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 forward. This is the sanctioning of our private only capitalization, which comes on top of our own cost savings and fleet deferral, which is worth hundreds of millions of pounds. It is a comprehensive package which has put Virgin Atlantic in a position to divide this pandemic and then thrive in the future and return to become profitable. It has come at a tremendous cost to our people, which you indicated. Go of aboutwe let 150 people today, the company would have shrunk by 46 to 47 precovid. That is just the stark reality that the Aviation Industry as a whole and Virgin Atlantic faces. Our job is always to respond to the situation, protect as many jobs as we can, but ensure the survival of Virgin Atlantic. Guy the survival, we are still talking about that. How solid of a foundation have you built . How significant is this recapitalization . How far will it get you . The transatlantic routes are still effectively closed. They represent 70 of your revenue. What will cash burn look like . How long will this last you . Shai all of us, people in scenariosre now doing on this predictive ability. And our minds we have set ourselves to deal with continued uncertainty on our major markets. ,lso the uks major market which is worse for the economy. 262 billion dollars. 262 million. With this injection of money coming in from the virgin group plus the cost cuts we have put into place should allow us to be in operation even if the demand from the u. S. And u. K. Across the atlantic is curtailed into the end of this year and the beginning of next. Guy when you expect demand to pick back up again . Are you grounded until we get a vaccine . Shai we are not. What you would have seen over the past few months is we have had a thriving cargo business. Now we are launching and have passengers on top of the cargo business. Whether it is los angeles, new , thishong kong, shanghai is how we are running the operation. We expect 25 of capacity to come online before the end of this year, and in our estimation it could be 50 next year. Hopefully a bit better, bit of uncertainty with the u. S. Elections, which impacts the opening of these borders. Guy given all of that, what is the path to profitability . When is the point at which you think this will put you back into the black, and how flexible do you think that number is . Taken,he actions we have we have been leading from the front. We have been the first to do many things. We suspended flying to china on february 1 this year. It looks like a long time ago. So much has happened. We continue to lead from the front. Fromdea recovery starts today for the aviation. On the long haul 2019, and50 of the our goal and aim assuming things become more normal once treatments and vaccine are possible and 2021, 2022 we would like to be profitable. It is a challenging goal. We do not determine if we have the right cost base. We have the right markets and partnerships. We are subject to demand and opening of those borders, of which it is so essential we introduce testing across the u. K. At the leadership position so flying can resume freely, and economic recovery of this country can take off. Guy what does that Testing Program look like . How would you like to see it work . Shai the ideal would be testing before departure, so people know when they arrive, especially for business travelers, when they arrive in their destination, they can go about it. We have to accept the beginning they can do a trial where we can do departure and upon arrival, which are now more rapid, cheaper, easier to facilitate, and not distracting from the of coursetesting, and at schools and other critical infrastructure. The idea would be to give confidence and get rid of quarantine safely. Guy lets talk about refunds. Look at your blogs, reading peoples comments, there still a lot of concern about the way refunds have not been paid. How big is the bill and when will those customers get the money back. Shai we increased our capacity tenfold in order for our ability to process an Unprecedented Demand on refunds. We are doing everything we can to improve the speed of our refunds and by the end of october and november we should have refunded everyone and returned back to a position where refunds are done within seven and 14 days. That is our goal. We are doing everything in our power to ensure that happens so we can provide services and Customer Care that our customers expect and demand of Virgin Atlantic. Guy how big is the bill . Shai it is over 200 Million Pounds we owe and refunds and our processing as quickly as we can. Guy youve mentioned throughout this conversation the importance you and the industry represent for the u. K. And the u. K. Economy. That youtill bitter did not get government money, you did not get government assistance the same way other air carriers did . You have been able to take advantage of the furlough schemes, but you have been treated differently. Respect the to rules set up by our government. I am not a bitter person. I am a forwardlooking, positive individual. I am proud of the fact we have been able to do what many impossible, which is a impossible, which is a private only position of Virgin Atlantic. What i like to see more support from our government to the Aviation Industry . Absolutely. Does it take back from our own achievement . No it does not. We are grateful for the furlough scheme. For consideration for government to continue and assess the situation guy coming up on bloomberg markets, we will talk to the dnc chairman at 3 00 eastern time. This is bloomberg. Healthy consolidation even though it is little bit painful. A lot of the selling seems to be technical. If you think about it, nothing has changed for apple, which was up in a huge way from monday to today. That is huge for the that is true for the other big tech stocks. We have the nasdaq 100 testing its 50 Day Moving Average, which is an important test of support. This happened earlier this year. It did not succeed. The big question is whether or not the 50 Day Moving Average will hold. If it does hold, we are likely to see some sort of a rebound rally, supporting the idea that could happen is the fact we do not have bond selling off. We do have bond selling off. Slower the yen slightly and credit is barely selling off at all. This is not a cross asset class panicked selloff. You can make the case that beneath the surface, bonds, again, and other assets suggest heads may prevail. Appreciate that alix appreciate that. Another one on country level. Argentina reaches a deal with 99 of its creditors. The new bonds will start trading after todays deal settlement. Joining us from going as eras is martin guzman, argentinas economy minister. Is a pleasure to talk about you. Before you were ready to reach a deal, you got it done, 99 . 1 hold out. What you do with those bonds. Good morning. N for us it was a very important step to reach this deal. 99 of our creditors. The remaining 1 , it was mostly a technical issue. There were some in europe that do not get a chance. We do not see that is a problem. We will continue working to 99 we consider massive acceptance. This is positive news for argentinas economy. Guy still in a very difficult place. We are going to see bonds read trading. I am wondering at what level you expect them to be trading and what kind of signal we can take away from that . The new bonds will start trading next week. What yield are you hoping for . Minister guzman that is a matter mostly for bondholders. We know stabilizing the economy is a process. It cannot be done from one day to the other. Was already suffering a deep crisis when covid19 hit. We hope our investors expectations become more positive day by day. This will take time and it will be a process. Higher thanto have a few months from today. Alix the yield question is important because you need a high enough yield to attract National Investors and foreign capital, but not a high enough yield where that will hurt you down the line. Some analysts are looking at 12 . What is the one you can manage that does both . Minister guzman at 12 , that would represent the cost of credit that for argentina would not be sustainable. Government will not need to Access International credit markets for a while. 12 from the viewpoint of the government is highyield for the prospects of accessing International Credit markets. It should be much lower but we are aware that will take time. Our investors were aware that was going to take time. Therell be no capital monetization payments for the first five years. We need to work on consistent Macro Economic management to increase that yield to levels we consider acceptable. That will take time. Going forward there will have to be a formal conversation with the imf. What kind of deal are you looking for . Is it a standby arrangement . Are you looking for an extended Fund Facility . What is your objective . Minister guzman the first objective is a program that works, one that helps argentina to stabilize the economy. All are on the table. We did not clarify when requested the program what the reality would be of the essence is the program is based on the premise for Macro Economic management and macro n themic policies tha package of fiscal and monetary in 2018f which the sba was based. In the context of a recession that program deepened the recession. We are moving forward to a different kind of program. We are having a constructive engagement with the imf, and it will be a complex process. Announced that we will send the program to the National Congress to be approved before we have the final bill. Alix you said you would not be asking the imf for more money. The question is what are all of the steps that have to go right for everything to work out . It is hard to rule out completely when youre in the middle of covid and the whole World Economy is a mess. Minister guzman there is massive uncertainty in the context of covid. Argentinas relationship with foreign debt has not gone well in the past. We have had a number of sovereign debt crises and the fact the country borrows in foreign currency has much to do with that. We have been focusing on developing the market. We have been experiencing a very positive dynamic in the process of developing the domestic capital markets. That is where the focus is now. We are not planning to ask for fresh money, extra financing in foreign currency. We consider that will not be prudent. Of course we will need financing. Our goal is to have financing and domestic currency over the next few years. Why should interNational Investors invest money in argentina . Why should International Companies invest money in argentina . You are putting very draconian limits on peoples ability to be flexible with their companies to hire and fire, to shut businesses down, to take money out of the country. That does not send a great message. How are you going to convince interNational Investors to put their money with you . Minister guzman first, because there are plenty of opportunities in argentina for investments. Now we are going through types of crises, and some of the measures that have been implemented do not constitute the structural characteristics of the economy. These are emergency measures. For instance, the capital controls yesterday, those were adopted in 2019 and times of High Economic anxiety, in the context of the currency run. We do not see those capital controls as a permanent measure. We want to move to a more reasonable system of capitalization. Necessary for attracting investments. We cannot do it in just one shot. We need to accommodate foreign reserves in order to be able to move to capital regulations. That takes time. That takes time, it takes fiscal policy in the direction of fiscal conciliation. It does not undermine the prospects of economic recovery. It takes consistent Macro Economic management, fiscal and monetary policies that are consistent, it takes growth in exports and growth in imports. That is not something we can do from one day to another. We will do it, and then the meantime, there plenty of opportunities in the agribusiness, energy, etc. We see the economy going in the right direction. We have done very important steps. These are times of uncertainty and were doing every step we know to stabilize the economy. Alix it was great to chat with you. Thank you so much for talking with us. We will check back in with you as we go through this. Martin guzman, argentinas economy minister. Happy friday. That wraps it up for us. Let seattle how unhappy we will be if you are a long tech investor. The nasdaq down 2. 3 . Well off the lows of the session. Guy it is a long weekend coming up. A lot of people will have taken a lot of risk off the table. We will see how they feel tuesday morning. Will this continue is a question. We will see a bit of expiry in the Options Market in the auctions market. Do we reset next week or are we seeing a systemic shift . Alix happy weekend. Lots of winners and lots of losers. Coming up, balance of power with david westin with austan goolsbee. This is bloomberg. David from bloombergs World Headquarters in new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. After the big selloff yesterday, we start with the markets again today with Abigail Doolittle to bring us uptodate on the latest. It is a selloff but not as bad as it was a few minutes ago. Forail coming off the lows certain. It does seem as though investors are trying to buy the dip. We will have to see how the afternoon plays out. What we are looking at is a two day decent selloff between the s p 500 and the nasdaq. On wednesday it was the best day in two months, yesterday the worst day. Lots of instability and volatility, especially for the mega caps and new york faang index. Down 6 after a massive close down yesterday. This has been the index that has been on fire all year from the march lows, up 130 . Big number. Apple up even more, up 160 . Tesla