1. 5 ct for the s p tumbled and the nasdaq hit harder in a couple of minutes. Treasuries and the yen gain. Money floods into safe hane assets it is a president s positive test acts as a wakeup call for markets. Good morning. Just under an hour away from 60 minutes away from the start of cash and equity trading in europe. We do see drops more than 1 in European EquityIndex Futures. We were looking at some positive numbers just an hour ago. Take a look at the u. S. Futures. Down with the nasdaq underperforming. 1. 9 . And dow off anna we see reaction to these stunning headlines that have taken the markets by storm. Gripped the market. Dictating many over the moves that were seeing. Beware many of the markets in asia are closed. What we have open in asia is japan, australia and indonesia. We saw instant negative reaction. Nasdaq futures down by as much as 202 in the initial place where we saw the news breaking. We do see negative riskoff reaction. We see money going into the dollar and coming out of the market and putting money into software and bonds and coming out of oil. Oil prices down by 3. 5 this hour. Back below 40 an a barrel. Lets get to the start of this story, lets get to the health to have president to have United States and the first lady. Donald trump and his wife melania have tested positive for covid19. The u. S. President tweeted that the pair would quarantine immediately. Stocks in equity futures slumped following the announcement as we just discussed. You can see on our screen the tweet that President Trump put out saying we will get through this together. Lets get to our White House Reporter jordan fabian who joins us from washington. Good to get you on the program in the early hours as this story is developing. What do we know about the health to have president at this point . Reporter right now, we know he has tested positive for the virus. The white house has released a memo saying he and the first lady who also tested positive are conventionalsing in the white house. The white house physician said they are both in decent condition right now. Other than that, we dont know much. We dont know if the president is showing symptoms. We reported earlier that his Senior Advisor hope hicks tested positive. She was displaying symptoms. There is possibly a decent sized outbreak here at the white house. Matt what do you think this does to business at the white house . Is the president , you know, asymptomatic and therefore able to work through this . Do they shut down the west wing temporarily . Does everybody else continue to work while the president conventional eses . Conventionalses . Reporter the president has continued working, but has scrapped his travel plans. He is going to try to work behind the scenes. This is going to have a big impact on talks over a new round of stimulus and the travel schedule for campaign. The condition of the support ominee, amy Coney Barrett. Anna we just saw a tweet from mike pence. He is saying his thoughts are the wth. Karen and i send our thoughts and prayers to President Trump and First Lady Melania Trump. We pray for a full and swift recovery. Heart felt words from the Vice President of course, mike pence. This puts him, as we were just discussing, the president seems to be well at the moment and in the first instance, he wants to doing n doing what he is but mike pence would be at the foreif the president had to take time out with this virus. Reporter thats right. Right now the president says he will continue doing his duties but if he were to fall ill enough, that would maybe trigger that happening. The Vice President taking over. Were not at that stage yet. We dont know if we are going to get to that stage but it is a possibility. Matt White House Reporter jordan fabian will be im assuming now up all night. Remember in the u. S. , it is only 2 00 in the morning as this news breaks. Joining us to talk more about this developing story and the Market Reaction is our Senior Editor for markets in new york. John, thanks for joining us. We saw a big drop in markets as soon as this news crossed. How do you explain that . Is it a concern that there will be a change in policy . Is it concern about confidence this morning . Reporter well, the initial reaction is simply shock. In a liquid market. I hate to use one of the oldest clishas in the book which is often very cliches in the book which is unhelpful, one that markets dislike, it ratchets up uncertainty very greatly indeed. Personally i think the fall in s p futures could have been greater. Were still the last time i lowerd my screen, we were than the day on tuesdays trading. Gold up half a percentage point since this move. There is still a lot further that markets could go. One thing that i do think one of the next questions that is being posed by a number of people is the fact that joe biden, who is three years older than President Trump was sharing a stage with him not so long ago. And so his Health Raises an issue. If you look at prediction markets, you can see that the odds of both joe biden and Kamala Harris being elected president next month have doubled in the last hour. So obviously some very profound, rather alarming thoughts are out there. One or two other points i would like to make. Chance of really major relief of lockdown measures has to be much lower now than it was before. With this kind of shocking news ehind it, the impetus in favor of opening the economy has to be very seriously jolted backwards and that is not good for the shortterm outlook for the economy. One other important question is will there be some attempt to create yet another october surprise . We have had more surprises than we wanted in the last two months already. But does this mean a shift towards something on the chinese front in the next few weeks . Is there an attempt to change the subject yet again, which i have seen the chatter among the people i talked about, that is raising an issue as well. Anna plenty of interesting themes as the markets peck up on then when it comes to geopolitics. Everybody will be waiting for the medical bulletins around the health of the president himself and the first lady and lists of people he has been in contact with. How close did he get to all of them. I wonder about the conversations around washington. You said this might mean lockdown restrictions are not lifted any more quickly than anticipated and perhaps we see further lockdown methods introduced. What about the fiscal side of things . Things start to head south very quickly. I wonder if that still exists. Reporter that is a very interesting point. I dont want to be saying anything flippant about a 74yearold man who has just caught covid but if donald trump himself is not involved in any of those negotiations that possibly improves the chances of some kind of a deal being thrashed out and it probably does increase the pressure. Youre right. On republican senators to agree at least something. It becomes much politically harder to say this is not really a problem, that it is a panic, that it is a hoax and so on. Even though it is only one human being, it is the president of the u. S. I expect you may be right. This does increase the chances on the margin that we get some kind of a fiscal deal. We were expecting to have to talk about we have the unemployment thing coming in, in a matter of hours. That will affect that equation as well. It doesnt seem so important now but that is quite an important element of that equation about what will happen to fiscal policy. Anna well look to see whether the jobs number can cut through what were talking about now, what were talking about now, the health to have president of the United States. You mentioned the geopolitics. What were you referring to there . You think perhaps this could be seen as you think there could be some in washington who might like to take the focus off this and take the focus off the virus in general and put the focus it started . He reporter precisely. That is one of the arguments that came up there. China barely came up in the debate, which was a horrible mess. It is one of the themes that the president has great support on from across the country, something which helps his chances of victory if people are thinking about it. It does increase the chances of something aggressive or notable happening on that front there. Another thing yet again to consider, it is only a matter of nths since Boris Johnson was very sick. You never know exactly how political Public Opinion is going to move on this. Ones natural reaction when hearing a 74yearold man has got covid is to feel sympathy for them. Lets see. It is possible this will change politics in ways we still havent thought through yet. Matt as we said earlier, it is 2 00 in the morning where you are. The markets are not going to open for another seven hours. How do you expect this to play out on the new york stock change and the coming week reporter my best guess is it wont be that big of a deal. There have been a series of events in the hours between now and then to give people omething else to grab hold of. The unemployment data which everybody is geared up for. I think youll certainly, it is amazing if you didnt see the vix so sharply. Volatility, i would imagine youll see more of a move towards the more conservative market. Which will then mean greater strength for stocks trading today, or yesterday, im still in the small hours of the morning in new york. In thursdays trading you have very Strong Performance for the fangs again. The large internet stocks which is fundamentally a defensive play and i would imagine you would probably see more of that than you would expect. The theme of being more defensive, to do very much better than others in the foreseeable future. It is a very interesting question. Rather than the stock market is the dollar. Which is appears to be entering into a downdraft. Normally it gains when people are really worried about things going on in the states. Because it is such a safe haven currency. The classic example is back in 2011 when you had the crisis in congress and the standard of gold downgrade, treasuries Credit Rating and the response in the rest of the world was to pour money into treasuries and the dollar even though treasuries have just graded. It will be to see whether the dollar is treated as a safe haven in this situation or whether you see people regarding the yen or gold as more of a safe hane. I there is some concern, think a serious weakening in the dollar. We have seen that in some initial reaction. A serious weakening would show genuine shaking of confidence in the u. S. In a way that we havent seen in many years. Anna interesting point. For the moment the movement into the dollar is in about the. The dollar acting as a haven. The yen more so. There is some movement into the dollar. Gold sold off initially but has made some moves to the upside. Well watch the typical havens with interest. Thank you for your time this morning. Very early in the morning or late for you. Lets get some further reaction from market participants. Dani burger is with us for that. We see the kneejerk reaction. The move into havens is very clear. What caught your eyes . Ive been talking with triggers and strategists all morning. One thing we have to keep in mind is right now were heading towards the end of the Asian Session where volumes are extremely light with so many markets closed on holiday. This is going to make the markets more volatile at this point. We are seeing u. S. Futures heading lower. We have been talking about it this morning. Some of the other Market Reactions are not as extreme. Slight gain. One thing that stood out to me, an analyst at nomura told me there might be some algo buying relating to these headlines. The fast type of investors might be interpreting this. Going forward it is unclear how this is going shake out for both the market and the president ial race given the fact we dont know how severe President Trumps reaction to his positive coronavirus testing will be. Another strongworded commentary from steven innes saying that rumors have been kicking around all morning, now that the cat is out of the bag, im assuming biden moves big in the polls market. From 60 to 90 of a certain democratic presidency, trump is all but toast. This is sort to sentment im hearing. This this is going to shift things in bidens favor. Also saying that this administration is likely to take strong steps early, likely against china. That could create a series of shocks after shock. Volatility will be expensive due to this. Strategists and investors getting themselves ready for if anything more volatility because of this news. Anna, matt . Matt absolutely. Thanks very much for that. Well be hearing reaction from all corners over the globe. Both friends and foes today. We need to keep all of that in mind. Those relationships are so important in the political picture as well. Lets get first word news. We go to laura right in london. Reporter thanks, matt. President trump has tested positive for covid19. He tweeted that he and the first lady both have the virus and will isolate. It is not certain how he contracted the virus but it mes after a close i had a aide, hope hicks contracted the virus. His doctor expects him to continue carrying out his duties. He said the president and first lady will remain at the white house where the medical unit will maintain a individual lant watch. He said they will update on any development. It is unclear how President Trumps diagnosis will impact he campaign. It will make it harder for the president to shift the campaign away from the virus to other topics such as racial unrest across the country. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thanks very much. Our top story, the only story this morning really. President trump and First Lady Melania Trump have both tested positive for coronavirus. Futures have fallen off a cliff after the president made the announcement himself on twitter. His physician at the moment said they are both well. That is good news. Everybody wishes them well. Were joined by mark franklin. We were just talking through with some of our colleagues. Some of the market implications of what were hearing. Your first assessment how this from an investment perspective how this shifts your thinking as we head to government november. Reporter that is a good question. You have to recognize you get a kneejerk reaction in this the spike of volatility. We would take a pause an reflect from what else is going on. We sense a narrowing of the gap the republicans and democrats for the fiscal package that could do a lot to get money to households. Any positive news on that front as an example would help to mitigate some of the fears that have crept into markets this morning. Matt assuming the president recovers from this just fine, he is a member of course of a lot of high risk groups but he is surrounded by the best medical professionals youd hope, in the world. Youd hope he is able to get some sleep at this point. How do you think this affects the election . Does this bring more people to his corner out of crrn for his health or does it concern for his selt or hurt him in terms of his handling of the virus in general . Some of the opinion polls that have been conducted, it has been a long time that the polls have projected they have less confidence in President Trump in than of handling the cries biden. Where they see they have more confidence in President Trump is the handling of the economy. I think that is critical. If there is a tail wind going into the election on november 3 in terms of the economy and jobs and public sentiment, they feel they have buffers, their jobs are more secure than they were six months ago that is a dominant factor when people decide who they are going to vote for. Anna where do you see the avens . Uncertainty would seem to be high. The dollar has been a haven through the pandemic. It was a haven when market ension was in the u. S. Do you still see the dollar playing that role through this . Reporter you have to evolve your thinking. Havens are a way to diversify away from risk assets. Hedge back the risk youre running in portfolios. Government bonds, the yen, the dollar still look like they give you that diversification. Once they are giving you a negative correlation, the size of the move is not enough to compensate for the losses on your equity portfolio. What were looking for is signs of an extreme negative provision. I would concur the dollar looks in shortterm because a large short position has been built up in the dollar particularly against the euro. There is the potential for sprint effect where the dollar naps back. Matt which assets does that affect . Foreign investors are not simply buying green backs. They do it through investments and treasuries and other fixed income. Which assets does that hit the hardest . Obviously the safest way is o target the dollar. You dont want to be exposed to asset classes. Ne classic example is not. The more cyclical commodities such as oil or Industrial Metals will be sensitive to the downside for any slivers safe havens that we have seen. Anna on gold, the kneejerk eaction has reflected the lack of liquidity in other assets, patches of risk aversion. We do see gold making gains now. We expect gold to be a place to ide from this. Gold there are two factors. One is the dollar and hence we saw the snap drop in gold prices. The other is real rates. Basically nominal Government Bond yields mine us the inflation. If you see all other things equal, Inflation Expectations plummet. If they dont fall, that means yields rise. It is a modest term buying the low into Government Bonds. We need to watch that. Gold is interesting as a diversifier in a period of uncertainty that we now have. Matt anna thanks so much for joining us. Mark franklin. Reflect on the investment s