| Covid's dangerous moment, almost all hope of pre-election stimulus lost, and China's growth plan. Record infections The U.S. added more than 85,000 coronavirus infections on Sunday, a new high beating the record set the day before. Vice President Mike Pence's chief of staff tested positive for the disease, and President Donald Trump's chief of staff admitted the U.S. is "not going to control" the pandemic. The World Health Organization's director general said some countries in the northern hemisphere are facing a "dangerous moment" with the spread of Covid-19 showing little sign of slowing in Europe or the U.S. There was some positive news on the vaccine front, with the Financial Times reporting AstraZeneca's shot has produced a robust immune response in elderly people. Pessimism Any lingering hopes of a stimulus deal before the election have been all but extinguished by the lack of a breakthrough over the weekend. House Speaker Nancy Pelosi said she's waiting for another counteroffer from Treasury Secretary Steven Mnuchin today as both sides get stuck playing the blame game for the lack of progress. The Senate is set to leave Washington today after voting on the confirmation of Supreme Court nominee Amy Coney Barrett and the House has already left. While both could be recalled on 24 hours notice, it is unlikely during the last week of campaigning ahead of the election. China plan President Xi Jinping spoke at a meeting in Beijing devoted to mapping out the country's 14th five-year plan. The blueprint will focus on technological innovation, economic self reliance and a cleaner environment. Should China stick to the growth trajectory of recent years it is set to become the world's largest economy, passing the U.S. within the next decade. The country also announced that it will impose unspecified sanctions on the defense unit of Boeing Co., Lockheed Martin Corp., and Raytheon Technologies Corp. in the wake of U.S. approval of the $1.8 billion in arms sales to Taiwan. Markets dropInvestors are showing signs of becoming increasingly worried about the growth in Covid infections as hopes for a stimulus package disappear. Overnight the MSCI Asia Pacific Index slipped 0.2% while Japan's Topix index closed 0.4% lower. In Europe, the Stoxx 600 Index had dropped 0.7% by 5:50 a.m. Eastern Time, with Germany's DAX hit by the 20% plunge in software giants SAP SE's shares. S&P 500 futures pointed to a slump at the open, the 10-year Treasury yield was at 0.808% and oil was below $39 a barrel. Coming up...The September Chicago Fed National Activity Index is at 8:30 a.m., with new home sales for that month at 10:00 a.m. and Dallas Fed Manufacturing Activity for October at 10:30 a.m. While there are no monetary policy speakers scheduled for today, this week sees decisions from the European Central Bank, the Bank of Japan and the Bank of Canada, with the Federal Reserve and Bank of England up next week. Hasbro Inc. and Twilio Inc. are among the companies reporting results. In M&A news, Dunkin' Brands Group, Inc. is in talks to be taken private by Inspire Brands, and Bayer AG agreed to acquire U.S. biotech company Asklepios BioPharmaceutical Inc. for as much as $4 billion. What we've been readingThis is what's caught our eye over the weekend. And finally, here's what Joe's interested in this morningWe're just 8 days away from the election, and the general expectation remains that Joe Biden wins, with a high likelihood of Democrats also taking the Senate. Wall Street analysts have been talking about the fiscal implications of this for a while now, and have generally come to terms with it, describing how it could be bullish for stocks. On the latest episode of the Odd Lots podcast, Tracy Alloway and I spoke with Josh Younger, a rate derivatives strategist at JPMorgan about volatility and hedging going into the election. At the end of a fascinating discussion, around the 47 minute mark, Younger identified the one election risk that nobody's really talking about, and that is a huge, 1984-style style Biden landslide. When talking to clients, he says, everyone's roughly of the same frame of mind: "Biden will win, but there is a risk of a polling error or some other surprise and so Trump still has a shot and that's what needs hedging." The prospect of a polling error in the other direction, whereby the polls are underestimating Biden's victory just doesn't come up in discussions he said.  And since a mega mandate may come with its own distinct policy implications (healthcare, taxes, anti-trust, climate etc.), it's perhaps thinking about the tail risk in the other direction, and what it would mean for different parts of the market.
Anyway, check out the episode at the link above or on iTunes here. Joe Weisenthal is an editor at Bloomberg. 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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