Correction from the march lows. Joining us is a chief market technician. Nasdaq, what is the level that we stabilize at . That is a great question. I think rather than looking at the levels, i think it is more about duration. We need more than one or two days of selling to alleviate the excess that we have built up over the last few months. Anybody who has been following the markets, equities seemingly have grind it higher every single day, so there is a lot of excess, a lot of exuberance built into the market. A a day or so of the selling pressure is not going to alleviate that. Where we kindbove of should be, are we . I guess it is the question people are trying to understand. We did push up aggressively, steadily though, but it has taken us above the 50, 100 and 200 Day Moving Averages. We are starting out to get back down to levels closer to the 50 Day Moving Average. How important is that going to be as a level we need to Pay Attention to . The 100 and 200 are still a ways away. This is a market where the technicals play an important factor, and i say that not just because i am a technician, but you look at coming out of the march lows investors were buying stocks not because of fundamentals or economic data, they were buying it off of priced action. That created a positive feedback loop. The momentum that was building up, that sucked more money and. In. Now, if all you have is price action and you are starting to see that crack and melt down, like we saw yesterday, now you are looking at a resting spot, when can i find a level of support when new buyers will come in with new money. That is why you need to Pay Attention to the moving averages. The first one, if you are looking at the nasdaq 100, you have to Pay Attention to the 50 day. I think that will be around 268. I think that will be the first level on the chart, where you will start to see some stabilization potential. So we are paying close attention to that. Alix help me understand how the money is moving around today. Are we seeing margin calls . I am struck by the fact nothing is getting a bid. Gold is not doing much. We can see selling in the gold market, and treasuries and across the sovereign debt in europe. Where is the money flow . Futures today were off a little bit. Obviously, with technology. But in the first 30 minutes of trading, what struck me as constructive is you have the market down about 1 , but there was 60 of the s p 500 stocks up on the day. It was up on the day. You are not seeing that slight safety in gold. And bonds are selling off a little bit. This is a Technology Story right now. Obviously, if tech drags you lower, that has potential to send ripples into the other sectors, but coming into friday they were buying at the opening bell. The market is down right now over 2 . But this is not a sell everything situation day. People are still picking and choosing their stocks here. Guy what do you see in volatility . Volatility is interesting, theuse volatility gave you signal that the market was extended and it started to pull back. Heading into yesterday, if you looked at the nasdaq 100, the prior 10 days it was up nine out of those 10 days, but the vix was up eight out of the last 10 days, so there was a positive correlation between volatility and stocks. That is extremely rare. If you go back historically and to find other instances where the stocks went higher along with the volatility, we were near the market top. So volatility was the leading signal that gave you that heads up, caution is warranted. Guy we will leave it there. Thank you for the input. Lets carry on the conversation. Tman with us ian har and lararhame. When you think of the selloff . Ian it is something we have been looking at. Very expensive indeed. When you are looking at loose money and loose fiscal, we think that goes toward value, rather than growth. We are seeing factors coming together, and we think this has a further go as well. Alix when you get into buy the dip, usually when we see things rollover we see buy the dip, so why not today . Ian it is about the scale of the moves. These have gone exponential. And that is our definition of a bull. You can see the scale of decline , the factors, very high. I do not think we will see the n levels we had in early june. It has got to go below that. The member, we go all the way down to 7. 1 back in march. So there is a long way, potentially, to recoup, unless we see something that comes in supported,uations is which means Interest Rates need to stay low and the fed will have to pump in more money. Guy we just saw a payroll that was ok, in many ways it was good, but kind of, if you take a step back you realize that the u. S. Labor market is still in a world of pain and people are still considering people are still under hardship. Lara i agree. This move that we are seeing still is more driven by market technicals, and not as much by a fundamental economic story. At the end of the day, we are not seeing broadbased equality. We have seen the market rise, that is because of a small number of names. And i think you have to say the same thing about the market on the way down. When we look at the underlying think the bond market is still focused on fundamentals, where as the equity market is really just dealing with the technical shakeout. Alix what do you make of the bond market today . Yields are actually up for base puts points four basis points. What do you make of that . Lara the report was good. Bi think it is really know about where we go from here. I think the market is looking at t despite aseeing tha pretty significant resurgence of the virus, our economy is able to make a recovery and some consistent gains. But september, october and november is all about the return to school, this disruption, and whether or not we can continue the employment gains when we still do not have a lot of kids back at school. Guy is there another way to look at the price action today . There has been good news over the last few days about a vaccine. Some people are saying that what we are seeing here is a repositioning for a postcovid world, the stocks that have done well during the lockdown, the ones that have been rallying aggressively, the Technology Sector at the forefront of that, but when you think about a world when we can go out and maybe start to resume our normal lives, the market is meant to be a discounting mechanism, so are we getting to that point . Ian you are right. One thing that is obvious is really for the first time we are starting to see people willing to buy the things that will do better afterwards. Beene covid index has consistently rising for the last month and a half. Stocks,covid sensitive things like transportation stocks, some of the gaming ones as well, those things are moving, cruise lines obviously, yesterday, but there is an alternative to the tech now for the first time. That is one of the reasons why the bond yields are very firm. You got down to. 5 on the 10. Ear, then we got up to. 77 it gives people an excuse to think about moving out of these growth stocks. Thatnemployment at 8. 4 , takes away one argument for the fed to carry on pumping and more money. The support from the fed has been holding the bond yields down. If they start to go up, if the yield curve starts steepening, steepen30 year yields against the fiveyears, then you see the banks performing. I think we will see more of the value growth rotation driving this, rather than just, you know, it is tesla, apple splits. Alix yesterday, it was the cruise lines for example, and then today in the s p it was capital one, discover, livenation, those are the top stocks that are outperforming, the second rung of the recovery trade. We have seen the value fake out a bazillion times. So how do you by value into the election . Ian we have said you cannot buy value until you see real signs of economic recovery coming through. I think we still feel that way. This combination of loose fiscal and loose money is a starting to give you more confidence about that. And the fall in the dollar tells you that that is taking place as well. So that is critical for this trade, as to whether the dollar carries on coming up, or if it carries on coming down. If it comes down, we will see more value trades unlocked on a global scale, not just in the u. S. And the election, it is a tricky environment. But that tends to be quite negative. Guy is a postcovid world inflationary . Lara it is way too early to say. Something that i would question isif this loose fiscal world actually going to continue. Theve been more bearish on prospect of getting a really constructive, productive nearterm move in fiscal stimulus. I think that going into the election, those kinds of negotiations it will only become more problematic. And i think it may take a deeper, Broader Market selloff to Push Congress to do that again. Thats not what i expect and one of the reasons i think we could end up with a more sluggish economic environment. I think that fiscal stimulus is really a question mark. Alix alix we have been waiting for the bottom to fall out because we did not get the stimulus renewed, we did not get the longerterm payroll production program. So i do not see the reaction. I know that there are pockets, right . I hear about the pockets, but when you look at credit card iending, consumer savings, do not see it and i do not understand why. Lara it sounds extraordinary, but we are still in early days. We just had the fiscal stimulus expire at the end of july. We still have a moratorium on evictions. We still have nonmonetary supports in place at we will run out in the next several months. In the north of the u. S. , we will see Outdoor Dining no longer be an option in a couple months, so you could see a new wave of restaurant closures or Small Business shutdowns. The economy has made and wedinary strides need to take comfort from that, but we still have a long way to go from here until we are back at our precovid levels. We cannot get a head to fix from the market. Se are talking about this a some sectors are doing well, others looking at significant declines coming on. Alix House Speaker nancy pelosi says the jobs report is highlighting the urgent need for action. Lara, thank you. Ian is sticking with us. This is bloomberg. Guy 17 minutes past the hour. Welcome back. This is the european close. Lets talk about europe. Ian is with us. Is it europes time to shine . Ian that is one of the discussions about where the fiscal policy is going. With america and the disappointment there, that is in contrast to the dramatic change. We have been talking for the last decade or more, guy, when did you think you would see a German Government announced a fiscal package of over 10 Percentage Points of gdp . I never thought i would see that. So there is a big, big change in behavior, fiscal behavior, that is taking place in the euro zone. And this week we had president macron say there would be another 100 billion euros of fiscal easing here. So i think that contrast is one reason we think it is time to sell the u. S. And move into european equities, because that fiscal easing is much more dramatic here in the euro zone. Alix do you need to make a distinction, though, of where . You mentioned germany, which has a good fiscal situation going, versus italy, which is still trying to get on its feet. How do you think about that . Ian the interesting thing, when you delve into the details in the European Equity markets, and you think there is this a value growth rotation, it is very clear that have the more upside. They are the more value driven areas. Remember, value versus growth, particularly in the euro zone is banks versus health care, rather than in the states where it is banks versus tech. So theve a lot of banks, periphery is a place to play if you want to make that rotation into value and use the upside. Remember, some of these core economies will be net contributors. Guy the ecb apparently has a problem with the euro at 1. 20, it might have been a rate of change argument or a level argument, so how can we be positive on europe without being positive on the euro, if the ecb has a problem here . Ian it means that they will have to provide more liquidity to keep the euro down. All they can do is try to keep the euro down by providing more liquidity and that should potentially take some of the pressure out. They have said they will keep Interest Rates low for a limited time. They can only talk about until they stump up cash to keep the liquidity flowing. Interestingly, we have seen Central Bank Balance sheets expanding more rapidly now in the euro zone, and actually japan as well, so i think we are seeing some covert action from Central Banks to trying to limit some of the appreciation against that weakening dollar. Alix i feel like the optimism around europe is it because of the lack of austerity, and the recovery fund. That is what makes this moment different than any time in the past 10 years, right . But are you 100 sure that is only done deal, are we accounting for a little bit too much . Ian it is not a done deal yet. We know in europe the political process sometimes gets hijacked. And unless there is an urgent need, then sometimes we see some backpedaling. But our sense is you have seen a mindset shift now. I think the european authorities have been taken to the point with it really has been more europe or less europe. This is her swansong, this is her six months of her presidency. Angela merkel wants to end her term on a high note for the eurozone project, and shaping the next decade of the eurozone project. So i think there is goodwill that will be extended to make sure that this continues. Guy events making life tricky for her. I want to find a quick question for me. The ftse 100 has been a big underperformer, even relative to europe. Does it play catch up . Ian if we see a rotation back into value, if we see inflation pick up on a global level, then the u. K. Might start to outperform. We are not there yet. But if we start to see more of these trends emerging, then i think given how cheap the u. K. Is in a global context, and how far it has underperformed in the last decade, there is an opportunity, as long as the u. K. Government plays its cards right around covid and brexit, for the u. K. To be a good catch up play, but probably more like 2021, rather than the latter part of 2020. Guy there are a fair amount of ifs. Thank you, ian harnett. We appreciate it. Have a great weekend. This is bloomberg. Alix from new york im alix , steel. Guy johnson in london. We have a look at the markets. Nasdaq off by almost 4 . But the s p 500 has a possible reason why, they say softbank was a nasdaq whale. They bought u. S. Equity derivatives that sort of soaked of the rally in big tech pullback on thursday. That would be interesting if it does pan out to be true. Guy we have been blaming robinhood for this, maybe it is not robinhood at all, maybe robinhood has been piggybacking on softbank. This is a strange conversation to have. But i do find it fascinating, if it is true. Tit is interesting because softbank, in some ways, you could argue is also responsible for the exuberance in Silicon Valley as well. Its kind of view was you scale fast, throw money at the start ups scale them really quickly, and that may have led to a mispricing of some of these businesses. And that, at a private level, may be they are doing the same thing at a public level here. Alix and what do you do . Guy maybe they expire in the wrong place. The ftse 100, down, not as much as u. S. Equity markets are. European banks are getting a bid. The european close is next. This is bloomberg. Guy almost done for the week in europe. The auction process to get through but largely the price action delivered over the last hour. Negative. We can blame our friends on the others of the atlantic. This is being derived out of the united states. In many ways europe is holding up. The Banking Sector is doing ok. Does your of equal value . Interesting to see how the trade makes its way through. 1. 26 , we600 is down spent most of the day in positive territory. Got off to a largely positive start this morning. On the week it does not look so grim as it does in the united states. Down 2 . The nasdaq was in correction territory a little bit earlier on from its highs. That is what we delivered, selling over the last two days but not as aggressive. Lets talk about where we are in terms of the currency market and the individual markets. Lets start off with the individual market. The ftse 100 down, the dax and the cac 40 all down. Underperformer, down a little bit less, relatively tasty gains on the downside not gains, losses. The cac 40 down 1. 2 . The currency market is a factor. The euro has been contributing in some ways to helping out on the upside for the European Equity market. We see the end of this dollar weakness that does provide some protection, should be on a currency basis for European Equity markets, but we are now trading at that 1. 18 level as we quickly back down off the 1. 20 level. It provides a catalyst for all of this as the dollar unwinds. The weakness turning into strength, may be a contributing factor to what we are seeing in terms of the equity market. Hard to understand the connecting forces. In terms of what we have seen on the sector story as well, lets break that down. What the grr function looks like, and add and on the others out of the atlantic, the Banking Sector is reasonably well bid, the Mining Sector reasonably well bid. We are seeing yield curve steepening and that should be positive for the Banking Sector. Also the sector you want to rotate into, maybe does the idea we are starting to get potentially into a post covid world and people may be starting, starting to think about what happens next. That takes me to my next story. What is happening in the travel sector. Virgin atlantic confirming the details of its 1. 2 billion rescue plan. It is an interesting deal but it fairlyme with substantial job losses as well. This is the structure of the recapitalization. Virgin putting money in. We have also seen a u. S. Hedge fund taking deferment. Delta airlines has a big stakeholder. Creditors taking a hit as well. I spoke exclusively to virgins ceo and started asking him about the recapitalization, the job losses and how different the business is going to be looking going forwa