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Chaotic presidential debate, jobs cuts add to recovery fears, and there's still no progress on stimulus talks.


The first of three presidential debates happened last night, and if you watched it, you've probably already made up your mind about it. If you didn't, you were probably avoiding it for a reason. If you really are looking for a recap of the often chaotic 90 mins, there's one here

Job cuts 

There were more signs that the "return to normal" for the global economy may take longer than hoped for in a couple of major layoff announcements. Walt Disney Co. made one of the deepest workforce reductions of the Covid-19 era after it announced yesterday it was firing 28,000 workers. Oil major Royal Dutch Shell Plc said it will cut as many as 9,000 jobs as it struggles with low demand and tries to restructure towards low-carbon energy. There is a check on the health of the U.S. labor market this morning when ADP releases its employment report while September payrolls data is due on Friday. 

No progress 

There are few signs of progress on agreeing a new stimulus package after yesterday's talks between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. The pair are scheduled to talk again today, with Pelosi saying her party is waiting for Mnuchin's counter-offer. She has already asked Democrats to deliver a "strong" vote for the $2.2 trillion package in the House which could be scheduled for as early as today before lawmakers leave for election campaigning. White House economic adviser Larry Kudlow expressed skepticism over the need for such a large package. 

Markets mixed

Investors are taking some risk off the table in the wake of last night's acrimonious debate. Overnight the MSCI Asia Pacific Index slipped 0.6%, while Japan's Topix index closed 1.9% lower, its biggest one-day drop since July. In Europe, the Stoxx 600 Index was 0.3% lower at 5:50 a.m. Eastern Time with travel and technology shares hardest hit. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 0.651% and gold slipped. 

Coming up...

ADP employment change is at 8:15 a.m. The third reading of U.S. second-quarter GDP is at 8:30 a.m. Pending home sales for August is at 10:00 a.m. The oil market will be hoping for some good news in U.S. inventories data at 10:30 a.m. Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman and St. Louis Fed President James Bullard all speak later. Ex-FBI Director James Comey appears before the Senate Judiciary Committee. 

What we've been reading

This is what's caught our eye over the last 24 hours.

And finally, here's what Joe's interested in this morning

The way to think about the government's response to the Covid crisis is as a bridge. The Federal Reserve backstopped a wide swathe of private credit markets, while fiscal authorities replaced a great deal of household lost income, and the premise was that all this would keep things going until the crisis was over.

While it's true (and unquestionably good news) that the unemployment rate has fallen faster than almost everyone had expected back in March and April, it's clear that for more and more people, the bridge was not built long enough. Yesterday's news that Disney would lay off 28,000 workers from its parks division should be a wake-up call on this. And indeed, investors are treating it as such, with the stock down nearly 3% on the news. Meanwhile, other businesses that rely on in-person activity and services remain deeply depressed, whether you're looking at restaurants or airlines -- raising the risk of further layoffs.

The next three days will be filled with labor market data. Today we get the ADP Employment report. Tomorrow Initial Claims, and then of course Friday is Non-Farm Payrolls, which will give us a further sense of how much we're still recovering, and how much damage is going into the permanent category.

Joe Weisenthal is an editor at Bloomberg.

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