65. 00 was the expected number. Remember that we have seen something of a bounceback, but not a complete bounceback in this data. In terms of how we think about this, are there more jobs becoming available . What type of jobs are becoming available for the mid people being laid off right now . How easy is it to recycle this labor market . Alix not to mention, how easy is it to quit your job and get a new one . At story, President Trump the white house after three days of covid19 treatment at walter reed hospital. In a video, he sought to play down the virus that has killed more than 200 and thousand americans. Pres. Trump dont let it dominate 210,000 americans. Pres. Trump dont let it dominate. Dont let it take over your lives. We are the greatest country in the world. We are going to be back out front. Alix despite the president s triumphant rhetoric, his doctor did warn he is not entirely out of the woods. Joining us is Bloomberg Health reporter Michelle Cortez. Onwing what the president is , knowing where he is in the timeline of the virus, how does he feel right now . Michelle the president is up and tweeting, and he is out there talking to the american public, and as far as what that means about his health, we really have no idea. Early in the outbreak, doctors realized the biggest risk for patients was actually seven to 10 days after they were infected. That is when your immune system can really start revving up and you could get quite ill. It wont be until this weekend until that, so we will have to wait until then to know if hes fully on the mend. Guy do we know exact what drugs he is on at the moment and the effect they are having . Michelle that is the other issue we are seeing. Hes gotten a much more aggressive round of treatment than any other patient in the world really. The very first day of his diagnosis, he was given an experiment of therapy that has been used by only a few hundred people. The very next day, he got remdesivir. The day after that was dexamethasone. That is typically given to people in the later stage of the immune system response. So the idea of giving all of those medicines so quickly, right on top of each other, even his personal physician has said we dont know where he is. We dont know how those medicines are going to play out. They are certainly trying to thread the needle with the president here. They are trying to get the antibodies early to fight the virus. They are trying to get the steroids not to overwhelm his system. If they managed to do that, that is it were markable thing. Certainly not a treatment that is available for most americans. Alix how contagious is he right now . Michelle he is absolutely contagious. They say at the very least, youre contagious for five to seven days, and he is not yet through that period until the middle of this week, when he would be not contagious. That means it is critically important for not only him to wear a mask, but for everybody he is in contact with to wear a mask, as well as keeping six feet apart from everyone at a memo. Even then, you are still exposing yourself to some degree of risk, so he is still contagious. Hopefully everyone is taking precautions in the white house to make sure that cluster of cases we are seeing their doesnt continue to worsen. Guy one final quick one for me. Is wearing a mask enough to protect those coming into contact with the president if they havent got the virus from getting the virus . Take a look at the precautions being used in hospitals right now. They are significantly greater for doctors dealing with coronavirus. Is a simple mask enough . Michelle we have seen numerous studies that have shown that People Living with somebody who is infected with coronavirus can take care of that person and have interaction with them and not become infected themselves. We saw that with data early in the outbreak, and saw some of the information from those naval ships where they had massive outbreaks, so it is not inevitable that if you are in contact with someone that has coronavirus that youre going to get it. The question of whether or not a mask is enough, that is a great question that we dont have an answer to. The bbc said yesterday that it is possible the cdc said yesterday that it is possible the virus could aerosolize. So if you are in a room that was recently evacuated, if they were talking loudly or singing or making a lot of strong vocal gestures, you could get aerosolized particles, so everyone there needs to be very careful. Whether or not a mask is going to be enough is going to be just a gamble. Guy good update. Michelle, thank you very much, indeed. Bloombergs Michelle Cortez updating us on what is happening within the white house. Barbara perry, university of virginia director of president ial studies, is joining us to give us her take. How much transparency do you think we have . Barbara on a scale of one to 10, i would say a four. You just went through the medicines the president is taking. I think that is always good to be transparent if that is indeed all that he is taking. But we havent been given a lot of information or probably enough information, given that this is the president of the United States, about his actual status and his condition. Alix i am curious as to the president s ability to function if he is in the residence and has to be somewhat isolated from other people because he is still contagious. How easy or difficult is it to run the country . Barbara i think they are prepared for that. Theres no doubt that people can see the president. You just mentioned that they would be protected with masks, and maybe face shields and that sort of thing i am sure the president doesnt particularly want to see that. In the residence, he can certainly be served and given papers. He can sign things, make decisions, presuming that he is of sound mind. Deal with the 25th, and meant the 25th amendment. At what point do we have to talk about three and four . Where are we in the process, and how difficult will it be to manage the president if we get to a situation where he worked where he were to take a turn for the worse again . Barbara we dont have any indication. We dont have exact knowledge, but we dont have any indication that the president is not of sound mind at this point. I hope they have contingencies where there is a proper letter that has been signed by the president that would invoke section three, whereby he would hand over the reins to mike pence. I think the more difficult area would be section four, a more gray area, in the sense that if the president isnt willing to end over the reins, i doubt whether this cabinet would be willing to push him unless he was in extremis. Alix in order to run the country, you need other people around you. I am struck by how many more cases of his staff have come down with covid, which meant they had to isolate as well. At what does it get stymied if you dont have the personnel . Barbara that is a problem. We have all faced that at various times during this pandemic. I suspect theres enough staff at lower levels, although that could be an issue in and of itself. You may be dealing with younger people, or people who dont have as much experience working in the white house at these high levels. So that is a concern for the country and for the world. Guy do you think, looking from the outside in to the United States at the moment, do you think the government is functioning at a level it should, needs to be . This is a very disconnected world. American enemies see opportunities like these as just that, opportunities. Do you think if you were looking from the outside in, you would see a government that is fully functional and capable of delivering and defending the United States in all eventualities . Barbara i think so. , think since 9 11 particularly the American Government has contingency plans for these kinds of issues, and i hope that this administration is carrying them out. The good news is that this administration has been at it for three and a half years, so it obviously has that experience behind it. It is not new, as the george w. Bush administration was only nine months into the administration when 9 11 happened. I think become a nation of this experience, combined with the experience of our military, i believe they can. But it is a time that people my dad used to say dont worry, but be concerned. Alix the other question i have is what are you looking for now . We saw President Trump the hospital. He comes out, makes this speech in the residence, he takes off the mask. We have reports in open with the New York Times that he may address in the New York Times that he may address the nation today. What do you infer from these shows of strength . Barbara i think he is temping to show that he is of sound body, and if he gives a talk from the oval office, there is so much symbolism and history thereby not resolute desk. Thatthe there behind resolute desk. Just the name alone, he is being resolute in trying to fight this illness. He is trying to be jfk giving an cuban missile the crisis. He is trying to show that he is up to the task, and that he will continue to make that case and make that message of dont let covid get you down. Whether people accept that message, the polls are showing that they are not. Is this about the commanderinchief at this point, or is this about the candidate for the Republican Party . Because we are so close to an election, i feel that those lines are blurred in the way that he is acting. Barbara i think you are absolutely right. They have blurred, and it is understandable. We are fewer than 30 days from the election. Bothresidents are commanderinchief and head of government. They are also head of state and the head of the party. When the head of the party is up for reelection in a mere three weeks, it is going to blur those lines. So i think what youre seeing is his attempt last night, taking off the mask, that is political. Saluting marine one is commanderinchief, head of the armed forces. So he is blurring those lines. It is understandable. Whether he should be approaching it that weighs another question. And a political scientist historian will be answering that down the road. Alix and we look forward to that, no doubt. Think you very much. We really appreciate it. Catch our special coverage of the Vice President ial debate tomorrow. Dont miss that. Coming up, pressing election risk. How demanded that when you have yields breaking out of a range yesterday . Art hogan, National Securities chief market strategist, will be joining us. This is bloomberg. Alix live from new york, im alix steel, was guy johnson in london. This is bloomberg markets. For more on the markets, we are joined by art hogan, National Securities chief market strategist. We have yields breaking out of the range. We have a value play over the last couple of days. Even small caps getting a bit. Getting a bid. What do you see over the last couple of days . Art that rotation has certainly been healthy. If you look at the month of september into the first week of october, we have seen the market breadth expand significantly. I think that is a healthier place to be for markets. I certainly think, and the note you referenced earlier, theres a lot of logic to the fact that polling numbers are widening out, with the challenger doing better, in both national and state polls. When you think about the obligations for that, you likely have the ability to have much more Economic Energy in the economy in 2021. I think the market, especially the debt market and yield curve, are sniffing that out and saying, what do the next six months look like . We are starting to see that broaden out in a steeper yield curve. In august and september, a lot of the talk around jay powell and what he might do in terms of Monetary Policy, the concept of yield curve control had come in. We have seen the back end of the curve rising a whole lot faster than the front end of the curve has. It is certainly something to keep an eye on. Guy powell is about to speak. Do you think he is going to step on this . Art i think he is going to talk about the fact that we need fiscal stimulus. He has been consistent with that message. Monetary policy cant do that alone, cant do this alone, and that has been his mantra. Alix part of the rise in the yield curve is because we are expecting stimulus now. Whether that is tomorrow where with a blue wave come january. How do you think about that . How high can yields actually go when you have the fed willing to step on it at any point . Art i think this is a marketplace that, in july and august, had priced in further fiscal stimulus. We spent the month of september taking that out of the market in equities and in the debt market. Now it appears as though nancy pelosi and Steve Mnuchin are getting closer to the potential for getting some out in the near term, that is why we are seeing the yield curve steepen, and i think that probably makes sense. To the comment about mnuchin stepping on this, i dont think there is a message he is going to deliver that says because of fiscal policy, we are doing less or doing something different. I think what jay powell has been very consistent in his we need both of these things at the same time because the Economic Data is clearly going to get worse before it gets better. We hit fresh record highs for the s p in september. What do you think the chance is of us hitting another record high before the november election . Art thats a great question. When we think about what the market has done over the last 45week, we have last four or five weeks, we have really been stuck in this 3200, 3400 band, and the peak of that was the first week of september. We have agitated back and forth along that on whatever news has come out. What makes us break out of that . I think that would be either the delivery of fiscal policy before the election or a really positive readout on one of the eating vaccine candidates at the end of october timeframe. Knowing either of those is possible, there is a possible that we take out the september high, but that is not our base case. Isour model portfolio that 60 equities and 40 fixed income, the equity portion is divided into having tech and health care on one side and economically sensitive cyclicals on the other. Is outpacing the s p 500 by 200 basis ends. It is just recalibrating your exposure and having a balance of technologies into the economically sensitive cyclicals. I think that will be our base case has we work into next year. We have been cautiously optimistic that we are going to start to see that stabilize a bit, but when we think about that 40 part, it is certainly getting trickier and trickier to find appropriate opportunities. Alix i knew that guy was going to aspect to ask that question. [laughter] do you look at more downside for the treasury market . Is there a more substantial pop in yields . Or if we get a rerating in ritika it is time for the Bloomberg Business flash, a look at some of the biggest this is stories in the news right now. Im ritika gupta. Apple has quit selling headphones and wireless speakers from rivals such as logitech. The company is gearing up to launch its own new audio product. Amongst them, its first over ear headphones and a smaller home pod. Meanwhile, a house panel led by democrats is seeking the breakup of tech giants such as apple and amazon. That is according to a critique of the recommendations by a republican member of the panel, ken buck. Lawmakers have said to want to ban Big Tech Companies from owning market places and selling their own products on them. Some of the biggest names in Silicon Valley have gone public with a federal government form on diversity in the workplace. 125 provided a full report on numbers of employees in each racial and gender categories. That is your latest business flash. Inx staying on diversity the bloomberg survey, 66 companies in the s p 500 index are changing hiring practices like recruiting at historically black colleges and setting quotas for new hires. 50 Companies Made commitments to improve diversity among managers and executives. This just goes to a level of accountability because you need to send things to the government to tell them what you are doing in terms of Diversity Hiring and racial equality within your workforce, and make it public so you can be held accountable. Very different story. Guy data absolutely critical in all of this. This data needs to be published. Need to be aware of what these businesses are doing. They often make big promises. They need to be backed up with numbers. You need a baseline you can start from. This has to be a step in the right direction, but more businesses need to do it. We need to get on with it. But at least there is a start. Every journey starts with a single step. Alix so poetic, guy. I do want to point out that there were only 25 of the companies that provided the full form, which is the absolute number of employees in each racial and gender category, so theres still a long way to go to get that full transparency. Guy yes, but it needs to happen. We need more companies to do it. I am stunned that they were publishing these to the government and never put it out there. Jay powell is going to be speaking pretty shortly. He is going to be taking questions on the u. S. Economy. Youre going to bring that to you. This is bloomberg. Are you frustrated with your weight and health . Its time for aerotrainer, a more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time, all while maintaining safe, correct form and allows for over 20 exercises. Do the aerotrainer super crunch. The prestretch works your abs even harder, engaging the entire core. Then its the back extension, super rock, and lower back traction stretch to take the pressure off your spine and stretch muscles. Planks are the ultimate total body exercise. Build your upper body with pushups. Work your lower body with the aerosquat. The aerotrainer is tested to support over 500 pounds. It inflates and deflates in less than 30 seconds using the electric pump. Head to aerotrainer. Com now. Now its your turn to lose weight, look great, and be healthy. Get off the floor and get on the aerotrainer. Go to aerotrainer. Com, thats aerotrainer. Com. Guy live from london, im guy johnson. Alix steel is a new york, of course. This is bloomberg markets. The European Union is ready to call Boris Johnsons bluff. They have no plans to offer concessions before next weeks brexit deadline. They are betting that the british Prime Minister wont make good on his threats to walk away from talks if he doesnt get what he wants. Joining us now is minouche shafik, who served as the governor. Nion theres a lot of uncertainty right now. For howyour expectation this uncertainty is going to affect only the longterm trajectory of the u. K. Economy, but the Global Economy as well . Minouche i think the most useful term for understanding this juncture is that it is going to be ak shaped recovery. We have had a sharp downturn, and now we are at a moment where some sectors are actually doing better, but some sectors are declining. That structural change in our economy is what we are witnessing area sectors like doodle, like manufacturing are recovering more, but hospitality, travel, tourism and so on are in decline area that is the moment we are in now. Alix is the answer only and always going to be some kind of fiscal stimulus . We talked about that at least for the u. S. As the panacea, but the more we talk about it, the more it feels like a longterm stimulus conversation rather than a targeted shortterm bridge loan, basically. Minouche it is interesting. I just came off of a event where i was with Kristalina Georgieva at the imf to celebrate the 125th anniversary of the lsc, and she gave a message of dont withdraw the fiscal stimulus too soon. And that we need flexible and forward leaning School Policy for longer. This is coming from the imf, which, as you know, is traditionally a very fiscally prudent organization. But at this juncture, fiscal support is needed to put a bottom on peoples livelihoods, but also, fiscal stimulus is going to be needed to facilitate that structural change in the economy to get those sectors of the future up and running, and to support people to transition out of the sectors that are in decline. Guy we also have the same message from Christine Lagarde this morning in a wall street journal interview. It is a message we are getting from a lot of places. Is that a reflection that Monetary Policy is now done, out of ammunition . That we are now pushing on a piece of string . There is so much excess liquidity in the euro zone right now, and it cant find a home. Minouche i think central bankers have demonstrated enormous creativity and innovation in finding when everyone else is saying they have run out. I wouldnt write off Monetary Policy yet. But i dont think that is where the important action is. I think the important action is going to be more on fiscal policy to help the economy structurally adjust to the new reality. So it isnt a question of lost ammunition. It is more about which is the most effective policy to use at this juncture. Alix how is all of this not modern monetary theory at some point in some form . Know,he well, as you modern monetary theory presumes that as long as the Interest Rate is lower than the growth rate, you can just keep our wing. Showedest imf estimates that global debt levels will now reach hundred percent of global gdp reach 100 of global gdp. This has not happened in history, even after world war ii and the runup to that. We did not have these kind of debt levels. Having said that, Interest Rates are incredibly low for many countries. So it is hard to argue that it doesnt make sense to borrow given the scale of this crisis. If you look at whats happened to longterm yield curves, no one expects Interest Rates to go up for a while. Timeframe of most frameworks, fiscal borrowing at the moment is all right. I think the key for me as to whether it is prudent is what you are borrowing for, and that is why borrowing for investments that will help the economy increase productivity in the longerterm is the way to go. Say, there is no expectation at the moment that Interest Rates will rise anytime soon, yet the economy is a wash with money. If you take a look at most broad measures of money, even narrow measures of money, it is everywhere. You wonder if we get a vaccine or some other kind of relief, that that money supply will ultimately be inflationary, and quite aggressively inflationary. What is your assessment of that . Minouche i think for the foreseeable future, for the advanced economies, the problem is low inflation that is too low, not inflation that is too high. Whichn see a situation in that levels are very high, and you could have a bout of higher inflation in the longerterm. In the foreseeable economic you church, i dont think that is the problem we need to be worrying about. Premise,you take that i wonder how we have to look at inflation. If you get the right stimulus, as you say, what is the pass through . It hasnt worked, so why will this time be different . Minouche i think part of the is to do with the pandemic, and the fact that Economic Activity is desperately constrained. So i dont think what we are observing now in terms of inflation is very normal or will persist. But i think we have to get through this period, and i suspect inflation will start to behave a bit more normally once we have a vaccine, people are able to get back to work, and so on. Think theres some things you have to look through, and some of the effects of covid on inflation are worth looking through because covid hopefully will not be here forever. Guy one of the other aspects that has come about as a result of covid is that companies are likely to shorten supply chains. We are seeing globalization that started before covid, but covid is likely to accelerate that trend. Labor is likely to gain a more significant slice of the pie or significant more authority to make its demands. Do you think we are going to see a rebalancing of labor and capital . Minouche i think for the last 20 years, we have seen a huge shift in income in favor of capital relative to labor, and has had negative social consequences. Ado think that we are seeing restructuring of Global Supply chains, a trend towards localization. It will take time. I think many countries are trying to encourage this. The pan is encouraging corporate to bring stuff clippard japan is encouraging corporates to bring stuff closer to home. It will not happen overnight. It will take couple of years to play out. But whether or not that will be rising wages is a different because what we are seeing is that people are bringing industry home not to create more jobs at home, but because automation is no more affordable. So i think a lot of those jobs will go to robots rather than people, and that will have a lot of consequences, and we need to think through what that means, particularly in manufacturing, where the opportunities for automation are very high. Alix i was doing a panel a couple of weeks ago talking about big risks, and someone brought up a really interesting point to the talked about the huge oligarchy of tech, and how that, longerterm, is going to be an issue in labor regaining any strength. If you have the googles and amazons and facebooks of the world dominating their field, it will be very difficult for workers to gain any power over their wages, etc. What do you think about that . Ofouche i think the issue growing concentration of industry is not just an issue in the tech sector. You see it in many sectors, particularly in the u. S. Economy. Theres been some quite good work on what has happened in pharmaceuticals and banking and financial services, in travel and someone. Theres ash and so on. Theres and so on. Theres growing concentration in many parts of our economy, and it has had negative consequences for wages and for productivity. I think what it means is that we need to think differently about competition policy going forward, that the old model of you only have a competition consumers have what is called consumer detriment, where prices get high for consumers, i dont think that is a good enough definition anymore. We need to think a lot more about the dynamic aspects of competition and what happens when you have whole sectors where there are too few players, and the risk of low innovation and low productivity in the mediumterm. Guy will that be solved, do you think, possibly by breaking up big tech . By making amazon into two, three, four Different Companies . We broke up the baby bells. We broke up big oil. Are we in that kind of environment now . Minouche i think there are many ways to do it. Breaking up is not the only possibility. You can introduce you can affect it through merger policy. You can force interoperability so that you have to provide access to your competitors to some of the backbone infrastructure. I think there are many ways to get this issue, and i think the best competition people are beginning to think about how we do that. Alix hang tight for one second. We do have a statement from jay bloomberg he from the conference. Bloomberg economics and policy correspondent mike mckee has more. Minouche he is making the struck us lisa he is michael he is making the strongest pitch so far for fiscal stimulus. While the feds Monetary Policy actions at the earlier c. A. R. E. S. Act have made a big difference in the speed of the recovery, there is still a long way to go, powell says, particularly for the labor market. But what the risk is not in spending too much, but too little. Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back growth. By contrast, the risks of overdoing it seemed for now to be smaller, even if policy actions ultimately proved to be greater than needed. They will not go to waste. That is very carefully phrased. He doesnt even mention the Word Congress in that paragraph. However, it does sound like he supports the higher of the two offers on capitol hill, put forward by the democrats, rather than the smaller republican plan. Powell notes that prior to the virus, expansion had finally begun lifting the economy for the most economically disadvantaged people, and that the pandemic threatens those people worse than anyone. Two little support would make inequality worse. He is also siding with scientists on covid itself, noting the private the progress of the economy is dependent on the progress of the disease. A big risk is that covid19 could come back strong and require more shutdowns. Managing this risk, he says, as the expansion continues will require following guidance like Wearing Masks and social distancing measures. Speaking, and he will be taking questions. We will pick up a little bit of that speech coming up in a few minutes. You very much,k indeed for bringing us those comments. We will get to jay powell in a little while. Still with us, minutia seek with us, minouche should seek minouche shafik. Do you just throw everything at it right now and hope that something sticks . [laughter] minouche i think you throw a lot, but you throw selectively. Things like investment in infrastructure, measures that will increase the productive the capacity of the economy in the future and help people shift to those sectors which are growing is money well spent. I think just broadbased supporting consumption ad infinitum, you need to do a bit of that, but that is not what is going to get us out of this crisis. Alix does that mean job retraining versus just cutting checks . Minouche i definitely think we need to move more resources into job retraining. You need to support people through that process and provide a minimum income why they are income while they are retraining , but most countries in the world spend far too little. The best example is denmark, who reskilling of gdp on workers. They tend to have high wages and very low on and he meant, even throughout this crisis. Most countries throughout the world spend 1 100 of what should be spent in that area, and i do think that many are realizing that at this moment of structural change in the labor market, now is the time to help workers transition. Guy how long do we think that is going to take, as we watch powell start his commentary . How long will that tradition take . To the point about how long you want to support consumption, my guess is you have to have an understanding of how long it is going to take for the economy to pivot. How much tolerance is there to support the economy over the mediumterm . Michael that is probably going to depend on the election in the United States and on the political dynamics in other countries as well. Here, jay powell is saying we are going to get to a point where weve got good spending, people have built their savings accounts on the aid that they have gotten, and that has held up so far, but we are going to need work because we are going to get to this intractable level of an event where it is just really difficult to get people back to work because their Companies Went out of business, and they need support. He points out that it is lower income people in society who are most likely to fall into that category. How long it needs to go is hard to say. Many fed officials have said it is going to take two or three years to get to the kind of employment levels that we saw before the virus. With hown we pair this we come out of it, even as we are seeing regional lockdowns the rates looking at market, for example, and there does seem to be some hedges against rate hikes by mid 2023 when it comes to the fed. What do you think the reaction function is going to be . Everything in the kitchen sink now, no holds barred. If we see a pickup in inflation, how fast do we think it will begin to act . Minouche youre asking what rates are going to be in 2023 . I am not going to answer that. [laughter] alix no, no, the reaction function. Minouche we are in the fog of war. Not being able to predict things like that at a moment like this, it is just not realistic area thats what i would say. Lets talk about what is happening in the u. K. Economy specifically. Theres a lot of concern, and you talk about this need to retrain. The u. K. Economy is highly exposed to the virus because it has a high degree of Service Sector jobs and a high degree of in the Retail Sector and the hospitality sector. You spent a lot of time talking about the need to retrain, the need to pivot. How broken is the u. K. Economic model right now . How long will it take to chile to fix that take potentially to fix that . Using that people coming off of the current furlough scheme is the right approach to be taken . Minouche i think the initial reaction of the furlough scheme in providing immediate income support to people was exactly right. But i do think it has now shifted to the next phase, which is more differentiated in terms of not keeping people in jobs that are unsustainable, but facilitating them moving elsewhere. So i think the approach is right. I thing there is a question about whether it is enough and whether the scale is sufficient, given the scale of the transition we are about to incur. Are you i would also say that the u. K. Economy is pretty dynamic and flexible, but the challenge is can we make those adjustments less painful and quicker if policy supports people to move more easily. Alix at the same time, we still have regional lockdowns going into effect in the u. K. We are seeing them here in the u. S. , even with a new york city, which seems quite difficult. How do you see the result of not a blanket lot down, but these targeted regional lockdowns . What do you think happens there . Minouche i think a targeted lockdown is definitely less bad for the economy than a blanket lockdown. So that must be a preferable thing from an economic point of view. I am not a health expert, so i wont say whether that would be a better way to deal with the health aspect of it. But i think the problem with targeted lot hounds targeted lockdowns is it does create a lot of uncertainty and unevenness in disruption. We already see that in terms of how people are reacting to having their locality locked down. I still think it is the least bad option, given the alternative of a blanket lot down, which is hugely disruptive. We saw the Economic Costs in the Second Quarter this year of nationwide downs, and it was very hard. Ouche the u. K. Economy guy the u. K. Economy is facing two huge challenges. Youve got the covid effect, the regional differences you have been talking about. This government was elected on a promise that it was going to close those. That looks really difficult with covid as the overlay on top of it. Then youve got the issue of brexit, which is going to be a huge economic dont come all but economic jolt, almost regardless of what happens with a deal being struck. I just want to come back to this issue of how quickly and how flexibly the u. K. Economy can adapt to what all of this. You talked about the u. K. Economy being flexible. Is it flex a bill enough to deal with this without serious economic consequences . We have already seen a huge contraction as a result of covid. Challenges toive deal with in a very short period of time. Boris johnson says there is going to be a tough winter coming. Will it be a tough spring, summer . How quickly can we move . Minouche i think it depends on which policy choices the government makes. We have done some recent research where one of my colleagues found that you do brexit could cost three times as much as the Economic Cost of covid because covid is over a finite period, whereas the Economic Costs of a new deal brexit last over a decade a no deal brexit lasts over a decade. Clearly, in terms of covid, the key is to cushion this transition for people. Covid will not last forever. I will not tell you that covid will end in march of 2021. It is not going to be like that. It is going to be a much more phased thing. But it will end. Guy but the scarring is going to be felt differently in different places, and this government was elected on a mandate that it was going to level up. Can you level up in this kind of environment . Is that promise debt as a result of what has happened over the last six months . Minouche no, i think in many ways, the need to level up has gotten are important, not less. If you do accept that there will have to be continuing flexible and forward leaning fiscal policy, there is a case for using that to level up. I think the question is going to be what do you need to help people level up. I think there has been a big emphasis on infrastructure. That is import. But there are many other things you need to do to help level up, things like early years education because many are at disadvantages in communities that start incredibly early in peoples lives. Focus on progress, not just what is happening to gdp. Enabling Digital Transformation that we are all living through creates huge opportunities for Economic Activity to change geographically. If people can work from home, a lot of jobs currently in the southeast could just as easily be done anywhere else. So Digital Infrastructure and enabling reallocation of jobs the country is a real possibility. So i think leveling up becomes more important, not less. You just need to think about it a little bit differently. Alix dont you need state aid to do that . Isnt that one of the main sticking points in the brexit conversation . Minouche not really. I think state aid has a very mixed record in terms of economic success. You can point to more failures than successes. There are some successes of the state picking Strategic Industries that do very well, but you could also point to the failures. As someone once said, state aid is often not government picking winners, but losers picking the government. I dont think state aid is a necessary part of a leveling out strategy. There are many other things you could do. Investment in research and develop it, investment in infrastructure, early years education, creative urban development, and as i said, using the digital revolution to change where people work. All of those could be an important part of the leveling up strategy, and dont require any state aid. Alix we appreciate you giving us so much time today and walking us through jay powells speech. Thank you for breaking down the headlines. Fed chair jay powell is now talking about the outlook on the u. S. Economy. He was talking about fiscal and Monetary Policy, what it was, how it helped, and now talking about what it could and should be. Evident inl as is data, the increase in permanent job loss as well as recently office are also noticeable. Should continue to do what we can to manage Downside Risks to the outlook. One such risk is that covid 19 might again rise to levels that more significantly limit Economic Activity, not to mention the tragic effects on lives and wellbeing. Managing this risk as the expansion continues will require following medical experts guidance, including using masks and social distancing measures. A second risk is that a prolonged slowing and the pace of improvement over time could trigger typical recessionary dynamics as weakness feeds on weakness. Of unnecessarily slow progress could continue to exacerbate existing disparities in our economy. That would be tragic, especially in light of our countrys progress in the years leading up to the pandemic. The expansion is still far from complete. At the at this early stage, i would argue that the risks are still asymmetric. Too little support would lead to recovery, creating unnecessary hardship for households and businesses. Household insolvencies and business bankruptcies would rise , harming the capacity of the economy and Holding Back Wage growth. By contrast, the risks of overdoing it seemed for now to be smaller. Even if policy actions ultimately proved to be greater than needed, they will not go to waste. The recovery will be stronger and move faster if Monetary Policy and fiscal policy continue to work sidebyside to provide support to the economy until it is clearly out of the woods. Given this audience, i would be remiss where i not to mention our view of our Monetary Policy strategy tools and communications, which concluded recently with our adoption of a flexible inflation targeting regime. My colleagues and i have discussed this new framework in detail in recent remarks. Today i will just note that the underlying structure of the economy changes over time, and framework must keep pace. Recent changes to our consensus statement reflect our evolving understatement of several important elements. There has been a decline in estimates of the longer run growth rate of the economy and in the general level of Interest Rates, presenting challenges for the ability of Monetary Policy to respond to a downturn. On a more positive note, we have seen that the economy can sustain historically high levels of employment, bringing significant societal benefits and without causing a troubling rise in inflation. The new consensus statement acknowledges these developments and makes appropriate changes in our Monetary Policy framework to position the fomc to achieve its statutory goals. The forward rate guidance adopted it our september meeting reflect our new consensus statement. The new guidance says that with inflation running persistently below our longer run to percent goal, the committee will aim to 2 goal, then committee will aim to achieve longerterm invasion excavations well anchored at 2 . The committee expects to maintain an accommodative stance of policy until these outcomes are achieved. The Committee Also left the target range for the federal funds rate unchanged at 0 to 0. 25 , and will maintain this target range until labor Market Conditions have reached levels consistent with the goals of maximum employment, and inflation is on track to moderately exceed 2 for some time. We expect that the new framework and guidance will support our efforts in support of a in pursuit of a strong economic covering. Thank you, and i look forward to our discussion. Wonderful. Thank you, chairman powell. In our q ak on session. I think i will start with a question from the audience, which is about fiscal policy. Following the gse, we had the gfc, we had a significant tightening of fiscal policy both at the federal level, but in particular at state and double levels. You mentioned this in your prepared remarks. See inuld you hope to terms of fiscal policy in the next six to 12 months . Chair powell i guess i would start by saying that the u. S. Federal budget is on an unsustainable path and has been for some time, and i think that is something we will need to return to. That just means having the economy grow faster than the debt, having the debt grow faster the economy is unsustainable in the long run. I would also say this is not the time to give priority to those concerns. The time to do that is when the economy is strong, unemployment is low, people are paying taxes, we are on sound fiscal and economic footing. That is the time to work on getting back on a sustainable path. You mentioned state and local government. This seems true of the federal government. Olicy was very tight conditions were very tight at state and local government because of the financial squeeze they were under during those years, and that held back the economy. Theres a lot of Research Showing that. In addition, the federal government chose to cut spending and raise taxes long before the economy was close to fully recovered. So i would just say that we will need to return to those concerns on financial sustainability, but i think in the nearterm, as i mentioned in my remarks, i think it is important that we keep working together. In particular, i would point to one of the unusual characteristics of this downturn, how focused it is on a