Virus flares in Europe, Brexit deal on the ropes, and Biden blasts Trump in convention speech. Virus fear, vaccine hopesThe fallout from the pandemic spread in Europe continues as authorities show little willingness to impose closing borders akin to the initial surge during March and April. The bloc is seeking to battle a public-health crisis without delivering another blow to economies. German Chancellor Angela Merkel on Thursday urged European leaders to work together. Pfizer Inc. and BioNTech SE said the Covid-19 vaccine they are jointly developing is on track to be submitted for regulatory review as early as October. Last month the companies clinched a $2 billion deal to supply an initial 100 million doses of the vaccine to the U.S. Meanwhile, Russia plans to start international clinical trials of its Sputnik V vaccine. Elsewhere, California's hospitalizations for Covid-19 fell to the lowest since late June while daily cases stayed below the two-week trend line. Brexit bluesU.K. and European Union officials fear a Brexit deal is at risk of slipping through their fingers. A British attempt, apparently rebuffed, to break the deadlock centered on a draft Free Trade Agreement based on where they believe there is common ground with the EU, said people familiar with the negotiations who asked not to be identified. The two sides are far apart on access to British fishing waters and the so-called level playing field requirements aimed at preventing a distortion of competition. The bloc's chief negotiator Michel Barnier said a deal "seems unlikely" after talks broke up on Friday. Time is running out as the cliff edge of a no-deal Brexit looms at the end of the year, when the transition period ends and tariffs potentially kick in. Investors don't seem hopeful: U.K. stocks' underperformance this year is pushing the FTSE 100 Index to a record low relative to the MSCI All-Country World Index. Bruising battleJoe Biden blasted President Donald Trump in a prime-time address accepting the Democratic nomination, dubbing his opponent a national embarrassment who left Americans vulnerable to the coronavirus pandemic and economic hardship. Without ever using Trump's name, the former vice president said he had "cloaked America in darkness for far too long," setting the tone for a bruising general election battle. Biden said another four years of a Trump presidency would result in more small businesses closing and higher virus cases. Trump sought to distract from the speech with an interview on Fox News warning, without evidence, there will be election fraud. The president said he'd dispatch sheriffs, U.S. attorneys as well as attorneys general to polling places, without citing any authority he has to follow through. Markets upVaccine news buoyed investor sentiment, overshadowing economic data that showed Europe's recovery faltering. Overnight, the MSCI Asia Pacific Index was up 0.8% at 5:30 a.m. Eastern Time, while Japan's Topix index closed 0.3%. In Europe the Stoxx 600 Index was 0.5% higher after briefly sinking on news the region unexpectedly lost economic momentum this month. S&P 500 futures were flat, the 10-year Treasury yield was at 0.64% and gold was lower. Coming up...PMI data for August is due at 9:45 a.m., with consensus expecting a slight increase from last month's manufacturing and services numbers. Existing home sales follow at 10:00 a.m., while the latest Baker Hughes rig count numbers arrive at 1:00 p.m. It's a quiet day for earnings, with Foot Locker Inc. and Deere & Co. reporting before the bell. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Emily's interested in this morningLooks like we've settled on the letter -- K -- that best describes this recovery (hat-tip Peter Atwater of Financial Insyghts, who shares the credit), and while it earns higher Scrabble points than the others, it's also the most insidious of the lot. The idea behind the letter is that some people and companies have managed to get through the health crisis in good shape, while many others are suffering. K-shaped economic and market data abound, and show a widening gap between the comparatively privileged -- for instance, those with jobs they can readily do from home -- and the disenfranchised. This divergence is wretched in part because it raises the risk that those in charge of the rescue effort will call it off when headline numbers are looking better. For instance, the urgency of another $1-trillion-plus stimulus package was apparently harder to grasp with payrolls numbers beating expectations -- at least, that's one way to read lawmakers' failure to seal a deal before the August recess. The Covid-19-exacerbated gap between the privileged and the rest is a depressingly pervasive pattern, and it's reflected in the bond market.  This week, high-grade issuance reached $1.346 trillion for the year-to-date, smashing the full-year record set in 2017. Over the past three months, A-listers Amazon, Alphabet and now Apple have each secured the lowest borrowing costs in history, or got close to them, for monster deals. Meanwhile, New York's MTA just turned to the Fed for affordable funding. Unequal access to the corporate bond market puts the U.S. recovery at risk, as Sally Bakewell and team described recently. Disparities have always existed in the bond market, but more banks have tightened standards on lending to small businesses than at any time since 2009, and the stakes are higher than ever now, amid warnings of record corporate defaults and bankruptcies. The painful and long-term implications of a K-shaped recovery are kryptonite to the Fed, which has faced widespread accusations of exacerbating inequality in its response to the global financial crisis. Follow Bloomberg's Emily Barrett on Twitter at @notthatECB Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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