Breakthrough could happen any minute. Good morning, everyone. This is bloomberg surveillance. I am Francine Lacqua here in london. The focus of courses on the markets, because we are expecting a lot of earnings, banks, roche coming out, and later, u. S. Stocks. Poundlso looking at the on the back of the selfimposed brexit deadline. If you look at some of the earnings, they reignited a bit of concerns about the number of cost cuts and job cuts. Time, you can see european stocks down 1. 7 . Now lets get to the bloomberg first word news. Here is leighann gerrans. Hi, leighann. Leighann good morning, francine. Disappointed by the slow brexit trade talks, and a call with eu leaders, he said he will decide after this wiis key summit if it is worth continuing to work for a deal. He previously indicated the u. K. Will walk away if no agreement by october. Germany is still optimistic a deal can be reached. Always the right way to discount questions that can be difficult, and sometimes at the last moment, you will find a solution. U. S. ,ann over in the President Trump has spoke out putr facebook and twitter out restrictions after an article over his election challenger joe biden. Bidens sun hunter introduced his father to a ukrainian executive. Facebook says Fact Checkers are checking the articles authenticity. In thailands capital bangkok, protests continue. Yesterday, tens of thousands of demonstrators broke through police lines to march on the Prime Ministers official office. Protesters want new elections, constitutional reform, and curbs on the traditional powers of the king. But they say they do not want to bring down the monarchy. 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, europe is intensifying its unrelentingurb the virus resurgence. Imposing a curfew in paris and other major cities. Chad good morning, francine. One of the challenges she faces is germany is a federal system, which means a lot of decisions are up to state leaders. She was frustrated last night. She met with state leaders for eight hours, and when she came on again for press conference late last night, she basically said look at what france is doing, france is putting in place a curfew, and she is really struggling to get any sort of agreement out of these leaders. She put her chief of staff on the radio today here in germany. He basically said germany is on the cusp of a second wave, and if we dont act now, it wont only have Health Effects but effects on the economy as well. I will be watching very closely to see how this continues to play out here in germany in the next couple of days. Right now, the new measures that they put in place have been very piecemeal, to say the least. Isncine chad, you know, it fascinating and terrifying at the same time, it is really up to leaders to decide what kind of approach that they take. If you take a look at the u. K. , france, and germany, they are taking very different approaches to how to beat the virus. Chad yeah, i think the real challenge is, francine, all of these countries went through very strict lockdowns in the first wave. They took huge hits to their economies, and now they are trying to find their way how we move forward without having another complete lockdown . Because merkel said herself yesterday, the economy cannot afford that. So they are all trying to find their way. In germany, for example, they decided to close restaurants in hardhitp. M. Areas, but there is an effort to tamp down on Domestic Travel in germany. Forre in followed a season schools here, and you heard merkel saying no, we will not do that, we are going to let people travel within germany, so it is really taking stabs here in the dark, trying to get this under control. Francine chad, thank you so much, our western european managing editor. The stoxx 600 heading for its biggest drop in three weeks. U. S. Stimulus deming ahead of the election. For more on the markets, lets get straight to dani burgers. Dani francine, the picture of the market is definitely a concern of the picking up of the coronavirus case count in europe. Falling more than 2. 5 , both germany and italy reporting record numbers of new cases this week, also seeing france putting on more restrictions, as chad was talking about. You can really see this reflect through the bid for more safe haven assets. Angela merkel said they have to control the coronavirus, so it would not be unreasonable to think we get more restrictions throughout europe, perhaps london also heading for a shutdown. So the disinflationary effect of those kinds of restrictions could result in Economic Growth slowing, the ecb putting on more restrictions or more aid, rather, and that stimulus from the ecb prompting the haven and really these bonds from government and europe really getting a bid, and that is exactly the kind of reaction we are getting today. Germany 10year bond yields close to hitting another alltime low at the moment, trading at the lowest since march. Textbook, a clear, riskoff day. You get the dollar moving higher as well. Francine, you mentioned earnings together. That is not helping a single Industry Group in the stoxx 600 move higher. I saw grr on the screen, even real estate, healthcare, safer names, utilities, they are not falling much but most of them falling by more than 1 . Roche disappointing on their earnings come uncertainly not helping the health care sectors. You have the beta names, auto parts, travel and leisure, energy as well, tou thao disappointing on the margins. When you have a day like this with a higher beta sectors moving down, it is less about individual companies. It is more about the macro headlines guiding the markets toward a certain path. But usually on a day like this, unless it is really overwhelmingly good earnings, you can get some good earnings stories in there, but, again, really high correlation between stocks today, everything moving deeper into the red as the trading day progresses, francine. Francine dani burger, thank you, with the latest on the markets. Coming up, Steve Mnuchin blames politics for coming in the way of a deal. We will have that next, and this is bloomberg. Rg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Now, lets get straight to the Bloomberg Business flash, heres in london as well, is leighann gerrans. Hi, leighann. Leighann hi, francine. Of abusing funds, they identified the business administration. The revelation follow jp morgans findings that dozens of its own staff packed the rescue program inappropriately. The u. S. May be about to hold its curbs on chinese companies. Reuters reporting the state department wants to add another to its trading blacklist. The report says it is not immediately clear when a decision will be made, in fact, it will likely happen before the Fintech Company does go public. Ford will fail to meet european limits on Greenhouse Gas emissions this year. It is falling short because of a hybrid suvs. Et his fleet tong meet regulations. That is your Bloomberg Business flash. Francine . Leighann, thanks. Treasury secretary Steve Mnuchin is blaming politics for undermining negotiations. The white house blames democrats, but democrats have hit back, saying the administration did not take the need for more stimulus seriously enough. Joining us this morning as Maya Bhandari, Portfolio Manager at lumbee a needle. Maya, thank you so much for coming on. There is a lot going on resurgence of covid cases, stimulus in the u. S. Not coming. What will drive markets in the next couple of weeks . Maya good morning, francine. Thereou are quite right are several risk events on the activity on the horizon, the second round of covid19 and the activity that brings with it. As well as the furlough programs at the in that this month in the u. K. Command of course now two months to the end of the program in the United States. I think the balance is shifting in a slightly more cautious from a risk perspective at columbia threadneedle, we are feeling a bit neutral, more than we were this summer, francine, when we last spoke. Markets have come a long way from there, and the risk that we discussed are significant. I think if we look at Something Like corporate bonds, for example, back in, march april, may, 50 times the historical average default rate. Now they are actually trading slightly rich for those longerterm valuations. So we continue to participate in the intellectuals market, but we are feeling more neutral on risk overall, because we cannot quite see that factor that we list from where we are right now. Francine maya, how do you view the u. S. Election . Is it a volatility risk . What exactly is priced in at the moment . Is it a blue sweep, and how do you protect yourself . Maya [laughs] or a i think a blue sweep democrat victory is certainly increasingly being priced in or expected, so we say shall we say. It is likely to be associated with Corporate Tax and Capital Gains taxes, and a greater chance of regulatory reforms that could, for example, limit the ability to compound to infinity. [laughs] but equally, a blue sweep on fiscal would be such that it would probably lead to higher nominal growth for the United States than the counterfactual, if you would like. Results s into her in turn results in more negative for risks generally, because absent that democratic sweep, you could have selfimposed retrenchment of a fairly significant magnitude, around 4 of gdp in the u. S. So i guess the Upcoming Elections have not really altered the medium term constructive view on the u. S. , those two sets of factors come away really we continue to hold exposure to the u. S. , and above all, with asia, as our favorite way of taking equity risk, those high quality growth compounders that are most found in the u. S. Theould say, though, that possibility of heightened volatility in what could well be a contested electoral process is meaningful. This is reflected pretty well in option premiere, where there is a fairly u. S. Rnible kink around elections, and we think that is pretty well reflected at the moment. Francine maya, how do you view the possible clampdown or restrictions . It is unclear country to country, or even in some cases region to region, whether we will have lockdowns or whether it will be called something else. What does that mean for, you know, where you want to be invested in . Maya well, i think, you know, fears around a second lockdown, fiscal policy, and programs are all key factors that could appeal to assets at columbia threadneedle against cyclical or valueled exposures at the current juncture. On that purview, we are very cautious. I guess it is fair to say the widespread shutdowns that we had in response to covid19 delivered less of a knock to growth and indeed less of a knock to earnings than we fea red. However, when you look at the more cyclical areas of the world, like u. K. , like europe, our forecast are to the lower end for corporate earnings this year, reflecting very much those concerns. Is in a u orher it lshape view of the world. Francine maya, thank you so much, Maya Bhandari from columbia threadneedle stays with us. This is bloomberg. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Lets go straight to the markets, because european markets are sliding. On reports that the stimulus in the u. S. Is not coming, and corporate earnings in many places in europe said to ignite rallies. I am looking out the dollar, rising with treasuries. I would point out that euro stoxx 600 down 2 , futures are actually dropping by less. The chinese stock market continues to outperform peers in asia. European Union Leaders are in brussels. Boris johnson has that he is disappointed by full progress of brexit trade talks, but negotiations will continue to right now, postponing the decision on whether to walk away by tomorrow. Still with us is Maya Bhandari from columbia threadneedle. Maya, i feel like it is deja vu. It has been years we have been talking about deadlines with brexit. Much what will happen and how you invest ahead of the decision . Maya [laughs] you are quite right on the deja vu, francine. Unclearite remarkably where we ultimately land come although todays selfimposed deadline will not be held, which is the stanza some of the optimism in, for example, sterling, and indeed gilt. Some are greater than 50 but not sufficiently so, and columbia threadneedle, we are cautious on both the u. K. Economy and its assets, because, of course, not only are we facing the uncertainty with brexit but there are two other factors to consider, the first being activity and response to lockdowns, the second wave of covid19. And second, fairly intense Downside Risk from the end of furlough programs at the end of this month and eventually a consumerlet economy. Thee have so far made up discrepancies in pay, and measures are not in online enough to make up the difference. Sharpexpect a pretty rise in u. K. Unemployment, once we start facing similar risks, if you like, in this area to the u. S. So from an allocation perspective, the deteriorating story has left us with the exposure to the u. K. Stock, like equities, which we downgraded in late july. I should say as well that, you know, importantly, the composition of the u. K. Equity market is also skewed toward those value factors we discussed in the earlier segment, may be challenged in the environment we envision. Francine what do you do with pound right now, if anything . Maya [laughs] we are somewhat more strategically, we are certainly cautious on the pound, and we very much maintain that view. We can sort of see how they may have a little more coming in sterling, but those factors that i mentioned, you know, we do not really know where we are going to end up on brexit at the end of this year. We do not know how the Employment Situation is going to play out, and we do not know how the economy is going to fair. We are feeling relatively cautious, 11 contraction in the u. K. Economy this year, much greater in other parts of the world, you know, twice what we expect in the u. S. , for example, and more than in europe and indeed japan. Francine maya, when you look at the recovery of the world tomatoes definitely uneven, you know, with parts of asia being so much better than western economies. China had great numbers earlier in the week. How do you play that . One areah, you know, of surprising resilience has been asia into terms of growth and also in terms of earnings. Asia is the only area outside the u. S. Were earnings are expected to be above last years numbers by the end of next year, except you have positive earnings being delivered this year and positive earnings being delivered next year. So from an Asset Allocation perspective, asia and indeed the u. S. Are our two favorite areas to take equity risk. A you say, i think asia had pretty good crisis, on balance. Francine thank you so much, Maya Bhandari, multiasset Portfolio Manager at columbia threadneedle. Coming up today, not buying today, activist shareholders want to block by shopping. Our interview with the leading investor is coming up shortly. We also look at the markets every 15 minutes. The focus is on the stimulus in the u. S. , which does not seem to be coming. If you look at stocks in europe, i think they are probably declining on next wrote restrictions, clamp down, whatever you want to call them, for the economy, to deal with the rising cases of covid19. Also, corporate earnings failing to reignite rallies. Coming up next, we speak to leon bressler. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to the bloomberg first word news with leighann gerrans. Leighann france is imposing a curfew in paris and other major cities. The measures will be in place between 9 00 a. M. And 6 00 p. M. For four weeks starting this saturday. It is the latest move to contain the spread of coronavirus as rising infections begin to fill hospital beds. German chancellor Angela Merkel is warning we cannot afford a second wave of the pandemic if it is as strong as the first. Singapore and hong kong are set to create a travel bubble. It will exempt people from both cities from quarantine. The move reopened links between top financial hubs. The news is helping air carriers in the region, including Cathay Pacific and singapore airlines. The chances of Congress Passing a stimulus package before the u. S. Election are all but done. Steven mnuchin is blaming politics for undermining the monthlong negotiations. The white house has criticized democrats for hindering the rescue plan. Democrats have hit back, saying the administration did not take the need for more stimulus seriously. Tensions are rising between armenia and azerbaijan. For the first time in two weeks of fighting over disputed territory. Attacked ahas military installation inside armenia, who warns it may retaliate. It says it is now studying the incident. 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. This is bloomberg. Francine . Two sectors few sectors have struggled this year as much as operators of shopping centers. In a statement today, the shareholders say they will vote against a proposed capital increase. They also say that the company should extend its portfolio during the westfield takeover. Aremore details on this, we joined by leon bressler, the former chairman and chief executive of he is one of the changelders trying to unit. Is it really the right strategy to try and sell off some of the u. S. Assets in a time when the market is so depressed that you wouldnt get much for them . Leon good morning, francine. It is the right strategy. We are proposing an alternative strategy, but is not that it is not an abrupt implementation we are looking for. Lenientto recreate a pure player in europe. We know that is the right solution. It has worked before, it will work after. Investors want a pure play with the leading Shopping Malls in as from stockholm to far as the u. S. Is concerned is the numberbail two and number three combined. In the u. S. , a private Property Group which is a Great Company with a superb management is more than five times the size of the u. S. Operations of Unibail Rodamco westfield. We are a leader in europe, marginally in the u. S. , so we have to refocus. That is the name of our plan. Refocus. Francine when would be the ito time the ideal time . When do you think it would be an ideal time to sell the u. S. . When will it get more back to normal . Leon there is no specific pressure on the company. Liquidity, has ample so it is not a liquidity issue. Issue,ore a strategic and we will do that over the next two or three years. If you can do it more rapidly, so be it. But we do not want to rush into that. There will be a post covid world. The u. S. Always rebalance more rapidly and more spectacularly than europe. You have some great u. S. Investors, and within the unibailwestfield portfolio, which is too small to payroll to play a role, you have superb assets. We take our time and we do very well over the next two or three years as it advances more rapidly, and it will be a great result for the company. Francine you and your consortium have about 5 of unibail command unibail does not have any major shareholders. Unibail, and of unibail does not have any major shareholders. How will you get this leverage . Believe that our , that refocusong instead of reset is so compelling that we should be all the majorce investors in that company to be with us. Clearly we will create value while the rights issue would be devastating. It would destroy massive value. What investors want is Value Creation. They won a new strategic plan. They want a new entrepreneurial spirit. That is a way to correct it, and i think that the markets will react very positively to the approach. Francine would you be willing to take a bigger share of this company . Leon very much so. We are ready, that we dont intend to take control of the company. Francine you are ready, up to how much . No target there. What is key is to make sure that we work as a team with all of the leading investors. What is key, that the board supports a new strategy, which is very compelling, a very compelling story, and that we relaunch the company. It is very bizarre that such a leading Company Loses up to 85 soits value over 2, 3 years, it was a major strategic mistake. The attraction of the u. S. , perhaps it will have sometimes devastating effects on european companies. And Unibail Rodamco would not be the first want to be the victim of that. Launch the strategy, the Value Creation will be suremely rapid, and im investors will come with us. We dont want to take control. We want to be a leading entrepreneurial shareholder of the company, but shareholders will have their own, and im sure they will benefit very largely of that position. Francine do you think the current management of you rw were somehow bullied into the rescue plan because of shortsellers . Ask theu have to management. What we can say is what we want to do, but it is clear that management has been the prisoner of the westfield disaster. It is very difficult for a to reestablish himself after such a disaster, so we know that is very difficult for the management to reimagine a new strategy. But it will be up to the Supervisory Board to make the right decisions. We want to respect very strictly the best corporate government its governance guidelines. Worried that you there was a cautionary tale into the Shopping Malls from all landlords that actually did not do rescue rights issue when they had the chancing hoping to do better by selling things off . It is a completely different story. Isajor company, it completely dominant in europe, as i mentioned before, from scandinavia to spain via and superb Shopping Malls in the u. K. Are twod london and of the best Shopping Malls in the u. K. They suffered today but they will recover because of their dominance. Every major city of europe. I would add also that continental europe, and figures demonstrate that. Continental europe has been a much better market for Shopping Malls with the u. S. And the u. K. For a number of reasons. Reasons,ith legal political reasons. We have a much stronger position in europe. Then we give you one example, for example. The source and the u. K. Will play a major role. They are in great distress Department Stores in the u. K. Will play a major role. They are in great distress. That is one of the elements that i could add many others. Food, the big Food Retailers are not key anchors in u. K. Shopping key anchorshey are in continental european Shopping Malls. If you go to a Shopping Mall in spain or in france, you will see them. So the traffic is much stronger, and there is no dependence on Department Stores, which are disappearing. Thankne leon bressler, you so much for joining us today, and i hope that this is the first of many interviews. Bloomberg has also reached out to unibail for comment. The share price is gaining 11 as we speak. Another day, another deadline for brexit as e. U. Leaders gather in brussels. No e. U. Trade deal has been reached. Cable. Speak with vince that is coming up next, and this is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Was theders, this brexit deal that was supposed to be discussed. Another deadline has slipped by. Boris johnson told leaders he is disappointed by the lack of negotiations. It would likely need to be in place by early november. The german finance minister, all schulz, into that he expects a deal even if it comes down to the wire. Way tos always the right ask questions that are difficult up to the last moment, and my experience is sometimes at the last moment you will find a solution. We are also getting a headline that will impact, of course, the u. K. Economy, which is london could move into a tier two by midnight on friday. It was a couple of days ago that Prime MinisterBoris Johnson gave us an indication there are three bands. Dear did tier two would be right in the middle. It would mean that this would not be a lockdown, and i guess would be in lockdown for greater london, but for example, nightclubs and every i guess it would not be a full lockdown but something in between. Get to vince cable, the former leader of the liberal democrats, a professor in practice at the institute of Global Affairs at the London School of economics. Ins cable, i have many questions on brexit. Let me just kick off on these lockdowns and these tears. How difficult is it to actually go on with negotiations and on brexit while at the same time trying to figure out how these . Ockdowns work and dont work well, its a terrible mess. Part of the underlying problem is that the government is trying to direct negotiations from whitehall, and the system is not able to deal with it. It is very crude lockdown measures that have been introduced, which is causing a great deal of economic damage. The is superimposed on brexit shock which is just around the corner. Thinkne how do you brexit will get resolved . We are waiting in the next 24 hours to know whether we have a deal. From downing street, is there a wanting of the deal, or would they be happy to go to a wto agreement . Are people in government who want the extreme option, the other etiological rowing ideological wing of the movement. The Prime Minister, the chancellor and others are more pragmatic. They want a settlement, and i think we will finish out with what i would call a minimal agreement. In other words, no tariffs and no quotas, but all the other aspects of european integration that we walk away from. I think what people have not really focused on is the extent to which even if we get a deal, the process of leaving at the end of the year is going to be very disruptive because we are leaving the customs union. That is going to have significant effects on industries and supply chains. It is going to cause a great deal of additional bureaucracy and form filling, and all the feedback were getting from the various transport troops is that British Business is not ready for it. They are not ready for a new process of form filling, checking. They have not done the background work, possibly because they have been disrupted by covid. We are going to get quite a serious hiatus at the end of the year. Whether there is a deal or not. Francine what are the chances of a deal, vince cable . The two sides are far apart, but Boris Johnson is leading the negotiations almost directly with the president of the commission. Think hisi said, i instincts, certainly the treasury instincts and the foreign office, some of the key people here, it is to get an agreement. The agreement they are looking for is not very ambitious. We know there are two fundamental stumbling blocks. One is fisheries, which is very minor. From an economic point of view, it is totemic, and the british are looking for some concessions and they will probably get them. The more serious issue is the playing field. I think the british in the past have always been the country that wanted to have straight a discipline and some subsidization which they expected would come from france mainly. What the british seem to be angling for is an arrangement where they can put money into very high tech new industries. That has never been a problem in the past. State forry of business, we never had any problems. Likeine big metropolises london are going through a tough time because of covid. London will enter a high virus restrictions curving socializing. A reminder for all of our london viewers but also with the Prime Minister did earlier in the week is basically have a threepart tearing system. Fromis would be moving tier one to tier two, which means you can still socialize households cannot mix indoors. Vince cable, if we have a no deal brexit and some of these lockdowns on the capital, london, what will london look like in 12 months from now . Vince it is all very complicated. The Prime Minister himself has difficulty explaining what the differences are in behavioral change. I think most of us are totally confused. The substantive difference in london is that there will be this ban on mixing between households. People,t for lots of they will become alarmed by the pandemic and doing this anyway. I think part of the problem in ,he u. K. Is total confusion lack of clarity and messaging. That is much more damaging to the impact on the economy than the rules themselves. We are operating in a very depressed economy. The latest projections are 9 decline year on year, the worst of the main industrial countries except spain. Twice as bad as germany or the United States. And im afraid brexit coming on top of that is going to mean that the First Quarter of next year is going to be really bad as well. Francine given what some people call the chaotic handling of covid19, what do you see as Boris Johnsons political future . What will it look like . Vince well, he is clearly very uncomfortable. This is not what he envisaged vision was going to be about. He does not have the qualities to manage crisis, there is just a lot of optimistic Wishful Thinking going on. So we are not getting leadership. I dont know what is happening inside the conservative party, but there are plenty of noises that they are unhappy with his performance. I find it hard to believe that they will jettison him so quickly, but there are people like the chancellor who are outperforming him considerably, as deteriorated as they are, we may get some dramatic Political Movement in the next few months. Francine thank you so much for your time today, vince cable, the former u. K. Labor democrats leader. Coming up later, sir howard davies. We will talk about lockdowns, u. K. Banks, and lending. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. The headlines on london are actually coming in thick and fast. I to be is saying that we could hear from i tv is saying that we could hear from the Prime Minister shortly on a lockdown. I dont know if we call it lockdown or extra restrictions. There are so many questions, these three levels, three tiers. We are at level one and we could go to level two. That would mean no household mixing indoors. Six people can still meet indoors for the moment. I dont know whether it is having an impact. I dont know whether it is having an impact on the markets, and im also told it is just being confirmed. London is moving up to tier two from tier one from saturday. I think that is probably the early time on saturday, but it does mean that from saturday onwards, households cannot mix unless outdoors and unless it is less than six people. Bloomberg surveillance continues in the next hour. 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. Francine the second wave strikes europe. After a curfew in paris, london is getting tighter virus measures. They will be in place by saturday morning. In germany, new cases rise by a record amount. No deal. Steve mnuchin downplays chances of fresh stimulus ahead of the election. Nancy pelosi says the white house offer remains significantly short. There are 19 days until the u. S. Elections. And brexit roundabout. Boris johnson seems willing to overlook his selfimposed brexit deadline. Germanys finance minister tells bloomberg a breakthrough could happen at the last moment. Good morning, everyone, and welcome to bloomberg surveillance. Tom and francine from london and new york. Tom, in the last couple minutes we had confirmation there would be much stricter measures on london from saturday. Remember the three tearing system we were talking about . Currently we are at one, which means it is only six people meeting at the same time indoors and outdoors from saturday. That is over, so restaurants remain open, schools remain