manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny. your top stories this morning. surges across europe and the u.s.. italy announces new measures to stop the spread of the pandemic. stock futures retreat, treasuries rise. stimulus talks remain deadlocked in washington. democrats and republicans, accusing each other of moving the goalposts. the election is next week.

china's leaders meet to draft their next five-year economic plan and the virus recovery. we are live in beijing. -- adi terry warning warning from the world health organization. we are in a dangerous place. we are not going to control the virus. are we perfectly positioned for risk? i take you to the changing risk in the polls. and thethe bond market polls. a blue sweep from a 62% probability to 51% probability in a month. it is a curve. overextended to the upside. these are the markets this morning with the risk from the white house. we are not going to control the pandemic. there are lockdowns in spain. are you pricing equity market risk appropriately? markets are trading what they see, not on what they hope. goldman sachs say you will have to reach for risk. stocks could outperform the

credit markets into 2021. i take you into the response mechanism on the australian dollar, a high beta trade. there, the rba could strike next week with lower rates. you just shredded the cost of hedging and shorting your aussie against the yen. the 10 year government bond yield, that is not exactly how we should pop that up. ,e never show a bond market let's rip that off the screen. crossed thewe've rubicon. it is all about the millennials so we have to have annmarie back on the show. let's talk about the risks. the world health organization is warning the northern hemisphere is facing a dangerous moment. new virus cases in the u.s. hit a record the second day. deadlockedlks remain

in washington with two sides accusing each other of moving the goalposts. >> we are waiting for the final -- >> they said they would, but -- >> they haven't yet and same thing. they keep moving the goalposts. we wanted the sooner the better, so that's why we are making concessions. >> we don't even have the bill yet because nancy pelosi, i know she can speak to this, but we continue to make offer after offer and nancy continues to move the goal post. manus: and the election is next week. my guest host is the global strategist at wealth management. i'm exhausted talking about stimulus. these markets have yet to get exhausted in terms of the stimulus, but is that a risk that we have an exhaustion from stimulus and when it arrives, it is a million rated fiscal response? orated fiscal response?

ifit remains to be seen something changes in terms of pricing the stimulus. the baseline is whether we get it now before the election, or even after, early next year, the is it enough for the growth recovery can be sustained next year? risk thatr republicans block any stimulus after the election, that is a risk that is not priced in. manus: of course, you got the ,teepeners, which are bountiful to say the least. i look at the odds of a blue sweep, from 62% to 52 -- 50% so this is a tale risk that is moving slowly to the center.

what does that do to the steepeners? do we come off the top and few bonds repriced to a new trading range? the last couple of ,eeks are the most significant very resilient to moves in risk aversion, the news you mentioned over the weekend, the numbers in spreading over19 europe into the u.s. are really bad, and despite that, the bond market has been resilient. it is less relevant than the endgame. also, both sides have made concessions, the negotiations remain open. just like brexit in europe. we are talking about brexit, but the door is not yet closed and the possibility remains a deal can be done. manus: there are various stories from scott minerd at guggenheim

over the past 48 hours. scott talks about the possibility of the bond market .41, the to .4, then -.25 in 2021. i would say you have to have something catastrophic to get you to negative rates in the united states as a headline number. to happen to get the bond market in the u.s. to reprice to .1, then flipped negative in 2021. what is the extreme grey swan that would take you there? aederik: it is a huge shock, broad recession that hits not only the u.s., but the world economy. 'sen then, we know the fed option is to increase the balance sheet, do some rotation before theyities

even consider cutting interest rates to negative territory. you also need europe, the bank of england, the ecb to change tack because they haven't looked too much at this. they will threaten with rate cuts but don't want to go there. you need a number of things to move before the fed considers negative rates. manus: we are not going to control the pandemic, the westridge -- message from the white house. is that an extreme response or assumed narrative? this is mark meadows. "we are not going to control the pandemic." an honestit is assessment of the past two days in terms of numbers. we've seen day have been really bad across the globe. the only thing i would add, and is weo adds as a caveat haven't seen the impact of the latest restrictions. the hope is france, for instance, the latest measures on virus an impact

numbers. this is probably the case but you have to strike a balance between protecting health of people and minimizing the impact on the economy. it is going to be more difficult in the second wave than the first one. manus: frederik ducrozet, pictet wealth management, my guest host this morning. weekghout the rest of the and today, we have the ubs ceo sergio ermotti in an exclusive on his legacy. this is bloomberg. ♪

manus: it is daybreak: europe. i'm manus cranny in dubai.

the stock, 15%. they signed an $8 billion contract in abu dhabi. it is a memorandum of understanding. projectsng to manage including riyadh city. there is a host of project here to be had. the biggest one-day move since the 18th of december at 2014. 15% up at one juncture. to the chinese economy. it is emerging from coronavirus. that is evident in the numbers. xi jinping numbers put forth a new growth model based on self-reliance, a dual circulation. china is setting these priorities at a meeting of the communist party's leadership.

like to see fiscal policy focuses on targeted ,roblems, helps households which will support consumption and facilitate the handover to make the recovery more sustainable. >> the new development paradigm is not about closing down our doors and our borders and developing in isolation. >> what they are trying to do is have a speedy, gradual recovery with high unemployment and that makes stability more of a think they arei reasonably confident about where they are right now. >> people want to spend more. the buying power from the lower tier cities is a major push for the entire retail. >> what we need in china to continue to be able to be a lever for wealth for the rest of the region is a handout from public support and demand in

china to private demand. payingese companies are attention to the debt sustainability in some of these areas and i think if china takes care of this, no problem. for more on china, let's get to our china markets anchor tom mackenzie. rates to have you with us. this is a pivotal moment, isn't it? what will be the overall key theme? chinese officials love long-term planning. they are sitting down in beijing right now and will be discussing over the next four days this five-year plan that maps out those economic policies up until 2025. we may get what has been discussed. the plan will be published in early 2021 but the themes investors are focused on our jewel circulation, the policy

president xi jinping and colleagues have been talking about, which is an emphasis on self-reliance, building out the domestic consumer economy, changing the way production is aimed toward china's consumer. the emphasis on exports and jewel part of this is keeping markets open and making more moves to open up markets, the financial sector to foreign investments. investors will also be looking at the themes around clean technology because president xi has set a target of being carbon neutral by 2060. are they going to bring forward clean energy targets? what does that mean for wind and solar? ? and of course, technology. ai, supercomputers, robotics, semiconductors. china has been explicit it wants to lead in these technologies. how is it going to final funding to these areas and what are the implications to investors? we hope to get some details

toward the end of the week. manus: part of that self-reliance is dose, ,hilosophy, almost heal thyself is driven by the u.s.-china dislocation at the moment. eases not assuming that to nothing, even if there is a blue sweep. to what extent do the sino u.s. discombobulated's play into this? tom: you are right and it percolates through many discussions that will be had among communist party officials, the concerns about decoupling and the acknowledgment amongst many you talk to that whoever becomes president in january, the tensions and friction will continue longer-term between the two countries, so they need to build out, for example, their semiconductor industry. they need to be less reliant on trade with the united states. they need to build out trading

relationships with southeast asia, for example. all these areas will be focus. that u.s.-china dynamic underpins discussions this week. manus: thank you very much. i'm sure we'll touch base. great reporting. men on the ground in china, tom mackenzie. my guest host is frederik ducrozet from pictet wealth management. i was caught by ray dalio's " over thethe ft weekend. don't be blind to china's rise in a changing world. the world order is changing, yet many of us are missing because of persistent anti-china bias. have you ever suffered from anti-china bias? do you think the markets have two and extent suffered anti-china bias? frederik: i don't think the market has adjusted fully to the idea that whoever wins in washington next week, this bias

will remain, probably intensify in some areas. pushing greenency criteria and social criteria and the same for europe. closer comes up and gets to the u.s. in fighting china, addressing competition in certain areas will probably remain. this is true and this is a risk since the markets, china is growing fast. indeed, after this week's plan, we can expect more clarity on the growth target and the long-term planning. this is the risk. whatever happens this election, considering what we've seen in the pricing of the stimulus, this can be buying the rumor, selling the new sentiment after the u.s. election. one of the most bountiful

charts i've seen recently is the two's, threes, and tends premiums of ina bonds. a lot of have come on the show and said china will do everything to protect its yield premium. is that now becoming a consensus trade? can that yield premium continue into 2021 for china relative to the u.s.? frederik: yes, indeed. there is a structural differential in growth and but china is likely to do whatever it takes. a change on the currency side, which makes a difference in terms of hedging this kind of investment. the currency could strengthen further. the baseline scenario is the dollar weakens after the elections. perhapssomething that

upsets after the rate differential, but in any case, this is something the government and central banks are likely to monitor and they have been successful. the result is quite impressive this year again. manus: what are the risks from the stronger yuan? weaker dollar, post the election, angst, but we will get there. weaker dollar is your base case. does that translate to a stronger yuan and is that driven by flows? perhaps we under appreciate the china narrative and we see a new flow of money into china in 2021? frederik: i fully agree. on the one side, more structural flows from institutional investors, domestic flows but -- to me, they are

likely to resent -- remain. other developed market currencies have been late to catch up with the dollar. this week, we could see rotation within emfx next year that -- and to some extent, the appreciation of the yuan. e.m. ishe new normal in the fact you have qe, which you didn't have in-depth 2008, 2011 crisis, the first responsive qe is perhapsat the new facet you have to think about when it comes to e.m. frederik: that's true, but if we get more qe in the u.s., more qe in europe, even in japan, in growthe terms, the qe

might not be that much of a drag for emfx. growser again, inflation in any normal recovery -- i know it will not be normal, but you can assume higher inflation in most of those countries. you may still see some pressure on a number of e.m. assets. manus: stay with me. it is frederik ducrozet from pictet wealth management, my guest host this morning. let's get your first word news. laura wright is at london hq. laura: italy is introducing its strongest virus restrictions since the end of national lockdown in may. it will limit the opening hours for bars and restaurants and shut entertainment casinos and james. -- gyms. spain is imposing a curfew. the world health organization is

warning of a dangerous moment for many countries in the northern hemisphere. the latest trade talks between britain and the european union have been extended to the middle of this week as the u.k. government has indicated optimism about finding a deal. the eu tell bloomberg, chief negotiator will remain in london for the discussions. the senate has advanced amy coney barrett's nomination to the supreme court to a final vote. for confirmation today is in little doubt, but comes after delaying tactics by the democrats aimed at putting off the boat. they want to wait until -- the vote. they want to wait, while republicans see a chance to lock in a conservative majority on the bench. areesters in thailand putting pressure on germany over the kingsley cult status in the -- kings legal status in the country. demonstrators are asking germany to scrutinize whether the king exercised royal authority during his time, in violation of the country's law.

the king is in bangkok but spends much of his time in germany. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. manus: laura, thank you. coming up on the show, we speak to the cfo at 7:00 a.m. u.k. time. this is bloomberg. ♪

manus: it's "daybreak: europe." i'm manus cranny in dubai. the turkish lira dips below eight per dollar. this is reaction to not raising rates on thursday, ripping up the turkish lira. this is about confidence. 7.99 is where we trade. let's revert back to the main story, election day. it is barely a week away. history is a guide for us all. what does it do for stocks? dani: according to miller tom us stocksory tells will rally into the election. he says on average, u.s. equities have risen 3.8%. every time they risen heading into an election with the the weeksbeing 2016, before the 2016 alexion, certainly were a volatile time. a lot of news hitting the tape.

eversays nothing is guaranteed in markets, but our point is history tells us the odds are high the market will rally between now and election day. manus: the current positioning, how does that look for equities? dani: hedge funds have moved from more or less a bearish stance to being on the sidelines. there is potential to go ahead and jump in the market and rally as the guide from history tells us, but according to the likelyfrom number, it is it will stay on the sidelines until after election day. manus: dani burger on market positioning at the retail end. the risk. swelling cases of covid across europe, partial lockdowns in

italy, a national curfew in spain. we give you the latest details from across the globe. this is bloomberg. ♪

manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny. your top stories this morning. surge across the u.s., italy and spain announced new measures to stop the spread. stock futures retreat, treasuries rise. stimulus talks remain deadlocked in washington. democrats and republicans, accusing each other of moving the goalposts. the election is next week. china's leaders meet to draft

their next five-year economic plan amid the virus recovery. we are live in beijing. welcome to "bloomberg daybreak: europe." 6:30 in london. to the markets. we are in a dangerous place, that's the message from the world health organization as the white house's core message is we will not control the pandemic. the blue wave narrative is potentially dissipating but the equity market is demonstrably on a risk off narrative this morning. world from the world health organization and white house, really upsetting markets and a sense of exhaustion that we do not have a fiscal stimulus plan yet. ratedit be a much amelio risk? monetary for more mayhem.

look at the lira, the dollar, the momentum of risk. thelira, breaking eight to dollar. ratesidn't raise thursday. it is the longest route on the lira since 1999. yields, at .8128. what does that mean? if a blue wave is dissipating, have the steepeners run too far and is scott minerd correct? as wave two hits, it will careen toward .4, .1, the negative rates. nymex crude, that is the ground zero, libya on the way to producing a million barrels a day. tutor -- 2.3% lower and bitcoin, mykonos gratz's long bitcoin. you are hearing other voices talk about an inflationary hedge. jones said that to news agencies.

up 1.27%. the top story, the european situation where a second wave of covid is taking hold. it is worsening in italy, in spain. in response, italy has introduced a partial lockdown, the strongest restrictions since the national lockdown in may and spain is imposing a national curfew from 11:00 p.m. to 6:00 a.m. spanish lawmakers are expected to vote on a six-month extension of the state of emergency. frederik ducrozet is from pictet wealth management. nobody welcomes the ascendancy but you said the european economy still needed a circuit breaker. what do you make of the current initiatives? do they go far enough? more need something demonstrable as the world health organization said you've got to balance the economy against health. frederik: there is a lot of withue, understandably,

the hits to consumer confidence and business confidence because some measures have been late to come, restricting the economy and there is a lot of frustration in the sense that the holidays were almost normal in some countries. some states have to reintroduce some local measures, is quite a big hit. and youso unavoidable, need to find a balance between the impact on the health sector and the economy. be smaller.ll you have hospitals, which will be a problem in some countries and also on the policy risk front that could come on top of everything else, because there is a lot as well in political circles and governments. manus: this reinforces the deflation risk for the ecb as we go to the meeting thursday, doesn't it?

frederik: it does. even before the second wave, before we got the news, it was on track to adding more stimulus. it is only because you have to wait until next year for the full fiscal packaging europe to be implemented and the ecb had to respond to a situation where core inflation is new zero and that is not acceptable. the news over the past couple of weeks is adding more pressure on the ecb. them to signalts a move in december. there is pressure for the ecb to deliver something this week in terms of refinancing operation or concrete things they could do in december. the very least, christine lagarde will need to react strongly with her communication to the recent situation. manus: how express does that need to be? does that need to be tilted?

recently, she intimated a couple of weeks ago about the fact that the lower bound, what you might have thought the lower bound for rates might not be the floor at all. the threat of cutting rates further will remain. there is consensus the reversal rates have not been reached. cuts below -.5%. but there is an idea this will be counterproductive. from is a research paper the ecb showing qe asset purchases are more effective in pushing the currency lower than a rate cut. i think there is evidence that plays against the idea of cutting rates further. in a market where there is uncertainty about the economy, very little at best. the bottom oft your screen, the euro trading

1.1834. that is covid risk and a leveling of implied easing coming from the ecb. zero stocks futures are down nearly 1% at this juncture. , in terms of bonds, which in discussion around the green bond, italy, and those offering. where will that play into going into 2021 in terms of asset allocation? would you see this as a new proportional part of portfolio management in 2021 and beyond? frederik: within the fixed income market, it is a huge game changer in terms of the next decade because if you think about what is coming up in europe, what happened last week, huge appetite for relatively small bond issuance. there are 10 more times -- manus: is there a scarcity premium and if so, how do i

premium as it were, green relative to risk green? frederik: there is absolutely and the pricing has reflected that and there might be risk down the road that the allocation of capital restores the price, but not to a large extent because there is arbitrage mechanism in place. you have infrastructure bonds, social bonds, carbon bonds -- given the current pricing, at the very least for large real money investors, it is going to be. first -- asset and a reason amanda was so strong. -- demand was so strong. manus: frederik ducrozet, my guest host. global strategist at pictet wealth management. first word news. laura: the deadlock over

stimulus on capitol hill seems to be continuing. both house speaker nancy pelosi and the white house are blaming the other for moving the goalposts in talks. pelosi said the chamber may pass a plan this week, but the senate may not act before the election. china is laying out a new plan for economic growth this week in beijing. xi jinping is holding a meeting to decide on the nation's next five-year plan. it is affected to focus on -- expected to focus on economic self-reliance and a cleaner environment. the event is closed to the press. he decisions won't likely be clear until it wraps up thursday. armed forces have taken control of a oil tanker in the english channel, obtaining seven people. an incident involving the suspected hijacking of the andromeda. the investigation will continue, but initial reports confirm the crew are safe and well.

the coast guard says the ship wasn't carrying cargo. samsungwho transformed into the world's biggest tv's,er of smartphones, and memory chips has died at age 78. he has been in hospital for six weeks after suffering a heart attack. lee was south korea's richest man with an estimated net worth of $21 billion. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. show, coming up on the more from my conversation with the ubs ceo sergio ermotti on his legacy after nine years at the top. this is bloomberg. ♪

many of our greatest companies and labs are coming out quickly with the vaccines. very shortly, it is going to be delivered fast. that will quickly and the pandemic. it is ending anyway, but the vaccine will get it down fast. >> folks, i have an admission to make. for so many of you here, i wish i could go kart a car to meet you all. i don't like the idea of this distance, but it is necessary. i appreciate you being safe. what we don't want to do is become super spreaders. >> how they are doing it again, the laptop from hell. they found the laptop. this is the laptop they don't want to see. how the hell this laptop got freed up, it is amazing the way god works. the laptop. >> they didn't tell us about the

virus. the administration gave wall street investors a heads up. he didn't tell us. he just told his wall street friends and that's why they made so much money by "selling short" in the market. they knew what was coming. what happened to the rest of us? breaking news coming through across the tape from libya. they are lifting their force field, building on the narrative from libya. 580,000 barrels last week. ago, we were weeks at 100,000 barrels. that is a risk to the oil market they had not seen a couple of weeks ago. nine years at the helm. the sergio ermotti's last week at the world's largest wealth manager.

he is one of the longest-serving bank ceos in europe. one of the key questions has been whether lenders can catch up to wall street. i asked whether a democratic sweep in next week's election would level the playing field. sergio: it is difficult to predict, but what we see and what clients are telling us -- you are going to see changes coming you are going to see asset allocation shifts, you are going to see new policies being implemented, even if the current administration is confirmed. probably they will need to make changes. manus: you always kept saying to me, it is an uneven playing field, i'm comparing the wrong things, so could that be a constructive thing, where maybe the playing field gets a bit more level for europe versus the u.s.? see.o: uh, we'll

will see. -- we'll see. is it europe improving or is the u.s. basically losing ground? we will see. it is difficult to see how europe can gain ground from where it is today without a significant shakeup of its system, and the u.s. is still not to be undervalued, underestimated because it has always been able to come out somehow stronger from any changes in administrations or may bes, but of course, at the beginning, you may see some dislocations when changes come through. manus: nine years come along tendency. what did you enjoy most in the nine years on the job? sergio: well, i would say i

enjoyed most of the days and the always something is new. early days was managing the aftermath of yet another crisis for ubs and starting to reposition a strategy and working on execution and getting traction with employees and clients was the first focus, but then, over time, things have changed a lot. i'm not so sure i enjoyed it a lot, but i spent a lot of time in resolving matters. that was probably less of an interesting part, but at the end of the day, a necessary part of my job. manus: if we look back at the strategy, you are probably going to be remembered most for downsizing.

i look at your trading background in your career. did that give you additional insight when it came to downsizing the ib? sergio: i think so. not necessarily the trading background, but the fact of working many years for very large investment bank and also later on, i was feeling bold in doing investment -- fairly involved in doing investment banking businesses before joining ubs. that yourced my belief will need to be a one-stop shop in order to be successful in investment banking world and in that sense, i knew ubs had excellent capabilities in equities, fx, equity capital and stronga, franchises in europe and asia,

and there were good and enough to sustain a business model that would serve well clients and shareholders. manus: that was the ubs ceo sergio ermotti. he'll say goodbye to ubs this weekend and you can watch the exclusive interview than. -- then. apollo is coming under pressure. the growing number of institutional investors are putting the wall street giant on review as clients hold off on fresh capital. questions linger over the cofounder's relationship with jeffrey epstein. to discuss is dani burger. the shareholders are getting a bit antsy, halting new investments in apollo. give me the latest. dani: the latest happened over the weekend. firm thatnsultancy manages $160 billion of

investments has told its clients do not put money with apollo. that's after another consultancy, cambridge associates, did the same last week. two pension funds in the u.s., a pennsylvania public school systems one as well as connecticut. connecticut's treasurer, coming out saying we are not committing new capital to apollo. the australian financial review is reporting one of the tensions is reviewing one of its mandates which is worth one million australian dollars. new yorkthe back of a times report that the cofounder of apollo wired jeffrey epstein 15 million -- $50 million in 2008 after his original conviction of soliciting prostitution from teenagers. this started as a reputational issue for leon black, increasingly becoming one of financial stress for apollo. manus: and in terms of the lasting damage, it is still very

early to assess this, but how lasting will this damage likely be to apollo? dani: i think that is the key. firmo hired an outside law to do a review. shareholders told bloomberg they can't see what the $50 million was sent for. they are confused by it, so answers need to be had for that. otherwise, we can expect more reputational issue for apollo to come forward. it is difficult for these pensions to pull out money they already have. you need to have a breach of contract typically to do something like that. stopping to commit new capital tends to be the route for these reputational issues that pension funds have been the first here just because they are under more political pressure than other types of investments. apollo is in the middle of fundraising for about $200 billion for various credit funds, so that is going to be an extremely difficult task if

these pensions and consultancy firms continue to review their relationship with apollo. manus: thank you very much. apollo management, down 14% on the year. great reporting on the numbers. so we up, it is monday bring you everything you need to know. your guide for the week ahead in european politics. this is bloomberg. ♪

manus: it's "daybreak: europe." i'm manus cranny in dubai.

brussels edition, so from dubai, the heart of european politics. bloomberg understands the latest trade talks between britain and the eu have been extended into the middle of the week. the u.k. cabinet minister and michelle barnier are staying in london, hopefully for a good sign. maria tadeo is the lady from brussels who knows all the ins and outs. is this a good sign? who's going to pay the expenses? maria: that's a good question, because the talks have been extended in london and i think on a serious note, you could read this as a sign of optimism, the two sides are still talking, they still want to negotiate and get this deal done. we've had a hint to the goal is to get something on paper that could potentially be ratified before the end of the year by mid-november.

that is being presented as the new deadline, a moving target but deadlines with brexit are difficult to factor. on "thebe speaking brussels edition" with a member of european parliament who sits on the brexit group and we will be talking about deadlines. when will this be agreed? we will be talking about fish. how much of a sticking point is this and do we get a deal or not? manus: indeed. maria, we look forward to it. there is a great piece on my twitter about northern irish fish and south of ireland fish, and apparently, it is all about the accents. on a serious note, let's hope we can get a deal. maria tadeo, tracking the latest on brexit. the european market open is next. a very special week for you all. it is interesting. jon ferro is coming early,

annmarie hordern has absconded daybreak europe for the week but she will be inside that seat in five days. this is bloomberg. ♪

♪ jonathan: from the city of london, good morning. the countdown to the market open starts now. i'm jonathan ferro. your headlines this morning. curfew on the continent. spain and france have the harshest restrictions since may. deadlocked in d.c., stimulus talks stalling up a week and a day before the election. here's the price action. futures are la