Trading could be numbered. Good morning, everyone, and welcome to bloomberg surveillance. I am Francine Lacqua here in london. The markets are telling the story of three things we are watching. First of all, Central Banks, second, politics, number three, rising some kind of program, so trying to temper that with relief to companies with furloughs. We did have senator kamala , and what that means is the widening polls for joe biden seem to have been taken in stride when it comes to the markets. I am looking at dollars weakening, travel Companies Leading gains in europe on the stoxx 600, and i am looking at a couple of other things, treasury yields steady and gold getting a little boost. Coming up, looking at the decision from chairman lorenzo bini smaghi, we talk brexit and Central Banks. Now, lets get to the bloomberg first word news in london with leighann gerrans. Hi, leighann. Leighann good morning, francine. Record daily increases. National politicians are leading leaning on politicians, fearing the Economic Impact of ofer measures the number covid19 patients and karen paris has tripled since the start of september. U. S. House Speaker Nancy Pelosi has signaled openness to an Airline Relief bill after the president stopped negotiations on a broader deal, but below is projecting pressure to bring back individual stimulus checks of 1200. She says that is insufficient to address the challenges of covid19. The Federal Reserve is that to discuss the future of its federal Asset Program the next month. Minutes from the september meeting shows an openness to alter or increase the program. Officials may also shift from bond buying away from shorterterm security. That could help lower longterm rates without adding to the overall level of purchases. And the wto has whittled its choice for its next director general down to two candidates. A former finance minister and south koreas trade minister will likely be formally announced later today. The wto has never been led by a 25year history. Global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am leighann gerrans. This is bloomberg. Francine . Francine leighann, thank you so much. Now the Vice President ial debate took a more moderate tone than last weeks president ial debate but still featured its own exchanges. They sparred over the trump administrations handling of the virus. Sen. Harris they knew what was happening, and they did not tell you. Pence when i look at creating testing, developing a vaccine, it looks a little bit like plagiarism. Sen. Harris you respect the American People when you tell the truth, when you have the courage to be a leader, speaking of those things that you may not want people to hear, but they need to hear, so they can protect themselves. Vp pence the reality is that we are going to have a vaccine, senator, and record time, and unheard of time, and less than a year. The fact that you continue to undermine Public Confidence in a vaccine, if a vaccine emerges during the trump administration, i think is unconscionable. Francine now, for more on the Vice President joe debate, lets go straight to bloombergs kailey leinz. Much more polite but much more focused on policy than the president ial debate last week. What were some of the key issues that were discussed where you can see the key issues between the two . Kailey the primary is what we were just hearing about, topic,9 and unavoidable when the moderator, usa discussingsan page it, senator Kamala Harriss saying that the trump administrations handling of the virus is the biggest failure of any administration in history, really putting mike pence on the defensive. He had to dodge a lot of harri attacks. He came after harris on a number of key issues, asking if they would pack the court of jill biden and harris would support that. Harris did not give an answer to that. They asked about the green new deal, what it would do for energy jobs. Mike pence saying joe biden is cozy with china, and senator harris saying trumps trade war is one that they lost for manufacturing in the u. S. , so very policyheavy. No doubt about that. Where the question is is whether or not it made a difference this far the election cycle. Francine 26 days out from the election, what do the polls tell us, kailey . Cannot 100 take what the polls are saying for what will actually happen come election day, but the Real Clear Politics National average put joe biden ahead by 97 points nationally come and when you look specifically at several key swing states, quinnipiac diversity put out a poll just before the debate that showed biden leading in a number of them, florida of by 11, leading ina up, also ohio, all states key for Electoral College, which biden would have to win to secure those votes. The odds of biden winning the Electoral College are up to near 83 , so we will see if that changes in the next. 26 days. We will see how that can change if indeed we do get a president ial debate, a second one, and of course a lot of that depends on introductory of the president s own covid case, francine. Iley, a lot of people have already cast their mail and, have already decided who they will vote for. What will the next 26 days see . Will it be more clashes . Will the president hit back, even while fighting covid . Kailey a lot of ballots have already been cast, and it is not clear whether there are a lot of minds left to change at this point, but what the change in the next 26 days as the president will be returning at some into the campaign trail. He has of course been off the trail since october 1 when he got that positive covid19 diagnosis. Is he able to get back to those rallies, really build up a lot of momentum with his supporters . That could make a difference. And of course we have gotten one october surprise in terms of the covid diagnosis with the president , but there could always be another one. 26 days is not that long, but in politics, it is quite a long time, francine. S kailey bloomberg leinz in new york, staying up all night, really. Get some sleep, kailey. What is the prediction based on more than 68,000 interviews for the u. S. President ial race . We will speak to the next, and this is bloomberg. Berg. Vp pence lost a trade war to china . Joe biden never fought it. Joe biden has been a cheerleader for china over the last several decades. Sen. Harris the president s trade war with china, he lost that trade war. He lost it. What ended up happening is because of a socalled trade war with china, america lost 300,000 manufacturing jobs. Farmers have experienced bankruptcy. Of the highlights from the u. S. Vice president ial debate between Kamala Harris and mike pence. Number ofat is the interviews carried out so far across all 50 u. S. States. It is a technique which works differently the most models, predicted the results of last years u. K. General election within 12 seats. It is latest forecast for the u. S. Presidency, and they think joe biden is set to sail past, taking 243 electoral votes 343 Electoral College votes to trumps 195. Some cant stand the polls and whether they are right, you have a slightly different methodology to what we see two american polls. Why do you think yours is better . What we are trying to do is look at more data than ever before. This model takes into account a variety of National Polling data as well as individual battle around state data, and that is important because, if we remember what happened four years ago, when polling went a bit wrong, the National Picture was correct in terms of the difference between Hillary Clinton and donald trump, but the battleground state picture, which determines who makes the 270 Electoral College votes and thus who won the presidency was wrong. So what our model does is it combines that battleground state polling with National Polling data and other sources of data to give a more accurate picture based upon his very large data sets, and that is why we can say with greater confidence this time what state of the race is, which seems to be a clear advantage to former Vice President biden. Francine marcus, what do you hear from the people . We hear from people speaking close to the president , the advisors, you know, aides, saying a lot of these polls they do not speak as if we about yougov but a lot of these polls are skewed, because there are people who will vote for trump but are embarrassed to tell the posters. Famous,ah, the anonymous, shy voter. Theres very little shy about them. Trump voters tend to be very proud about their voting intention, they tend to be very loud about their voting intention. The shy biden effect is more practical, where republicans a e have never voted for democrats but might be willing to do so. As for the myth of the shy trump voter, i tend to think that it is a convenient excuse, both for pollsters who have gotten things wrong in the past and also for campaigns that might not be doing so well in the polls. Francine so theres not a female shy trump voter, marcus . If you break it down, you have the trump base, very vocal, very prothe president , you know, you have the democrats, progressive, probiden, and then there is this, like, elusive, how do female voters vote because they found the president much too aggressive in the debate . What are your polls saying about that demographic . Marcus suburban women are some of the most important voters in this election. It is because President Trump was able to keep his margin of defeat narrower than 2016. In 2016 then Hillary Clinton that he is able to win the election. Suburban female voters have been leaving the trump bandwagon in their droves. They have been leaving it mainly because of the coronavirus crisis, but also our polls show because they do not like the tone or the tenor and the general on president ialness of much of the trump presidency. That was manifest very clearly in terms of the debate last week and the handling or rather mishandling of the coronavirus crisis, in fact, the white house thereafter only a compounded that fact. That is why it looks like instead of losing those voters by a narrow margin like he did in 2016, 60 of suburban women are currently looking upon the 68 of suburban women are currently looking upon the president with disapproval. Francine are they different than 2016, and, again, is the gap between the two contenders widening . Widening, butp is there is a difference. We are in a period of transition for the Electoral College and what the battleground states are. The rust belt states, the midwest, those traditional battleground of iowa, ohio, pennsylvania, wisconsin, michigan are still very important to the election, but you no longer need to run the table in them in order to win the presidency. Instead, you need to win most, if not all, and that gives the Biden Campaign the opportunity to wins, say, what michigan, wisconsin, pennsylvania to win, say, michigan, wisconsin, pennsylvania, and the opportunity to win maybe even florida come as we see in the last week or so, Biden Francine marcus, how comfortable or how confident are you that the people that you poll will go and vote . So if there is bad weather, if they are worried about covid, you know, could that change . Because he really had to energize your base to make sure i think we have lost, actually, marcus roberts. I am not sure if marcus is with us. We have a couple of technical difficulties. Really fantastic insight from yougov. Aswill get back to marcus soon as we can. This race is 26 days away. As kailey leinz was saying, a lot can happen in 26 days. For market moves to bring to your attention, regeneron gains in premarket trade and several several, asking regulators to authorize emergency trade for immediate use. It outnt trump approved under a Compassionate Use Program after becoming sick with the coronavirus. Premarket gaining more than 5 . Coming up, is london facing the end of its dominance as a dock trading hub . Stock trading hub . A new report. We will have the latest on brexit, next. This is bloomberg. Oomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Now, lets get straight to the Bloomberg Business flash, heres leighann gerrans. Hi, leighann. Leighann hi, francine. Aftery major acquisitions a rebuke with its risk control. Officials are also reversing the right to acquire changes in Senior Management if the company does not act quickly to address the shortcomings. Chevron has overtaken exxon mobil as the largest u. S. Oil company by market value. It is the first on the texas giant has been there thrown b een dethroned. They are both behind next era. The biggest producer behind wind and solar power is the biggest utility. The pandemic is wreaking havoc on the budget carriers summit schedule. They apply about a quarter of the its typical capacity during its final three months of the year. It is calling on the government to step in with even more aid. And more restrictions on jack ma as well as tencent. Sources tell bloomberg that is over concerns of a digital payment, threatening national security, and disrupting the ipo. That may be the Worlds Largest ever. And that is your Bloomberg Business flash. Francine . Francine thank you so much. Brexit negotiations could break down within days after the u. K. Warns it will pull out of eu talks if there is no clear deal insight next week. Progress on the key sticking points of state aid and fishing rights appear, from the outside, at least to be slow. By cboee, a report Global Markets says london is losing its role as europes leading stock hub. Companies could actually go elsewhere after brexit. For both on these stories, we are delighted to be joined by our brexit editor, edward evans. First of all, thank you so much for coming in, but what is really going on behind the scenes . It is unclear whether it installed are still progress, or the 15th of october, that is it, no deal, and the u. K. Leaves under wto agreements. Edward lets take the two questions. Thet, you have to separate rings mention from the briefings and political leaders, what is going on in the negotiations. On that part of the discussions, you can begin to see now some signs of progress on state aid and some on fishing, but and it is a big but to get to a deal, political choices need to be made i political leaders, and we are a long way from that point. The october summit is Boris Johnson deadline, not to get a deal, but to see if one is possible. The talks could then go on a little longer. The point of that summit is johnsons own deadline. It is not clear that the eu are perfectly prepared to let these negotiations back onto the end of the month, possibly even november. The one deadline that has not shifted and wont shift in all this is december 31. That is when the transition period ends and when britain leaves the market and customs union. The problem is, they need to ratify an end limit a deal by then that is why you are seeing people trying to get a deal at least signed and agreed by the end of october. Francine is a 50 50 on whether we get a deal or not, or is it more likely we do not get a deal, or is it impossible to say . Edward to get a deal, there needs to be a choice by Boris Johnson on what state rules he is prepared to follow. Now, initially, that you wanted u. K. The eu wanted to u. K. To sign up, and it looks like it has pulled back from that position, but what it needs from johnson is a statement to what the u. K. State aid rules would become and so far, those have been pretty vague, so if johnson wants to make a move, he will need to put something forward on state aid. Block is big stumbling fishing. Bear the stumbling block is french president emmanuel. The french have pushed very hard to savor european fishermen over british fishermen after the end of the transition period. For the british, this is an absolute redline, taking back british waters. It is clear to see ambassadors in brussels yesterday, he wants the eu to soft in its position. Aid,u get a deal on state it will be very quickly after that, i suspect. Francine ed, thank you so much. Edevans, we will get back to on brexit and what it means for the trading hub. Up next, we talk about the economy. This is bloomberg. S bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to the bloomberg first word leighann news with leighann gerrans. Leighann hi, francine. Senator Kamala Harris and mike pence faced off last night and their only debate of the election cycle. Harris condemned the trump administrations handling of the pandemic, calling it the worst failure in u. S. Government history. Hence it back at the democrats tack plans tax plans and questioned if they wanted to pack the supreme court. President trumps apparent recovery from coronavirus that she has announced his intention to authorize emergency use and provided free to americans. The president added he believes his brush with the virus was a blessing from god because it gave him firsthand experience of the therapy. And in the u. K. , the government is drawing up rescue plans for businesses struggling to cope in areas forced into local lockdown. Bloomberg sources say no firm for rollingn set out the package, and it depends on any changes to the rules. About 17 Million People are in areas with strict virus restrictions. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. Francine she says france and spain are very pretty girl he poorly. France has reported a Record Number of new cases come and italy infections spikes to the highest level since april. Joining us is lorenzo bini smaghi. He understands everything there is to do between markets, the economy, and im sure like most of us, you are now a virologist. How worried are you that the recovery will be uneven because we just dont know how these infections will develop . Well, animal spirits are the key issue. Right thatt trump is we really have a medicine that is available to everybody that can make it easier to recover, that would certainly be a game changer. We are to be but expecting the vaccine to arrive, or some breakthrough in terms of can give ant horizon to the and of the crisis and accelerate the base of the recovery. These signs, the risk of a second wave and people having to stay home longer, working more at home, those who can and more businesses shutting down, pace of the recovery is likely to be weaker than we thought, with of course then problems accumulating and maybe the need for more stimulus. Which is now the debate, i guess. In terms of Monetary Policy and fiscal policy. Francine what have you learned about the kind of recovery we are seeing . Many people were saying the rebound was quicker than we were expecting, but the scarring could be deeper because there are industries, companies that will go out of business and will not come back. The rebound or the end inthe freefall that we saw q1 and q2, i think that is the beginning. But the uncertainty is about q4, and especially 2021, because that is where we should need really a recovery in terms of consumption investment. When we look from the banks perspective, we dont see yet a sharp increase in nonperforming loans or in the cost of credit. Actually, it is doing better than we thought. But of course it is early. We have to see how the risks are coming, how businesses and the heads of businesses is going to develop going forward. I think it is still too early, but of course the concerns about , iecond wave are dominating think, the economic perspectives. Francine so are we going to see much more from government . Again, it seems that all Central Banks are saying, look, we can do more but be more useful as fiscal policy was a bit more robust at this point. Lorenzo i think this is the current debate, in the u. S. And in europe, that may be more is needed, more stimulus on the fiscal side. Europe is discussing the Recovery Fund. Is not yetnt finalized, but there is a lot of pressure for it to close this issue, because otherwise markets and start to worry again, we may need to do more in terms of convincing markets that everything that is needed will be down to will be done to avoid a depression or a deflation. Inflation rates in europe are negative, and this is worrying because it is these anchoring Inflation Expectations and the loop, aentering into a aretive vicious circle, rising again. So the discussion again, the economic policy, needs to do more than what has been done so far. Francine is there anything that can be done to try to avoid the japanese example of deflationary pressures, or overall because we are doing quite a lot in terms of stimulus, and because there is quite a lot of centralbank action, and because a rebound could be quicker once we find a vaccine, you see a risk of inflation . The move, thenk european move to this Recovery Fund has been a game changer. I think they risk is coming too late in the second half of 2021, so what needs to be done is, first of all, to take the decision quicker and maybe to frontload part of it as the markets are most ofng the risk that the measures will come too late, when the recovery is suffering. So we need to strengthen the some of and to upfront the measures that are needed in this phase to accelerate particular public investment, and create a Multiplier Effect on the economy and maybe also contribute to stimulate private investments. Francine do you worry about negative rates, negative rates being here much longer and hurting the Financial System . That in well, i think principle, Christine Lagarde has at the ecb entered qe, it should have reduced Interest Rates to a much lower level, and this would have created negative effects. So the ecb i think is starting to recognize that beyond a very shortterm effect, negative rates are producing a negative bankson banks, on profitability, and on banks ability to lend. We have to look at the combination of Monetary Policy, but also prudential regulation and how the combination of the two are creating the environment which really enables banks to support the economy. And if i look at the combination of the two, a negative rate and some of the prudential regulation, in particular, concerning the ban on dividends, which may be corrected in the third term, but if it remains, it creates uncertainty about the willingness for investors to system, as financial investors, and so there is a the of fleeing away from Financial System, and this is not good for the Banking System and for the real economy, because it does not create enough capital for the banks to support the economy. Francine what is the prescription to deal with this, and our regulators and policymakers aware of this risk . I think what markets need is certainty. For investors who may have the intention to come in and invest in the Financial System, what are the rules for distributing dividends . Certainty, they will invest in other sectors, where there are no bands on dividends. So i think we need clarity as soon as possible. 2020 it was correct for not to distribute dividends but for 2021, i think it is essential to have the possibility to provide investors with some return so that cap so that they can come in again and support the Financial System, the Banking System, and this will enable the Banking System to support the economy, to provide more credit. So we need certainty as soon as possible on what are the rules of the game. Smaghi, lorenzo bini from Societe Generale route, stays with us. Thatom satiety general from Societe Generale route, stays with us. Coming up, we hear from the e. U. Trade commissioner on a new deal with the u. S. And the wto candidacy. Dont miss that interview. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Wtos nextfor the director has been whittled down. It means the body is set to get its first female leader. We spoke to a new you trade commissioner on the candidacy it as well as a trade deal with the u. S. Important to is have an experienced candidate with political experience, which can actually bring the wto Member States to discuss things, including at political level and to make compromises. They hated to wto form and many things to happen, so first we need to revitalize negotiating function of the wto. We recently had multilateral agreements, and many things are wee multilaterally or need to unlock this station and internally we need to get the wto procedures more in line with the current challenges come also being able to deal more efficiently with issues like industrial subsidies and transparencies for technology transfer, intellectual property rights, so there are many things which indeed need to be dealt with. And there is also the question mark about what is going to happen with the e. U. When it comes to the u. S. What can you tell me about that . Well, obviously we are in a close contact with the u. S. , and our first references to a negotiated settlement, where the u. S. Is drawing their tariffs, then we will not reduce our tariffs, and we have to discuss how we deal with disciplines in course, of civil of if we will not see engagement , we willu. S. Side impose our tariffs in line with the wto rulings. Francine lets get more with lorenzo bini smaghi. That was Valdis Dombrovskis theyre talking about a trade deal with the u. S. The more immediate threats to the markets is what happens on november 3 in the u. S. How much volatility do you think we will see in the markets from now until november 3, but maybe even possibly beyond . There are at least three factors of risk. Of uncertainties. One is who will win the president ial election, but maybe even more importantly, we have a of coursenovember 3, in the morning. How long will it take to get a result . And the third question, which is maybe even more important is what is going to be the combination of president ial election and Senate Election. It will make a big difference if for instance we have biden winning the president ial election with the Republican Senate or biden with a Democratic Senate. These are going to be big factors determining the policies that will be implemented in the u. S. And of course the forced uncertainty, how strong will biden fee to select some of the key persons in the administration . For instance, who will be the u. S. Treasury secretary . Could it be elizabeth warren, for instance, or somebody else . So these are the uncertainties that are making the markets very nervous at this stage. Francine is anything priced in at the moment . Or is it just volatility . All the Central Bank Actions are waiting for more stimulus and waiting for politics to quiet down. What is the market be the politics and what you are clearly looking at . Think, as i mentioned in the end, the Senate Election is underestimated maybe in the public comments, but it is a key issue because the ability of biden if he is elected to implement a real change in policy, a real stimulus, we depend on his ability to work with the senate. Clearly the Democratic Senate will make a big change. So markets are looking very closely at the different races in different states where senators are up for election, and as the markets as the the ability ofs the Democratic Senate, i think they are getting more bullish, i , with the possibility of a package being adopted to quickly stimulate the economy in the u. S. Very clearhere is a narrative in london that despite no butter how much happens because of brexit, if there is a deal or no deal, because of the uncertainty we have had so far, london as a financial help will lose out significantly because a lot of the banks will have to move trading platforms outside, and that will have possibly an impact on the consumer or the customer at the end. How do you see this evolving . Wouldnt call i clearly uncertainty uncertainty is not a good thing, but what is emerging over time is the concept of equivalence, that is being in london and working on the same rules as other continents is going to be difficult. We see that with switzerland, with other countries, and of itrse it is a friction, creates a friction with the , that the sovereignty u. K. Political environment is so keen in defending. So there will be tensions, even if we have a deal at the end of thatear, showing equivalence is being implemented across the channel, is going to be eight is going to be challenging over time, and will create friction. So these debt so this uncertainty, we inevitably need Financial Institutions to try to move people to the continent and to move activities to the continent, avoiding this uncertainty and these continued discussions about equivalence of norms and regulations. So i think it is going to be a trend more than a disruptive change that will penalize longer. Francine are banks deciding now, or are they waiting to see the outcome . Lorenzo i think they have already decided partly, and they are continuing to make changes, my impression is that after the agreement is done, and the first incident, the first discussion about how to implement the concept of equivalence, there may be some through activities through. For joining us, we touch on the number of things, coming up, how much of a difference to the vp showdown make we will take a closer look is bloomberg. Is bloomberg iseconomics, finance, this bloomberg finance. Difference did the showdownr the vp make with global assets . Danny is here with insights. This was certain on the front burner, but without any fireworks after the bait after the debate, we saw the status quo. This enabled itself to continue a in hopes of stimulus, with hope of eyed and winning in the polls. It seems like the 10 year yields continue their charts higher and the dollars moving lower. Has put it,ner regardless of who wins the election he thinks we will get more stimulus. Thats whats moving this. But there was one reaction that came after comment from Kamala Harris. Lets take a look. The president s trade war with china, he lost it. What ended up happening is because of a socalled trade war with china, america lost 300,000 manufacturing jobs. Farmers have experienced bankruptcy. Those comments causing a rally in stock futures. Francine thank you very much. Bloomberg surveillance continues in the next hour. And we have a conversation with the dallas fed, and robert kaplan. We will focus on the vp showdown. This is bloomberg. Viceine Kamala Harris and president debate. Nancy pelosi says she is open to an Airline Relief bill, this hold on hopes of a bigger physical block down the track. U. K. Boards that it will pull out of the e. U. If theres no better deal by the end of the week. And londons days as a stock trading hub could be numbered. Ispy thursday, this bloomberg surveillance. Tom and francine here. Tom, a lot of people enjoyed the debate because it was a lot less background most a lot less most st lacqua its a lot less. And couldnt