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Traders are ratcheting up bets that the outcome of the presidential election on November 3 will potentially be very messy. 

Futures contracts on the Vix volatility index — which uses options to derive an estimate of the future choppiness of the S&P 500 stocks benchmark — show what some traders call a “kink” around October and November, in a pick-up that exceeds previous contests for the White House.

The derivatives indicate that despite the US stock market’s ascent to new highs, the increasingly combative rhetoric between Democrats and Republicans and the possibility of political unrest are gnawing at investors’ nerves.

Betting odds compiled by Real Clear Politics show a dramatic fall in expectations of a victory for Joe Biden, the Democratic candidate, over the past month.

“There is a noticeable bump” in expected volatility, said Federico Gilly, a fund manager at Goldman Sachs Asset Management. He estimates that options are pricing in an S&P 500 move of at least 3.5 per cent on the day of the election. (FT)

Use the FT’s interactive calculator to see which states matter most in winning the presidency.

Coronavirus digest

  • The Trump administration has ordered a halt to many residential evictions until the end of the year. The move reflects mounting fears in Washington that millions of Americans could struggle to make rent payments in the coming weeks.

  • The US said it would not join a global effort to develop, manufacture and equitably distribute a Covid-19 vaccine. Governments were told last week that the deadline to join the WHO’s so-called Covax programme had been pushed back, according to documents seen by the FT.

  • Apple and Google have announced a new contact-tracing tool that will be embedded into the operating system of smartphones. The companies said 25 states and territories were “exploring” the technology and more than 20 countries were involved.

  • Australia has entered its first recession in almost three decades after the economy shrank a record 7 per cent in the June quarter. Brazil has also officially entered a recession after its gross domestic product contracted nearly 10 per cent in the three months to the end of June, compared with the previous quarter. The eurozone, meanwhile, has slid into deflation for the first time in four years.

  • Japan’s karaoke bars have hastily adapted to the pandemic by tweaking their technology, including a series of settings that adjust the tone and clarity of your output to compensate for singing through a mask. (FT, WaPo)

Follow our live coronavirus coverage.

In the news

Trump says US is not systemically racist Donald Trump dismissed the idea that systemic racism is an issue in America as he visited Kenosha, Wisconsin, in the wake of protests that erupted after the shooting of Jacob Blake, a black man, by a white police officer. With two months to go until the election, the president has returned to the theme of law and order but is taking a different tactical approach to 2016. (FT)

Donald Trump visited Kenosha, Wisconsin, which was rocked by several days of unrest after a police officer shot Jacob Blake © REUTERS

Tesla seeks to raise up to $5bn in share sale The electric carmaker is planning to capitalise on the six-fold surge in its valuation this year. It is shunning a formal secondary offering, however, in which an investment bank sets the terms, in favour of selling shares on the open market. Meanwhile, investors are pouring cash into Chinese start-ups in search of the next Tesla. (FT)

Facebook says Russian network behind fake leftwing news Facebook said it had taken down new disinformation campaigns, including one carried out by the Russian group accused of meddling in the 2016 election, and another linked to US public relations firm CLS Strategies. (FT)

McDonald’s accused of discriminating against black franchisees
The fast-food chain is being sued by dozens of black former franchisees who have accused the fast-food group of forcing them out of business by putting them in locations that were destined to fail. McDonald’s called the claims in the lawsuit “highly inaccurate”. (FT)

Pentagon warns of China’s growing nuclear arsenal China’s military is set to double its arsenal of nuclear warheads over the next decade, as it races to become a “world-class” force, according to a Pentagon report released on Tuesday. Meanwhile, senior US military officials are making the case for a new generation of space weapons in a sign of their concern about China’s extraterrestrial capabilities. (FT)

Joe Kennedy fails in Democratic primary The 39-year-old grandson of Robert F Kennedy and great-nephew of John F Kennedy failed to defeat incumbent Ed Markey in the Massachusetts primary. The contest sharply divided Democrats in both New England and Washington, DC, exposing ideological and generational fissures in the party. (FT)

Swiss regulator escalates Credit Suisse probe Switzerland’s financial regulator has begun enforcement proceedings against Credit Suisse over the bank’s recent corporate espionage scandal. Citigroup, meanwhile, has become the first US lender to receive a licence that will allow it to act as a custodian bank in China. (FT)

Czech Senate president’s Taipei visit heightens tensions Czech Senate president Milos Vystrcil declared himself to be a Taiwanese as he addressed Taiwan’s parliament, in a pointed reference to John F Kennedy’s speech in Germany at the height of the cold war. Mr Vystrcil’s visit has drawn an angry response from Beijing. Our editorial board lays out how western democracies can help Taiwan. (FT)

Czech Senate president Milos Vystrcil addresses Taiwan’s parliament © AP

German parliament to open full inquiry into Wirecard collapse A full parliamentary committee of inquiry was needed “to clear up an accounting scandal which has no precedent in Germany’s postwar history”, according to Lisa Paus, finance spokeswoman for the opposition Green party. The move will keep the affair at the top of the political agenda well into a critical election year. (FT)

The day ahead

Macy’s reports earnings The US department store chain has already announced nearly 4,000 job cuts in response to the coronavirus pandemic. Today it will reveal the extent of the financial damage to store closures and redundancies. (FT)

Charlie Hebdo accused go on trial In Paris 14 of the alleged associates of Islamist gunmen and suicide bombers who launched a series of attacks in the city in 2015 go on trial. The targets included the Charlie Hebdo satirical newspaper and Bataclan concert hall and left a total of 149 people dead.

Digital passes are still available for this year’s FTWeekend Festival. Starting Thursday, our annual festival will feature more than 100 speakers, including Snap co-founder Evan Spiegel, author Claudia Rankine and actor Annette Bening. FT columnists Martin Wolf, Jo Ellison and Tim Harford will also be speaking. Explore the full list of speakers and register here.

What else we’re reading

Equity bulls spur IPO markets into action Every time you look around these days, it seems as if another big company is heading to the public markets, writes Brooke Masters. But while more money has already been raised this year on the Nasdaq than for any full year since 2000, during the dotcom bubble, it has been famine in London. (FT)

Why Trump no longer talks about the trade deficit with China Eight months after inking a “phase one” trade deal, with China on track to miss the targets in the agreement, the US president has shifted his language on trade. What does Beijing really think about the forthcoming US election? (FT, SCMP)

New York’s bold green plans hit opposition Projects such as the 180-megawatt Horseshoe Solar on the southern fringe of Rochester underpin New York’s ambition to transform its energy system. But it is facing opposition and a tortuous planning system that threaten its target to eliminate carbon emissions by 2040. (FT)

Why Warren Buffett is gambling on Japan’s dealmakers Japan’s sogo sosha — or general trading houses — have a distinctive culture, fierce competitive streak and a horror of being compared with their rivals. But as of this week, the five biggest — Mitsubishi, Mitsui, Itochu, Marubeni and Sumitomo — have something in common: Warren Buffett as a shareholder. (FT)

China cracks down on waste to ensure food security China’s “champion eaters” have become internet stars. But this past weekend, China’s state broadcaster departed from its regular programming to expose the hoaxes behind their seemingly insatiable appetites as part of President Xi Jinping’s initiative to safeguard China’s food security. (FT)

A chilli-pepper eating competition in Ningxiang, Hunan province. China’s state broadcaster has exposed the hoaxes behind some ‘champion eaters’ as part of a campaign to tackle an estimated 18m tonnes of annual food waste © © AFP/Getty

Belarus crackdown threatens flourishing tech sector Before Belarus’s disputed election, Nick Kaeshko had never considered moving his IT company out of the country. But after a brutal crackdown by authoritarian leader Alexander Lukashenko the tech entrepreneur — and many like him — are reconsidering their options. (FT)

Video of the day

Why India is struggling to cope with Covid-19 The FT’s South Asia correspondent Stephanie Findlay looks at how the coronavirus spread from India’s biggest cities to rural areas and why the country is finding it harder than its peers to bounce back from the pandemic.

Thank you for reading. Send your recommendations and feedback to [email protected]

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