U. S. Stocks are closed today. On whene things going it comes to european stocks and when we look at the u. K. Assets on the back of what we heard about brexit. European stocks are climbing. Analysts are speculating the market could be rosie and resilient. On concernsakened the u. K. Is inching closer to a no deal brexit. We are looking at dollareuro 1. 1837. Lets get to the first word news. Indias overtaken brazil as the country with the second most cases of coronavirus. Confirmed more than four point 2 million infections. It is also the third worst country in terms of deaths. More than 71,000 have died in india. Protests have flared up on the streets of hong kong, leading to hundreds of arrests. Thevists marched through area and blocked the streets with barricades. The aim was to protest hong kongs delayed election, which was scheduled to take place on sunday but has been pushed back a year due to the coronavirus pandemic. A periodstrations and of relative calm since the implementation of the National Security law. Dramatic scenes in tennis. Been kickedic has out of the u. S. Open in extraordinary fashion after losing a game. Hitworld number one angrily an official in the throat and is prompting the chief umpire to suspend the match. A stunning end to his winning streak and bid for an 18th grand slam title. Global news 24 hours a day, onair and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im leighann gerrans. This is bloomberg. Is steppinge u. K. Up preparations for no deal results on trade talks with the eu. Boris johnson says he is willing to walk away rather than compromise on what he sees as the Core Principles of brexit. Have the same time, the drafting of a new law to dilute the legal force of the divorce deal signed. The outstanding if outstanding issues on Northern Ireland cannot be resolved. If you do preparations in case of a no deal, do we take from it the government would be happy with a no deal brexit . He is dramatically ramping up the threat of the no deal brexit at the end of the hes madehe comments about not compromising the Core Principles, that is a continuation of the governments rhetoric over the past month and years. Goingamatic move today is to be the internal market bill and this is really ripping up parts of the divorce agreement britain signed a year ago. This is a matter of huge concern u. K. Is in where the negotiations to sign a trade deal. What incentive do you have designed an agreement if your partner has just ripped up an agreement one signed only a year ago . Is,her we get to a no deal however, another thing that we have been here before in brexit threatening a no deal only to then sign a deal. Francine where are we on that . Out if this is a negotiating tactic or whether Boris Johnson prefers does . Boris johnson gain popularity . To back up on your first question, britain has gotten to october 15 to get a deal. That is the deadline the eu has set to come to an agreement. It is possible if they are close or the possibility of a deal, the deadline is extended and could go into november. The eu has very little incentive to walk away from these talks because it doesnt want to be blamed for this. The hard deadline is december 31. That is the cutoff point. If there is no deal in place, britain leaves the bloc. What does that mean for Boris Johnsons popularity . It is hard to say. A number of people in his own party will be happy with that result. There are people in the tory party who are perfectly comfortable with that result. What are theis economic costs of doing that because there will be an. Conomic cost to leaving there are extra frictions on trade, the potential disruption of the border coming after covid and the economic fallout from that. Is that something that rish government wants to risk British Government wants to risk . Joining us this morning is the global strategist at quicktake wealth management. And fewe many questions answers. We will get to the ecb in a second, but how does europe or euro react to know deal brexit comes the end of the year . Difficult to say. Politicaln a tricky gain and i would argue it is not only bad news we hear these threats and ramping up of rhetoric, because we need to get sides to make concessions. In terms of internal markets, there are still grounds for concessions. I think there is room to get to a deal. The timing is very difficult and we will get more strain before we get better. Francine does it mean you are modeling the euro and u. K. Deal or an 11th hour you are assuming we go to wto rules come january 1 . . We still see a deal at the end of the day. It comes on top of the effect of the pandemic and this will be an argument in terms of the political back drop to say we dont know what comes from no deal brexit or the pandemic. It would be a mixed bag and negative for the u. K. Economy. We are still assuming a deal at the end of the day. Francine what does it mean for where you find value or you like Asset Classes . Is there anything in the u. K. You like or would you rather look at the euro region . Frederik i think both cases, it makes a stronger case for fiscal stimulus. We know despite the rhetoric downside,ntial reducing fiscal spending also in europe at some point, the reality of the economy will be the government will remain too fragile the recovery will remain too fragile. Equities or credit in some cases. The theme remains in place and. N the eu side, francine how do you buy the green somatic from europe somatic from europe . We haveth sides, selected companies in terms of the constructive sector construction sector, real estate, there is potential. The eu recovery is also fragile. How strong the Fourth Quarter will be and the gdp data we see, overall, this will be well supported by the recovery front which will only start to be implemented by the beginning of next year. On top of that, the french stimulus package last week also is dedicating about 30 billion to the green economy. Francine thank you for that. Frederik ducrozet from pictet stays with us. Looking ahead to the Rate Decision this thursday comedy European CentralBank Monetary policy decision could be in the shadow of the u. S. Counterpart. We will talk europe next. This is bloomberg. Francine economics, finance, and politics. This is bloomberg surveillance. Im Francine Lacqua in london. Lets get to the first word business flash leighann softbank has tumbled after reports it made bets on equity derivatives. Japanese conglomerate has reportedly sat on 14 billion of trading gains tied to u. S. Stocks clobbered in last weeks trading. Cap has raised concerns softbank is embarking on a risky endeavor into unfamiliar territory which could lead to substantial losses like those after betting on wework. Approach, the deal overvalued the company. Last week, it offered to buy a a. 9 in the first step toward full takeover to create an Environmental Services giant with more than 30 billion euros in revenue. Chinas exports kept expanding in august. Output rose from the year monthr, the third highest on record as business picked up with Major Trading partners. Imports expectedly fell, leaving a trade surplus of about 59 billion. Italys economy will rebound softer than expected in the Third Quarter according to finance minister. Sees output expanding 9. 5 forecast in the latest financial plan. The figure is significantly forecast 7. 9 compiled by bloomberg. That is your Bloomberg Business flash. Francine lets look at what you should be watching for this week. Next round of brexit talks begin tomorrow, secondquarter gdp figures for the euro area, we will be looking at whether the recovery is stalling. Thursday, the ecbs Rate Decision and signs of a stalling recovery emerge. For newbe looking forecasts for growth and inflation which may offer clues on the next steps the central bank may take. A press briefing by Christine Lagarde will follow. Still with us is Frederik Ducrozet from pictet wealth management. In theflation collapsed euro area. How will the ecb deal with that . Frederik it was shocking news for those expecting lower inflation. There was no story where the central bank would not respond to such a surprising downside. You had a colleague who just said a week ago there was no need for the ecb to add to stimulus so it is a tricky communication that comes up on thursday and we will get at least a signal more easing is likely to come. Francine more easing that could be a rate cut . Up a this be a signaling rate cut or could we have a rate cut as semesters day . How would the markets take it . Frederik a rate cut on thursday would be a big surprise, but even if president lagarde thinks the possibility of reopening the door to rate cuts, that would be some surprise to markets. It has been historically. He response of the ecb the Exchange Rate is 13 against the dollar, 4 on a trade weighted basis. Significantve a impact on inflation projecting from core inflation, which is already low. This is nothing the ecb can ignore, although the more likely response in the short term will up insignal a stepping the face of gdp in qe, which has been slowing down. Sense give me a when you look at euro strength, and we have heard a number of ecb Officials Say this is something positive. Is this euro strength or is this simply dollar weakness and at what point does it become problematic for the ecb . Frederik there is a big difference, and also with the u. S. The fiscal outlook has been improving dramatically in europe. We just mentioned the french stimulus package. We have the german one, the uae recovery fund, a massive difference. The ecb will disagree on many things, probably the need for a state immediate stimulus but will most likely agree on the fact that the euro is reflecting rising confidence in consumer currency. It doesnt mean the ecb can just hold up and wait to see what the fed does. They will have to appease, say they wont tighten financial conditions. There are not many options to deal with that. Interview create uv earlier qe or you have to signal a rate cut, which would have to an increased multiplier. Francine do you feel like once again, the ecb is the only game in town and how problematic will that be longerterm . No, you just mentioned the italian finance minister signaling a stronger recovery, but there is also a hope the theet is not fully buying, policy mix will change forever. There will be no going back on this promise. It could be gradual, it could be slow to bear fruit, but it will come and more importantly, the fiscal rules, they just went away and they will not go back. I dont expect any kind of austerity in the next couple of will because the economy be Strong Enough wont be Strong Enough to afford it. The hope is for the ecb to have step by the end of this year, increasing the envelope. That would be the final one and a way for fiscal policy to take over. Francine thank you much, as always. Frederik ducrozet, global strategist at pictet wealth management. Softbanks foray into options trading runs into problems as the Japanese Investment company gets smashed by the selloff in tech. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Softbanks sitting on 14 billion worth of trading gains tied the u. S. Stocks in last weeks trading. Here with the details is dani burger. Dani thats right. What is called the nasdaq whale, softbank, built up a position of billions betting on u. S. Equities derivatives, call options surrounding tech. That is bullish derivatives those shares would move higher. That is all well and good, but certainly a risky bet. It may have allowed them to get a reportedly 4 billion worth of gains, but those gains are unrealized. Softbank would have to unwind their position pretty quickly to avoid more substantial losses from the selloff. Because of the uncertainty over what their position is, softbank saw the more than 7 fell more than 7 in tokyo. We see nasdaq futures falling nearly 1 . Market closed today, but futures still dropping and that could eat into profits. The question over whether this acts the july market underlying market, there is debate but something is clearly going on. Im looking at call options on u. S. Stocks and since the march low, the volume has absolutely exploded. The result a lot of retail interest, one strategy where you buy the call options and own underlying with hopes banks from the other side will have to buy up the underlying, but in august, we learned softbank is ting more many on equities money on u. S. Equities and we see a rampup in volume. That could be caused by softbank s previous call volume three times less than it currently is so according to nomura, we have seen the tail wagging the dog, where they buy these options and that impact the underlying market which seems to be falling. Francine some Retail Investors will have been hit hard. A lot of call option interest in it and tesla has dropped over the past three days, but during extended trading friday, it fell as much as 8 off news the s p had decided not to include it in its index. Ip we have to remember the s p 500s constituents are decided by committee. It is not automatic once tesla reaches market cap. Part of the reason of the runup in tesla was the idea it would be included in the main equity index, to get more interest from passive trade or, a lot of benefits that go along with that so tesla ended up ending the post marketrate friday unchanged, but it is very possible when the cash it opens again tomorrow, bulls will be discouraged. Francine thank you so much, dani burger, with the latest market moves. Back to the cinemas, a muted response in the u. S. This is bloomberg. Francine economics, politics, finance. Lets get to first word news with london, leighann gerrans. India has overtaken brazil with the secondmost cases of coronavirus. The nation has confirmed 4. 2 million affections infections. When and 71 thousand people have died from covid19 for that more than 71,000 people have died from covid in india. Today Boris Johnson will say he is willing to walk away rather than compromise on what he sees as a core principle of brexit. At the same time, his government is drafting a new law to dilute the legal force of the deal he signed with e. U. About standing issues on Northern Ireland cannot be resolved. Protests have flared up again on the streets of hong kong, leading to hundreds of arrests. Activists marched through the area and blocked the streets with barricades. An election was scheduled to take place on sunday, but it is. Eing pushed back their demonstrations and a period of relative calm since implementation of a new National Security law. Dramatic scenes in tennis. Novak djokovic has been kicked out of the u. S. Open extraordinary fashion after losing a game the tennis world number one angrily smashed a ball behind him, hitting an official in the throat and prompting the chief umpire to suspend the match. It is a stunning end to a winning streak and this for an 18th grand slam title. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Francine thank you so much. Hollywoods first big test in the age of their pandemic has mixed results. Film mader nolans 20 million in the u. S. But it has been received enthusiastically overseas where total sales were 129 million. There are still big films scheduled for at least this year, including the latest james bond offering and wonder woman 1984. But can the industry get back to normal without a vaccine . Jim richards, great to have you on bloomberg surveillance. Tim richards, great to have you on bloomberg surveillance. Europe, u. K. , taiwan how many seats are you feeling at the moment . Different social distancing laws in these countries, but on average we are filling up 50 of our seats, and then we have a geographic or social distancing at 50 . I think it is important to remember as an industry globally, we typically have 20 to 30 occupancy rates in any event, so we have always had excess capacity. So the actual social distancing laws in our markets in europe have not really affected us at all. Your mainwhat is concern Going Forward . If there is not a given vaccine, what countries where your operations are present will be at risk . Tim looking forward right now, we are going to be living, until there is a vaccine come in a world of hotspots. Hotspots are going to come up. We are seeing that across markets. We have been seeing that for the six weeks we have been open in europe, and we are going to become a society that is faster and quicker, more adept at jumping on those hotspots with tracing, testing. I think there is a chance we might lose one or two cinemas in those hotspots in different markets. We might lose bond, we might milan. Rt of northern i dont see a situation where we have full lockdowns. Huge credit to warner bros. And Christopher Nolan for really having a vision to move away from what had been the norm, global release of movies and look at monetizing where they can. With markets that are open. Yes, Different Countries have come into this epidemic and are coming out of it at different times. The u. S. Right now is a little bit behind other parts of the world. Warner bros. And now what the other studios are doing are looking at that and they are looking at 70 or 80 of the screens that are now open, and they are jumping on that opportunity. On the basis of several weeks later, they will then release the movie in a market as they open up. Which is really the plan with itnet, which is why you so rolled out a week or two later internationally. Francine how are the situations with did you pay them . Did they give you a holiday rent . We came into this in late february. We lost part of our surrogate and lombardi in northern italy. We had it in asia and taiwan and we knew this was coming. It hit hard and fast. It took me 20 years to build this company, and in a matter of three weeks we were completely closed down. We have three main cost everest studios, people, property. Amazingios have been partners. We have worked together and continue to Work Together more than we ever have, with a furlough program. We were able to work with local governments and were able to 9. 5 9500 employees. We have not had to let go a single employee. Finally, property. What we saw with our landlords drive footfall into high and shopping centers. They started working with us, about two months into the epidemic. They realized they needed us and they started accessing as partners and we have been getting major concessions with all of our landlords. Francine enacted 48 u. S. Ban on movie studios owning cinemas was a 1948 u. S. Ban on movie studios owning cinemas was and acted. Tim there has been a lot of hype around that and he has been a long time, 60, 70 years. But the world has moved on. With these Subscription Services coming out, amazon and apple and netflix, i think that particular law became less relevant. I believe the future absolutely is i believe content producers are going to want to control ultimately all the different channels, and the future is really going to be few channels. It is going to be one theatrical athome experience, which will be with us. Followed by Subscription Services. That vue does it mean is for sale . Tim we have been private equity backed for 20 years. We have fantastic partners right now who have been with us for a few years, and part of the appeal is that they are really longterm. They are Pension Funds but they are private equity. There is an opportunity in the future to look and listen. Milan was released mulan was released this past weekend. You concerned that tim there has really only been two movies moved, and the first was trolls and that was for obvious reasons, that universal had done a large retail deal in the u. S. Market. It spent a lot, over 100 million apparently, promoting the film, which was an big movie. It was disappointing, but disney has been amazing partners with us. That was a lot of reasons the movie was released to disney plus. In some markets, it will be released theatrically. The restu look at all of the movies during that period, they have all been moved. Year. Moved into next i think the problem they were looking at with mulan is that next year, there is this incredible year for movies because we have all the great movies from 2021 to begin with, plus youve got all these amazing movies that were released in the last six months altogether. So we are looking at next year as going to be a really exciting year. Our expectations right now are that the business will return to normal levels by sometime at the end of next year and we will be back on track, hitting the ground running again in 2022. Its important to remember, we came into this with a recordbreaking year, 43 billion in the global box office, biggest in history. Biggest movie of all time, the avengers, biggest rrated movie of all time, joker. This is a vibrant business, and we are probably guilty of not getting that message out enough. We came into this very, very strong, and our expectations are that within the next 12, 18 months we are going to get back to where we were precovid levels. Francine tim, thank you so much for joining us. Tim richards, founder and chief executive of vue. Minister says the economy will rebound faster than expected. We will hear from him next. This is bloomberg. The measures we have taken so far have been decisive in containing the Economic Impact of the crisis and preserving our productive capacity and jobs. Would beecovery reentered to the future, on the line of innovation, sustainability, and cohesion. We will focus the plan on investment, and investment aimed at enhancing our Growth Potential. So it would be investment in innovation, cloud, supercomputing, project of common interest, factories, microelectronics. We would support the private sector to invest more in innovation and to support the process of carbon emissions. We would boost our ,nfrastructure equipment material infrastructure, particularly in the south. And we will invest a lot in Human Capital education research. Is a big concern for investors and for markets. You mentioned in your speech a the debtnism to reduce to gdp ratio in a solid and sustainable way. Can you give us the pills in how much you think it could lead to a reduction . Therto we will present at end of september our fiscal government, which will have not only a three year rising, but also a longerterm horizon where trajectory or the reduction of our debt to gdp ratio. That will be significant and sustainable. We have the opportunity to do that by a mediumterm fiscal measures, and also thanks to the impact on growth and Growth Potential of the productive investment that we will deploy with our nextgeneration plan. An 8 r Government Mission estimate for gdp contraction this year your government mentioned an 8 estimate for gdp compression contraction this year. Roberto in april, as we said, already it will be revised downward. That is contrary to other are predicted very significant, a decrease of gdp, two figures, thanks to the positive rebound that we are seeing. Our vision will be limited, and we expect a onefigure reduction gdp for 2020. Add next year for gdp . Roberto next year we will have a positive increase. We have not yet defined our forecast. We will see soon, and i think 2022 will be able to arrive for a precrisis gdp level. Taken ac finances have hit with covid and the national lockdown, one of the strictest in europe. Public extent italy finance is sustainable only because of the current default and the European Central bank . Ecb because isry extremely positive. But the strong fundamentals of the time the economy make our debt fully sustainable of the Italian Economy make our debt fully sustainable. Also what we are seeing even in this difficult moment of the crisis, for many months since this government entered into force, also a very positive trend of fiscal revenue. We had a know, downward revision of our deficit for 2019, and one of the factors our is making us improve forecast for gdp is a recent drawdown in fiscal revenue. So we have a number of elements defineake a condition to the trajectory that will further increase. Francine that was italys finance minister, roberto gualtieri. Coming up, we will talk about italy and we will talk about the conference. That is coming up next, and this is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. The prime minister, giuseppe istes, government kickstarting growth. Now drafting products for an expected 2 billion. 2 2. 9 billion euro share. Managing partner and chief executive a european house, hosting the 46 addiction of its annual forum. Valerio de molli, thank you for joining us. You are the first conference where you had policy makers meeting in person in the forum come and you were telling me others were able to joined by hologram or video. First of all, how was it, having a conversation with policymakers in a room together . Thanks, francine, for having me with you back again. It is a great honor and pleasure. In fact, i have invented a new definition. A cg grandma event. Me had 34 acg a cggra event. We had 34. His defense and speakers and guests in holograph, including the former secretarygeneral of the United Nations the foreign minister of russia and so many others. We respected all the sanitary concerns, the social distancing and everything, the masks, and we were very careful in that concern. Employees of 300 the european house. Employees and suppliers. Respectinged with the sanitary concerns. And we did it. It was a very, very great success. Nine governments participated from all over the world, 19 countries, the entire time government, two heads of state, and a number of others. Great, great success. We are very much satisfied. It was, as you said, the first experiment, digital, hologram at, and physical. Francine i know you were telling me there are a number of research papers. How much were people worried about the economy . We also had your wonderful forum, and interview with the feynman the finance minister of italy, who was concerned about covid19 and the impact on the economy. What was the mood like . Were people worried or did they see bright spots in the economy . We have created an indicator that every quarter measures basically four things the short term sentiment, the ideaonth sentiment, the for investment, Business Leaders and the sentiment for employment. Indicators, we have got 70 improvement. The indicator goes from 100 to plus 100. In the first two quarters of 2020, we had 60, the worst level ever reached since the indicator,e specific which is extremely sophisticated. Now we are basically on all four aspects, we are around 20, which means that we remain negative, but not as dramatically negative as we were before. Assess theo can better mood in the economy, and the latest available data. We created in july 85,000 new jobs over one month only, which is not bad at all. And as minister gualtieri anticipated in the interview he gave to you exclusively, the over summeract seems to be much better than initially estimated. Overall, one of our please. Time today,o short but we will have to get you back on. Managinge molli, partner of the european house amber is eddie. The u. S. Markets are closed because of labor day. If you are american and are watching, thank you so much for joining us early. This is bloomberg. Francine johnson plays hardball. The u. K. Steps up preparations in case brexit trade talks fail. Officials plan a law to water down the withdrawal agreement. On hold for now, the ecb is unlikely to make any moves at this weeks meeting, but Christine Lagarde may set the stage for further easing this year. And risky business, softbank plummets on reports it made big bets on derivatives linked to u. S. Tech. The nasdaq selloff looks set to continue. U. S. Stocks are shut for labor day. Good morning and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom is off for labor day. For every american watching, happy labor day and we hope you have a good day off. Working on we are bloomberg surveillance to bring you uptodate politics and some of the Asset Classes. Lets get to bloomberg first word news with leighann gerrans in london. Leighann a new poll shows joe biden has a doubledigit lead over president donald trump, according to the cbs news survey