>> it doesn't really matter who is elected. i think the market is headed higher into next year. >> we could be in for a prolonged correction. >> the service is part of the economy is really in trouble. >> but we need is central bank and financial markets. >> the longer we wait, the bigger that package is going to need to be. >> it is clear we are going to see downward revisions in many businesses. the question is how strong they are. >> it looks like we are headed towards a double-dip. it is increasingly likely in europe. in the u.s. we might still have a fighting chance. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. "bloomberg surveillance."

today toe all of you extorting there news flow. an -- to an extraordinary news flow. an election in five days. markets, there they are, and reversal. you see it in the futures of the s&p 500. jonathan: we are down five on the s&p 500, -0.2%. the bounce in europe was never convincing, and the bounce in the united states has not held up. euro-dollar clinging to a $1.17 handle. the ecb is getting what it once for all the wrong reasons. a weaker euro for a fourth straight session off the back of more restrictions in germany and france in the past day. a $1.16 handle, that will be symbolic. of course, distracted by the death in nice. lisa abramowicz, what was so clear yesterday was that the

bond market did not move, and that it did. lisa: to me, this is the story of the week. we've got very hard-core risk off in response to very real threats of a widening pandemic. treasuries are not the hedge they used to be. yields rose yesterday, which is exactly the opposite of what they traditionally do when stockmarkets selloff. they are coming down, but not to the same degree that you see the weakening in futures ahead of the open. tom: i want to touch on nice here, the second attack and a number of days. just your immediate thoughts as we see the news flow coming. can -- flow come in. jonathan: continued tension around islamic terrorism. has warned about this, the trial around charlie hebdo prophet muhammad.

we have seen this before, and unfortunately we are seeing another version of this morning. tom: the president of france flying to nice this morning. the prime minister of france is speaking at this moment. he says the government response will be "firm, relentless, and immediate." and goes on to say they have moved the state of affairs to " for thel of emergency entire national territory." again, we will be following this this morning. so much going on and with wonderful sets of conversation through the hour come on radio and television, we start strong with brian levitt of invesco. he is their global market strategist. what is so wonderful with invesco and their perspective is there global reach. what has been the global

response to this worsening pandemic? actedther markets much, like we see in the united states and europe? brian: you have seen asia hold up better than you have in europe and the united states. i think that is a reflection of a part of the world that had a history or a recent history with pandemics, and seems to have done a better job of compressing thes and containing a bit significant hit we are seeing in markets in the united states and europe. jonathan: there seems to be a confidence that has returned to this market, for many market part is up in that this time is somewhat different. maybe not the lockdowns in the united states. do think we are sleepwalking into some trouble? brian: i would say it is less sleepwalking, and more that we

understood that this was a high probability. we have been talking about a next wave of cases since we first learned of the coronavirus. anybody that went back and studied the spanish flu knew that things could get worse once the summer past. the difference this time is many were caught very well off guard, very surprised by it, and we had to await a policy response from the federal reserve. it came within 20 days, but certainly felt like a long time while we were going for it for the fed to ease financial conditions. we are in a better place in that we have a better understanding of the virus. we have financial conditions -- conditionsased which have eased meaningfully. clearly with the rise in cases and what looks like will be the slow in mobility will put a damper on this economic cycle. we should accept -- we should expect your growth into the

beginning of next year, and a need for more fiscal support for u.s. households and businesses. jonathan: i know this is a little cliche, but i just wonder from the conversations you have been having how strong you think the hands are in this market right now, and how high the bar for capitulation actually is, given that we talked to 70 people on a daily basis, talking about a vaccine on the horizon -- talked to so many people on a , talking about a vaccine on the horizon. brian: i think there is some concern, but we saw quite a capitulation in february and march. if i have my numbers right, we had 3.5 trillion dollars in money market assets coming into the year, and we were over 4.5 trillion dollars in money market assets by march. i don't believe that has come down all that meaningfully. or etflook at equity fund flows, the money is still going into fixed income at the extent -- at the expense of equities.

whether it is the election, the rising cases, the u.s. debt level, you are hearing a lot of concerns. isaac we have largely seen a capitulation. could there be more? i suspect there could be more, but there's already $4.5 trillion sitting in money market until atarning nothing least 2023, and the stated goal is to inflate a way to percent of that value per year. that is a tough spot to begin for investors. could there be more capitulation in the near term? sure, but i expect with some time,l breakthrough over and it took years with the financial crisis, you will perhaps see more money come back into the markets. lisa: is this the message we are getting from the bond market, which seems to be not reacting to the volatility inequities? basically, people are saying that the fundamental story has not changed.

growth has slowed in the near term, but it will come back and will result in an increase in inflation and higher term premium. brian: the good news is the bond market seems to get it right more than anything else. we expect the economy to recover into the 21. just might take a little bit longer now. what we have seen is we do have an ability to compress cases if we exhibit the right behaviors, seene have already easing of financial conditions. i think the market is expecting it at some point. i always go back to churchill, that americans all raise -- americans always do the right things, but only after exhausting all of their options. i think we are exhausting our options now, but we will do the right thing as we await some type of breakthrough. he bond market is not ready to

call a further decline in economic activity, but rates are already still low, reflecting what is going to be slow economic growth. tom: brian levitt of invesco quoting churchill, that's always a good thing. $1.1700uro with a print. a oneeight -- we await dollar 16 since handle. handle -- a $1.16 handle. jonathan: clinging to that $1.17 handle at the moment. allocations are broad. how may times have you heard that chit chat over the last couple of months? we are going to have a recovery, we opening -- recovery, reopening. is that still a call that would resonate with you?

stabilization -- jonathan: are you still there? carry on, brian. brian: we are not likely to see a significant rise in the dollar that we saw in the aftermath of the 2008 crisis. we need more fiscal support, so that should put some pressure or at least keep the dollar relatively stable. the money is going to flow to the parts of the world where growth looks best relative to expectation. that is going to be challenged in europe. we started this conversation talking about asia and select emerging economies. growth seems to be on a better trajectory, and that is where i think investors can start to find opportunities. there's a lot of great structural growth stories in asia, particularly in china. that might be a way to play a weaker dollar environment.

at some point we will get this recovery reflation trade. it is just in the next couple of quarters more challenged, and that means your u.s. stocks probably outperform european stocks. but the asian markets look like they are on better footing. jonathan: brian, great to catch up, sir. we count you down to that opening bell. we've still got to talk about the economic data. 20 minutes away, you will get claims in america. gdp as well for the third quarter. futures eating into that. unchanged on the s&p 500. we talked about the turn in the fx market about 60 minutes ago. dollar strength coming back into the mix. euro-dollar, $1.1703. tom: i must bring this to you in london. the prime minister of the united kingdom. "i am appalled to hear of the news in nice this morning of an appalling attack at the notre dame basilica. our thoughts are with the victims and their families, and the united kingdom stands steadfast with france against

intolerance." jonathan: from london and new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. lesliep next, vinjamuri of chatham house. this is bloomberg. ritika: with the first word news, i'm ritika gupta. authorities in nice, france are calling it a suspected terror attack. three people were killed in a stabbing at a church. police wounded the attacker whilst arresting him. he is now in a hospital. france is on high alert right now for islamic extremist violence. last month, a terrorism trial began in the 2015 killings at satirical newspaper "charlie hebdo" and a kosher supermarket. hurricane zeta has weakened to a tropical storm as it heads through the southeastern u.s.. it battered new orleans, left 2 million people in the dark, and

led president trump to declare an emergency for mississippi. zeta was the fifth hurricane or tropical storm to hit louisiana this year. the supreme court has handed republicans a pair of defeats on deadlines for mail ballots to in states that could decide the presidential election. intact an left extension north carolina and did not fast-track review in pennsylvania. lvmh has agreed to buy tiffany at a reduced price of almost $16 billion. the conglomerate will get a discount from the original price . it ends a year long saga involving a war of words, french government intervention, and a lawsuit in the u.s. another takeover in what is already a record deal in chipmakers. the price represents a premium

's close yesterday. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. gupta.ika this is bloomberg. ♪

pres. trump: with sleepy joe, there'd be no graduations, no weddings, no thanksgiving. california, you have a

special mask. you cannot in any circumstance take it off. mr. biden: this president thinks he is only responsible for the well-being of the people who voted for him. we can't afford four more years of a president who attacks doctors. i can't get over this guy. jonathan: president trump in arizona and vice president biden in delaware, with just five days to go until wrapping up this u.s. election. from london and new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your market 12 minutes out from economic data in america, gdp and claims just around the corner. one hour from that, we will have the market open. somewhere in between, you will hear from christine lagarde, the ecb president. and there it is, tom keene, a ofak of one dollar 17th -- 0.4%.on euro-dollar, down

on the equity market, jonathan golub of credit suisse just publishing, "with all of the chatter around the election, it has been giving the market heartburn, not politics. near-term risks are real, but we remain optimistic as we look toward the horizon. many people, i assume, share that view." tom: part of our job on radio and tv is to give you the news as it comes out. many others will publish as well. daniel alpert published moms ago on the american labor economy. this is blistering. "what we need is federal government balance, not bailout, providing not months, but years ." relief that really speaks to the market tension as they are trying to figure out the x axis of where we are in this pandemic and with our greater economy. on u.s. gdp, looking

for something in and around 32% positive. that mechanical bounceback from shut down to reopening from the previous quarter of -31.4%. tom: the fix back above 40 -- the vix back above 40. right now we will segue to politics. of chathamamuri house has been of such support in the u.s. and america's program. what would be your lead paragraph? leslie: i think it has got to be the extraordinary turnout we are seeing across the board. early voting, in person, by mail. guess it is interesting in texas to see we are just about hitting the numbers that voted in toto in texas in 2016. we are at about 93% of that

number, so early voting turnout across the country, but especially in certain states, is really remarkable. tom: breaks us on the character of that voting and the assumption by mr. trump that showlicans en masse will up the first tuesday of november. is that a correct theme, or are we off the mark? leslie: i think a lot of people believe that, that democrats are more inclined, especially in some of those battleground states, especially in the northern battleground states, where covid has been very bad, that democrats are more inclined to vote by mail. we not this point, anybody voting by mail has to carry their ballot in. it is too late to send in through the postal service. but we do expect more republicans turning out on the day. but i think people are hearing this message that they cannot actually put their vote from today in the mailbox and assume

it will get there on time. we might actually see some turnaround in that. if that is right, what we are led to believe, unless we see a democratic victory in florida, north carolina, that this race could then go on for quite some time because it might look like a republican lead, a trump lead early on, and then begin to change over the next several days. there are a lot of people that think it is very hard to predict how florida is going to go. but if it goes the other way, of course, it will take some time potentially to know what is happening. lisa: in eight minutes we are going to get the latest read on u.s. jobless claims, the last before the election. typically before election seasons, the economy dominates. in this one, not as much. president trump for much of the race was considered to do better when it comes to the economy among voters.

has that changed? leslie: it is really come look at it right now. donald trump's -- really complicated right now. donald trump's ratings have come down recently. hiss still stronger than handling of the virus. people are seeing it either as a health crisis or they are seeing the pandemic as an economic crisis, so i am not entirely sure that the polling is actually telling us what we need to know for a lot of people. on the republican side, they see the pandemic as being a problem of the democrats trying to shut down the economy. so it is a slightly typical calculation to handle, but the fact that the economy is not doing well, that the stock market didn't do well yesterday, that people are concerned about their jobs, this can't help the president. most especially among those voters who are minority

categories, among younger voters , and older voters, the first two categories, younger and minority voters are losing their economic opportunities at a much higher rate than others. that really affects how they feel about the current leadership. jonathan: leslie, great to catch up, as always. for our audience worldwide, a busy morning once again this morning. it has been a busy week for anyone long this equity market. early this morning, we struggled to generate a bounce in the european session. we were positive for a little while. it did not hold. a similar story on the s&p 500. futures had a nice bed after a really rough session. we roll over two unchanged on the s&p 500. if we can with through the markets quickly, euro-dollar briefly with a $1.16 handle, now $1.1702. that bid has not returned to the

bond market, though. i know a lot of you were discussing this. yields aren't coming in again, 0.77%. to echo the words of kathy jones, lisa abramowicz, and others, the risk aversion is being captured through foreign-exchange once more, with that stronger dollar and japanese yen. gold plunging, $1866. as we look at the coverage in france, turkey responds. i will let you discuss turkey , strongly condemns savage attack. the minister of foreign affairs says, "it is clear that those who committed such a savage attack in a place of sacred worship cannot be inspired by any religious, human, or moral value." so turkey speaks after nice. jonathan: this morning's tragedy

bringing those countries perhaps closer together this morning. eight lira out with an handle. your economic data just around the corner. this is bloomberg. ♪ ♪

jonathan: from new york and london, good morning. the economic data just around the corner. alongside tom keene and lisa abramowicz, i am jonathan ferro. futures unchanged on the s&p 500. waiting for claims, waiting for gdp. some of might argue the gdp data the market and economic historians and the data from initial jobless claims will be for the traders. let's start with claims. michael: 751,000 during the week last week, that is down from 787,000 for jobless claims last week. it does show some progress, but we are still at an elevated level. down tong claims 7,756,000 from 8,373,000 but a

lot of those people will be leaving to lengthy continuing claims process because they have used up their 26 weeks. we are still waiting for the bea to put out their numbers on gdp. tom: there is the number. michael: 33.1%, a little bit 32% on anconsensus of annualized basis. however, the thing to keep in mind with gdp is the economy is not an annualized economy, it is a quarterly economy, it shrank by 10.1% in the first and second quarters. looking at a 7.4% gain, so we are still in the 3%e by 3%, the economy still smaller than it was at the beginning of the year. we are looking for the breakdowns but they have not crossed yet. waiting to see what kind of numbers we get.

as has been pointed out many times, this is the largest quarterly increase in gdp ever but it follows the biggest quarterly contraction. tom: for the sophisticates that big,ut there, down we go this is the report of up we go big. where are we on a level? how far beneath the level trend we had in february are we? michael: i think you have to go back to january because in the first quarter the economy did shrank 5%. still atoint we are 7.4%, down 10.1%. you have 2.6, 2.7% smaller than we were coming into the year. something else to keep in mind is the economy normally continues to grow. if we had grown at the same rate we would have in 2019, an average of 2.3% per quarter, you would've ended up with a 65%

annualized gain to try to make that up. we are still well below where we would have been otherwise. than otherwisere we had gotten. tom: -- lisa: after these numbers, you are seeing a little bit of a lift in futures, but not much. what is more interesting is you are seeing treasury yields bounceback, they had dipped a little bit and now they are backup on the day. what leading indicator can we take from this data given the fact that as john rightly pointed out, the gdp figures are ancient history and the jobless figures are similar at this point, given how fast the virus is moving. michael: you make a couple of good points, especially with the jobless claims figures. with the virus moving quickly we will see additional target of lockdowns, probably not something like we saw in germany and france, but that probably

means more people start to lose their jobs. you notice it is colder in new york and boston. we will see some of those restaurants start to close up and that will mean more jobless claims. even if you do not agree with the level of claims, the actual number itself, the trend has been flat. we are not seeing a lot of people going off. we do have new numbers, some of the breakdown coming out. personal consumption up 40.7% after falling 43.2% in the first quarter. we are looking at the gdp price index up 3.6%. that was expected given the shortages of goods and problems we have had. people will not look a lot at that. now we have a good breakdown of the numbers. nonresidential fixed investments, the business spending number, 20.3 percent after declining 27.2%.

business is not coming back quite as much as they lost. personal consumption more than we lost, but remember the way this works, and tom will tell you all about the math, when you're coming from a lower base the percentage change is not as big. government down 4.5%. federal government spending was in the second quarter. that is the end of the ppp. what is fascinating about this is how do vice president do they campaign on a 33 .2% gdp? jonathan: you did not tell

anybody it is annualized and you say to set to continue. tom: "we delivered a 33% economy." jonathan: you know how it is going to go. the tailwind from the fiscal package, can you walk us through how much is left in the tank now so many of those programs have expired? michael: we do have significant savings, but people are spending them down. the spending numbers seem to suggest we have seen a slowdown. if you look at the gdp by a month-to-month basis, it was big in may and june and then started to tell off as august and september were slower. october looks to be the same story. at this point, the consensus has been for 3% to 4% growth in the fourth quarter, and that is on an annualized basis as opposed to 33.1%. a significant slowing in the fourth quarter. what you want to look at to

answer lisa's question is the level of gdp at this point is higher than it was, but not up to where we were. it will be a question for the next president to figure out how to get us back to where we started from. with twoael mckee important reports before the election. right now we will digress and moved to david leibowitz of j.p. morgan asset management. trying to bring in a strategy to adjust to a little bit of a lift in the market in the last 10 minutes. i have to go to the arch question. beenof the pullbacks have pointed, down we go when we come back up. is there something different about this pullback? there are three issues that have driven the pullback. there are three somewhat familiar issues. if we get resolution i think things could bounceback quickly.

unfortunately i believe resolution will take time. the first thing that is going on is the virus growth is re-accelerating. you are seeing it in europe. i think this is much more about the lockdowns that have been imposed in germany and france that a little bit of will this then it ise, too, about the virus on the health of the population. policy. policy in the united states on the fiscal side continues to come up short and that is the bridge that needs to continue being built to get us to the other side of this pandemic more broadly. the third thing that has gone on is there is a lot of good news priced into the market. when we look at the way stocks have responded to better-than-expected earnings reports, they have not done all that much. there is a lot of good news, there was an assumption on the part of a lot of investors we were not going to have another hick up with the economy, we were not going to have another hick up with the virus. we are seeing that is not

necessarily the case. i think we will bounceback. it may be more challenging than we have seen over the course of the year. lisa: what do you make of the move and treasuries, the fact that yields have been so resilient and moved higher, even in the face of equity volatility? david: a big part is when you decompose what is moving treasury yields. it is more about an increase in the term premium then an increase in inflation expectations. what that represents to us is greater uncertainty around the direction of travel broadly. we were seeing yields up on higher inflation expectations. that would be a signal to us investors are pricing in better economic growth. i think the backup in yields we have seen and the firmness in yields represents a wide distribution of outcomes that could materialize over the coming months, and obviously that is feeding through into the performance of accent -- of fx and the equity markets more broadly. jonathan: when you read -- tom:

when you read your economics at j.p. morgan, do you factor in a disinflationary trend? david: is a good question. what i would say for everybody within the walls of morgan with my opinion, there is somebody with the opposite opinion. we do not view inflation as a risk. output gaps are wide, unemployment rates are elevated, and we would be surprised to see inflation pick up. in the short term. long-term, there's a lot of debate. we think inflation will remain in check. i am more in the disinflationary camp. we have seen this mass debt built -- jonathan: i will jump in. david leibowitz of j.p. morgan asset management. some cracks in the line. forgive me, i am sorry. let me get economic data quickly. initial jobless claims at 751,000, down from the previous read. the estimate was 770,000.

upside surprise on the gdp figure. the best way to think about this, shut down in q2, -31.4%. , an annualized jump of 33.1%. the momentum and sustainability of the improvement, what is q4 look like, that is the question on many peoples mind. looking to europe and the united states. as we count you down to two things, and ecb decision and the opening bell. let me get to the price action. a little of a bounce on s&p 500 futures turning marginally negative and now positive, up about seven points. we advance .2%. we saw that 1.16 handle on euro-dollar. 1.170 one is where we trade right now. tom: no question. there are telltale signs across the bloomberg come equities, bonds, currencies, and gold.

gold has broken down again. ounce.6 -- $1867 an oil down almost two dollars a barrel. jonathan: coming up, more coverage of the market, and ecb decision, and we will catch up with alberto gallo. this is bloomberg. ritika: with the first word news, i am ritika gupta. another suspected terror attack in france, the third one in the last two months in the city of nice. police say an attacker armed with a knife killed three people at the church. the suspect was wounded by police while being arrested. authorities say they believe he acted alone. high alert for possible islamic extremist violence. it is at this time this year -- it is the fifth time louisiana has been hit by a tropical

storm. arricane zeta came ashore as hurricane before heading into mississippi and alabama. to as been downgraded tropical storm. about 2 million people are without power. at least one person killed. in germany, angela merkel has defended her decision to severely restrict movement. she told parliament the country is in a dramatic situation with the rapid spread of the coronavirus. starting monday, germany will impose a month-long partial shutdown. and what has the pandemic meant to your business? schatzker spoke to the ceo of brookfield asset management about the outlook in retail and working from home. as nine out of 10 people and they said they want to work from the office. efficiencies are not even close when people are not in the office because you get distracted by 100 other things. ritika: global news 24 hours a

day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ jonathan: from new york and london, this is bloomberg surveillance. moments away from an ecb decision out of frankfurt. we will run you through the price action then run you through that decision. in about 46 minutes you will hear from christine lagarde. this is the set up going into the decision. we will get the right position, we will get language around the asset purchase program, then later you will hear from the ecb president and get the language around the balance of risk about the outlook. that is where the ecb president and governing council to maybe lean more dovish given the

developments of the last couple of days. euro-dollar 1.16 handle earlier, right now 1.1704. if you switch of the board into the bond market, we want to give you a brief feel of how the bond market in europe is set up ahead of this. a nice option of italian 10 year debt earlier this morning. your guilt .73 9% on the italian .73 9% on your yield italian 10 year. the marginal lending facility at 25 basis points and the depot rate at -50 basis point. risks quilted -- risks tilted to the downside. i brought up the balance of risk around the economic outlook. risks tilted to the downside. , aroundlar unchanged 1.17. untill run shortly before shortly before interest rates rise. that will be a long time.

willcb communicating they reinvest maturing pandemic the emergency purchase program bonds at least through the end of 2022. the december forecast will allow a clear assessment of the path forward. we mentioned this earlier on. the ecb and the governing council would like to adjust monetary policy when they have those forecasts. those forecasts do not come until december. the euro unchanged, 117 00 on the back of the decision. negative on the day. the story not about rates. about the asset purchase program. ecbhint, any clues from the president in about 45 minutes around how they backup those forecasts when those forecasts get downgraded, what are they adjust, what is available, where is the team? we know the balance of risk is tilted to the downside given what has happened to the last 24 hours. what we want to know is how they

adjust monetary policy ahead of that. -- forat is interesting american viewers there is confusion over the timing of this. daylight savings time for jonathan ferro, he demanded it in england. we have a delay of when we see the announcement and the press conference. right now we want to speak with alberto gallo. he has been wonderful for us on opportunities in fixed income. there must be great comfort right now in cash. for alberto gallo, is cash and asset? alberto: it is, and if interest rates are so low the opportunity cost of holding a bit more in liquidity is much lower because you are giving up very low yields. many government bonds are at negative yields. we do not want to be invested all the time. we want to be invested when there is an opportunity. the selloff we are seeing over the past few days is starting to

become an opportunity in some areas because the backstop by central banks and governments is very strong. there's a lot of discussion about what the ecb will do. they can increase quantitative easing, they can also increase the tltro's, the loans the ecb gives to banks. also germany is very important. they announced support for small businesses for up to 75% of their revenue. the government would pay anything up to 75% of revenue lost during the lockdown. well,e fiscal policy as not just central-bankks. tom: what is interesting, and we can take it over to other central banks, the headline december forecast will allow recalibration of stimulus. are you investing in putting capital at risk understanding

that madame lagarde may change the rules of the game in december? alberto: we are having a virus will coce today and it me across europe and probably also the u.s.. the reaction function of policy will be strong december with more policy meeting from the ecb and the fed, then we have the vaccine. short-term, the situation is bearish, but medium-term if you look two months away, you have strong backstops to guarantee the survival of the economy. fors a positive environment selling puts on the economy, so for buying credit. sovereign bonds do not have a lot of value. we do not want to buy what the ecb will buy because boones are already -- because bunds are already very negative. if governments continue to spend , you could see widening.

yesterday and the day before u.s. treasuries were widening as the s&p was falling. we do not have safe havens anymore. we have cash and then we have risky assets that may or may not become attractive. we prefer credit over stocks. lisa: we prefer credit. there is a lot to unpack. the idea the ecb is pushing investors out of the safe assets because they offer no value and no hedge. at the same time, credit instruments do not provide a hedge because companies can go bankrupt in these investments can get wiped out. what is the bet? the ecb will delve deeper into credit for their purchases were just that the economy will eventually revive and you will get at least some of your money back versus equity? alberto: there is no hedge. that is the short answer. build a portfolio with stocks and government debt, the traditional 60/40 portfolio.

what we're doing is to have a bit more cash, and instead of stocks we are going higher in the capital structure. rather than having equity which puts you as the most junior stakeholder in a company, we will bid higher up in bonds, especially bonds that give you some collateral to assets of a , airlines, airplanes in case of airline, and so on. you can face very high yields with some protection in those instruments. the rationale is governments are issuing debt at very low levels, negative rates in case of germany, and they are given this money from companies to help them survive. youe is no safe haven, but have a fiscal policy backstop for the largest firms. in the case of germany, even the smaller ones. we are not worried about a massive increase in the polls. in europe there may be sectors that are weak, but we know

governments are behind in the economy will survive and it makes more sense to lend money to these companies then to lend money to the state at negative rates. lisa: when you talk about holding some cash you are underscoring the conundrum, you're not getting a lot of returns from the riskier assets and you want to have something on hand if there is an entry point and things do selloff. what is the appropriate amount of cash now relative to the past that can give you that flexibility without dragging on your returns. alberto: in our funds we have been holding over half before the selloff. run in55% in the final january and february, and currently we have around 30%. generally we do not want to be below 10%. we can compensate with investments that make more money in the part that is invested. 2%, where yout can make -- tom: alberto gallo, thank you so

much, after this important ecb announcement. greatly appreciate that. all over the place. a lobed of euro strength that 1.1712 -- a little bit of euro strength at 1.1712. i wanted to mention liz ann sonders of charles schwab. she is on fire on twitter. bring up the charge. this is an important chart. this is the actual level of our animal spirits, our nominal gdp, and liz ann sonders souls pullback -- shows pullback. down we go and we have not come back to the trendline established in 2009. and people talk about acute rebound, but it comes down to math. if you drop 32% and you gain 33%, you're not back where you were. you're coming off a smaller

base. bloomberg economics before the gdp number to map is expecting a 3.3% total your contraction in q4 versus last you for which would be the worst going back to the great depression. tom: liz ann sonders doing humans duty this morning. jonathan ferro, you will lead it onto one of your next properties. what will you focus on? jonathan: the ecb news conference in about 34 minutes. we talked about this repeatedly. the ecb typically likes to change monetary policy around the time they produce their new forecast -- that will happen in december. it is clear what they are communicating with the following headline, "the forecast will allow for recalibration of stimulus." where you see the move is not foreign-exchange, where you see the move is in the italian debt market. btp's. yields coming in another four basis points on the day to .72%.

the message from the ecb has to be clear. they need to keep financial conditions loose, they need to keep open to governments, they need to do a lot more as these economies introduce more restrictions. it is a tough winter ahead. today i'm in 35 minutes, the ecb president will have to give a strong hint as to what that recalibration of stimulus means. john, i will let your entourage moved to the open, he moves to the other side of queen victoria street for "the open." five days until the election. it is amazing how five days until the election, we touched on politics but boy was it a sideshow to the markets. lisa: the markets responding to the virus. jonathan's point on the btp is interesting given the fact italy just sold debt at record low borrowing costs backstopped by the ecb. tom: surveillance correction.

entourages nine people, not seven as reported earlier. red and green on the screen. stay through this day with us on bloomberg radio and bloomberg television. good morning. ♪ are you frustrated with your weight and health?

it's time for aerotrainer, a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time, all while maintaining safe, correct form and allows for over 20 exercises. do the aerotrainer super crunch.

the pre-stretch works your abs even harder, engaging the entire core. then it's the back extension, super rock, and lower back traction stretch to take the pressure off your spine and stretch muscles. planks are the ultimate total body exercise. build your upper body with pushups. work your lower body with the aerosquat. the aerotrainer is tested to support over 500 pounds. it inflates and deflates in less than 30 seconds using the electric pump. head to aerotrainer.com now. now it's your turn to lose weight, look great, and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. ♪ jonathan: from new york and

london for our audience worldwide, good morning, good morning. "the countdown to the open " starts right now. we begin with the big issue, market showing cracks as the coronavirus urges across europe with daily infections hitting record highs in the u.k., italy, france, and germany. the u.k.'s two biggest economies responding, shutting down bars and restaurants for the next four weeks, tempering investor sentiment and threatening the economic recovery. >> we are seeing a tremendous pickup in cases. >> a significant surgeon europe. >> an increase in infections across the globe. >> that will prolong the misery. >> economic data and the recovery start to slow. >> we are seeing some country's lockdown again. >> it will be a headwind. >> the