Particular group of industries and people that are directly exposed to the pandemic. Who come ofople their old jobs may struggle to come back them because people will take their time in going back to certain activities that involve a lot of direct contact with other people. I think the right thing to do and the smart thing to do for the long run is to continue to support those people as they return to their old jobs or find new jobs in different sectors of the economy. Great. When you spoke to us in 2018, the fed was just at the beginning of reevaluating their framework. That younce learned are particularly keen on some of the estimates that you showed of how the phillips curve and inflation trends had flattened over the last decades. Those realizations helped inform the feds decision to engage in the average inflation targeting model. In the spirit of careful what you wish for, should we actually see some of those trends start that itt, do you worry may actually be difficult to turn some of those trends back if they start to move upward . Chair powell i guess i would say that the economy is everchanging, and the framework that we use has to adapt. Veryesnt and to change quickly. It tends to change gradually over time. If you go back to the 1970s, what you had was a steep phillips curve and a high persistence of inflation. Those were the charts that i showed, i think in boston at your meeting there. They really capture the change in inflation dynamics in our economy since that time. Time, as the that labor market tightened, you would see inflation move up. People would expect inflation would be higher. Now the phillips curve for a long time has been pretty flat, persistence is quite low, but we are not under any illusions that any of this is a permanent state of affairs. The economy will continue to evolve. We know that, and we know that we will have to keep adapting our framework as it does evolve. On inflation on the risk of something happening unexpectedly, i think if you look around the world, what you see our disciplinary pressures from demographics, from technology, all over the world. Theres no question that that can change. Ultimately i suppose it will change, since nothing in this is permanent. These have been persistent forces now. Declining inflation has been persistent as a factor for some time. We are still seeing downward pressure on inflation i think it is appropriate for Central Banks, and certainly the fed, to take that into account and move to a framework that is robust to that Current Situation so that we are able to respond to future. Ownturn if we look back 10 years from now at the policy that has just been implement it, what would be the science of success . Mentioned, asas i we have gone through this, we have three consecutive executives consecutive objectives, one of which was to provide relief when the economy was down. The second was to support the expansion when it came. Well, it is here. The third was to avoid longer running hits to productive capacity in the economy. Been listening to fed chair jay powell taking questions at the annual meeting of the National Association for business economics in chicago. A main point, the most aggressive i guess you would get from a Federal Reserve chairman talking about fiscal stimulus. Mike mckee, bloombergs International Economic and policy correspondent, is here. What were your biggest take aways . Michael that was the biggest take away. Today, he went a little bit farther than he has in the past in saying that congress should we assume he is talking about congress because he didnt mention them specifically but he said doing more is better than doing less in terms of additional stimulus because the economy can always absorb more, but if you dont do enough, that stretches out the recovery and people suffer a lot more. A very strong statement from him. He went on during the q a to repeat his view that now is not the time to worry about the budget deficit. Now is the time to keep the economy on the right course. Guy what should we read that this is the fed chair saying this . This is the man in charge of Monetary Policy basically saying, dont worry about it. Spend more. Get on with it. Mess around. What should i take from the fact that that is coming out of jay powells mouth . Michael it is definitely a get out of jail free card for congress if they want to spend money. He has been saying this for a while, and they havent been able to come to agreement on that. Theres a real dispute on capitol hill about whether or not it is a good idea to put a significant amount of more money into the economy. Both sides want to put at least 1 trillion in. , kratz want to put over 2 trillion in. There is a democrats want to put over 2 trillion in. There is a dispute among how much to spend. It will be interesting to see, even with the glacial pace of talks, whether this puts a thumb on the scale and influences them one way or another. Guy we are going to leave it there. We really appreciate you bringing this to us, and urinalysis. Always appreciated. Lets bring in and your analysis. Always appreciated. Lets bring in another voice on this. With us now is julia coronado, Macro Policy Perspectives president. What did you make of that . Julia a clarion call for more stimulus from the fed chair. That is not new, but it is particularly overt. He sounds more worried about the outlook. I think reflecting two things. One, the flattening in the data momentum is still positive, but it has flattened out. He noticed and acknowledged that more clearly than he has to date. And i think the prospect of no fiscal stimulus are more acute now than they have been, and i think that really worries him. Monetaryhe point that policy works together with fiscal. , andeed the fiscal support together they can support the recovery. By itself, Monetary Policy cant get the job done. Alix so does d. C. Listen . Julia i think we are so tangled up in politics and division right now, i dont think so. I think the bar for getting something done before the election, which is less than a atmosphere i made an that is fraught with tension, i think the chances are more than likely that it gets kicked to after the election, and then we various political scenarios that will lead to different fiscal outcomes, with material implication for the recovery. I think we are at a really critical Inflection Point in the u. S. Outlook, and i think that is what we are hearing in chair powells tone. Guy the curve has steepened significantly over the last day or so. Have seen the back end moving up. Do you think that sticks . It is obviously a report of you have been talking about in terms of the politics. In terms of the scale of fiscal policy we could get before the election and after the election, how big a gap do you think there is . The market is certainly beginning to price and the possibility that i for the election, it looks bigger that after the election, it looks bigger. Julia that is one of the scenarios. The market is grappling with a very fluid situation of different competing scenarios, one which could lead to know stimulus or very little additional stimulus, and one which could lead to very sizable additional fiscal stimulus. I think what we are seeing in the market is a lot of movement around very different outlooks, and we are probably going to see a lot of that movement. The curve steepening is pretty modest. If we put ended context if we put it into context, it is higher than we have seen in a few months, but i think what we could see, depending on which of these scenarios plays out, if we get the prospect of no fiscal, we could see the curve flattening right down. If we see the prospect of significant fiscal coming more clearly and tangibly onto the horizon, you could get the curve steepening even more. I think we are going to be in this Holding Pattern for a few weeks until we get more clarity on which one is more likely to play out. Alix powell also talked about how the tightening positions after the great financial crisis really held back the economy, and that is why we have not seen productivity or Wage Inflation pick up. Do you get the sense that this time will be any different, particularly when state and local aid is one of the sticking points within d. C. . Julia this is where we get to the divisions. The republicans do not want to give money to state and local governments because it has got to be weighted toward the populations, which would mean it would go to awa go towards democratic cities, so it goes to the politics. That is what we saw in the financial crisis, that it was the twoparty divisions that held back but the fiscal support of the federal level were number 2011 and the debt ceiling debacle remember 2011 and debt ceiling debacle, and aid to state and local governments, but that could be immaterial headwind to a more vigorous recovery. I think this time around particularly, we dont have the structural deleveraging we had post gmc. , wee get the support right can come back in a pretty robust fashion. Scenario is so tangibly important to the recovery, it is right in our grasp. Yet, it remains out of reach. It is frustrating as a forecaster, and a policymaker, i imagine. , we if i believe the polls could have been essentially a blue sweep. If we do have a blue sweep, the expectation is that we are going to see significant spending. Back that into what impact that could have on Monetary Policy. Think we could get more guidance about the positions that are going to be required to get the fed to lift rates . It feels like we are miles away from that, but lets say we get a vaccine and we get big fiscal spending. I am wondering how the fed would treat that and what the conditions are. Julia i think the first message is going to be we are not going to react by taking the punch bowl away. The first message from chair powell and the sen. Enzi will be, dont worry. We are not going to risk and be, dont worry. We are not going to risk this away. That will be the message. It will be dovish, it will be reinforcing the fiscal support. I think that is what we would hear from chair powell. Weve heard that from vice chair clarida. I think that will be the messaging that we get initially. Doesyou are right if that come to pass, if we do get big fiscal and the fed staying dovish and keeping rates low, and it all supports a more vigorous recovery, they will end up lifting off earlier than otherwise, and we might start having that conversation maybe later next year. It is markets. We will be having that conversation all along. But it will become more of a tangible reality lakes 2021 into 2022. 22 into again, they will not be in a rush. They want to overshoot on inflation. A want to get they are no longer worried about scary things happening if the unlimit rate gets too low. They want to really see this labor market take and heal the wounds that we are still experiencing right now. So i think the message is going to stay pretty dovish for a while. Is this all going to force the ecb to do exactly the same thing . Globalwe are in a Capital Market and a global economy, and what one central does affects currencies and other Central Banks. I dont think the ecb needs that much pushing. They are already leaning in the direction of doing more, and have been just as innovative arguably as the fed. Isi think what this means you could see the stars aligned for a stimulative 2021. The uncertainties around us are tremendously high. Disrupted,so see a contested u. S. Election, which would only deepen uncertain. Again, we are at a really dicey crossroad. Guy on that note we will leave it. Julia, always appreciate your time. Thank you for your time today. Julia coronado of macropolicy perspectives, thank you very much, indeed. Ikea planning to open a Record Number of stores this year despite the pandemic and the headwinds it provides. The ceo of the group that owns ikea is coming up next. This is bloomberg. Thats the picture as you can see. The stoxx 600, flat. The s p flat. Over continuing to climb the last few days. This is bloomberg. Guy live from london, im guy johnson. Alix steel with the new york. This is the european alix steel is a new york. This is the european blows on Bloomberg Markets. Thats the european close on Bloomberg Markets the european close on Bloomberg Markets. Brodin,us now is jesper ceo of ingka group, which controls the bulk of ikea stores. Thank you for your time today. Greatly appreciate it. Are you comfortable with the way you have performed . Do you think you have done a good job online . Jesper this has been a remarkable year for all of us. To understand the performance, i think you need to divide the year that is behind us in one part in three parts. Well, andrting another is hitting the closures of covid, which is the most rocket will thing that has happened that the most revocable thing that happened. And the third is on the increase. We have been progressing well as we have been able to open up again. Alix you were also opening up smaller city center stores. Is that still in the works . Jesper it is. I would say the strategy to become more accessible for people where they are whenever they like is the way forward. If anything, this year with covid has accentuated the speeding up. So we want to be finding new ways of being there for people. N the city centers it is actually the place that serves Home Deliveries and fulfillment through our customer network. Guy so where does that leave online . Most businesses that are strong in online have done well during this crisis. Do you think that you have done do you think you are good enough in online to compensate, to be able to spend more of a focus there rather than on stores, which remain very important to the group . I am trying to get an idea of where you see the balance in online and in physical. Jesper i think partly come online saved us during the closure. We actually experienced about 75 of our stores in lockdown. We were at that moment , whichting a record loss was definitely a new experience for us. But we are working hard to recuperate that. We went from 11 share of online to 18 by the end of the year, so it was most definitely a leap. We are lucky to experience progress in our stores. We are growing. But it is really the common nation where you can say that use out of five today for five different channels, so we can offer a multitude of different experiences for people. Alix how do you manage inventory . Not only the physical store issue, but online inventory as well . Jesper definitely it has been a roller coaster when it comes to operations this year, for sure. I will say that in a way, you can say it is all by accident 70 of we do about 60 , our deliveries go directly to our stores. Since we have most of our range in our stores, that becomes a natural point, and a very effective solution for field for for film and for us for fulfillment for us. Guy guy once we get a vaccine, once life returns to a sibilance of normality, will you see a significant a semblance of normality, will you see a significant drop in demand . Jesper who knows . If anything, we have learned humbleness in the strange times we are in. We think and hope that the importance of life at home has come to stay. As a place for the family to be, as a place for safety, as a together, forg cooking, for eating, for living. We think that aspect of life will hopefully stay, but who knows what the future has in mind . Alix you have to put money to work and invest, so how are you allocating your capital, and where is that corresponding to areas you are seeing . Haver in our model, we been through a roller coaster when it comes to the finances this year. But as we close the year, obviously we have been under pressure financially, but we have recently reaffirmed our plans, both when it comes to the transformation, which means our plans for the Digital Investments we are doing and the investment we are doing in physical locations, in old stores, new stores, is there. We have also been able to increase the investments we do in sustainability, as we think, in spite of all of the respect for covid, we think the Climate Crisis is going to have more challenges ahead of us. It is so important to remain aggressive in investments in that field. Guy how much has sustainability spending gone up, and where you spending that money . What am i going to see from our from ikea that is going to improve your footprint . Walk me through what things you are doing. Jesper it is a comprehensive plan. To take a serious grip on climate, you need to address your co2 footprint. We havemillion euro added to the 3. 2 billion euros already invested will go definitely to renewable energy, it will go to forestry and alson capturing, but how we speed up electric vehicles for Home Deliveries, and of course a couple of Services Like furniture as a service. There we are still trying and testing different models, so we will probably need another year to figure out what is the right formula for us there. Guy we are going to leave it there. Really appreciate your time today. Jesper brodin, ingka group ceo. A quick look at where we sit with markets. The european close is just in front of us now. We are, as you can see, seeing a slight softening in the picture for the ftse 100. The dax and the cac 40 on the continent have been trading higher. A little bit of volatility in Foreign Exchange today. We saw the pound jumping on comments that the ecb sorry, unwillingu would be to offer any more confections any more concessions ahead of october 15. We are waiting for philip lane to start speaking. Interesting to see if his on the same page us Christine Lagarde. We will carry on the conversation and bring you the European Market close. We will bring you some of that commentary from philip lane. That is coming up. This is bloomberg. Had, wes take a look are off session highs, positive after the story yesterday, today has been much more muted in terms of the activity we have seen. If health gains here in europe up by 1 10 of 1 coming into the close. The trajectory looks more negative. In terms of where we sit from a technical point of view, it looks more interesting. There is the charts. What is interesting is we are and you can point, see this clearly, at the critical point where europe is bumping up against they averages. Clearly those have been declining pretty can see whether or not europe has the capability of getting through it. We are up against the 100th day average right now, but we are converging. In a breakout i think would be interesting from the technical point of view. We have been in a range since may, if europe has the capability of breaking out, i think that would be interesting. A lot of people are talking about the possibility of europe outperforming if we work to see a joe biden when in the yields to come back, that would push people into europe. In terms of today, a little bit of divergence on the main markets, not by much. The more interesting story comes into the individual single stocks. Weve got this huge flurry of activity in the credit markets. Rollsroyce is part of that. Lots of other companies are as well. Certaintyhis sense of that the time is running short and now is the time to strike if are going to see these credits coming to market. The stock is up by 20 . Logitech, apple will stop selling some of its gear on its and they sell a lot of gear through apple and that will now be curtailed as a salt as a result of which logitech is trading down. Some of the hotel stocks on both sides of the atlantic have been having a solid day. A little bit of a head scratcher. I guess we do have some of the numbers coming up. These stocks have taking a battering. Alix lets dig into that. We are waiting for philip lane to deliver his speech at the annual meeting of the National Association for business economics. Lagarde warnedne against ending fiscal support to jay powellar to what talked about as he pushes for more stimulus in the u. S. Joining us now to break this down is frederik ducrozet. Help me understand which narrative is going to win. Frederik it looks like both of them would win. The sequence and the timing of this in the u. S. [indiscernible] guy we are starting to get some comics coming through from philip lane. He is saying that accepting lower inflation can risk entrenching week expectations. You think super lowinflation is now becoming entrenched within the euro zone . Remember christine us, and lagarde told [indiscernible] they cannot ignore such risks, and also taking a message from other members of the government. Alix does anything stimulus wise change that, the latest headline to left inflation momentum. It does anything help at all . [indiscernible] im not sure what they can do about inflation, but i know one thing they should not do is do nothing. [indiscernible] guy they have been doing this for ages. Expectation the that that is going to have a positive effect on inflation . Inflation has been going in the wrong direction for a long time, and at the same time the ecb has been doing more qe. Why the expectation that more qe and at some point i know we will be talking about cutting rates again, is there a belief that this is going to have a positive effect . It hasnt thus far. Truthfully, to be consistent, to be critical of [indiscernible] if that were to be delayed, then the ecb has to adjust. [indiscernible] finally the ecb can help that with this very large Balance Sheet is that a done deal at this point . Frederik it is not. Tiedrocess is complicated the fiscal rules have been , and whyto the point is that, because of the ecb because they know they have a backup. [indiscernible] you think philip lane and Christine Lagarde are on the same page . They do not seem to be and there seems to be growing concern about christines ability to manage the press conference and deliver the message that you talked about a little bit earlier. How would you rate the ecb communication right now . ,rederik a little bit confused but i think is less confusing that something we have heard from the fed sometimes. It is a Tipping Point for post for both this Central Banks [indiscernible] i think there will be concessions and ultimately an agreement at the end of the year. Steeplell we see a curve in a steeper curve in negative yields . It that spread to europe, if we get the Recovery Fund and you can get it done . [indiscernible] if we see the results, some inflation, then we can see some steepening pressure including in europe. How does the ecb react if we get a hard brexit . They would probably wait with the bank of england. Nd the government to adjust ecb [indiscernible] there is one thing we have not [indiscernible] guy the banks have got to lend it out. Thisonder whether or not will really help. There needs to be that demand for that money and the needs to be the willingness to be able to lend it out. I will have to leave it there. Thank you very much. Now,p lane speaking right giving a presentation. The European Markets are now shut. The ftse 100 sing a little bit of a lift, back into positive territory, holding ground. The dax and the cac are up 5. 6 and half of 1 respectively. We will get an analysis at the top of the hour on the radio. This is bloomberg. President trump is considering a televised speech to the nation now that has been released from the hospital after treatment for coronavirus. The president and his castigners have tried to his return as a triumphant president ial moment, but polls have shown him falling badly behind joe biden. A new poll shows joe biden leads over the present has widened, 50s percent 57 back biden n poll was taken after the president s virus was made public. Bloomberg has learned the au has no plans to offer concessions to the british Prime Minister before next week. Spacex has finally launched the rocket carrying 60 satellites. They will join hundreds in orbit around the earth recent launches have been plagued by a variety of problems. Two were halted last week before liftoff. Spacex said they would check the launch pants launch plaids before the launch pads before today. 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. This is bloomberg. Guy thank you. About the european banks. Deutsche bank could consider an accusation as early as next year if its share price recover. Matt miller spoke exclusively to the ceo about the turnaround plan. Increasing domestic deals, not yet crossborder, stille things like are progressing, not the way it should be before you come to these deals. Yes covid accelerated certain developments and also the banking industry. Is ays set the scale that is happening in other countries, but it is domestic so far. Consolidation will come in europe, but crossborder, some. Nothe banking unit is just there yet. They are not ready. Whenever i talk to e. U. Leaders they always say ceos are free to do crossborder deals. Which shoe drops first . Yes, we are free to do those deals, but if the regulatory and wind and also certain restrictions are still there, that for instance the free flow of liquidity or e four , which is not there makes the merger constructed, then something still needs to happen. I think we need to wait for further developments. I know that regulators well understand this issue. I am confident that we will see progress. I know that the german finance minister is working hard on this. That will come. For the time being, my view is that you will rather see more domestic mergers before. You got enough on your plate already. Does that mean you will out for now any acquisitions . Finalizecus is to transformation. We are laserhat focused on this and the success of the last 15 months proves the point that this transformation is the right one for the bank and this has top priority. It has my full management attention. What does that mean . When will this be at a point where you can start to consider some bigger deals . 2020 2019ys said that where weey years really have to focus fully on transformation. After the end of the Second Quarter we had 75 of our transformation costs booked. We made good progress, so 2019 and 2020 is the key. We still have items still to come. Our key targets we have announced for the end of the 2022, so it is a transformation. The first two years are key. So far we have been successful. Andhen you look beyond that you hear reports in the press about dream mergers, do you think it is possible Deutsche Bank could be part of a big deal . I think in general consolidation must happen in europe. We need to be competitive with the u. S. Banks. You need a certain size for that and therefore the general theme of consolidation is something which europe will see. For us it is important that we are not a jr. Partner to such thoughts. That means we first have to sustainably increase profitability. Mattie wase that able to push him on that question trying to get a timeline on when Deutsche Bank would have enough of its stuff to gather. Together. There is a lot that will go into this, like internal fixes first and it is not just bigger is better to compete with u. S. Banks. It is time and fixing internals that are key. The gap is massive between where european banks are and where u. S. Banks are. Marketsr thing, the just simply is not excited about this. Stillprices in europe are on the floor. They are very low. If there was a belief that europe would be picking up, then the banks would be rallying. That is not happening, a reflection of the troubles within the banking sector. The two are connected. The banks need fixing. Im not sure that consolidation will be easy. Alix that is a good point. In italy we did not get the booze that we were thinking about, so you have the cap last catalyst but if it doesnt is aent, then that problem. This is bloomberg. G. And look at some of the biggest business stories in the news right now. Apple has quit selling the companynd while is gearing up to launch its own new audio products, amongst them its first ever ear phones. For a long time apple has sold thirdparty technology. The International Monetary fund will make a revision to its Global Growth forecast next week. At the same time it will one that the rebound from that recession will be long. They estimate the second and third quarters were somewhat better than expected in june when it forecast that gdp would shrink or. 9 this year. That survey has found working from home will be a regular feature after the pandemic ends. According to the survey, working from home is the new normal and most employees will not return to the office fulltime. That is your latest business flash. Limitingo, belgium is private gatherings to four and strongly advising everyone to work from home. One other thing we are watching is delta is because a category four hurricane, barreling tordsancun. This will go right across the gulf of mexico and could come on chore somewhere between louisiana and florida. It is calledon delta is because the authorities and out of names for hurricanes because there been so many. This is been a record year. At the devastation has been i watering and this one looks like it will deliver something of a punch. It will be interesting to see what oil prices will do. Alix usually that is a shortterm effect. We have to watch natural gas as well. Atlantic has had 25 storms this year, the secondmost on record after 2005 when Hurricane Katrina hit new orleans. That wraps it up here in new york. Coming up on balance of power, u. S. Commerce secretary wilbur ross will be joining him. Central bankers are pushing d. C. For more stimulus, and jay powell coming on very strong. This is bloomberg. Happy tuesday. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. David i am david westin. Welcome to balance of power. The president is back at the white house and judging from the tweets back at work. Front update on what we know about the situation, we welcome michelle cortez. What do we know and what dont we know about the state of his health . Shell michelle as you know, he is tweeting so we know he is up and about his doctors have said he does not need to be convalescing in bed in terms of some people who have had the virus. It takes them a while to get better heard we know he has been out and walking around. How he is going to fare going forward, it is still early days. We do not know whether not he has gotten through the first wave of the virus itself and how his immune system is reacting in the days to come. David
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