manus: good morning from bloomberg's middle east headquarters. it is daybreak europe. here top stories. >> everyone knows he is a liar. i want to make sure -- >> you graduated last in your class. >> can you let him finish? >> he does not know how to do that.

the wrong guy, the wrong night, the wrong time. biden and donald trump clash on issues from the economy to covid in an ill tempered debate. biden says the president panicked and just looked at the stock market. the quotetrump blames china plague for hurting the u.s. and says beijing eight biden's lunch. fresh pmi data showed the nation's recovery is gaining pace. lower asocks tick the month draws to a close. the markets will watch a speech from the ecb president. german inflation drops below zero. 6:00 a.m. in london. 7:00 a.m. in frankfurt. annmarie hordern, good morning. it was a shouting match. it is interesting biden went after trump in regards to being putin's puppy and the wealth

differential. >> noise it was. little substance, a lot of chaos. 34 days until the u.s. presidential election. westin, to david franklin said amongst the swing chris, they thought wallace was the winner. he tried to bring decorum back to the debate. i will call it chaos, he called it a hot mess. manus: biden's salvo was under the u.s. -- under trump, the u.s. has become weaker, sicker, and poorer. president trump and joe biden hurling insults repeatedly. this is the first debate. pres. trump: we are going to deliver it right away. we have the military set up

majestically. thatve our military delivers soldiers and they can do 200,000 today. >> the same man who told them by easter it would be gone away, by the warm weather it would be gone like a miracle. maybe inject bleach in your arm and that would take care of it. >> i said it sarcastically, you know that. >> this man is talking about a vaccine. every serious company is talking about maybe having a vaccine done by the end of the year. the distribution of that vaccine will not occur until sometime beginning or middle of next year to get it out. a lot of chatter about how he did debate got. the markets are absolutely focused on the fact that trump will not commit to urging his supporters to wait for the

results. good morning. >> good morning. you are exactly right. the president very much keeping a contested election on the table, questioning the legitimacy of mail-in voting. this could be characterized as undignified. trump and biden stepping all over each other. biden telling the president to shut up. he called him a racist, he called him the worst president america has ever had and repeatedly called him a clown well trump for his part came after biden on allegations of his son and questioned biden's intelligence. this was a lot of noise. really light on policy. annmarie: i got up very early in london to watch this debate.

on specific policy it was very hard to find those moments. we were few and far between. what were some of the primary messages? >> one of his primary messages was with regard to his economic policy. he tried to make this a referendum on president trump's handling of the virus. he said his plan will create millions of jobs, $1 trillion to economic growth. he talked about his plans to raise the corporate tax rate to 28%. on climate he said he would have the u.s. rejoin the paris climate accord. he spent a lot of time defending his record in his first term handling the pandemic and the strength of the pre-pandemic economy. when focused on his actual in regard to the virus and health care he was really light on details. we will have more analysis in about 30 minutes

time. let's look at how the markets reacted to the debate. asia's stocks lower. s&p 500 futures lower after that debate. 50, butthe euro stoxx no massive moves. let's look at what's going on across assets. the showtched yesterday. we are 0.64%. nymex crude well below $40 a barrel. top oil traders are just worried about the demand coming back to to covid-19. 18 months for oil market demand to recover. fxning us now is the head of strategy, help us to digest all of this. good morning to you. u.s. futures up a touch. the dollar higher. does this debate matter at all to market?

washingtonng on in with munition pelosi, it was chaotic, but was anyone expecting anything different given the political discourse in america? >> the characterizations from the previous segment i would agree with. very difficult for the market to trade. the price action we are seeing provides a consistent narrative to that. a very muted market reaction. it is very challenging in some respects. it is paralyzing for the market to really translate the outcome of the debate yesterday into price action today. , clearly the u.s. election news flow is going to be key for the market. the view that we have at bnp paribas is provided the state of the world where you have an

uncontested election outcome, the market scenes which prevailed in july and august, higher u.s. inflation expectations, lower real yields, rising equity prices ended --ker dollar are all races rising equity prices and a weaker dollar are all likely. matt: that --manus: uncontested election, let's run with that. i don't think that is the consensus trade. goldman say if you have uncontested, this would perhaps be the most underpriced risk in the market. .ields to 1% uncontested, that is on a blue suite. 1% in yield. 30, 40 basis point is not that much. how would we replace that -- reprice that? agree on a democratic sweep you are likely to have a

steepening move in the u.s. nominal curve. i would argue what is key to think about, why we are getting that move. we are getting the move based on the large fiscal stimulus expectations. those same expectations should push u.s. inflation expectations higher. 10-year breakevens reached 185 basis points post jackson hole. they have traced down as low as 160, recovered more recently. the key point here is post-election, any rise in nominal's should be met by a rise in inflation expectations. keeping real yields at the current low levels and perhaps even falling further. the fed reaction is key. very asymmetric reaction function. in a state of the world where the fundamental backdrop is improving and inflation expect tatian's are rising for fundamental reasons.

the fed will keep policy very loose. that is the real yield's fall. the fed are more likely to ease offsetting the fact that inflation expectations may not be rising. reactionmetry in fed is going to be super important given the various election outcomes. i would argue the asymmetry is somewhat disrupted pre-event. what i mean by that is it is very difficult for the fed to announce or signal a new dovish message before the election, let alone deliver any easing messages given political constraints. while the trend for the dollar is very likely to resume a weaker path post-event, we may be in for a challenging few weeks. matt: -- manus: we have seen the dollar

turnaround. our guest host this morning from bnp paribas markets 360. the first word news flow, laura wright is in london hq. union's stimulus package is in danger of being delayed. germany says that is due to disagreements over how to ensure short funds are not misappropriated. the 1.8 trillion euro budget is designed to combat the steepest recession in the bloc's history. prospects of a deal with the u.k.. the prime minister says the obstacles are not insurmountable and not agreeing to an ideal -- to a deal would be an enormous failure. is a good chance we will get a trade deal before the end of the year. even if we don't, there is a lot of work to do in terms of

implementing the international trade deal that facilitated the u.k. leaving the eu. >> a wildfire of california's wine country forcing the evacuation of an entire resort town. scorched miles. 70,000 people have been forced to leave the area. local fire chief warned residents to plan ahead in case more evacuations are ordered. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. . annmarie: thank you. coming up, signs of a solid recovery. china's factory output grows more than expected in september. ♪

>> i was asked to bring back chrysler and brought them back in ohio and michigan. he blew it, they are gone. >> ohio had the best year it has ever had last year. michigan had the best year they have ever had. >> is not true. >> many of our companies went to michigan. take a look at what he has actually done. he has done very little. his trade deals are the same way. he talks about the art of the deal. china has perfected the art of the steel. we have a higher deficit than before. we have the highest trade deficit -- >> china eight your lunch. ate your lunch, joe. that is why guests are

able to send us messages. they did say it was trump who was biden shut up, that it biden who told trump to shut up. my mistake. the official manufacturing stages rose in september. the improvement is in manufacturing. it is better than estimated by bloomberg economists. manufacturing pmi numbers reinforcing the picture despite a takedown. i remember the days when the pmi a meaning.e what lacks force in the data that the politics of america is overshadowing? >> the data is important. it further reinforces that the

recovery in china is getting settled. it also reduces the need for additional stimulus. stimulus in china we think should be consistent with the currency continuing to outperform. ties in with that structurally bearish view. i articulated in our previous segment on the dollar, it is a very appealing proposition whether it is bnp paribas or the head of china rate strategy based in beijing. we could actually trade down as low as 660. less stimulus should be consistent with yields continuing higher. we talked about the potential for a selloff in u.s. ten-year nominal. we also think there is a potential for yields in china to had higher. uptrend getting well above --

annmarie: what we're seeing out china, the chinese pmi's, when will the rest of the world pickup? >> the diversion market performance has been evident for several months. it is a theme which the market is already trading. in terms of implications for currencies, it means those with larger trade exposure to china such as the australian dollar should be poised to benefit. it is going to be quite interesting heading into the central bank meeting in australia next week where you may have a situation of rate cuts and a reduction in the yield curve target than the rba is pursuing.

against a backdrop of better data today in china, which would lead to improving recovery in australia going forward, you going to have a central bank that may present an interesting opportunity where the low in the australian dollar will be seen into an rba using measure. thereafter the central bank will -- the currency should be poised to benefit. annmarie: thank you. lynton-brown stays with us. boris johnson could face a defeat at the house of lords. ♪

pres. trump: the country would have been left wide open. millions of people would have died. >> when he was presented with that number, he said it is what it is. it is what it is because you are who you are. pres. trump: democrat governor said the president did a phenomenal job. we got the gowns, the masks, we made the ventilators. you would not have made ventilators. now we are weeks away from a vaccine. >> you should get out of your bunker and go in the office and fund what needs to be done to save lives. pres. trump: you could never have done the job that we did. it.re going to deliver we have our military that delivers soldiers and they can do 200,000 a day. >> the same man told you by

easter this would be gone away. warm weather, it would be gone. could the way, maybe you inject some bleach in your arm. manus: heated round one in the first presidential debate. let's get your morning call. juliette saly is in singapore looking at the potential impact of a democratic house when on the s&p 500. >> this is what they call in the blue, both chambers of congress , this is ate house goldman sachs call that you could see upside for s&p 500 earnings. it is a contrast to what we have seen, that if we saw a blue sweep it would be negative for earnings. but the goldman sachs analyst are essentially saying you would see an increase in spending and that would boost economic growth and help offset earnings headwind from higher tax rates. they have reiterated their target to the s&p 500 of 3800 by

mid next year, a 30% upside. when it comes to the bond market, goldman sachs saying you can see a 30 to 40 basis point rise in the 10 year yield on the democrats sweep. this increased spending in the white house if the democrats take the white house along with control of the house and senate, but eric robinson says the opposite would happen and that a blue sweep would actually weigh on risky assets and drive treasury yields lower on safe haven flows. everyone watching with the outcome of the election is going to be in november. also talking about the fact you should be looking at the potential of a very smooth transition as well. saly on theliette moves you could expect potentially if there is a blue sweep. politics in the united states, also in the united kingdom. boris johnson is braced for defeat over his controversial

lawbreaking brexit plan, a law that could throw negotiations with the eu into chaos. the bill will move to the house of lords. johnson's party does not have the majority. johnson of the boris bill will be really the state of the brexit trade talks. do you see a trade deal by december 31? are you long the pound? against the dollar or the euro? whether or not we get a deal is still very finely balanced. i tend to downplay the deadlinee of the eu the eu put forward. the eu has said even if it were to begin pursuing legal it would -- in trade talks.

in contrast how the eu characterized that initially, it is somewhat separate. the news flow week in terms of the trade talks and heading into -- week had been cautiously but i emphasize consciously. we see that across our quantitative metrics said bnp paribas. when we look at our fx positioning. the market heads into this week positioned to sterling. it holds a small short. it is only a very moderate exposure. similarly when we look at short-term valuation, the pound headed into this week with a slight undervaluation. that is where we think it should be trading in the short term. how are view is that over the medium term, cable could go much higher. that ties in with a base case expectation that ultimately a deal will be agreed.

it also ties in with are structurally bearish -- i think cable could end next year closer to 150. this is an expectation heavily predicated on the weaker dollar thesis outlined earlier combined with a brexit deal being agreed. the risk reward for this week i don't think is particularly skewed by the way. the view should be to stay nimble. nimble.tay stay with us. fx strategy from b.n.p. paribas. a quick snapshot of the markets, we are repricing. a turnaround in u.s. equity futures. we are down 0.6%. it is about the possibility of an elongated and protracted discussion about who wins the

u.s. election. 0.5%.toxx 50 down nobody seems to care really about the pmi in asia at a six-month high in china. the first debate dissents to chaos. ♪

♪ ♪ good morning from bloomberg's european headquarters in the city of london. this is bloomberg daybreak: europe. here are today's top stories. >> everybody knows he's a liar. i want to make sure -- >> you were last in your class, not first in your class. >> can you let him finish? >> he doesn't know how to do that. >> you would be surprised. >> the wrong guy, the wrong night, the wrong time.

annmarie: chaos. president trump and joe biden slam each other with insults and clash on everything from covid-19 to climate change. 34 days away from the u.s. election. disney cuts deep. they will lay off 28,000 workers at its resort business, one of the deepest economic scars of the covid era. europe's shaky recovery. germany's inflation rate fell further below zero. the ecb may need to do more. christine lagarde speaks in two hours. good morning. just gone 6:30 a.m. here in the city of london. what a wild evening it was. a little substance, a lot of chaos. in mywas more decorum model u.n. high school debates than we saw with president donald trump and joe biden. mustlin's called it a hot -- mass.

swing voters said america was the big loser in this debate. manus: absolutely. the insults went backwards and forwards. there was a lot of shouting over one another. biden going over the wealth differential. biden going after the status. trump bombing back in regard to biden's son and pushing towards the family narrative. how does it play out for markets? the equity market has rolled over. we've done a range of 1%. s&p 500 down. the pmi down in china. it's the tale that is wagging the dog. volatility in the equity market. euro stoxx 50 down. what can the guard -- lagarde bring to the table to reinstate the cyclical narrative of europe?

the dollar is big. 1.7% this month. the first month of gains in six months. oil is lower. the grim reaper's came to bear at the conference yesterday. oil market demand will be tough. more rough times ahead. there's aelds, if clean blue sweep, that could get you up to 1%. that's a risk that we are not debating. daily lines have been following the debate minute by minute. i was stuck in an uber. and re-horton said it was extra special. what did you make of it? has anybody called this? did anybody win? annmarie: it doesn't seem that anybody thinks that anybody one. it was very messy and undignified. characterized by both candidates stepping over each other.

biden resorting to name-calling, telling the president he was a clown. at one point asking him to shut up. there was very little policy discussion. biden tried to come out after .he president on his record they discussed health care and climate change policy. there weren't that many specifics. many are saying that not much has changed coming out of the debate. not a lot of mines were molded by what the candidates said tonight. biden was leading in the polls going into this, nationally and in key swing states. trump is the most behind of any incumbent president since the 1990's. it's unclear if he did anything tonight that will really close that gap, narrow biden's lead. it's not clear that biden has cemented his lead at this point. we are expecting two more debates. some questioning whether those will happen given how messy this

debate was. looking beyond to the election, president trump again casting question on the integrity of mail-in voting, not promising to tell his supporters to stay calm should there be an election delay. the market take away from the debate tonight seems to be a contested election is still a risk factor. annmarie: thank you so much. for those debates, the vice presidential debate taking place october 7. .oining us now is david wolf think you for joining us. you also woke up early to make sure you could catch the debate. not a ton of policy plans detailed. it was messy. i want to pick up on what manus said. do you think anybody won the debate? >> yeah. your colleagues are absolutely right. it was a hot mess, actually.

what was supposed to be a debate of 90 minutes with some structure, there were six issues that the moderator was supposed to cover. he did cover them. we did not hear any answers because the candidates kept interrupting each other. he didn't really callout president trump to stick to the rules until way into the debate. i don't know if there's a clear winner. i guess the loser is america. we didn't really hear much substance. we looked a little bit silly in front of the world. i'm sure other eyes, people outside the u.s. were also watching the debate. manus: great to have you with us. i want to get your sense, will the appointment of miss barrett to the supreme, if it goes through, will that be a game changer in the swing states? does that play to the narrative of the right?

sudha: yeah. i think the question of the nomination of amy coney barrett, there's no clear answer. it depends which side gets mobilized more. the conservatives, the evangelicals in the trump base? will it be the democrats that get mobilized? the fact of the matter is, the senators have the votes. there's not much the democrats can do to stall the process. they will stall a little bit. most likely, she will be installed as the successor of ruth bader ginsburg. president trump said it himself. if he doesn't get it done before november 3, he still has time during the lame-duck congress. that was the one issue area where president/-- vice president biden duct. he did not give a clear answer when chris wallace asked him. if he's president, willie expands the court to more than nine judges? annmarie: in your notes, you

talk about the dose of reality. if there is a biden when, not let's -- not much will change overnight. what would be the biggest change if we were to see a biden administration? electionsberlin, u.s. don't cover a lot of international politics. there was mention of the paris climate accord. vice president biden said clearly that he would work to get the united states back into that agreement. i think our allies will naturally be relieved to see vice president biden win. the tone will change. there will be more of an effort to work on cooperation, on transnational if youth -- issues. climate change or cybersecurity or relations with russia. certain things will stay on the agenda for europe. whether it's more military spending, americans will want allies to step up. things won't change overnight.

i think it will be them for the europeans to not necessarily cut ties with republicans. election, there will be another midterm election in 2022. we will see if the republicans do manage to check the presidency if biden manages to make it into the white house. berlin whicht in takes me naturally to a lot of the stuff written about a biden when in terms of its implications for russia. an and china. the first two are relevant to the seat of power that you sit in. russia and iran, if biden wins, could have material impact on europe. sudha: absolutely. i think a biden administration will look to work in concert with european allies. china has been a topic in the trends atlantic relationship for a very long time.

this is nothing new. could thought that china be brought into the international system and abide by the rules. there's a realization in europe that the united states and europe have to work together in order to not allow china to duck these rules. also to have a level playing field. i think the europeans are also realizing that there's a security context that they need to use when working with china. think the german government more conditions when it comes to 5g. we will see that while way is not necessarily going to have an easy time to be a provider here in germany. manus: ok. thank you very much for being with us, sharing your thoughts. the long road to the white house.

sudha david-wilp. the first presidential debate descended to chaos. what the impact of the election here will mean in the middle east. the view for the region from a dubai billionaire. it's an exclusive. this is bloomberg. ♪

>> i paid millions of dollars in taxes. millions of dollars of income taxes. let me tell you, there was a story in one of the papers -- i paid $38 million one year. i paid $27 million. >> show me your tax returns. >> the tax bill that gave us all these privileges for

depreciation and tax credits. it was given to me by the obama administration, if you can believe that. him,e tax code that made put him in a position that he pays less taxes than us -- a schoolteacher makes is because he says he's smart because he can take advantage of the tax code. he does take advantage of the tax code. that's why i will eliminate the tax cuts. >> that's ok. >> and make sure that we invest in the people who need the help. of the highlights from the first presidential debate. some saying it descended into chaos. donald trump and joe biden clashing on issues from the economy to covid-19. it's the first election debate. more will come. the discussion steered clear of

geopolitical issues. that comes shortly after a major for -- foreign policy when. last month, israel and the uae agreed to normalize relations. trump hailed it as the foundation for a conference of peace. companies and investors are keen to seize on the new opportunity. one of those is a dubai billionaire. partnering with an israeli farm -- firm to bring self driving cars to the uae. great to have you with me this morning. i don't know whether you watched the debate. i want to get a sense. his there's -- if there's another four years of mr. trump in the white house, do we have a safer region because of the alliances that he has struck? do we have a risk of greater tensions? good morning. khalaf: good morning. i was watching part of the debate. it was entertaining. the president of the united

biden.and the candidate it wasn't expected that they would attack each other in very bad way. democracy allows you to do that. [inaudible] saw the damages during president obama and president biden. iraq, libya, a lot of countries. appointing iran to be the governor of the area. that is an acceptable to us. i am not against democrats at all. sometimes, it doesn't leave you comfortable or relaxed. president trump [inaudible]

he created something called business peace. i don't want to call it peace. it was an economic arranges -- arrangement between us and israel. it's an achievement. [inaudible] manus: let's talk a little bit about that. you want to understand from the abraham accords. do you think it bolsters the position against iran? was that the primary driver? you speak to many people. was that the real driver? it was a hedge against biden getting back in, reasserting the 2015 deal. is that the driver of this? khalaf: our relations with the americans are very strong. military, etc.

we are not expecting the relationship -- [inaudible] i think we have the power to defend our country. with the cooperation of the united states, our aim is to do business with israelis. to do business. we are the same caliber of businessmen. that very much brings us together. it will be a great achievement. it's a warm up. manus: part of that is the mobilei partnership you have done. are you prepared to put physical dollars on shore into israel? if so, what kind of businesses

would you like to invest into israel? khalaf: it's a great achievement to sign with mobile he. this warm up will let us expand in israel. [inaudible] we have a plan to do that soon, as soon the lockdown is finished . i'm planning to visit as well. manus: let's talk about the business here. i know that it's a challenge. you have seven properties here. what is the occupancy looking like for the winter season? will you have to close any of these hotels? will you have to shave back on any occupancy capacity? close: we did not really

at all. [inaudible] we are doing better than the years before. [inaudible] we can see local visitors. ,lus we have people from russia we hope the lockdown in europe to open and allow the people. we will receive huge business improvements within two or three months. critical?that is that the critical point you need? an air bridge between us and the u.k.. is that a left line to the business of dubai? khalaf: that's true.

we have a great relationship with the very -- -- british. we love the people without quarantine. rules ofo respect the the medical advisors. we can do that. respect every instruction from our health ministry department. that will be for everybody. there is no exception. we are not doing quarantine to anybody. let them free in their houses. yes. manus: you make your money on doing deals. are there any big opportunities out there in health, education, or who tells -- hotels? do you take advantage of this great crisis for all of us? if so, where. in the areadamage like hotels, airlines, etc.,

which we are suffering not only in dubai. lot.e suffering from not a manus: are you ready to buy anymore if there is value out there? in 30 seconds. are you ready if there's a deal on the table for you? khalaf: [inaudible] ok.s: we wish you well. i can do a trip advisor for you. thank you very much. khalaf: no problem. manus: take care. we will see you soon. show, do on the debates really matter? they matter to markets. off hasp biden spar seen the equity market take a dip. will it last? we reflect the data.

this is bloomberg. ♪

annmarie: good morning. we just had the u.s. presidential debate come around one. mliv is calling it a grumpy sentiment after that acrimonious debate. dani burger, do the risks matter? dani: u.s. equity futures are starting to sink. does this mean that markets are pricing in and incumbent loss? the market is saying, biden will be president. it's an extremely noisy day. it's hard to sort through that and get a big take away. perhaps history can be a better guide for us. what do equity markets usually do after the first presidential debate?

the next day, they are barely unchanged. one month out, you do tend to see a 2% decline. this is on average. there's another problem with this data point. the total span of what it looks like after every sigel debate, which is my next chart, the data looks more confused. look at what happened in 2008 during the great financial recession. we see big declines. that skews all the data which is usually unchanged for equity markets after the first debate. more than anything, this really shows us that there is a correlation between markets to and how the presidential debate goes. more important might be the election itself and the sentiment around it. manus: ok. thank you very much. the markets are now lower.

ubs, the first debate, everyone loses. this is bluebird. ♪ -- bloomberg. ♪

♪ anna: good morning. welcome to the european open. i'm anna edwards. the cash trade is less than an hour away. here are your top headlines. next to the peaceful transition. donald and joe biden clash on everything as the first presidential debate dissents into a chaotic core of insults. we are 34 days away from the u.s. election.