manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny. here top stories this morning. coronavirus deaths top one million as some expert -- experts estimate the real figure could be double but stocks push higher as house democrats leases scaled-back stimulus proposal. christine lagarde says the ecb is ready to act further to 80 the recovery, as chancellor

merkel is said to have warned germany could exceed 19,000 cases in a day. trump and joe biden square off in the first presidential debate tonight. bloomberg television and radio will have special coverage and analysis on the head-to-head. 6:00 a.m. in london, 7:00 a.m. in frankfurt and 9:00 a.m. in the difc. differencell it make to markets who wins technically? tell you what is questionable, who is the greatest of them all? -- slightly schizophrenic in the equity market but do you want to walk naked for the next 30 days into an election and be short the dollar? we will take a look at the dollar. kitties is the carry trade getting unpacked. the short dollar by the e.m. --

buy the em. this is the biggest losing trade out there. bmp into the election, high vol, there will be a better opportunity. the fx carry trade is down nearly 3% this quarter, adding to the dollar. do you walk naked into the woods into a u.s. election with no dollars around your neck? let's talk about the markets, the dollar index down point -- 2.5% that the last three months. mnuchin, a trillion dollars apart. that compresses the concertina of differential narrows. it is impossible for you to be bearish. the hedge funds to boost are the shortest since 2006.

christine lagarde, helping the european trade, up .4%. the stoxx 600, the most in three months. market is sustained by christine lagarde. if yousie dollar, believe the election and the vaccine and the fiscal narrative changes in the united states, do you want to belong the aussie international private next week, where you have any budget and central-bank tenure paper? snooze, snooze. what would it take to move 10-year paper from .65? let's see some of the narratives on the agenda. the unfortunate global death toll. one million as economies around the world struggle to contain coronavirus almost 10 months after the first emerged. president trump announced plans to distribute tens of millions of test in the coming weeks. >> today, the vaccine is

approved by the fda, we'll begin distributing it with hundreds of millions of doses to follow very quickly. we are all set to go. we are already under logistically, we have the military lined up and some incredible people are waiting to have it. over 100 million doses will be available before the end of the year. meanwhile, house democrats prepared to release a pair to back aid package of $2.2 trillion to support the u.s. economy. nancy pelosi and steve mnuchin plan to speak today. if a bipartisan deal isn't reached, the house is aiming to vote on the latest relief bill this week. the head of debt capital markets at gulf investment corporation. the trillion dollars apart between the dems and the republicans, if there is a

hybrid deal somewhere in the high 1's, that potentially averts a fiscal cliff. does that shake the bond market in any way? from what i would say is an artificially repressed vol state? >> good morning. i don't think so. i think the fiscal package is very important for the economy, very important especially for risky assets in general. think ineasury side, i order to move the 10 year from to current level, we need assume deterioration of the economic outlook. the fed has made very clear it is not going to high-grade anytime soon, but the fed didn't say what it is ready to do if the economy would deteriorate so that is the reason in my view,

10 year treasury yield has remained in this tight range, even with the serious selloff on the equity side. manus: if we look at the road map going forward, i put it to you, credit suisse say the nirvana trade is biden takes the white house, the dems take the house and the senate. that delivers a fiscal impulse, which overrides the tax hike risk. if there is a biden victory, where are we going to see perhaps the most immediate response? raffaele: i think the immediate response would be on the fiscal stimulus, the fiscal package. support of the economy and especially the theployment rate is where

new administration would focus. we saw stabilization of the unemployment rate, but there is much more to do in order to return to the pre-covid level for unemployment. about the uglylk word called inflation. average inflation targeting, hot inflation targeting. i ran the breakevens. we've had this slow, moderate tick higher in the breakevens over the past couple of sections . i would say even if you have a biden or trump victory, you get fiscal from both and you get an alpha of spending from both. it is hard to build a bearish case on the inflation narrative regardless of who wins. do you agree or disagree with that? raffaele: i totally agree with you.

already the market is pricing higher inflation going forward. not only u.s., but in europe as well. yesterday, the ecb was talking higher expectation of inflation going forward, and that is the big risk for the fixed-income market, in particular for risky assets because at the moment, real rates are very negative and the risk is that going forward, we would have even more negative of moving,ot because but inflation expectation will move higher. manus: do not hang up the phone. that is the clearest indication i can get you, raffaele bertoni, gulf investment corporation. donald trump and joe biden will square off for 90 minutes, the first debate later today. sideslitical pros on both

are fretting about the potential for a viral moment that could turn the performance into a disaster. our international editor jodi schneider is with us. you've covered many a debate. what is the risk here as we go into this one? what do you think it is that could turn the voters mind? do these debates change our minds? it doesn'tis case, seem very is going to be a lot of minds that are going to be changed. we even have a recent poll, monmouth university released a call yesterday that showed 87% of voters are unlikely to be swayed. however, many people are going to be watching. it could be the most-watched political event of all time. the one so far was 2016 when 84 million people watched the first debate between now president trump and hillary clinton. so while people may not be wenzhou their minds,

hurt joegaffe could biden a lot. you can come back from a first debate, but it is hard. obama debating mitt romney had a bad debate in 2012, but came back. it would be very hard for joe biden and his advisers are trying to work hard to not let president trump get under his skin. manus: i think it is going to be fascinating to see how biden attacks the debate. we have additional sanctions on iran, i feel that will wrap higher with china but try and will play. the music is going to play early. jodi: i think it will play early and joe biden's team expect it to be a focus during the first debate. how would a president biden, if he was to win, deal with china? would he keep those tariffs in place?

what he sticks to or renegotiate the trade deal signed in january? what his administration continue the sanctions on chinese officials regarding hong kong, for instance? there are a lot of issues there and president trump has been touting his record on china, being tough on china and producing ads focused on some of biden's past comments on china, trying to make it look like he would give away the store to china so it will be an issue in this debate and presumably joe biden is ready for it. his campaign advisers have really been working with him apparently on this issue. let's see what tonight brings. john authers, great column this hillary won all three debates and went on to lose the white house. our seniorder, international editor. bloomberg's coverage of the presidential

debate, and analysis before and after. david westin will cover, full coverage from new york 8:30 p.m. new york time. your first word news. laura wright is with me at london hq. macron isanuel equipped to meet with the opposition leader in belarus as he is serious about confronting russia. the eu is holding a summit to discuss potential sanctions against moscow for not cooperating on belarus. u.k. could be facing a long-term increase in the size of the state as well as substantial tax hikes. the institute for fiscal studies says it is highly plausible government spending could hit 45% of gdp by the middle of the decade. that is a level not sustained since the 1970's. it underscores the major shift being brought on by the pandemic. a wildfire ripping through northern california's one country has more than tripled in

size. it is forcing thousands of evacuations and destroying properties in the region. the glass fire north of san francisco reached more than 36,000 acres monday night, the second fire in shasta county is raging, having killed at least three people. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. manus: thank you very much. a snapshot of the markets. two words of the dominant themes, testing. in the u.s., six point 5 million tests will be delivered, 100 million promised by the end of the year and the vaccine narrative moves along. all three equity markets in the united states higher. all three markets moved in unison yesterday. hedge funds might be as bearish as bearish can be since 2006.

christine lagarde carried the stimulus banner. she's ready to do whatever it takes and asia up .25%. some of the rest of the markets, there you go. we will talk about christine lagarde. what is the size and scope for this stimulus from madame lagarde? she boosted european equity markets yesterday. she will act as appropriate. she takes hold of the do whatever it takes narrative. we will discuss the numbers on. this is bloomberg. -- the eurozone. this is bloomberg. ♪

manus: i'm manus cranny in to buy. ken murray -- in dubai. let's talk about your morning calls. meiette saly, she has left on my own. always a bit dangerous. let's talk about europe because

ubs, what a spoiler. what is going on? >> this is due to the pickup in virus cases in europe and the accompanying restrictions that come with this. ubs saying you are seeing a plateau in the economic picture which could have downside momentum for european earnings. see modestu could downside from the stoxx 600 index although analysts including nick nelson have targetted the year-end for the index. 340 is a drop of 4.4% from friday's close. would beany upside from relative valuation to bonds and not absolute ones and over the past 30 years, europe has underperformed u.s. stocks during bull market corrections but this time, there has been slight outperformance. in terms of where they had with defenses, you should be looking at pharma and retail stocks and

some of their top picks in the region include the swiss multinational pharma company novartis, the german supplier and the super market chain in the u k -- in the u.k. manus: thanks very much. juliette saly in singapore. you saw her imagery before we went to break. she leads the european central bank. christine lagarde has a message for the eurozone. we are not out of the woods yet. she said the ecb is ready to deploy more monetary stimulus to aid the recovery if needed. let's take a listen. >> the impact of the pandemic is still being felt across the euro area. people are losing jobs, people are losing income, businesses are facing difficulties and prospects about the future remain uncertain. at minus zerod

point 2% in august and is expected to remain negative in % incoming months -- -0.2 august and is expected to remain negative in the coming months. we are not complacent about it. euro area real gdp is only expected to recover to precrisis levels in late 2022. while euro area economic activity rebounded in the third quarter, the remember he -- recovery remains incomplete and uneven. ,anus: raffaele bertoni listening in to madame lagarde corporationvestment inflation is expected to remain 1.3% over the next three years. this is the target. how do you break that cap? -- gap with the most efficacy?

how do you break this bandwidth upwards? raffaele: that's a difficult question, because we all now central banks have been fighting these deflation environments for a long time and the amount of resources they use starting from rates to the size of the balance sheet has been in our mess -- enormous with no significant threat on inflation. i think there is very little central banks can do at the moment and honestly, in my view, all central banks are now more focused on unemployment rather than inflation. lagarde, what she said

is centrallly what banker should say but in my view, the focus is on unemployment and going forward, what they can do is very little. the increased the size of the balance sheet about 50% in a short period of time. that's pretty much what they can do at the moment. in negativeready territory and have proven not to be effective, so going forward, the ball is on the fiscal side rather than the monetary policy side. let's see if there is more fiscal lift to come. the bond market is ground zero for you. negat -- -0? .52. you are looking at the most issuance since 2009. is there asymmetric risk in the

bond marke= -- bund market? unpickssuance in any way the bund market? but the: it could, amount of liquidity in the market and the players needed to buy german bund, whatever the and the central bank is still behind the curve. even aaw in the u.s., significant increase in supply can move the rates much. therefore, i'm not particular worried on the side. what can be very negative for risky assets and the bund in particular is the outlook on

inflation going forward. certainly doesn't look as if we have anything spectacular to worry about on the inflation outlook at the moment. stay with us. raffaele bertoni, gulf investment corporation. let's see where i reach for yield. coming up, 28 years old and he wins the lottery. we will discuss how the newly minted billionaire and his electric trucking company are set to join the public market this week. this is bloomberg. ♪

manus: i'm manus cranny in dubai. spac mania continues this week. yesterday's, shareholders approved a merger with a battery-powered truck company.

allows them to go public without the additional ipo and it will make a 28-year-old founder a billionaire. he will be the most chaste man in america. frenzy continues. this one is so interesting because not only is it a 28-year-old who is set to become a billionaire, he is a carnegie mellon engineer graduate. this is a company that had not had her any revenue at all that is being valued at $7 billion. to give our viewers a reminder of what a spac is, a blank check company decides to go public. it merges with a private company and takes that private company public without ever having to do the ipo. in this case, the 28 founder, thomas healy, is going to take yllion, and on the

other side is tortoise, which is acquiring hyllion. manus: it is just quite incredible, isn't it? a bit of a frenzy, but that is my inner grinch. reap?s the deal poised to did i say 1999 to you? that only slept out. dani: it is -- i don't think it ch, the samer grin frenzy that sent tesla soaring. part of the reason it will reap riches is its share price has skyrocketed since the deal was announced in june. it is going to get 80% of the proceeds from this merger, usually an ipo underwriter would get 7%. manus: let's see.

that is talent -- channeling the inner downside. dani burger with a snapshot of currencies. we go into the presidential debate. do you want to be short dollar or long? ♪

manus: good morning from dubai. i'm manus cranny. your top stories this morning. coronavirus deaths top one million as some experts estimate the real figure could be double. stocks push higher as house introduce a scaled-back proposal. christine lagarde says the ecb is ready to act further to aid the recovery, as chancellor merkel is said to have warned germany could exceed 19,000

virus cases a day. donald trump and joe biden square off in the first presidential debate tonight. bloomberg tv and radio will have special coverage and analysis on the head-to-head. 6:30 a.m. in london, 9:30 a.m. in the difc. higher are ripping because they think a fiscal deal is narrowing. major pharma companies in stage three trials, the pharma trade is on fire. nasdaq up .25%, the hedges are and itrtest since 2006 is flat in asia. christine is ready to do whatever it takes. the stoxx 600 had its best rally in three months. it is a cyclical that is the alpha.

the bond market, what does it take to move this news? 6.5%, the lack of inflation is the risk. aussie is off its highs of the day. if there is a fiscal deal, what does that mean for the beater currencies of australia? we are worried about inventories. bnp paribas asset management is rethinking the affinity with the carry trade, cutting positions in em currencies as vol picks up. raffaele bertoni is with gulf investment corporation. bnp paribas, maybe i am being ungracious to them. -- the carryng by nearly 3%.ck

they don't want this vol going into the election. this comes down to the unwind of the carry trade. do you believe the best of the carry trade has been done and we should reset after the election? disagree in the sense that i think there is still a view in some part of the credit market that we continue riskierr credit to assets at the moment. regarding emerging markets, obviously we had a nice performance of the carry trade, in particular on the currency side, and it makes sense at this the electionnto and the volatility that we can see on the dollar to reduce the exposure, but generally speaking, credit and risky assets represent the best option at the moment.

in particular, in my view, high-yield is the asset class where we should be focused. high-yield,rms of can i push you insect oriole -- in sectorial? we've seen the victory narrative from trump and the recovery narrative. martin malone talks about the triple v. does not correlate to the high-yield exposure you want to take -- does that correlate to the high-yield exposure you want to take? in thee: yes, we saw equity market a rebalancing of portfolios from tech to more cyclical sectors. i think that is something very the yield market, which is represented by cyclical saw, based one

the latest data, that the credit quality on average has remained resilient despite the covid and it is supportive for the asset class overall, which will continue to be volatile, but has the most -- it can be resilient. together thatied the language from christine lagarde, the preparedness -- we don't know exactly what that will be. in terms of the high differential geographically, people talk about the cyclical upturn in europe being ripe, does that's you more to the year -- more to europe and the u.s.? raffaele: european high-yield looks more solid, but everything is already priced in.

therefore, we continue to prefer u.s. yields, which are more volatile, but in terms of spread, they represent a good value despite the strong rally ofhad since the end march. from a credit quality point of view, europe looks better but in terms of valuation, the u.s. is the place to be. manus: raffaele bertoni, head of debt capital markets at gulf investment corporation. thank you very much. tesla has secured its own lithium mining rights in nevada after dropping a plan to buy a company according to bloomberg sources. it has vowed to slash its by 50% to deliver on a promise to bring $25,000 electric car to the market. the plan doesn't seem to have

phased china's most promising an electric vehicle startup. the executives at the beijing auto show telling bloomberg elon musk can bring it on. we spoke to the ceo about the threat tesla poses, as well as the demand the company's latest model may bring. >> in fact, demand in july and august was stronger than actual deliveries as we had a conservative sales estimate at the beginning of the year. our supply chain partners were not ready for higher production. we are working to solve this problem in the current quarter. we believe construction capacity will have improved in september. we will boost capacity in the coming months, especially for the ec6. >> elon musk has talked about a $25,000 tesla. what do you know about these plans?

do you imagine that would have to be manufactured, that $25,000 tesla in china given the labor costs and supply chain? william: undoubtedly, battery costs for the industry have been declining. 10%eached a gross margin of in the second quarter and it will increase in the coming quarter. the overall battery costs increase will help promote ev's. in the chinese market, the average price for our car is more than 16th -- $60,000, $16,000 more than teslas in china. launch more cheaper products, but that is not our priority at the moment. musk has talked about potentially producing one million units in china. how much of a challenge is tesla now? i think auto products

aren't only about cars, but more importantly serving customers well. for family, the car isn't a small expense like loads. it is -- clothes. it is a big expense like safety. like all automakers, undertaking rapid expansion. lius: that was william speaking to bloomberg at the beijing auto show. first word news, laura wright in london hq. laura: globally, the confirmed number of coronavirus debts has hit one million but health experts are warning the real death toll could be twice as many. developed and emerging economies are struggling to contain the pandemic last 10 months after it first emerged. the world bank is warning of a class of new poor expected to be living in poverty. the u.s. is considering fresh sanctions on iran. sources tell bloomberg it may target more than a dozen banks

and label the entire finance industry off-limits. the move would effectively -- iran has already been crushed by the loss of oil sales thanks to american restrictions. house speaker nancy pelosi says the white house will have to agree much more spending to secure a fresh round of stimulus. come as democrats release a scaled-back plan of $2.2 trillion of support. discussions between pelosi and steve mnuchin are ongoing. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. thank you very much. tory rebels expect a compromise from the government. lawmakersonservative would be ready to vote against the british prime minister's virus powers this week. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." tory rebels expect a compromise after 80government conservative lawmakers would be ready to vote against the british prime minister's virus powers this week. baker said tory mp he expects a satisfactory agreement for tomorrow's commons vote. raffaele bertoni from gulf investment corporation is still with us. risk? you look at u.k. is it political risk? visit currency risk? we are looking at cable volatility specifically. l is linkede vo

to dollar, but it has brexit and a u.s. election to deal with. would you be a buyer of volatility because it is nowhere near as expensive as march? raffaele: the volatility is on the back of the political uncertainty, and the discussion around brexit, and it could go higher in the case of a negative outcome from the discussion with europe. obviously, the currency is the first way to express a negative view on the economy and on the country. we expect volatility will pick up, especially if the narrative and discussions deteriorate going forward. manus: one of my guests

advocates ifm bmo you want to position yourself over the next 12 months, you want to buy volatility over the six month and 12 year tenor. volatility,k at when does it flash expensive? what are the hallmarks of volatility being expensive other than price? raffaele: volatility is becoming more expensive when there is more uncertainty. we are approaching the end of the year, which is crucial for the discussion between the u.k. and the rest of europe, and therefore there is a chance to have a significant increase in volatility, so from my point of view, how expensive is volatility depends on the level

of uncertainty we expect going forward. therefore, i agree with his comment. buy's a good way to volatility. manus: in terms of the equity re, if i think there will be more political angst, eurosterling can come under pressure, does that come to looking at equity exposure or is that dwarfed by economic impact from covid? raffaele: the equity market in is well, the ftse whichented by companies support around the world, and usually, as we saw in the past, the equity market tended to perform well when there is a

strong devaluation on the currency. exposed to thebe u.k. market, the equities are probably the best place to be rather than the asset classes, in particular fixed income where real rates are quite negative and don't represent any protection. past 40 minutes, i've been obsessed about bond volatility, which i would say is repressed, slightly schizophrenic. equity market volatility, and then you have fx, which i think is ground zero. i want to focus on the equity market volatility as we go to the close of this conversation. what is it that concerns you the that really will dictate your philosophy going into 2021? vaccine or the potential victory of who sits in the white house?

if you had to make a call, what would be the narrative for the equity markets into 2021, or does it have to be the both? will probably be a little bit of both but i needed -- if i needed to choose one, i would choose the political front more than the vaccine. we know companies are working on the vaccine and they are very well ahead. the political front is more uncertain, and is going to dictate the narrative in 2021. manus: ok. thank you so much for being with us, raffaele bertoni, head of debt capital markets. gulf investment corporation. a quick snapshot of how the markets are assuming risk. the dollar is lower, to do with rebalancing before the u.s. debate but hillary clinton won

the three debates and the markets were fairly irreverent to that. the dollar is flat today. 1.1674.lar, cable, you are seeing movement. there is a mood music coming in terms of the u.k., rebel tories expected compromise. contact of that, we expected a breakthrough. erday, at breakthrough in brexit negotiations could be good news in a trade deal. christine is ready to do what it takes. euro-yen, where do you want to be hedged going into this election? do you want to belong yen? how do you want to trade into the u.s. election? coming up, a glacial pace. it will take 200 years of female front runners to reach parity with male counterparts. we look at the research. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i'm manus cranny in dubai. some of the stories we are tracking host the terminal. the final round brick talks kicks off in brussels today with the mood music shifting. focus,onomic recovery in facing inflation. the president of the fed announces -- john williams speaks at the u.s. treasury market conference. later, president trump and democratic opponent joe biden, face-to-face in the first presidential debate and we haven't covered. bloomberg tv and radio are there with special coverage and

analysis of the head-to-head debate. let's talk equality and it will take two centuries of female fund managers to reach parity with male counterparts if the current rate of promotion continues, according to the research. dani burger joins us with insight. is diversity within the money management industry improving in any shape or form? dani: honestly, it barely is. currently, the percentage of women who are managers, who run funds, that is 11% and you want to hear the big improvement we had? over four years ago, it was 10%. that is one percentage point improvement in four years. database, only $2.9 trillion is managed by women but people are doing things about this. we've seen clients of fund

managers pressuring them to include more diversity among their ranks. there are charities within the industry, different initiative. one is gain, girls are investors which aims to get girls interested in the industry to get their foot in the door to help gender diversity. i spoke with one of the cofounders who is managing director at the cambridge in -- university endowment fund. she was optimistic about the work she is doing and said this year presented a unique opportunity to not just reach more women, but reach a diversity of women. here's what she had to say. >> as horrible as covid-19 has has actually presented us with a strange opportunity in that we've moved the entire program online, and by moving it online, we are able to reach so many more girls outside of the n25 and across the u.k. and it has been interesting to see the

connection we are getting from parts of the country that we would never have been able to reach to face-to-face talks. i don't think there is a lack of talent. i think we need to get them through the door first. dani: those last comments were a response to when i asked what the wells fargo saying there was not enough talent in the ranks. shebe humanly disagree -- vehemently disagreed. manus: one could argue it is a narrow funnel of universities that speed the financial the financialed industry and perhaps we need to go backwards to move forwards? dani: that is right and that is one of the things fleurbaaij said. they looked at the universities they had been too, a lot are oxbridge graduates and realized they needed to widen their

scope. she said when she spoke to young women and girls, they have a stereotype that the industry itself does perpetuate, that this is a man's job, that you need male attributes to really succeed, be it aggressive in this or a huge interest in math and that is really not true. soft skills and really, any woman could do well in this industry. so a lot of her work is to dispel the myths in this. not to mention that even young women who decide they are interested trying to and her, be it hiring software or the application itself that prefers typically male attributes. manus: thank you very much, great research. dani burger on the equality story. a snapshot of risk. it is about the fiscal narrative. could it improve? the political narrative. is it biden's to lose? nasdaq, up one third of 1%.

even though the hedges are shortest since 2006, but the aussie believes in the growth story. this is bloomberg. ♪

anna: welcome to "bloomberg market: the european open." i am anna edwards alongside matt miller in berlin. matt: today, the markets say not is the time to run out of steam. asian equities cool off after monday's rally in stocks, and equities in europe and the u.s. -- the futures are pointing higher but look unlikely to emulate yesterday's gains. cash trade is an hour away.