Attention to what is happening. Very much what we did earlier. This is it this is what Christine Lagarde says the central bank will do. The governing council will carefully assess incoming information, including developments in the Exchange Rate when it comes to simplifications for the mediumterm inflation outlook. Christine lagarde, president , speaking earlier and joining us now. Christine lagarde basically indicates it is ok until there is an impact on inflation. Three ways the ecb can talk about currency. They can talk about principles, how it is not a part of their policy. They get seriously concerned about the movement currency and it could lead to price stability or the aims to achieve inflation goals being undermined. We can go back to worrying more about covid19, more about the growth prospects, rather than ecb getting too worried today. Whenever you see a headline about policymakers, bear in mind the context of where it is coming from. Those comments are in reference to the question. The journalist did a great job of making it public. I think there were five or six questions today on the currency guide. The market has a lot of euro positioning. Please get liquidated. We need more good news to keep the currency going. The dollar. The same problems, covid19 is evident in the u. S. You have the u. S. Election coming up with a lot of uncertainty and what that means for tech stocks when you get joe biden and the democratic senate. Alix do you need a lower in the dollar for a true jump higher particularly when you have cases popping up in germany and france, in europe and the u. K. Is well with these restrictions . What will move the dollar lower at this point . The big question about u. S. For coal stimulus fiscal stimulus, it should boost u. S. Growth prospects. If we get a cliff at the end of euro swiss, brexit, but just a few weeks ago before everyone cared about brexit, the. Uro as a whole not as big economists are pointing to and from the ecb in september. What form will that take . Risks are skewed for some action. Emergency program, buying sovereign bonds to help address this crisis. It is the full amount they can use. It is a big envelope and they have not used it up. Or june go until march of next year. They can use this envelope. In december, i expect the pace will be faster. It is a question. Then i take a step back. It is very technical. Will we have a technical wave of covid19 . I have even got myself. Do we get a second wave of covid19 that leads to economic mobility being hit again. Action fromsome policymakers, fiscal and monetary . If the answer is yes, and the ecb ecb needs to do something in september. They have gotten till next year. It might tip toward action. Good to catch up with you. I hope you feel better. Stay well. President trump acknowledging publicly that he downplayed the risks of covid. More on what that means. This is bloomberg. President trump you cannot show a sense of panic, or you will have bigger problems than you ever had before. Trumpthat was president yesterday on why he downplayed the threat of the coronavirus in february. Here is a reason this could matter for the 2020 election. The coronavirus outbreak is one of the top four issues for voters in the 2020 election, 62 of those surveyed calling it very important to their votes. Joining us more is bloombergs chief content officer. It is really nice to be here. Alix we hear things all the time about this really going to matter. Will this really matter . I question whether it will change anyones mind. On the margins, it may. If it is a close election, which i expect it to be, that may be important, in battleground states and in the suburbs. The president and others are pushing back and saying, whys this being released now . Why is it being released now . Marty bob woodward wants to sell his book. That is why. Aware there are all have been a number of twitter criticisms of bob woodward for not releasing details before that. The question remains, what would have happened if he had done so. I am not sure it would have made a lot of difference. If we look in terms of what part of the population this matters the most for, very much trying to get the suburban vote like you did before. In particular, white womens suburban vote. Health and the safety of their children is of paramount importance. If it is perceived that they would convey the severity of the earlier, created a threat to their households, then it may actually matter. The data are pointing to the fact that these are hardening. Will this provide confirmation bias on either side of the political fence . It is true, as you say. People arews that not going to change their minds over the next couple of months. There is a significant percentage of people still undecided. It is hard to imagine how someone could be undecided in this politically charged environment. Be thoseple may indeed that will turn the election in the battleground states. Glad to see a back in the studio. Thank you indeed. This,g us now to discuss david. Likely to be a tight election and likely to have some implement implications. The advice, and i agree with with what a lot of what is being said. A really do not want to make gnu big moves and portfolios. We have said to take advantage of the selloff at the end of last week in the beginning of this week. Make sure your portfolios are appropriately balanced, do not make big directional bets one way or another. A lot of uncertainty surrounding the election. It does not seem very prudent at the current juncture. Alix i feel like if it were any other election year, candidate bided saying he would like to Tax Companies 10 if they make product outside of the u. S. And give them tax help if they make it in the u. S. Would be something we would be talking about and the winners and losers in who they are. That is not the case this election cycle. How do you process the idea of regulation, and those potential equity markets . Macro issues surrounding covid is particularly important. With respect to a lot of issues surrounding taxes, we need to be sensitive about when those tax increases may show up. Given the debt we have seen in the past few months, i think the question of higher taxes is more of a question of when rather than if. Increasing corporate and individual income taxes in 2021 would be throwing a banana peel at an economy getting back on its own two feet. A 2022k this is more of story. Part of the reason the market does not seem to be very upset about it is there seems to be a tradeoff. With the biden administration, you will get higher taxes but a little more predict ability and little more of a politician whereas as we have seen in the past four years, the trumpet administration can be less predicable. Andgenda of deregulation lower taxes. Markets seem to be willing to trade one for the other. That is why until recently, you have seen volatility remain well behaved compared to what you might expect given polarized views of the two candidates. It is a little higher than you would expect to be, volatility. Lets explore the portfolio for a moment. A lot of debate right now. Particularly what it is made up of, given we are likely to have low Interest Rates and low yields for a long time. Infrastructure, hedge funds . Are those more susceptible to a less election risks than bond yields . This is something that has come up quite a bit in our conversations. When you have a 10year treasury yield at 60 or 70 basis points, you need to rethink the way you build portfolios and think about having a bucket that will be a hedge to equity exposure. You need a growth and income bucket, equity data at the end of the day. In the middle, you need a bucket of things income generating but not correlated with equities. Problem. He big a nice coupon in relative terms but it will bounce around right alongside the equity market. Nonowledging that there is better equity diversifier than u. S. Treasuries but in real terms, u. S. Treasuries are costing you money to hold them, we think things like core real estate, private infrastructure, and certain types of Hedge Fund Strategies can provide certification strategies in a world of historically low Interest Rates within the hedge fund universe. We like accra funds, relative value credit with infrastructure. We like regulating utilities and contracted assets. I know there are a lot of questions around commercial real estate. Playinds and tailwinds in coming into the covid induced innturn are very much existence still. We think retail will remain challenge. The sector will look very different months from now than it does today. Industrial continues to have a firm tailwind at its back given the continued growth of ecommerce with respect to total consumption. What about hedge funds . West marine talk to clients about hedge funds they tend to leave a bad taste in peoples mouth. In the prior cycle, a lot of people were paying for performance that failed to materialize. Is thing we have noticed that hedge funds volatility. Outperformed Global Fixed Income in april. They may not generate a whole lot of income but neither do high quality bonds at this juncture. The definition of diversification the clients use into portfolios needs to broaden out. We see certain types of hedge funds taking playing a role in doing that. Election, herehe allondon at the moment, very much on the agenda at the moment. We may normalize tax rates against income tax breaks though maybe some of the other asset out there. It is currently in existence. I think a big fundamental shift in tax policy in the u. S. Will require a sweep of washington one way or another. If we end up with a divided government, which remains our base case scenario, and preventing significant changes to tax policy may be more challenging than people expect. You make a reasonable point, that people with private equity and real estate who have historically benefited from certain tax policies, may well come under pressure. We have heard it in the past couple of months in the runup to the official nomination, that these things are on the minds of a number of politicians. I do not think we are going to escape a conversation around them. Say,nk it is premature to this is what i think tax policy may be, so i will revamp my portfolio. That would be allowing yourself based on emotions rather than facts. Alix it is good to get that perspective. You are right that guy is a reasonable person. Citigroup makes history. The ceo retires next year. There will be the firstever female executive of a wall street bank. More on that next. This is bloomberg. Alix the big news this morning, the citigroup ceo is retiring this morning. The bank is tapping his successor. She will be the first female chief executive of a major wall street bank stop joining us for more is goobers wall street correspondent. Does this put more or less pressure on other wall street firms to match the Glass Ceiling breaking . It puts a lot more pressure on them. Let me show you how fast this all happened. Generating less than 50 of the banks revenue a year ago. Then she was elevated. So citigroup move very quickly here. The numbers under the ranks. There is a big pipeline problem. This is a huge Glass Ceiling being broken. A wall street bank being run by woman. It has been ebbing and flowing for a while. It is a huge moment in terms of implications of what this will mean. It will send a big message to people further down that this is possible. How big of a game changer is it and how significant a messages being sent . It is a huge message. She is not afraid of pointing out the disparities not just among women but also people of color. She told me earlier this year at paidroup, that women are significant, disparities, it woman planning to make change. Peers around wall street. Women feel this resonating with them, that is possible for women to become a bank ceo. Even among the top six, after the top six u. S. Banks, only six of the ceos are not men. If you look at even the smaller banks, there is still a significant Glass Ceiling. For citigroup to make the move, it says a lot. It will hopefully be a catalyst for further change. Thank you. Coming up, we will switch to oil. Impact onscuss the the tanker market. Looking forward to the conversation. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. So youre a small bor a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Alix alix live from new york, im alix steel. With guy johnson in london, this is bloomberg markets. We are looking ahead to the official api numbers coming at 11 00. This is a problem for the oil market. This is a function on your terminal, wti prices, the green line is where the prices were a month ago in the orange line is where they are now. We are now seeing prices cheaper than in the future and that is distorting the market as well. Joining us now to help us break it down is randy gibbons. Randy, we will get to the implications of shipping and a second but what do you expect in terms of inventory builds and the dislocation effects of hurricane laura and what demand issues do we have to contend with . Aboutm hurricane laura two weeks ago we saw 84 of gulf of mexico production offline. Since then had it has gone back up to only about 14 of production offline. You are starting to see production come back quickly. Fortunately, laura was not as damaging as people expected. But you are seeing u. S. Ultra production coming back quickly. Onshore didnt change as much. We do expect continued draw downs and completion from the inventory levels as well in the next couple of weeks here because, right, demand is not rebounding as quickly as many people thought it was. Roof finally utilization is still at the mid70s. Not what it was a few months ago. We expect continued drawdowns from the inventories. Exports are strong. Production is not. As a result, you need to draw inventory further. Alix we have seen leasing vessels for oil cropping up. Is that a purely freight rate decline . Is it another super situation like we were in earlier in the year where there is just no demand, too much supply, oil on the water. . Certainly not yet. In april that was the word of the day. A 14 spread over two months with eight or nine dollars over six months. The prompt prices were so far below, six or 12 months later, every vessel that could become available was available to store oil. Now that it has blown out a bit, the largest it has been since late in may, it is still only around three dollars for six months compared to like i said eight dollars or nine dollars just a few months ago. You are seeing some plays. Booking four to six vessels in the last week to do just that. They dont say we are going to the oil off the coast of singapore, right . They dont exactly tell you but you know that when they charter it work six months, they buy it now, store it until later to collect on the profit. Guy want to hold that thought if we can, weve got news coming out of the u. K. Eu, European Commission talking about the incidental market group that represents an extremely serious violation of international law. We are seeing the u. K. Saying that parliament can pass laws in breach of a treaty obligation. The eu potentially looking at legal action. Further sending the brexit negotiation conversation into the deep freeze. The u. K. Parliament is sovereign and this is a matter of domestic law. That is tough language coming out of both sides. We will return to this issue of it later in the program. I hear that there is a lot of crude leaving right now. You expect these to keep going the rate they are . Especially heading to asia, its the shortest route. If you could take a barrel from saudi to china versus the u. S. To china, you would much rather saudi because it is so much closer but saudi arabia is starting to pull back the production cuts that they announced. Now they are back to 7. 7 Million Barrels per day, so they continue to trim that, right . Production is continuing to rise, exports are starting to pick up. The big thing is, is china demand there enough to satisfy the barrels . In our view, not yet. As a result you are seeing it back near 40, if not below. And there will probably be continued softness on that until you see the ramp up in asian demand to buy the saudi barrels without needing much of a price incentive. Wins here . What are the stocks that are going to benefit . Comes to floating storage you want vl cc, they hold 2 Million Barrels. The companies we like the best in this environment are euro nass, the largest tanker fleet in the world, 2 billion market vl cc,ey have the most great market team. The other one we like is international seaways. And you cannot spell win without ins w. When it comes to spot exposure, the best Balance Sheet in the industry and a shared trading at a massive discount, all they do is win, win, win. Those are the top two picks on the tanker trade that we like here for the next four months to five months. One more quick, every year, or 18 of the last 20, rates bottomed in late august, early september. That is where we are today. 18 of those 20 years you had a market pickup from now till year end. This is a great time to play the tankers. Guy going to leave it there. Randy, always appreciate your time, thank you so much for joining us. Lets return to the headlines we have been getting out of the eu and the u. K. , war of words intensifying as we think about which way the Brexit Debate is going to go next. The issue at the moment is that we had an agreement signed by that coveredthe eu Northern Ireland and it came out of the walk in the woods that. He british Prime Minister had the u. K. Is now walking back on that according to many people by basically putting a piece of legislation into the house for the internal market bill designed to give them control over the process. The u. K. Is basically trying to say we want to provide a failsafe. However, we are getting a very strong pushback from the eu on this and it could have market implications. This is bloomberg. This is bloomberg markets. Coming up today, exclusive interview with Nextgen Climate action president tom steyer. Lets check in on the first word news now. There is a sign that extensive job losses in the u. S. Are persisting. Applications for state Unemployment Benefits did not decline as expected. Initial jobless claims were unchanged and the total number of americans claiming unemployment assistance rose to 13. 4 million. Joe biden says that President Trump willingly lied about the posed for coronavirus months and the democratic president ial candidate spoke after the president s comments to journalist bob woodward, who that trump told woodward in march that he downplayed the pandemic to avoid panic. The woodward book is being published this month. Wildfires in Northern California have transformed the skies over san francisco. During daylight there was only a dark orange glow. Two dozen major fires are burning in the state now. One carving a 25 mile path of destruction through mountains and foothills. Its possible that thousands of homes have been destroyed. Three people were killed yesterday. A British Software company says that it has come up with a 22nd s 20 seconds saliva to detect the virus. Globalal is set to take news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Guy thank you very much indeed. Perfect introduction, staying with Virus Testing stories, labcorp launching the first Virus Testing method to detect covid19, flu, and rsv. Joining us now is the chairman and ceo of labcorp. Test talk to me about this. How big of a breakthrough is it and what kind of demand are you expecting for it . Good morning, its a pleasure to be here with you today. We continue to make significant progress. We have had a lot of innovations when it comes to testing for covid19. The latest is the ability to test people with a simple nasal swab. Not the oldfashioned ones that are long and go deep. This is a simple swab where you can test all three respiratory diseases, covid19, flu, and rsv with one swab. You have it done in a Doctors Office and it can then be reported back to you in 24 to 48 hours. At the same time we file to have in the athome collection tests. You can order it online, sent to your home fedex. Take the simple swab, apply it for yourself and send it back to us. Results are typically available on average within 24 to 48 hours. Alix whats the biggest hurdle to getting this out to the right nowht now . We can do about 200,000 tests per day. The flu season hasnt hit the United States at the moment, theres probably no need for the triple test at the moment, but we wanted to have it out there for whenever the flu season starts. Guy how much capacity do you have . I said. 00 per day, like those are the pcr tests. Many of those could be single tests or testing all three. Based upon the number of orders that we get, we will decide how many we want for those, but we continue to build capacity. Right now with capacity at 200,000 per day, we are only using about half of that you are still building capacity because we want to be prepared for a worstcase scenario if the flu season in the United States is severe. Do you think you will be able to get 100 in reimbursement . We are launching without the part of the government test that gives pricing. Just like we did with the antigen test, we want to make this available to the public as quickly as possible and we will not theyll until we have the exact pricing worked out. Our assumption is that we will be able to get a fair price for them measured together. How does demand for the business change if we get a vaccine . The real question is going to be how effective is the vaccine, how often will you take it . Once a year . Once and you are done . And how many people are absolutely going to go get the vaccine . Our assumption is that most people who get the vaccine, there will still be a need for what we do with pcr testing, but importantly when you look at labcorp, pcr testing is not the majority of our business. Its other diagnostic tests. Its in drug development, developing without Pharmaceuticals Companies things like vaccines and treatments across all therapeutic categories. Guy what kinds ofs alix what kinds of supply issues are you looking at right now in your day to day testing and supply capacity . Right now we are in good shape. We are running on eight different platforms. We have eight different ways to run these tests. If there is a supply issue on one platform, we have separate others we can run. The Biggest Issue is getting enough of the machines that do the molecular testing. To give you a sense, one of those machines is about the size of an ordinary car and if you run it all day for 24 hours, you can go about 3000 tests on that machine. You can imagine how complicated they are and how many you need in order to run 200,000 tests per day. Guy just in terms of what is about to happen, we are going to see covid cases spiking showing that data is having europe spiking faster than the United States. Can you describe to me the cocktail of events and how difficult it is going to be for doctors and medics to be able to tell the difference between one tother . If people continue to wear masks and are socially distant, it should minimize the impact of the flu season. The same thing that works for having less covid spread will work with the flu not spreading as much. People have to continue to be diligent. At the same time, when someone has a symptom, they can go to their doctor and be tested for all three had once to see what they have, or if they have symptoms and want to stay home they will be able to have a test ordered from their home to see which they have. It really depends on how much of the flu season, how big it is as we go into the fall. As you look at certain parts of the world that were in winter while the u. S. And europe were that the fluu saw season was not as bad as last year. A part of that could be because people were socially distancing and wearing masks. We will have to see if that holds true in this part of the world. But there is reason to be optimistic as people continue to be diligent. Alix do you think that the 20 seconds test using saliva, obviously you will talk to your own company for the 24 hour tests, but will there be a market for all of these for implementation . Absolutely. There are three primary tests. Theres pcr, which is what we do. That looks like looks at the molecular rna of the virus. Then there are the antigen tests that look for the protein of the virus on the outer surface. And then there is the antigen test that tells you you have had the virus in the past. The pcr test is the Gold Standard by most people. However, if you are looking to do surveillance with mass testing, there is a real use for antigens in the areas where there is a low prevalence rate of the virus. Guy a lot of people are trying to figure out how you would reopen the north atlantic. How would you do it . How would testing fit in . How fast does it need to be done . That have a Service Group spends all day, everyday day, helping employers and schools think about how to reopen. To stayeople have diligent, use masks, stay distant, use good hygiene. If you have temperature checks or questionnaires, loss of sense of smell, fever, cough, you can try to avoid those people getting into work. Of course, some will get in. Particularly if they are a symptomatic. Once they do, send them home, have a pcr test. Test them as well. I think that if we do those things, we can reopen schools and businesses and we have seen some Success Stories there. Adam, thank you for your time. Coming up, we will look at how diseaseseadly circulating in europe. Swine fever and what it could mean for hog futures. This is bloomberg. Alix live from new york, im alix steel with guy johnson. What we are moving here is hog futures, hitting their highest in six months after a confirmed case of swine fever was confirmed in germany. Joining us now with more is our senior agricultural reporter. What is the flu, why is it bad, how does it spread . Thanks for having me. We are basically talking about a highly contagious disease that doesnt affect humans but it does kill most affected eggs. Within 10 days. It has been spreading for years in Eastern Europe since last year at the border, at the polish border with germany. Germany has been trying to do everything they can to prevent it but it has finally costed it crossed in a confirmed case. Basically the german agricultural minister confirmed the first case today. In brandenburg, bordering poland. Confirmed and was they cant export out the eu now that they have a confirmed case. What does that mean for the demand coming out of china . Who will be able to take advantage . Of the countries usually when they get into these situations, they will bring in imports from germany, most likely, as we have already seen south korea make that move. We expect china to do that as well. The biggest beneficiaries here, we are talking about brazil and the u. S. Hog futures in the u. S. Are 5 up today. Spread, evengrim if they produce other types of meat, not necessarily pork, they are all up to date and the u. S. Could really benefit from it. Attention torn our the Housing Market. Time for a look at one of the biggest business stories in the news right now, kicking off with what is happening on barrick. Bullish on cities, even though the economics of real estate have shifted. The big cities are not going away. The aftermath after the election cycle, whatever it is, will start to dissipate. With a vaccine, with a cure. I always has my friends, if we have a vaccine, will you take one . Half of them say never, right . Cities are here to stay. Suburbs are here to stay. Utilization of them is going to be different and in a replicable way. In a not replicable way. Its impossible to replicate new york city. Guy he says no he is focusing on what he calls digital infrastructure. Meanwhile, a different story in the London Housing markets. Prices and the most affected areas falling since the height of the pandemic. And thetax break lifting of International Travel restrictions further boosting sales in prime london neighborhoods. There is a sense, maybe, that there is pentup demand here. We have seen the lower end of the Housing Market strongly of late, but not the Upper Echelon in the international markets. Once the restrictions are lifted, demand comes back, people want to come back to View Properties and maybe that will take place. But this area has been hit hard by significant increase in taxes as well. But it alsoint, seems like there will be a gap of 355,000 apartments right now, in london in particular. In that case you should take some of our apartments here in manhattan. Listings in manhattan have soared, pushing vacancies to a record. The vacancy rate is like five point 1 . Hasnt as much affected the rental rates, particularly site in brooklyn, but clearly people are not here anymore. Are they coming back . Different story. Theres definitely movement out of the city right now. Guy absolutely. To compare and contrast, the demand for new housing, thats not the upper end of the market. Thats a more sustainable lower end housing. There has been a huge demand for it as the councils change how they build housing. We need more Sustainable Housing that will allow people into the Housing Market and give people a fairer chance. Coming up, more on whats happening in the u. K. And we will be wrestling we will be looking at that ecb decision as well. This is bloomberg. Guy,live from london, im with alix steel in new york. Lets talk about what you need to know about europe. The euro, jumping, the ecb playing down the strength of single currency. President lagarde says the central bank will carefully assess the impact on inflation. The eu gives the u. K. Until the end of the month to amend the internal market, saying that the adoption of the bill would be an extremely serious violation. Next year,g down mike corbat will be replaced by jane, the first female ceo of a major wall street bank. Wall street. For significant euro strength popping back north of 119 against the dollar. 100ing below that now, 18. 73