Into new orleans, killing two people. It also left 2 million homes and businesses in the dark. Experts say damage could total as much as 5 billion. Wto members are confronting the reality that the future of the genevabased institution is now in the hands of the american electorate. The Trump Administration has decided to block nigerias former finance minister as the next wto would record general. The u. S. Is backing the south korean trade general despite overwhelming support from other countries for the other candidate. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Mark Crumpton. This is bloomberg. It is 1 00 p. M. In new york, 5 00 p. M. In london, and 1 00 a. M. In hong kong. Im taylor riggs. Welcome to bloomberg markets. Here are the top stories we are following on the bloomberg and from around the world. The u. S. Economy recovered much of its normas ground it lost in the spring, expanding at the fastest rate on record in the Third Quarter. Yet it is still in incomplete recovery. We speak to john ryding. One of the worst performers westech yesterday but it is bouncing back today. The sector has a big earnings day after the bell. Apple, facebook, amazon reporting. In the spotlight as it chugs along to profitability and potentially an ipo. Sound familiar . It should. Lets get a quick check on the markets. After a brutal day yesterday, a bit of a reprieve today, particularly in big tech. Up 1. 8 . Elevated 40ar an but coming off of the highs from yesterday. 10year yields drifting higher, a little bit of a risk on tone today on that beaker better Economic Data begot. Lows, earlier down to the we have not seen since june. Off 4 on wti. Back to that Economic Data begot this morning. The u. S. Economy recovered much of the ground it lost in the spring, recovering at the fastest rate on record. Moments ago, we spoke to nancy pelosi who says the rebound is proof that we need more stimulus. Speaker pelosi the reason we had a better Second Quarter better Third Quarter is because of what we did in the cares act, the subsequent legislation for ppp that put money into the economy. Off and weng to wear need another infusion. It is not a question of we dont need it. It proves that it works, and now we need it more. Taylor for more, we are joined by john ryding of brean capital. Looking at some of the components in gdp, particularly consumption, are you surprised at the resiliency of this economy . John not at all with a degree of income support provided to the consumers. We saw in the Second Quarter a surge in personal income because of the unemployment compensation, 600 a week benefits that have expired, 1200 one time tax refund checks. We had a big increase in income in the Second Quarter. Although incomes fell in the Third Quarter, the degree of stimulus was reduced, but incomes are still about Fourth Quarter of last year. It is not really surprising being what constrained consumers in the Third Quarter was less the income they had and the ability and desire to spend it on services. We had a very strong goods economy. People are buying lots of stuff, much less services, where we still see severe impairments, especially in leisure and hospitality industries. Thatr following up on point, stimulus is sort of a bonus at this point . John we have the on employment claims data today and we are seeing declining people on traditional state benefit programs. The problem there is expiration of benefits. We are beyond the 26 weeks where claims surged in march and april. Now people are moving on to this 13week extended program. Soon, those benefits will be winding down. We have a much more impaired economy. In the labor market, 11 million thate have lost their jobs were employed in february. That income support for those households is going to become quite difficult. So we need targeted support until the labor market is fully restored. I think that restoration will take a vaccine and at least one or possibly two years before we got most of those people back in employment. Taylor talk about that targeted report. Within the weaknesses we got this morning, investment in ip virtually unchanged, Residential Construction only a small source of strength. What is going on in the weakness you saw this morning . John residential has been very strong. We are calling it a super v recovery. Investments in housing and what we have seen in home sales is actually very strong, about the Fourth Quarter of last year. Within Business Investment spending, we have seen weakness in nonResidential Construction. Who needs to build a new shopping mall, new hotel . Side was veryent strong with an annualized gain around 70 , and more strength to come probably in the Fourth Quarter, given what we have seen orders for capital goods in the durable goods report. Businesses are making it, investing in the future, and that is good news for the sustainability of the recovery. It is really the support or those who are being left behind at this point that is important. In other areas of weakness, Government Spending, people may think that is odd, Government Spending is down given the income support, but that is purchases of actual hiring, equivalent and services, not in terms of that income support. As we go forward, that will be a risk to the economy. State and local governments, unlike federal governments, are not allowed to run deficits. That will be challenging, something that remains to be done with the targeted support programs. Obviously, a very hot political betweenhe negotiations the white house and Speaker Pelosi, who you just had on. Taylor you are bringing me back to my muni bond the days, the budgeting goes on there. You mention something i want to go back on, the length of the recovery. Another analyst saying that to get to where we were at the end of 2019 may take until the end of 2021. Do you see that as well . John absolutely. Really, the problem is it depends on the vaccine. If we get a vaccine that is effective and safe, there is wide take of it, then we can get the industries where we have severe constraints. Cruise lines, hotels, airlines, bars, restaurants back in business. Something we have been pointing out, we have a bigger employment gap than gdp. 5 relative to where the economy would be in precovid trends. But the employment gap is more like 8 because of these laborintensive industries that are also not very socially distanced, that simply cannot reopen safely to the degree that would put these people back to work. For the employment objective to be achieved, to close the employment gap, the fed does not see that happening until the end of 2023. I dont necessarily disagree with that forecast, which is difficult. A lot of uncertainty, but we can all but hope that the medical science comes through for the u. S. And global economy. Taylor pushing this forward, if there is a blue wave, if there are higher taxes, what does that analysis show you about how much that hurts or not businesses, people, raising taxes on them . Good idea toever a raise taxes in a recession. I dont think we are in a recession, so the question is by how much . Example,he issue, for the Corporate Tax rate, is an important one. We had an uncompetitive tax rate that was hurting the economy in 2014, 2015 at 35 . It depends on where that goes. Competitive. Has a advantage, and there are gradations within that that may hurt or not hurt as much. Opinion, thaty would be still of a punitive tax rate. Be about not going to tax legislation that determines the path of the economy. Those are important issues for the productivity investment environments of the economy. In the short run, it will be more about can we get people comfortable getting closer together . It will be a good sign when we can do this interview in person in midtown rather than over skype. Taylor i look forward to that day. Im hoping it is sooner rather than later. Thank you as always. Coming up, new plans for we work. Why they are eyeing an ipo again even after the fallout of last year. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. A contrarian outlook on the pandemic and sending billions to communities over the year. That officersng will come back to life again. Erik schatzker spoke exclusively. O the ceo about a Business Centers for centuries and centuries have been attracting more people for very simple reasons. People like to associate with other people, they like to do jobs anding, there are employment, they can walk to work, they can do all the things that come with it, and this is not stopping it. In fact, i could probably make an argument that this will just reset it and it gets stronger. The point is, these cities are not going away. Suggests these cities are going away probably has not looked at history and is only reacting to the Current Situation going on about suburban housing. Suburbanl you our housing business, where we sell residential singlefamily homes to individuals, is booming. , but ithrilled with that think that is an anomaly at this point in time, relatively speaking. One of the things i have been struck by is the speed at which brookfield is growing. Assets have more than doubled in 550ast five years, billion. It took you 10 years to double assets before that. Now, you have set out a number of different areas in which you want to expand and grow. How long does it take to double assets again . Are you asking will we have a trillion dollars in assets in five years . Probably. If we dont, we have chosen not to for specific reasons. Our businesses make money for our shareholders and clients. We have two goals in life. Everything else is, we should do the right thing, all the things that run a business well, all of that, but those are our two goals. If it means that we should grow, we will grow. If it means that we shouldnt, we will not grow. We have to be very cognizant of that in everything we do. But there is one thing that we found in the businesses that we are in. Scale matters. When you buy things, there are not that many people that have the amount of capital that we have two be able to compete. When you deal with governments, constituents, clients, scale matters. That, that has meant that we should grow and offer more products, and the industry has been consolidating into larger amounts with less people. Luckily, we are one of those. That means we should grow. Taylor that was Erik Schatzker in an exclusive conversation with bruce flat. You can catch more of the interview throughout the day or on the bloomberg terminal. I want to stick with real estate. After its ipo disaster, we work has put its past behind it and is on track to be profitable in 2021. It may also revisit their ipo plan under the leadership of their new ceo. Joining me now is ellen huet. A year ago, we were face to face in San Francisco talking about this company that failed the ipo, putting pressure on that ever elusive profitability. What is the turnaround plan for them to be profitable in 2021 . End upever levers they pulling, if they manage to reach profitability in 2021, it will be a huge shift from their 10year history in which i believe they were profitable for only one year, 2012. Every other year they have been doubling the growth rate every year but losing money hand over fist. As of february, we have this new ceo, and he has been trying to usher in, and missed a pandemic, a difficult thing, a we work that spends carefully, that doesnt send money on wild side projects, like their former ceo. As far as i can tell, this turnaround plan which they have been working on for close to a year at this point is cutting staff, losing 8000 people, cutting back on projects, renegotiating leases, and really changingg the belt, the way that they have spent money. Taylor i think the timing of this is also fascinating. Even the hint of an ipo in the way that we are rethinking commercial real estate, shared spaces, what is the strategy to be functioning in this current covid environment . Ellen it is so interesting to hear we work talk about how the coronavirus could actually help them. On the one hand, i can see where they are coming from. People want to come back to work but they are not sure how, or they want to come back to work but they cannot be as packed in, people want the flexibility to be at home sometimes, in the office sometimes. We work says that people will parcels ofe larger space because they will want to spread out more, but they will still want to get office space perhaps more flexibly than what they side with landlords in the past, because they are not sure about what the future of the office looks like. All of that makes sense to me. At the same time, of course, the company is going to come up with a way to convey optimism for the future. People cut is, many their contracts with we work because they said we dont need an office. Both dynamics are happening at the same time and they are understandably emphasizing that they see a positive future, especially with larger enterprise customers who want more flexibility, some kind of office in the future. Taylor certainly a story that we are following closely. Thank you for the latest. Still ahead, more consolidation in the chip industry. We will talk about the latest deal in todays stock of the hour. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. Time for stock of the hour. Marvell technology. A big premium to expand in the market for Cloud Data Centers with 5g wireless infrastructure. Scarlet fu is looking at what could be an 8. 2 billion deal. It sound small relative to the recent deals we had in the chip space but you hit on all the hot areas in technology. This is a cash and stock deal valued at a 42 percent premium to its last close. When you include that, it has an enterprise value of 45 billion. Stocks were already flying before the announcement. They are up 91 this year. Reported a fullyear growth as well. This is even after it lost huawei as a customer. This marks the second major deal in the chip industry this week. Tuesday, amd made a bid for xilinx. Before that, nvidia agreed to take over arm. In july, analog bought maxim. We know the backdrop is the pandemic has led to increased demand for pcs, laptops, and while businesses are moving to the cloud, demand for chips is way up. That is helping to lift the share prices of these companies. The ceo of marvell says that scale is critical in this kind of environment. The two companies have similar customers, so by combining, they can sell more to the amazons and alphabets of the world. R d and the complexity of making these semi conductors have gone up so much, you have to be mindful of getting a solid return on investment. Taylor all of these m a deals that we have seen him it is a bet on data centers, more memory, and 5g as we await the huge rolled here in the u. S. Scarlet it is not here yet but will be in the coming years. And there will be a lot of spending for that. I like the note they put out, saying the data center arms race continues. For making optics and computer chips that work inside these data centers. Data centers and networking is already a big chunk of marvells business. Ceos point, the it is gaining scale in that area, and that is making up or softness in the storage business. Taylor thank you as always, scarlet. More on chip stocks later this hour. One of the top analysts from sanford c. Bernstein will be with us. It is all about big tech and the big earnings reports. Facebook, House Speaker nancy pelosi says she is not insisting that the white house except all demands for a fiscal stimulus package in order to resume talks. Speaker pelosi sent a letter to Stephen Mnuchin outlining areas waiting for al response. She told Bloomberg Television the point is to weigh each sides arguments and negotiate. President trump blames the speaker for the stalemate. Partys opposition labour has suspended its former leader Jeremy Corbyn after he failed to fully accept the findings of a report into antisemitism within the party. Labor faced repeated accusations of antisemitism under mr. Corbins leadership. The current leader said it was a day of shame for the party and vowed to win back the trust of jewish members, staff, and politicians. Thousands of californians are being allowed to return home as calm or wind help firefighters beat back wildfires that had spurred widespread evacuations. 100,000 people were ordered to leave monday after the wildfires broke out. Here are some of the top stories that we are following from around the world. Big tech earnings deluge. What to expect from the results coming out after the bell and their importance in keeping the s p 500 afloat. Morgan stanleys green gold. The Investment Bank attempt to eliminate that carbon activities within 30 years. We discussed with audrey choi. Intel semiconductor dominance. We will discuss the deal and what it means for the sector that has been historically dominated by intel. We will do that with stacy rasgon. Amanda, after yesterdays drop off, a big rebound today. Amanda we are seeing a rebound. It is very techfocused. 500, a bitbroad s p of takeback from what we have seen over the last couple sessions. Still setting up for a rough week. All the subgroups higher. Health care lower on the s p 500 but otherwise pretty positive. It is showing up in communications and tech. Big earnings after the bell attracting attention. Energy also doing well although we saw west texas below 30 a barrel today, a signal of concern about covid19 and as europe shuts down again, and we question what will happen across north america. That stimulus package remains on the minds of investors and economists. The gdp read of 33 cannot last forever without additional help until the economy recovers. Here in canada, i spoke to our finance minister who said publicly that the stimulus must stay open for now but they will not stay open forever. Understand that there are that a prudent government imposes restraints on itself rather than waiting for the bond vigilantes to do that. Amanda we expect to hear from the federal government here in canada a budget that will outline what the future spendings look like. So far, no word on getting us back to balance. U. S. , here in the outside politics, a major day for tech earnings. 7. 5 trillion dollars of S P Companies are reporting earnings. Bellf that comes after the from apple, amazon, facebook, google. For more on what we can expect from apple in particular, i want to bring in emily chang. What stands out most to you . Emily we are calling it techapalooza. The main thing Everyone Wants to know is will he get any clues about how the iphone 12 is selling . We will not get many reports because those were delayed this year, so they will be in the Holiday Quarter. Analysts looking at about 38 million iphones to be sold in the summer quarter compared to 76. 6 million expected in the Holiday Quarter. That shows you how much bigger that Holiday Quarter normally is. 63. 5nsus revenue of billion dollars, but analysts optimistic about apple devices as we continue to work from home, not just iphones, ipads, services revenue. We will be looking at that and for any clues as to how the health of apple can give us indication about the health of consumer demand around the world. Amanda we watch big tech so closely, not only because we know them, use them, invest in them, but we sometimes talk about the s p big five. They have been driving the market. We can show the extent to which they drive the market. What do you make of the disproportionate weight today have across the market . Emily apple now makes up 7 of the s p 500 and tech in general could end the year making up 40 of the s p. That is the most since the dotcom bubble days, when tech made up about 37 . Investors are not as concerned about overvaluation right now but they are concerned given the runup we have seen this year despite rising cases of coronavirus, despite our economy being in recession, there could be a lot of volatility. Tech has been a bright spot this negativeif we see some or pessimistic signs in the reports today, if tech is not the bright spot, what will be the bright spot going into a potentially tumultuous post election season . Amanda all good questions, thank you for that. We are also waiting on facebook. Its ceo took a grilling this week. W, what are we looking for from facebook, what do we need to see from the company . Wall street is looking for earnings at 1. 91 a share, earnings around 20 billion. For all the talk around moderation and misinformation on facebook, there is no evidence of impact on the companys top and bottom line. Thirdparty data suggest monthly active users will come in better than expected. Chart. This it shows advertising revenue growth. Facebook has registered doubledigit growth throughout the pandemic, when others have faulted, including google and twitter. That graybar is amazon. While it is a much smaller advertising business, they have seen higher rates of growth in facebook. We know that from snap and pinterest earnings, advertisers are feeling more comfortable deploying dollars on digital advertising. One question is whether that july boycott of facebooks platform by Bluechip Companies had an impact. Consensus seems to suggest it did not. At the end of the day, we are looking at a growth quarter from facebook despite all the noise ahead of the election on content moderation and misinformation. Taylor you mentioned consensus. We came into the year thinking it was a big year with the olympics, ad spending around the election. All of that seemed to fall apart but it seems like it will be a good advertising year. What happened . Once again, this is the covid story. We are all at home, more screen time. If there is one take away from this period, it is that the companies that have been consensus found more relevance during the pandemic. Take amazon. Of course it is more relevant, all of us are ordering more online. Compare that to the likes of s. A. P. And visa. They have found less relevance, and they have really underperformed those tech names when you put them sidebyside since march. Taylor thank you as always. Stay with us, Morgan Stanleys plan to eliminate net admissions from financing in the next 30 years. We will speak to the chief sustainability officer. Sustainability officer. Taylor this is bloomberg markets. Im taylor riggs in new york. Weekly uber green series, we focus on the developments in green finance and environmental solutions. Today we are looking at how one big wall street big bank is trying to address Climate Change. Morgan stanley is trying to eliminate the net Carbon Emissions generated by Financing Activities within 30 years. To talk about this is audrey choi, the chief sustainability officer. What stood out to me doing this, the Financing Activities. Why is that the best way, in your opinion . Audrey i wouldnt say it is the best way but it is one of the many ways that we have to come together. With our achievement to achieve net zero by 2050, it is not all that finance should be this way or another way, but we will not get there as a planet unless we can pull all of the levers that we can pull. Amanda can you be more specific about what that means, when you say to cut net admissions from financing . What are we talking about . Audrey it is a number of things. Trying to beely more a part of financing things, new innovations, things that we may not even know about today, that will be able to reduce emissions, and in some cases, sequester or capture carbon. It is also thinking about moving away from extremely carbon intensive activities that we know is contribute into Climate Change in an unsustainable way. It will definitely be a journey. Innovation, discovery has to happen. What is clear is we know we need to move the needle on omissions. We know we need to achieve the goals of paris. Even if we do that, there is still a lot of negative outcomes that we will have to eat in that scenario. We have to figure out how finance can play a part in that movement. Our theorystent with of change, why we focus on sustainability. Has aneve finance Important Role to play in determining how the flow of source, andses one therefore is the oxygen to fund activity, what grows faster. It is essentially a recognition that finance has an important play. O so where investors are making their bets, which activities. Again, these low carbon activities that we will be financing david taylor and by pulling out of those sectors, raising the cost of capital forces them to shift gears. If what they are doing is all of a sudden more expensive to finance. What is the forecast you have of pulling out of those sectors, the impacts you can make on them . Audrey at this point, we dont have a specific forecast from pulling out of sectors. We are trying to advance the focus on those Market Forces, thinking about what is the longterm opportunity and risk associated with those things that are carbon intensive, or extremely sustainable activities. We are looking at how Market Forces work. Greenly, we have seen bonds are actually achieving a much more lower cost of capital going to the markets because they have so much demand and oversubscription. We are seeing the Capital Markets say we want to align with those investments that are lower carbon, that will foster sustainability, increase access to affordable housing, other social goals. When that capital is oversubscribed, spreads narrow, and they can raise money more efficiently than some of these other offerings. I think we are in this process of a seachange, where it can become a virtuous cycle. We have done multiple studies of investors, tracked their interest over the years. When we ask investors, are you invested in sustainable . 85 of investors, 90 of millennials say absolutely. When you say what are the theme that you must care about . Investors are increasingly not saying anything sustainable, but Climate Change, Plastic Waste reduction, and circular economy are right on top. We think there will be a real gravitational pull of investors, assets toward those things that are really promoting protecting the environment, strengthening communities. You also announced that Morgan Stanley is joining the partnership for carbon accounting financials, a group that will start reporting your admissions from lending and investing. What change does that make in the world . Audrey it is a journey. We cannot get to these meaningful goals and say that zero, if we dont have any agreedupon methodology across industry, across economies about what that means. How to measure it, how to count it. For us, it was an important step to say we want to be a part of this very Important Group that is essentially setting the ground rules for how we want to under thethat we are uniform measure. You cannot measure when you cannot count. You cannot count if you dont have a methodology. This is us building that infrastructure. Amanda we are out of time, but i have to ask, you are getting in front of government policy. How risky is that, should that be necessary . Talkingwe are always about what investors already know and what they are already doing. If you want to be a prudent investor, you want to look at upside and risk. All the studies that we have seen show that Sustainable Investing performs in line with traditional investing, sometimes outperforms, as it has in the last year and a half. And with lower volatility. We are not looking at this as a policy thing, but we believe it is right for our own portfolio, for our clients, and the planet. Witha great to have you us, we appreciate it. Drew choi, chief sustainability officer at Morgan Stanley choi, chief audrey sustainability officer at Morgan Stanley. This is bloomberg. Amanda this is bloomberg markets. Im amanda lang in ontario alongside taylor riggs in new york. It was a big week in the chip space as we saw amd take a run at xilinx. 35 billion in stock. With us not to talk about the significance of it and what may happen from here, stacy rasgon is a Senior Analyst for u. S. Semiconductors for sanford c. Bernstein. All stock deal. It feels like amd is really trying to bulk up, be as competitive as possible against intel. Who is the loser in this transaction, should they come together excessively, what is the fallout . Stacy lets talk about the rationale behind this. This is a strategic deal, not really an accretion driven deal, it is more strategic. It bolsters their ai offerings. There is a big push within the data center itself to push to heterogeneous consulting where s, givingloading cpu them a bigger play there. It builds up their auto business. These are markets where xilinx has a position in. This is where amd has not historically played by design, but recently started to talk about beginning to look at it. Xilinx gives them a presence in that market. This strategically fits. Talking about winners and losers, does it change the structure of the market . At least not right away. It is a duopoly market between them and what was alterra, who was bought by intel. The ceo of xilinx is coming across to run amd. As far as synergies where you can think about new products, that is 325 years away. It is a ways away if you talk about disruptions, but it does diversify them and gives them a leading position in all of the leading architectures. Taylor when you think about ships going forward, what is the big story . Is it a push to data centers, automotive . Stacy i think is more than that. There was a period of time, especially following the financial crisis, where even myself included, were thinking about the semi industry as potentially exgrowth. It was flat for a couple of years once things normalize from the financial crisis. That no longer seems to be the case. Certainly it has its ups and downs, but the industry is still potentially a growth industry, and in the middle of the pandemic, is starting to show the importance of semiconductors to human society. New,ve a number of potential Strong Demand drivers, whether Artificial Intelligence iot, theseon, 5g, are applications that can drive growth. The other thing that you can look at is within the huawei,d tariffs, geopolitical issues, semiconductors is at the middle of all that. Thetimes they say semis are new oil, i think it may be true. The industry itself and the capabilities it is bringing will be increasingly important to the world, going forward. Taylor thank you as always, stacy rasgon. Always need more time with a sell side analyst like that. Turning back to the markets, two hours from the closing bell. I took the day off yesterday and markets managed to sell off 3 , so im coming back today. Coming back in the green. S p 500, up 1. 5 . It has been big tech leading the way today. Of aa in the absence stimulus package, it has nothing to do with your day off, im sure. We have some tech and hopes to come after the bell. Yields getting a little bit of a lift up as we get a risk on tone. From new york and ontario, this is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Ask about saving up to 1,500 on your installation. Virtual appointments now available. Mark i am Mark Crumpton with bloombergs first word news. Nancy pelosi says she is still hopeful an agreement on a fiscal stimulus bill can be reached. She sent a letter to Steven Mnuchin outlining seven major areas of agreement, including a National Virus tracing program and running for state and local governments. In anpoke an exclusive interview with Bloomberg Television. We sent a letter with some answers we are expecting. We dont expect them all to be expectfavor, but we do to come to a compromise and negotiate so we can go forward. Mark President Trump blames Speaker Pelosi for the stalemate. Trump Administration Says it is making progress on the building of a wall along the u. S. Mexico border. Administration officials are in texas today with they announced they have completed almost 400 miles. The barrier was one of President Trumps Biggest Campaign promises