From the bloomberg terminal. Tipping point Boris Johnson is set to tighten u. K. Restrictions after a spike in virus cases. Italys government also considers stricter lockdown rules. Britains other headache the Prime Minister tells angela remains significant gaps in brexit trade talks. A crucial eu summit takes place. Hursday, and stimulus President Trump and House Speaker nancy pelosi blame each other for a lack of progress on a second package. Larry kudlow says he expects more negotiations this week. We are just under an hour away from the start of cash equity trading throughout europe, and in the u. K. , lets look at futures, indicating a positive open this morning across europe. We have euro stocks futures up 6 . 75 utures in frankfurt up and ftse futures kind of trailing behind, but still a gain of. 6 . Stocxx up. 6 . Gmm . Do you see on the anna i will get to that, but we have some breaking out from london. Iag says sean doyle will become ba, part of iag. This is interesting, given the plight of aviation at the moment, that we have seen that management change. We see that asian equities are not doing too badly today. Up. Ave the ms tia pacific chinese stocks are doing well. You see the selling of the chinese currency, very clear, so the pboc making it easier to short the chinese currency, unhappy perhaps with some of the strengths within of late. As a result, we see a little bit of a tick up in the dollar more broadly, but the dollar index as of now almost entirely flat. Its a holiday in the united states. Trump and pelosi continue to blame each other in terms of lack of stimulus progress in the united dates as we edge our way towards the election in november. Week ahead is going to be busy. Brexit talks continue. Virus restrictions in europe. Banking reporting season getting under way Imf World Bank meets with plenty to talk about this morning. Here are our top stories. New sparring over stimulus in washington. President trump and house quarrelingcy pelosi over the lack of progress. Larry kudlow says he expects the sides to continue negotiation bus has new deal is not essential for the u. S. Recovery. The annapolis fed president said the nation could see a very slow recovery with thousands of businesses at risk and that more action in washington is pivotal. The u. K. Is set to tighten restrictions in an effort to curb the spread of coronavirus. Prime minister Boris Johnson ,ill unveil a new tiered system dividing areas into medium, high, and very high alert. The deputy chief medical officer warned the nation is at a tipping point. Prime minister Boris Johnson is calling for the eu to back down from its hardline position on fisheries. He made it human the comments in a call with chancellor merkel and president Emmanuel Macron ahead of a key eu summit thursday. It is still unclear if enough progress will be made or if the u. K. Will walk away from negotiations. Global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in within 120 countries. This is bloomberg. Matt thanks very much. Laura wright in london. The offshore yuan falls after chinese policymakers acted to restrain strength. They made it easier to bet against. Lets get to the markets with laura cooper, our Bloomberg Mlive strategist. How will a weaker yuan affect assets . Certainly picked up the pboc action over the weekend did prompt this weakness we are seeing, but it shows the pboc is more worried about weakness than the speed of gains. I think its probably too soon to declare an outright depreciation of the currency from here and therefore knock on to risk assets, but taking a step that, it would suggest that we could potentially see that way on the s p 500 over those risk proxy currencies like the aussie dollar or even potentially commodities, just given the fact that those are priced in u. S. Dollars, so that could actually impact demand, but i think at this stage, really, the pboc is signaling that after, you know, the strongest quarter for the currency in 12 years, they wanted to have some tempering of that enthusiasm rather than outright decline, so i think at this stage, its a little too premature to declare that, but the last time they did kind of pricing, weforward did see the currency slump about 2. 5 in the weeks that followed, so likely some nearterm pressure, but probably not enough to really prompt a major selloff Going Forward. Anna good morning. What is the nature of the transmission mechanism between a weaker yuan and other risk assets . You can see maybe this has an on the aussie dollar, but some of our colleagues even writing about weaker u. S. Stocks. How do we get from the chinese currency into the broader risk story . I think theres two components to that in this current context. One is certainly dollar weakness, so if we do see, you know, you want strength resume, then that portends dollar does tend tothat be a tailwind for u. S. Assets. Then, the second component of that is just the fact of the yuan strength so far this year has really captured just the growth and narrative in china and the fact that it is amongst the only economy that is going to grow this year, so that is a positive bright spot in terms of overall demand for global trade and knock on effects to other economies, so that is helping to kind of feed into this broader risk on narrative that looks to be kind of taking hold. I think those are the key transmission mechanisms that are going to play out. Even if we do see the currency kind of lose some of that momentum, still going to remain, you know, relatively supported. Matt ftse futures are gaining. The pound is a little stronger against the dollar right now. Gilt yields are coming down. We are looking at or getting ready for more serious left in the u. K. And, you know, Boris Johnson has said if he has not made enough progress by thursday, they are going to lead with no deal. Why do risk assets look so positive ahead of such a difficult week for britain . Laura its another case of another crucial week for brexit negotiations, and that self imposed deadline does not necessarily mean a hard stop. If there is enough progress on talks this week, that could actually be a moving target, so we could see negotiations persist through the end of the transition period. I think thats why risk assets are really taking this week in stride, but i think the important thing to note is that even if we do see a deal or no deal brexit, the difference between the two at this stage are quite slim, and that is overlaid on top of quite a challenging growth backdrop for the u. K. , so we are seeing potential for renewed restrictions coming in place, and that comes as the u. K. Economy has already lost its initial readout momentum, and it continues to lag its advanced economy appears, and its going to remain kind of sluggish Going Forward, and so brexit certainly is not helping to alleviate any of those headwinds. Anna what else is going to take our attention this week . Ongoing focus on the way europe handles the virus with more than two months to go until we get to 2021. Perhaps winter temperatures ahead of us. A lot of focus on the u. K. And also italy. Certainly we are seeing governments in several countries including italy, spain, the czech republic. They are prepared to tighten restrictions as infections rise, as hospital admissions rise, and clearly that is on the radar of the ecb this week. We had the imf and world bank meetings, so that kicks off with Christine Lagarde today, and what they are telling us is that a rocky road lies ahead for the recovery. We are still in this period where inflation remains exceptionally week. The growth backdrop is deteriorating, so that likely portends even further monetary stimulus, so clearly, the backdrop right now is one that remains quite challenged, and then as we look to the u. S. , that is going to be another busy week ahead. We have a number of u. S. Data, and while markets dont anticipate any kind of stimulus package ahead of the november 30 and, its likely to be the case that may have to get worse whileta front markets dont anticipate any kind of stimulus package ahead of the november 30 election. Anna as we get with the market open for europe, up next, critical gaps remain in brexit trade talks as the Prime Ministers own deadline for pulling out approaches. We will get details. Matt welcome back to bloomberg markets. This is the european open. Were going to open up in just about 48 minutes. You can see that futures are green across the board for European Equity indexes, which is quite industry quite interesting. Ftse futures barely treading water, but cap 24 cac 24 futures up. 4 . Its interesting because we face a selfimposed deadline on brexit this week. Maybe thats why the ftse is not doing so well, and a serious aree in covid infections expected to force lockdowns, certainly in great britain, possibly throughout the rest of europe. In germany, we started our first curfew since world war ii on saturday night. We still have some optimism coming through asian stocks, and that could be whats driving european futures so far. Lets get the Bloomberg Business flash. For that, we go to laura wright in london. Laura a federal judge rejects the request to put fortnite in apples app store. The techpany alleges giant runs and illegal monopoly. The case is headed to trial next year. The worlds biggest maker of rubber gloves is considering a hong kong listing to make to raise more than one billion dollars. Bloomberg sources says say it is working with advisors on a potential share sale. Its already trading in cobol of them poor and singapore. At 1 billion, it would be the in hong kong. Y Saudi Arabias National Commercial Bank has agreed to by its rival for 15 billion. The new firm would have a total asset of more than 220 billion, creating the gulf regions thirdlargest bank. Its market cap would nearly match that of Qatar National bank, the middle easts biggest lender. Thats your Bloomberg News flash. Much. Thanks very lets get more on whats happening in terms of the news update for you. There is aabout how big deadline coming, certainly in the mind of the u. K. , anyway, theres a big deadline coming. Unclear as to if the germans are very attached to this deadline. Has told Angela Merkel significant gaps remain in trade talks. Johnson has set thursday as a deadline to reaching a deal or coming close to it. Lets get an investor perspective on all of this. Roger jones, head of equities at London Capital joins us. Good morning to you. I wonder how much time you spend thinking about frexit these days compared to other risk trades in the u. K. How do you view the negotiations as we head toward the end of this year around brexit . Good morning. It is certainly true used to be a centrifugal focus for investors, but i think it has moved on along with everything else. I think it is important still. I think the market has come to the view that the discussions that are ongoing at the moment are very much the sort of process style. Theres a lot of bluffing going on and ultimately, there will be some sort of trade deal that materializes. Both sides claiming a victory, but the details would be the important part. Fairly sanguine approach. I think some of the u. K. Stocks, especially domestic stocks, are probably pricing in a bit more risk, but the u. K. Market in itself is very international, topheavy, and i think that is really what has been holding up the markets, though it has been clearly a big underperformer year to date. Matt yeah, i mean, its down what . 18 year to date . Other European Equity indexes are not doing a heck of a lot better. We are looking at drops im sorry, the ftse down 25 year to date if i look at it in euro terms. I guess its different depending on obviously, if you are invested in pounds, its down less than that, but we still have big drops in other equity indexes, with the exception of the dax down only 1. 5 , do you think the germans are doing that much better . Thek to think the makeup of index is a helping point. Clearly, the industrials held up a better through covid19. A lot of these were required services that did not need to shut down and continued to operate. We have seen this for some of the german industrial businesses that have held up a lot better than the Consumer Service line, so i think the makeup of the index is quite a bit stronger. Remember, the u. K. Makeup, a large part of that is the oil majors and also the financial stocks as well, and it has been very tough for both of sectors. Me ask you about financials. We got a note from city this morning recommending buying banking stocks, and largecap lenders are trading on lower multiples during the financial crisis by some measures we got a note from citi this morning. Is that a compelling argument for you to get involved with u. K. Banks or increase waiting, you given u. K. Banking uncertainty, given uncertainties around unemployment and where that gets you in the u. K. And the knock on impacts on business . I think it is certainly true haveu. K. Banks valuations been very hard hit. Its absolutely true the levels you got to in the financial crisis, but the difference this time as the levels of capitalization in these banks and their ability to survive a period of significant losses and provisioning that has already been put in place has been very large and was very frontloaded into the first half of this year, so we are sitting a lot better than we did clearly in the financial crisis side of it, but as you mention, there is still a lot of uncertainty out there in terms of how the domestic economy is going to the size and magnitude of this commercial real estate is a big question that has to be answered by banks. I think it is certainly true missing the catalyst at the moment for these stocks, of in the way to some extent given the valuations. Matt what do you expect in terms of bankruptcies, in terms of defaults . You mentioned commercial real estate. In terms of loan losses for european banks going into the end of the year . At think its going to be quite big. I think we are going to start to see him take on assets, start to get Bank Ownership of assets. In scandinavia, but i think its a good example of it, the banks start to take on some oil rigs, and we are going to get to that sort of ande as we work through these measures are very low Interest Rate loans start to roll off. I think in terms of the havetude of it, the banks provisioned quite a lot up front, so i dont really see this being an issue for the second half of the year. Its really what happens later into 2021 and seeing how that avelops and seeing if we get much more challenging aspect with banks would be if the becametial market difficult as well and we started to see a lot of things accumulate there as well, i think that would be difficult for the banks. Matt thanks for joining us. Roger jones from london and capital is going to spend a little more time with us. We have a lot more to talk to him about. Coming up, it pays to be picky. We will speak with roger about why longerterm investors need to be particularly selective in the current environment. This is bloomberg. Back to bloomberg markets. This is the european open. Right now about 36 minutes from the start of cash equity trading. The ftse futures nearly up right now, but we are looking at gains on the cac futures about. 3 . Up about. 5 right now on some optimism tearing through from asia. There are plenty of risk events to subpoint equities in the mediumterm, but longerterm investors need to be very selective. Roger, it does look like, you know, we are downgrading our expectations for some of the biggest western economies, for the Global Economy longerterm. Where do you think are the best places to be right now with your money . [indiscernible] economic backdrop a pretty tough place to be for earnings growth. In terms of what we are seeing, clearly evident this morning as asia, there come out domesticong, recoveries and strong growth from immature economies as well. We are seeing oil prices predominantly being low, which is helpful in terms of emerging market economies, and also in terms of the geopolitical starting toe market look at the potential of a democrat clean sweep in the u. S. Wars are expected to be significantly less under democrats than they have been for President Trump. In terms of asian markets, we are also starting to look at valuations will look which look relatively attractive. I think thats probably one of the brighter spots at this point in terms of an oil threat to investors. Anna kalinskayas very much. Anna thank you very much. It will be interesting to see how u. S. Markets play the various risks involved. Coming up, a deal still not insight with trump and pelosi blaming each other for the lack of progress. Is anyone pricing in a deal before november 3, or are we waiting a little longer . This is bloomberg. 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. Anna welcome back to the European Market open. 30 minutes until the start of cash equity trading. Futures to the upside with the exception of ftse futures. Let us have a look at some of the events on the agenda. The imf and the world bank will. Old their meetings virtually we will hear from Christine Lagarde. Wall street banks will begin to report earnings. Details tomorrow from j. P. Morgan and citigroup. Details at the end of the next hour from our team about what to walk for watch for. And apple is expected to unveil its 5g iphones. Thursday, another brexit deadline. European Union Leaders will meet in theory to uproot a postbrexit trade deal. And on thursday also we will find out if there is a second president ial debate or not. President trump said he would not take heart in a remote debate. And the ongoing focus on the virus and europes handling of it. Matt that is a lot going on. Now excited for this week that you have read that. Morning calls. R Juliette Saly joins us out of single or. Analystsff with what are saying about the pbocs fallpts to let the yuan further or stop the recent rallies. What are you seeing . Liftsolutely, this move to the 2yearold role making it easier to bet against the yuan. Newman,g to hsbcs fred it is not a game changer but a tactical move he sees to the upside. The rule change is not seen as a signal of discomfort with the recent gains. What could this mean for other currencies and asia . In asia . They are more susceptible. Uan has giveno back of a lot of the gains we saw on friday. It strengthened to its highest levels since april 2019. Some weakness coming in today but some analysts saying it could be shortlived. Out goldman has some calls what are they . They are saying that you could shorten the dollar if we see the increasing likelihood of through ine coming the president ial election and if we have favorable outcomes on the vaccine. The dollar index could hit 2018 lows. And if you are looking at volatility weighted currencies, look at the South African rand and the mexican peso. The wide margins reduces the rate of a written of a delayed election risk. You very much, Juliette Saly. Let us get a bloomberg first word update. Is set to u. K. Tighten restrictions in an effort to curb the coronavirus. Boris johnson will unveil a new tiered system. The deputy chief medical officer has warned the nation is at a tipping point. President donald trump is no longer considered a coronavirus transmission risk. His physician said he has met the criteria to end his self isolation. se president symptoms have improved. The president has a rally planned in florida for tonight. Lebron james has led the lakers to its first nba championship in a decade. This is its 17th title. The m. V. P. 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. Anna. Matt. Matt laura wright in london. With your first word news. Traders may be coming around to the idea that the u. S. Election will not end in fireworks as volatility bets ease around the world. The real believers seem to be in emerging markets. One of the big risks around the u. S. Election we have been hearing about is not that a democrat or republican is in the white house but the threat of an uncontested election. As biden has started to stretch his lead in the polling, we have seen the volatility complex come down significantly. This is from a week ago, the vix curve. Around nearterm volatility and the election come it comes down dramatically though we still have a kink in the carver around the election. We do not have the steep dropoff however. When you think about volatility, it is in the em spaces making sense because it is a higher beta asset class. The spread is what i am showing. Over the past couple of days, volatility for em assets and become cheaper. Benefiting emlar assets. This is one of the biggest areas where traders are taking a deep breath. Where there is no concern which is a little bit volatility. Here is the difference between nasdaq volatility and of it. It has and vix. Fears of more regulation, should there be a Democratic Congress and a democratic white house, really are not showing themselves through. Anna we saw some interesting house recommendations around technology. Thank you. Dani burger with the latest on volatility around the election. Let us stick with the election, we are joined by jodi schneider. What is the latest in polling with three weeks to go . Why is joe bidens lead thought to be expanding . A little more than three weeks and we are seeing President Donald Trump trail joe biden by 12 Percentage Points in a National Poll of likely voters. That is a washington postabc poll released on sunday. Other surveys including from cbs inws joe biden up six points nevada and michigan, highly contested states and tied with donald trump in iowa, a state the president won easily in 2016. Part of this is over the handling of the coronavirus and his own Coronavirus Diagnosis and the week of treatment. People think that while most of the voters surveyed think the president is healthy enough to carry out his duties, many are concerned with how he handled this. We are particularly seeing this with older voters, that is a group that donald trump won in 2016. They are split now almost evenly and a lot of this is over the concern of his handling of the coronavirus. That question, the handling of the coronavirus and and the blame game on stimulus between President Trump and Speaker Pelosi, where do negotiations stand . There is a blame game. Saying they are having a hard time with nancy pelosi moving forward and nancy pelosi saying the administrations offer on pandemicith the health is inadequate. Larry kudlow expects treasury secretary Steven Mnuchin and beaker closely to hold more talks this week. The treasury secretary said they may increase the amount of aid the administration is offering. Wow they are gelding at each other about who is to blame, it does look like they are continuing to talk. Part of the issue is whether unspent money from previous stimulus could be spent in a targeted way before they offer a bigger package. That is something larry kudlow has mentioned and the white house would like to see. The spending from the unused funds to the paycheck protection program. The democrats in the house do not want to see that. They do not want these targeted issues. I want to see a bigger package and they want to see that before the election. Anna thank you very much, jodi schneider. ,alking about the u. S. Election let us bring up this chart. Whether we will see a repeat of 2016 making the point that Donald Trumps polling is not that far away from where it was in 2016. We know that many on the republican side say that polls always over poll democrats. And we know about october surprises. And there is always the disconnect between National Polls and the states that really matter. Perhaps focusing on the popular vote. Maybe we need to get more granular and look at the state that really matter. Matt absolutely. Definitely something we will be keeping a close eye on. Coming up, we will be talking keeping a close eye on the virus. European leaders stepping up efforts to contain the spread and we will discuss that as brexit approaches. This is bloomberg. Anna welcome back to the European Market open. The start oftil equity trading. A bounce at the start of trade despite ongoing concerns around the virus. Ftse futures looking flat. European leaders are stepping up efforts to contain the spread of the virus. Doris johnson is expected to announce a new tier system of alert levels. And the government is working on tighter restrictions around dow durings. And curfew restrictions. In germany. Very much a european story. What is focus on the european side. Good morning. Or as johnsons new coronavirus lockdown measures announced today there has been a lot of backlash from various parts, within his party and the opposition. It does seem like this will go to a vote in the comments. Particularly for the numbers to make sense. Is there a enough fiscal support or a furlough type support . I think we are seeing a new phase not just in the virus but in the way the government has to handle things. Of the viruswave when it emerged in march and april, the government announced its measures and held press conferences. That is no longer enough to maintain public support. The government negotiating with local leaders, the mayors of liverpool and manchester and also with parliament because it has pushed back so forcibly against the idea that measures have been taken without Parliament Scrutiny and vote. Now, Boris Johnson will have to go to parliament. Show the evidentiary base. That is one of the things we can expect a day. Government disclosure about the evidence it is using particularly in the hospitality industry. Labor has always said they will support the government measures. Lead ther does not party should politicize questions about dealing with the virus. At the same time, they are very aware there is a huge displeasure in the north especially with the closing down of the hospitality sector. They will seek to make demands. In the end, i think labor would support a government measure. We have conservatives that are very unhappy and others that have been trying to press the government on why it is taking these measures. Going to benow is more debated in parliament than previous measures ever were. Why seems pretty clear, right . The virus, the infections are spiking and you want to stop that. At the same time, they have to deal with her exit and a self imposed deadline. Boris johnson has said that if he has not made enough progress, he will abandon the talks for a no deal. And the french are insisting on. Ishing in u. K. Waters how much progress has been made . Clear very much progress has been made at all. Most people think there is a compromise that can be struck but it is also about Boris Johnson being able to go back to his party and say that he got concessions out of the eu and it is about eu leaders also feeling that they have not somehow rewarded johnson for breaking international law. I think at the moment we have a game of chicken. Negotiators say october 31 is the ultimate deadline. What the hard deadline is but i think it could easily go into november. What i think we will see this week is eu leaders becoming more engaged. They have been so distracted why the virus that this is not this has not been drawing them in at the head of state level it i think that is what will start happening this week. Ana fishing remains, such iconic industry. It has a controversial relationship between the u. K. Fishing industry and the eu ever since the start and yet it is so small in terms of the economic contribution. It seems to be holding such sway over these negotiations at a time when we know the eu economy is facing a tough winter. It does feel like tension over brexit is the last thing these governments need when they want to get economies robust enough before the winter comes. The eu wants a deal as badly as britain was like a deal and maybe even more so. They cannot afford to walk away from this. They also know that the eu does not want to be blamed for having the talks break down. They remain at the table and i think both sides have calculated that the other would really like a deal. And in a way, that has increased the risk that you could accidentally fall into a no deal situation. And there is the other calculation that works against the deal and that is even with the deal, it will be such a minimal agreement that there will be disruption and cost and trade friction. Some have argued quite plausibly that if there is no deal, italys Boris Johnson can say this is a result of the eu being in transient. If it has a deal, once the thisions, has to accept is the result of brexit which complicates the situation. Fishing is a small share of the economy but trade deals often small but highly political issues so this would not be the first time. Matt thank you for joining us. Aphael of Bloomberg Opinion joining us. Fors once again crunch time her brexit. Let us get the Bloomberg Business flash news. Games a federal judge has rejected the request. Direct pay option that circumvented the apple system. Andsing it of running illegal monopoly. The trial will be next year. The biggest banking takeover this year saudi americas saudi arabias. Have wouldould be creating the gulf regions Third Largest bank. The uks financial regulator has imposed just four fines so far this year, a record low. Periodom 17 in the same last year. The decrease is likely down to difficulty with conducting interviews due to the lockdown. That is your Bloomberg Business flash. Anna laura wright in london. Minutes away from the start of equity trading. We will get you the stocks to watch. Is facingone Company Another potential takeover attempt. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are six minutes away from cash equity trading. Your your stocks to watch from dani burger. Here are your stocks to watch from dani burger. These are earlystage talks. A lot of hurdles to get over. They need to get over a poison pill that kpn has in place but they also need consent from the dutch government. Ceo to takeng a new over british airways. He came from aer lingus. He has faced some criticism regarding some cost cuts in the service changes. The clashes with unions that happened because of that. He is now out as head of british airways. And astrazeneca, more news around their research for the coronavirus. They are entering the late trait late trials. They have received 486 million to support the research and as part of the deal, they will give 100,000 doses. Anna dani burger with your stocks to watch. The market open. Four and a half minutes to go until the opening of the market. Ftse futures looking decidedly sluggish this morning. This is bloomberg. A minute to go until the start of cash equity trading for another week. Tipping points. Boris johnson is set to tighten u. K. Restrictions after a spike in coronavirus cases. Britains ugly headache Angela Merkel saying significant gaps remain in brexit trade talks. And stimulus clash. President trump and nancy pelosi lack ofch other for a progress on a second package. Larry kudlow expects more negotiations this week. Matt take a look at futures. Here we are we have seen london treading water but it is now down. Euro stoxx 50 futures are gaining about one third of 1 . Dax futures are rising about 0. 4 . The numbers are getting smaller as we get closer to the open. Take a look at the live cash trade. This is the global mover screen. Nowftse opening up down about 0. 2 . The ibex in spain gaining about 0. 2 . Looks like you will see a little bit of a mixed market with the ftse down and other continental European Equity indexes gaining this morning. The ibex the others take so long to open. The cac is up 0. 1 . European markets mixed because the ftse is falling. This as the virus continues its unrelenting spread. Throughout europe really. Rants posting another daily infection record. Germany reporting the most covid related deaths since may. Joining us now is eddie vander wal. The concern is not the actual but actions or death rates what happens in response to them. For example, lockdown measures. How heavily is this weighing on markets today . It is a real concern coming back into the winter. We have not seen a sustained selloff. There is an assumption that most governments will try not to shut down the whole of their economy again. They will try a piecemeal approach. We are shutting down the north of england or parts of it. That is the assumption. Governments will do that. At the moment, we are seeing the infection rate. It is climbing at quite a fast clip. If that continues, we may have to see broadbased shutdowns again and that will be a very difficult thing for markets. Anna we are hearing from the Prime Minister of france. Talking about how general lockdowns must be avoided by all means. Frenchain stating the position that they really want to avoid all out lockdowns as we have heard from many european governments. Let me ask you about other things moving markets. Overnight trade and asia dominated by weakness in the chinese currency. How is that affecting other assets . My old favorite, copper. Yuan is a managed currency for all of its flaws. Chinaeing the metal is the biggest consumer of copper. What we have seen is the tends to correlate with the stronger demands for copper. That would be one place i would expect it to have significant fallout. , it is harderrd for chinese consumers to purchase cars and so on. We are seeing right now if i look at European Equity indexes gains in Continental Europe though a loss in the ftse. We were talking about the differences between the performance of the ftse and the dax. Why is this . Why are german equities or the german equity index doing so much better year to date . Is it the brexit differences . Covid difference . Think brexit is waiting but also the pound plays a role. It has had a bit of a bounce back. Differencet makes a and it plays on the ftse. Most of these companies are exporters. Anna it is often about the fx. When we see the london market go its own way, we look at the pound. We are seeing a bit of Pound Strength this morning. What about your thoughts on bond markets . About inflation, some worry it is coming all others say they cannot find it right now. What are your thoughts on inflation . I think that is right. In the shortterm, central bankers are not optimistic. They talk about inflation above 2 . Of wishfuls is a bit thinking for higher inflation. We dont see any signs of that yet. But in the longer term, we are reaching the logical bottom for bond yields and we are seeing this probably for inflation also. I think these are cyclical drivers. I think we are coming to understand that we do not completely understand this. And i think we are going to see inflation play out in a different way Going Forward than it has in the recent past simply because we are reaching the troughs of what we should logically expect. Matt what should we expect from Central Banks . Is there a another is there a another wave of action coming . We have lagarde speaking again and i think she will say the same sorts of things. We hope to see inflation above 2 . We stand ready to act where we can. I think central bankers feel a little lost at this point. While they wont admit it come i think they are realizing that they are reaching the end of the power they have to move markets. They are reaching the lower bound of that. They wont say it. There is not much they can do. What they need is fiscal and conspicuous in its absence so far. We still we keep hearing promises that do not see them. Anna plenty from the fiscal side. Thank you for joining us. Watching the stimulus. Eddie vander wal, thank you for joining us. Street Lending Program has been a disaster. A key part of the central banking response stateside. This is bloomberg. Matt welcome back to bloomberg markets. Open and weeuropean are 10 minutes into the trading session. The ftse is down 0. 2 while the dax is gaining 0. 2 . Head isritish airways being replaced by the leader of aer lingus. He is leaving. Over costticized cuts. The uks financial regulator has signs so far. Our a record low. Just four fines so far. A record low. Casescontinuing to pursue and the figures rise and fall naturally. Epic games has failed again to force apple to put fortnite back in the story. Apple removed the game in august after epic set up a direct a that circumvented apple. The case is headed to trial next year. The worlds biggest maker of rubber gloves, top glove, is considering a hong kong listing. Bloomberg sources say it is working with advisers on the potential sale share sale. It would be the biggest other listing by a Malaysian Company in hong kong. That is your Bloomberg Business flash. Anna lara right in london. Scott minerd says the fed main street Lending Program has been a disaster. Ceo says it has done permanent damage to the jobs market. Turns on the definition of saving the economy. Trillion that is probably enough to buy us another 36 months. It wont come in time to make a difference for the month of november but the impact may start to be felt by christmas. , the cares act for existence has done very little to lift structural growth for the long term. Monetary policy has saved the credit markets in a lot of ways. A lot of these bigger businesses have been able to find financing. How would you compare that to the access for credit for smaller businesses as we have seen so many of them shut down already . Arehat the policymakers doing is leaving themselves open to another round of criticism just like they got at the end of the financial crisis. The Government Programs were designed to bailout the big boys but they left main street behind. The main street Lending Program has been a disaster. The ppp, which was a Great Program as an emergency stopgap, is gone. And all of the aid to the. Irlines has been used up we are going to start seeing , mores and structurally than half of americans are employed by small and medium businesses. A lot of them are never coming back. And we have permanently done damage to the job market which some other industry or future growth is going to have to correct for and that will take a long time. You called the main street Lending Program a disaster. Is the fed ultimately able to meet the needs of main street . I dont think the question is what the fed as much as it is in combination with the u. S. Treasury. When you look at how the main street Lending Program was designed, the banks were sitting position andloss they have to absorb a lot of losses if something goes wrong. At the same time, they cannot use nor will they be capable of the underwriting standards necessary to make good loans. I can understand why the banks are having a lot of success with this program. They are guarding their capital. The other side of it though is that the banks did get a big windfall here, especially those that underwrite securities, by corporatend bond issuance. Record profitability. I think there is sort of a feeling in washington that there is a quid pro quo here. We did this program that made you a lot of money so you should be taking some losses on these main street loans and i think they are at a standoff. Let us talk about the banks. Some have said that the Consumer Outlook has gotten better for them. Is that selective bias . The bank has chosen better customers anyway and a large part of the economy is not being seen by the banking system. There is certainly a large part of the economy not being seen by the banking system. An issue for chairman powell and other members of the Federal Reserve because getting money or capital into the inner city communities, minority businesses, it is nowhere similar to the levels that get to other sectors of the economy. Structural issue that is basically embedded in the system is going to lead to a on the view of socialism and other programs which basically directly protect certain groups of our society. Guggenheimwas partner, cio scott minerd talking to us. Thirdquarter earnings. Top of mind for investors, how much worse is it going to get . We preview the agbank earning and look for some outlook, next. This is bloomberg. Anna welcome back to the European Market open. 20 minutes into the trading session. Ae ftse 100, a bit of laggard. Some Pound Strength. The dax and cap make more gains cac make more gains. Laura President Trump and nancy pelosi hit out at each other over a lack of progress over a new rescue package. Larry kudlow says he expects the sides to continue negotiations but a new deal is not essential for the recovery. President donald trump is no longer considered a transmission risk. Metphysician says he has the criteria to end his isolation. He did not say if donald trump had tested negative for the virus. The president has a rally in florida tonight. The u. K. Is set to tighten its restrictions. Prime minister Boris Johnson will unveil a new system of over levels dividing england into areas of medium, high, and very high levels. The nation is at a tipping point. Lebron james has led lakers to its first nba title in a decade beating miami in game six for a record equaling 17th title. Mvp for thehe fourth time. The nba withn miami, cleveland, as well as with the lakers. 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. Anna. Matt. Matt ok, laura wright with your first word news. Bankseek, wall street report their earnings and we will be watching closely. Month,he start of this lenders have risen almost 9 . From thespite underperformance during the pandemic. Joining us to discuss what to expect is bloombergs dani burger. Earnings figures will they build on the market momentum . It seems momentum has come from optimism. I spoke with the Deutsche Bank ceo and he was upbeat. Dani part of the optimism is hopes of an inflationary environment which would help banks. Somene point that may undo optimism is income margins are so under pressure. Many executives have downgraded their outlooks for what to expect. Consumers not spending a lot on credit cards. Net is negative for interest income. Altogether, lenders are expected to have higher profits. Part of this is that they have doubled there were chests to protect against war chests to protect against bad loans. It gives investors the chance to dream of a time when they can start to release some of these loanloss reserves and that in turn would help their profits as well. Anna what kind of commentary will we get from executives . Scott minerd said some banks have been given a windfall with the amount of corporate debt issued and as a result, there was an expectation in washington that these banks may take some losses on their main street lending. How will that fit into the narrative . Dani absolutely. That ties into how they see the credit environment, the dealmaking environment and related to policy in washington. Will theyon is how face the question of politics and how will that impact what they see as the environment ahead . Will they be preparing for a more inflationary environment . We will also get more details about cost cuts. Go ofhave begun to let employees. Wells fargo making a lot of adjustments as well. Will we hear about more cost cuts . We talked about how morgan theley that was only second megadeal they have had this year after purchasing a trade e trade. That will be another topic brought up by analysts on the earnings calls. Matt take a look at the other movers outside of banks. Kpn is one facing another potential takeover attempt. This time, it is from a pe firm. Dani this will be one of the ifgest takeovers from eqt it happens. This is very much in the early stages. They are exploring what a takeover might look like. They have a lot of hurdles to get through this. Itself or the dutch government. Anna dani burger with the latest on the bank sector. Other movers kpn. Stockegen. The lender may surprise positively. Online retailer in poland. Going public in poland with the biggest ipo we have seen in the polish market. 51 or so on the day. Reflecting the amount of excitement there is around anything that is technologyrelated in europe. Just as there had been previously in the united states. Much like amazon in the east. Tap into the things that have done well during the coronavirus. Fascinating ipo and story. The question is, can it hold back amazon . We will speak exclusively to the the easy commissioner, johannes hahn. Matt welcome back to the european open. We are 30 minutes ended the session and we are still seeing a gain in the stoxx 600. Seeing that as continental stocks rise while the ftse falls this morning. Bloomberg first word news. Revenue falling over stimulus in washington. President trump and nancy pelosi theout at each other over lack of progress on a package. Larry kudlow says he expects the sides to continue negotiations. President donald trump is no a coronavirusred transmission risk. His physician says he has met the criteria to end his self isolation. The symptoms to have improved but did not say if donald trump had tested negative for the virus. The president will be in florida tonight. The u. K. Will tighten restrictions in an effort to curb the spread of the coronavirus. Boris johnson will unveil a new system dividing england into medium, high, and very high alert levels. The nation is at a tipping point. Lebron joins lebron james has led the lakers to its first title in a decade. James was an bp for a fourth time with his 11th finals tripledouble. Mvp for a fourth time with his 11th finals tripledouble. Won a championship with cleveland and miami. 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. Anna laura wright in london. Time now for the brussels edition. Your essential need to know guide and for that we go as ever to maria tadeo in our brussels studio. Maria . Today, i am excited because we have an interesting interview coming up. Is european commissioner tackling something that has never been done before. We are joined by the budget commissioner. Johannes hahn. This is huge. To give us an idea, when will we see the Commission Cap markets for the first time . Two. Hahn we will issue different kind of a bonds we will start with socalled sure bonds. It is aimed at supporting member measures support aiming to bring people back to work or keep them at work during these difficult times. And for this we have a maximum volume of around 100 billion. We will start issuing the First Tranche in the second part of october. And the biggest chunk and the second half of next year. After that, we will start the next generation part which is finally more than 800 billion and this will start i suppose by the end of the Second Quarter next year. Maria there will be an issuance of short bonds that will happen at the end of the month. November. And when it comes to the big Recovery Fund, you expect that at the Second Quarter of 2021. Normally, you would issue a 10 year potentially but given that Interest Rates are so low, jp morgan might have a 50 year bond . Comm. Hahn legally we will have certain limitations until 2058 but we aim to repay earlier if possible. Marketnds on the absorption capacities. On average, we expect maturity in 15 years. Mentioned thet absorption of the market. The market will be flooded by good quality, debt. Are you speaking to investors . Comm. Hahn we have already reached out in july. My experts at the first ference with investors last week we had an investors call. That . Who was on big banks . Comm. Hahn everybody was there so im very confident there are a lot of expectations. In particular, if you take short , the current bond market is around 50 billion. What aressue considered social bonds. 30 of the bonds. We pursue our political priorities with these bonds. Mentioned the call that happened last week. Who was in it . Comm. Hahn the whole range. Private investors, public ones, etc. Americans, japanese, norwegians . Comm. Hahn it is more or less everybody. Im very confident. We have to coordinate also with our big Member States to avoid any kind of unhealthy competition. Andink this is routine work we include ourselves in this coordination. Maria how are you looking at this . Do you want to issue the debt through syndication . Comm. Hahn this is something where we coordinate with our main Member States. Germany, italy, spain, france. The big issuers. We are coordinating with them. I have no doubt that this will fly. When you move away from the bond issuance, it has to do with the european budget. The yields have been anchored by that but there are concerns that it may not be operational by the start of 2021. When will the Recovery Fund be operational . Comm. Hahn the Recovery Fund works that Member States have to provide their reform plans. It has to be a test it has to be assessed by us. Just by the end of last week, i was informed that spain has already prepared their reform plan. Maria and that is looking good . Comm. Hahn moving in the right direction. The intention of the Recovery Plan is not only to recover but also to invest in future areas like green areas. Our of economy will be better equipped for future crises but also more come but also more competitive. That is why the Recovery Plan is not just about filling budgetary inpholes but about investing future maria you are confident about your date . We are in the last mile of negotiations. Fund, this next generation is part of it. I hope we get the agreement. And also for preparing the annual budget of next year. Nextis is the case, the generation will be i am confident that all Member States have to ratify this agreement and then we can start borrowing and that is why i expect if we donerm well, this could be at the end of the next the Second Quarter next year. Thank you, commissioner for those specific deadlines. The idea that we will see inst initial tranche october. In brussels. Adeo thank you very much for that important interview. Up next, a cycling uptake with the pandemic. Are searching for alternative ways of transport and cycling is one of them. We speak with the brompton bike ceo, will butleradams. This is bloomberg. Anna welcome back to the European Market open. 42 minutes into our trading session. European equity markets started on the front foot. The dax clinging on to green. The ftse 100 was an underperformer this morning. A bit of strength in the pound early on but now we are flat. Let us get a Bloomberg Business flash with laura wright. Laura epic games has failed to force apple to put fortnite rack in the apple store. Epic set up a direct pay option circumventing the apple system. It is accused of running any legal operation. The case will go to trial next week. Arabias National Commercial bank has agreed to purchase its rival for 15 billion. It will have a total asset of more than 200 20 billion creating the gulf regions Third Largest bank. Boss alex cruz is being replaced with the head of aer lingus. Shawn doyle will also replace him after a transition perry o. A. T. Period. Transition criticized over cost cuts and service changes. That is your Bloomberg Business flash. Matt laura wright with your business flash. With the coronavirus pandemic, more people are searching for alternative modes of transportation and cycling is among them. Joining us now is will butleradams come from and bicycle ceo. It is not just the pandemic but in lets say the thievery london among other cities that encourages people to purchase folding bikes. What are your sales looking like right now . Will we are off the charts. We were unable to supply demand. We took quite a hit during lockdown but we are making our bikes by hand in london. There was a global shortage of a bikes so the supply chain was under pressure. We are may be making 20 more thes then last year that demand is way off from what we can produce at the moment. Anna that is interesting. Are you concerned that longerterm, if people commute less, that perhaps longerterm there will be less need for bicycles even though you struggle to meet the demand at the moment . Will that is a concern that this is a bubble and there is a big reaction as a result of the coronavirus but i think it is more than that. We have been on this trend as we become urban and people realize they live in a world that is very urban with poor quality air and paying money to go under the ground into a little metal tube and that was before coronavirus. We are seeing mayors across the this is not a london or berlin issue but a global issue. And cities are realizing that they want to make cities nice places to live and they are investing in cycling infrastructure. They are not only thinking about the risks of coronavirus but also the risks to mental and physical health and getting on a bicycle makes you feel great. Matt are you concerned about brexit . How bad will that be for sale . How bad will that be for sales . Or are you expanding outside of britain . Will we have the capacity to double our output in london but we cannot turn it on overnight. In terms of brexit, in many respects it saved us because we have been waiting or it for so long come it was imminent a year ago and imminent a year before that. We have been waiting for brexit. It kept getting put back. That saved us because when we came out of coronavirus, we did not have enough stock and the supply chain was under pressure. We do have brexit coming now and the global pressure on parts for cycles is great. We do have a challenge coming with likes it. Tomay reduce our ability grow as fast but in the medium to longterm come i think we will weather the storm. Europe will find an agreement with a few bit pushed to one side and i hope we will be the main bit because we are relatively straightforward. Things, ind scheme of think we will be fine and on a macro level for cycling, we have been living in cities in a completely nutty way. That hastackling to be the way to go. The lessonsntioned that up and learned around brexit and coronavirus. Let me ask you about the ways these have responded to coronavirus to give more facilities to cyclists. In the u k, there are big plans. Doctors prescribing cycling and creating 12 man minihollands. On a journey been and we have seen this in new york and around the world, there is a shift with what has happened with the current crisis. It has accelerated the investments and commitment from cities around the world. Cycling is a smudge on a piece of paper where roads and rail have Huge Investment wall cycling is seen as a sideshow. That is beginning to change. K wehe first time in the u are being given a per capital investments. In paris, it hundred 50 kilometers of segregated cycling lanes. Probably with the exception of new york where things are still a it old school, there is a massive wave of investment. And cycling has been recreational in the last 40 years. And is about urban living about how you transport yourself. If you are going to go see some friends 40 miles away from the betting on a bike is a bit optimistic for most of us but in a city, when you are traveling four or five miles come it is a breeze and youre are going way faster than the traffic. Matt absolutely. I had my 70yearold mother writing to the top of the burchestgarten. But doe expensive now you do a lot of electric asian tear bikes . Ification to your bikes . Will it is small and light because you have to carry it. Because they are expensive, they get stolen. An electric bike is quite attractive. There is no doubt the price will come down but it is not going to come down to nothing. The demand for lithium batteries is high and technology has advanced to and there is a cost there. If you want a tool that you use every day, you should be prepared to invest to get something half decent. Will, thankteam you for joining us. Consultsof england other banks on how ready they would be. We get the details next. This is bloomberg. Mattanna welcome back to the European Market open. We are starting off positively. A mixed performance. The bank of england is asking Financial Institutions if they trying to assess the readiness of the Financial Services sector. Metcalfeon this, tom joins us now. What is the significance of what the bank of england is asking the Banking Sector about . Tom it makes it that much more likely that they may try to implement this. When they first said they were looking into this, they made it clear that they did not think it was a policy tool they were planning on using. But they are following the procedures to see if they could put this in place which shifts to the point where they may begin to implement negative rates. From people who do not like negative Interest Rates. Ceos having aank hard time with this. What are the positives the boe sees coming from negative rates . Tom the reallife examples it is not a clearcut case at all. In one case, it Interest Rates were so low this was the only next step they can take. To their mind, they are looking andhe main street economy they say this may encourage investment. You are right. When i talk to the finance bankersa lot of [indiscernible] metcalfe talking boe. ToBoris Johnson is said tighten u. K. Restrictions after a spike in virus cases. It also considers stricter lockdown rules. The Prime Minister tells angela while crucial eu talks take place. President trump and Speaker Pelosi blame each other for lack of progress with 22 days to go until the election. Trumped trails joe biden and a Fresh National ball