Remember on the week u. S. Markets are lower. On the week european markets are higher. Eurodoller trading 118. 30. Taking a tougher line on the link between the Exchange Rate and inflation. The pound continues to fall trading 11787 as we continue to see the stalemate between e. U. And the u. K. On the u. K. s new legislation, the internal markets bill, which will undermind the treaty signed between the Boris Johnson government antie. U. Not that long ago. Alix thanks so much, guy. We are very welcome special guest, we are happy to have him here. Stanley fischer, the former vice chairman of the Federal Reserve. He has just been awarded the first miriam pose yem prize by the m. I. T. College center for finance and policy for his Outstanding Research and leadership in financial policy. Its a pleasure. Congratulations. We truly appreciate you spending this time with us. Not to get right to it but lets get right to t the latest Inflation Numbers out of the u. S. Today, Consumer Prices arose for the you Third Straight month. Vehicle sales momcoming in strong. How do you look at the renationary theme in the market with the feds trying to do and where the market is . Fed is clearly trying to get up to 2 and above because they have some catching up to do. We are a little distance from this still. On the other hand we have considerable unemployment, more than we expect a couple years down the road. That will be the inflation that will bring the inflation up somewhat. Thats what we are looking at right now. I dont think this number on the inflation rate is a longterm number. Its a number you get because the economy is in a recession. Guy do you believe because the market has its doubts, in the ability of the fed and other Central Banks around the world, to get inflation on a more sustained upward trajectory back towards target . That also depends on them getting employment down. And getting output up. And i think that should be possible if we dont have more viruses. And if we are just in the world there are only two instruments, fiscal policy and Monetary Policy. En thats compounded by what factors, th other namely viruses, we dont quite know as well as we used to where we are going. Alix totally right i think on all fronts. Does it mean that the feds going to have to be loose for years . The fed cant do all the heavy lifting, which is what you alluded to, in your work as well you said that. If the fed still has to be in it, is it loose forever . I dont believe in anything being forever in economics. But it will take a long time. And well see how that goes. It also depends in the outcome of the american elections. Which means it also depends on the economic policies of the United States government. Guy a lot of improblems. We are still trying to get to grips with all of them. Fiscal policy one of those, trying to figure out where the virus ultimately will do to the economy, whether or not we are all the way through that. How would you characterize the way that Central Banks have responded to this crisis versus the crisis that we saw back in 2008 . What are the differences that you can deduce . And what are the implications for policy Going Forward from those differences . The one big difference between in addition to coronavirus, the other big difference is that the Interest Rate is close to zero. And that makes a huge difference in what is going to happen in the economy. People keep talking about for reasons i dont understand, eople keep talking about the share of interest in the budget, share of interest in the economy , and that just sorry the share of bonds in, ratio bonds to g. D. P. , well, bonds are not the right one. What they should be looking at is what the interest burden s the interest burden is way lower than it was in 2008. And it makes a difference. Can keep at the fed going with very low very cheap money. And that can go on for a much longer time at this rate, which is 2 , Something Like that, possibly less. And if thats whats going to stay with us, and it might, for a while, it makes a difference for what the fed can get done. It matters enormously. Alix it just seems, mr. Fischer, how are we not going towards m. M. T. With that . If the feds are officially going to keep yields low so the government can borrow more and spend it, how is that not going to devolve into something that the fed either cant get out of or becomes a totally different policy framework . We dont know what the next framework will be. And that depends a lot where whats going on now. Where this policy is going to take us. What the fed has done in this period between 2008 and now is a massive change. Because the Interest Rate is so low. With an Interest Rate like this, the fed can be putting out money for quite a long time. Without doing anything very overall framework of macropolicy. That is a big change, and it will enable the fed to have more ime to buy and get the economy started and removing that , ats the word, removing thats what we are looking for. And i thought that when the fed came out with its package after some hesitation that that was a really excellent move that they have made. And you can see that to some extent by the fact that what we thought would be a very flat recovery beginning to see quite a bit of sharp recoveries in articular areas. Housing crisis, and in so icular automobiles and forth. Where the demand is pretty high. At these Interest Rates. Weve got a simply more powerful monetary instrument now. I dont know how long well have it. But i suspect it will be longer than most people think. Guy lets talk about the implication abouts for Financial Markets. Interest rates are going to say ower than many of us think for a period of time. Asset prices in Financial Markets have already risen very dramatically. It is clear that the clarity provided by the Central Banks is a maimor factor behind that. Do you worry about the fact that prices are rising too fast in the financial economy . Do you think there is a Financial Stability risk as a result of that . Well, i dont know i dont think they are rising too fast at this stage. They may be up a little bit where they should be. There may be room for them to decline. But we are not in the situation in which with these Interest Rates we need to be worrying too much about we are creating a situation that we cant reverse. We can reverse it. Particularly if Interest Rates go up. It will be very simple. Alix will the market like that . They are sensitive to any kind f change in Monetary Policy. If thats how if thats what it is, fed and the other Central Banks had better do it. We are not going to let the economy go wild because the markets want it to go wild. Guy do you think we are in a bubble now . Do you think there is evidence that we are starting to see asset price bubbles in equity, for instance . Tech stocks . The market is discounting to infinity. Well, they are not discounting everything to infinity. Nd remember that this the many many index of very high prices which look too high was around before the fed changed itspolicy. And itspolicy. Those price also change at some point. Its also true that the firms that whose prices are going up so fast are doing very well and probably going to do very well for some time further. At this stage i need to mention that i have a son who is fairly be up in facebook, and may talking my familys book since i dont have any of that stuff. Well leave it at that. Alix thats a very fair disclosure. Thank you very much for that. The other part of the conversation when it comes to asset prices is how it exacerbates inequality and a feedback loop. It makes people richer richer, and the poorer, poorer. Feels like jay powell has been adamant that the fed policy has not contributed to any kind of inequality. How can we still make that argument . I guess we better look at the data and see what they say. My guess is that if jay powell said you cant attribute any of this to Monetary Policy, i think hes probably done his homework there. He always used to do his homework. I think that probably thats probably not decisive fact. Guy nevertheless, to kind of reference back to the asset price story, not all americans, in fact a relatively small proportion of americans, he own assets that are benefiting considerably at the moment from the liquidity thats been provided by the central bank. That i think is where the genesis of the argument surrounding inequality comes from. And there is a concern that we end up with a significant spread within society, but ultimately has to be fixed between the assets of those that have and the assets or lack of them that dont. Absolutely. This is not going to be this is not going to be solved by making Monetary Policy ineffective and raising the Interest Rate before the economy is moving along. What we need to do is also use fiscalpolicy. Fiscal policy, for instance, is t your reduce the payment to. E unemployed 600 to 300 and there is no way that if you are going to be cutting down on fiscal that you are going to keep the gaps between the ealthy and the less wealthy, you are not going to get it down by cutting fiscal expenditure. Alix do you think that the fed should be including racial employment differentials in its mandate as is strongly intimated at jackson hole . Thats there is a question of whether the feds got a brain the s to put things on robot to make the decisions. When it d can easily needs to change the Interest Rate. But this is also a fiscal thing. And the fiscal thing is very important. And that one is in the hands of he federal government. Its bothersome. And i am sure that if there is a presidency, that situation will change. Guy can we talk more broadly out how we get wages to go higher. The fed clearly sees this and its unemployment mandate being critically important. And jay powell placed greater focus on it. Im just wondering if we need to see changes elsewhere in society that are going to be needed to get wages to go higher. There appears to be a strong relationship with the breakdown of organized labor and wage pressure. Clearly globalization is part of this. The output gap now a global phenomenon. Do you think deglobalization will help raise wages . Do you think that needs to be augmented maybe with the return of organized labor . A lot of questions there. The return of organized labor is would probably come from the unions and strengthen and raise wages somewhat. Its not going to raise them forever. And then the other part of that story is somebodys got to get demand up. And we are going to get demand up by increasing output and employment. Those things have to be done, and those things are primarily fiscal if the Interest Rate is at a very low level, it cant go much lower. Its up to fiscal policy now. The way the fed did its initial intervention was very sophisticated and made a difference. And maybe theyve got room to do more of that. Im not sure we do. Well just have to watch it. And if the fed cant do it and its not natural for the fed to do that successfully, its got to come from the government side. Alix heres an unfair question for you. Whats the thats all right. Alix whats the money amount that we need to see from government . Well, i dont know what the exact numbers are, but it would be significantly above where we are now. Alix i ask you because i feel like there is a point at which we are going to have to pay for it. We see this debate happening in the u. K. As the Furlough Program is rolled out and there is a question do we raise taxs . Do you extend the Furlough Program . When do you think we should be talking about raising taxes . How does and when does that make sense . The raising taxing taxes is the assuming they are aise taxes in a way that doesnt reduce the wages of poor people and raise the incomes of the rich people as the previous as the last major change in wages happenedin , but it would require that taxes are changed in way which raises the amount that is in the hands of poorer people and takes money away from richer people so that the there is a change in distribution of income. Its very simple. Thats what should be done. Le it se if all your people are wealthy they may have a different view on this one. But the economics and the arithmetic is pretty obvious. Guy do you think we should change the way the debt is taxed versus equity . We have created this society that favors debt. You see it in the corporate sector and elsewhere as well. Do you think thats the fundamental change we need to see in terms of the fiscal story . I dont think its a simple single fundamental change we need in fiscal policy, but, yes, i think it would be better if we return on we taxed capital at the same rates as we tax return on wages. Alix taxes corporations, bring that up, joe biden, the democratic nominee mentioned taxing if you are manufacturing overseas, subsidies if you come here. It was hinted before. Retrenching and having Companies Come back to the u. S. Even if its more expensive to operate and tax them if they are working elsewhere. Is that going to help . Europe is thinking about that. Hey want that digital tax. They havent gotten to tax those companies yet, but it could well happen. These are all sort of small changes that irritate a lot of people. That is something which a newly elected government, particularly if it has a big mandate, i have no idea which side will have a big mandate, if they have a big mandate, they should do these things immediately, because if you wait you are going to be eaten up by guys who have gotten. Heir reserves in place i dont mean financial reserves. I mean political reserves in place. Who make it difficult for the government to make a change. But those changes should be made. And they should not be made in a direction where amazingly its always that at the top people et to pay less taxes not more. Guy alix brings up europe. Let me ask a couple quick questions on europe. How big a corner has the eurozone turned now turned in terms of its ability to act as one in we are going to see the unified issue of debt. We are not going to talk about eurobonds or anything else. We have seen a significant step forward. How does this change do you think the world perception of the eurozone and its ability finelyfinally to function as a proper monetary region . That is the big issue. And if, in fact, they now have a unified fiscal policy, which applies to all the countries, and unified Monetary Policy, then theyll be looking more like the United States used to look. But you need to be sure you also got all the Little Things that add up to a lot that will what an offsetting should be happening right now. You get you have to decide what you want to do and you have to do it early and people kind of tend to forget about it if along with that the economy starts recovering more rapidly than it has so far. Its doing ok so far. Alix based on that, which economy has the potential to grow faster out of this based in particular on labor policies . The u. S. Or europe . I dont know enough to answer that question. Alix in terms of the way they protect their workers versus how we did it here in terms of the stimulus and the fed support and how much the fed may have versus the e. C. B. . The fed hasnow that a whole lot to do with that at this stage. And i dont think it will be a critical element at this stage. Basically we need to get taxes on high incomes up and taxes on low incomes down. How we do that is going to be specific to each country. Having a unified financial ets and having a unified will mean this can actually be done more easily than has been possible up to now. But i dont think that we should take it that the difference between the northern countries of europe and the southern countries of europe have gone away through this measure. Somebody has to get out there and tell the north, guys, you are in a union now. Some part of the union want taxes and that union are determined by the federal authorities. Those are big changes. And the fact that it took merkel all their efforts, fortunately she was there, to get this progress is very significant. But whether thats going to go through to the next set of politicians for making these decisions remains to be seen. And i dont know whether thats going to happen. Im guy congratulations on the award. Im glad it comes with our ability to spend a bit of time with you today. We appreciate it. Stanley fischer, former Federal Reserve vice chair. European close is next. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. The big events are back. Xfinity is your home for the return of live sports. Guy 30 seconds until the end of regular trading this friday in europe great equities on the front foot trading higher into the close. European equity markets are up on the week, outperforming what we have seen in the United States. We have seen considerable turbulence led by the tech sector. Intraday up. 3 . Pushing up towards session highs. It felt like a date more of consolidation than anything else. A quick look at where we sit in terms of the individual markets. We have to look at what is happening in the currency market. The ftse, the dax, and the cac 40 all higher. Underperformance from the dax. We have been seeing a greater effect on the ftse this week from the currency than anything else. The pound has been pushing lower. Today we are seeing equities higher. Let show you what is happening with the single currency. Eurodollar has been subject of conversation, particularly when we have the press conference yesterday from Christine Lagarde where i thought she maybe did not go as far as some suspected she would and dampening enthusiasm for the single currency. Of thehe chief economist ecb made up for that in a blog post earlier on. He pushed the idea of the currency strength is having a meaningfully impact on the Deflationary Forces having an effect on the eurozone. Today we track to lower. We are treading 1. 1834. This afternoon we tracked lower. Off our earlier highs as we push towards the 1. 19 level. In terms of how the sector story breaks down, let me show you what the story looks like. There is the british pound, down. 2 . A trade deal with japan. Markets seem thave brushed past that. We will hear from the trade secretary to get his take on that later on. Lets get back to the sector story. A little bit about performance from basic resources despite the fact we have seen the departure of sean jack at rio pinto. We have seen the Metals Prices pushing up and that has been reflected in basic resources. Elsewhere, aside from that, quite a defensive bias at the market positioning. Staples doing well, health care doing well, the bondlike proxies doing better. Oils, travel and leisure, and gas going lower. While the equity market has gone lower, the composition is more riskaverse then you would first suspect. Lets talk about individual names. Is one being watched carefully on both sides of the atlantic. The billionaire frenchman stepping in and trying to buy the majority share of altice he does not already own. Some suggesting this is an opportunistic moment for him, particularly given the fact he has driven all of his major acquisitions with debt, we know where debt prices are. Altice up 24. 69 . In terms of where we have seen weakness, i want to flag the fact we have seen weakness in the airline sector. There is a new focus on what is happening with their case count climbing in europe and the restrictions with that. Hat faces pressure easyjet down as well. The reason i bring this up is they have seen an offering the german billionaire selling stopped in this business. Selling stock in this business. He has been investing heavily in lufthansa and it is suggested you may sell steak in other businesses to fund some of his acquisitions, and we are certainly seeing acquisition evidence of that. The stock down 7. 47 . Maybe some irony in terms of the airline. Alix it is definitely a friday when youre making a 747 joke. The u. K. Secures a trade deal with japan. That is the u. S. First that is the u. K. First major trade post brexit. The tops, at times when the talks, at times when eu u. K. Relations are deteriorating. We spoke about the deal. It is our firstrate negotiation as an independent nation now that we have left the European Union. The biggest economies in the world with japan. It is a significant moment for all of us, for the country, for. He country it improves on the eu existing deal with japan, particularly on Financial Services and also on u. K. Food and drinks into japan. There are improvements on the existing eu trade deal with japan. Overall, very good deal for the United Kingdom. Why should the japanese believe the u. K. Will stick to the terms of the agreement if it is prepared to renege on the terms of an International Treaty with the eu. Minister hands we havent. Publish e done is we hope we get a deal with the the needould obviate for those provisions to come into place. It is also important for the u. K. Government as it expects to guarantee the integrity of the u. K. s own internal market, which is what the internal market still does, is make sure goods and Services Flow freely between england, northern ireland, wales, and scotland. That is an important thing for the people of this country and an important thing for the u. K. Government to ensure. Alix you may not think you broke any international law, but other countries disagree. The u. S. Is concerned about reneging on the deal with northern ireland. What you say to that . Minister hands i say what i have said, which is the uks own internal market is the most important thing for the United Kingdom government. Wet we have done is if cannot come to a further deal , we willEuropean Union supply more elements of the eu law to make sure we preserve the u. K. Internal market, which will secure peace in northern ireland. We are still, with the deal with , Major International partners. The u. K. Is still a reliable country to do agreements with, particularly in the area of trade, and we have shown people do have confidence in the u. K. Government and rightly so. Guy do you think the eu will walk away at the end of the month of the bill does proceed . Minister hands that is a question to put to the European Union. What we have been clear is what we are seeking from the European Union union is a canada style freetrade agreement, similar to what the eu has granted canada and japan and others, no more, no less than that. That is what we are thinking. If there is no further agreement, we going to trading with the European Union on australia style terms. Hands, u. K. Minister of state for trade policy, initially talking about the deal struck with japan but also referencing what is happening in the dispute between the u. K. And the eu and the internal markets bill, which is causing such consternation. Christine lawrence joining us to give us his take. Christian, the market and certainly the pound seems to be the pressure valve, seems to be increasingly pricing and the prospect of a no deal brexit. Is that the right approach, is the risk rising . Mentioned,s you sterling the worst performer so far. Although i suppose the announcement has been somewhat of a surprise. At the same time it is not that surprising, given how negotiations have transpired over the past four years. I think in the coming days things will get worse before they get better. Ends so often see, a deal up being forthcoming one minute. O midnight join i think sterling will remain under pressure and that moves into an interesting period, where the second half of september is usually the worst period of the year for u. S. Equities. If we see pullback there, we might see Dollar Strength emerging. Cocktail for alix the Furlough Program is set to run out. Theres been a push to continue it, and an issue of if you raise taxes, can you afford it . How does that play into the brexit conversation . Three issues at once. Christian we are starting to see covid cases increase. This is not just a u. K. Story. The market has been taking a glass halffull view of economic activity, enjoying the bounce from the serious lows. As we move into q4, whether we look at europe or the u. K. Or the u. S. , the picture will get a lot worse as a lot of these stimulus measures start to fade and the real underlying strength of the economy without the government helped starts to come more to the forefront. The marketsthink will focus on the vaccine news . We know it is likely to be a difficult autumn in a difficult winter. As we count our way down towards the end of the year, the vaccine news is probably likely to improve. Will the markets focus on that rather than the Rearview Mirror data we know is going to be something we will have to deal with . Christian it feels as if the equity market likes to focus on the vaccine and the bond market likes to focus on the weaker economic data. , any progress on the vaccine is likely to be a positive. I think there could be a Tipping Point where the data we have starts to fade, and unless we have absolute solid guidelines as to exactly where we will see the vaccine, there is certainly room for a bit of negativity to start being priced in. Up until this point, it has not been. Alix i feel like the stock market is like tigger at the bond market is like eyore. I clearly have a sixyearold. Youre also dealing with an election in the u. S. How do you protect yourself . Trying to infer longterm directional trades in this election will be a difficult task, indeed. I think the Dollar Strength in the runup to the election is a High Conviction call. Where we go thereafter remains to be seen. I think the big story around this election is the shift we have seen in volatility. When we look at the currency markets, as you have early august and start to see implied volatility priced in that election risk. One of the interesting things is we are seeing elevated volatility on the four and five month range, which implies the market is not expecting to see results from this election in early november, or we will see some sort of contest. I do not think it will be a smooth election where we get the results one or two days afterwards. Higher volatility is probably only High Conviction call i can make around that. What does that mean . As i mentioned before, Dollar Strength is the way to play that. Guy if we do not see stimulus out of washington, if we do not see another round of stimulus being delivered, what is the Market Reaction and will the fed step in to ameliorate some of the concerns that exist . Christian christian ive been quite surprised the market has not been more concerned about the lack of progress on that front. Until the end of july when the additional Unemployment Benefits to 50 states in 30 Unemployment Benefits were higher than the median salary. We have seen quite a nice rebound in the labor market, but i think that will start slowing. We saw the savings rate increase. Now households are eating through their savings and there will be a Tipping Point where household Balance Sheet destruction starts in earnest. Those cracks have been paved over so far. There will be a Tipping Point where the market becomes concerned about that. There is a consensus anything coming before the election is unwise at this stage. That is another factor why think the coming weeks will prove increasingly tricky for the markets to keep the glass halffull view of the world. Alix then what do you do . Do you buy gold . Christian i like gold. I have for some time. I am certainly a subscriber to the fact we are seeing a general debasement of currency. That has been priced into an extent, but even on a longerterm basis it will remain well supported. Certainly any longterm trait in this environment is very difficult. When we are speaking to clients, agility is the key word. We need to be opportunistic and iile because longterm trades think is going to be a dangerous game. Clear direction is hard to find moment. On that note, thank you for much indeed for your time. Christian lawrence of rabobank. Lets talk to where European Equity markets have finished. These are the final numbers for the week. A positive week for european equities. A less positive day for the dax. Not down by much. The ftse 100 getting. 5 with the miners bouncing back strongly and we saw that in the grr is that section outperformed in a big way. The cac 40 up. 2 . It has been a big day for the u. K. A big week for the u. K. Well carry on the coverage in terms of what we have seen for the brexit negotiation and how we have broken down in such rapid fashion. We will continue the coverage at the top of the hour on bloomberg radio, dab Digital Radio is where youll will find the cable show. Jonathan ferro and me in london. This is bloomberg. Ritika this is the european close. Lets check in on the bloomberg first word news. The chances of another round of stimulus for the u. S. Economy have fallen. Senators headed out of washington after a slimmeddown package proposed by republicans failed to advance. The bill was intended to provide supplemental Unemployment Benefits and extended aid for small business. It was only a fraction of what democrats were asking for. New york city mayor bill de blasio has responded to Business Leaders from multiple industries they want him to restore essential services to the city. De blasio says the most direct way to do that is with longterm borrowing and a federal stimulus. The mayor invited Business Leaders to join in this fight. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am ritika gupta. This is bloomberg. Alix you have to love the spirit of all of these Business Leaders saying there is we want toeconomy, bring people back to work, we cannot, please take necessary precautions, and bill de blasio is like, call washington. Guy the state and local element of this is when we focus on a great deal. They need the money. You look at the underfunding of what is going on with the transport network. How do you bring people into new york city if you cannot run a transport network . There is the chicken and egg argument. Clearly the state needs taxes. In order to get people back you need to fix the infrastructure. It becomes very circular very quickly and this is where you need a federal kick start to get things going. Alix especially when Governor Cuomo was, like, new york city cannot handle all this traffic we are seeing because people will not ride the subway or metronorth, so you have to start taking public transportation, but to get that you have to feel safe, which has a cascading effect. Now lets look at what the deadlock in stimulus talks does for banks and consumers. Joining us is betsy graseck, Morgan Stanley global head of banks. I want to start with yesterdays news about jane fraser taking the helm of citi. What do you make of right now, in the middle of pandemic, that seemed like interesting timing. What do you make of that . Betsy i was not a flight on the wall in the meetings, but i do think that with the conversation you were just having around the back to work and what Companies Need to do Going Forward to improve their returns, efficiency, etc. , this is not a bad time to make a change. Why do i say that . We know mike corbett has said he was in the job for another two and a half years. If youre thinking of banks ceo, what will you do to get your r. O. E. Up in an environment where rates are so low, you have to have a three to fiveyear time horizon in your planning. That is what i think of the timing. Guy more activist were activist investors instrumental . The presence of activists as a result of the underperformance has been growing. I see the same kind of articles that a lot of people are reading. From my perspective, having this transition occurred now, at a time when rates are low and you need to be strategically thinking a little bit longer ,erm then two and a half years like i say i was not a fly on the wall. Jade being promoted to see jane being promoted to ceo starting in march of 2021 is a time that seems to make sense for a variety of reasons. She has been on the top of our list for expectation in succeeding mike when the time comes. Ceo is in line with our expectations. Returnow does she get up . Betsy a couple of different ways to do that. Number one is going to be in thinking through what the Business Units are they have got, where they have scale that are not fully employing benefits to those scale strategies. Is in the to mind international wholesale, the International Consumer payments, we know there is a ton going on. We have one of the best in class platforms. Are they taking full advantage of that . Number two, they have a brand in the u. S. That is one of the best known, wellknown brands. That comes for many years of investing in their brands through the consumerproducts. Are they taking full advantage of that . Is that delivering the deposit value that can be delivered . Those are the things at the top of the list for me. Do you think a widely scott will focus less on the Expense Ratio than mike corbat did. There was thought this was too much focus. Betsy operation focus is the number one thing when it comes to bank stock performance. I do not think i could ever say there is too much focus on operating expense. I do believe that is critical. When we look at bank stock alpha, and this is what we did with our colleague many years ago, aside from the credit cycle like we have been having recently, a positive operating leverage is the single biggest driver of bank stock alpha. Alix who was winning that . Betsy bank of america has been in the lead for many quarters now. Today, i would say fargold argue that wells should be positioned to be one of the leaders. The challenge they have is the asset cap is not enabling them to generate revenues in line with peers. Even though it looks like they should have a pole position, they are not because the asset cap spirit we put a note because of the asset caps. We put a note out that suggested they have to shrink to win. They have to peel back some of what they are doing in order to create the room for the winning Business Units there to drive the positive operating leverage because without that first, it is tough because of the asset cap. Guy if we do not get more stimulus from the u. S. , which looks increasingly unlikely, what bank will feel it the most . Where will we see the most delinquencies . Atsy the stimulus has been phenomenal deliberating affect you talked with the prior person on the show. The relative to the employment level. If we do not get a cares act 2, that will me in the last in the next three to four months well be see Savings Rates go ,own in the subprime consumers delinquencies will start to rise. Couldmove into q2, we potentially see losses move higher than our expectation. Year a one q, q2 next issue, but we could see that coming with the savings rate declining. Guy we will leave it there. Thanks for your time. Have a great weekend. Betsy graseck of Morgan Stanley on the significant changes we have seen. A woman leading a wall street bank is something we should all applaud and one of the big takeaways from this week. Lets talk about next week. What we have coming up next week . You have the fed, the ongoing brexit story, a case in the u. K. Regarding uber. A packed week coming up. Alix where are we in brexit negotiations . I feel like that will get worse if it gets better. That will be front and center. Michel barnier is still there, right . Guy twin track at the moment. You have the issues with the internal markets at, and the separate track which is the ongoing trade talks which are still happening and will continue in brussels next week. On monday, you get the second reading of the internal market bill and it will be interesting to see how much resistance comes from within Boris Johnsons own party to give us an idea of how weak or not he ultimately is. Alix that wraps it up for me and guide in the new york and the u. K. The nasdaq flat on the day. Coming up, balance of power. The former fcc chairman be joining the former sec chairman will be joining david westin. David from bloombergs World Headquarters in new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. Today marks 19 years since that clear september morning in new york when commercial airliners were turned into weapons to attack the heart of wall street. The morning has been given over to events commemorating the day and the lives we have lost. We welcome one of the u. S. Officials called upon that day to address some of the crisis as it unfolded. Harvey pitt was the chairman of the Securities Exchange commission when the markets were shaken to their core. We welcome him black we welcome him back to bloomberg. Take us back to the day. Where were you when it happened. What was your Immediate Reaction . In my office preparing to go to new york city and someone came in, it was very early in the morning and told me it appeared