Infections rising not only in europe, but also in specific European Countries. Lets get to the markets. The focus is also another currencies. Eurodollar on the back of what we heard from Christine Lagarde. Investors toward u. S. Fiscal stimulus. The bloomberg first word news. Here in london with me is leighann gerrans. Is considering fresh sanctions on iran. They may target more than a dozen banks and label the entire finance industry offlimits. The move would effectively leave iran isolated from the global economy. A wrong has already been crushed by the loss of oil sales thanks to american restrictions. French president Emmanuel Macron says he has agreed to meet the Opposition Leader of belarus, as he looks to persuade his eu colleagues that he is serious about confronting russia. The eu is holding a summit later this week to discuss potential sanctions against moscow for not cooperating on belarus. Fears the u. K. Could be facing a longterm increase in the size of the state as well as substantial tax hikes. The institute for fiscal studies says it is highly possible that Government Spending could hit 45 of gdp by the middle of the decade. That is a level not sustained since the 1970s. It underscores the major shifts being brought on by the pandemic. A wild fire through northern californias wine country has more than tripled in size, forcing thousands of evacuations and destroying properties in the region. Thanire reached more 36,000 acres monday night. The second fire also raging, having killed at least three people. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im leighann gerrans. This is bloomberg. Tesla has secured its own lithium mining rights in nevada after dropping a plan to buy a company there. That is according to bloomberg sources. The ev maker has vowed to cut battery costs by 50 and deliver on a promise to bring it when he 5,000 electric car to the market. Globally, the number of coronavirus deaths has had one million. Health experts are warning that the real death toll could be twice as much. Economiesand emerging are struggling to contain the pandemic after it first emerged. 38 million more people are expected to be living in poverty in 2020. Meanwhile, President Trump in the democratic nominee Joe Biden Square off for 90 minutes in their first debate. Pundits are fretting about a viral moment that could turn a good performance into a disaster. Guest. Us now is our thank you for joining us. First of all, when you look at the market functioning and the fact that we did have a lot more volatility as we try to figure out stimulus and these number of rising, do you worry about liquidity . I worry about the next few months because you are heading into an election. You have fiscal on hold pretty much everywhere. Fiscal in the u. K. All risk assets really going into the next few months. Do you decide where to invest . Do you prefer equities, other Asset Classes and is it about innovation or is it just about safeguarding . Time i was here , by chinese p currency. All that has sort of come to pass. I think the dollar has not really moved much since we last spoke. I think if you look at equities, you have to stop thinking about pe. You have to think about revenues and you have to think about cash flows. That is the first thing. You cant just say, tech is expensive, we should not buy tech. I think Innovative Companies are going to do well. Companies would benefit from consolidation. Covidies now because of have looked to localization. Those companies are going to do well. It becomes more difficult to be a stock picker if you are looking to be an active manager. But there are ways to make money. What is happening right now is a lot of people are following very extreme news on the market or in the economy. At companiesd look that are getting beaten up. If the federal side of things continues in terms of fiscal spending, then the underperformer would all have a pretty good 2021. Francine is there anything the market is mispricing or getting wrong . Sorry, i didnt hear that. Francine is there anything they are mispricing . I dont know if there is a belief to whether or not there is inflation around the corner and the market is not pricing whether brexit could be a harder brexit or a no deal brexit . Mispricingpeople are and number of things because they are using the traditional methods of trying to look at markets. Can only comeion with a much weaker dollar, ok . While the dollar has not dropped has dropped significantly, it has not dropped enough. I dont see that happening in the next several months. I think the market is mispricing inflation. I think the market is mispricing gold. I dont think gold goes anywhere for a period of time. Gold is an inflation hedge, it is not a reflation hedge. To me, i think the market is mispricing gold, mispricing inflation. I dont think it is mispricing credit. You thatlly telling the fed agrees. It is not coming back in an accelerating way. Back. Ions are not coming and the market has got that right. I think that highyield will set off more. I think risk assets from a credit point of view are more vulnerable, especially going into the next onethree quarters because you have a trade that is going to be vshaped. Think q1 is going to be quiet. Gotink really what youve is the next six months or nine months when people are going to start to worry about bankruptcies, defaults under more emphasis here. I think that our credit by default would actually take a lot on the chin versus another asset class. Francine thanks so much. Dont miss the bloomberg and radios official coverage of the first president ial debate with analysis before and after the event. David westin anchoring full coverage from 8 30 p. M. Eastern time, 1 30 am in london. This is bloomberg. Francine economics, finance, politics, this is bloomberg im Francine Lacqua. Lets get straight to the Bloomberg Business flash. Uber is considering a ridehailing joint venture, but the deal could be complicated by the Challenging Market which may make it difficult to agree on a price. Lvmh is country assuming tiffany weeks after pulling out of its 16 billion purchase of the jeweler. The french luxury brand says the decision was driven by the french governments request to delay closing the deal. Tiffanys citing mismanagement during the pandemic. Tesla plans to mine its own lithium, securing rights in nevada. We are told they held discussions, but failed to reach a deal. It is all part of elon musks plan to cut battery costs by 50 . That is your Bloomberg Business flash. Francine thank you so much. Christine lagarde has a message for the euro zone. The ecb is ready to deploy more monetary stimulus. Lets take a listen. Pandemic ist of the still being felt across the euro area. , peoplere losing jobs on the income businesses are facing difficulties and prospects about the future remain uncertain. Inflation in the euro area stood august and is expected to remain negative in the coming months. Away frome are far the goal that we have, which is close to but below 2 . We are not complacent about it. The euro area real gdp is only expected to recover to precrisis levels in late 2022. The recovery remains incomplete and certain and uneven. Francine lets get more on this with our guest. From theso hearing finance minister of germany raise 75 t they will of gdp. Do you think they are underestimating how much they will need to get out of the recession . But i thinkwill, one of the things people said of miss is it does not really matter how much you borrow. If you are borrowing nothing, which is what people are doing now, germany is borrowing negative people have to realize this money goes into the market. Going. S the economy so borrowing at zero does not really mean anything. Lenders will not lose faith as long as they believe they will pay them back. Japan is your classic example. There was an article today that said we are going to have to do austerity. I had to laugh because italy is going to be higher, who cares . You need to spend to get the economy back. Covid. Also because of this is all boosting consumption which is boosting gdp. Debt to gdp thing, which economists have harped on for decades is a complete i think it is really a waste of time. How much of my borrowing out . Why not borrow if you can produce those proceeds . Point,e but at some should we start worrying about debt . Or will investors worry about debt will the focus turned to that . There was a very small window for a lot of these countries to spend this money wisely. If you dont kickstart the economy, you are left with legacy problems that italy for example has had the last 20 years. Is part of the eurozone. Countriesue that some deserve to borrow at zero and others dont. I think we are clearly now a single market. It does not really matter. I think people worry about debt, but that is the next generations. You create domestic product out of that debt, which is what im suggesting to do. It is all right to borrow, so i dont understand this handwringing about borrowing, especially here in the u. K. And other parts of the world. Japan is a good example. Gdp, two thirds of their bond yields are negative. Nobody is worried about the japanese not paying back their debt. Every time there is a risk off, people by japanese yen. To the extent of that, japan is a model, im not suggesting it is a good or bad model, it is a model. You should borrow money especially when you are trying to get your economy to recover. Between the fits and starts of shutdowns, i think you are headed toward stagnation. I think borrowing is the one thing you will do that will help you. I think this goes for the u. S. , as well. I think whoever wins the election, i dont think that is that mature because fiscal policy is going to be loosened 2021 and 2022. Yes . Francine no, i was going to ask you does this make sense worth this also just to make it a more of a fair society otherwise we go back to a very populist agenda and for five years . That is the big thing. People say if you do Monetary Policy and fiscal policy together there is some logic to that. If you actually devalue your currency through massive fiscal spending, there is a risk of inflation. There are a few headwinds for inflation. Lowers the cost of everything. It does not increase wages. It makes things more efficient. Headwinds we did not face 30 years ago, 40 years ago. The second thing, demographics. Demographics in the world so im not as convinced that running a large deficit for the next couple years is going to be super for inflation. If the treasury comes out and and we want a weaker dollar the treasury wants to debase the dollar, in short, there will be inflation. To me, the only inflation i think you are confident about everywhere in the world the next five or 10 years is asset price inflation, which started in the 2008 crisis and continues today. It actually just magnifies the inequalities in society. The reason people would have to spend, the reason fiscal spending would continue to increase, the governments will have to address the inequity we have seen in society. Everybody writing about inflation does not really suffer from the psychology of financial and get ready. You worry about losing your job. These are the basic things. About inflation just going away. It seems very hard to fathom. Francine thank you so much for joining us today. , we will discuss the newly minted billionaire and his electric trucking company. That is coming up next and this is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua. Shareholders yesterday approved a merger. With a batterypowered truck company. The news allows the company to go public without a traditional ipo and will make its 28yearold founder a billionaire. Dani burger, good morning. What is so special about this one . Dani this particular one is very emblematic of the frenzy around spac this year. It is a special acquisition company, a blank check firm goes public, and its sole purpose is to find a private company, merged with it, therefore going dolic without ever having to an ipo. It is taking it public. It should go this week. The company has yet to produce meaningful revenue. It is forecast not to have revenue until 2022. Despite that, it has a 7 billion valuation attached to it. Once it goes public, its founder, a 28yearold from carnegie mellon, will have a 1. 8 billion valuation. As already mentioned, the founder, thomas healy, stands to gain a lot from this, but we cant overlook a beneficial this has been for tortoise, the Blank Check Company acquiring the company. It put about 7 million into this Blank Check Company according to Bloomberg Intelligences kris bryant bloomberg opinions chris bryant, rather. It stands to gain from the acquisition itself, getting 80 of the cash proceeds. Usually for an ipo, and underwriter would only get 7 . Francine thank you so much. Dani burger there. The pandemic shut jewelers for months, but are there signs of recovery now . Executive of the iconic italian brand. That is coming up shortly. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Now lets get to the bloomberg first word news with leighann gerrans. Thehann globally confirmed number of coronavirus deaths has hit one million, but warning the real death toll may be twice as many. Developed and emerging economies are struggling to contain the pandemic almost 10 months after it first emerged. Million more people are respected to be living in poverty in 2020. Speaker nancy pelosi says the white house will have to agree to much more spending to secure a fresh round of stimulus. The comments come as democrats release a scaledback plan of 2. 2 trillion of support. Discussions between pelosi and treasury secretary Steven Mnuchin are ongoing. The European Central bank says it is ready to deploy more monetary support if needed, addressing lawmakers in the european parliament. President Christine Lagarde warned the recovery is uncertain and incomplete. Consumers are cautious to spend and companies are reluctant to invest. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im120 countries, leighann gerrans. This is bloomberg. Lets focus on jewelry and the closure of Factory Stores and airports. There are signs that demand is recovering, but only in certain regions. In china, luxury customers have started spending again. Luxury remains under pressure across europe and north america. One of these iconic Jewelry Companies shut for three months is an italian brand established in 1967 and worn by kate lynch blanchett. Te sabina me today is belli. Talk to me how much delayed saw during the close because of covid and how much revenue you will be able to get back from customers. Sabina the first thing to be said is that jewelry is a very ing time and safe industry the eyes of our clients because when you buy a piece of jewelry, you buy a piece of eternity, so this is kind of a safe investment. And there is also a question of celebration. You buy jewelry to mark a very special occasion. So there is always a celebration even during pandemic a birthday, an anniversary. Saw clients coming back after lockdown, wishing to actually celebrate at the time what they missed during the lockdown. Yes, we have kind of a recovery these past days and we are quite domestic for the future. Francine where are you seeing a recovery . Is it in a specific region or in a specific section . You have high end jewelry, mediumrange, and a more visible range. Strongest one of the starkest we see is tourism. People are traveling less now across europe, for shopping occasions, and so they buy locally, and basically the big regions such as china, of course, but also japan and the main European Countries are germany, italy still on the celebratory side in terms of jewelry. Sense of howe me a covid19 has impacted your strategy longerterm. Are you going to sell more to the aipac region because we see retail strong, or are you going to sell more on the internet . Sabina yes, we are going to sell more on the aipac region, also investing in the marketplace that is very energetic. The slightest difference is in the way we sell. Basically in jewelry there is a lot of one to relations. Our managers calling their clients and establishing this very personalized relationship that can be made even without going to the store. So distance remote phase is the name of the game today. In america they call it by the from acause you can call distance, choose the goods, and it is delivered to you on the curb and you dont even have to interact really in the store for all the safety reasons we know. Though it is a mix of strategically choosing the world tore the clients are keen still purchase and methodologies in terms of the of how to approach the client that are slightly different than precovid. Francine does it mean that we could see the closing of certain stores, or does it mean, for example, that the way you look at the geography will change . Is it also making it more difficult to source gems, or is it something that hasnt happened for a couple of months and now youre back on a more normal footing . Sabina fortunately the Big Companies and the big brands like us, we have a great treasure with gems and stones in our vaults that have been acquired over the years, so that is not a problem shortterm and i dont think it would be a problem in the future for sorting. The most important thing is to really create a situation where the experience of buying an exceptional product remains an outstanding experience. The way toto crack make the online experience absolutely as memorable as a store experience, and so that is really a new way that i would whathat this also also covid pushed everybody to be ofe keen to find new ways interacting with the client that is not, again, the Traditional Store interaction. Excitedthat, im quite because there is a totally new frontier to go find, and we see that the initiatives that we have started putting in place, like this very special and very intimate moment with our facebook clients, paying back, and the storytelling, the reasons to celebrate with a jewel are very important matters, and im glad that we can be on that front with our brand. Francine i was speaking to Bloomberg Intelligence analyst on luxury and they were saying that the focus on watches and luxury in general is a smart one because it will probably be one of the most increasing sales growths in the coming years because of durability. It is just a slightly different section. Given all the talk we have had over lvmh and tiffany that have really gone wrong, are you expecting more consolidation in the jewelry phase . Does it actually impact any of your work . Sabina unfortunately i cannot predict these type of things because it would be too easy to try to foresee the future, but for sure, brands and the companies that have a very legitimate place on the markets ,ecause they are admired recognized, established have much more of a chance to survive then the brands that have been created more recently on the marketing concept simply. On my part, i am very keen to see luxury still developed on the basis of the quality, preciousness, craftsmanship, and we have 100 master goldsmiths inhouse that bring their savoirfaire to each and every piece of our jewelry, and that is a point of difference that the consumers understand and they do make the difference. Therefore, all these Big Companies that have, again, this forcefulng and attention to quality and details is what makes the difference, and the preciousness, are the ones that are going to win the game. Francine how much does size matter . How much do you think your company can become over the next five to 10 years . Definitely aiming and growing all over the world. Our domestic markets, rather european so far, but the investment is very much due to asia. But again, this is a brand born years ago in milan, italy, with a very strong sense of italian elegance and style, and i think that the made in italy is a brand per se and has this amazing attraction all over the world because it says this is elegance, this is style. This is a touch of class that italy has been recognized for for centuries. And so i trust that this brand can really develop a lot. Also, thanks to this added value, to this twist that comes from our origins, and the absolute italian genius that is really recognized all over the world. Francine sabina, thank you for joining us. Sabina belli, the chief executive of pomellato. Let me bring you some uptodate comments on the turkish finance minister. Gdp in 2021, according to turkey, will be around 5. 8 . If you look at what we have been seeing for this year, it seems gdp will only grow 0. 3 . That is a huge downward revision from the turkish government, and the finance minister says despite that, some of the Financial Measures put in place will be removed gradually. We will have plenty more on turkey and some of the emerging markets. This is bloomberg. Francine this is bloomberg surveillance. Lets get to the Bloomberg Business flash with leighann gerrans. Leighann j. P. Morgan says most of its consumer staff will continue to work from home until 2021. It is a break with the first wall street operations, which told senior traders to return to work. Bloomberg sources say the new measures exclude branch work and operations. The consumer unit has around 122,000 staff. Lvmh is counter suing tiffany weeks after pulling out of it 16 billion purchase of the jeweler. French luxury brand says the decision was driven by the french governments request to delay closing the deal. It is also fighting tiffanys mismanagement during the pandemic. Tiffany sued lvmh earlier this month to force it to go ahead with the deal. Japanese Telecom Giant mtt plans to turn its wireless carrier whollyowned subsidiary. The buy is worth around 14 billion, more than 40 premium on the Closing Price on monday. Mtt controls two thirds of the wireless carrier. Evereal is the largest offer for a japanese company. That is the Bloomberg Business flash. U. K. Carmakers have formed a united front to protect the industrys supply chain. The risk of insolvencies as the Companies Face the combined risk of covid19 and a no deal brexit. Joining us with all of this is bloombergs european autos reporter, sid phillips. This is a really important story, and it is basically about some of the carmakers getting organized. What are they exactly doing . Sid the automakers are coming together, trying to create this plan under the auspices of the smm p, the industry body. And what they are trying to do is because the supply chain at a crucial time when carmakers and consequently suppliers are dealing with the twin effects of the covid19 crisis as well as the as we had to december 31 when the transition agreement on brexit and. Francine why are carmakers struggling so much and what is happening with suppliers . Sid carmakers are struggling because of at the beginning of the year you had the lockdowns, which affected production, and production has not come back. There is a shortage of demand in the export markets, and a majority of the cards cars made of u. K. Are exported. Because production is down about 40 in the first eight months of the year, that has had a cascading effect on suppliers. And they depend on getting their money and stay in business. Carmakers consequently also have to deal with the issue that if suppliers go under, it could make a massive hole in their supply chain and completely halt production. Brexit such ais concern for u. K. Carmakers, a be more than any other industry . Sid brexit is a major concern for two reasons. One is a lot of supplies from car parked in the u. K. Comes from the european union, and with brexit, there may be tariffs in the heart of brexit. Question of tariffs and while tariffs may not have that much of an impact on extensive luxury cars, carmakers such as nissan, which make entrylevel models at very low margins could be hit. You so much, sid philip. Autoackenzie went to the show and spoke to the chief executive about what tesla poses. In fact, demand in july and august was Even Stronger than deliveries as we had a conservative sale estimate at the end of at the beginning of the year. Our supply chain partners were not ready for higher reduction. We are working to solve this problem in the third quarter. We believe reduction capacity will have improved in september and we will boost capacity in the coming months, especially for the ec six can which started deliveries over the weekend. What do you know about plans for the 25,000 tesla . Will that have to be eac actured, that 25,000 tesla, in china . Undoubtedly, battery cars have been declining. We reached the gross margin of 10 in the second quarter, and it will increase each coming quarter. I believe the overall battery. Ost decrease will promote evs in the chinese market, the average price for cars is more wen 16,000 60,000, so have a lot of work to do in this market, and in the long term we will definitely lunch more cheaper products, but that is not the priority at the moment. Aboutn musk talked potentially reducing a Million Units in china. How much of a challenge is tesla now . I think auto products are not only about cars but more importantly serving customers well. Families, the car is big spending and it is closely related to safety, so we spend a lot of attention on service and quality, which i believe should be the big challenge for all automakers undertaking rapid expansion. Chairman that was the and chief executive, william lee. Donald trump and joe biden faceoff in a debate tonight. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Thes five weeks to election, and today President Donald Trump and Joe Biden Square off today for 90 minutes in the first debate. It occurs in the swing state of ohio, and his first debate could be the most important. Joining us now is kat hunter from our politics team. How big given issue are his taxes likely to be tonight . i think we know certainly that the tax issue has split it onto the scene in the last 48 hours, and gives an advantage to joe biden. It gives him a chance to paint this contrast between his characterization of trump as a product of park avenue and his characterization of himself as being from scranton, pennsylvania. We would expect biden to emphasize that tonight, and the extent to which this changes voters minds, we know that one million americans have already voted. There is a very small percentage compared to the past elections of undecided voters. So it certainly gives biden an in to attack trump tonight, but i dont know how many minds will be changed. Francine what could change minds . There are not that many undecided voters. How is this debate different from the first faceoff between donald trump and Hillary Clinton in 2016 . Differencesthe main here could be that we have an incumbent President Trump, not two candidates vying for their first chance at the white house. This could be different because there is one thing to see trump as a candidate and another to see him as a sitting president with biden as the challenger. Trump has spent a lot of time and energy trying to lower expectations for joe biden or lowering expectations, whether or not that was his intent, by talking about biden as sleepy joe, talking about raising questions about his mental acuity. That has the effect of lowering expectations. So i think there is an opportunity for biden to exceed those expectations. The risk for him is that he is very gaffe prone, so there is always the possibility of an unforced error and something he does to damage his campaign and himself, the type of thing that could become a viral moment that plays into trumps hands and the spec tatians trump has set for him. One millionre than americans have already cast their ballots. Is that more than ever . Kat yeah, its the highest number we have seen so far, and i think its indicative of a couple of things. It is a fall off effect of the coronavirus and the fact that states have made it easier for people to vote by mail, not to vote in person ahead of election day, but it is also indicative of the fact that a lot of voters have already made up their minds and dont feel like they need to wait for the president ial debates to make up their minds. That has the effect of downplaying the significance of the debates. Francine thank you so much, Kathleen Hunter with the latest on the debate. Eitherple staying up, that you bed late or stay up later go to bed early david westin will have full coverage in new york from 8 00 p. M. New york time, 1 30 a. M. In london. Coming up, when bloomberg surveillance continues, tom keene joins me out of new york. This is bloomberg. Francine coronavirus deaths top one million. Some experts estimate the real figure could be double. European stocks decline. Attention shifts to tonights u. S. Debate. Donald trump and joe biden face off in ohio in an event that could shake up the race. And Christine Lagarde says the ecb is ready to act further to aid the recovery. This as chancellor Angela Merkel could place further restriction measures to stop the spread of the pandemic. Good morning and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. Tom, i have to say all eyes are on the debate this evening with joe biden going up against President Trump tonight. The focus is also on what we have heard from Christine Lagarde, that could move fixed income in your, but that in europe, but euro also saying we are not over this. Tom a little bit of a rebound in euro. I know Prime Minister johnson will be making comments in some form with the virus front and center