I cannot underscore enough the originality of what was being accomplished yesterday, francine. I was sitting there with michael mckee, and his press conference question was superb. They are all dealing with what to do with inflation at no aggregate demand. It is a fascinating time. Francine we will have plenty more on that, but now lets get to first word news in new york city with ritika gupta. Ritika President Trump has slapped down some of his top health officials. He contradicted them at a news conference, saying that a Coronavirus Vaccine could be distribute it widely to the public by as early as next month. Cdc director Robert Redfield told congress that the vaccine would be distributed in the second and Third Quarter of next year. The president called those comments a mistake. At least one person was killed and hundreds were rescued after Hurricane Sally came ashore near the floridaalabama line. Heavy rain swamped pensacola, florida, and other cities in the region. Sally is now a tropical storm. It could drop up to a foot of rain in parts of alabama and georgia today. Attorney general william barr says the black lives Matter Movement doesnt care about black lives. Instead, barr says it wants to use africanamericans killed by police as props to advance its political agenda. He also suggested the issue of black on black crime is being overshadowed by Police Killings of minorities. Dealls of that proposed between oracle and tiktok are coming out. Merck has learned that oracle we get full access to bloomberg has learned that oracle will get full access to tiktoks source code. The Administration Still has not signed off on the agreement. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom thanks so much. Curt related risk off here. Equities, bonds, currencies, commodities. 2. 46. Ures vics up two big fears the vics up to big figures. Bonds adapt and adjust to what we saw yesterday from chairman powell. 10year yield remarkably stable,. 68 . Coming in off the enthusiasm yesterday. Turkish lira, it is off the radar. Ian bremmer on later. Im not going to waste dr. Bremmers time with lire, but lire is making news right now, weaker. Francine im looking at dollar steady, treasuries picking up. I think a lot of markets are focusing on the fact that it was pretty dovish for the fed chair jay powell, and he highlighted the uncertainty about the economic rebound. In europe it feels like they are picking up on that instead of the more specific guidance, which could maybe make his life a bit easier. Also looking at automakers in europe, they are down after data showed european car sales plunged by nearly a fifth for the month of august. In his news conference, fed chair jay powell says the economic recovery has been faster than feared, but the path ahead remains highly uncertain. We believe particularly this very strong Forward Guidance, very powerful Forward Guidance we have announced today provide strong support for the economy. Rates will remain accommodative until the economy as far along in its recovery, and that should be a powerful statement and supporting economic activity, with inflation running persistently below percent, we will aim to achieve inflation over time. So that it averages 2 over time remainsterm inflation over 2 . The labor market has improved, but it will be some time getting to full employment. The details are for congress, not for the fed. We believe the strong policy guidance we are providing today will serve the economy well by promoting our goals through the many possible paths the recovery may take. Francine lets get to joyce chang. Of jayd you make powells comments. Will it make it easier to reach those targets . Joyce i think all eyes are on the fiscal discussions in the congress. Youre seeing little or no progress on the negotiations here. You are running out of time. The house is supposed to recess in october on october 2, the senate on october 9, but mcconnell has said he might send everybody home early, maybe the last week of september, so there is a real possibility that you dont see something done on the fiscal side. The skinny bill, the 500 billion proposed by the senate, they could not get the super majority. Democratt get a single to crossover, so i think there is immediate focus on this. In our focus we had been to 1. 5ing 1 trillion that is that, so one of the immediate questions. Turning more to the fed statements, i think they have very much telegraphed this is something where the unemployment it iss are key here, and also multiple years. Before they deal with the first formal review, that will probably be like five years before you do even a review, so i think they have telegraphed this. There is capacity in the fed facilities which are not being fully utilized to do more, but the Forward Guidances, the path that i think they want to go, and the facilities they have already laid out if more needs to be done. What jay powell is talking about with the economy, does he have to deploy much more aggressive tools in order to ensure recovery . We have the most synchronized dramatic swing up and down in history, and what the market is focusing on right now is, is there a risk of a doubledip . Is it early 2021 . What ammunition will be left at that point in time . Cutting rates is not much of an option given how low we are right now. So i think that the fed will continue to rely on the Forward Guidance. The qe measures they have in place, i still see the possibility of the negative rates in the u. S. As being very low, and yield curves something they would not go to either. So i think you are going to see more of the type of messaging we have seen, the focus by the marketplace is on the fiscal package now. It will turn more to the election in the coming week, and the question is, is there a risk of a double dip that is out there that could mean your restrict could mean your restructuring of the Balance Sheet . Tom i love that im starting my morning with joyce chang here. This is going to be a two hour conversation, so make yourself comfortable. Lets go to aggregate demand right now. Theory,y, all of the monetary and fiscal come is about nothing more than aggregate demand. Does bruce kasman think the demand is going to be there . Joyce for this quarter you have had considerable pentup demand, and your good spending really good overshoot. So the question is, if it is going to spark a turn, will you see a rebound in capex . That is the question that the jury is really out on this. So you have had this historic surge, all 39 countries that we follow falling into this recession with a dramatic rebound, a surge in manufacturing, and the good sector activity that is underway. But whether that will result in a rebound, i think remains to be seen. Things with joyce chang here, and one of them is my essay of two summers ago, talking about the forecast and the model of the vector to lower interest rates. Is that model still in place, joyce chang . One ofhave been the casualties of all of this is going to be that that 60 40 Asset Allocation is one of the casualties of covid19. We have been looking at, for the last 45 years, if you did that traditional mix, you were getting about 10 return. We are looking at now 3. 5 percent. Whether you will have to do more in the equity markets, and we are seeing that play out this year, or some more of the hybrid fixed income that can give you more yield. And did very much play out, now we are talking about the consequences of that and what it means with respect to traditional Asset Allocation formula that has been in place for 45 years and whether you will have to see a decided shift away from that. Francine there are a lot of correlations out there that we never used to have in the past. What will it take for some of those bizarre correlations to break . All, i think first of what the development with the developed markets have done, the Central Banks, they have blurred the line on capital allocation. You would have to see more of a market shift away from policy. If anything, the central pings are laying out frameworks that really extend this into the mediumterm. That is still not going to solve the ultimate problem that we started talking about, that we see potential growth coming down further from here. And will we actually get that rebounding andex business spending regarding, now that we have had these vshaped all the way down and all the way up. Inflation is the other question, that inflation should near the growth volatility as good prices have been happening. Tom i really want to point out, on potential growth, our colleague, michael feroli, way out front on a reduced potential gdp, three or four years ago as well. This is fabulous. Joyce chang of j. P. Morgan in this hour. In our next hour, a substantial onversation with dr. Bremmer the american election. Ian bremmer on the changed new map of international relations. This is bloomberg. Good morning. Futures at 42. Surveillance, Francine Lacqua and tom keene. Lust is are out off the fed lots to talk about lots to talk about. Joyce chang to get your global wall street day started if i can get my bowtie straight there it is. Francine is going to take notes because she is good at latin. Im not. Joyce chang, i want to talk about the dissents. Neel kashkari yesterday, this is fed, a fedan ex post that wants to get in front of a debate or a fed that wants to wait to see the inflation actually there. Neel kashkari really took issue with the phds looking at the vectors changing as a time to act where he wants to wait to see inflation. Which will it ultimately be . I think core cpi inflation, we expected to settle half a percentage point lower as a result of the buildup in slack. This persistent slack does have the potential to the press gdp growth. I think you are going to see inflation mirror the growth haveility as good prices rebounded in the second half of the year. We saw some of that. I think the fed messaging is very clear. The low core inflation poses a very significant challenge to the countrys Central Banks. Tom this is so critical. It goes to lagarde and the bundesbank as well. Do we have a new policy where we are not going to raise rates until there is the actuality of tangible inflation . Joyce i think they are going to air more on that side. What covid19 has done has pointed to the credit easing policies with response to a sustained inflation under shoot. That is where the messaging has been going for the last six months, and the framework and the way they have gone to average inflation targeting really enforces that. I do think that this is a major paradigm shift for what the Central Banks have been doing, prepared. Tand they have laid out the benchmarks that they want to see more of a normalization in the unemployment rates. That normalization, what you are really facing here, is an incomplete recovery. We still think that relative to the prepandemic past, you are going to help local gdp, that she will have local gdp that is 4. 3 lower than it was, at the end of next year. Francine what does it mean for other Central Banks . The bank of england has a whole other set of problems right now. Joyce i think the bank of england has a whole other set of problems, and then you have the brexit risk as well. The question has been, are you going to see more upscaling of qe that needs to occur from the bank of england and going to negative rates . That is really the debate that is going on right now. But i think all eyes are on brexit right now after having appeared where there was not a lot of focus on this. And looking at the currencies as well. There is a heightened concern that you have the binary scenario in place. Will you get this barebones freetrade agreement, or could you have something that is worse with respect to what the outcome is, you know, and i mean the u. K. Is warning that the withdrawal cannot be treated as isrosanct if a trade deal not forthcoming. We see on the fiscal side, the timeline is lapsing on the fiscal package that is under discussion now. Francine given what we know about the bank of england and how you lay down brexit, what would be an ideal time for governor bailey to actually put extra stimulus . Joyce i think they are looking budget, the tax increases. It also seems it is harder in the u. K. Compared to some of the other countries in europe, controlling the rise in the covid19 section rates. So i think there is the brexit timeline, the fall budget. There is also what happens with covid, and as we get to this deadline, do you see both sides coming to some type of accommodation where you sort of get a barebones freetrade agreement . A lot a focus is on the currency right now as well, because you see further declines in the spot if there is not a deal. We are still looking at sterling, a Real Effective Exchange rate, 2 stronger than where it was post referendum. Tom joyce chang, is the phillips curve dead . Joyce i think right now you , andthe persistent slack all the dislocation you have had in the sectors is going to depress gdp growth, and that points to core cpi inflation settling lower as a result of that buildup in slack. And you are not going to work through this very quickly with respect to the global gdp growth. I think youre looking at potential growth coming down here. We have already come in our estimate on emerging markets, taken the potential growth forecast down by about. 4 because we see china slowing from 6 to 4 by the end of the decade. But it iss not dead, not going to be the nearterm focus right now, given the bigger macro issues we are discussing. So joyce chang, thank you much. Really appreciate it. Joyce chang will continue with us through this hour, and ian bremmer again with us later. As we drive forward on economics, all the u. S. Economy with barclays, michael gave will join us. For that later today. Futures 37. The vix up 1. 670 points. This is bloomberg. Ritika this is bloomberg surveillance. Here is your Bloomberg Business flash. It was a stock market a view to remember. Shares of the software company. Nowflake snowflake had a market cap of 17 billion, making more valuable than uber, dell, and general motors. In europe, automakers hit a stumbling block on their road to recovery. After surprisingly weak sales last month, new car registration punched 80 18 . Some of the subsidies have now ended. Barrel,ped below 40 a the government reporting a surprise decline in u. S. Crude stockpiled. That is your latest lumber business flash. Tom . Francine . True way to the tape today interrelated the dow went up 300 points off the fed release yesterday, and then settled back down to flat off of the Powell Comments in the press. We go back down further, a 250 points 254 points right now. 25,683. As francine mentioned earlier, the dollar turning. Francine looking at european stocks, they are suffering declines across all Industry Groups after the jay powell press conference. Automakers slumping after data showed european car sales plunged nearly a fifth in august. Coming up on bloomberg markets, will askone off we him about correlations in the markets. That is coming up at 10 00 a. M. In new york, that is 3 00 p. M. In london, and this is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Francine we were talking about the fed and the Monetary Policy across the bank of england. Joyce, what do you do with emerging markets right now . Joyce co. I think it has been a tale of two stores. The northeast the north Asian Countries led by china are recovering faster. But we are seeing questions about what are you facing, are you facing a loss decade in latin america which has underperformed . There was mention of turkey earlier. We are seeing doubledigit inflation as you have had the fx path to inflation. We have to take the we are you have a lot of variation depending on the region in north asia, likely to likely to grow more positively, but latin america is andg to underperform here, that is coming out in the inflation numbers. Have they seen a better overall handling of covid19 . Joyce co. You have had real prising joyce you have had real surprising it was Global Demand for medical surprise supplies, the pbe for personal protective equipment. First in an first out, china of the risks slowing as the year progresses. It is at an enormous cost, though. You could have china separate debt increased by 25 Percentage Points just this year. I think part of this is the management of covid, but part of it is also the manufacturing, the expert numbers have been a lot stronger than expected and you have these big current account surpluses right now in china as well. Tom joyce, the great debate is when does International Pop . This lag, lag, lag, and where international has done better, how do you advise j. P. Morgan Wealth Management on the when we will see a shift from u. S. Domestic over to International Investment . Joyce well, it has been winner takes all for the tech sector here, and we are estimating that cap, 45 in the market of the market cap if you spell that out in gdp terms, about 15 of global gdp. You have had this case shipped to recovery with the tech this k shaped recovery with the tech sector take all. Part of it is because you have had the companys here have really been able to create a liquidity buffer and build cash balances. We are actually back to 2 trillion where we were before balances. The cash we have also had to take the Corporate BondMarket Forecast on Capital Raising we had it at 1. 6 trillion, we took it up issuance llion of 1. 70 5 trillion of issuance. Usually august is debt quiet. It was a very active Market Capital activity. Companies have been able to use this window to shore up the cash balances here, bring them back to where they were, but you are seeing it very much concentrated in one sector. So it still has been winner takes all for the tech sector. That has been the story this year, and it could well continue for the remainder of the year. Tom do you see consolidation . If we cannot find growth i am still not used to the idea of joyce chang telling me, of trying to gdp under 3 , it is just a simple path all of your across all of your Equity Analysis that we will see combinations . That whatl, i think is really looking at record Second Quarter down, record Third Quarter up. What does the Fourth Quarter hold, and how are we going to see some of these shield political risks such as the elections play out . Having us a sign on whether the doubledip is a possibility that you have to give more attention to, rather than the numbers this quarter. I think that Market Participants are going to look for stability in the credit markets, and they are going to expect that Central Banks play a role in that and ensuring accommodations. The risk of a doubledip is what we are really focused on as we head towards the end of the year keep emphasizing this is an incomplete recovery. Even though we have had the sink and iced growth swings, there are huge gaps in some of the regional performance, and you see that in emerging markets in particular, but relative to the precrisis path, we see potential growth coming down, that you are well below, a bigger hit than what the financial crisis was on gdp. Much,ne thank you so joyce chang staying with us. Lets get to first word news in new york city with ritika gupta. Ritika president says one of his top officials is wrong when it comes to the Coronavirus Vaccine. Cdc director Robert Redfield said the vaccine will be distributed in late spring or early summer next year. Trump disagrees. He says the shot will be available as early as october. President trump is moving closer to a bipartisan plan for more stimulus spending. The president said he likes the trillione, 1. 5 proposal of a Bipartisan Group of house members. He urged Senate Republicans to go for the higher numbers. There has been a months long deadlock over the Coronavirus Relief bill. Boris johnson has made a key concession over his controversial brexit lawbreaking plan. He agreed to give the house of commons veto power over whether his government can override parts of the brexit divorce treaty. Members of his own conservative party have threatened to rebel against johnson. Is harder to solve now, the coronavirus pandemic or Climate Change . Erik schatzker posed a question to billionaire philanthropist bill gates. Bill Climate Change is much harder, and the damage that will be done every year will be greater than what we have seen during this pandemic. So i hope it is a wakeup call to think, ok, what else have we been warned about . Does it take what percentage of Government Resources with that , and Holding People to account that even things that take a long time, we have to get started now on. Ritika you can catch that full conversation from new york time. More throughout the day from the bloomberg green festival. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom . Francine . Make sure you catch francine make sure you catch the bloomberg fest double the bloomberg green festival event. Today includes the will indicates the Melinda Gates foundation cochair, bill gates. That is 8 00 a. M. In new york, 1 00 p. M. In london, and this is bloomberg. Mallika snowflake saw fork stock market to be. Uber. Re valuable than fill 3. 4int billion ipo is the biggest this year. Chief executive franks litman spoke with emily chang about the debut. I was thrilled. We started assembling our Institutional Ownership a little over a year ago. The last couple weeks, we had people buy into an by into an offer we had earlier. Ipo,e time we got to the it was High Conviction into buying 2d offerings. We are thrilled with the way things have gone this week. Shares more than doubling, you priced at more than 20 a share, closed at 253. You lost a lot of money on the table. Thatu have any concerns you have given the bankers too much . Thate assumption is always we could have sold the entire offering at the number we close data. There is such a thing as a demand curve. There are always investors willing to buy some number of shares at higher prices. The ipo is a price discovery process. After a very specific set of institutional investors. People that can hold multibilliondollar positions, we wanted to hold them for four to five years. That is really how we landed on our price. It is not unusual for price to get chased up by momentum players in retail. There is a lot of noise to it. The idea that we could have sold the whole thing for the price we closed at, i do not think is reasonable. That said, is there a lesson here for some of the other companies . Huge public debuts expected for other companies. Airbnb. Any advice . People toard for price high growth assets. Highgrowth assets how fast is it going to grow into its valuation . You have got to do a lot of work with investors because they have to make longterm bets. This is not a 12 month deal. For 37 years. Ng reasons why the stock ran up. Tradingdelayed in because we have no sellers. People were hanging on for dear life. That slowed things down a bit today. Seeing anrs are opportunity here to disrupt iszon because what you offer basically your version of a data warehouse. Amazon has a similar product. What do you have on them . Industrye have on the is a product that was built from the ground up by a group of people who are some of the worlds greatest architects. People who understand the technology really well. Time, welacking this wanted to get completely redesigned for cloud scale computing. A completely different product architecturally. Something based on multiple vectors at once. Compare that to what other people are offering, they are trying to carry legacy Architecture Software designed for machine computing to the cloud. Cant takeut they advantage of cloud scale. That is what you see going on. Snowflake is a deceptive product because it is powerful given the underlying platform. We only run a public cloud. We have zero legacy in terms of overseeing architecture. Mr. Salute been i do not need to go into the ipo. I got nothing. With us, joyce chang of jp morgan. Jp morgan has provided real leadership here. On the manipulated scarcity when somebody goes public, we have seen this for ages in silicon valley. Legit processed initial public offerings, or is it nothing more than the manipulation of arch scarcity by private owners . Broadernk you have got dynamics in play. The first thing i would say is ,n this zero yield the world developed Government Bond market looking at about 70 of this debt having a yield less than 50 basis points. Indexes having a yield of only 1 . Demand because of what is happening in the bond market. That is the first overriding macro point i would make. Everybody sees in the tech sector for every bun has made their lives easier. You had perfect conditions during this pandemic to help the tech sector. You had your work activities occur online. Using all of these new tools. I dont know if i would talk about transactions. Markets, the flows are not saturated yet. Flows are still in negative territory. There is still space here, that is one reason we have been up to taking the s p 500. Joyce, when you look at some of the part and parcel with the furlough scheme sending across the world, do you worry there is going to be bankruptcies of Healthy Companies . At there seeing, looking default rate, the openness of the Capital Market has brought a lot of space to larger companies. Have access to Capital Markets at an alltime record pace. They have built up cash reserves. Rates,oking at default 8 , we think it is going to come in below that. The openness of the Capital Markets has helped give the larger corporate sector, youre going to see questions about what happens to small businesses. Fed facilities have not had to use that much. The amazing thing is you had markets come back. Record issuance using only about 12 billion. It has been more about getting those markets to reopen. You have provided companies with the way in which they have been able to really build up their cash reserves. Tom this has been wonderful. Very generous for you to be here. Chair of Global Research at jp morgan. I want to emphasize i do not think it got enough play. A regional fed meeting yesterday. New york fashion week. One person i want to talk to. Robert work. Buddy thompson. Rebecca ming croft. This is bloomberg. This is bloomberg surveillance. Johnsonnister boris faces a battle in the house of lords over his plan to break International Law over brexit. Michael howard waiting on johnson weighed in on johnson. My objection is that it invites parliament to use its sovereignty, parliament is it invitesbut parliament to use its sovereignty to break International Law. I do not think parliament should be asked 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 that would breach International Law. Enteredof the bill is is against the law, but parts are. Have said your party they will not put for the bill. I have no idea. It sounds, from what i heard a numbert, as though of those who had previously said they were unhappy are now content. Whither there are some of them who agree with me, i do not know. Written was a mechanism o the Withdrawal Agreement the joint committee. Do you know why the government has not gone down the route of trying to use that to resolve these tensions . I do not. You put your finger on it. My whole argument is that those processes have to be used. There is an article in that Withdrawal Agreement which commits both the u. K. And the eu only to using those procedures to resolve any disputes. Article 168. That is what i think the government should be doing. If it cant Reach Agreement in the joint committee, then the procedures set out is to go to independent arbitration. That is what the government should be doing. Why do you think the government has chosen this path . Do you think it likes the heat . Im afraid you have to ask the government. Not able to see into Boris Johnsons mind. What about the response if this bill does get to the house of lords, what will be the approach taken . Will you try to stop it . Will it have been deemed to be in the manifesto, or not at all, and therefore stop with the government is trying to do . The manifesto was the the manifesto was on the basis of the Withdrawal Agreement. This agreement was in october. The government was fighting reelection on the basis of this Withdrawal Agreement. I think it will have a rough passage in the house of lords. It may be last nights concession would 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 conservative would probably vote against it and quite a few conservatives including myself. Franciene . Tom lord howard. Think isqua, i in order. The lords take a different approach than the green lathered house of commons, dont they . The house of commons is political tom riffraff. Franciene even if you dont want to vote for or against, you may be encouraged into it. The house of lords is different. Youre meant to be a political but also see themselves as the guardians of the constitution, which is why be conceited different tone. Tom we will continue. Tom keene in new york. We have an interesting hour coming up. Futures big 36 . A genuine weight to the tape. You are looking at a 500 point move from the enthusiasm statement up 300 out points down flat, no futures 252 on the dow. Losss been a 500 point from the moment of the Statement Released yesterday. Most interesting as well. Dollar flat. Yen 104. 74. Euro weaker. Ian bremmer will join us from eurasia group. We got an email yesterday. We are starting to work on our new years show. This is bloomberg. Tom this morning, chairman path toeighs in on the january 2024. The said forecast, 2023. In this 2020, retail sales suggest a weaker economy. Trump and powell on the same page. Fiscal support is needed now. Redfieldr is in dr. , georgetown medical, walter reed, columbia university, university of maryland. He suggests a vaccine. Dr. Trump benson to disagree. Good morning, this is bloomberg surveillance, from new york and london. I thought lord howard was fascinating about this division of the lords in the commons in the u. K. We have the house in the senate and it is ugly. Do the lords have power to change the political debate of brexit . Francine