♪ caroline: from bloomberg world headquarters in new york, i am caroline hyde. tradee: the reflation getting a gut check. one trump tweet causes a reassessment. trumpne: will tweeted and

tweeted. is it the art of the deal? time will tell if this man, the commander-in-chief, is bluffing. we had seen investors rotate value stocks. we had seen a widening of the yield curve. airlines, what for job losses and people hurting? off, askets selling noted. in the last few days, it felt like a reflationary narrative had emerged. that loseyimpressed and mnuchin are still working on

a deal. all of that is still possible. perhaps a deal after the election. but at least part of the stimulus story had the legs kicked out with that trump debate. romaine: this is a market that moves on narrative. thatmarket was the idea the economy was improving, fiscal stimulus was coming, and the outcome of the election would probably print some sense of stability. set to talk all about reflation, steeping yield curves, stimulus, blue waves, and then you had to rip up everything to come on the show. trump tweet.bout the last timeof

that happened. clearly, traders were pinning their hopes on losey and mnuchin coming together, republicans and democrats going to frame it as a it, get people fired up, just didn't happen. -- he is also the one calling off the -- entirely. from a market perspective, real big damage. thoughe: it feels as when we talk about the heady heights of the market, buying are riskier debt, markets forward-looking, then markets get so effected on the day when we see a headline like this.

it is the narrative still there that potentially we will see some stimulus. you were writing on the focus of the polls, focusing on perhaps a fight and win and therefore stimulus at that further date. day, ite end of the will take a further week. joe biden being possibly the next president, the stimulus or 2.2 more than 2.4 trillion. you could easily see a $3.5 trillion bill if all goes well for the democrats. if it's keep control of the doate, what will republicans with that power if the other two

branches are democrat-controlled. for now, markets are not happy that there is no fiscal stimulus before all of that transpires. inaine: there is an event sylvania, former vice president joe biden speaking. he was supposed to be talking about calling on americans to come together. we will monitor it and see if he makes any comments that would be material to someone watching and making insights into the economy. that is democratic candidate joe biden on your screen. brian, there was a lot of concern about election risk. at least that was the narrative couple of weeks ago. everyone wanted to hedge about the possibility that on november 3, we might not find out that evening. that narrative seems to have changed a little bit over the last few days.

the idea that things are becoming a little clearer. are we seeing that reflected in market prices? brian: i think that is a reason why you are seeing the market start to selloff. i am not the only person saying this. but, a big selloff if democrats took all parts of the government, basically, with the idea that there would be more fiscal spending and that could trickle into inflation and that could ultimately cause the fed to act. -- withthat has been fiscal stimulus off the table, a short-term blip, but there will be a lot of pull watching among the senate will be democrat or republican controlled. the house looks pretty solidly

democratic. and obviously the presidential race is a bit one. joe: it is kind of a cliche that they say every time, the fed is out of ammo. but, to some extent, right here, there is not an obvious next thing for the fed to do. interesting one. that has obviously been a hold up here in the fiscal stimulus. . -- fiscal stimulus package. we saw today that suffolk county, which is home to the hamptons beach community, is considering tapping the fed for a loan. but it will cost them quite a lot to borrow from the fed. if they brought those rates down, they could perhaps make it

not as putative -- punitive for the mta tomorrow. borrow.ta to joe: coming up, we will be speaking on the end of stimulus talks, how it affects the fed. pleas for more aid, and so forth. this is bloomberg. ♪

romaine: senate majority leader mitch mcconnell, of course a republican that controls everything coming in and out of the senate, basically saying that he agrees with president trump. president trump saying he is pulling out his negotiators from those stimulus talks, saying in his words that the democrats

were not negotiated in good faith. policy responded saying that trump is ignoring jay powell and the need for stimulus. joe: joining us with more is the director of research and analysis for employee america. thank you for joining us. there is sort of been this narrative that we might get a stimulus now. it seems less likely now. but it is very much more likely underrate theoretical provided industry should sometime early next year. supposing we do get that, and again it all depends on the vote and everything, what are the costs of the next several months of basically nothing new being spent into the economy? >> i think we are right now seeing the transfers from the government to the household sector are dwindling. hope you're likely to see, especially -- still elevated

unemployment. obviously, the unemployment rate is down probably faster than some expected. but we are still dealing with a pretty rough labor market and not really the opportunity to earn income the way there normally would be. we are talking about people who cannot make their payments for rent, cannot afford some basic essentials. that sort of cash shortfall is more likely to have spillover effects as households get more defensive. now, think about it right it is early october and we are talking about fiscal stimulus that was already kind of dwindling. and you are going to leave it until, what, late january at the earliest when legislation could get past?

that leaves room for a lot of volatility. maybe markets can pricing the expectation that there is at some point down the line going to be sufficient stimulus. but that is not very fair, that consideration in the context of people who are liquidity constrained and who cannot sort of bank on expectations. the income will come through five months from now and i can keep my spending patterns the same. there is some distributional inequity that is pretty obvious if you are paying attention to what a lot of the cash transfers really facilitated from direct payments. that would help keep a lot of or more closer to whole likely whole than not.

caroline: the pain is clearly real. the pain had been shouted about quite loudly from the federal reserve president today, the chair of the fed, jay powell, with his most stark warning yet about the economy. we have the president of cleveland for the federal reserve saying that she sees fragility in the economic recovery. really saying once again that the only policy that makes sense is fiscal policy. that is the only one that will move the needle and make the difference. been byrised have you the forcefulness from the federal reserve? right now? skanda: i think the fed is being justifiably clear. even though fiscal policy is not directly in their mandate, it directly connects and relates to what the fed is trying to

achieve in terms of maximum employment and price stability. how they define those goals are inherently dictated by the choices made on the fiscal policy side. the cares act, they could find ways, as brian chapala highlighted, there are ways to make municipal facilities more attractive, lower the costs trying to borrow. it could still help at the margin in terms of making that market even more liquid and make it easier for issuance to take place. we are talking about things at the margin, whereas fiscal policy can do direct payments to people who really need it to make sure their standard of living is kept afloat in a period of immense turbulence we are headed into. a lot of the experts say that the havoc has a greater risk of

getting out of control, especially because we are getting colder months. second waves have actually a lot more common if you look across the world, if you look even within the united states itself. that risk, coupled with the fact that people cannot earn income that easily. even after the on employment rate news on friday, there is out there.ot of pain romaine: the idea that you had a certain segment of the population generally rebounding much faster than the lower income folks out there. is there a sense that the top end would be in jeopardy if we did not get more assistance here? compare inis hard to

personys how an affluent 's outcomes are likely to change. there was an expectation that we would get some kind of fiscal follow-through. fiscal policy does not just benefit the government or government programs. they are also creating income that facilitates spending on things that businesses produce. help to buffer business revenues , household income. that is also good for a flourishing economy. fiscal policy, there is clearly a better way of delivering distributional benefits, making sure standards of living are cap whole across the board. impact ons also an the growth environment where there is not fiscal follow-through. the baseline right now is that biden is likely to win and there is increasing possibility of a

democratic trifecta, there is -- wethat tail end of the an impasse and that -- it makes up for some of the shortfalls. people whomore for cannot afford some of the basics and necessary payments to be made. joe: skanda amarnath, thank you for breaking down the impacts of the latest news. coming up, we break down who would be more affected by the lack of support in the near term. this is bloomberg. ♪

joe: some headlines from amazon. of course, they are responding amazon sayingort, large companies are not dominant by definition. private label goods, that they sell themselves, they say represent just 1% of sales, trying to establish that they are really kind of a neutral platform for third parties rather than a company exploiting the dominance of the marketplace. caroline: so much breaking news today. we are focused on the role back in terms of stimulus negotiations on ice according to president trump, pushed back

after the election. for unemployment relief and indeed more spending power? o'brien, who tim wrote about congress should act boldly to help workers and avoid the mistake of 2008. you have been writing throughout this pandemic about the need for belief, ppp loans, supports for small businesses. what about jobs right now? we saw the numbers on friday. what worries you today as we hear of lack of stimulus? to point tos like the fact that nearly 70% of gdp comes from consumer spending. if workers and consumers do not have money to spend, there will be a macro economic effect that

affects the bottom line. a lot of the boost i think we saw in markets over the summer and in the wake of that massive downturn in march and april, was because of the cares act stimulus, a significant portion of which extended unemployment benefits to unemployed workers and had a benefit to families and workers across the country. those benefits expired in july the the first round of cares act expired. that is what has become a political football since then. democrats came up with a second large covid relief plan in may. i think the republicans waited for strategic reasons to try to get some brinksmanship on their side. but by the time they came to the plan,in august with a

benefits had expired. now it is extended up until in october. apparently, given what president trump tweeted today, the negotiations have been blown up. i think this will create economic problems, employment problems, and possibly electoral problems. all, thisirst of political football, we are talking about a $2 trillion bill passed by the house. republicans based on our own reporting were willing to accept around $1.6 trillion. basically coughlin over $600 billion here. hole, economy deep in the millions still unemployed, and a gdp that we have no idea if it will snap back. a month out of the election. what is the thinking?

what is the deal that trump is going for that will somehow recess at eight this economy and somehow get him reelected? the $600 billion gap is essentially accounted for by two categories. the money given to the unemployed, democrats want $600 a week, republicans won $400 a week. the other big hurdle that has been blocking negotiations has been assistance to state and local governments. amocrats originally wanted trillion dollars. republicans offered $150 billion. since then, republicans have come up to 250 billion it democrats are seeking $436 billion. they are not that far apart you know have trump wading back into

this. it is a difficult time. the president is still medicated, still struggling with the effects of covid, not out of the woods. his state of mind on this is a wildcard that makes it more curious, i think. caroline: really puffing it into for us, executive editor for bloomberg opinion. do read his story talking about how congress could and should act. what a topsy-turvy day. what is the main thing you will be looking at tomorrow? joe: i might keep it simple and look at what futures did overnight. nothing fancy for me tomorrow. just going to see what futures are doing first thing when i get up romaine: we are going to try to look at the real world impact we talk a lot about the market that is an economy

struggling out there. caroline: something to think about as you walk down the street and look at your local restaurant, local corner shop, and local hairdresser. technology" is next. romaine: this is bloomberg. ♪

♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." house leaders recommend sweeping reforms for big tech, calling facebook, amazon, and apple monopolies, and describing how facebook neutralized search

rivals. plus, facebook and twitter take action on a post from the president in which he