♪ caroline: from bloomberg's world headquarters in new york, i am caroline hyde. romaine: let's get you caught up on where u.s. markets stand. stocks rebounding after last week's selloff. caroline: the day is almost here. tomorrow is u.s. election day. as we all know, this time it is more likely to be election days know if or before we they win, it could be months. this year's race could be the

most well litigated. one legal tracker is already following around 400 lawsuits filed. it is not just the white house and congress. americans will be voting on everything from the gig economy to marijuana to taxes. joe, we all know, after brexit, after the 2016 election, pulls, you have to take with a healthy dose of salt, but we are going to look at them anyway. joe: even in the absence of perfectly reliable data, we will tell stories on the data that we have. polls all seemhe to be saying the same thing. most people seem to think that joe biden is going to win. you can see how similar trump's pulling his versus the same time last year. the polling is,

similar. not sure what that chart tells me. should i panic? joe: sell everything, by and back in the morning. up a lotwhat tripped of people in 2016 was not the popular vote, it was the electoral college trump's into thosereally go swing states and dominate there. we just had ed ludlow talking about what is going on in arizona. us, keeping our election update story going all day long. the mostd you say is interesting thing that happened on this final full day of fall campaigning? >> really come at this point, it is over, we just don't know what the answer is.

thought you were going to tell us the answer. >> the undecided voters, most people kind of know where they are going. i think that the polls you are seeing show that biden has multiple paths. it is possible that he could win the sunbelt. he could win the rust belt. unusual state an like georgia or ohio. he has a lot more rolls of the dice then trump does. romaine: i am curious about the outcome, how we sort of know the outcome. this is a much different election in that you have had millions of ballots cast already

although many of those will not be counted until election day itself. how do you think the rollout will differ from 2016 and previous election cycles? >> in some states like north , they just have to push a button called show me the answer. so the machine knows the answer. when they hit the deadline, you votesee a huge batch of coming online right away. they have been talking about a red mirage where trump appears to be ahead because some votes are counted faster. it is also possible that there could be a blue mirage in some states. could start out with a healthy biden lead and that could diminish as votes come in. i would say, give them a little

bit of time before you start getting excited about the results. caroline: what will you be in particular? >> the thing i will be looking for most closely is the southern states. arizona, north carolina, florida, i think they are the three states most likely to have the results in tuesday night, mostly counted. north carolina, if it is really -- that one, we won't exactly know. but, if it is much higher than expected, it could be sort of all over. basically, if biden wins in arizona, florida, or north

carolina, then the chances that he can pull it off get a lot bigger. if he loses all three, then we have to wait to see what pennsylvania and michigan do, and that could take until friday. romaine: great reporting here about how the election process here in the u.s. will play out. definitely something to check out. for all of our terminal users, re to use mliv starting tomorrow. coming up on this program, investors bracing for that election volatility. we will talk about the impact. that is coming up next. this is bloomberg. ♪

romaine: today, we are focused on u.s. election day tomorrow. the end of voting tomorrow. will we find out the results? the market, apparently they are already starting to rotate. joe: this is a big question, whether ray new set up in government, a new election could change some of what investors favor. the blue line is the price of sales for the small caps. look at how much more investors value large-cap versus small-cap . orlwind of economic growth stimulus. in theory, you can see the small caps at john. caroline: jp morgan having that call today. talking about the time to get

into the financials, insurance companies. finally after two years of overweight tech, getting out of that. for once, saying it does not matter what the election says. joe: not many people saying that. for more, doug ramsey. let's start with how you think anut positioning going into inherently uncertain outcome like an election. obviously, you could look at the polls and say one candidate favored over another but no one really knows for sure. what do you think about the task of managing risk? >> i have to say that volatility can wreak havoc with some of our models. in fact, a couple flip at the end of last week that i'm a little concerned about. we had some similar activity around brexit in july of 2016. they ended up being short-term

whipsaws. this volatility does troubled me as a quant. but, just echoing the earlier comments from j.p. morgan that you mentioned, i do think this rotation that happened today, i think we will see a lot more days like today. bege-cap growth stocks and a particularly tech. it is make a cap growth that has really just got ridiculously expensive. the lockdowns, the stay-at-home theme certainly responsible for that. i think the air will come out of those stocks. the chart that you put up it's a big piece of it. i hear a lot about infrastructure spending, more mmt. but what is missing from facte's arguments is the that the evaluation gaps are so

big. it will be an amazon truck. romaine: when you look at what has been happening for the past couple of days, we are not seeing a selloff, we are seeing rotation. investors are still willing to stay exposed to equities risk assets in one way or another. >> that is true. in all honesty, i am very clear that this rotation will continue. i am not clear as to whether it takes place under the backdrop of sort of a churning market that goes nowhere, certainly on if,s&p 500 and the dow, or which is more typical, you get a vicious rotation and some more corrective action.

i am pretty clear that if you look out 3, 4 years, that we are not going to have a lot of upside progress like the s&p 500 index or the nasdaq in particular, just because the air is going to come out of those very high large-cap growth evaluations. by definition they are enormous chunks of both of those indi ces. likeuld be periods 2002-2005. if you are positioned correctly in terms of mix, which i think is the key here, you could do pretty well. caroline: mix always within the u.s., do you think? >> it is interesting. foreign relative strength trend work is starting to turn. we have some models trying to keep us from merrily domestic

within our core allocation fund. some of that work is looking interesting right now. that would be the kicker on top of it, not only if you had a andtion towards cyclicals made an small caps, but on top of it if you started to see foreign stocks lead. on the size of deficits we are talking about, regardless of how things pan out tomorrow night. that will, i think put longer-term pressure on the dollar, which will be a tailwind, i think, for foreign stocks and emerging markets. joe: how much of a difference does it make if d.c. has the political composition such that another round of stimulus can be gridlockme kind of scenario where we can assume no new spending?

>> certainly, the stimulus, the votes, and the constituency to have more stimulus spending would be more favorable in terms of accelerating this rotation trait i am talking about. it would probably also be a little bit more market negative. if we have biden win and we do see the senate change hands. there is certainly the likelihood that we will try to perform a greater share of this increased spending whereas there has been no ruminations or discussions about that under a status quo scenario. as a matter of fact, if we do, for example, repeal some of that corporate income tax, that would harm large-cap stocks more. because they make money. a lot of these small-cap companies make very little money. they certainly overall have

lower profit margins, so they did not benefit from that inporate tax cut we enacted 2016. joe: coming up, voters heading to the polls tomorrow. there are various initiatives on the ballot including the future of the gig economy in california. we speak next with morgan harper of the american economic liberties project. this is bloomberg. ♪

♪ caroline: today, we're focus of course on u.s. election day and the uncertain to get rings. uncertainty not just for the working in for many entire ecosystems like the gig economy. california, -- in

the voters are set to decide on an industry's future. joe: the california legislature passed a law a while back that limited gig economy freelance type arrangements for work. they companies are saying are threats to the business model, they cannot make them work. now, prop 22 on the ballot. it would allow these companies to operate as they have been. romaine: see in these big initiatives in california in the past. either pass or fail based on sort of interpretations about how they were -- joe: for more, let's bring in morgan harper, american economic american partners -- economic liberties project partner. how would you characterize prop

22 and how it fits into the existing law? morgan: thank you for having me. prop 22 is an attempt by these companies, where their business model relies on not giving workers protections, gig workers. what they are trying to do is evade the strong protections that the california state legislature came out with that would force them to classify these workers as actual employees and therefore entitled to benefits. it does not make it any easier for voters to understand what is going on when these companies million and $200 also pressuring their own drivers. -- done: do you think they survive this boat or change on the back of this vote whichever way it falls? morgan: i think the businesses will have to adjust because they will have to treat their drivers

-- whether or not they want to consider themselves just as tech companies, they are relying on labor to complete deliveries and rides. so, yes, they will be able to function but they will be subject to more competition. that is a healthier marketplace, by paying people more, by having workers who have more control over their schedule. it will result in a very different marketplace. this proposition, let's assume it does get past. someoes that sync up with of the losses and regulatory challenges made earlier this year? morgan: this is their last-ditch effort. the california state legislature of already acted on the side protecting workers, forcing them to treat their drivers as employees, not independent contractors. is an an act of desperation.

it has not proven to be the case. ultimately, it will be a very important moment because it will impact what is happening in other places. there has been a lawsuit in massachusetts saying the same thing. i think it is important to note that it is a slippery slope. when you have one industry essentially getting a free pass, not having to treat people like workers, not paying into the state unemployment system, which right now we are seeing is stretched to the maximum, it hurts other industries ultimately, what we are saying is that you have to have a fair , treating workers fairly and providing them with the fits. monolith,oup a including the people who drive for uber and lyft and so forth.

what is your best read how this proposition is viewed by the drivers and impacted by it? morgan: there is a range of people are driving. certainly, in a lot of the coverage of the proposition, a lot of the messages the companies are out are trying to wantit seem like drivers to be independent contractors. the reality is something different. reality is that most of these drivers are driving more than 30 hours a week. that is not someone just doing in retirement to make a little extra money. that is someone doing it to provide for their family. these stories, they are ones for folks that this is their only form of income. when they are not able to make enough money, they are sleeping in their cars.

wear andto pay for the tear, etc.. really, a lot and most of the workers are doing it as their income.source of caroline: this would have ramifications for u.s. and global businesses. how are they hearing about what the rest of the employees may think? >> this has a lot of ramifications. if you are forcing these companies to admit that they cannot operate profitably, that you have to change your business model that is fundamentally exploiting workers, then you will have other states and jurisdictions across the globe that i believe will start to push back. when you take this kind of

industry, consolidate power on, it is possible. caroline: it has been great speaking with you. you,ber of bicycles behind love the backdrop. romaine: how did you get to work today? did not cycle. joe: me neither. romaine: do you exercise, joe? joe: no. i went for a run this weekend. caroline: and you both voted this weekend on saturday. the gighing about economy on the ballot here. beoline: plenty more to about that -- plenty more throughout the day. romaine: bloomingdale's all ordered up.

ofoline: looking at the end glass in new york for the time being. romaine: this is bloomberg. ♪ businesses today are looking to tomorrow.

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♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." the big day is just hours away. we will take you to ground zero state whereeground the count could speed up or slow down the result. plus, stocks