influenza pandemic. it's just shy of the 675,000 estimated to have died a century ago. the u.s. will soon reopen its borders to most foreign travelers as long as they are fully vaccinated against covid-19. the white house at the new measures will involve stricter requirements of coronavirus testing and contact pricing -- tracing. it's to try to curb the spread of coronavirus new rules take place in november. in canada, premised are justin trudeau seems set to retain power. he made some concessions and he wants to get his liberal party to win 152 seats in the house.

the conservatives occupy 5000 people were evacuated and there were no injuries expected but they will explore everything. the law is moving 100 feet per hour in some areas. global news, 24 hours a day and powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪ ♪ matt: welcome to bloomberg markets. the markets dropped, we will have full coverage coming up this hour as stocks fall and

volatility spikes. we will discuss that with our guest and we will break down the ongoing situation as contagion spreads. that's what behind the red arrows in your screen and later this hour, we will have special coverage of the canadian election. prime minister justin trudeau seems that to retain power in a close vote. let's check what's going on in the s&p which is now down almost 100 points. investors are buying bonds and pushing the 10 year yield down. 130.23 is the levels of down almost six basis points in the u.s. dollar index is rising stop investors are flocking to those assets they perceive as savor them stocks.

the fears come from a potential spill over in risk from china post ever grand. that's sending stocks lower around the globe. let's bring in ed yardeni to talk about what's going on the bond universe and thanks for joining us. how much of a concern is ever grand to global markets? >> i think it's a big concern today. the concern will potentially be like the lehman brothers meltdown. if anything, it will be more long like long-term capital management. it was billed out by the fed and several major banks in new york. in a similar way, i think the chinese government will step in here quickly and restructure

ever grant in a way that the management will be gone and it will be split up along the other property developers so they can finish all the unfinished departments that need to be delivered to people. matt: what does this mean for dollar debtors in china and emerging markets? >> there has been a lot of discussion about whether china is indefensible. some believe it isn't. private property rights are not there so it's gotten worse over the past year. ever grand is the latest negative -- negative toward china's of the implications are more of a negative for china than it is for the united states. we still have the rule of law and relatively good governance i think global investors will be

rethinking whether they want to have money at all in china and if they go out of china, where do they go? u.s. makes a lot of sense. matt: what does that mean for u.s. markets? the s&p 500 is down to 4% step it could be argued that the equity indexes were ready for a correction. why pile into u.s. debt at such a low level of yield? >> i'm not recommending anybody jump into u.s. debt. i was a that u.s. equities, if you been in the market for most of it, i would stay with it. i don't think this will lead to a bear market. it was lehman brothers, it would be a bear market but it could be just a quick correction. clearly, you are seeing some interest in bonds because there is a global risk off trade going on.

by the way, foreigners to find an attraction here for our bonds yielding over 1% where in japan and germany, they are zero or slightly negative. matt: i think i heard earlier that chinese government debt is a good place to go to hedge this risk. do you agree? >> now, i think china is not investable at this point. matt: even on the government level? >> you really don't know what protection you will have. you don't know what the currency will do. the chinese have been moving toward convincing people there currency should be a major player in the global markets but is not going to be that way when you have the kind of intervention that the chinese communist government has indulged in in their economy. matt: how much of a seachange

has this been? we witnessed the problems surrounding ridesharing and education and fintech, video games. what we have witness over the past few months, has it been a seachange for investors? >> it certainly has been head spinning but it hasn't been that much of a surprise because what's going on is related to the terrible demographic situation over there. because of urbanization, all countries are seeing a drop in fertility rates and people are not having babies so populations are getting older. the chinese made that much worse with the one child policy and now they just recently said habtoor three children. they are providing incentives for people to have more children. it's a very geriatric population situation. i wish i was kidding but i think

china has to become the world's largest nursing home the way their demography is going. most of the major changes is an attempt to make life better for the middle class and encourage them to have more babies. they are turning against wealthy technology companies and they don't want their kids playing video games all day. they want full control of people's lives and they say it's to make their lives better but that means less freedom. matt: what concerns do you have at home? on a bigger picture, if you step back, we have similar problems. in terms of demographics, not as that is china but housing in equity. we had a story today on the rising cost of homes and rent. we see that in the u.s. as well.

>> everybody has problems. it's the nature of human existence. on a relative basis, the u.s. is doing quite well. there is a view that workers have seen no increase to their standard of living for decades and i've done a lot of work on that and that's just wrong. the fact is, most americans including lots of working americans are better off today than they've ever been before. there are problems. because of the pandemic, home prices went up 20% and its pricing a lot of people out of the market. i think we also have the kind of entrepreneurial economy that will respond to the demand of less supply. it may take some time but it is going to happen. matt: i'm sure you've been asked a million times where the bond

vigilantes are but especially recently. we are looking at 130 on the 10 year yield and we are struggling to make do with the $28 trillion debt limit so what does that mean to you? >> the political situation remains not particularly good for the financial markets. that's on a long-term basis, bigger deficits and more debt. in the short-term, is very stimulative, the economy is growing and earnings are up over 80% year-over-year in the second quarter in the economy has been booming and that will cool off a little bit. in terms of the 1.3 percent bond yield, it's disheartening to see if this low in the face of a pickup in an asian and maybe the bond market is drinking jerome powell's kool-aid that this is transitory but there is not much

evidence so far that we have peak on the inflation rate and we should do that pretty shortly. what's going on i think is the bond market has been rigged by the fed and central banks around the world. the bond yields are zero to slightly negative in japan and germany. depending on the cost of arbitrage that in the currency market, there is an incentive to buy our bonds. the trend hasn't started to peak yet. they are still buying 120 billion dollars per month. that has led to a huge increase in deposits in the banks and the banks don't know what to do with it other than pile more of it into treasuries. matt: if i pull up the fed balance sheet, i can see an $8 trillion balance sheet. when will they start to taper? even when they taper, they will

still grow the balance sheet stuff how high does this get? >> it's an important point. taper is not reducing the balance sheet. it's just buying securities at a slower pace. i think that officials will start to recognize that they've got to get started and moving with tapering so they can be done with it by the middle next year. just in case inflation does not go away, they will have to raise interest rates and they've made it clear that they will not raise interest rates until they are done with tapering. they have to get going and i think there is enough concern on inflation. ask any friend or relative about them nation and they will spend half an hour telling you how terrible it is. maybe the fed doesn't see it i guess they don't go shopping. i think -- matt: they might buy a house. when i look at rising home

prices and i see the rising mortgage debt, the idea of the fed raising rates seems impossible. how could that work out? >> i've been struggling with that myself. the longer they have kept interest rates down here, the more debt we have accumulated, making it kind of nightmares to think about what happens when we go back to somewhat normal interest rates. remember when three or 4% was viewed as normal in the bond market? the arithmetic of compounding gets to be pretty terrible. if there is a model for where we are all heading, it's not in japan. japan has had an increasingly geriatric demographic profile and a huge amount of fiscal spending that's been financed by the central bank. their inflation is close to zero and i think demography is the

destiny. aging demographics around the world is the reason inflation has stay down and the reason interest rates matt:. thank you for spending time with us. hopefully, everything turns out ok. coming up, u.s. airlines stock shrug off the wider industry worries and united is our stock of the hour. this is bloomberg. ♪

matt: this is bloomberg markets. time for our stock of the hour, shares of american airlines are

a speck of green in a sea of red today. they are benefiting from the u.s. decision to ease restrictions shortly on foreign travelers. dave wilson is digging into the market action. this is not now but we hope by early november, more passport holders will be able to enter the u.s. airspace? >> that's right, the biden administration did not set an exact date. for the past year and a half, if you are in the u.k. or the european union, you couldn't get into the u.s. at all on the past 14 days but now they are allowing people who have been vaccinated to enter the country. you will still have a travel ban against the unvaccinated. if you haven't unvaccinated american coming in from europe, they will still be required to at least get a test. it's not a complete reopening in

that sense but it's a step in the right direction especially for companies that depend on international flights. united, delta, american are getting at least a third of their revenue when you break it down on a per passenger, per mile basis from these international flights. not all of your buttock good chunk of it is for all of these companies. the idea that things are easing up is definitely looking like a plus. in the past couple of years as the pandemic has unfolded, it's been the companies that are more focused in the u.s., the short-haul routes that have done relatively well in the stock market stuff they have had their challenges but they have not suffered quite as much as the likes of american and delta and united which are marginally lower in trading today so the speck of green is a good way to describe it.

matt: tsa data show travel in august turning down. we saw that on a frequency story a couple of days ago. should investors be concerned about that or was it the delta spike or just the end of summer vacation? will it change as workers go back to the office? >> it may well be a mix of that because if you were prepared this year to two years ago before the pandemic kicked in, you would see at this time of year, there tends to be a slippage, you might say, in terms of people going through airports and therefore being checked in by the tsa. it's a matter now of what happens going forward. back in 2019, it bounced around week to week but they were stable but these are ten-day averages. the question is, what are we going to see this year

especially with the potential for europe to open up again and be able to -- to have europeans come to the u.s.? how will that change the ways in? matt: absolutely important for global commerce. that's our stock of the hour. we will continue our conversation about the new travel guidelines in the u.s. with a virologist at the johns hopkins bloomberg school of public health. if they are vaccinated, it doesn't matter what citizenship they have, we will ask him. this is bloomberg. ♪

matt: this is bloomberg markets. we are witnessing a selloff on

the equities indexes. the dow jones is down more than 800 points in the s&p 500 is off to .3% and we have seen bigger drops in the nasdaq, 2.7%. we are looking at these kind of drops globally. we saw this in australia, we saw this across europe. chinese markets were closed today but we did see hong kong markets down as well. these are drops the likes of which we haven't seen since january 27. it's all from the ripple effect out of ever grand, the concern about their default and the one we are waiting for for thursday

and on the two days we expect them not to pay their dad. we are hearing that the white house is monitoring what goes on global markets. they are monitoring ever grand. they said monitoring will be done by the treasury department but you have to live under a rock if you don't see this so i imagine everyone in the u.s. has seen this as well along with pretty much everyone in the world who is paying attention. speaking of that, the biden team is set to relax their travel restrictions on foreign passengers as long as they are fully vaccinated. this is the most sweeping change to u.s. travel policy and month and it widens the gap between those who are vaccinated and not vaccinated worldwide. at the same time, it brings a little justice to a lot of american workers who are from foreign countries.

let's welcome dr. andy pekosz. i have had trouble understanding this policy because there are many people in the u.s. who are foreign citizens working in america. they want to go home and come back so doesn't really matter what citizenship you have as long as you are vaccinated? >> i think you are absolutely correct. the important thing is global travel bans, irrespective of vaccination status rarely are the most effective ways to keep track of the spread of an infectious disease. this makes logical sense in terms of opening this up to vaccinated people. it also makes sense for you to get a test a few days before you travel. it's one more layer of protection you have to make sure you are not infected when you get onto that plane which is a very dangerous environment in terms of spreading the virus.

matt:matt: absolutely, so as long as you are vaccinated and tested, you are good to go and that's what we are seeing. are we seeing a rollover in the delta variant? will things start to normalize now? >> i think we are seeing a little bit of a drop but we are worried about what will happen in the fall with increased cases. i think that will be the critical thing we need to follow up on. are the cases going to make a resurgence as we have indoor opportunities come back? matt: thanks very much for joining us. this is bloomberg. ♪.

ritika: let's get to first word news. new findings could clear the way

to begin vaccinating grade school kids within months. pfizer says there vaccine is safe and produced strong antibody reaction in changes five-11. pressure to vaccinate kids has been on the rise in the u.s.. students will have to go covid testing under week in new york schools. the mayor made the announcement today after 77 classrooms worse -- were closed in one school was shut down. the new rules take effect next monday, the same day that all teachers and school staff must show proof of vaccination. we've got exports of covid vaccines next month. india was expected to be a major supplier to the equitable vaccine initiative on which most

of the poorest countries in the world rely. dry and gusty wind will sweep across northern california this week which could aggravate a blaze that threatens to torch sequoia trees across the sierra nevada and leave thousands of homes without prior. the fire began september the 10 after a lightning strike has torched more than 21,000 acres. gould -- global news 24 hours a day, powered by more than 2700 journalists and analysts, this is bloomberg. ♪ ♪ ♪

amanda: welcome to bloomberg markets. matt: welcome to our audience and here are the top stories we are following from around the world. full market coverage coming up this hour as stocks fall and volatility spikes and we would break down the latest in the drops. plus another look at the broader economic market outlook with tiffany wilding of pimco and look at the ever grand fallout and complete coverage on the canadian election with the former canadian ambassador to the united states of america. we certainly are seeing a decline steepen. amanda: it's picking up steam across all the indexes. the nasdaq is leading the way. it shows the steepest declines coming from energy and

financials but behind those groups are the usually important waiting groups that make up the faang. the moves are momentum moves, 3.5 percent to the downside. you can see what's happening with your 10 year, popping up above 1.3 but it was at 1.9. there may be a slight risk on feeling in canada is another minority government looks like it will be elected. we look at the latest from the canadian elections. >> polls are suggesting that there could be multiple outcomes from this election, it's a very close race. from a popular vote point of view, the two main parties,

liberals and conservatives, our neck and neck. most pollsters believe that justin trudeau, based on these public opinion polls will get a plurality of seats but fall short of a majority which is really the status quo right now. he had a minority government which means that he governed but needed the support of the smaller parties to pass legislation. he called an election last month, hoping to be able to parlay the strong marks he received from the public for his handling of the pandemic into a majority but it appears that's not going to happen. we know the pollsters have been wrong in the past and you cannot rule out any scenario. right now, based on the polls, it looks like prime minister

justin trudeau will win a third term but fail to get his majority government he was seeking when he called the election last month. matt: one of the most interesting issues has been foreign buyers of canadian housing. the prices have soared so dramatically step i believe both sides have said they will limit foreign purchases. the will that be policy? >> housing is a very big issue. it's probably the number one source of anxiety for many canadians. certainly canadians who are not buyers, the younger families, the cities and the prices of homes and then mover and toronto and montreal, they are becoming unaffordable for young families. everyone seems to have a proposal for that but there are no easy solutions. the proposals that most parties

have to solve this problem will possibly fueled a problem because they are trying to make it easier for first-time homebuyers to get into the market. that is fueling demand and the problem in canada is a supply problem, not enough homes for the demand that is being driven by two things which is low interest rates, something the federal government cannot do anything about and canada has very high integration levels and that's also stoking demand. canada doesn't need the immigration levels to keep growth moving. matt: thanks for joining us. i want to bring it back to the markets where we are still seeing the drops, almost 100 points on the s&p 500. and the drop in the dow jones, 775 points.

more markets when we come back. this is bloomberg. ♪

♪ matt: this is bloomberg markets. today is a federal election day in canada and the vote will determine who will lead the country for the next phase of the ongoing pandemic and the recovery. it also comes on a day with a lot of market volatility. i'm going to focus on what's going on in the markets. it looks like trudeau will keep his seat in the great white north. what we don't know is what will happen with these markets. tiffany wilding joins us.

i don't want to be too insane about what's happening. we have seen 2% drops in markets before. it's not time to gather gold, guns and bottled water but on the other hand, this ever grand issue has been referred to as kind of a long-term capital management moment. i guess that's better than lehman brothers. how do you see what's going on around china and affecting the rest of the world? >> we are actually seeing more evidence of contagion within chinese equity markets as well as the hong kong property sector. i think there is a little bit more worry and markets today that this could have a bigger impact. it's not going to be isolated to just ever grand. these issues have been going on

for quite some time and we have been -- we have known there has been a lot of issues. the thing that was unknown was the interconnection between businesses that can create these kind of contagion events. that's what the market is focused on today and the china property market more broadly. it's highly connected to global markets through trade and things like commodity demand, etc. a meaningful slowing in the chinese are pretty market associated with this would potentially have decent implications for global trade and global manufacturing and therefore global growth. amanda: we have to keep this in the context of where the markets have been the question around valuation is not a new one. the fundamentals remain the same which there is still no alternative to these returns.

do you expect to see the buying on the debt that is happened in every pullback in the last 18 months? >> it's not the initial conditions for valuations and equity markets but i think it is initial conditions for fundamentals more broadly within the global economy. we are seeing these issues within china pop-up in the context of water regulatory tightening around credit and trying to rain and financial stability risk but that's coming against the strong tailwinds from global growth from developed markets who have put in fiscal stimulus to get their economies out of recession associated with the pandemic and that had created pretty strong tailwinds. for the u.s., we still think growth for this year is around 6%. although you see this happening in china, it will ultimately potentially could take some off of the growth trajectory.

the fundamentals for global growth are still he -- still very much intact. if you look at valuations in equity markets, i think they reflect that. ultimately, this is a bit of a soft patch and maybe some downside risks that ultimately, the. recovery continues matt: alan crawford wrote a great story about soaring inequality and pointed out it has become a global/political full-line. it has toppled governments in sweden stop it's what's behind the ever grand issue. they want prosperity. it is a huge canadian issue as well. the property price stories have been daily and both justin trudeau and his opponent have said they will limit foreign buyers. we've seen this issue in western

and emerging-market con e-minis as a problem the whole year, does it have the potential to affect markets as well? >> you have to think about this in terms of the systemic risk emanating from the housing market. i would put that in the context of what is the potential for developed market housing prices. for those prices to actually fall, we have seen a very large and meaningful acceleration and property prices across developed markets a lot of that is the result of a pandemic driven demand and that's domestic demand. more so probably them the kind of foreign demand at least for the last year or so. the pandemic drove people to one

housing outside of urban areas. they want more space, household formations have picked up quite dramatically. that has driven prices and i think the good news for the housing market is that despite this activity, we have not seen leverage ratios really accelerate in the housing market. a lot of this is underpinned by demand for cash getting put into the housing market. you access savings because of the pandemic which has been large. the leverage metrics are not really flashing to us that there is a sort of red you would want to see to think there could be more systemic risk in the housing market. right now, we are not too concerned that this could derail the recovery. amanda: one reason for concern is the central banks which have pledged to keep their eye on

inflation and they think they can keep it under control, do not control global on the markets and expectations could get away from them which would spill real trouble for those who have the leverage in the housing market now. what is your expectation about the fed but also has it changed what they will tell us about taper? >> in terms of the implications for markets to day for the federal reserve, so far, they are somewhat limited. the federal reserve is looking at equity markets but they are looking at them in terms of broader financial conditions and those have tightened but they haven't really tightened enough for us to change our near-term outlook for growth. we need a larger tightenin. we are not looking for a big change but we still think that

jay powell during this press conference provides a in advance notice that tapering will come later this year. we thinks most federal reserve officials want to get the reduction of the balance sheet with monthly paid purchases in november but we think because that coincides with other issues like u.s. treasury debt ceiling, they have to start prioritizing payments that that tapering decision will be delayed until december. i think the market reaction to day and isolation doesn't change that, this contagion is -- could spread more and that could be more impactful but as of today, it's not. matt: thank you so much for joining us. a great voice to have when we

see the market drop. you're nothing the typical recovery or the typical buy the dip as you normally would. we continue to see seven hundred 50 points wipe out the dow jones industrial average. kevin: amanda: delta is of concern and we just got new policy on travel. still ahead, we will talk to a former u.s. ambassador to canada, frank mckenna will be with us. this is bloomberg. ♪

kevin: this is bloomberg markets. it is election day in canada. which leader will form the next government, we will know potentially by the end of the day or tomorrow but issues of

affordability were top of mind for canadian voters like people around the world. with stock markets in a swoon, there are some risks in the world and frank mckenna the former ambassador to the united states is with us. thank you for being with us. i want to start with your outlook on the canadian election and the biggest issues in the world which seem to be the same everywhere step affordability is a big issue in the pandemic is lasting longer than anyone. looks like we lost frank. this is an issue that is top of mind in canada. when the election was called, the expectation was we were on our way out of the pandemic but delta has changed the game for many and affordability is the central story.

housing is one piece of it but the transitory prices are important to most consumers. matt: that's important for now but i think the housing picture is a much more important story at 35,000 feet. whether or not you can buy a house this year or next year really affect your wealth in 30 years especially if the prices keep going up and you cannot save enough for a down payment now, you will not be able to save enough next year or the next year unless you are doing very well. for the majority of the population come if they get locked out of this, it magnifies the inequality that we have all been talking about and heard so many people complaining about for years now. we are looking at housing prices that are far above those during the housing bubble before the

great financial crisis. i think it's such a key issue right now and then you have the travel issues. if you are vaccinated, you get to go to america in early november? amanda: that is what the united states is saying is that by early november, we can travel across land borders. you raise key issues that are global in nature. we are seeing the policy issue of affordability is one that is heading home for everyone. the wealth effect of highs stock market is not immaterial. people who have been vested deal better. that could go the other way. matt: absolutely, we have seen this at an incredible effect on governments around the world most i pointed out the allen crawford story. a swedish government was toppled by this and you see the

president geez inc. thing is doing. it's not just ever grant but the whole common prosperity thing driven by the senate all the they don't want to see exacerbated3 .housing prices are soaring in berlin, paris, london, in boise, idaho as well as toronto, canada so with an issue i think everyone is paying close attention to. amanda: we had to keep our eye on these markets. we are seeing an acceleration to the downside stop we are seeing momentum moves that we have not seen in a week to the downside. is one to watch as this afternoon goes on. do you see continued acceleration or the willingness to buy on the dip to consider this market on sale or will there be a time where investors want to sit it matt: matt: out? currently, it looks like they are sitting it out step you see

a 700 50 point discount on the dow jones industrial average and a 2.2 discount on the s&p 500. if you are going to buy the dip, i feel like now would be the good time unless you see a bigger one coming. we here for more and more people that there could be a correction coming. i think i saw a story from morgan stanley, their michael wilson says a plunge of more than 20% is a possibility stop it's a worst-case scenario but it's a possibility in which case, he won't stay away from this. we will see how it turns out in the next two hours as far as is trading session. this is bloomberg. ♪

ritika: i'm ritika gupta. the number of americans who have died from covid-19 have surpassed the number killed in

the 1918 influenza pandemic. more than 673,000 deaths since the beginning of the pandemic in the u.s. according to john hopkins university, just shy of those that were estimated to have died a century earlier. the u.s. will soon reopen to most foreign travelers as long as they are fully vaccinated against covid-19. the white house at the new measures will also involve stricter requirements for testing and contact tracing. it is part of a swift reform by the u.s. to try to curb the spread of the coronavirus. the new rules take effect in november. in canada, prime minister justin trudeau is expected to remain in power but he may fall short of the majority in parliament. his liberal party is likely to win 155 seats. the opposition party is expected to win 119.