| Pre-election stimulus hopes fading fast, more lockdown measures, and economies hit by fresh virus wave. No breakthrough The slow pace of talks on a stimulus package and the rapidly approaching election mean that the chance of getting a deal passed by Congress ahead of Nov. 3 now seems increasingly distant. Adding to the problem is the increasing resistance from Senate Republicans to voting on the multi-trillion dollar package, with there being a real possibility they would not vote in favor of a package even after the election. House Democrats are starting to say that they would be unwilling to come back to Washington to pass a bill if Senate support isn't in place. Virus Democratic presidential nominee Joe Biden attacked President Donald Trump for his handling of the pandemic in last night's debate. There are more worrying signs of the resurgence of the disease in the U.S. with the seven-day average of deaths hitting the highest in a month yesterday. In Europe, governments are deploying curfews more widely as they struggle to keep a lid on rapidly rising cases amid looming shortages of trained medical staff. There was some good news on the treatment front after the U.S. Food and Drug Administration approved Gilead Sciences Inc.'s antiviral therapy remdesivir. PMIsThe re-emergence of Covid-19 in Europe is starting to show up in economic data. Today's Purchasing Managers Index for France pointed to an economy back in a slump while in Germany a strong performance in manufacturing helped offset a service sector that slipped back into contraction. IHS Markit's October composite PMI for the euro area slipped to 49.4, dropping below the 50 mark that divides an expansion from a contraction for the first time since June. PMI data for the U.S. economy is published at 9:45 a.m. Eastern Time. Markets riseWith no prospect of a timely stimulus deal and a worsening virus situation, investors seem to be focused on earnings at the moment. Overnight, the MSCI Asia Pacific Index added 0.2% while Japan's Topix index closed 0.4% higher. Europe's Stoxx 600 Index had gained 0.7% by 5:50 a.m., boosted by strong bank and carmaker results. S&P 500 futures are pointing to a small rise at the open, the 10-year Treasury yield was at 0.855% and gold was higher. Coming up...It is a quiet day on the economic data front with PMIs the only release of note. A week full of Fed speakers is coming to a gentle end, with only New York Fed Executive Vice President Lorie Logan on the calendar. The oil market may take some interest in the Baker Hughes rig count at 1:00 p.m. as the shale industry is having a big outbreak of M&A. In earnings today, economists will be watching American Express Co. results for hints of how the economy is doing. Fannie Mae and Southern Copper Corp. are among the other companies reporting. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Katie's interested in this morningSomehow there's only a week and a half until the U.S. presidential election, but you wouldn't know it from looking at credit markets. While the Cboe Volatility Index -- the equity market's "fear gauge" -- hovers around a still-elevated reading of 30, corporate bond spreads have been steadily grinding back to pre-pandemic levels. That's opened up a rift between the VIX and investment-grade spreads, which tend to loosely track each other.
That divergence is an opportunity in the eyes of Saba Capital Management founder Boaz Weinstein, whose flagship fund has surged 80% in 2020 through September. The current status quo can't hold for much longer as the U.S. election approaches and coronavirus cases tick up, he said. "It's like a calm before the storm," he said in a Bloomberg Television interview. "Equity volatility is almost inescapably high. Is that a good form of insurance? The payoff profiles are nothing like they were back in January. Whereas in credit, we're almost back to where we were in January."  To take advantage, Weinstein shorting credits that he views as vulnerable -- he declined to say which -- while adding bullish exposure to issuers such as International Business Machines Corp., AT&T Inc. and Walt Disney Co., which he says are "going to be in good shape" regardless of how things shake out. However, Financial Enhancement Group's Andrew Thrasher has a different interpretation. While the two measures have drifted apart, there's no guarantee that spreads will widen to meet the VIX, he said on Twitter. Rather, such dislocations tend to result in lower equity volatility, with spreads being "right." It's fair to say that credit investors don't share Weinstein's concern. Risk premiums on BBB-rated debt -- the last rung before junk -- shrunk to the tightest level since early March last week as dwindling supply met robust demand. And with the Fed's corporate bond backstop still firmly in place, any credit storm may be closer to a drizzle than a hurricane. Follow Bloomberg's Katie Greifeld on Twitter at @kgreifeld 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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