will the democrats, what will the republicans be blamed for . If we dont get a stimulus, who are citizens going to blame . Stephanie there is a kind of a fascinating comparison with the u. K. Trade talks at the moment. They are speaking to their own bases. That is an environment that makes it hard to get a deal, whether youre talking brexit or in the case of the u. S. You are talking about republicans and democrats to get a fiscal deal. I think the reality for the physical deal is that there are incentives for both parties because again, political spin can have a big effect. President trump says they cannot get a deal because of pelosi, pelosi says they cannot get a deal because of president trump. That kind of political blame game if you saw widespread voter disappointment, particularly voter disappointment over the key swing states, it might stop the uncertainty on voting day, mobilizing and go to actually vote in a vote in a day francine if you look at geopolitics, how difficult is it to model what a Biden Administration would look like . The relationship between a democratic candidate in the white house and china, what with that actually look like . Stephanie i think it looks it is very difficult. Essentially, you are talking a situation much more favorable to traditional ad licenses alliances. With china, democrats have deep concerns about china. For Different Reasons than republicans. They are more concerned about transparency and human rights abuses. In terms of the nontariff action, i would not expect any change. The nontariff action that has been taken so far has been bipartisan. Thattariffs, it is likely biden would launch a strategic review, speak to european partners, and move forward without necessarily doing anything in the First Six Months of his presidency. It is likely he takes time to review the relationship. Day to day for markets, that means less volatility in the relationship, but not necessarily a different end point, which is that the u. S. And china continue to be rivaled in a challenging clinical and economic environment. Talkine there is a lot of about belarus and but president putin wants to do there and what president putin wants to do there, and also about germany and russia. Does that impact your world . Could it impact the World Economy longerterm, or is it a very regional concern . Stephanie this is something i have been thinking about quite a lot in recent weeks because there is sort of a theme emerging that as western governments continue to put esg center,enter at the youre seeing governments more and more under pressure to act when they see human rights abuses, speak out, act to kind of contravene any potential transparency issues, human rights abuses come etc. You are seeing that with china and russia. What that is illustrating is the challenges for these western governments as they move along, when countries like russia and china are not coming along to that germany with that journey. It contributes to this longterm theme of a more regionalized environment for trade come and i think that is the reality of what will play out, again, over the longterm. Shortterm, there is that relationship, but longterm the sustainability, social and governance principles, it also adds to this more challenging environment for globalization and ultimately a more regionalized environment. Francine Stephanie Kelly, aberdeen political economist. Coming up in the next hour, christian. That is coming up at 6 30 am in new york, 11 30 am in london, and this is bloomberg. Leighann this is bloomberg surveillance. Softbank shares have fallen in tokyo. There were reports that the japanese conglomerate made substantial bets on Technology Stocks using equity derivatives. That led to concerns that softbanks billionaire founder is engaging in risky behavior that could lead to big losses. Frances suis that his company was undervalued and that it could run into antitrust obstacles. They have offered to buy a 30 stake in suez. That would create a weight a water and Waste Management giant. And jobs cannot be boosted without wages. A surge of orders is driving and manufacturing expanded in august at the softest pace since 2018. The labor shortage comes at a time when unemployment is still high. That suggests there has not been a cure for these skills cap where workers do not have the necessary qualifications. That is your Bloomberg Business flash. Francine . Francine thank you so much. We are getting breaking news out of the spokesperson of the kremlin, speaking on a Conference Call to our reporters, saying that the kremlin sees no risk that germany will block the pipeline. Im sure everyone is familiar with the nord stream 2. Knowingly with germany but across europe not only with germany but across europe. There is no sign at the moment that Angela Merkel is about to pull the plug on that 9. 5 billion euro venture which is close to completion. There are comments from a lot of people saying that she should look at putting that into question. The markets are looking at a couple of things, a selloff in asia. The u. S. Markets are closed because of labor day, so happy labor day to americans out there watching us. European stocks are climbing, but there is a lot to do with pound weakening, on concern of a new trade brexit deal. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Francine this is bloomberg surveillance. Im Francine Lacqua and london. Talking about the markets, the main themes including brexit, lets get to patrick armstrong. Patrick, when you look at good morning, first of all. When you look at some of the things moving in the markets, definitely the pound weakening on concern that the u. K. Is inching closer to a no deal brexit. I dont know how you take it. Do you believe they want a no deal brexit, or is it agreement at the 11th hour because it is a new sheeting tactic active a negotiating tactic . Patrick it could go either way at this point. I dont think the up and ready deal in the past it was quite so up and ready. Thecould expect a deal at 11th hour. It could go either way. The pound is going down. I think a no deal brexit will not be the end of the world. Anythinghink we get like we were worried about when inwas down at 115 as it was march. Francine if you have a no deal brexit, are there technical opportunities for u. K. Assets, or is it something you dont want to be involved in right now . Patrick i dont see the attraction for most of the u. K. Assets. If you look at the banks are going to be struggling with Profit Margins because of the Interest Rate policies. Oil and gas, there is no excess on capital employed in that industry. There is not much in the index. It is not going to be driven by brexit, it is going to be driven by the sectors in equities and bond markets. They are priced at zero already, and i dont think there will be Much Movement from that. Francine in the past we have talked about european assets. Change because euro is so strong . Patrick it will be interesting to see what the ecb does this week. You have seen the fed change their policy to an average inflation target rather than the 2 inflation goal, and that has led to a leg up in the euro. You have policy from the United States, and it will be interesting to see what ms. Lagarde can pull out of her hat thursday if she intends to do anything. A strong euro is definitely a disinflationary force. You have no growth there and no inflation there. The only way to generate some inflation is a weaker euro. And a lot of these policies, the outcome is a weaker euro, so i think you might have to see a shift from some of the other Central Banks to keep up with what the fed has already done. Francine do you think it will lead where is eurodollar at the end of the year . Is our target. It is a little bit below that right now. The u. S. Election i suppose is the wildcard. If you have a contested election, you can see a weak dollar for the remainder of this year. There is definitely a possibility of that. I dont know if it is a probability of that, but i dont see either side giving ground if there is any contest to the election. The policies from the United States have been more aggressive than they have been in europe so far. Francine where do you see, patrick you have been buying specific talks or industries. Where are we . September, new quarter, toward the end of the year have any of your positions actually changed . Patrick we are going to stick with the winners that we have been in all this year. You have seen a big rotation out of the Technology Companies at the end of last week and no one knows exactly what is driving it. It looks like a lot of gamma hedging because of softbank and call options. There was pressure thursday and friday on tech stocks, you might see some pressure opening up next week. With zero Interest Rate policies, i think you want to be allocating your equity risk with growing revenues, growing earnings because future earnings are as much as turn earnings when discount rates are at zero. The companies that have seen some weakness over the last few days other companies you want to get into. Some of the comings are too expensive for us, but if you look at facebook, alphabet, you have to go two years forward. If you go two years forward, it is 17 times earnings. Quality growth is where i have been keeping my capital deployed right now. I would not be chasing a cyclical rotation. The economy is improving every month, but it is not good and it is far from getting good. I dont see how you get a sustainable value rotation. Francine patrick, when you look at longerterm, is there a chance of a breakup . I feel like i ask every time you come on, and you say your long on some of the tech stocks. What is the Regulatory Risk . Patrick that is a risk. There is always going to be risk. In europe they are talking about taxing some of these companies on revenue that they get at source rather than income tax in the United States. There is definitely going to be Regulatory Risk. There is going to be headwind for them, but i think those headwinds are offset more by the getting. That there people are working from home a little bit more, not traveling as much as they were, providing advertising entertainment, merchandising, all of these things. I think these were already happening and the environment right now is pushing them a little bit forward. It is from Central Banks. Until you get a steep yield curve, i want to buy same as current earnings. Regulation is a risk, but i dont think it destroys them. Francine is there any fixed income in europe that you like . Is also chatter, talk about a possible rate cut. What will that due to some of the things you are watching . Patrick we are not worried about that right now. But within europe we like the coco bonds. Youre getting below inflation returns right now because of negative Interest Rates on quality debt. We are getting a 5 yield right now. We dont like the bank equities because of the Interest Rate margins. They are not existent, but they are wellcapitalized. We dont think they will be very profitable. That will mean dividends are suppressed which further enhances the capital ratios, which you look at when you buy these bonds. We are getting a 5 yield, which historically does not sound great. But that is compelling for us right now. Patrick, thank you so much. Patrick armstrong stays with us. Lets get to first word news with leighann gerrans. Leighann in the u. S. , joe biden holds a 10 point lead over president donald trump, according to a new poll from cbs news. The poll also found that four out of 10 democrats say that biden is not campaigning enough. The top issue for voters is still the economy. That is followed by health care, the coronavirus outbreak, and recent protests. Now in germany, chancellor merkels support for the nord stream 2 as pipeline is being tested. Her foreign minister has linked the project to moscows cooperation with an inquiry into the poisoning of dissident Alexander ValleyAlexei Navalny. Pipelineupported the over the objections of the u. S. And other allies. Rose 9. 5 to the third highest level on record. Chinas trade surplus with the u. S. Was the highest since november 2018. President donald trump ended his november 2018 trip to france by having art from the ambassador set residents flown back to the u. S. Bloomberg has learned that the president liked several of the pieces in the ambassadors home and decided to take them with him. The works were displayed at the white house. This was a visit where the president canceled a planned trip to a French Cemetery for fallen u. S. Marines. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Coming up tomorrow, european commissioner Vice President speaks with uber get there brussels economic forum. That will be at 11 30 a. M. Time, 4 30 p. M. In london, and this is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Softbank is plunging after the lets bringmes in dani burger. Whats going on . Dani the reason it is being called the nasdaq whale is because reportedly, softbank spent aliens building up exposure in u. S. Equities, more specifically buying call or bullish options on u. S. Tech shares. It reportedly gave them a 4 billion profit gain. The issue, though, is that profit has not been realized, so softbank needs to quickly unwind that position if they dont want to see their profits on a road profits erode because of that story. That, in the japanese trading session, we saw softbank fall 7 more in tokyo trading. It is a question whether buying all these options for softbank actually led to the impact on the underlying market, but you can definitely see that call volume. The chart here has certainly spiked. This is starting in march, and there is speculation that this is a Retail Investor heavy crowd trading in this, but bloomberg learned at this point in august softbank plans to invest in public equities. Pastan sachs said over the three weeks, volume has been three times as much the daily average as it was in 2017, so there might be a feedback loop scenario happening where softbank buys these call options and banks have to hedge and then buy the underlying. But for now the softbank position might be eroding with the recent losses. Francine it may also have come as a surprise to many, but tesla failed to be included in the s p. What is going on . Dani this is also somewhat connected because tesla is one of those companies with another with a lot of call options. Tesla is not being included in the s p 500. This may take the bulls by surprise, and we did see tesla drop last week. This was a threeday, close down where 16 . After the news, it does not get included in the bluechip index. 8 la shares fell as much as postmarket trading, ended up unchanged. This is just a reminder, the s p 500 constituents are decided by committee, just because tesla rallies does tesla rally does not mean it is going to get included. They review this on an ongoing basis, so not all our lust for hopesinclusion not all are lost for tesla inclusion in the s p 500. Patrick francine patrick, you say you continue liking some of the stocks that have done well so far. How do you explain the selloff . Patrick i think what dani burger just explained is my take on what led to the seller. When someone, Retail Investors are softbank, if there is a large amount of people buying hedgeptions, people delta deposition. What it leads to is a momentum market because as the stocks go up, the delta goes up, meaning the hedgers have to buy more and more of those stocks to hedge their short option edition. If the market moves the other way, the delta falls and those option riders the delta on the options have changed. It does not create a significant directional change longterm, but it reinforces the most recent direction of movement. There is a lot of technical buying led by the options originally come and that has led to some technical selling over the last few days as well. Francine let me get to a quote by julian emanuel. He seems to be saying things that are pretty similar to what youre saying. Insays investor optimism recent weeks has created extended conditions, and he continues that by such momentum is rarely if ever to stable. Do you think it will be sustainable . Patrick i think you are better served putting her capital into these growth and Quality Companies rather than value companies. Everyone knows that these companies are more expensive than ever before. Their shares are at alltime highs and the multiples are at alltime highs. If you want to stay in equities, you go to the companies that have lagged. As of friday, it has never been more expensive. On a forecast price to earnings basis. It has never been more expensive. Although the Growth Stocks are expensive, the value stocks are just as expensive. The Growth Companies are going to generate the revenues and the earnings. They will roll into those multiples. I dont think the auto companies, the banks are going to grow their way into the alltime high multiples on the value sector. While Interest Rates are zero and there is no slope on the yield curve, i prefer to pay up for growth versus value. Francine what are you doing with emerging markets . Patrick we are not doing much. I think there is a lot of risk in most emerging markets. If you want to put your money into emerging markets, i think Southeast Asia is where you want to do it. Priscilla and indio have a lot of robbins with covid brazil and india have a lot of problems with covid. Pmis globally are about 50 no, and we are improving. Things are not great but every month we are getting better. That is the one region of emerging markets i like. While liquidity is abundant, i dont see that changing as a deal for emerging markets. It is not something i would be buying. I would be focusing in Southeast Asia. All of that region looks better for equities on the bond side of things for me. Armstrong,atrick thank you so much. Up next, italys five minutes minister tells bloomberg the economy will rebound faster than inspected. We will hear from our exclusive interview next. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Italys economy will rebound faster than expected in the third quarter, at least according to the finance minister, roberto gualtieri. He spoke exclusively with bloomberg. Here he is. the measures we have taken so far have been decisive in containing the Economic Impact of the crisis and preserving our capacitive our capacity and jobs. The plan will be reentered to on the line of innovation, sustainability, and social and territorial cohesion. We will focus the plan on investment, and investment aimed at enhancing our Growth Potential. So it would be investment innovation, cloud, supercomputing, european projects of common interest like factories, microelectronics. The sector tort invoice to invest more in innovation and to support the process of reduction of carbon emissions. We would boost our , andstructure equipment material infrastructure, particularly in the south. And we will invest a lot in Human Capital education, research. Minister, italian debt is a big concern for investors and foreign markets. You mentioned in your speech a new mechanism to reduce the debt to gdp ratio in a solid and sustainable way. Can you give us details on how much you think it could be as a reduction . Roberto we present at the end of september or fiscal government which will have not only a threeyear horizon but also a longerterm horizon, where we will defined a trajectory, a reduction of our debt to gdp ratio. That will be significant and sustainable. We have the opportunity to do mediumterm fiscal measures and also thanks to the impact on growth and Growth Potential of the productive investment that we will deploy with our nextgeneration plan. Your government has mentioned an 8 estimate for gdp contraction this year. Now what would you think the true number would be . Between eight and 10 . 8 forecast was a forecast down in mid april. It will be revised downward, and that is contrary to other forecasts that have predicted a very significant degree of gdp. Two figures, thanks to the positive rebound that we are , our vision will be limited and we expect one figure reduction of gdp for 2020. And for next year, gdp . Haveto next year we will a positive increase. We have not yet defined our forecast, you will see soon. Will arrive ate our precrisis gdp level. There has been a hit with covid and the national lockdown. Are to what extent italys public finances sustainable, only because of the current support in the European Central bank . Roberto Monetary Policy in the ecb of course is extremely policy positive. Strong fundamentals of the italian economy, it may cover that fully sustainable. I have to say also that we are seeing, even in this difficult moment of the crisis, for many government his there is a positive trend of fiscal revenue. Veryu know, we had a significant downward revision of our deficit for 2019, and one of the factors that is making us improve our forecast for gdp is the recent lay down in fiscal revenue, which are positive. So we have a number of elements which make us in combination to define a trajectory that will further increase and improve the public debt. Francine that was the italian finance minister, roberto gualtieri. We are getting breaking news. Angela merkel responded to nord stream 2. She has not spoken to putin on the Alexei Navalny case, occurring to a spokesperson of the german chancellor a. But we understand that angela that gas ready to link project with a response to election ovale. We will have plenty more on that. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. Francine johnson plays hardball. The u. K. Steps up preparations in case brexit trade talks fail. Officials plan a law to water down the withdrawal agreement. On hold for now, the ecb is unlikely to make any moves at this weeks meeting, but Christine Lagarde may set the stage for further easing this year. And risky business, softbank plummets on reports it made big bets on derivatives linked to u. S. Tech. The nasdaq selloff looks set to continue. U. S. Stocks are shut for labor day. Well, good morning, everyone. This is bloomberg surveillance. Im Francine Lacqua in london. We understand from the kremlin that they had not heard back from germany and were now briefed by the chancellery side. Angela merkel has not spoken to putin on the Alexei Navalny case. This is after a lot of pressure project,zprom let dete