Like it is getting down through thursday lows. We are seeing pressure. I love covering the markets. Europe is a snooze fest from an equity market point of view. There is nothing happening. Light volumes. Market trapped in a tight rein from an equity point of view curate we are going nowhere in a hurry. The Energy Sector is reasonably well bid but not spectacularly. The euro is back towards the middle of its risk range. Brent catching a bigger bed. We have the opec note coming out later this week. Reports worth paying attention to. Overnight, we do not see much out of china. You are seeing a little bit in terms of the nasdaq. Alix yes. That is a good point. He saw mike wilsons note at morgan stanley. He came out in the note last week talking about it was a pull forward of demand for tech where sustained acceleration. If there is a pull forward, how much earnings estimates increase can you see in 2021 . You also wonder moving into cyclicals, may be moving into cyclicals and out of the growth trade today. After wonder how much is that regular folio rebalancing . Guy lets try to get an assessment on what is happening. You have the stimulus story, the china story, all of that needs to be factored in and worked out. Steen jakobsen is the cio at saxo bank. He joins us to give us his take on all of this. You travel widely. You have seen this all happened before. Is anything different in washington right now from your perspective . We are approaching election . Everything needs to be seen from that prism . From a market perspective should we assume the base case is the deal gets done . Steen there is no way either the democrats or the gop party can live with themselves going into the election without a deal. I am certain we will end up around 1. 5 trillion, which in itself is a sad story down to the fact that it is not about the future, it is not even about safeguarding the jobs or creating new jobs, it is about the election. Alix no kidding. Welcome to u. S. Politics. Devils advocate, you have the job openings that came out earlier. 5. 9 million if you round up. There are openings for jobs. I guess the argument is how much of a stimulus does the economy neat and what will the boost be in the of the fb market or other markets . Numbers, you these can use them for whatever you want to but they are not an accurate reflection of what goes on in the economy. We have bifurcation in the economy in the sense that if you are online, youre doing great. If youre in the Service Sector you are doing extremely poorly. We are now seeing more and more sectors were not only having a huge burden, but also have to let people go in terms of jobs. As with everything in the market and in society, there is a good story and a bad story. The overall draft of the jobless market is we will see increased unemployment and resources that are unutilized, both in terms of generations, the young people been the most affected, but also in this rich versus poor, unfortunately. Guy what do i do in that scenario . Clearly the economic pain will be felt and it will be substantial, yet the kneejerk reaction continues to be buy stocks. Do i keep buying stocks . More you become slightly selective in this process. On the one hand you realize the Central Banks and the government will go all the way, they will go to infinity and beyond in terms of the support of the market. At the same time you should realize all of these measures, especially the money printing, has a limited impact it on the market. Suggests thembers bigger the support gets to the markets the less it impacts the market because you have the saturation of the impact, and the natural laws of economics dictate the more debt we get, the less velocity we have, and the circle goes on and on again. Your defensively wanting to be long. The antidose of this money printing, which remains technology, cash flow rich and debt light in the shortterm, and overall you want to do last time you want to be long bold, which is the debasement to monetization hedge, and you want to be long volatility and that remains elevated despite the almost alltime levels we see across the globe in stocks. Alix what changes that . We have had 70 headlines between china and the u. S. In terms of sanctions on individuals it does not seem like the markets in the u. S. Blinked. Steen no. That is the story unfold. The passive investment share of the market today means everyone, especially the young people who are the main proponent of this, they are buying the old valuation, nondiscriminatory against what is going on in the world. Trouble, turkey is in south africa, and brazil in terms of the emerging market. You see a number of stockmarkets not reacting, the u. K. Being one. If you want to look for the signs of this not working, you can find it. On the other side, a huge amount of money, which i estimate to be 40 of the overall market that comes from passive. Investment is not discriminating against valuation, against momentum, it is just buying the market, which reduces the amount of cash coming through that increases the volatility because the amount of cash relative to the overall stock market becomes less and less. Up. The risk goes if volatility is increasing, if you can discount to infinity, the risk goes up, and i am wondering at what point that risk becomes real to the average investor . This ise to understand a difficult situation they are playing with, and yet we are miles away from that at the moment. Financial professionals try to balance risk and volatility. That doesnt seem to be happening at the moment. Steen there are two ways to approach that. What is the theoretical one. This could go on. We know the fed is committed for three years. You could create a program by which you remain long market and then you wait and see what happens. Is to say there is an end game. How is the end game start. What makes the end game evolve. The answer to that question is the saturation of capital, the velocity of money, the fact that printing more money and creating more debt is not working. Anyone who can do a chart can put chip input debt to gdp and overall real growth in any economy and we have a downward sloping growth. Putconcept let me just the nail in the coffin. Everyone talks about the Federal ReserveBalance Sheet expanding. The feds Balance Sheet has been falling for the last two months. No one noticed, no one cares, because the narrative in the media continues to be the same. The Balance Sheet is expanding. It is not. It is decreasing because of the extraordinary Credit Facilities being decreased despite that, the market still goes up on the fact liquidity seems to be increasing. It is not cured the problem is it is not. Ie problem is when facts think this week with the china story breaking, microsoft being involved, and huawei running out of semiconductors, that is one of the risks the market does not like. Chinese media, which already talks about the gang of four in the u. S. Against china, using , i hong kong legislation think all of that, chip by chip, is creating a bad risk reward. Alix that is a good take. Steen jakobsen, you will be stiffing with us. We will have much more with you in terms of how you look at the eu versus the u. S. As an investor. This is bloomberg. Guy i am guy johnson. Alix steel in new york. This is european close on bloomberg markets. Jakobsen, us is steen saxo bank cio. We talked about europe and the fact europe is potentially heading in the right direction. It has a Social Security system that is working. It is managing the covid crisis much more effectively and is starting to invest in technology , i. E. Environmental technology. Since we have had that conversation, european stocks have gone down in u. S. Stocks have gone up. When is the right moment to invest in europe the longterm trade . Steen thank you for putting me on for that one, guy. Obviously the game is you believe there is better cohesion going into the u. S. Election year that will at best be will beus and at worst a starting point for further social unrest in the u. S. Up, but i do not think overall the s p 500 is recovering as well. For me europe remains at a changing point. The budget we have in place shows a commitment from your. Is that enough longterm, but in the short term you created the euro rally to 1. 19, coming back down to 1. 17. People increasingly want to invest money at home, and personally, not because im european, but for me europe is a better place to be invested. I like the upandcoming scene. I like the health care sector, i the clean water sector, like the green transformation sector, and all of these companies are way too small to cater for all of the surplus saving in the world, but as an individual investor is where you want to be because we lead in that and that is where the u. S. Lacks. The u. S. Leads in big tech and will continue to lead for the foreseeable future, but the right time is right now cured alix the right time is right now. Alix how much of that is future looking and how much is what theyve done with covid . Vanke of america had an interesting report that says every country will have a ton of debt. We think europe is better, but we will be hit with covid across the board. That does not mean europe is doing it better . Steen that does not mean europe is doing it better. Steen i do not think europe is doing better better than the u. S. But not better globally. Europe catching up is the main driver for me. That is what our Equity Analyst has written about. Europe is able to release all of applications and ways to do with the world needs right now, which is a green transformation, clean air, clean food, and clean water. That is where europe is doing extremely well. They are extremely small, but they will grow. If you want to look at the next 50 or 20 in terms of the market, it will come from green transportation. I do not know which name it will be, but im certain it is. We knew it was extracting oil from the soil. 20 years from now it will be how we convert and live with nature, not against nature. To talk a little bit about what is happening in china. Just getting a headline that citi and Standard Chartered are looking to sanction chinese chinaals after friday, opposed sanctions on 11 individuals. How do y, as a corporate, manage my exposure to china if i am based in europe or based in the United States, banks like hsbc and Standard Chartered will struggle in this environment. They will be caught between the security law in hong kong. They will be caught with a dealings in china more broadly, yet the chinese economy will be growing and growing strongly over the next few years. We all know that. Even if it is not a bank, it will be nike. Some company has to manage its domestic constituency in the u. S. Or europe at the need to be part of china. How do we do that as a corporate . Steen it is interesting you bring that up, especially interesting because microsoft you have two examples of how you deal with china. Microsoft and facebook. In the case of microsoft, they have decided globally to adhere to whatever rules are implemented. They are compliant with the restrictions ways the chinese want them to operate in china. Facebook would take a decision to not do it, and than they were left behind. For all commercial businesses, you operate under the rules in china or not, and you take the decision as a business decision. That can add severe impact in terms of repercussion with the u. S. Increase in the rhetoric. , there is the microsoft way of doing business in china and the facebook on. Andbook is banned in china microsoft remains the backbone of software in the chinese system. You see apple and all of the apps still operating in china. It is binary. You are either fully invested into the rules in china, or you do not. Increasingly people argue that is what the u. S. Is doing to the chinese counterparts in the u. S. The only problem is the u. S. Is a small market, china is a massively growing market. I am not deciding this is good or bad. There only two models, to comply or not comply. Binary, it because more what kind of risk does that help for your europe call it doesnt make eastern asia more appearance and does it make eastern asia more appealing . Steen there are two liars to that question. One is should you do with china or the u. S. , and secondly is the way you conduct your business, taste on the more you sell the better it is. Those are ethics questions very difficult to answer. The fact of the matter is if you look at germany, by far the most successful country in china in terms of exports, they are complying, all the way from their Foreign Service to their business level. U. S. , you have a dictated policy of what you should do and not do, more randomly. You need a strategy of what you want to do. Inside that, you have to take a business decision. Down the line, i am sure most Companies Inside the next five to six years need to decide whether they want to do business in the u. S. Or asia, unfortunately. Guy always appreciate your time. I may have bit i may have been a bit unfair earlier on. If you put it in dollar terms, the dax is up 4. 5 , the s p is up 5 . Maybe the biggest move has been pro europe. The big difference there is the euro has gone up. Cio of saxoen, bank. Thank. This is bloomberg thank you very much. This is bloomberg. Guy welcome back. Within the last few minutes we have learned the lebanese government has resigned. I do not think this will come as a massive shock following the massive blast in beirut. Joining us from to buy from dubais bloomberg executive editor for the middle east and north africa. Now what . We do not know. We are entering the unknown. This government took a long time to form. There was a lot of horsetrading between the different parties. This was supposed to be more of a tecra product government that can attack some of the problems a technocratic government that can solve some of the problems. , the was hyperinflation currency was collapsing. The government was able to take control of the economic situation, and then this blast came in the outpouring of anger in lebanon was unprecedented this morning. Alix is there a fringe party or some kind of smaller Political Party that does have the confidence of the people that can be supported, or are they starting from scratch . It is everyone. There is a slogan that says everyone hates everyone. They want to replace the whole political elite because they have all been involved. Not a government or you have active opposition and elections were different parties takeover. There is always been compromise and deals being made, but these deals are what put lebanon into the trouble zone is in now. There is corruption, there is negligence, the kind of negligence that led to this story of Ammonium Nitrate in the middle of a city. Also, even with this new government, the fact it was not able to act because it still needed to get the agreement to all of the different parties come into the great frustration of the imf it cannot. The imf came without came with a strong statement critical of the government demanding was the lebanese agreed to be a requirement of the imf because the imf said it stands ready, it has the money and wants to help lebanon, but reforms need to happen. This is a country with a vicious history. How do we make sure that does not happen again . This is something from a regional Strategic Point of view we cannot go back to. No. The Global Reaction to what has happened in beirut is telling in their are a lot of powers there are a lot of powers that do not want evan on to slide into the kind of do not want lebanon to slide into the unrest we have seen recently. There is money coming in for immediate aid. The only hope is that these lebanese parties will agree to significant reforms that would allow money to flow in and hopefully lead to further reform. Always appreciate the update. Hank you very much up next, we will show you the european close. That is next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. 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Since then it is polite to say weve been trapped in a tight trading range. Quite warm in europe. Whether that is having a contributing factor . With the majors and in terms of what is going on with the volume, that me give you 90 of what is going on. Me give you let an idea of what is going on. The ftse 100 is trading have normal value. Down thes 40 dax in germany is down in terms of very of normal volume. You can see the volume with the vent that function on your , worth paying attention to as well. You can see that there. As you can see, you normally get a big spike around the close. This is when you get a lot of the passive funds clearing, and as a result the volume tends to come in at that point. We are significantly below where we would normally be. This is not surprising. It is august. To take a mored relaxed attitude towards the volume picture. Seeings of what we are in terms of the sector story today, we are seeing some of the oil stops doing better today and some of the banking stocks doing better today. I do not think theres anything to read into that. The oil stops bouncing back the oil stocks bouncing back. Tech trading lower. Health care trading lower. We are seeing tech underperforming in the United States, particular versus the russell. The midcaps are outperforming. Lets turn to our stop of the hour. Our stock of the hour. Here is scarlet fu. Declinesbig oil posted , and saudi ar