And the couple of months. Togetherr euro coming to make the short term inflation outlook for the euro look a worse. Alix even though the words she said we might have heard before there is debate developing for the ecb. Are they going to be reactive or preemptive . That really hinging on inflation targets. Maybe we will get more on that over the next couple of days. In the markets, a fierce rally in europe, the u. S. , a lot of money pouring into tech. The nasdaq 100 futures are being shorted by the most since 2006. Pop. E seeing a last week it was about the stronger dollar and now you need to sell the dollar top. Yields go nowhere, oil goes nowhere. Now ofraho joining us ubs. What the ecb says, what the fed says in stark contrast to stimulus. In the u. S. , there is giveandtake on either side. What happens if we do negative stimulus deal . Jason the fed is going to be reactionary. We are fairly optimistic about the economy. Howell said he was on the optimistic side poweel said he is on the optimistic side. Given the political dynamic of ,he election in over five weeks until december, they are on hold until we see more clarity and where the economy is headed. Jonathan volatility remains elevated. What is the biggest risk to portfolios right now . A contested election, covid19, or more action from central banks, people like Christine Lagarde . Jason i think the biggest risk comes down to the outlook and that applies whether it is covid19, whether it gets worse, whether we do or do not get fiscal stimulus. We look into 2021 and there is a wide range of expectations. A lot of that hinges on whether we get fiscal stimulus, whether we get a vaccine solution that is effective. To me, that is the biggest thing driving the market volatility. The structural growth uncertainty that is taking place. Until we get clarity on that markets are going to stay elevated in terms of overall volatility. Alix people morning of november and december as data roles and. In. The question is what is the safe haven right now . Jason that is a great question. 2 when equities and the tech sector sold off the safe havens have not done well. Treasury yields are pretty much flat, gold is down, yen has not rallied. If you look over the past week, the Market Dynamic has changed. We suck Growth Stocks in the saw growtht week stocks the u. S. Up last week. That suggests we are back in an the growth where dynamic is up. Jonathan markets are very short, tech at the moment. Has september and anyway changed the narrative regarding whether or not tech is a safe haven . Has that narrative changed during the month of september . Jason i think until we see a sustained rotation so that people are willing to move into more a cyclical component, we saw that safe haven status. You stick with that playbook. That is the case right now. Alix when you look at the 60 40 portfolio. How do you make returns . Jason i think the reality of the portfolio, which is done great for 20 years, will not be adequate for most people. Not because of that is not the right calculation, but you need a certain level of return and youre not getting the component, you ultimately have to take more risk. Period for a 20 year fixed income. You are going to have to take more risk. Whether that is increasing equity allocation. A lot of investors want retail, but also institutional. Fixed exposure you have to take more risk. The question is where do you want to take it . Jonathan jason, im hearing more people talking about wanting to get into distressed assets. When do you think we are going to see the peak level of those assets becoming available . I am hearing april, may, june of next year. How do you get your investors into those positions . Jason if you want to get into distressed markets, you have to look at private markets. You have tohe case, look at various investors and strategies that take a longerterm perspective. We have been advocating or suggesting for clients who want to get into that space over the summer going into private credit markets, hedge fund strategies, nows the time to get into that. If the opportunity arrives next april or may, you have to start to position for it now. That is a move investors have to think about. In terms of when it will materialize, and the Public Markets if you look at the credit space, they tightened a bit over the past month which is suggesting the default cycle is peaking out. The distressed assets might materialize sooner, but it will be the opportunities that exist for extended time. Where there was a surge in default in 2009 and 2010 this could be more like the late 1990s and early 2000s. Alix that brings us back to central banks. Jason draho, we will get his thoughts ahead of the first president ial debate tomorrow night. This is bloomberg. Totally fake news. Actually, i paid tax and you will see that as soon as my tax returns it is under audit. They have been under audit a long time. The irs does not treat me well. Alix that was president from speaking with night after that bombshell New York Times report that he paid only 750 in taxes and no taxes in 10 of the last 15 years. His collegeor more professor of political science. The actual implication of a tax avoidance of any kind is no big deal to the average voter. How does it change the narrative today, monday, as a Supreme Court justice was picked into the debate 24 hours to go . It was a bombshell. The New York Times got access to these records. As far as i know nobody outside the times has seen them because they are protecting sources. We are going on what they are writing. This is the first we understand in a series of stories they are going to be putting out. I think the implications for the debate are that it throws into the debate that was already full of major stories from the Supreme Court appointment to the pandemic to the economy another big story that harkens back to 2016 which is how much did the president make . Is he telling the truth about his status as a billionaire . Did he avoid taxes and so on and so forth. We are going to see a rehash of that debate. Affectn how does this trumps strategy . Every time you think he is going to be able to control the narrative, and we should have been talking about the Supreme Court, but we are talking about taxes. I am wondering how he cannot control the narrative and what impact that is going to have. Exactly. This was a celebratory moment for republicans thinking they were on the brink of taking over the Supreme Court for the foreseeable future in turn the page on talking so much about the pandemic. Then they were hit with his bombshell. To hearwe are going from the president on what we heard previewed yesterday. He will talk about this is fake news, he will say the story is fake, and we will hear what he said in 2016 again which is that he is smart. Asked tohat he was pay. If the tax structure is broken, that is not his fault. In my talking to some republicans and Trump Supporters today, that message resonates. They say, you know what . He paid what they told him to pay. We have a crappy tax structure and this is how it works. I think we are going to hear more of that from the campaign. Alix im glad you brought that up. A viewer said is this mean we are going to see calling again for a flat tax . Policy going to become stronger . I think we will. I think trump has a few things he can say. Number 1, 1 of his major accomplishments was the tax bill he did early on. Could have, and i hope we do, i debate on tax policy. We may see that Going Forward and i hope that we do. Notenk it is important to the no evidence he exchanged any money with the russians and he was honest about the audit from the irs. This does support with the president has been saying since he began running for office. How does the Biting Campaign use this effectively Biden Campaign use this effectively tomorrow night . You talked about the way the president could use it. How does the Biden Campaign use it . I think they will make this bottom line the president is a cheater or he is not the businessman he claimed to be. I think theyre going to make the case that here is somebody who only paid 750 and claimed to have a fortune. Paying it be he could be that . I think we will hear that out of the Biden Campaign. I think we will hear questions about now you are in control of the irs. What does this mean Going Forward . I think some of that is going to happen in these indications that money was paid to foreign countries, not russia, but other countries. Always great to get your input. Thank you very much. Course, we are going to catch her and our other great contributors tomorrow night as part of our special coverage of the first president ial debate. It kicks off at 8 00 p. M. In new york. Still with us is jason draho, head of americas asset allocations of ubs. I am trying to figure out what the pricing is around the election and how much volatility we could potentially see around this point. It is clear the market is anticipating we will see an elongated period around the election of volatility. What is your best case and worstcase scenao for the markets . Jason i think the best case is we get clarity. Resolution in the the same thing would apply to the senate. If you can wakeup november 4 and know what the outcome is, you can plan and anticipate Going Forward. That would be the best case of scenario. What does this mean for taxes as pillagin policy changes, hunter biden, they are worried it would biden they are worried it would go up. The worst case situation is if you get this dragging on for weeks. Some people think it could be a tie in terms of the Electoral College and congress has to nominate the president. That would be into january. That would be the worst Case Scenario which seems unlikely, but anything that i lon elongates or questions the legitimacy of the outcome could undermine government authority. Those would be the worst Case Scenarios. Until you get that result it is hard for us to look at it one way or the other. I think the future of market starts to moderate after. Alix to look at it , a strategistvely of the most positive outcome for a market is higher fiscal stimulus and higher economic growth. The most negative outcome is a Biden White House that will split congress. That brings up the question if we do get a democratic sweep, and so much negativity is already priced in, are we setting ourselves up for more upside . Jason you have to distinguish between the reaction in the markets versus three or six months down the line. In a blue wave, you could get this initial market drawdown because of concerns about the antigrowth policies of biden. ,t the markets become clear liquid do not get stimulus before the election, but become probable by january or february, that becomes a positive is that is good for growth next year and we deal taxes later on. A counterintuitive take would be if we get a status quo situation, if you cannot pass anything through congress because the democrats have the hose and the main policy tool has isnt trump reelected, the status quo would be worse. There is a lot of dynamics playing out. Things can surprise us. That is how i would the blue wave slightly negative. Alix we will have to leave it there. Thank you so much. This is bloomberg. Welcome back. You are looking at the spacex launchpad. We are expecting a launch imminently. We are launching a starlight satellite. The weather does not look good. This was postponed already. Joining us from San Francisco is ed ludlow. We are about to see liftoff. With think it is going to happen. Another 60 going up takes us to 800, right . Ed right. They want to deploy the network in north america and expand globally from plenty 23 onward. The target is much bigger than 23 onward. 3 the target is much bigger than that. It is an intricate science. Maintainlites have to a constant out the dude of 340 miles above earth. It is described as a game of soccer. Guy it is very complicated. Getting the things into the lower orbit also incredibly complicated. It has been canceled, or postponed. We did suggest maybe the weather was not looking that great. It seems like the last minutes, we have been denied. Nevertheless, it is fascinating science. The other subject i would like to get your take on is what is happening in terms of the uber story. It is time for a Bloomberg Business flash. Buy wpn energy agreed to x energy. It will consolidate at a time of the sector is hurting. In texas and new mexico. And a place were Software Engineers are cheap, smart, and plentiful, the biggest retailer is developing a Mailing Center in vancouver. It is designed to help 8000 workers by 2023. A steady flow of candidates have made canada an attractive place for tech companies. A big victory for uber. Fit and proper to operate in the city. Last year they revoked the license over safety concerns, but cars were allowed to pick up writers during quarantine riders during quarantine. That is the latest Bloomberg Business flash. Guy thank you. That court ruling coming as a relief, many would argue, to what is a difficult story for transport in london. It does come with 21 conditions. But it would have been likely there would have been an appeal anyway. Hoover would have carried on uber able to operate would have carried on being able to operate. 3. 5 million regular passengers in london. That is precovered numbers. Alix i like the fit and proper. We do not say that in the u. S. , but what i find interesting is many were looking to london and california when they made the labor laws for the workers for and lyft. Ruber there is no template for other countries that want to suppress lyft orth of uber or their own ridehailing service. There is no precedent to do that now. Guy i would agree with that, however, you get the sense from those jurisdictions and others that the gig economy is being pushed back. I wonder if this is going to be something we hear increasingly whe if we end up with a biden administration. Growings back to these strength of labor and whether it can reassert itself. That would be one of those cases in which you could see companies otherser and plenty of that have to change the way these contracts work. Alix some workers do not want to be classified as workers. They like the freelance. Coming up, we talk about the future of the Affordable Care act. This is becoming a major issue with President Trumps new Supreme Court pick. How it affects the Health Care Sector and we talk to nina deka about winners and losers. This is bloomberg. York i am from new alix steel and this is guy johnson. The threat to Health Care Coverage due to Donald Trumps new pick, Amy Coney Barrett. Joe biden spoke of the nomination. There is no mystery about what is happening. President trump trying to throughout the Affordable Care act. He has been trying to do it the last four years. Alix for more on the potential global nina deka, robo analyst, joins us. We need to understand what could be invalidated by the Supreme Court to handle the ripple effects. How do you handle it . Nina there are a lot of different ways to speculate, but adly speaking is to view let us say the most extreme is the Affordable Care act is repealed and the downstream impact would be 22 Million People now insured would no longer have coverage. When we think of that further downstream on the impact of stocks i would look at the Health Care Sectors that originally benefited from the incoming 22 Million People who got coverage. Visits,nt more doctor more using healthcare services, so providers, managed care organizations, and Health Care Services were beneficiaries from the Affordable Care act. We could see a resulting negative shift if people were to altogether lose health insurance. There are other factors as well. For example, much of the Affordable Care act could stay in place, but some aspects could be deemed unconstitutional. Fine which, the tax is zero penalty for those who do not have health insurance. Things like that could be in question while the rest could remain in place. That ifg i will say is you look at the health care subsectors that might be more resilient, i would look toward Health Care Innovation like telehealth. The reason why is over the last several years we have seen friendly legislation that has gotten wide, bipartisan support for these very Innovative Health care areas. Guy what is the timeline, do you think, on any threats to the Affordable Care act . How long will it take . Nina it is not even going to come to the hearing until after the election. It remains to be seen what is going to happen with the Supreme Court seat. We do not have the information yet, and there is still the hearing that will take place after the election. Then there is the election not being official until next year, depending on the outcome. If people were looking ahead, i would not expect a dramatic change to occur until 2021. Alix such a good point. It is not like tomorrow this is going to happen. Let us hear about Health Care Innovation. How does that evolve . How do you find the winners and losers in that space that do not have valuations . Nina for those who do not know, indexo global we have an that trades at the etf. A lot of those companies that belong to the subsectors like telehealth, diagnostics, data analytics, are included. We conduct fundamental research. We look across a broad range of companies that participate in determines and to tw who are the market leaders, who has good data we think there is going to be a runway for growth . We have taken a collection of these companies that we deemed to be leaders and represent the most amount of disruption in health care, bound them together, and that is how you traded. E it. If people are trying to chase the next vaccine stuck or the liquid biopsy stuck, one adjust own and index were someone behind the scenes is doing the legwork and you can just forget it . Guy how was covid accelerated what you are doing . Nina in a couple of ways. For example, the research and development behind the scenes, so when you look at diagnostics for example, companies were coming up with covid tests at an unprecedented pace. There are other things we are not looking at. Fory Cancer Detection example. Covid kept a spotlight on areas like diagnostics, telehealth. There was a sevenfold increase in telehealth companies. What people are not paying attention to is this massive runway for growth in virtual care. 10 yearsxt 5 to telehealth visits will underline health care. Alix what becomes priced in . I feel like every time we get a shift in any narrative on the president ial stage or Supreme Court, Health Stocks are going to move. What is actually in the market . Nina there are a couple of things. If we take exact scientists, they had early date they announced last week. Just reading the word liquid biopsy and having early data, and they had the expansion in their multiple by like 3 million, when you ask about what is pricing and what is not i would look at the broader opportunities. If you are looking at rectal just tog, for moderna, covid vaccine, one might argue that is already priced in. When you look at the broader opportunity for example, moderna has 20 other therapies in trial right now, 10 of which are vaccines unrelated to covid. It is a positive catalyst for the rest. They have a longterm Growth Opportunity. Early detection for cancer is coming. Im willing to bet on that. It will be here and so there is plenty of room for companies. There is a 75 billion opportunity. When you look at the worlds runways, that is when you start to say, you know what . Maybe this is not priced in yet. Guy are there more opportunities in the United States or europe . Nina i would say if you look across the Broad Spectrum of Health Care Innovation companies, a large issue of them are u. S. Based. I would look at the ones that operate globally. Eledoc operates in 120 countries worldwide. The Growth Opportunity is europe, u. S. , asia, all over the world. There are people in far corners of the most rural countries and emerging markets that need care and virtual care is going to help reach those individuals. It is early Cancer Detection. The opportunity is vast and global. Guy we are going to leave it there. Thank you for tim your time. Nina thank you for having me. Guy coming up, we look at the shipping and Energy Policies and what it means for investors. E speak to a leading investor this is bloomberg. This is bloomberg markets. Coming up, we hear from the former massachusetts governor, deval patrick. This is bloomberg. Checking in on first word news, President Trump faces scrutiny of personal finances weeks before the election. According to the New York TimesPresident Trump paid 750 in income tax in 2016 and 2017. He reported losing millions of dollars on his golf courses, plus has hundreds of millions in debt that will come due the next few years. He called the report fake news. Democrats want the confirmation fight over Supreme Court nominee Amy Coney Barrett to be about policy, not personality. Theyre focusing on what they worrying future of obamacare. The case could determine the Affordable Care act. It comes up just after the election. Almost one Million People have voted for the president according to the university of florida professor michael mcdonald. He has been compiling data on early voting. He calls the number, jawdropping. Concerns over coronavirus and interest in the campaign have upped numbers. The u. K. And European Union are starting brexit talks. There demanding how any trade deal will be enforced. Both sides are holding out hope that a deal can be reached. Global news 24 hours a day on air and on quicktake by bloomberg. Powered by more then 2700 journalists and analysts in over 120 countries. This is bloomberg. Alix thank you so much. We are 24 hours away from the first president ial debate. The candidates stand far apart in one big issue is energy and the importance of energy played out in california as they suffered rolling blackouts. The grid could not handle supply and demand. The savior could be Battery Storage. 2030. Rnia has a target by this is not enough. We want to bring in someone on the front lines, senior managing director and head of capital dynamics. They currently generate 10 of solar power in california. John, walk me through what the link is for my solar panels to Battery Storage to the grid. Help the viewers understand that connection. John thank you. To california for example. There is plenty of power in california. It is not the amount, the time it is needed, and how the grid manages. That is a new thing for the grid. Your solar power is producing power in the early afternoon, but peak demand can go on until early evening. California is developing a challenge in managing that end of the day. If you think about it, the most effective way to manage that situation is to put storage systems, store that power in the middle of the day, and use it at the end of the day. Once that is gone there is plenty of power in the evening. Guy how big does that storage have to be . We started using this in the used but the site that was in dorsett is around 1 10 of the size of a gas station. Big, butll quite relatively small in the big scheme of things. How much smaller can we get . The u. K. Is trying to figure out a way of doing this to allow smaller and smaller battery packs to be part of the network. How networked can we become . How granular can we become in the size of stores we are using . John you know, this really gets to one of the key points in the Power Industry. The Power Industry historically thelarge power plans transition power to consumers. This is becoming a new kind of grid with generators, users of power, and a battery can be a generator and user of power throughout the grid. That needs a different kind of control system. Now the battery systems, small battery systems, can be helpful and allow a home system to not need so much power at the end of the day. We currently have 2. 6 gigawatts hours of batteries under construction which wouldve made a huge difference if they were operating. The first large systems will go into effect march of next year. We are hopeful that next summer the battery systems, among those of others, will make a big difference in california. Alix how much does it take to build it and when will you reach Capital Investment . John the systems have dropped in price by two thirds in the last three years. You have a situation where even two years ago batteries were not viable. The market is growing very fast. Returns are attractive in the sector. Batteries in california do not get any significant incentives. They do not currently participate in the federal government incentives, which not many people understand, yet they still make economic sense as investors. Guy john, how many electric vehicles are there in california and how many do you expect there to be in the future . I am wondering how integrated this could all become. Tesla has a huge battery in it. John if you were to take the current cars and trucks on the road today in the u. S. And convert them to electric, that would increase electric demand in the u. S. By 25 which would be a huge amount. To your point, you now have this huge battery system that is basically sitting on the grid and available to not only use power, but the power back into the grid. That is where the system is going. In many cases, this will include electric vehicles and be both users of power and supply power back. If you have a crisis like you did in california and by the way, what happened in california was you had two weeks of record hightemperature throughouts entire western part of the United States. If you had that in london or new york city, that would be a tremendous strain on your system. Storage is going to be a big part of that. Batteries from things like electric vehicles in the future would be able to discharge in that event and that could really help alleviate this kind of fluctuation. Alix what would you need to see from government policy to see this along . John if you go back to the beginning of the current administration, there was a view that the policies that were going to be adopted, in many of which were adopted, were really going to slow down the implementation of renewables that has not happened. Renewables have exponential growth during the trump administration. I think federal policy can either enhance that speed or perhaps slow down a little bit, but there is really no way it is going to stop this. It is driven by fundamental economics. I think what we need is to continue the government getting out of the way. If there is a new administration, there will be some enhanced policies, but the industry really operates effectively on its own at this point. Guy john, is there a danger we focus too much on one renewable at the expense of another . You talked earlier about the reliance that california has on solar. Do we need also to be spending money on things like grids . That is happening in europe about connected infrastructure that allows areas within a region, in california has a pretty big region, but maybe across the United States to better be able to manage the Power Dynamics each region is experiencing at different times . John the transition system constrains are a big issue for sure. When you think about it transition systems were built over 100 or 150 years for one type of electrical grid system. Now it is a totally different system, but that no longer works. We have a similar situation with the gas pipeline structure in the u. S. There was a big transition revolution going on. Transmission issues are more important for winter. Wind has a difference from solar. The sun comes up and goes down and you know what is going to happen. You can put it closer to the load. Solar really operates more effectively in todays grid. Wind is not as effective. It will blow at times which are unpredictable. When all the wind blows you have credit transmission lines and too much power in one place. Advancedrly for wind transmission implementation is important. The big problem with transmission is getting a permit and that is not going to go away anytime soon. Guy fascinating conversation and it is going to be interesting to see were governments spend money on this, particularly with a new administration coming in the u. S. Are not. We will see. Here in europe a great deal of money being spent. John breckenridge, thank you very much indeed. We look at the nasdaq 100 absolutely surging. The most extreme since 2006. We discussed what happens next coming up. This is bloomberg. Bloomberg. It is time for the Bloomberg Business flash. And look at the biggest business stories right now. The ohiobased company will be the biggest super producer in north america. Cleveland expect the next major deal in less than a year. Caesars entertainment says the board of british gambling company, william hill, will recommend a takeover price. That would give caesars an advantage and a potential bidding war with Apollo Global management. Caesars and william hill already have a joint venture in the u. S. [indiscernible] process of sending the cases cases that is your Bloomberg Business flash. Alix thank you so much. We are going to look at position with hedge funds. The shortest since 2006. Fu. Ing us is scarlet has been a know it dismal month for big tex. 2. 6 asdaq 100 was down before pairing losses and still the nasdaq trails the broader market. Sentiment on the ndx, and this is a proxy for big tech because the five big names make up value, are steadily souring. Boosted since the most since 2006. Positioning in 2020 never got bullish either. It is not like it went back to the highs of 2016. Bloomberg macro strategist observes the speed of selling in recent weeks leaves a position six standard deviations short versus the twoyear average. One reason we may be seeing a return to the playbook of tech stocks leading the way is that you are getting rebalancing before wednesday which is the final day of september. Keep in mind that most of this weeks event risk is later on this week. You have got the president ial debate tomorrow between President Trump and democratic nominee joe biden. We have the september jobs report on friday. When jeffries looks at this data they conclude the extreme positioning means now is the time to buy big tex. Tech. Perhaps single minded opening singlemindedness is opening a window into tech stocks. If you look at how hedge funds are performing and how they are faring on big equity overall, hedge funds took a long stand of the s p 500. It is not as if they are souring on equities. They are souring on nasdaq 100 futures. Jeffries points out there is more cash sitting on the sidelines now than back in february. This is money market assets. They total 4. 4 trillion . That is up 21 from late february when the s p 500 made its last record high and before the drought began. Guy absolutely. Thank you very much. Close. Up, the european we talk brexit and much much more. This is bloomberg. Welcome. Here on bloombergs. What you deed to know from europe this hour. European stocks surging. Thanks leading the charge which that with hsbc jumping. The capital faces the threat of a tighter lockdown. William hill is in advanced talks with caesars. Market signals not enough. We will have analysis from that later. Lets check the markets. Market surging on both sides of the atlantic. Stocks up 6. 2 . Boy 1. 4 . We are coming in two months and. We are coming into months