good morning from bloomberg middle east headquarters in dubai. your a break europe and top stories this morning. nasdaq futures slide after last week's selloff while shares in softbank plummet. and u.s. labor markets are closed for labor day.

china's exports expanded in august but imports tell a different story as shares of the chipmaker, smic dive. and u.k. officials are said to designed toa law override the brexit agreement. it has just gone 6:00 a.m. and that in london and dubai.m. in will christine lagarde said quietly on friday? squarely back is on the agenda. good morning. >> it certainly is back on the agenda. look at cable trading this morning. as you say, boris johnson playing hardball and the u.k. may introduce the bill that may dilute the agreement that they

have come up with which will more complicated. i'm interested in the hurdles -- state aid and fisheries -- eight hours dedicated to each of those pocket -- topics this week. the question is about the repositioning on tech. andill dig into that whether or not the market is beginning to turn order is it going to bifurcate more profoundly? today. markets are closed but the nasdaq 100 futures softer this morning down more than 1% after a selloff. as a my see down 18% in hong kong trading. it is a; -- semiconductor company.

crude under $40 a barrel. had comes as the kingdom cut their prices. and the pound under pressure. begin. the brexit talks softbank is reportedly sitting on $4 billion of trading day but they are tied to u.s. stocks which were clapboard in trading -- clobbered in trading. for more on this, we are joined by dani burger. softbank down more than 7%. almost 7.5%. .his is tied to the nasdaq softbank being unmasked. one of the reasons for this explosion in tech shares that we have gotten him a softbank spent billions of dollars betting on u.s. call options, bullish options tied to attack.

they are sitting on $4 billion reportedly tied to the gains. the problem is they are unrealized gains. they need to unwind deposition and unwind a quickly if they are not going to suffer losses. the nasdaq is down again this morning. -- this is aar risky bet. let's take you to the next charge. they bought a lot of call options. they are bullishly tight. here is the volume. bloomberg reports in august that softbank is opening up public equities. and the call volume explodes for u.s. stocks. according to goldman sachs over the last three weeks, $335 billion worth of call options were traded. the average is about three times less than that. it is clear this has made a huge impact on the market. a feedback loop that threatens

to unwind the gains of softbank. manus: thank you. lovely context there on the pushback against softbank. our guest toes is wei li -- our guest host is wei li. let us jump off on the softbank story. what stands out for me is the volume whichin causes distortion. is it getting harder to get real price discovery in tech? heard tohat we have explain some of the reasons behind the tech route last week .as some of the hedging

perspective, into option volume has been building up. tech is the favored area for many investors and institutional investors alike. thanhas accounted for more half of the overall inflows. way more than any other sector that investors could be looking u.s. asset allocation. it is a favorite destination. if you look at investors is viewed ash overweight by many investors. to your point about price discovery, even during volatility, we see the etf trading in an orderly

fashion and yet volume has been picking up. >> was this removal of froth, or was it the start of declines? the longer-term story for technology more broadly, and u.s. technology in stay.ular, is here to and will be here to stay will be the main beneficiary. if you look at the significant outperformance so far this year,

they are justified by their share of earnings growth in the latest earnings season. maybe it was run-up to quickly there isar, and now natural consolidation leading ousting. we remain in favor of technology in the long-term but the shorter term momentum could be steered by any number of catalysts given the nervousness in the market. manus: when you look at the flow augusty, you talk about just under $10 billion went into u.s. equities where if we think

back to march, it was nearly $30 billion. the flow had in already shown up for you in the data at blackrock. wei li: september is starting on a rocky footing because of the last few days of the market volatility. all of this was already slower gathering the asset and allocation into previously popular exposures like credit and gold. september continues on that appetites are waning because of exposure. previously popular exposures are gathering less momentum. unpopular exposures like emerging-market for example have seen greater inflows compared to previous months.

appear to be using this opportunity to a just their portfolios a little bit. investors may be trying to rebalance. [indiscernible] a bit of an adjustment going into september. , stay with us and we will dig more into those adjustments. let us get to the bloomberg first word news with laura wright. has overtaken brazil as a country with the second most cases of coronavirus. the nation has confirmed more than four point 2 million infections. it is the third worst country in terms of deaths. the u.k. is stepping up preparations in case a new trade deal is reached with the eu.

johnson is prepared to walk away versus compromising. the economy rebounded more than expected. after output expanded more than 9%. this figure is significantly above the forecast compiled by bloomberg. novak djokovic has been kicked out of the u.s. open in extraordinary fashion after the losing a game. he angrily smacked a ball behind me hitting an official in the throat. the chief umpire suspended the match. this is the end of his winning streak. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

thank you very much. china's exports expanded in august. we dig a little deeper into the trade picture from china. this is bloomberg. ♪

bloombergthis is daybreak: europe. i'm annmarie hordern. welcome and good morning. when you look at the futures market across the board, u.s. equities are closed but s&p 500 down 0.3%.sed 0 -- after last week's text light hitting the softbank in japan. manus: down a percent in japan.

-- up 33% this year. we are talking about the nasdaq wailed. is this a lash back in the unwinding of some of those positions. global trade tops the news. annmarie: under the microscope. of theter the crisis coronavirus, it still faces the threat of u.s.-china tensions and an uneven recovery. the world trade organization is without a leader. what are the key challenges that it faces? what does it actually do? >> trade between nations promotes free movement of goods and services across the globe. it is perhaps in its most

turbulent point in history. it has long been a center of controversy. the latest round of negotiations, the doha development agenda stalled in 2008 before a partial agreement in 2013. since then, little progress. some of the disputes spanned decades. the case over government funding of airbus is 16 years old. the u.s. has given a green light for terrorists on the eu. the eu.fs on the wto is the single worst trade deal ever made. >> over two years, the u.s. it meant theree -- main form for settling global trade disputes lost its ability to rule on new cases. man,elf-proclaimed tariff good news for president trump. roberto acevedo decided to

resign a year early. the organization needs a new leader at the time the global economy is also feeling the heat. recession, and the u.s. presidential election -- the stakes could not be higher. turning to chinese trade data -- experts continue to expand in august as the country's trading partners gradually resume business. wei li is still with us from blackrock. exports kept rebounding in august but special factors were in place like the surging ppe and work at home products. is it down to slow -- is it bound to slow? wei li: the renminbi has been quite strong especially versus a weaker dollar. in terms of the rebound in trade activity, i think we have seen

the initial bounce back from low levels but the recovery is uncertain. and a bit of a dislocation between the picture painted. given how quickly things are recovering. from here on, we do need is see a more sustained global recovery for the trade picture to continue climbing higher especially as we had into the u.s. elections. between the u.s. and china may also cloud the issues. we do think that when it comes to global asset allocation, you have to have both the china -- both china and the u.s. should put your eggs in multiple baskets. manus: one of the things we have

touched on on a number of occasions is the appeal of chinese government bonds. you talk about the flow of money. i want to get a sense of the 3% momentum in the chinese market or is that topping off? wei li: i heard a little bit of the question but the screen froze. i think manus, you are asking about china bonds. bonds are athina 3.2. the u.s. is at 0.7. a lot of clients are going to china bonds because the renminbi has been strong. chinese bonds are attractive from a yields perspective.

it is the fastest growing asset data we have seen. that speaks to the increasing recognition of china. manus: ok, and there is the spread to treasury, rich and plentiful. show, the u.s.e elections loom ever closer. poll,r day and another joe biden holds a 10 point lead over president trump. can it endure? ♪

annmarie: good morning.

this is bloomberg: daybreak europe. turning to u.s. politics, there are less than two months left before the election. joe biden holds a 10 point lead over the president according to a new cbs news poll. support for each candidate is getting more solid. we are joined by derek wallbank. break this down, where does the race stand today? traditional is the start to the end of the presidential campaign. this is when your general election voters who, have not attention, that much the people who are not that addicted to politics, start to tune in. that we are right now is joe biden looks like he has a durable lead.

nationally. it is not massive but it is definitely there. he has a lead that is somewhat tenuous and democrats don't necessarily feel comfortable with it right now. that is because a slight reversion among republican leaning voters could make this race close. donald trump does have plenty of paths to win renomination but they are not as expensive as they might have been before. one thing i'm watching is with just two months to go, you have to make spending priorities. you will see some of these campaigns start to cut off some of the past because they cannot pursue every single one of them. manus: tv why -- thank you very much. in terms of this narrative you are seeing, do you think these

50 days -- what do you think will top the agenda? we saw huge social unrest last week in the media. will that top the dollars in my pocket? >> the whole ballgame is the economy. because at the start of this year, donald trump was starting to run a campaign that basically said -- you might not like how he goes about everything but look at your 401(k), your retirement account, and the markets. covid-19 took a giant bite out of that. you still see that trump does well on polls on just economic issues. if the economy is still soft and if covid-19 is not on track so people feel it is going well -- and keep in mind, those are linked -- it will be hard to

make that argument. social unrest does not help. i think it all comes back to the economy. it becomes ane, difficult case to make. ok, thank you very much. i know there is a lot of discussion over the presiding offices. derek wallbank, bloomberg senior political editor. wei li is still with us. ist i'm going to ask you regardless of who steps into the white house, is it a reflation trade in the u.s. that i should position for? inflation is think underappreciated. see a lot of the stimulus feeding through though

there is a bit of a lag. we see unemployment rates coming down. pointingthe signs are towards inflation in the medium and long-term being somewhat underappreciated in the market. is a bigelection uncertainty factor as we can see -- holding investors back from allocating into u.s. equities. asset allocation pace has been slowing down significantly. that seems to be the case heading into september as well. many clients are telling us that election uncertainty is weighing on their minds. annmarie: we will have to leave it there. wei li from blackrock will stay with us. we will get her thoughts on the

ecb's policy coming up this thursday. euro-dollar this morning trading at 118.35.

annmarie: good morning. from bloomberg european headquarters in london, i'm an recorder. these are today's top stories. the tech slide continues. nasdaq 100 futures continue to tip while shares in software continue to plummet. china's trade divergence. exports expand in august but imports tell a different story

while tensions in the us are back in focus on reports that washington blacklists smic. boris johnson playing hardball. onmade introduce a new law talks restarting in london this week. good morning. a big week for your when you look at the fact that we have christine lagarde on thursday. will she verbally intervene? and then the brexit negotiations back on the table. eight hours for each session on state aid and fisheries. tous: and they are preparing see some legislation to override the agreement they originally did. euro falls five days and a row. cable fault four days in a row. it is driven by the dollar. which is your bigger fx risk? a cap on euro-dollar and a break on the cable?

that is the debate for me. annmarie: i know you are very interested in these currency wars. the bigger question needs to be -- will this be a dollar weakness story? brexit --. will it push the currencies lower? manus: one narrative that will take form. futures are opened. day three of the destruction of value. softbank bid up in position. they bit of their position on tech. onrefore, you have an attack softbank coming through this morning. 835. -- 1.1 will lagarde cap into the rhetoric in terms of capping off the move? boris johnson ready to walk away. as there isby 1.5%

a little bit of concern over the demand side of the equation. mr. novak saying we are not going to get back to the pre-covid levels. the cable screams to me from where i come from -- no surrender. let's take a look at what will be watching out for. the brexit talks are front and center. they begin tomorrow with face-to-face discussions between the u.k. and the eu in london. tomorrow, we will get second-quarter gdp futures for the euro area. and we will look at whether the recovery is stalling as the cases surge in the region. annmarie: and on thursday, it is the ecb rate decision. we are looking for new forecast for growth and inflation which may offer clues the next steps the central bank will take. and we have a press briefing from christine lagarde to follow. wei li from blackrock is still

with us. that thet lagarde says market is waiting on. will she talked down the euro? actionsno tangible are expected on thursday. the focus will be on what is communicated. it was our idiot knowledged the euro strength so we could see a potential nod there. broadly, if you think about what central banks can do, the ecb compares to the fed and the boe. they have less room to maneuver. coulddown the line they talk of the asset purchase a little bit more. they are more out of ammunition compared to their counterparts. it depends on how much lower the

euro could go. when it comes to european assets, we have been overweight but clients are increasingly inclined to come to us asking --how do we play this? strength to euro what we can select for asset exposure. that means we are domestically forecast -- that means we are domestically focused. manus: does that play out in any way in the vae versus gwth debate? whene say to be discerning we go to this rotation. if you look at where the value lies in the indices, it is europe and japan in terms of their exposure. they are nearly 50% value exposed in europe and japan versus 45% in the u.s. and em.

is there any of that narrative coming into play? seen a i think we have few around this rotation into value and the final turnaround after years. it is still too early to say that the value will come around. apply a quality future to our allocation. another way to play this growth rebound is through true value which is too early to call. looking at the rebounds in terms of what we have seen so far and what we are heading towards. that seems to be a more favored way to play these rebounds. i think the jury is still out.

especially given the fact that the rates are still low. the value will fall and the curve will be been. how much more can it go? we are neutral on value. we are more in favor of quality ventures. a voice of temperance, finally, in the growth versus value. the narrative. there is a lot to go before you can invoke the turnaround. to italy, the economy will rebound faster than expected in the third quarter according to the finance minister. he says output is expanding by more than 9.5% forecast in the government's latest plan. returning to pre-covid levels is

not expected until 2022. the measures we have taken so far have been decisive in the economic impact on the crisis and preserving our productive capacity and jobs. but the recovery and resilience has to do with the transformation of the italian economy on the line of innovation and social cohesion. we will focus the plan on aimedment and investment at enhancing our growth potential. int will be investment innovation like broadband, cloud, supercomputing, and the european projects of common interest like batteries,

microelectronics. we would support the private sector to invest more in innovation and to support the --cess of production reduction of carbon emissions. we will boost our infrastructure -- material infrastructure. lot inwill invest a human capital -- education and research. debt is a big concern for investors. you mentioned in your speech a new mechanism to reduce the debt-gdp ratio in a solid and sustainable way. could you give us details? and how much you think it could lead to in terms of reduction? september, weof

presented our fiscal documents which will have not only a three-year horizon but also a longer-term horizon where we will define the project rate of the projection of our plan. we will have medium-term fiscal measures and also thanks to the impact on growth and growth potential of the productive investment that we will deploy with our next generation plan. >> your government has mentioned and 8% estimate for gdp contraction this year. now, what do you think the true ,umber will be, a percent 8%-10%? april, as we said already it will be revised downward.

that is contrary to other forecasts that have predicted a very significant decrease of gdp . two figures, thanks to the positive around -- positive rebound we are seeing in the third quarter, we expect a one figure reduction in gdp for next year. next year, we will have a positive increase. we have not yet defined our forecast. you will see soon. in 2022, we will be able to arrive to our precrisis gdp number. strictest in europe, you're locked down. these publict are finances sustainable only because of the european central

bank? policy of they ecb is extremely positive. but, it has to be taken into account also some fundamentals of the italian economy. to make our debt fully sustainable. i also have to say that we are seeing, even in this difficult moment of the crisis, for many governmentce this entered into force, a positive trend of fiscal revenue. we had a significant downward revision of our deficits both for 2019 and one of the factors that is making us improve our forecast for the gdp includes the recent data on the tax revenue which is positive. we have a number of elements which give us a condition to

divine the trajectory that will --ther increase and proof and improve our public debt. the finance minister of italy speaking exclusively to bloomberg's john. boris johnson gambled on no deal. the u.k. steps up preparations for this weeks brexit trade talks to fail. up next, live to brussels. this is bloomberg. ♪

manus: this is bloomberg daybreak: europe. i'm manus cranny. let us get you the first word news with laura wright. india has overtaken

brazil as the country with the second cases of coronavirus. the nation has confirmed more than 4.2 million infections. it is also the third worst country in terms of deaths. china's exports kept expanding in august. out rose -- output rose 9.4%. business is picked up with major trading partners. exports expected to fall. novak djokovic has been kicked out of the you in extraordinary fashion. after losing a game, he angrily smacked a ball behind him hitting an official in the throat prompting the chief umpire to disqualify him from the match. it ends his winning streak. the u.k. is stepping up preparations for brexit trade talks to veil as time runs out for reaching a deal. boris johnson will tell the

european union he is willing to walk away rather than compromise on the core principles of brexit. dominic rob says this week's talks are a moment of reckoning. >> it is a wake-up call for the eu. there are only two points holding us back but we cannot accept that the eu controls our laws. that is the reason we are leaving. goes into free trade negotiations with the eu on that basis. annmarie: dominic rob there. maria tadeo is in brussels for us. what is the state of play? seeing ist you are that we still have the same sticking points we had in the past. that has to do with fisheries and state a but also the tone of the negotiations has shifted. we are seeing a more aggressive tone on the side of the u.k. with the idea that new

legislation could be introduced to water down some elements of the deal. well -- thisgone has not gone down well in brussels. the irish foreign minister binks it is not a good idea. there is a time pressure. we are looking potentially at a deadline of october 15. what is wants to see the contingency plan. if there is a no deal, if the transition carry euro is not extended, you are leaving on wto terms. businesses want to see how exactly you are going to manage that. good to see you. what is the possibility that this could be sidelined? the bandwidth negotiations are down to two stumbling blocks and politics will win out, one day

-- won't today? maria: the lead in the negotiations for a year and who does the technical work going into this could be sidelined by the european governments to get this deal. the reality is, we see this many he is not that powerful. wants him there and he negotiates on the perimeter set out by european governments. he also have reaction from the french minister for european affairs saying this is not true. that he continues to be the person that handles the negotiations and will continue to do so. what is key is the european council meeting and the european leaders october 15. that is being pointed at as a potential deadline to see if the

politics can change to get the deal over the line. manus: maria tadeo tracking the brexit negotiations this week from brussels. wei li from blackrock is our guest. the flow of money flowing into the equities -- perhaps markets have already priced a worst-case scenario? assets appetite for u.k. has been very neutral compared to the broader appetite for risk on. i think a lot of that had to do with brexit uncertainty and also the fact that the u.k. economy had been coming through slower because of the management of the covid crisis. cable has dropped compared to a few days ago but it had been so resilient. part of it is the dollar weakness story that part of it

is currency not yet pricing in the potential situation of the brexit talks. going into the negotiations with harder posturing is expected but we do expect volatility ahead. -- appetite is not that strong. they are more domestically focused. you for: wei li, thank joining us this morning. ahead of ishares strategy at blackrock. the north stream to pipeline is at risk. this is bloomberg. ♪

manus: this is bloomberg daybreak: europe. and record in his alongside me. nordny support for the stream 2 gas pipeline is at risk. the foreign minister has become the first member of angela merkel's cabinet to make the russian linked to the poisoning of a kremlin leader. this is real angst. matt miller is our berlin anchor. what are the details? good to see you. you should join the show more often. i'm happy to do it especially on a story like this. i've been following this for many years. the u.s. is firmly opposed to this pipeline that germany is

helping the russians along with a number of private companies build to get gas from the russian ground into the german economy. angela merkel has been very supportive of this and she has also been very a opposed to linking what she says is a commercial endeavor to political poisoning of the -- the alleged poisoning as well as the russians taking crimea. there has been a number of issues that have pushed her but she really has not botched. she does not budget very much. you can see what her foreign minister said to a newspaper -- i certainly hope that the russians do not force us to change our stance. this is the first time we have heard anything like this from her cabinet. ofhave heard a little bit

concern about nord stream 2 from coalition lawmakers most notably the person running for chairmanship of the party. he may want to set himself apart from the rest of the party. he also runs the foreign affairs committee. that is why it is important what he says. otherwise, we have seen pretty much everyone in line with angela merkel on this issue and very much.t do 180's i was writing to a bloomberg reporter and we have come to the conclusion that she really, in her long career, has 0 degree almost any 18 turnarounds with the exception of the nuclear issue. annmarie: thank you so much for that. matt miller joining us. some analysts do not even think

europe needs that gas pipeline now. we will be watching for those developments. the european open is up next. we see divergence in futures. u.s. equity futures to the downside. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker,

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for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) anna: good morning. welcome to bloomberg markets. i'm anna edwards, live in london, alongside matt miller in berlin. matt: today, the markets say it is not over yet. nasdaq futures point to more losses in u.s. tech stocks, but europe looks set for gains, with ftse futures outperforming. the cash