Boris johnson concedes a veto to parliament over his plan to illegally override the brexit treaty. Slumped after accusations of fraud by a short seller. The selloff deepens even if the company rejects the report. Good morning. Welcome to the program. Lets get to breaking news across the bloomberg. Capex andto go to the eu car sales. European collar sales falling 17. 6 in august after a 3. 7 drop in july. This is the story that we are essentially tracking. Europes car sales setback stoke fears over annual drops. This headline was written by our colleagues at bloomberg news. 18 slump snapped a three month streak of improvement. The result may indicate that subsidies are shortlived. We have seen that improvement coming through. Whether that has been a shortlived experience rather than showing underlying resilience, we will have to see. These numbers are not so good. We will watch the automakers as a result of that. Acrosso to the picture European Equity markets. The futures picture. We are weaker. This is what we have on european futures for you. Alsofutures, dax futures giving us more detail of where thats coming from. Yesterday, europe fairly flat. The ftse underperformed. Banks and miners are part of the story. The nasdaq was down by more than 1 . Lets have a look at u. S. Futures. S p futures, dow futures, nasdaq futures projecting further weakness. A lot of this comes down to the feds language around the rebound. They were dovish in that they presented a situation or scenario where rains dont move for a long time after 2023. There was some language that talked about the uncertainty around the recovery. The cautious language about the pace of the Economic Activity we are seeing. It turned into a risk off story for global markets. Money coming out of equities. Asian equities moving to the downside. In terms of the rotation into fixed income, we see some demand for some Government Debt products is as a result. Lets get a bloomberg first word news update. Laura President Donald Trump isnt happy with what hes heard about the tone of the oracle tiktok deal. He will be briefed on the specifics this morning. Sources tell bloomberg that Top White House officials have raised concerns about the proposal. Doesnt it for shots meet National Secure concerns. Donald trump says a Coronavirus Vaccine could be widely available as early as october, contradicting his top health officials. Anthony found sheet told bloomberg hes reasonably confident a vaccine will be available by the end of the year. Widescale adoption takes time. Boris johnson is making a key concession on his brexit plans to get it through parliament. He agreed to give the house of commons a veto over whether the government can override parts of the agreement. He comes as one of the governments most senior Legal Officers resigned over the controversial proposal. Staffhe bank has told its they can continue to work from home until mid2021. Thats in contrast arrival bakes who are seeking to return employees to the office. Deutsche bank says workers only have to return when the bank moves into its new offices in july. Global news 24 hours per day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you very much. For more on the markets, lets get to garfield reynolds. Good morning for you. In the words of mark cranfield, the angst dialed way up high. Futures are suggesting we will be weaker in europe and the u. S. Session ahead. The asian equities session is weak. Does that all make sense to you . Im not sure how much sense they were. Somewhat head scratching lee strong risk off reaction to what was a pretty mild and steady as she goes fed meeting. Reaction hughes huge reaction during the u. S. Session. Shares did drop. They initially climbed after the feds announcement. It basically seems that a lot of people have been positioned, especially in fx, for a much more dovish fed then we got especially ones powell said the significantly more fiscal and monetary stimulus, the fact that he wasnt looking like he was going to be providing any of the monetary side. We all know that the fiscal side is being strangled by the political gridlock thats going on. That left risk assets looking aimless. People have been going into the meeting expecting that if there were any big moves, they would be to the dovish side. That seems to have been enough to set off some fairly strong moves. Essentially, they were overstretched in the first place. Anna on the markets live blog, youve been asking this question. How much more stimulus to risk assets need . That might come down to questions around the fiscal side. Weve had mixed signals from the United States, even from different parts of the republican party, about what is possible here or what is likely to happen. Garfield its a bit of a mystery. Democratsase is that and the white house will agree on something that can keep the government operating past the deadline in october. It usually is. Thats the minimum. Theres a feeling that a lot more than that is needed. The difficulty is that the doesnt want to see much more than a half a billion. Some think there shouldnt be any more. Donald trump is favoring proposals for about 1. 5 trillion. The democrats are favoring up to 3 trillion. You can see theres a lot of money being talked about. Gaps. Ixed very wide you would think, looking at where markets are at the moment, they would just want some sort of stimulus. Indications that once the elections are outoftheway, whichever party is in charge of whichever part of the west government will push for more stimulus to come. At the moment, we are gridlock. That is the worst of all possible worlds. Anna when i look at fx markets and you point to some of the reaction, i see the pound is down by a quarter of 1 . We will wait for the bank of england later. I doubt it has anything to do with that or do muster policy. Look at the dollar. The dollar is gaining. The euro is selling off. Moves in a risk off direction look over done to you . Garfield they are more of a snapback. Look at the currencies. They are doing the worst today. The pound looks relatively perky. Look at the australian dollar. Keeley down more than half a percent. The yuan down 0. 4 . Those are three of the currencies that have been among the strongest. Those that gain the most are now falling the most. We are already getting close to the end of the quarter. Expectations are very strong. Equity rebalancing could go on. We are also seeing some currency going on. Up until yesterday, the dollar was headed for its worst quarter in several years. It was probably do a bit of payback. Relatively quiet stance set up curve deepening. It gave the dollar a chance to take back some of those rather overstretched declines. Anna thank you very much. 10 minutes past 7 00. Up next, Holding Steady for three more years. Jerome powell gives his clearest guidance yet. His negativity on the Economic Outlook ways on global chris evans risk assets. This is bloomberg. We believe that this very strong Forward Guidance, very powerful Forward Guidance weve announced will provide strong support for the economy. Rates remain accommodative until the economy as far along in its recovery. That should be a powerful statement and supporting Economic Activity. Inflation running persistently below 2 . We will aim to achieve inflation above 2 for some time. So that inflation averages 2 over time and longerterm Inflation Expectations remain well anchored at 2 . Labor market has improved. Its a long way from maximum employment. It will be some getting back there. My stance is that more fiscal support is likely to be needed. The details are for congress and not the fed. We believe strong policy guidance will sort of the economy well by promoting our goals through the many possible paths the recovery may take. Chairmant was the fed jay powell speaking after a twoday meeting of the u. S. Central bank. He was outlining his do inflation policy. The fed said it would leave me Interest Rates near zero until 2023. Stocks gained before sliding as powell highlighted uncertainty over the economic rebound. Global equities caught in the downdraft. Asian equities on the downside. Futures in europe point lower. Chris dyer is with us. If we start our conversation around the fed and the response to it, are you surprised to see how risk off the Market Reaction is or race expected to be . Is it to do with Something Else . Chris i dont think the Market Reaction is particularly surprising. I think the expectation going into the fed meeting was very clear. Tone will continue through the end of 2023. That was delivered. That was priced into the market. Performance in the previous few days leading up to them meeting. The comments during the meeting and press conference really highlighted the fact that the focus now needs to be on the recovery. There is a lot of uncertainty there. Theres a requirement for additional fiscal stimulus. Theres questions regarding that. Thats what the market is reacting to today. A lot of uncertainty around the virus and in the hands of congress. Failed to extend that fiscal support. What do you think the u. S. Economy needs to see . What do risk assets need to see . What are your thoughts . Chris i think its really a continuation of the fundamental improvement we are starting to see as people return to work and schools are reopening in many locations. I think that what the economy needs to see is continuation of stimulusadditional from the u. S. Government. Theres difficulties but some promising signs that there might be some progress in terms of those negotiations. Next point that we are waiting to see. The election coming up shortly is another area of uncertainty for investors. We think that thats going to affect volatility for the foreseeable future. Anna how do you petition ahead of that election . Do you expect volatility to be shortlived . Theres a chance that the uncertainty lasts longer. Chris in terms of our positioning ahead of the election, we favor nonus equity over u. S. Equity at this point. We think that european and japanese equity are more favorable from an economic perspective, from a political perspective, and a valuation perspective. Thats the point regarding our positioning. In terms of the uncertainty, you are right. Its not just the date of the election. Go back to 2000. It took several weeks to get clarity. The markets suffered as a result. There were affects on the underlying economy. Businesses waited to see what the outcome of the election would be. I dont think we necessarily have a resolution of that uncertainty on the election day. Anna we heard from the fed last night. Some guidance around when rates might eventually go up. A lot of unknowns in that guidance. 2023 is a date that many are now focused on. Does this give Central Banks globally license to keep Interest Rates lower for longer . Not just on the part of develop markets but also emerging markets. This doesnt just impact the United States. Maybe other central bank will take the lead here. Chris i think that thats right. Out,e fed has pointed accommodative positioning needs to continue in order to support the recovery. The recovery is in the early stages. We have not yet seen a revolution resolution of the underlying problem, coronavirus. Thats a powerful signal to other Central Banks. Each of which has a slightly different tuition. Of england is facing somewhere challenges. Perhaps even greater in terms of the next few steps that the u. K. Will see in terms of how brexit proceeds as well as unemployment. U. K. Ll likely rise in the as for those deepen. The central bank has a challenge. The underlying theme is that they need to be as supportive as they can to stimulate economic growth. Anna thanks very much. Chris dyer stays with us. We will get further details around strategy away from the u. S. , into japan and europe. Lets get a bluebird business flash. Heres laura wright. Laura snowflake sword in its stockmarket debut. Share price up as much as 106 26 . A market value of more than uber, dell, and general motors. 6. 4 billion dollar ipo is a record for a Software Company and is the biggest in the u. S. This year. The ipo is a price discovery process. We were after a very specific set of institutional investors. People that can hold multibilliondollar positions. Willing to hold them for 510 years. Also people that dont change momentum up or down. Laura the latest version of the playstation will go on sale on november 12 for 500. That matches the price of the xbox series s. The Companies Battle for market share. Pricing is an important factor of success. The less expensive systems sell more, driving an increase in revenue from games. Rollsroyce says it is continuing to think of ways to bolster its coffers after the pandemic slumped aviation revenue. The u. K. Maker issued new debt for equity. In has been hardhit this year with its debt downgraded further into junk. Thats your Bloomberg Business flash. Up, a violent sideways shift. We will be back with chris dyer to discuss his thoughts on a geographic rotation out of the United States. This is bloomberg. Welcome back to the European Market open. Futures point to the downside. More than 1 . Reaction in the aftermath of what we heard from the fed and their assessment of the u. S. Economy and the stimulus that might still be needed from fiscal sources. The u. S. Has outperformed other develop markets significantly during the recovery. Is that dominance about to come to an end . Concerns about the exuberance of the u. S. Stock rally are growing. Our guest says now maybe the time to rotate to european and japanese equities. Chris dyer is still with us. Why is now the right time to rotate out of the u. S. And into europe . Youve said, the u. S. Market has outperformed in her national markets. International markets. The are geographical rotations. They are normal. This is an extended time for the u. S. Market outperformance. That look ahead, we think the International Stock will perform better. The Economic Cycle in early stages across the globe. These type of environments favor more cyclical and valueoriented stocks and markets. Those types of things we see in europe and japan. Theres a lot of uncertainty in the u. S. Regarding the election and policy outcomes stalling the election in terms of taxation. In coming years, they will be focused on the level of u. S. Government debt. It has become extremely alec elevated. It has implications for taxation and growth in coming years. In europe, greater cohesion among the european union. We have seen that through the european recovery fund. That will go along way in terms of reducing the equity risk premium that has been assigned to europe over the last decade. From the valuation perspective, the u. S. Market is significantly leading in terms of valuations. We think that is to just pointed now. Disjointed now. Look at 2008. Nonusi global index, companies were 54 of the global index in 2008. Today, they are 34 . Thats not representative of International Stocks within global economies. We think there will be a natural reversion in the coming years. Anna we have seen a lot of focus on u. S. Tech. You want to focus on global tech. Where do you look for that tech sector outside of the u. S. . U. S. Has Great Technology companies. That has been reflected in what we have seen in recent years. Also the performance of the stocks in the stock market. Haves Technology Companies been largely ignored or underappreciated. Look at our positioning within our global portfolios and International Equity portfolios. We are underweight technology in the global portfolios. A large component of u. S. Tech within that. We are overweight technology and our International Equities portfolio. Taiwangreat companies in. Companieslike that, that have attractive longterm Growth Prospects and compounding characteristics. They are not necessarily appreciated in terms of the relative valuations of u. S. Technology. Anna thank you very much. Market isy sideways what he foresees in the foreseeable future. Lets talk about that next time. Very good to speak to you. We will see if we wind up in that violently sideways market environment. Up next, time to get back to work. The alphabet cfo says being in the office fosters innovation. We will get more from that interview, next. A lot of headlines from Different Companies around this. Certainly in the Banking Sector. Many Companies Taking different stances on the urgency with which they want to get their staff back into offices. We will talk more about that in a moment. This is bloomberg. Welcome back. He first equity session. Futures just over 1 as well. We do expect negative tiff post fed in these European Equity market. Plana is close to 11 billion. It has achieved enormous popular thanks to its buy now, play later service. Clana will have an i. P. O. At some time in the future. We have the se oh of klarna. You raised a load of moneyful money. What are you going to do with it . Well, obviouslyings we believe the future that the credit card industry which is a trillion dollar industry is a better offer for consumers. The traditional way is you get a grace period for 30 days and the banks are trying to put you into revolving and 29 and youre borrowing against grocery. Buy now, pay later is interestfree. Its installments much easier to understand. We think this is a better alternative and were seeing the Younger Generation adopting these products. Its really exciting to see that. And getting now to 10 million users in the u. S. We want to continue growing investing in the u. S. Market. P. We added a couple of u. Markets like spain and other nations. What about if youre late with your payments . It depends on the market in uck we in the u. K. , we have no late fees. So not having late fees could have a negative impact for people. Were trying to find the right balance. But compared to what you see with credit cards, this is a much better offering for consumers. How do you limit the risk, and how do you limit your credit losses if you dont creditcheck the people youre lending money to . Thats a good question. Weve been running this for 15 years. Sweden and ets in weve learned to deal with customers realtime online. And some credit data is appropriate. We do use that occasionally as well. So we have a lot of measures, and you know, weve been doing it for 15 years. So we learned how to do it in an online environment in a good way. Youre operating a lot of different jurisdictions in. The u. K. The buy now, pay later ervice is actually being investigated by u. K. Regular or thes. How do you expect things to turn out . I feel positive because if you think about it if you compare the credit card space and how you that works and the Interest Rates that they charge and so forth and the late fees they charge and what were offering, it is a better product for the customer. When something new comes along people get worried. They want to understand how its working and the details of it. Weve been having a Great Corporation with the afca sharing data, discussing this and obviously, happy to think about whether there are more things that we can do to make the transparency of the product and how you to make it work for consumers as well. But if i think about a person ing a debit card and using klarna, i think were in a better world if people use their debit card. You dont think it is recklessness as some have suggested . Not at all. Its a much better option. There are some people that have a political conviction that you should never borrow whatsoever. Way, its think that ard get you. But its better than what has been historically in the market. You may have lots of fear from your business. You want to wreak havoc. Who have you reached . The obvious one a lot of people compare us to is papal. Thats because were now getting to 85 million users world wide and thats about half of their ize. And now in the u. K. As an example, our use of checkout, we have a higher checkout with papal with most of the merchants that were with. When they start using klarna they realize so much more. When you made a purchase, with everyone else you just see the merchant payment, the amount. Full aarna you have the digital images. Makes it easier for them to see what theyve spent. And it makes it easier. What about i. P. O. Plans . Why do this in private . Why not go to Public Markets . I do get that question now and then, ill tell you. We have a fairly large number of shareholders today. And obviously, from that perspective, we think that sometimes it can potentially provide some it will be simply less complex if we would be public. On the other hand, i must say that im always strug you struggling with this because the Public Market are capitalistic. We still believe that there is a trillion dollar credit card industry out there, theres a Retail Banking industry thats ripe for disruption. And thats a longterm project. Weve come very far but there is still much to do to bring customer sense trissity. Well see how things play out. On both i mean, it could happen. Were a bank. We report quarterly. We have publicly traded bonds already. On one hand klarna is ready to do it. On the other hand, i want the company to think longterm because this Industry Needs change. Really good to speak to you. Thank you very much for joining s, sebastian, the cofounder and c. E. O. Of klarna. 23 minutes for equity trading. Lets get an update with laura wright. Laura President Trump isnt happy about the oracle merger with tiktok. The Top White House officials have raised concerns about the proposal. They say it falls short of Satisfying National Security concerns. Joe biden is warning about the impact of the latest brexit plans on a potential trade deal. He says an agreement depends on the continued respect for the Northern Ireland peace protest and the good friday agreements. E interventions shows that they may renege. A citigroup employee has been placed paid leave pending investigation that he reported a q anonconspiracy website. Jason glen niss is said to have run the site. The bank says employees need approval for any outside business activities. Global news 24 hours an bloomberg updates by more than and analysts. Coming up on the program, Janice Henderson says low rates from the fed will make shortterm treasuries your morning bid. This is bloomberg. Welcome back to European Market open. 20 minutes until the start of thursdays cash session. Youve be pretty if followed these markets. Lets talk to Juliette Salley, shes been waiting for some analysts. She joins us from singapore. Youre looking at what the feds lower for longer yields mean. What have you found . Thats right, anna, as you were saying before, look, perhaps the front ends is a place to hide here knowing that we do as the fed said its going to be lower for longer. These lower Interest Rates for three years. But they are expecting that the curve will move to a steepening further. The analysts including nick moritz saying in terms of the fed theyre not mentioning with their asset purchase plans. This is a bullet that the feds want to hold on to the we see a deterioration. Theyre caught in a difficult position without appearing too hawkish ahead of the president ial election. Nick moritz is saying you will see it gradually steepen further. Anna it was like aholding pattern statement or an event with the feds. The markets havent reacted that way, have they . What about Precious Metals . Is it Something Different . Yeah, it is. C. I. B. C. Turning very bullish on Precious Metals particularly gold and silver. The next four years, in fact, d they say the gold price at 2300 an ounce. They will fall back to 2,000. Ounce. Rget price 32 an and weve had a call on base metals including greg barnes saying that this inflationary trade tight supply and improving demand is strong before base metals, their top two picks, London Mining call in canada, anna . Anna Juliette Salley in singapore. We should mention that the governor of the bank of japan is speaking. Governor k uffer ro governor kuroda. They took a slight less gloomy view on the economy. But given the political changes that weve seen in japan. The governments fiscal policy has created it effectively according to kuroda. The b. O. J. Wants to keep firmly suga ing the economy as will come in. Its an important talking point as we go into 2020 and 2021. The coronavirus pandemic has caused millions to work remotely. On the David Ruben Stein show peer to peer conversation, the alphabet c. F. O. Spoke to the cofounder about how this shift in Work Environment has impacted the companys thousands of employees. When you started working remotely, did you worry it was going to be a problem . You have all these people but youre technically very savvy. Savvy . Im responsible for our global response. We are in sync daily that worked well. What we were most concerned about productivity and wellness. Our chief medical officer very early in the crisis said that more people would be affected by Mental Health issues than the physical disease itself. We focused on those two. I think that was really important. The other thing is google is about our people and the ability to deliver for users in communities because of our compute capacity. And one of the things we didnt have to worry about was our ability to to really deal with this surge in online activity. And that was because of the investments for many years and all of the testing of what could happen in a crisis scenario. Its an important point because you cant solve the Risk Management issue in the middle of a crisis. You obviously need to solve it ahead of time and that worked. So Many Companies have learned that now that my people can work from home, maybe i dont need all these people or work from office . Is that your view . We believe that when people are together, thats a critical element for innovation. Collaboration within teams and its collaboration across teams. We do look forward to having people back in the office. What were looking at is the productivity lift if people have the ability to work from home some days, be in the office in particular when the rest of their team or more broadly treatment in the office. When you can save them commute time youre solving what they want in their personal life. Its going to result in a better outcome. What that means for real estate were still figuring out. Google was well known for among other things. You got free food. What about if youre working at home. Do you give them free food showing up by delivery somehow or how do they compensate for that . So, were not doing that. A lot of people focus on food. When really what we are trying to create have been trying to create is this fun quirky magical campus. And so its more than just the free food. Its the experience on campus. So what we did when we moved everybody to home is we moved a lot of these sort of connecting. He community we took our fitness classes to virtual fitness classes and even some sort of goofy style ones like yoga with your dog. Welcome back to the European Market open. 10 minutes just coming 10 nutes until equity markets start. Danny burger joins us. Lets start with u. K. Resales, shall we, dani . Next is joining the other retailers like h m and czara that are starting to recover better from the pandemic. Their outlook certainly improving. They gave an update saying they would see a pretax profit of 300 million. That compares to their earlier profit of 195 million. This shows us that sales have manymark restill yent than analysts were expecting. What about the car sales . Perhaps worrying signs . Look, over the past few months since the pandemic weve seen these declines. For the past three months they had been easing. 3. 7 decline. In august we get an 18 decline. The fear is it will be 20 declines. So look for some of the higher beta names, bmw for example to move on these latest numbers. Anna and whats the stir on h 20, not the water. Weve been following the sag a saga for a while. Look for nitixes that theyre writing some of their liquid bond for up you to 60 . Its ban story for a while here. But earlier this month, french regular or thes did make them freeze one of their funds because of these assets. This is part of the fallout youll recall last year, they lost a lot of money in their funds after morning star warned liquid funds. Anna dani burger, thanks. Investors are targeting another German Company. Grenka worked more than half it market value following a report by frazier pairing alleging fraud at the firm. Short interest is at the highest evel since 2012 in ge grenke. What are the allegations being made against this business . Are that the ions companys cash is showing out. Its missing. Hes alleging them of buying companys that were controlled by grenke executives. He is saying this is against governance and the company is trying to improve their financial data. Hes pointing out a couple of things linking the company with a potential fraud. The report is about 64 pages ong. The effect on the share pricing is clearly devastating. What does for the companys part what does grenke say . Weve received a short statement. They say they strongly reject the allegations and pointing out that they are holding 800 million in cash. I think thats the usual playbook of a company being under attack that they first came out and say theyre rejecting what is set. What is needed right now from the company certainly a little bit more details so that they are dressed all the points that the short seller has made to make sure that they dont lose their trust. What about the regular or the in germany. I guess the regulator will be keen to prove that its taking this seriously to make sure they know they have firm control of the market. I absolutely. After the collapse of the German Company didnt look really good because maybe not ignored, but didnt take action for years when the company was accuseded of wrongdoing. The big question is how forcefully will they act . They are looking into the company. They are looking if they have manipulated into the Balance Sheet. Theyre looking for a manipulation from those making accusations. And the big question is how how long it will take until they make a decision here. And is there a danger that they may have overreact. Thats certainly a very sbrege interesting angle to keep an eye on. Anna thanks so mu. J. P. Bonnet on grenke,. Look at the futures. We have them duel the downside. These are in the aftermath at the fed statement and decisionmaking in the last couple of days. Its really around the feds assessment of the u. S. Company and what ales it. But it seems to be weighing on global risk assets. So they were down by this. Just shy a percent. Ow u. S. Features have been weark. D essentially 2 on nasdaq futures. Theyre considerably weaker in this early stage of the trading date here in europe. Coming up, its the market open, this is bloomberg. Bloomberg. A minute to go until the start of cash equities trading. Here are you headlines. Three more years. The fed predicted rates will stay near zero before 2023. But the caution on the economic rebounds weighs on stocks. Nasdaq futures are down more than 2 . Even as rates go nowhere in westminster Boris Johnson concedes a veto over his plan to illegally override the brexit treaty. Plus, shares in german Leasing Company grenke after accusations of fraud by viceroy. The Company Strongly rejects the report. Good morning. Lets have a quick look at futures. Futures have been telling us a gloomy story. We are expecting to see some weakness at the start of the trading day, really what the fed said about the u. S. Company and the pace that its recovering or not. That seems to be weighing on market sentiments. That was certainly true of the Asian Session and this is how thank you European Equity markets are opening up or down. Asia was weighed down by this negativity as well. Down by. 9 of a percent. U. S. Futures still point to the down side. Shy of 2 . Y more than 1. 5 in e mini futures. We are expecting some negativity. Weve got the iback down by 1. 3 waiting for the dax to open up. Waiting for some of the big car names to open up. And we have the e. U. Car registration figure. T looked gloomy around an hour ago. Well keep an eye on that. Thats off the fed chair Jerome Powell highlighted uncertainty for the u. S. Company. Lets get in it with cole smeed from cole capital management. Really good to speak with you this morning. How you do you make sense of what were seing in markets . Does it seem sensible, logical to translate what we heard from the fed yesterday . Whats going on this morning s i wouldnt take a lot of things coming off of what the fed said. Theres a lot of noise coming into the markets. They didnt legaly want to be in the position which is they have nowhere else to go. They cant cut to a certain extent unless they want to experiment with a negative race. If you go back two years ago, the fed began their cutting to an effect prop up the stock market as the late 18 calendar really hurt u. S. Equities. And now were in a position if my gut is right two weeks ago we peaked the fed phenomenon in the university. And there will be no support on the shortened of the curve. We didnt hear anything from the fed that suggested theyre going to dial back the level of the court. Is it the fact is it the fact that the fed highlighted once again that they need physical support here . Correct. They can provide support in terms of buying assets but on the price of money, they cannot support any whatsoever. And the beautiful part about markets is Central Banks in the shortterm can affect markets but in the longterm they really cant. I say that because after the top of the equity market, you run out of buyers and sellers. And the fed cant do anything about running out of buyers. In call options or stock markets ultimately. You know, use all the stimulus that the Central Banks of the world have provided. And that hasnt propped up equity markets there. We have performance chasing going on in the u. S. Stock market. And thats the only reason why sthrings been so well. Anna what low rates are supposed to do is to give people confidence to borrow and invest. And businesses might be thinking more about that doing that if they know rates are going to stay low for 2023. Is that going to be is it significant that they can rely on those low Interest Rates and therefore borrow it to invest . Ill give you do data point that reflects whats truly going on on main street u. S. A. Coming out of the lock down the two things that shocked watchers and wall street was that autos and housing have led the United States out of the lockdowns of march. I say that because thats a classically normal thing to happen coming out of a tough recession. However, coming out of the 0809 recession, those did not leave, they lagged the entire time. I say that because the fundamentals coming out of this problematicer yeah tied to covid, is a classic expert reversion of the economy. And that sets up a picture thats different than what the fed communicate. You you can see higher rates versus having alan wishing economy. So i think this is really different and the problem is, you look at the rearview mirror, no one has seen to Something Like this. The feds have a certain perspective. People are so spoked whether they will come back. Yeah, and so do you think that the fed will be called out what tes too low, given you just said there. Im betting my entire network that thats probably true. Ill give you an example. If you look at the composition of markets and the way that, you know, the Commodity Markets are set up right now. Theyre incredibly low expectations in the future of commed di markets. Some have been investing in gold and lumber has been hotter than hot. You see cargo pricing has been picking up from l. A. To hong kong. Thats been a big pick nup the last few weeks here. So you see certain pressures right now. But theyre no en masse. And the difference would be if we get input pressures that are really strong , which isnt good for equity markets. And well put pressure on inflation. The dollar being week is a very big picture. Youll find that kamala is doing really well. Hat creeps up into the feds dialogue. Like i said before, i think that game is over. The fed is going have to watch it. They wont be able to manipulate at off. Anna and the fed being called out. Well get to that topic of conversation and get more of coles strategy. Across the bloomberg says the ecbb, this is coming through an email state from the e. C. B. And many have. And says this just fice leverage ratio relief. To some extent a lot has been expected to keep lending, to assist government to keep the money going where it is requested. And a lot of restrictions have been put on banks in terms of the dividends. Lots of pay out and seriously. Well, here theyre getting a little bit of a break allowing temporary refleef banks leverage ratio. Banks can benefit from leverage ratio until june the 22nd. I guess of next year. Thats another line coming through the usbc we take a look at cole smeeds stock picks. And why hes shunning one of this years stock market challenge. This is bloomberg. Anna welcome back. This is the European Market open. European markets down by just over 1 . U. S. Futures point to the down side. Lets get back to our conversation with cole smeed at smeed capital. Who is with us. You talked moments ago how housing and cards have bounced back really well. And yet, youre not buying tesla. Where do you go for exposure . Yeah, i mean, the biggest problem is the u. S. Automakers dont do as good a job as other people out in the world. You want to be part of the company historically speaking. On the housing side the housing business here has been fabulous. And thats something people didnt expect coming out of the lockdowns. And the interesting part is because of the just that position where we dont have enough blue color trades inputs are not in a place where you can grow Housing Starts 25 in a year. Its fairly impossible because of the supply constraint. O what that means theyre r theyre looking able to grow at 10 to 15 . It could be some private illeders. Youre not going to be able o get one of them thats too dumb. Youre too tight on the supply side. It takes a sick la cool and makes its more consistent. There are dumb rooms for marks because of the supply. And so what kind of returns would you make about housing given that supply will be so important and mainly avoid dumb behavior. Yeah, its a great question. , mean, i could put up numbers but i think it would be silly. Lets say a builder like lenar who we own can grow their housing 10 a year. Well, the translation it would not be surprising for them profit. 5 so most of the returns are stock markets looking at u. S. Stocks are going to come down here with who grows earnings . Theyre going to reduce returns. So were not coming to investors say, hey, these housing stocks are sickically call. Normally they trade it to 10, 14 times. No, were coming to them saying there is a compounded earnings gross story in here that you dont have to worry about getting higher or lower multiples. Most of the returns will come toust earnings which is different in the last three or four years where the entire turn came down buybacks or multiples. Anna in terms of picking the next few winners, you talk about survivorship bias. What has the race to survive turnover last few months taught b us about the robustness of the many sectors . Its a great question. The perfect picture of survivorship. I mentioned analyzing play plane coming from. And everyone wanted to look where the bullets were. The planes that you got back, you couldnt analyze the data. Thats a perfect picture for todays equity mark. The survivors, theyre just the survivors but they dont teach you anything because the survivors never do. I. B. M. Was the Largest Company in america. All it told you was you that it was big. And you wont up 10 years later, he did terrible during that 10year stretch. So what is going on right now . That bias is setting up people and investors like youve never seen. But doesnt go ahead. But does it tell you something about Balance Sheet resilience, quality of management . Do they give you those clues. It features you to look in the back in the rearview mirror. Theres a great part to this is that human cant change. We think there are some people in economic theory and Behavioral Finance that think their tools make them smarter. Thats a flatlie because they buy low and they sell lowful 50 years from now, im going to be able to is it here on your guys program. Like i said, thats what were dealing with right now. The performance chasers got a chance to do a half a trillion dollars of call buying. Just to give you a sense it was only 100 billion in the 1990s. This is no different than any other. Its just that the first time at my age group, the millenials ave done this to the point where they make themselves poorer. A lot to make. Clole be conversationing with his conversation at 9 00 a. M. U. K. Time. So after this program head to bloomberg radio. Lets go to Bloomberg Business flash. Thanks, an avement theyre ontinuing a way to bolster the sfer. They may issue new debt or equity. Its been particularly hard hit with the chap rones down over 2 3 and the debt down graded further into junk. Its selling its unit to the fresh lower price than the two sides agree. The new terms are based on a reduced ant value for the unit down 350 million. Thinking of buying a new car . European car sales plunged by near le a fifth dashing hopes of a recovery. It suggests that the market could end up depressed. It snapped a threemonth streak is easing sup flies. In july they only fell 3. 7 . Thats your Bloomberg Business flash. Nna . Anna well talk about the european Banking Sector as e. C. B. Allows temporary release. This has to do with the response to covid19. More on u. S. And european banks shortly. This is bloomberg. Thrilled with the reception. We started getting our Institutional Ownership a year ago. This is not something of the last couple of weeks. We had people, you know, buy into it like we did earlier, january, february time frame. Snowflake is a vetted company. By the time we got to the i. P. O. It was real illhigh conviction into buying into the offering. So were thrilled with the way things have gone this week. So talk about convictions shares more than doubling. 253. Prior you priced at do you have any concern that youve given the bankers a little bit too much here . The assumption is always that we could have sold the entire offering at the number that we closed that. And obviously, theres such a thing as the demand curve. You know, theres always investors that are willing to, you know, buy some number of shares at higher prices. But you know, as you know the i. P. O. Is a price discovery process. And we were after a very specific set of institutional investors, people that can hold multibillion dollar positions and are willing to hold it for five k 10 years. And people who dont chase momentum either up or down. Thats how we landed on our fries. Its not unusual for a price to get chased up but momentum and retail and so on and so forth. Theres a lot of noise to it. So the idea that we could have sold the whole thing at the price that we closed i dont think is reasonable. Is there a lesson for some of the other Companies Looking to go out of the gate. Weve got huge public debuts expected for some other Huge Companies in silicon valuey. Air b b. Any advice . I think its hard for people to price a high growth asset because how fast is this going to grow into its valuation, right . So you need to do a lot of work with investors because they have to make a longterm bet. This is not a 12year deal. And they need to understand the story extremely the whole be able to do that. They were reasons why hanging on for dear life. We slowed things down a bit today. Anna investors are seeing an opportunity here to disrupt amazon because what you offer is basically your own version of a data warehouse. Amazon does have a similar product. What do you have on them . Well, you know, we have the whole industry is really a product that was built from the ground up. Clean sheet of paper. By a group of people that were some of the worlds greatest data base technology architecture. Also, what is lacking is time and one that gets completely redesigned and reimagined for the computer. And its something that innovates on multiple vectors at once. You compare that to what other people are offering out there. Theyre trying to do that. Designed for machine computing to the cloud. Thats sort of you see going on. Its incredibly powerful given the underlying form. We only run 100. We have zero legacy in terms of older machine architectures. Anna that was the snowflake german and c. E. O. Frank sloetman. Its a euphoric i. B. O. Which turned them into a business now more valuable than uber, del and general motors. Banks from cities hsbc has tried to slash their workforce. And danny burger. I want to start with some headlines coming out of the e. C. B. Theyre giving lenders some semp rare relief when it comes to their ratio. A way to judge how lyde these are. It looks like total assets. The total assets can shrink. Theyre not going to get a penalty for homeding cash at the central bank. Right now, as of the end of march 202, their level ratio was about 5. 36 . Its expected that this move will shave about. 3 Percentage Points off of that leverage ratio. But theres other trouble in store in banks. This is what you were talking about. Job cuts coming delout the industry. Now, at about 60,000 job cuts that are planned for this year, we are well on base to exceed last years level of job cuts. That means this year will see the biggest termination of lender workforces since 2015. They want to save and especially if they have these lone losses. You consumers who arent spending as much. We have leg latory costs to keep up with. These banks are betting on. When you look at where these cuts are coming from, the majority is europe. Its no secret that european banks have been in pain. The e. C. B. Announcing that. It looks like 78 of these cuts are coming from lenders who are in basements. The u. S. Len door is a little bit more immune. But whats in this european portion, 35,000 are coming from hsbc with the cuts announced in february. Thats where most of them are coming from, anna. Anna e. C. B. Allowing cuts. And its brought forward to assist globals we economy. Lets get ready for the next part of the company. A professor will be joining us in just a few minutes time. This is this is bloomberg. So youre a small business, or 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. Anna welcome back to Bloomberg Markets european open 30 minutes into a trading session that is negative for European Equity markets, off lows, thoy ugh. We have got other markets moving to the downside in europe. U. S. Futures also point lower. All ine off lows reaction to the fed and their assessments of the u. S. Economy. Lets get to the sector picture across equity markets. The worst sector is banks. We had a headline around the ecb and the support they are going to offer to banks in the form of giving them a lighter touch when it comes to leverage ratios. We have not seen Much Movement there. Just a bit of breaking news, lets get to that around uber. Seek a partial sale of its 6. 3 billion stake d. D. It is set to seek a partial sale didi. It is set to seek a partial sale. Softbank is involved in the discussions for uber to sell its stock, according to people familiar with the matter at the moment. Lets get a bloomberg first word news update. The Federal Reserve sees rates staying near zero for at least three years. At its last meeting before the president ial election, the central bank vowed to delay any hiking until the u. S. Gets to maximum employment and inflation. President donald trump is not happy with what he has heard about the terms of the oracletik tok deal. Sources have told bloomberg that the Top White House officials have raised concerns about the proposal. They say it falls short of Satisfying National Security concerns. Democratic president ial nominee joe biden is warning about the impact of the latest brexit plans on a potential trade deal. He says on agreement depends on the continued respect for the Northern Ireland peace protest and the good friday agreement. The governments planned may make other deals more tricky. Global news 24 hours a day, onair and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna laura wright in london. Oxford biomedica expects to receive additional revenues in excess of 35 Million Pounds until the end of 2021 surrounding the coronavirus. If the if they find, vaccine that they are producing for coronavirus is continued into 2021. Company, alongy with Oxford University and astrazeneca, as part of a partnership developing a vaccine for covid19. John dawson is the ceo of Oxford Biomedica and he joins us right now. Oxford biomedica involved in the manufacture here, not the testing of this vaccine at this point. You are already manufacturing it. Can you give us any insight into how that is going . Were there recently any hurdles . What way through the order you of insight into how the manufacturing process is going . John we have been guarded about that but it is going extremely well. Produce batches throughout 2020 into 2021. We will play a big part in supply. We are very excited about this and really pleased to be playing a part in the pandemic and excited to drive this forward. Anna can you give us any sense of the size and scope of your involvement in what is a fascinating and important global effort . John our part is to make the drug effectively. We were fortuitously just finishing up a new manufacturing plant when the pandemic hit in q1. We have some capacity in our general manufacturing suites. We are part of that consortium. They contracted us to work throughout 2020 and 2021. We will be doing probably tens of millions of doses. Anna i know that this vaccine is being produced at risk, in the sense of financial risk. The trials are ongoing. ,verybody hopes that this drug this vaccine will be successful, but there is financial risk i suppose. Is the risk yours, astrazenecas, is it shared . Batches Going Forward and that will be the size of batches. We would have an an advantage. We have done a bit of work which we have been paid for as well. We are doing this because we want to play a part in fighting the pandemic. Anna important to make that point. In terms of the rest of your business, and what you do on a ytoday business, obviously you have scaled up, anticipating more partnerships. Are young to be going to keep up that pace of additions . John of course. We are working around a vaccine around a pandemic here. Thats what we do day by day, take an opportunistic approach to try to help the fight against the pandemic, our core business and our partners. Anna you balance your own gene alsoell therapies and providing manufacturing facilities to other partners that want to use your vector delivery mechanism. What balance of those two do you want in the future . This seems to offer quite different revenue streams, i suppose. John we started many years ago as a product company. People found what we did very attractive and tried to do vector manufacturing. We have some fantastic partners. Weve balanced that with the drugs as well. We did a great deal in 2018. We have the choice in each to keep the portfolio inhouse and do it ourselves. One of the big, important factors you have to think about in gene therapy is manufacturing. Runningthat, which is extremely well. We lead the world in vector delivery. We have that part sorted already because we do it so well. Anna talking of the partnerships that you have, i think at one point, novartis was the source of more than half of your revenue. How have you managed to diversify the number of partners that youre getting money from . John well, its actually performance driven. It has made people stand back and think how good we are at what we do. We have a lot of approaches. Its been an interesting year. Weve done quite a few deals since then. I think its interesting how you can see our business practice changing. Its great to do it face to face. We do learn a bit about how we work in the future as well. Anna for those who dont follow the gene and cell therapy industry daily, how big do you think it can get . How big can this sector be compared to where we are now . John it can be a lot bigger. We built our new factory based on the fact that we saw demand. That would be 800 million at least by 2026, and we believe in having at least one third of that, maybe a bit more. We see a huge market, evergrowing. We see this growing. Anna john, thank you very much. John good to talk to you. Thank you. Anna john dawson, the ceo of Oxford Biomedica to talk to us about results and that partnership with astrazeneca. A brexit compromise, sort of. Boris johnson has made a key concession to members of his own party to get the controversial internal markets bill through parliament. We will speak to one of the draft laws critics, former conservative leader Michael Howard. This is bloomberg. Anna welcome back to Bloomberg Markets european open 42 minutes into thursdays trading session. European equity markets down by 0. 9 . Breaking news coming through. China considering a proposal to boost clean energy in it fiveyear plan. We heard from the European Commission president , ursula von der leyen, about plans for the climate front in this part of the world for the european union. And then Commerce Bank retail set another red headline on the bloomberg. 8 42 in london. Lets gay Bloomberg Business flash. The latest version of sonys gaming console, the playstation 5, will go on sale november 12 in the u. S. For 500. That matches the price of microsofts upcoming series acts as the two Companies Battle for market share. Historically, the less expensive systems sell more, driving an increase in revenue from games. A citigroup employee has been placed on paid leave pending an investigation after revelations he operated a prominent qanon Conspiracy Theory website. A Fact Checking service identified him as running the site, which has since been shut down. No specific comments from the employee or citigroup. Citigroup says the employee needs approval for any outside business activities. Rollsroyce is continuing to think of ways to bolster its coffers after the pandemic slump in aviation revenue. The u. K. Maker may issue more debt or equity. It has been particularly hardhit this year with its share price down over 2 3 and its debt downgraded further into junk. Thats your Bloomberg Business flash. Anna lower right in london. Boris johnson has made a key concession to try to get his controversial internal markets bill through parliament. After a meeting with members of his own party, who were threatening to rebel against him, the Prime Minister agreed to give mps a veto over whether the government can override parts of the brexit divorce deal. The plan has also come under fire by senior members of the house of lords. Lets speak to one of them now. Joining us now is Michael Howard , lord howard, conservative peer and former leader of the conservative party. Lord howard, good to speak to you. Lord howard good morning. Anna assuming you have heard the proposal from the government, have you heard enough to make you change your mind . Lord howard no. Anna you havent heard or you dont like the details . Lord howard i know what the proposal is, but its not enough to make me change my mind. Anna is there anything that the government can do with this internal markets bill that would make you change your mind . Lord howard yes. My objection to this bill is that it invites parliament to use its sovereignty, parliament is undoubtedly sovereign in the united kingdom, but it invites parliament to use its sovereignty to break international law. I dont think parliament should be asked to do that. I dont think the government should have asked parliament to do that. The only thing that would satisfy me at the moment is if the government were to withdraw from the bill those parts of it which would breach international law. Not all the bill is against international law, but some parts of it are. Anna do you think that is a view shared by some in the house of commons in your party who have said that they will not vote for the bill . Lord howard i really have no idea. I mean, it sounds, from what i heard last night on the media, as though a number of those who have previously said they were unhappy are now content. Whether there are some of them who agree with me, i just dont know. Anna there was a mechanism written into the Withdrawal Agreement for solving differences that may be had and have also been solved through the early parts of negotiation. Do you know why the government has not gone down the route of trying to use that to resolve these tensions . Lord howard no, i dont. You put your finger on it. Have to be used. There is an article which commits the u. K. And eu only to using those procedures to resolve any disputes. And thatsle 168, what i think the government should be doing if it cannot Reach Agreement in the joint committee. The procedure set out and the Withdrawal Agreement is to go to independent arbitration. Thats what the government should be doing, not threatening to break the law. Anna why do you think the government has chosen this path . Do you think they like the heat that this creates . Lord howard im afraid that you have to ask the government this question. I am not able to see into Boris Johnsons mind. Anna what about the response that this bill will get if it does get to the house of lords . What will be the approach that will be taken in the house of lords, do you think . Will you try to stop it . Will it be deemed to have been in the manifesto or not at all . John lord howard the manifesto was the election on the manifesto were on the basis of this Withdrawal Agreement. This Withdrawal Agreement was in october. The government was fighting reelection on the basis of this Withdrawal Agreement. I think the bill will have a really rough passage in the house of lords. It may be that last nights concession will satisfy some of my fellow conservatives, but the conservative party does not have a majority in the house of lords. I think virtually every peer who a conservative will probably vote against it isnt conservative will probably vote against it and quite a few conservatives, including myself. Anna do you think this will be delayed in a meaningful fashion in the house of lords . Lord howard i think thats highly likely. ,nna will that cause trouble navigating the movement into New Territory next year . What will be the net effect to what happens to the house of lords . Lord howard i think the lords, as far as i can see, they have the power to block it, not permanently, but for a year. Normally, what happens is that in the end, the lords give way. I think on this issue, which is so fundamental, i think the lords may well insist on blocking the bill. Anna clearly, lord howard, you have objections which are based on principle and around the legality of this. Others are concerned about what this does to the prospects of a trade deal with the United States. Joe biden has said that he is concerned about the good friday agreement. Do you think that the internal markets bill is at risk of jeopardizing future trade deals, in particular with the u. S. . Lord howard there is clearly concerns in the United States. To be perfectly honest, in my opinion, those concerns are misplaced. I think the good friday agreement is a red herring and all this. In my opinion, there was never likely to be a hard border on the island of ireland. The head of her majestys revenue and customs, who is the principal Civil Servant in the u. K. Dealing with customs arrangements, is on the record as saying that even if there is no deal at all, there will be no need for any infrastructure at the border on the island of ireland. In my opinion, thats a bit of a red herring. My objection is not to do with the good friday agreement. I am in favor of the good friday agreement. I dont think it is at all imperiled by this bill. It invites parliament to break international lot. Anna thank you very much, Michael Howard, lord howard, former leader of the conservative party. 50 minutes into european trading this morning. Up next, how much more stimulus derisk assets need . We will put that do risk assets need . We will put that question to laura cooper. This is bloomberg. Anna welcome back. This is Bloomberg Markets european open. 53 minutes of the trading session that shows the negative. A real negative response from global risk assets to what we heard from the fed yesterday. Does that make sense to you . I certainly dont think that is the catalyst for this retrenchment in risk assets. We saw investors nerves were already afraid based on the price action that we saw earlier when risk assets were under pressure. I think what we saw earlier this week was a case of this wait and see, awaiting to see if the fed could meet dovish market expectations. More stimulus is likely not in the pipeline. Assets that have been propped up on stimulus reacted. Anna how much stimulus do we think that the risk assets really need . Do you think markets are hoping, expecting that they get something on the fiscal side from the u. S. . I think thats really the question. Its less a question of how much more stimulus is needed, but really where its going to come from. I think the fact that we are seeing this last dovish messaging across Central Banks is just shining the light on the gap in terms of fiscal stimulus. So yes, rates are on hold in the u. S. A are not going to see potentially greater amount of bond purchasing their. Really, that lies on the fiscal front. On quite shaky ground, the prospects still look good. Markets are grasping for the next catalyst in terms of propelling this buy the dip mentality that has prevailed. Clearly, that is falling short because we are not seeing these positive signs that we are going to see the stimulus needed to have this economic recovery be sustained. Anna i talked to a guest who said he thought the fed would be called out in the years ahead with rates too low. It is interesting, the fact that average inflation targeting, what does that mean . We dont have a clear guidance about inflation. There is the risk that if we do potentially see inflation sustained about that 2 target, if we do see full employment, then the fed could be caug behind the curveh. I think at this stage come inflation remains quite elusive. Yes, we have this ample liquidity in the system. Thats not being funneled to the real economy. We see stage, until privatesector impulse of firms and consumers going out and spending, we really are not going to see those price pressures for quite some time. From the fed, they are able to take this easing stance for some time, but it remains a tell risk Going Forward. Anna thanks for joining us. Laura cooper. That is it for the European Market open. Stay with bloomberg television. Surveillance is up next. European markets, risk markets to the downside. Down 0. 9 on the stoxx 600. We are now fairly flat on the dollar index overnight. We still see u. S. Futures under pressure. Nasdaq futures were under 2 , now down 1. 5 or so. Surveillance will build you up to that. This is Bloomberg Francine three more years. The fed predicted rates will stay near zero through at least 2023, but jay powells caution ways on stacks. Expected dovish noises from the central bank today. Boris johnson makes a key concession in order to get as brexit gilder parliament. President trump contradicts his health officials, saying a vaccine could come by october. Global coronavirus cases are 30 million as the death toll approaches one million. Welcome to bloomberg