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tv   Whatd You Miss  Bloomberg  September 25, 2020 4:30pm-5:01pm EDT

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♪ >> let's take a look at where the markets ended. a volatile week, taking equities from round to rally as investors look for a new narrative. >> did it make up for the weekly loss? we have seen four straight weeks of declines in the s&p 500. the losing streak has not been seen for more than a year. markets are under political pressure, in terms of the like of fiscal deal.
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this can also be seen in currencies, stocks. investors are bracing for turbulence not only on u.s. from novemberbut on into december. those worries of a contested election, how do you hinge for that? democrats, dropping a proposal of around $2.4 billion worth of help. plenty of first to be chewing on into the weekend. >> obviously, this week was a little noisy. we saw ongoing selling pressure. ,ith today's rebound in tech it finished tire on the week. we are sorting the signal through the noise. tech was a huge winner
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throughout this. they remain in a funk even with the gains, below the 50 day moving average still. it is the first real-time that we continue to be in this theine phase for tech since rally started at the end of march. >> he saw this reflected in a lot of other metrics, too -- you saw this reflected in a lot of other metrics, too. we still don't have a proposal on the table. saw the breakevens rally off the march lows. and indication of not only fiscal stimulus, but a strong economic recovery. the flatline has started to drop a little bit. we have seen 20 basis points of selling pressure on the 10 year breakeven here. this is for those folks that are looking at the market's
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expectation going forward. you see that flatlining out. that really tells you what you need to know about what the market wants right now. that is more clarity on washington on how they will stimulate and keep this economy going. >> it is that lack of additional physical temples that may show markets anticipating some sort of rollover on expected inflation. for more on this, let's bring in our bloomberg across asset reporter. thanks so much for joining us. looking at that chart of breakevens rolling over, is that the story right now until proven otherwise? ofs boom we saw by the end march, that crucial measure is running out of steam? >> i think in a lot of ways, it is. if you think about where we are right now, you have the fed making it very clear, basically begging for help, that we need fiscal stimulus. the fed has done so much at this point.
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policymakers, beating the drum again for fiscal stimulus. ies are seeing buyers' worr reemerge. all of that is really displaying on breakevens. you're seeing that ripple across markets, if you look even as far as copper. it is interesting to see tech is finding a way to are performed -- finding a way to outperform. these are companies that tend to debt burdens, borrow a lot of cash, very painful for those companies. but with breakevens taking a bit of a break, that is helping tech out a little bit. caroline: tech is a haven of choice. gold doesn't seem to be at the moment. -- i am interested if we should be worried about it. >> in terms of the election? back to thewent
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florida ballot recount in the last presidential election, it was very much a risk of market. you saw the s&p over 4%, gold rallied, treasury yields fell over 50 basis points. that was from 5%. now for basisrder points. you are seeing demand for protection in gold even though it has not really behaved as they haven it is thought to be in the past couple of days and weeks. still, traders are going to what they know. we are heading into a very uncertain period for the election, for the virus. you're still seeing the demand for both protection through the end of the year, even though to your point, it really has not worked that well as a hedge lately. >> we also saw a lot of the hedges in those vix contracts in november. now some folks going even deeper, going all the way towards january. hen you look at the
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structure of the vix right now and the structure we are seeing in the s&p 500, and on a week where the s&p 500 has a fourth straight weekly loss, the nasdaq manages to rebound, i'm curious as to what that tells you about how hedged investors are? >> this is a really interesting dynamic that has emerged as a straight are stricter, -- as traders such a price that volatility. the s&p term structure, it pretty much mirrors the vix. you are seeing elevated volatility in december, as well. if you look at the tech etf, it doesn't. you are not seeing that demand for further out protection. it could become to mechanical that traders tend to default for theirp and vix hedges and it has not in the to the nasdaq yet, but it also could be tech stocks seemed to tod a way to go up -- seem
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find a way to go up. you have the nasdaq down as much actually on3% wednesday, now we are ending 2% higher. if you're looking for a haven in terms of just the equity state, tech is probably a good bit. >> this sort of gets back to what we were discussing in the beginning, which is this phenomenon we are tech is this trades like a haven, like gold, let treasuries. we think of tech stocks like risky, but from the investor perspective, it does not trade like other areas that are thought to be risky. >> absolutely. in this low-rate world, it has emerged as a haven. it really all boils down against real rates and breakevens. if the fed is able to get to that 2% average inflation target that they so very much want to get to, that would be bad news
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for tech. that is just a fundamental problem for these tech companies. right now, with the breakevens cooling-off, treasury yields not really going anywhere, tech for sure can perform as a haven. >> it will be interesting to see how that works out. katie, have a wonderful weekend. we will continue on this topic here. there are a lot of political jitters out there. plus goldman sachs, telling people to chill out, you are not seeing the type of volatility a lot of people are pricing in. we will talk about the rates market, coming up next. this is bloomberg. ♪
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>> welcome back to "what'd you miss?" jitters, surrounding the u.s. election. a lot of concern over the next lack of fiscal stimulus, showing up in the options market, in the fx market, even in the rates market. a lot of volatility popping up. >> when of the things people were talking about is this idea there is a binary nature of what could happen on election night. we are talking about no stimulus and policy gridlock. on the other hand, if you were to have a bite in when antidemocratic -- biden win, and a democratics -- haveratic sweep, it would an ample's on inflation and growth and rates.
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there's a wide range of potential outcomes here that could see through the markets. >> which could electrify the silver market, the bond market. >> there is literally nothing going on. you are looking at 10 year yield, it's flat. >> maybe we might get a little bit of amusement. >> for more, joining us now to discuss rets -- discuss rates is emily. if you look at the nominal 10 year yield, it is pretty boring. i guess there is potential post-election we could get something here. >> i hate to make anything in the treasury market some boring. >> we are looking at the chart right there. >> clearly, it is undeniable. 0-basis points range. this is the kind of thing that traders really hate. it has not been a great time to be in the treasury. but the point to this is the
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index that tracks rate falls has been at a record low again. there's not much to be said. we also see points creeping in. as you look at after three months on the move, you are up, butome picking there will be volatility around the elections. >> how much longer are they looking into this this year? goldman sachs saying it is a risk mother perhaps the market should not be assessing. perhaps we could get clarity after a day or so. how far out are we looking into? december, even, for volatility? >> what we are capturing and the three-month-one-month spread is the initial part of the election. there is an uptick. what we are seeing is there is
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priceprolonged volatility in. what we have been seeing is one of the biggest events since 2009. it's not as if -- you know, i think it's difficult to say with any great clarity how long volatility will stay in the market. in terms of the election, as a real-life potential, it looks like that's what they need to do to avoid [indiscernible] >> there's of is the a lot of focus on congress and what they are doing or not doing -- obviously a lot of focus on congress and what they are doing and not doing. when you take into account the assumption by some folks in the market that you will see edux sort of form of qe r again, is are some sense that could be playing a little bit more of a factor here on where rates are and where they might be going? >> yes. this is definitely a point
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[indiscernible] i think the sense there is qe, another platform to come, the idea that the fed might soon [indiscernible] longer, that sort of stuff is weighing in longer. keepcould possibly possibility down for a while -- keep volatility down for a while. >> if we get some sort of a conflicting message, i guess the consistent thing is that everything they are talking about is years in the future, presumably. normally, fed speakers might say something about next year, maybe the next decision, but they are discussing 2023. everybody knows the fed is not doing anything. it is an unusual situation for traders and all the big action expected to come years from now. that is absolutely the
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point. it is difficult the last decade, we have seen barely any movement until 2015, when rates started to rise again. you had that crushing experience. this time around, it is, if you are looking at 2023 with the fed on hold, and pretty much a strong consensus around that, it is hard to imagine anything other than this downward pressure on yields. things kept pretty immobile. thanks to emily barrett, breaking down the markets further for us. matt malia's joining us to discuss how he sees traders responding to election risk jitters. maley is joining us to discuss how he sees traders
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responding to election risk jitters. this is bloomberg. ♪
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,> in terms of the outlook because of the reduced likelihood am very low likelihood now of a fiscal deal, we were 6% quarter and quarter annualized. now 3% quarter on quarter annualized. >> the goldman sachs chief economist there. economists have been worrying about the lack of fiscal stimulus, cutting their growth forecast on the back of the. jpmorgan followed suit, as well. we will be discussing the investor view on the election and the stimulus risk we are seeing at the moment. >> in the last couple of weeks, there's no doubt that this sort of sunk into investors that
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election night might be election week or month -- concerns about the smooth handoff. you can see this is the chart of the gap between first month vix futures contracts and the spot fix. another way of looking at how volatility will get up there. this goes back more than a decade, this chart. you can see the highest levels going forward. yes. people are clearly taking into the account that there's this big thing coming up. >> to be fair, we should point out, a lot of people caught up during the 2016 election and did not price in a trump victory. this time around, everyone wants to hedge their bets as to whether there's going to be a second term for trump or a first term for biden. ml--t's bring in matt matt maley.
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point was that these headlines about how there's going to be anxiety with the counting of the votes itself, to the outcome, are starting to catch people's attention as a sort of nerves, perhaps. >> there's no question. headline seems to move the market. the head of the gop in pennsylvania was going to suddenly say, we are not going to go by what the voters say, we choose ourselves. gop committee doesn't have the power to do that. but for one thing, it is interesting, no matter who wins the election, every four years, you go back 50 years, forever wins the election, you start right around the election to about a week and a half or so later. there's usually a bond in the market matter who wins. market rallies into the end
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of the year. there's been a couple of times with the market was flat. ralliedher time, it's into the end of the year except for one. that was 2000. the one time we had a contested election. 7%-8%. fell between we could easily see some of the senatorial results contested. it's a very close vote in terms of how many senators we have any party. we may not know who was in charge of the senate -- who is in charge of the senate. there's a lot more potential for unanswered questions. >> you talk about how in the longer term, it's rally through it. we've had the ultimate long-term investor saying the way to write is through asset diversification.
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how are you looking to get protection? >> one of the best ways to do it is a versification but one thing right now is of course income in the stock market. we are not getting any income from the fixed income market, with interest rates at ridiculously low levels. the bond market doesn't seem to want to go anywhere. if you look at some of these companies, they pay their dividend yield. have to be careful just because it pays a high dividend doesn't mean it is a secure dividend. there's a lot of companies that pay a decent sized dividend that have a record of increasing the dividend every year for many years. there's a list out there for 25 years in a row. that way, you can ride through it with some good news. some of these consumer staples have some good dividends. they should do well if we have a second wave of the coronavirus.
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they all hold up, but they will also pay you while you wait. i think we are going to get a nice opportunity in the tech area coming up soon. not yet, but soon. even then, you don't want to go back into the same way you did in august. saw some folks nibbling back around the industrial stocks, the material things, some companies you would bet on if you were expecting a real economic recovery or economic activity. is that exist you would become double in right now? would you wait longer until we got more clarity as to how the election shaped out? >> i think a little later. you don't have to wait too long. if it looks like biden is going to win, it looks like he might win fairly easily, the market may come down with concerns over
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tax rates and such. that provides a great opportunity. it is the economy, is going to turn around. once we can get the vaccine and everything pushed out. this will not get pushed out for years. there's a good chance we will get it by next year, the end of the year. you have to think about six months in advance. andnow the stock market individuals stock most six of onein advance something takes place. around election time, that will be a time to move more aggressive in those means -- more aggressively and those means. have a constitutional requirement to have this done by mid-january or basically early december. hopefully, we will have some clarity long before that. it will be an interesting right here. -- ride here. have a wonderful weekend, chief market strategist, matt maley.
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you can also be our listeners. subscribe to our weekly each friday, you can put it in your pocket, enjoy it over the weekend. >> definitely downloaded. -- download it. called "what'd you miss this week?" i'm going to very luxurious connecticut. a log cabin. watchl you be able to "what'd you miss?" while you are there?
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>> there's lots more to "what'd you miss?" >> have a great weekend. this is bloomberg. ♪
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♪ emily: welcome to "bloomberg technology." i'm emily chang. stocks, rallying today. sign a waiting out any venue stimulus package. , nancyhe close, speaker pelosi, and steven mnuchin agreed to keep talking. the s&p, with a fourth straight weekly drop. tech for once was not to

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