Struggle with a contested election, and i dont think we with a delayed or contested election come i dont the queen of the interest to that. Guy unresolved contested election, and i dont think we know the answers to that. Guy unresolved issues. Services come in, and it is a miss. Just reinforcing the idea that maybe as the virus numbers continue to pick up in the United States, the Services Sector will feel that, and just reinforces the idea that may be of this trajectory continues lower, we will need more stimulus. That is looking a little bit more down right now. Alix and the number of tremulous of stimulus is much less likely now. The president ial election does remain too close to call, and a could stay that way for days. Joe biden leading in the Electoral College at the moment, taking the lead in michigan, wisconsin, and georgia. Going us is jeanne zaino of iona college. Where are we now . Jeanne we are at 238 for joe biden, 213 for President Trump. We are still waiting for several states, primarily wisconsin, michigan, pennsylvania. Those three blue wall states that President Trump very 2016 by lessin than 70,000, they are all up for grabs at this point. We also have still outstanding nevada, georgia, and north carolina. Forward, have pathways but those paths really do go through those three blue wall states. We have joe biden their own narrowly biden very narrowly in the lead in michigan and wisconsin, so we are still waiting for these counts to go forward. We dont expect results out of pennsylvania until friday. If you listen to the president , as i know you did last night he is saying that he is going to contest. He was not happy about the call in arizona made early by fox news, and later by several other organizations. We think he will contest there. He has also expressed frustration at pennsylvania. I think we are looking at litigation going forward. Guy which is going to muddy the water even further in terms of the timeline for getting a result. Jeanne zaino, thank you very much. Lets talk about what is happening in the senate, just as crucial. Democrats hopes of gaining a majority quickly fading after victory for several vulnerable republicans, raising the prospect of divided government. Joining us with more from washington, bloombergs laura davidson. Update us on where we stand. Laura six seats are still undecided. One is going into a runoff. Five right now are still being counted, and things are looking pretty good for republicans. In most of these states come others upwards of 90 of the vote in, and they are all tilted towards the republican candidates. Democrats were looking to flip a lot of these seats, and it does not look like they will get all of them or even some of them. One interesting one to watch right now, where votes are actively coming in, is the michigan seat. Gary peters, the democrat, defending that seat. The incumbent is still ahead of him, even as biden pulled ahead in the president ial tallies. That would be a win for republicans, a kind of unexpected win. Democrats were hoping to get that maine seats currently held by susan collins, and she has a sizable lead. That is when they have been in for a couple of years. We will see what happens. Alix like you said, we may not know one of the outcomes for the georgia races until january, so a huge question mark there. Thank you very much. For more on the uncertainty around the election and how csuites are thing about this is a man from wall street, ralph loss ralph tein, evercore coceo. It has been quite a 24 hour whiplash. What is wall street talking about today . Regardlesst of all, of the outcome of the president ial election, we are going to have divided government because the house will remain in the hands of the democrats. It looks highly probable that the senate will remain in the hands of the republicans. We will have either President Trump or Vice President biden as our president. I think what has happened today in the markets is an endorsement of divided government. I personally think if biden is trump, it president means a smaller stimulus package then we might have gotten preelection, when the republicans would have been more to help in the senate the president. If biden is elected, there will be support for a large package in the presidency and in the house, but my guess is the moree will revert to its roots andservative you package will be scaled back substantially, although still some stimulus. Sonali you have been a member of the administration before. The wife served as well in carter administration. When you look at the Democratic Party moving forward, what is your expectation . What comes next for the party . Sonali ralph the interesting thing is both parties will have lots of soulsearching, as they have been doing for the last few years. The Democratic Party, there is an active discussion certainly carried forward in this primary season, when you had more than 20 candidates, as to whether we are better off in National Politics putting forth leftcenter or centerleft candidates. That happens to be my view. I actually believe, had we put forward a true cardcarrying , weressive, the results wouldnt be sitting here hanging on a razors edge as to who wins right now. Probably inover President Trumps favor. So that debate will continue. In the republican party, if President Trump does lose, there will be an interesting debate between those who have become very strongly allied with his form of politics, which has not been particularly fiscally conservative or traditionally republican i any stretch of the imagination. And those who want to revert rootso the center right of the republican party, that will be challenging for the republicans because President Trump clearly is still extraordinarily popular within the party, so it is not clear to me that candidates who walk away and him or repudiate him his policies will be embraced by their party. Where, in a world because of gerrymandering in many of our states and certainly many congressional races, the election, the general and that tends to encourage people to go to the extremes rather than towards the center, which is an unfortunate thing. Market trying to parse all of this and figure it out. Good morning, by the way. Yesterday i was told by many Market Participants that divided government was bad. That as you say, it would not deliver the stimulus that the markets crave. That divideds government is good. Can you explain that flip to me . Is it simply that todays gains in the equity market are simply being driven by what is happening in the tech sector . Is there a bias just to go up . Does the market just want to go up when it comes to equities . Ralph i think that divided government probably does mean, as i said earlier, that stimulus will be smaller then it might otherwise have been, certainly preelection. Thatheres a lot more divided government also means. It also probably means less aggressive regulation. It probably means more plans, if on the tax biden is elected, that he wouldve had as they pertain to the Corporate Tax rate, Capital Gains rates. It is hard to imagine that the reversal of the trump tax cuts will be high on the agenda of Mitch Mcconnell and the senate republicans. So there are a lot of elements to divided government and the size of the stimulus packages, but one of those, and i would argue a relatively short term one. Sonali you have been such a big proponent of some of those taxation measures, especially Capital Gains. Without a blue sweep scenario, how do you expect some of those more aggressive measures to be passed . Do you expect mems of the party to still push hard on taxes on investors, on the wealthy, and on corporations . Ralph i think we are living in a world, and we have been for many years, where our appetite for Government Spending significantly exceeds our willingness to pay for it. To the end of the clinton administration, the share of gdp that went to federal taxes was about 19. 5 . This year it is around 16 . But the share of gdp going to spending has actually drifted up a bit. That is not a sustainable situation. Obviously point, and in the middle of a deep Unemployment Rate and recession. It is not the time to put your fiscal house in order. But at some point in the relatively near future, that has to happen. I dont see spending coming down that much, so we will probably wind up with some combination of modest spending cuts and some tax increases, and it will be very hard to find consensus on how that happens. Lisa if week alix if we continue in a divided government scenario and get stimulus that we were not expecting, we dont get it all, or if it is delayed, what is your expectation for the market in terms of Companies Going bankrupt, m a activity . What is going to be the repercussion in the Investment Banking world . That evenown view is with a pickup in the virus that we have seen over the last two impact weeks, that the on the economy will be nowhere in march,it was april, may. That we will figure out a way to balance Economic Activity continuing to some extent. Obviously there will be service restaurants, tourism that will be more affected. But i think the economy is in recovery mode. That will be helped by more fiscal stimulus. Hink we are in the reality alix it looks like you might have muted yourself, actually, if you can hear me. Are you with me . Ralph . No . Ok. We are going to get back to ralph. We work out the technical. We love remote working. Sstein, evercore coceo. Sonali basak staying with us. Scar . Term, then the short market is repricing the prospect of a blue wave. It is not impossible, but it hasnt happened yet. The thinking is without a democratic sweep, you can say goodbye to massive fiscal stimulus and infrastructure spending. The root inflation trade that had been building up, where we saw in ask petitions rising through inflation swaps, as well as the breakeven rate, that is unwinding right now. Even talk that the Federal Reserve may need to raise Interest Rates sooner than , keep in mind as well the Federal Reserve is starting its two day meeting today and will have a decision out tomorrow. U. S. Treasuries are in rally mode because we are also seeing the short treasuries trade unwind as well. Higher price means lower yield, and as a result, a flattening yield curve. There is a move lower at the very end of the chart. The 10 year yield went from 94 77. S points to again, the fomc will come out tomorrow, and traders are looking for jay powell to come in and buoy the markets. If by tomorrow there is still no winner declared, and that is very likely here, and jay powell somehow disappoints, he says it may be time to review Circuit Breaker levels, at least in the equity markets. The return of uncertainty means a shift to defensive big tech names. That means tech of all stripes gets a boost. You could see the stoxx index up by 2. 3 . Two. 3 . Ware up by in the previous five days, materials, industrials, and financials led gains. They are all up by at least 2. 6 . Heres another reason to be defensive right now, whether in stocks or in bonds. Ian shepherdson of pantheon economics points out that covid doesnt care about elections. We have seen how hospitalizations in swing states have been soaring, and of course, that has been the case in europe as well. Alix scarlet, things a lot. We really appreciate it. This is bloomberg. Ritika it is time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. Im ritika gupta. A big victory in california for gig economy giants. A hotly contested ballot measure will exempt them from considering their workers employees. Its outlook for the full year, at into signs that automakers are benefiting from strong car sales in china. Meanwhile, the amendment keeps hurting business in europe. Bmw thirdquarter sales beat estimates. Chinas suspension of ant groups 35 billiondollar ipo is just the beginning. Beijing wants to rein in the empire controlled by jack ma. Authorities plan to discourage lenders from working with ant, calling on ant to provide at least 30 of the funding for loans. That would render many of ants existing transactions noncompliant. That is your latest Bloomberg Business flash. Guy thank you very much, indeed. The tech rally picking up speed this morning. Still with us is Ralph Schlosstein of evercore, and bloombergs sonali basak. We have rates lower for longer, little or no regulation, the california vote, all of these being factored into the price action this morning. I question to you, do you see this being sustainable . Is tech the right place to be . Does divided government suit the tech sector . Ralph theres definitely a expert ly with the with the expedition that capital , and rates will not go up so year end selling on huge gains to capture this years apple gains rates wont occur. I do think that the one factor that you have also neglected to mention, which i think has a greater effect over the theterm, is the fact that conclusion i think most people are reaching is that the virus is going to be with us for lintr, and somewhat very irulent. Hat v Tech Companies have benefited from massive market share gains during this time. I would expect that to continue. So without having a tax reason to sell, i think these continue to be good things to hold. Sonali with prop 22 passing in california, and i know another thing relevant for you is you work a lot with these new economy companies, what does the prop 22 decision say about the future of big labor and where it goes from here . Clearly there is a tension. Ralph i think what we are areng is that young people massive supporters of the gig thatmy, and i would expect there is a whole range of things years willhe next 10 become more consequential. Not owning as many cars and utilizing Services Like lift pop uberber like lyft and in the same ways citi bikes are ind, less emphasis on being a particular locale to accomplish your work, and i think all of those things benefit large tech, and also reinforce a trend that the people are responsible for their issues, whether it is a 401k or savings or health care. A mine i may not completely agree with all of that, but that is certainly the trend in our country, the trend in terms of preferences of the next generations. I think the vote in california is very consistent with that. Alix the other part of the tech story was the burgeoning tech sector in china, and then the ant group ipo got scrapped, and that caused a lot of havoc in the last 24 hours. How you look at the u. S. Tech space versus the china tech space . If you were going to invest in china, how do you look at that now . Ralph i think we are fairly far down a path right now of having , whichhnology ecosystems two or three years ago, we might have said we are at the crossroads. Way down thatair twosroads, and leading to tech ecosystems. China is the less penetrated of onee today, and therefore would say that it now has over the short to mediumterm more growth opportunities. But over the long run, if the world continues as it has over the last year or two, we are going to have a reasonably intense battle of those two ecosystems, one led by the United States companies, and the other led by chinese companies. Guy how do you invest in that kind of environment . Just to come back to the election, the president has largely been in control of foreign policy, and the white house can make unilateral decisions and many of these kinds of spaces. Do you think biden is going to be significantly different were he to win the white house in these areas . Ralph i think a major and lasting effect of President Trump is that he has moved the on china and economic policy, particularly toward china, quite significantly from where it was four or six years ago. I think that is a permanent phenomenon for the foreseeable future, in both the republican and democratic parties. , think, in terms of investing five or six years ago when we were talking about large Tech Companies, we would be talking about the opportunity to today, wechina, and wont talk about that. Hand, their dominance in the current market will continue. Alix weve got to leave it there, but thanks for joining us on this very important day, Ralph Schlosstein of evercore. This is bloomberg. Guy live from london, im guy johnson. Alix steel is in new york. This is bloomberg surveillance. Lets get the latest on the vote. Joe biden leading the Electoral College count. Lets bring in bloombergs nick wadhams for more. Update us. When are we expecting more news that will update this map . Nick the Biden Campaign says wisconsin should be called later today. They say they have a clear path to victory here. The former Vice President is now ahead in michigan and wisconsin. They believe they also have arizona and nevada. They say pennsylvania is also swinging in their column is more absentee ballots are counted, and georgia is a tossup. He believed that in all of these battleground states, the president is winning. However, on the other side, you have the president and make both tweets this morning casting doubts about the validity of some of these votes that were being counted later because they were sent by mail. His campaign is also expressing confidence. Pennsylvania can go to the president , and they say arizona, which was previously joe bidensx in column, is going to go to the president. So you have a war of words right now where both sides are express and confidence, but looking at the numbers, it does appear that things are shifting in joe bidens direction. Alix thanks a lot. Joining us for more is nathan sheets, pgim fixed income chief economist