With the election less than two years away. Welcome to bloomberg surveillance. I am manus cranny in dubai. The Global Equity rally rolls on. The inexorable roller. We have some breaking data from the euro area. Pmi at 50. 5. The market had preliminary suggested a number of 50. 1. We saw the german numbers on Services Come in at 52. 5 from 50. 8. This roll up in the equity rally is marching on. One hundred billion euros for the recovery in europe. 1. Have a new date, november the politicization of the vaccine has never been more. That trumps any china rhetoric of building up their tech and chip ability. They are going to use the power of the atomic bomb, as they said, to get there. 10 year yields,. 66, back at the level that they were when jay powell spoke. The glaly re when jay powell spoke. The global rally rallies on. There is this reluctance by the bond market to reprice with the exuberance of stocks. Is it about the dollar or the euro . The euro has been dropping for three days. It is the biggest proportion of the dollar index. Where will we roll down to . Kick jukes says for the moment kit juckes says for the moment, you are looking at a level of cable drops ever so slightly. The bank of england says there is room to do more. There is always room to do more and better. Leighann gerrans is here with your first word news. Germany says tests show unequivocally that russian Opposition LeaderAleksei Navalny was poisoned by the type of military grade nerve agent used in the salsberry poisoning back in 2018. Berlin will now consult with allies to form a plan. Chancellor Angela Merkel says the world is waiting for answers from russia. [speaking merkel german] we are expecting that the russian government explain this incident. There are very serious questions that only the russian government can answer and they must answer them. Now, u. K. Prime minister Boris Johnson is trying to win back trust after a series of policy reversals. His return to westminster has seen a series of facetoface meetings with conservative mps who are anxious over his handling of the crisis. The coronavirus crisis. Chancellor rishi sunak is also promising there will be no horror show of tax rises. And china is planning broad support for its domestic chip sector. Sources tell bloomberg the move is to counter restrictions from the trump administration. They say beijing is giving this the same priority that it gave to building up its atomic capabilities. The policy includes a suite of measures to bolster research, education, and financing. Global news 24 hours a day, onair and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am leighann gerrans. This is bloomberg. Manus . Manus thank you very much. Breaking news from amazon. In0 jobs are to be created the u. K. This is amazon, 7000 jobs to be created in the u. K. We will get more detail on that. We will bring that to you through the show. To the inexorable rally of u. S. Stocks, rising to yet another record, the s p 500 scored its biggest advance in more than two months. Driving the rally, well, it has been the dovish comments from policymakers, the confidence in a broader economic recovery. Of u. S. Has shown signs progress but continues to struggle with the pandemic. Meanwhile, hopes of a vaccine ng the market after the cdc told u. S. States to be prepared for the vaccine. It sets an aggressive goal for the government, as it plans largescale distribution in the fall. President trumps political future hinges on the response to the virus that has killed almost far. 00 americans so joining me now is iain stealey from j. P. Morgan asset management. Great to have you with us. Thank you for joining us. So the market at the moment seems to be leaning onto the vaccine narrative and ignoring what is quite demonstrative rhetoric from china with regards to battling on the tech front. It is the vaccine narrative that is the ultimate out for here, isnt it alpha here, isnt it . The vaccine a narrative is ortant but also the narrative. There are questions about whether some of the hikes that were put in place would have even occurred under this new framework. I think that, combined with the vaccine narrative, combined with some of the Economic Data is really fueling this rally in risk assets at the moment. Here is the conundrum. Lets deal with the steepeners first of all. You have this momentum. You say that that continues, but where is the Inflection Point for the fed in terms of their tolerance for steepness . There is a question as to whether the steepness occurring is actually saying that the market believes the fed is credible. If they do believe that this new mandate is going to allow inflation to pick up over the longerterm, then the curve should be steepening up. There is going to be a limit to where they would like it to be because we are still in a very high unemployment averment, and a very challenging growth environment. That is an area where you want bond yields to be look. We have been in a 6080 basis point range for the last few months or so. That could easily move up towards the 1 handle if we did get good news around a vaccine and the positivity around that. But i think the fed would push back on that. Bonddo still want overall yields in the u. S. To below. That is good for governments, people, corporations. I think that will also be part of their focus. Manus you mentioned the magical 1 level. Our analyst have done the data calculation. 1 would be delivering a draw. 13 . Equities of about 8 what do you think upsets the fed more, rates at 1 or a correction equity markets could be healthy for the fed . Im trying to balance the two in my mind. Iain i dont think the fed would want a particularly big correction. That would basically remove some of the confidence that is building in the u. S. Economy. I think that is really what they are trying to install, a big level of confidence. With the stock market at the levels is at the moment, people are seeing the positivity around that. I think any collapse in that would be seen as a negative by the fed. On the fiscal side, we havent had some of the news that we were expecting regarding the fiscal side. If we started to see a big collapse in the equity markets, it could encourage the u. S. Government to look back at fiscal negotiations and maybe get something on the table. Manus that could be a market risk. Royal United Services institute iain stealey stays with us to continue the conversation. China is planning sweeping measures to develop its domestic chip industry. Theiscussed t discuss exclusive story, the trade tensions between the worlds two biggest economies. That is next. This is bloomberg. Economics, finance, politics, it is bloomberg surveillance. I am manus cranny in dubai. Lets get you up to speed with your business flash. Good morning, manus. The white house is poised to set boundaries for its crackdown on wechat and tiktok. Sources tell bloomberg the administration is currently debating the scope and will make a public decision this month. The Commerce Department is drafting documents to clarify the exact transactions that will be banned. Now, sanofi is starting human trials of its covid19 vaccine after earlystage data impressed the drugmaker. It brings it one step closer to late stage Clinical Trials that are aimed to start before the end of the year. This shot being developed by sanofi and glaxosmithkline is one of more than 175 coronavirus vaccines currently in development. And robinhood is facing a regulatory probe. Sources tell bloomberg the sec is looking into if the firm properly informed its clients that it sold their stock orders to highfrequency traders. It is related to disclosures prior to 2018, when it made the information easier to find on its website. Robinhood didnt comment on details, but says it cooperates fully with regulators. And that is your Bloomberg Business flash. Manus . Manus thank you very much. Lets get the latest on the trade tensions between the worlds two biggest economies. China is planning a sweeping set of new Government Policies to develop its domestic Semi Conductor industry in an effort to counter restrictions by the u. S. Government. Beijing said it is preparing broad support for a socalled thirdgeneration Semi Conductors over the next five years. The ambition is high. Iain stealey with the j. P. Morgan asset management, a new morning, a new red headline on i suppose the diversions divergence and pressure between china and the United States of america. I want to bring it straight back to the bond markets and the rates market, because the data from china is by far better than the rest of developed markets. Pboc to, does that move a more neutral position relative to fed, relative to g10 . Iain its a good question. Obviously, the virus was much china at the beginning and they shut down very quickly and managed to get their economy back up and going a lot sooner. What we have seen from china over the course of this year is that they have not done the same Monetary Policy easing with Interest Rates that have happened across the g10. For that reason, we still have Chinese Government bond yields up around the 3 level. When you compare that to almost every other major Government Bond market in the world, that yield looks pretty enticing. I think that would drag investors into it over the coming months. When you combine that with the fact that the Chinese Government bonds are finding their way into the Bloomberg Global index and morgan Global Market indices, there is going to be a big foreign demand for it. Manus does that shore up the currency even more . We have debated this, this Bermuda Triangle that we have been trying to break out of. Does the flow of money on the rates differential just add another layer to the currency narrative . Iain if you do get that flow of cash into china, both into the rates side and also into the equity side, then yes, that is going to be just another area that is supportive for the currency. We have seen the currency do very well recently. That is more a taste of dollar weakness relative to chinese strength, in a sense. If anything, the strength that we have seen was a little bit lax compared to areas like the euro. The euro moved first and china has followed. Manus what do you make of the turnaround in the dollar . To me, it smacks of a momentary repricing, overdone. Is there something more substantial to it for you . Iain the dollar is a really interesting question. It is going to be a hot topic i think over the coming weeks, because what we saw was rbc the dollar weaken. Obviouslythis was the dollar weaken. In cases that we were seeing in the u. S. At the same time as cases were going down in europe really left people questioning whether europe has got its house in order more quickly. That was what was driving the strength in the euro. Aviously, that hasnt shifted little bit over the last couple of days. We have had a bit of jaw boning from ecb officials. We saw a pretty horrendous inflation printout of your plastic. So questions around there is actually a hindrance to the recovery. You have casese, in the u. S. Coming back down a bit. We are starting to see cases rise again across other parts of the world. Of u. S. Looking a lot worse from a virus standpoint compared to other areas is definitely not as acute as it was a few weeks ago. I think that is maybe putting a cap on the dollar for the time being. Manus ok. Thank you very much. Iain stealey there from j. P. Morgan asset management. Coming up on the show, denmarks biggest bank is the target of a Second Police probe involving 15,000 customers. We speak to the director general of the countrys financial watchdog. That is next. This is bloomberg. Goes back to 1979. Most of it occurred around 2004. 15,000 customers, 100,000 accounts. Are you worried about systemic issues at this bank at this juncture as you uncover more problems . I dont think this is a systemic issue. I think this is an important issue in relation to how you treat your customers and the confidence of customers in the information that they get from the bank. It is not a systemic issue. Nevertheless, given the things that pop up, the media, we are happening. O what was and if it is consistent about the information. When we know more about it, we have a better sense of the scale of the event. Manus what level of rye grass is available to you rye grass redress iss available to you . Happened. Nds on what if what they told us earlier is consistent with what they knew, and they are handling the issue, ot a lot whichn we can do. One of the big since with them banking sins with them banking that is if you have not told the supervisor the truth. We dont know whether that is the case here, thats a big issue. Because as a supervisor, you are enormously reliant on that institution to tell you the truth. That is why when you have issues popping up in relation to that, the steps which could be taken could include Police Investigations and possible prison sentences. Manus ok. Do you believe this bank has enough capital to prepare for any penalties that they may face . Are you happy with the capital level at danske . Yes, we are. This is not a capital levels issue. This is a Consumer Affairs issue. Manus danske bank ceo is asking for a joint response investigating the money laundering, including those from denmark and the u. S. Can you update us on that . Jesper yes. The story goes back, again, many years. New management has started a process in terms of handling these issues. The finendering, levels are potentially more serious, both in denmark and the u. S. The bank has set aside pretty substantial funds in relation to paying the fine. I am sure discussions are going inwithin institutions denmark and the u. S. In relation to settling that issue, and canrly, as a supervisor, we only look forward to that issue being put down. Manus thank you so much for joining me. Jesper berg, the director general of the danish fsa, on the very latest with danske bank. Emmanuel macrons government unveiled the longawaited euro stimulus plan. This is bloomberg. Economics, finance, and politics. Its bloomberg surveillance. I am manus cranny in dubai. Sterling has repriced by nearly 1 over the past two days, as ramsden at the bank of england the potential talks up the opportunity for easing. We have the numbers. Services pmi comes in at 58. 8. That is down on the previous month and certainly below the survey. Below the estimate on the u. K. Cpi. We are just seeing these numbers come through. And as i say, sterling has just repriced ever so slightly. Services below estimates. The flash rating was 60. 1. 58. 8 is where we are. 58. 8 from 56. 5 in july. Thes the highest reading, second consecutive month of expansion. We are seeing the rebound, reopening. New businesses rises to 58, the highest reading since the 2016. Ck december the u. K. Lurches into reopening. That is cable for you, down 0. 4 . We will, of course, whats really driving the narrative on sterling is more so about the dollar strength. But ramsden coming out and saying we have plenty of capacity to do more on the q. Week site. Mr. Bailey qe side. Mr. Bailey reiterating the risks. Leighann gerrans with the first word news. The u. S. Economy has shown signs of progress but continues to struggle amid the pandemic. That is the readout from the federal reserves latest beige book report. It sees childcare access as a major roadblock for getting people back to work. Data released yesterday estimates private sector payrolls increased by just over 420,000 last month, less than half the amount actually expected by economists. U. S. , the centers for Disease Control and prevention is telling states to prepare for a Covid Vaccine by november 1. That is actually days before the election. According to a letter seen by bloomberg, the cdc is preparing for largescale distributions in the autumn. It said limited doses could be available. Netflix is adding some royalty to its roster. Thece harry and meghan, duke and duchess of sussex, have signed a production deal with the streaming giant. They will produce a wide range of content, from childrens programs to documentaries. They are the latest global celebrities to sign on with the company, joining the likes of barack and michelle obama. Global news 24 hours a day, onair and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am leighann gerrans. This is bloomberg. Manus thank you very much. Governmentcrons unveiled its longawaited 100 billion euros tims package. The french president is betting on the plan euro stimulus package. The french president is betting on the plan with less than two years to go before the election. It includes subsidies, tax cuts, and funding for environmental projects. At ad of Research Investments is with us. If you take the stimulus package from the paneuropean response, plus the french narrative of 100 billion, does it recast any of your thoughts on risk for europe . Good morning. Well, not really. I have to say, this plan was expected. Its not very surprising. That 100 billion split over two years, thats about 4 plus of gdp, but split over two years. Very clearly, there is a focus on jobs, on competitiveness and the green transition. Not enoughargue that is done for consumption, but i think the focus is going to be on investment and on employment. Overall, it is welcome. You know, the funding will be clearly facilitated by the recovery fund, where france is going to get about 50 billion in grants, plus loans. So overall, this is fairly consistent, not too surprising and very clearly, president macron was trying to give a bit of a boost into the april 2022 election. Manus lets see, it sounds as if you are underwhelmed by the 4 number. The title of your global view is, covid paralysis receives and global risk rises. How do i hedge the politics . How do i add more value for the receding paralysis, as you call it . Take me through the two narratives there. Vincent on the covid crisis, obviously, you need to be very humble. Nobody knows exactly how the situation is going to evolve after summer. But there is, you know, some positive notes whereby the progress on the vaccines are very fast. I am not going to pass judgment on whether it is a good thing that the testing phase is reduced so much. That will help reopen the economy. The hospitals i think have better protocols now. Mortalities seem to be falling. We need to be very humble, but the worst is not for sure. I think the focus over the autumn may be more on the clinical situation. Not just the political situation. Not just the u. S. We also have the brexit discussion, which needs to be completed by the end of october. There is not enough time left for a grand deal, so it will be a very small deal, if any. And then we have the u. S. Election, where we could have tight results and that could be contested, leading to gridlock for quite some time. But iare risks there, think those are very hard to predict by definition. But otherwise, i think the story is that of an ongoing recovery, that of ongoing support from central banks. We are hearing from the bank of england, for example, we are going to get more support their. The fed has Just Announced support there. The fed has Just Announced quite a significant change in its objectives. I think that is very significant. I think we can position for a rotation towards the cyclical recovery. That should support some of the cyclical assets. Manus so you are an advocat . Etfs. This shift in the we will talk about that with one of our reporters. Is that something that grows in momentum . Should it be dissected . Vincent thats correct. I mean, the equity market has had quite a remarkable rebound. Bias remainsour positive. Of course, you have got to look at valuations. The purely directional move is not going to be easy from here. I think there is more value in trying to effectively pick the right sectors and on that side, i think the value side remains probably not a good bet, because yields are still low. The cyclicals have started to outperformed offensives. I think defensives. I think there is more room there as the economic recovery is being confirmed. Manus i know that you like a highquality bucket of credit but we will touch on that later. Or certainly francine will. Vincent chaigneau, head of research at generali investment. Tom cruises latest stunt is traveling through london, sitting down in a cinema to see tennis. The florist first blockbuster released since the pandemic but will it be Mission Impossible at the box office or will audiences return to the movies this weekend . This is bloomberg. Manus you are watching bloomberg surveillance. I am manus cranny in dubai. Grab your popcorn and a mask. Christopher nolans longawaited t, isuster, tene released in some parts of the u. S. Today and china over the weekend after it debuted elsewhere in the world. We have been speaking to the imax ceo about the industry. One thing that warner others intended, which is really warner bros. Intended was, instead of the traditional pattern where you would wait for the whole world to be safe and then open, they said, there may never be a time where it all works perfectly. Lets do a rolling, global opening and lets open where its safe and continue to roll through the world in doing that. Right now, that seems to be working. The hope is that that gives comfort to some of the other studios and the other films and they open in a similar manner. Manus joining me now is dani burger. How did tenet due at the box office . It opened do at the box office . What were the numbers like . Dani it did pretty solid internationally, getting about 53 million on its debut. In normal times, that would be may be a disappointment, especially because this is a Christopher Nolan film. It is solid numbers that we are looking at here. We cannot say, people came to t, they think movie theaters are safe. This is a nolan film. It has a builtin, captive audience. In terms of the movie ecosystem, we did see movies, for example, new mutants from disney, it was widely panned. It did pretty poorly, only about 7 million in the u. S. , 10 million internationally. The key here seems to be, if its a really big name, there is a lot of hype around, it c ould get people to see it. Disney doing a strange approach. Mulan set to be released this weekend. You need a disney plus subscription, plus pay another 30 to go see the movie. Disney has not said whether this is the strategy going forward, but certainly going to be a big test if these major movie houses are now going to flip more towards streaming during these uncertain times. Manus i have been known to hum a disney tune. Dani burger with the latest on the cinema numbers. Lets bring a ceo who knows a thing or two about moviegoing. Greidinger, ceo of cineworld. When do you think you can get back to 100 capacity . Will you ever get back to 100 capacity without a vaccine . Y i think we need to differentiate between two period s. After the vaccine, there is no doubt that we are going to go back to normal. Remind all the people 2019,re talking now, in the cinema industry had the biggest year ever in the industry. A record year. No reason why not we see the very room come back to the cinemas by our audience. Of course, the more regular visitors are coming earlier. Know,might even say, you i had a remark about the 53 Million Box Office of tenet. I think it is amazing results. We need to remember, this is without the u. S. It is about 30 more than what was expected. I think this went well. Shows andy sellout probably this weekend will be strong because people want to go and see the movie. In many places, it was the first week of schools. I think in general, we are very encouraged by the results and we are expecting a strong weekend in the u. S. We need also to remember that u. S. Is still without new york and california, so we have to look at the numbers differently than in europe. In general, i think the good signs are there and i believe that once we get into the next blockbusters, they would do better and better. Manus ok, mooky. Lets think about what disney has done. Mulan onreleasing their streaming service, so that is a risk, that studios will start releasing blockbusters on streaming services. How much of a challenge is that . Are you worried about that . Mooky my job of being ceo of the second largest circuit in the world, to tell you the truth my am not worried. Numbers,k into the these moviemakers are doing tenetg movies, i saw 10 days ago. This is a movie that was only done for the big screen. Case. Was a very special i think disney said clearly that they are fully committed to the window. They are the biggest supplier. It is true that disney plus territories, and i was very they to lose mulan in u. S. And u. K. I am sure it will do well in the territories that are opening theatrically, including china. Say, whenave got to you do go to see one of those kinds of movies in the cinema, it a completely different experience. Lets get to the business. Youve got a big old shareholder in the business and there is you are talking to someone about taking the Business Private . I have not even exchanged one word with this new investor. The shares. Y to see we were surprised to see that they sold some of the shares that they bought. Weve had no contact with them. Of course, they are welcome to contact us if there is a need but we have no plans from our side or from the family side to take the company private. Cineworld as a solid, strong company. Our shares are not at the best position now, but this is only natural for businesses that have been closed down for six months. We totally believe in the business. Thirdgeneration in the business. My father opened his first cinema and we are not going anywhere. Manus no, youre not going anywhere and we know it is your ipad. We have got identity definition for you. Have you drawn any credit lines . Chest ifs your defense we go into a second wave . Are you drawing on credit lines . Have you built up any Additional Debt holdings at the moment that you can tell us . Yes, we are wellpositioned for a second wave. We are in a good position. Of course, i cannot reveal exact details, being a public company, because once we announce, we will need to announce. We are in a good position. Linesjuly, we raised two of credit, total of about 350 million. This is a very good, solid amount, but we have other possibilities and other sources if we need. My guess is that november, we are going already to be operating relatively strong. Will g if theyre not if there will not be a great deterioration. There will be a vaccination and we will be back in full force, but we are ready if this will not happen and we are preparing ourselves all the time for the few months ahead and order not to be under any stress in the last months. Manus we wish you well. Thank you for joining us this morning on the lookahead for moviegoing. Thank you very much. Greidinger, ceo of cineworld. Daimler reveals the very latest version of the Mercedes Sclass. Traditional carmakers play the catchup again with tesla. We hear from the german automakers ceo next. This is bloomberg. Economics, finance, politics, its bloomberg surveillance. Daimler has unveiled the very latest iteration of its Mercedes Sclass luxury sedan. It includes an all electric car, which will be sold from next year. Traditional carmakers are pouring billions of euros into electrifying their fleets as they play catch up to tesla, which has zoomed past them to become the worlds most valuable car company. Matt miller spoke to daimler ceo and the trend that he is seeing in the industry. Ola we are investing in electrification, going co2 neutral, new Software Architectures based on artificial intelligence. We have fantastic styling and a luxury brand. If that market cap can serve as an inspiration to build on that, then we should be quite optimistic about whats possible. Manus the ceo of daimler speaking to matt miller. Electrification all the way. Markets are debating. Narrative . Right how do you traded when you are trading at record highs around the equity market . Is it about the vexing narrative . You have been given a date of november 1 in america. Stocks in europe fly higher as the euro trades just a little bit lower this morning. Is it the vexing narrative that is really vaccine narrative that i suppose driving the market. S p futures flat. As france goes for 100 billion euros in stimulus. We are up on european stocks. Have a look at what i would say are the foothills of a very modern currency war. Theeuro is dollar lower, dollar a bit better bid this morning. This is bloomberg. Tom this morning the blizzard of stories that makes up this odd and of summer. Tomorrow, under forecast a bold unforecastable jobs report. Is anyone out there . They are driving the dow back over 29,000. President trump says vote early, vote often. Vice President Biden says vote once as early as you are permitted. Surveillance as we stagger towards the end of the summer. Francine lacqua doing what i did yesterday, moving chairs. How about back to school . It is bizarre on the island of manhattan. it is bizarre everywhere,