disentangle the u.s. from china. he also suggests heavy taxes for american companies that create jobs overseas. pound pain. sterling slides as boris johnson says he is prepared to walk away from the e.u. without a brexit deal. the u.k.'s chief brexit negotiator calls for realism from brussels ahead of today's trade talks. and angela merkel considers taking action against nord stream 2 after the poisoning of putin critic alexei navalny. while speaking exclusively to bloomberg, poland's prime minister says it's a no-brainer. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. a number of things going on. as e.u.mr. dombrosky's trade commissioner. we look at tesla, down 10% premarket, and we have a lot going on with trade. tom: there is only one topic for the markets, and it is indicated by tesla, down 20 -- down 10%,

down 24% from the peak, and apple as well. this is been a rolling story there is noday and other topic on wall street. futures down 1.7% and deteriorating. we will be looking at that all morning. francine: let's get to first word news with leigh-ann gerrans. bloomberg has learned president trump has discussed putting up $100 million of his own fortune for his reelection campaign. it would be unprecedented for an incumbent president putting up his own money to win a second term. joe budden's campaign and other democratic entities have been raising more money than the trump campaign in recent months. -- joe biden's campaign and other democratic entities have

been raising more money than the trump campaign in bismuth. theriticized joe biden for decision that the fda, which would approve fx income is operating free of political pressure. biden is demanding transparency from the government while it studies the vaccines. president trump is vowing to sharply scale back u.s. economic ties with china, threatening to prevent companies who do business with china from winning federal contracts. the president also said that if joe biden wins the election, china would "own the u.s.." china is proposing global data for u.s. moves on tiktok. proposal toed a prevent foreign governments from acquiring data stored locally. the u.s. has accused services ofe tiktok and wechat sharing information with the chinese government. global news 24 hours a day, on

air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? tom? tom: thank you so much. equities, bonds, currencies, commodities. futures -10, but dow and stx futures have been sliding. the nasdaq 100 off the apple/tesla thing, which will explain through the morning, down a solid 1.5%. the fix -- the vix shows the 1.50%, 32.24 on the vix. turkish lira crushed today. fromur days, it has gone 7.40 out near 7.50. sayinge: bonds are not much because treasury yields are falling, but it is clear that

european stocks are dropping after president trump stoke tensions with china. technology shares leading losses. the dollar index on gold were little changed but there is a lot going on when it comes to pound. yesterday was a big move, and you can see sterling at 1.3104. this is again, prime minister johnson saying that actually he is ok with not having an e.u. trade deal. that is sending a bit of fx movement in haywire. president trump has vowed to sharply scale back economic times in china by punishing american companies who outsourced to china. he spoke yesterday. our. trump: we will relent reliance on china once and for all, whether it is the coupling or putting -- decoupling or putting in massive terrace as i have done. if they cannot do it here, let them pay a big tax to build it someplace else and send it into our country. we will prohibit federal

contracts from companies that outsource to china. francine: joining us now is bloomberg's chief asia correspondent, enda curran. how will they take this? enda: certainly they will respond, francine. what we had from president trump is specific details that i don't think we have had before. american tax credits to get jobs back to america. threatening companies that do business in china. remember, there is a lot at stake here. u.s. exports to china, that is almost one million u.s. jobs. employ aroundies 100 million american workers. the stakes are really high. tom: let me do a scientific study for you. i just moves, and you buy all

that new stuff when you move. of that stuff that i bought, all that garbage in your house, is made in china. could that change? enda: that is the big question, tom. there is a competitive advantage for china, that it has been able to manufacture at a cheaper cost and export to consuming nations that buy those goods at a cheaper price than they otherwise would have. the big question comes with the automation and technology -- will that come at a cheaper cost? would even create jobs -- would it even create jobs, given that we are in an era of automation? when it comes to the supply chain story, and a lot of people you speak to say that companies are assessing manufacturing out of china and we know that some governments are encouraging -- japan, for example. i think the supply chain story,

i think both america and the rest of the world will be buying made in china for a while yet. francine: do chinese officials expect to have an easier time, as it were, if it was joe biden in the white house? and a code that is really the big question. as you know, -- enda: that is really the big question, francine. a tougher, more hawkish approach to china -- on the chinese side, i think they are girding for a tougher approach regarding who wins. china's leadership once the economy to become more self-reliant. not a newhat is policy, but they are accelerating efforts to get more demand generated by consumers at home. on the flipside, they want to make more of their technology and not rely on technology from elsewhere, for example, the u.s. on the chinese side, they have already signaled a fairly

important policy shift in recent months. that is feeding into the idea that they are expecting the u.s. to continue its hawkish decoupling approach with china regardless of who wins the election. francine: -- tom: we greatly appreciate that this morning. let us look at tesla and apple. they are not part of global wall street. this is a huge, huge deal for returning wall street in america. 23%, 24%n 9%, down from the peak. apple reaching that to trillion dollar point, down 2.7%. this bears extreme scrutiny through the morning, based off the unwind of the softbank derivative strategy. they made roughly 100%, according to the ft, off a multibillion-dollar derivative , aategy run out of abu dhabi really successful trade, and we will talk with andrew sheets about this because, as you

unwind a trade, there is rehab and hedging going on across -- edging and hedging going on. executive vice president with a new title. that will be important. stay with us. nasdaq futures -1.5%. this is bloomberg. ♪

."m: "bloomberg surveillance good morning, everyone. one of the stories they discovered yesterday was breaking not only into the weekend but last week.

softbank, with an extraordinary derivative strategy. we are thrilled to bring you a gentleman better than good in the mathematics of the derivatives business, and that is andrew sheets of morgan stanley. i don't want to get you in trouble with the general counsel of morgan stanley, but i want to start with the trade -- the gamma whale company nasdaq will, whatever you want to call it. the nasdaqa whale, whale, whatever you want to call it. what does the global market do with someone that intrusive? andrew: good morning, tom. you know, i think when we look at what is going on in the nasdaq, to me it is actually about taking a step back and realizing or kind of appreciating that this is a very expensive, very well owned part of the market, and so it is always because of those two

factors, going to be more vulnerable to any particular dynamic changing. i do think one thing that was kind of notable and developed over august was this really enormous correlation, positive correlation between a lot of the same trades. a lot of people expected nasdaq to go higher, they thought gold would go higher, they thought real reach would go lower. ironically, i think people at the same time thought that those trades would almost diversify themselves, that it is ok, i'm long nasdaq but good with gold, or i'm long real rates. to be the biggest take away from what has been happening over the last couple of days is an appreciation that we are seeing a very real world stress test for what happens when a popular segment of the market gets hit, and we are seeing in real time what works as a hedge and what does not. tom: well said, and the technical studies -- i put this out on twitter moments ago -- we are nowhere near two standard

deviations down on the nasdaq. there is not much carnage, although you get the emotion of tesla and apple. you are so good with this out of brown and mathematics. one of the great things is the impact on people not doing these derivative strategies. if softbank unwinds trade and the global wall street that facilitated their derivative strategies is forced to unwind their sides of the trade, how does that affect the rest of the market, other than the price decline? what is the short-term or long-term impact of the unwind of the successful derivative strategies? andrew: i won't comment on any specific kind of derivative strategy in the market. what i would say, though, and i think this is kind of one of the more interesting dynamics that we see from a cross asset perspective, is that volatility in both equity and credit market , is pretty high.

it has been high throughout this whole rally. that was one of the disconnects that you saw. mus on new highs in the s&p, certainly nowhere close -- theere near the lows in volatility. if you look at the vix or the ve x in europe, levels have implied have been pretty elevated. as we take a step back from this market, and again, there are a variety of things that could be behind that, but i think volatility markets are trying to price in and have been trying to price in a decent amount of risk premium. which makes me think that further repricing volatility might not be the biggest change that we see here, given that you actually i think have pretty high risk premiums in a lot of the different kind of volatility measures that we track. francine: how much more volatility are we going to see going into the u.s. election? kind ofi think there is

important things to focus on here. first, i do think what is in the price matters. alreadyons market is implying a pretty high level of volatility, and we have actually had relatively little realized volatility with the last couple of days being the notable exception. so one answer would be, i think you could see more volatile markets between now and the election, and that would only just equal what the options market is expecting -- the u.s. equity options market is pricing for the s&p to move 1.7% each day every day between now and early december. so i think that the options market is certainly price for some pickup. the end of september is a crucial time. that is when you have the first u.s. presidential debate. that is when a second cares act would need to be done by if it is going to be done. i think that is when we will

have a much better idea of the impact of school reopening's on covid cases, and that will be an howrtant weight point of the market will be in the next month or two. francine: if you look at everything going on in terms of volatility, is it institutional investors, and a very it a number of institutional investors that make up the bulk of this volatility? andrew: well, you know, i think that it is a variety of factors that are going on. i think what volatility markets ie kind of saying is what hear from a lot of investors, which is that there is still a lot of uncertainty out there, there's still a lot of uncertainty around the economic trajectory come around the election, there is kind of uncertainty about what we are looking at with the long-term effects of this policy. i do think that that is, in a

supportive way, subjects the -- suggested that overall investor sentiment is not wildly optimistic, or investors are not all in on their market allocation, which i think stepping back is a good thing. i do think that the volatility market is correctly saying we are at a crucial juncture for markets as we come back from the summer, and there are scenarios where more fiscal stimulus passed, where the economic recovery turns out better than we were previously expecting, and there are scenarios where the additional stimulus doesn't come through or the coronavirus trajectory is worse than we expect, where things could deteriorate quite quickly. that is i think what i hear from investors, and i think that is what you see also being reflected in these volatility markets. so much, thank you andrew sheets of morgan stanley. later today, the german finance minister joins us for an

exclusive virtual conversation to discuss the e.u.'s economic recovery under the coronavirus pandemic. that is 9:00 a.m. in new york, 2:00 p.m. in london. you can watch that on life go as well. -- on lives go as well. this is bloomberg. ♪

francine: this is "bloomberg surveillance." francine from london and new york. let's get back to andrew. when you look at everything going on with trade -- the u.s.,

china, the appointment of an e.u. trade commissioner -- how do you play trade in the markets? are,w: so i think there you know, a couple of things to keep in mind. the first is, i think i am skeptical that the market will react much to the new headlines out of the trump administration. i think simply because we have had over three years of this administration, the idea that they would do something very different here, i think the market is going to be a little skeptical about. think onee time, i constant of this election is that both candidates have articulated a relatively hawkish trade policy vis-a-vis china, so i think the one factor that might not change, more than a lot of other policy factors, would be u.s. trade policy, vis-a-vis china and the election. but something that could change would be u.s. trade policy vis-a-vis europe. that is an underappreciated part of the u.s. election conversation. there is an you norma's

conversation about what could change around tax policy or it isment, but actually on trade. we have seen this in the trump administration where a president can operate relatively unilaterally. the biden team has been very different on trade and very different on foreign policy toward europe, and that is something that i think investors should appreciate could happen very quickly under a biden administration. you don't need to wait for congress, you don't need a large majority. i think that is an important thing to keep in mind, and as we think about the investment case for europe, morgan stanley, we are relatively constructive on you european equities versus u.s. equities. tom: i want to go back to the gamma trade and the tail risks that are out there, which always start with leverage. is it your perception that we are leveraged up and maybe we

cannot see the leverage that is in the shadows? the many leverages that are out there, how bad are they right now? andrew: i think what is actually fascinating is if you look across the market, i think the positioning story really varies. -- if wef you look at look at the positioning data that we have, i think the market stocks,exposed to tech especially u.s. tech stocks. they are very popular. i think you see among hedge funds, levels of gross exposure are relatively high, levels of net exposure have risen. there are some concentrated exposures, but they're also plenty of parts of the market that are not particularly crowded or overexposed. small-cap stocks in the u.s. --ional -- in the u.s. financials in the u.s. or europe are not particularly crowded or over owned. i think you have a number of segments in the market that we

consider actually kind of traditional early cycle beneficiaries, and i think sectors that benefit from higher interest rates, steeper curves, where i think positioning is not crowded and valuations are not expensive. so when we are thinking about this market and my colleague mike wilson has a note out on this this morning, we are thinking about a more range bound s&p 500 but with more rotation under the surface, some of those early cycle beneficiaries do better. thank you so much. andrew sheets, morgan stanley cross asset strategist. up, we talk brexit, we talk trade. this is bloomberg. ♪

leigh-ann: this is "bloomberg surveillance." i'm leigh-ann gerrans with first word news. bloomberg learned that donald

trump is considering an unprecedented step for an incumbent president, discussing spending as much as $100 million of his own money to win the election. the president has been scrutinizing heavy spending by his team earlier this year that failed to push him ahead of joe biden. plus biden's campaign and other democratic entities have raised more money than the trump campaign in recent months. now president trump is threatening to curb the u.s. economic relationship with china , and he is promising to punish american companies that do business there. the president calling on those firms to be banned from getting federal contracts. he also wants to impose tariffs on companies that leave the u.s. to create jobs in china and elsewhere. president trump said that if joe biden is elected, china would own the u.s. in california, the electricity crisis is getting even worse. the state's biggest utility says it expects to cut power to

500,000 people this week to prevent live wires from sparking wildfires. last weekly problem was a heat wave. this week california is expecting high wind to come sweeping off the pacific ocean. kamala harris has made her first solo campaign trip as a democratic vice president candidate, going to milwaukee where she can peel -- where she appealed to communities of color that will be crucial. latino activists who support front-line workers. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? tom? tom: joining us now is chief content officer martin schenker. it is about politics, it is about kicking off the presidential campaign.

roundingl stretch, maybe third base, maybe second base. we have to rip up the script. marty schenker with us, and we need to talk the nasdaq. the nasdaq whale, the gamma whale, as it is called as well. not thes it is strategy, it is the sheer mass of the strategy. aat softbank has done as publicly traded company borders on being a hedge fund as abu dhabi/deutsche bank types have done with softbank as it measurement. are they a hedge fund? marty: they would say they are an investment firm, but they have all the trappings of a hedge fund and taking on all the risks that hedge fund might take. as we are seeing, tesla down 10%. tom: who wrigley's them? u.s., japanese regulators? -- who regulates them? u.s., japanese regulators?

marty: they are subject to regulation in their home country and in japan and in the u.s., to the extent that they engage in investment activity, but clearly there is no consequence to their actions, or at least there hasn't been to date. tom: nasdaq right now, down 2%. i know we have to switch to politics and the presidential election, but the nasdaq futures -228.orate in qa, that is a big number, francine. francine: it is a big number angry to get marty's perspective on it. the market is concerned about this ramped up rhetoric around china and president trump, but now president trump is ready to put $100 million of his own money into the campaign. what does it tell us about his state of mind? marty: it tells us that his internal polling is not very good if he is willing to put in his own money. i think this race is a lot

tighter than the polls would suggest and will get tighter still as we get closer to the election, 58 days away. so i do think that putting in his own money is not just a fool's errand, he thinks there is a chance that he can turn this election in his favor and he is willing to put up his own money to do it. francine: how tight is it, or how tight will this election be becoming? is it on 2, 3, 4 states again? marty: i think it will boil down to michigan, florida. texas is in play, although i think it is extremely unlikely the democrats will take texas. joe biden is running a do no harm campaign. he has to be vigilant about keeping his name out there, keeping above the fray that donald trump is creating. he is going to have a tough time breaking through if he continues this campaign.

tom: this is absolutely critical come and you are an expert at this. running through the dallas morning news and the cbs poll as well -- the general election poll, nobody really cares because of the electoral vote and the margin of error in those swing states is somewhat within the gap, right? marty: it is, and it is closing. the polls in 2016 where pretty accurate. they did have hillary clinton ahead -- tom: of the popular vote. marty: with the popular vote, but it is the battleground matter.hat really francine: what is the thrust for the vice president and for the president in the next 24 hours? marty: they are thinking about what it is going to be like on election night, and voting security and mail-in ballot in, and i think it is quite likely

it will take days, maybe even weeks before we know who won the election on election night. francine: what happens if -- how close can it be? if there is no clear winner, how ugly will it become? marty: well, it has the potential of being very ugly, but it is all speculation at this point. it depends. there was a report last week, or two weeks ago, from axios, about how we may see an illusion of a republican victory on election night only to see the mail-in ballots get counted and the democrats close that gap, which i think would create real chaos in the markets and in the general public population. what is this election going to be on? is it purely on the economy? i have spoken to a couple of people that basically say we don't want president trump to be elected because of his

personality, it is just on policies. if the stock market is ok and the economy is ok in november, is he a two-term president? marty: it is my contention that is quite possible as a scenario. i think one key issue where the president has weaknesses in health care -- joe biden polls consistently way ahead of the president on that issue, and in battleground states in the suburbs, that is a critical issue. tom: this brings up a question i have put a lot of thought into, and i am as guilty of this as anybody. that baloney,t this is an election about the culture wars in america. mi off the mark on that? -- am if the mark on off the mark on that? packagenow, that is the this is surrounded in. we are so polarized as a country, individuals view every issue in the context of donald trump or against donald trump.

so you're not wrong, it is a mandate on donald trump's leadership, no question about that. thank you soty, much, our chief content officer, marty schenker. delete step his hood of david rubenstein's show, catch that on wednesday. 9:00 p.m. in new york. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tum and fencing from london and new york. angela merkel is rethinking her support for the nord stream 2 gas pipeline. this reflects tensions with

russian president vladimir putin after was confirmed last week that alexei navalny had been poisoned. >> i think that the decision-makers will change -- already, by the same token they admitted this is a political project, because without political involvement the project would already be abandoned. isncine: talking with us wolfgang munchau. thank you for talking about this, geopolitics. piling the pressure on russia after they navalny poisoning, they are saying that the gas pipeline would be in balance, but will they actually go as far as casting it to one side?

germans obviously having the -- they also know dropping the project altogether, they are dependent russia.nergy lines from the political decisions, many germans would probably agree with that. it is becoming very difficult. pipeline as athe , and it isnst russia a signal to russia that if this continues, we cannot continue with this, we cannot continue to do business with you. but i would say that they are

not at this point ready. francine: what exactly is at play here? russia has gotten away with quite a lot in recent years. will europe be much harder this time? wolfgang: well, the public opinion has changed. there would be more leeway these -- even in they coalition partner, with the , a supervisoryor senior stafformer putin, this iswo not something that germany would easily do.

germany was behind the fence but alsoe.u. imposed, ensuring that the relationships remain intact. ,ermany does need russian gas and she would never go so far as to threaten and block russian gas. that would really cut off the e.u.-russia trade relationship. that is a big one. if that happened, that would be -- germany is very careful about that because -- i an opportunity -- they areo the

extremely powerful in terms of their influence over the government, over the mp, over the economy. this is not something that germany is taking lightly just because there is a shift in the geopolitical direction. francine: to describe -- tom: to describe the pipeline, folks, out of st. petersburg come across the baltic sea, somewhere in copenhagen, germany -- copenhagen into germany. if the germans actually shut down nord stream 2, is it the first thing mr. putin does, turn off the spigot of nord stream 2 one? -- nord stream 1? wolfgang: that is a possibility, all sorts of reprisals. patients rush holt is hike -- his patience threshold -- his

patience threshold is high, but certainly that is one of the options under consideration. so that would be a reprisal. positionalso shift his , build up a much harder position on belarus and ukraine if they cut him off completely. then what have they got to lose? not in the russian interest to have a military intervention. support for the regime could take on a different quality then has been shown so far. -- dan has been shown so far. we have to take that into account. on cue,fgang, right back from labor day, back from the summer, we look at a brexit heat up as well. you have been dead on about this, the intransigence of both sides. what are you watching in this

new brexit debate? wolfgang: what is happening now with the u.k. seems to be preparing a situation that could be interpreted, or may even have of effect of canceling parts the withdrawal agreement. that would be an extra ordinary act. -- it would be an extraordinary act. it might be a step too far because of the international treaty. they made a binding commitment. that -- whatt -- my interpretation is that they are building up negotiations. any sort of unilateral action by the u.k., northern ireland, that would be a huge problem for the

public, and it would make the e.u. potentially vulnerable in those situations. betting soay that much on this particular deadline, having previously expressed with the previous deadline -- i also believe that he overplayed his hand on the state aid issue, trying to subject the u.k. to various rules, direct rules, or principles of state aid and policy. and was time to badly come is making a no deal somewhat more likely. there hascally -- been no progress. it all depends -- the key issue to watch out for is whether the european -- in october, whether

they will change the negotiating mandate, and they will have to specifically change the issue on state aid. so if the e.u. is more flexible, i would expect the u.k. to be more fixable as well. now,hat we have seen right johnson is signaling that he is serious. he is signaling that he is ready to walk, and the e.u. has to believe that. that no deal is better than a bad deal. the intention is to make sure that they actually believe this. and i believe that -- changed: so has covid boris johnson, because he has lost so much popularity in how he has handled the health

crisis? is brexit really going to be his legacy, and that is maybe why we should start believing that he would be ok with a no deal? can they actually have a no deal and then come back to the negotiating table at a later date? wolfgang: first of all, i don't think that johnson's position has changed through the course of this. some people suggest that the covid crisis would overlay -- the effect of the crisis has been so bad that nobody would recognize it. i don't think that is true. i think he genuinely wants a deal, but he needs to have his own state aid policy if he wants any chance in the 2024 election. he would need to put money into a new policy, invest in artificial intelligence. this is extremely important

for him. the cost of a no deal brexit will be significant for certain industries, but it will not be -- they will not be -- they will not triple the economy. it will not cripple the economy in 2024. tom: wolfgang munchau, thank you so much. appreciated, particularly on germany and the new challenges with russia. i need to inform you of a further deterioration in the nasdaq futures. these are confusing numbers, and don't line up directly often with the nasdaq composite or the nasdaq 100 ndx as well. qa -226, a have and , down fromcline recent weakness. --s is what we see in the

different than the standard & poor's 500 and the nasdaq. tesla and apple enjoying some of these challenges as well. this will be a theme for us on fundamental investment. chris differ merengue, thrilled he could come back here. -- christopher merengue, filled he could come back here. lan, but much more as well. on volatility in the markets. this is bloomberg. good morning. ♪

leigh-ann: this is "bloomberg surveillance." i'm leigh-ann gerrans with your bloomberg business flash. shares are of tesla are falling. the electric car maker widely specter to be named on the s&p 500 on friday, but that didn't happen. the decision may have rested on questions about tesla's probability metrics and murky full-year forecast. the release of the movie "mulan" has forced a big jump in downloads for the disney plus app. the rose 690,000 over weekend and consumer spending on

to app store, up 193 percent $12 million. an" was released on friday and viewers had to pay an extra $30 to watch it. that is the bloomberg business flash. tom: leigh-ann, i cried at the beautifullan," a movie even with the debates in western china as well. the nest egg deteriorates. 2.4%. it is a sharp -- the nasdaq deteriorates, 2.4%. it is a sharp fall. this is bloomberg. good morning. ♪ so you're a small business,

or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure?

sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business. lookentertainmentour experience: xfinity x1. it's the easiest way to watch live tv and all your favorite streaming apps. plus, x1 also includes peacock premium at no extra cost. this baby is the total package. it streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. yup, the best really did get better. magnificent. xfinity x1 just got even better, with peacock premium included at no additional cost. no strings attached. tom: this morning, what will

apple, what will tesla do after softbank garners a 100% return on derivatives trading? how will global wall street unwind the gamma? futures terrible, nasdaq futures down 2.3%. the dollar strengthens. oil descends -- west texas intermediate under $39 a barrel. and they are off -- biden and trump, trump and biden, they dash to november. kevin cirilli in moments. "bloomberg surveillance," in new york. francine lacqua and linda. -- francine lacqua in london. what is the position for our viewers and listeners on brexit? francine: the negotiators have come back from