End. Reversing what we saw last week, 128 handle on the cable rate. We saw bank of england pushback earlier. Eurodollar, we are trying to get a 116 handle. 11645. The virus is setting the tone for growth in europe. Global covid19 cases are topping 33 million. We are nearing one million in death. Angela merkel warning germany could face more than 19,000 cases by christmas. The u. K. Health minister refused to allow more restrictions despite lawmakers pushing back against government curbs. Joining us from brussels maria, what have we learned about restrictions from different governments . We havent really seen anything new except for what was already announced last week. It has deftly changed in terms of perv Public Perception and tone. Story making headlines across europe is that warning from Angela Merkel that she is concerned about the virus. She is concerned about the number of cases we could see heading into winter and flu season. You have that number narrow there at 90,000 perhaps by christmas. Lagarde today is speaking at European Parliament in front of European Parliament and repeated this idea that we have seen a rebound in the economy, but it depends on coronavirus. The risks are still very much to the downside. This is something that if you have a treatment for it unless you have a treatment for, government is not going able to handle it effectively. Guy maria tadeo joining us from brussels. Has she mentioned, the president Kristi Lagarde currently testifying before the European Parliament in brussels. This is what she said earlier. The impact of the pandemic is being felt across the euro area. People are losing jobs. People are losing income. Businesses are facing difficulties. About the future remain uncertain. I know headline inflation in the zero a stood at minus 0. 2 had is expected to remain negative. Are far away from the goals we have, which is close to but below 2 . We are not complacent. Gdp is onlyal expected to recover to precrisis levels in late 2022. Economic activity rebounded in the third quarter, the recovery remains incomplete, uncertain and uneven. Is jeffrey yu. The numbers are going up rapidly. Kristi lagarde points to the Downside Risks to the economy our markets are this correctly . I think the markets are not giving the euro enough credit right now. It is probably the only region where you have proper fiscal backstops. If you have the Recovery Plan which is ready to be deployed over two years, this seems like if you look at how euro is trading, options are trading mother median term out to look is being factored in. Reason ishat which not going to suffer as much economic scarring, the euro is looking better. On a relative value basis, europe provides upside. Alix do we care about the inflation target . There was an reactive conversation had except for the fed. It is not the fed is you is unanimous. Looking to drop the jobs below 2 to keep it explicitly at 2 . Please hawkish members. At the end of the day, if you look at the forecast, despite the euro being strong, they raised by 10 big figures. They still saw that inflation number heading for 1. 3 towards the end of the forecast horizon. Not great. The direction is ok. Are they going to change that mandate . I think it is too early. Ritika back to what guy you were positive on europe , how high does the case counts for your faith in the ability for europe to whether this better than others have to be . Less about case counts and more about how you manage cases. Economic restriction, is it going to be one dimensional or blunt force . Ben if there is going to harder lockdown, i think one thing europe has which the u. K. Does not have in the u. S. Does not have yet is stronger schemes. T protection we talked to the press about the act to support programs last week, it is not coattail. [indiscernible] even if we do get a strong second wave. I think in terms of economic fallout, europe can handle it better. Alix how much more upside as there for the euro . At 120. N sub challenges the dollar at the end of the year, it depends on how the u. S. Goes especially with alexion volatility. I still see the euro surging and strengthening. I still prefer stronger euro values. The employment numbers are going to be challenging toward the fourth quarter. There are a merchant seeing currencies linked to the canadian dollar. The eurozone may outperform. Brexit we were to see a deal, even as skinny deal, how much with that offset sterlings underperformance that is being generated from high unemployment and less Good Management of the covid situation . See is we are going to perhaps the sequencing of this. We will know about a deal or no deal quickly. In short order. Perhaps within the next three weeks, botero Boris Johnson called for a hard lead online harder deadline on october 16. The official Furlough Program ends in october and the new support scheme comes in. When will businesses actually choose to lay off staff. U. K. Labor market data is lag ready. I think we will see toward the end of november, that number we could start to see the income drop. I do not doubt that if we get a very skinny deal and sterling can trade ok for four to six weeks. For me, there is no opportunity to take a downside. Of course we could get another uturn. Weve got a more fullfledged support package on the fiscal side from the labor market, it doesnt seem like it. Alix Christine Lagarde was testifying in front of you parliament. She says the Exchange Rate is not a policy target for ecb. She has not commenting on levels of euro come a saying they are monitoring them. These are typical responses you would hear from the head of the ecb. When does central bank really care . Dont have an we insane trade target, but there are a lot of bots buts. Levels, it ist about speed. Through 120, they will be ok with that. It would not eek in a forecast. Pushbackhink the stronger. At this point on balance, they are willing to talk and not go beyond talking, that is the pace for depreciation. Guy the eurodollar rate has gone 120116 really quickly. Do you think that run is over . Do think the dollar has potential to strengthen . I think that run is over. We have the kneejerk reaction where the dollar is trading as the safe haven, it is being respite. Regarding side is ucb, they have been on the euro a bit more of late. Riskwe do have the u. S. Ahead as we head into the home stretch of the election. I think that its going to be in question. Investors will look at the yen then the swiss franc. The dollar may need china on that. If inflation rate is stabilized, which is reflected in the ucb forecast. I think that will be enough to let [indiscernible] leave itre going to there. We appreciate your time and input. Jeff yu. Coming up, we take a closer look at the u. K. Economy. No outright scream bloomberg. S guy welcome back. The from london with alix steel. This is the european close. Let me update you on where markets currently sit we are seeing an xt market rally into month end. Unsurprising there is windowdressing going on within portfolios. A bad month for equities. I suspect we are seeing a rebound from portfolios having to buy back into equities. One of the stocks we are seeing today in london is hsbc. Hsbcs biggest shareholder. What im fascinated by here is we have seen the chinese blowing hot and cold on hsbc. 30 was a suggestion out last week from the global times, which many argue is a mouthpiece for the chinese authorities saying it could be added to a list which would be negative. The unrivaled entities list. Would see them down sharply. Now there is a suggestion that maybe paying out insurance is a vote of confidence. Hard to gauge what is happening here. I wonder about the politics, how much more of a business place hsbc was in when they were already getting pushback from doing business in hong kong and china. Notwithstanding the protests, this has made that conversation harder. Still al hsbc is european bank. There is a tiny portion of the Business Done here in the u. K. , the bulk of their Business Done in the u. S. And asia. The only thing i really take away from today, it was like the days when apple was rope apple was whipping around. Do youyou as an investor invest in a business that is being pushed and pulled around like this . Worlds biggest company, moving around by 8 . How as an investor, do you invest . It feels so speculative. It is hard to take a longterm decision. We will kick that around a little bit. Up, Danny Blanchflower to talk more about the labor market. Payroll friday. This is bloomberg. Guy joining me Danny Blanchflower, professor of economics, former member of the external committee. Thank you for joining us today. We were talking a few moments eoff yu, and the shifts we have seen. We are going to see the furlough scheme ending at the end of the month. We now have news from is going to replace this, by what some of the british crash british pets are calling a scheme. Saying it is nowhere near as good and wont have the same effect. What is your view . What is your view . Chancellor has just raised the incentives on firms to fire people. If you think of it, he has raised the cost of labor to firms that are struggling. What you can do in these schemes like the germans have is protect firms, allow them to keep workers on, perhaps give them less hours than they normally would. What have you done as you raised the cost of labor and raised the incentive on them to fire people at a time where the government has basically pulled out public spending from the economy. Spending is less. Plausibleade it less to lots of the firms that were surviving with this money to survive. What you have done is you have created the perfect storm. You kill off small firms, the firms died because of what you have done. The firms that survive are better off by just firing people rather than taking these folks on. What he has essentially done is found for ae few months and now we have to go back to the thing where we worry about paying for things. Everything here that is right. I spec to see a huge rise in unemployment. The only question is how much . We saw workers on furlough schemes. Those numbers came down somewhat, but the question is . An we firms can they survive if people change their behavior especially going into lockdown this makes no sense. Alix what are the longerterm implications of that. We have seen small and mediumsize businesses go out of business, and then you have big guys and conglomerates. Labores that change the dynamic and the voice that labor doesnt have . It means that recovery wont be vshaped. It means the people who have especially been hit by the great recession, then subsequently by covid, the folks who have been left behind are the ones who are especially left behind. Every time i come on and people ask me about the labor market, the first thing i ever worked on in economics was the young. Think about what that does. Firms are laying off existing workers. The ones who presumably are high up the line to get hired later, what you have done is who pushed out the new entrants. 700,000 16yearolds in the u. K. Where are they going . We especially know that unemployment among the young have about effect. Young people go in the street. I think this is shortsighted, dangerous command in some sense you may think that firms will just lay people off. Hugesense they generate political pressure on the government to do a uturn. That is what youre going to see as the unemployment numbers start to look horrible. The government has going to have to do one of many uturns they have done. This looks like a foolish air to raiseace error the cost of labor in a pandemic. It makes no sense. Otherets talk about the issue which could have another major effect on u. K. Unemployment and the u. S. Well, brexit. We are talking 700,000 jobs that could go on the continent as a result of a no deal brexit. We are expecting that her research over the next few days. U. K. Hen you have got the effect as well. Whatu see the landscape, effect on employment do you think what is being discussed will have . No deal or skinny deal . As i came, i heard you talking about apple and how hard it was for you to plan for the future in terms of investing. Lets extend it to hiring. What you have here is unbelievable amounts of uncertainty. Extent are you going to be able to deal with covid . Is there a vaccine . Are people going to change their behavior . Have aof that, you brexit deal which we have no idea. All we have seen our hundreds of kent, hearingin youre going to need a passport to get in. And to the issue about the irish border. Who knows exactly where this is going to go. If you are a business, presumably you say i am going to sit tight here. Uncertainty is spreading forward. Certainty in the sense that things are going to be major disruptions, presumably. If any kind of breakfast brexit happens. Selfless a selfinflicted wound . At a time when the economy is slowing. Felt 20 ine u. K. The second quarter. We have never seen anything like this. In 2008, we saw five point drop over five courses. What istion is destroyed now and what resilience to firms have . The answer is they are going to retrench, weight and work. For u. K. Ng to be bad employment and output. Alix give me a good headline. Bank of america seeing zero growth in the First Quarter of 2021. What do you see . That seems to make some sense. That itself isat too optimistic. We have seen areas where that number becomes negative. That is really possible. Now,nk any forecast right and i have said this many times, when you say to me what is going to happen . The answer has to be, it depends. It depends on the pandemic, what the government does. The key we have to keep focusing on is what are people going to do . Are they going to change their behavior . With the resurgence of covid again, are people simply going to revert back to where they were . The increasing likelihood is no. The answer depends on thinking they are right in saying zero looks like a central case, but presumably risk is down too. The reasons we have all talked about. And the big word uncertainty. To we didnt even get on talk about negative rates which was talked about much today. Danny blanchflower, thank you. Lets look at European Equity markets as we move into the close. We are having a positive session, as you can see. We are looking at an end of month effect. Banks bouncing strongly. The ecb announcing within the , ecb is looking to conclude its review in september 21 2021. The close, is next. Guy 30 seconds until the end of regular trading this monday in europe. Lets take a look at how the session has developed. Very positive. The stoxx 600 up 2. 61 . We gapped higher this morning and have been climbing ever since. The u. S. Session added extra impetus to the upside. One of the factors worth bearing in mind, particularly when you look at the ftse 100 is what is going on with the pound. The Deputy Governor pushing back on the negative rates story. That is what happened to the pound at that point. We faded a little bit of negative brexit headlines, but nevertheless a big move on the pound which i am sure you bear in mind when you look at the board with the ftse, the caps, and the dac the cac 40, and the dax. The cac 40 up 2. 54 . A stronger pound usually weighs on the ftse 100 and vice versa. Matt is a factor behind the underperformance we are seeing. Certainly strong underperformance being pushed forward on the continent. It is the rebalancing story. It has not been a great month for equities and as a result there is a factor that needs to be borne in mind. I want to show you what is happening with the sector point of view. Thanks having a solid session. We will talk about hsbc. One of the stocks that has been a big driver, real bounceback for that stock. The cars have bounced back strongly from the Insurance Companies have come back. The more defensive names of the bottom. Health care you, utilities, telecoms, the minors taking a hit and the staples as well. They are all up and doing relatively well but that is not where the upper has been. It has been the banking sector. Let me show you hsbc. The stock up 1. 96 . An Insurance Company taking more stake in the business and is now bigger holder. Hsbc rallying quite strongly. It has been lower over the last few days. Still a negative territory. Ive not yet checked that. When i checked on a 10 day basis, it was still negative. Hsbc rally hard. Businesse drinks talking a story about what it sees in the drink business, particularly in the United States. That stopped benefiting. These are big stocks being whipped around. I come back to the argument can you invest in a market that is the speculative . Very interesting to see what happens. And then william hill. Caesars comes through with a possible offer. The market got wind of this last week and the stock rallied aggressively. Disappointment coming through william hill. The stop down 12 today. Alix lets get to that story and dig more into it. Greg johnson joins us now. He has a buy rating for william hill. Caesars already owns 20 of william hill. What price gets this deal done . It is a good deal for caesars, less so for william hill. The entire u. S. Business can by william hill online in the states, caesars the profit share agreed. Combined 8 billion, which of you strip out the u. K. And European Assets is probably 3 billion. Think a fantastically attractive opportunity, a once a Generation Opportunity guy how did William Hills management find themselves in a position where there push to route by caesars and caesars saying if you do not go with us, we will withdraw the agreement we have in the United States, which would put them in a difficult spot. How do we end up here that caesars are able to do this . Back inu probably go 2018, a land grab for Market Access to the u. S. We think the we cant is often the week hand is often with the ultimate license owners, which is the casino. [indiscernible] a way to keep the bid price down. Alix would william hill want to be part of apollo . What would that look like for that company . Greg if you look at where the full value of this business is, the real upside, the real valuation is in the u. S. , and that would be of further tie up with one of the preeminent rands and gambling in the United States, which is caesars. It is difficult to see what apollo brings to the party in t sense if we do the value the value on the upside is on the u. S. Opportunity. Guy how big could the u. S. Opportunity b. If you took people how big could the u. S. Opportunity be . If you talk stateside you say the u. S. Will have to accept sports gambling because it will be a huge revenue driver. Post gav post covid we will see a massive opening up for sports gambling in the United States. How much money could that be worth . Greg we are in a position where shortly 40 of the u. S. Population will reside in places where Sports Betting has been legalized. And the tvort is going to be a big market. , weou extrapolate the u. K. Are a 20 billion architect a 20 billion market for Sports Betting, and state betting in the u. S. Could exceed the u. K. , and that is before you bring in igaming. Alix my husband has that on his phone for poker. Is there going to be another bidder . Is there someone else that makes sense . As you pointed out regards the poison pill and playing hardball, it is difficult to see anyone doing it with outside or with caesars. Guy have to leave it there. Thanks for the analysis. Greg johnson, short Capital Equity research joining us on the william hill story. A quick look at where european stocks have settled. A very positive session. Markets on the continent driving to the upside. The dax up 3. 2 . The cac 40 in paris up 2. 4 . Underperformance from the london market. There is a currency factor in some of that, but we did see big banks like hsbc and to diageo in the drinks business. Well analyze all of this and get a sense of what is going on with the cable show at the top of the hour on bloomberg radio. Dab digital radio. This is bloomberg. Ritika this is Bloomberg Markets the european close. Coming up on balance of power, deval patrick, former massachusetts governor. That is at 12 30 in new york. This is bloomberg. For the bloomberg first word news. I am ritika gupta. President trump faces new scrutiny on his personal finances just weeks before the election. According to the new york times, President Trump 750 in u. S. Income taxes in 2016 and 2017. The paper says the reported losing millions of dollars on his golf courses and reportedly has hundreds of millions in debt that will come through the next few years. President trump called the report fake news. Want a confirmation fight over Amy Coney Barrett to be about policy, not personality. They are focusing on what they see as a winning election issue, the future of obamacare. Republicans are trying to get barrett confirmed in time to hear a case that could determine the future of the Affordable Care act. The case comes just after the election. Almost one Million People have already voted for president according to the university of florida professor michael mcdonald, who has been compiling data on mailing and early voting. He calls the number jawdropping and gives the credit for changes in state laws on concerns over coronavirus and intense interest in the campaign. , thes of inovio plunged drugmakers putting a partial hold on the study but coronavirus vaccine. Regulators raised questions about a delivery device used in the inoculation. Inovio says the whole is not due to any adverse effects from the vaccine. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am ritika gupta. This is bloomberg. Guy thank you very much, indeed. Lets get more insight on how the pandemic is affecting air travel. Last week i spoke exclusively with the lufthansa ceo. We talked about rapid covid testing and whether or not this become a normal part of the flying experience. Carsten maybe one day there might be a cure that makes the violence that makes the virus less dangerous. But i think there will be a serious time where testing is part of the intercontinental travel experience. I look forward to this compared to what we have today where we sometimes operate for cargo only. The lufthansa ceo. Joining us for another exclusive ,onversation, Marco Troncone the ceo of rome air force. Thanks for joining us. We appreciate it. Lets talk about what you are doing. You are testing you are using Rapid Testing on the road to malan root at the moment on at thed to milan route moment in italy. Do you think this has the ability to open up a Wider Network of routes . Said just heard the words by carsten and i say we are totally aligned. We think Rapid Testing is actually the way forward compared to today. Let me give you a number. In rome in august which is our peak month, we recorded a decrease in traffic by 80 , which is a combination of zero on intercontinental flights. That is because of passenger confidence in traveling or lack of supply, it is just because of restrictions on arrival and quarantine, which impede any traffic to happen. The reciperess to address that issue is in withd can combine safe traveling. Rapid testing is the way forward. What we are doing now [indiscernible] alix hows it going, how successful is it, what is the update . Marco it is successful in that it works. It addressed two out of the seven daily flights available from rome to milan. Passengers have an option, whether they would like to jump on board the flight or talk to other flights, the first numbers say this isan successful. Increaseis not to safety on board, which is at maximum levels already. The idea is to put together a model canto show this be put in place, can be prevented to see how it is working, to see the operations which may be complicated, which are proving clean and functional, and replicate the prototype on intercontinental routes. This is where we come from. Guy which governments are you talking to and what are they telling you . This is basically down to governments making a decision this is an acceptable way to reopen routes, and at the moment lots of different governments are on different pages in terms of what they are doing. How easy will it be to standardize this or do deals with new york and the United States . Marco we are talking to a number of parties, both domestically and at the european level, and we are addressing u. S. Bodies as well. What you mentioned is one of the big problems we have. Lack of coordination, lack of uniform policies at the european we need to have sustainable policies. We have seen this policy can be an effective one, not only to prove sustainable and effective and safe, but also to promote predictable policies at the european level. Just for clarity, if i was to go to the airport and deal with all of these tests, how much more time is that going to add to my travel and will that eventually be some kind of deterrent, especially for other airports . Opto today passengers that for those flights have to be tested negative within 72 hours. This means they can take the test even before and get a jump , which will take zero time out of the journey come to it may opt to the airport. The airport to come a couple of hours before. [indiscernible] facility in the airport allows for swift testing, and the response is swift. Within 30 minutes the response will be with the passengers. It is only going to improve because there is a lot of progress on testing. You should imagine a world in which having a test will be as swift as passing through security checks as passengers used to do in the last years. Guy are you prioritizing europe at the moment, and when you think outside europe, which will be your priorities in terms of the routes you are looking at . York,going to be romenew romemoscow, romedubai . Give us a sense of where your priorities will live. Is theour first target u. S. And new york. The u. S. Is the market of election for rome. That is our most important market. Of course we have to be realistic. Out of the total noneu less critical countries, including canada or japan or south korea, we would like to start from those. Of how those different conversations are going, how is it at what stage are you at in terms of the conversation with these places . Are you near agreement . Are you still far away from agreement . Where are you closest in terms of getting agreement. I want to get a sense of the timeline of where this could bps a ball . Of where this could be feasible. Marco we are in talks explaining the model and , atnstrating it can work the implication of the models are absolutely of satisfaction. Now we are in the process of showcasing the model. It is the starting time for the authorities before we are close to agreement. We are probably not far. If the situation does not create any headwind, i am interested in a matter of weeks or months we may get there. The other idea is to be as far as possible, but the real issue will be to address the next summer season, 2021. We have a few weeks in order to get these up and running. Alix great for your time. We super appreciate it. Marco troncone. This is bloomberg. Ritika time for the Bloomberg Business flash. A look at some of the biggest business stories in the news. Cleveland clinic will by the for 1. 4rations of billion dollars in cash and stock. That will make the ohio company the biggest steel producer in america. Cleveland cliffs expected second deal to benefit automakers. Bayers upper grandson November Bayer is upto against a november 2 guideline a judge could send the case to trial. Christmas shopping this year is set to show the inequity in the socalled kshaped recovery. Total Holiday Spending is expected to rise from last year. Are also u. S. Workers benefiting from a strong stock market and lower expenses. The less fortunate are struggling with job losses, eviction, and food insecurity. That is the latest business flash. Alix thanks so much. A terrible story about that kshaped recovery for christmas. We are also watching the debate and how the kshaped recovery plays into the coverage. One narrative is the expectation game. The idea that joes expectations are so low, he just has to keep the vote, but President Trump has to woo more voters and get the vote because there are not many undecided. Guy absolutely not and it is interesting how much voting is already taking place, the story surrounding the taxes that has dominated the news cycle will certainly feature strongly. Itll be interesting to see how well prepared the president is, famous for his offthecuff comments. I think it will be mustsee viewing, but what impact will ultimately have on the outcome of the election . We learned a lot about joe bidens debating style in the primaries. Itll be interesting to see how he performs against the president. Alix he cannot stumble and get confused in sentences, that will be huge. Also for President Trump, how much can he stay on message, particularly in their messages that can speak to him versus joe biden people talk about the virus in the economy. Thats it. Guy a great story on the terminal today talking about the fact that both candidates must avoid the viral moment, which can snatch defeat from victory because just one of those, one of those moments just plays out and out and has a massive effect. It could come down to moments, which is fascinating and the social media world. Alix which is all we will do. Well watch it. You will be asleep. It will be about those moments. It is also interesting, and tus, that should be the story, it is not because of President Trumps taxes. Clearly President Trump would want the nominee would want the narrative by it is trickier, being a devout catholic. Guy all kinds of issues out about this. The issue around scotus is fascinating in terms of trying to make it about policy seems to be the way the democrats want to talk about this, they want to highlight the risk surrounding the Affordable Care act, which in some ways is very popular in could bewhich then something they could go after, and the issue of the taxes is how do you model this one correctly and not give the president an opportunity to turn it into a positive . I paid the taxes i meant to pay it is dealt with in how you answer the question. Alix i did it because it was legal. Do not forget to tune into bloomberg special coverage of the debate tomorrow night at 8 30. Coming up, balance of power with david westin. This is bloomberg. David from bloomberg World Headquarters in new york to our tv and radio audiences worldwide, im david westin. Welcome to balance of power where the world of politics meets order business. We start with a check on the markets with abigail doolittle. Abigail it is a pretty perfect scenario, or perhaps a goldilocks scenario, looks right from a sector perspective in particular. This shows when we are examining the major averages because the dow is leading the way. We have not seen that in quite some time. , the s p 500 1. 8 up 1. 5 . The other is lagging two averages. The s p 500, this is the first three day win streak in about two weeks, and the bulls liking that. Setting off the tone with the all world index. European equities higher on the day. What makes it so good is the fact
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