Budget set to be outlined in parliament today. Tesla takes the trade war in its own hands. Suing the u. S. Government and Robert Lighthizer over the tariffs over imports from china. A warm welcome lets kick off the show with fresh numbers out of germany the Business Climate for the eve owe since september has come in a touch light. Current conditions 89. 2 for spent versus 89. 5. So just a touch light of expectations in terms of the expectations component, came in at 97. 7 versus forecast of 98. Slightly weaker but generally similar to what was expected the august numbers have also been revised we have the Expectations Index at 97. 2. These september figures and the forward looking part of this index has come in at 97. 7 for the month of september as business morale rises. This comes after data yesterday. The pmi flash for september showing that manufacturing in germany continuing to improve. Services contracted. Dropping below the 50 Mark Services trends in the economy we are going to come back to the german situation in a moment well look at the european markets. The dax down lower and relatively contained moves as of now. This follows a steep selloff. S p dropping 2. 4 . So negative sentiment coming off the u. S. Trading session yesterday. We did see european markets continue to recoup losses climbing 0. 5 . We are coming off a bit of a rally in europe. It feels as though investors are pausing. Lets dive into the sectors and see what the split looks like. Weve got real estate, utilities and fed and bev and household goods. Feeling good for the defensive parts of the market. Lets take a look at the worst performing sectors travel and leisure is leading losses down 1. 3 retail sector, financial and Technology Round out the worst performers worth noting we did see steep declines in tech the nasdaq driven bya 10 decline in tesla following that weak trading session in the u. S. Yesterday. Moving back to germany, the cabinet has approved taking on 100 trillion in fresh debt as the country continues to fight the economic roll out. The most since world war ii. The new debt means germany will again suspend the constitutionally enshrined debt break. Hoping the borrowing will help the largest economy return to precrisis levels and return to the balanced approach by 2022. Translator i hope with the measures this year and continuing next year, well continue this trend so by the beginning of 2022, well have reached precrisis levels and well have so much new jobs and businesses that will continue for our country. President of the efo institute. Summarize how the german outlook is from over the summer . So overall, the recovery is continuing we have the reading and this is continuing on the back of the exports to china and others that are recovering the numbers are less positive in services this is something we see across europe a result in rising infection numbers. In terms of that stretch, you attribute some of that stretch in an up tick from china how are the manufacturers doing to meet the increased demand how is that supply side . It looks like it is doing okay most value that were interrupted in the spring seem to be working again. We see very little supply side sectors. Thats exactly what we saw yesterday in the september flash pmis for germany weve seen 56. 6 for pmi. The Services Back into contraction territory. How long can this dynamic persist. Is that a sustainable level of divergence it is not sustainable for the long term. We have to see german manufacturing is b to b. We are supplying other companies. As long as manufacturing in other companies is doing well. Clearly in the long term, that is not sustainable and goods have to be sold to consumers if the Service Sector continues to contract, that will have an impact on the industry lets take about the labor market the massive use of the working scheme has insulated and mitigated job losses we could have seen. What can we expect more medium turn can have a stronger sense of how the next few months may look it looks like shorter work schemes could stabilize employment and demand of cost because people continue to buy you would expect shortterm work to decline further unemployment numbers will go up but start to decline next year at least thats what we would forecast reading the draft budget which paves the way of net new debt of 100 billion euros. How significant is this for the german industry. This is significant next year, the Economic Activity will be lower than 2019. That means tax revenue will be lower and public spending will still be higher than normal. It will take some time and make sense to turn to the taxes that would stop spending the overall German Government debt that is so low we can a forward stimulus for some time. Youve got some people saying from a european perspective, brexit has moved down the list of priorities as it does with the crisis based on what you are seeing, do you think german businesses are thinking about this as a less severe risk than previously. The potential negotiations sour from here. My objection is that most companies have prepared for the worst. That is kind of off the agenda according to the uk operating and continue to watch this i think most companies are prepared for a hard brexit well leave it there, thank you for joining us lets push on and take a look at what is happening in norway this morning. The policy decision. Investors are eyeing this not necessarily for rates but the upward revision for the rate path what weve heard is that they have kept policy Interest Rates unchanged as expected. The decision was unanimous the policy rate forecast is little change since 2020 and implies a rate of a current level over the next couple o years followed by a gradual rise as activity approaches a more normal level so looking ahead, the Central Bank Sees 2023 key policy level at 0. 5 so same forecast there in terms of covid, the central bank has said the increase in rates may put a break on the up swing in the current period, it will take time for output to return to prepandemic levels underlying inflation on target but the appreciation since march will be moderate low Interest Rates attributed to speeding up more normal output and reduces a risk of unemployment being entrenched. So clearly the unemployment a key concern. Considerable uncertainty surrounding the outlook suggest keeping the rate on hold until there are clear signs the conditions are normalizing you can see the euro are trading this morning up by 0. 7 to around the 11 mark the bank is not the only central bank in focus, the Swiss Central Bank has maintained its key policy rate. Willing to intervene more strongly in the Foreign Exchange as the frank continues to be highly valued. Turkeys central bank keeping rates unchanged. Lowered rates to the current 8. 25 to prevent further devaluation. The policy has worked to boost exports and soften the economic fallout of the pandemic. Lets look at u. S. Futures after yesterdays brutal selloff. The s p dropped 2. 4 with 94 of stocks moving lower. Consumer durables and apparel was the exception with strong results out of nike. Nasdaq dropped 3 . We are in for a soft start if these levels hold. It looks like the pace of selling has eased some what. The nasdaq looskiking to lead losses the dow looking at about a 20point drop at the open. Fed chair powell called for a fiscal stimulus. He said the recovery would go quicker with is support from congress a full recovery is likely to come only when people are confident it is safe to engage the path forward will depend on keeping the virus under control. Other central bankers echoed the call with boston fed chair calling it, quote, a big problem. And warning the u. S. Economy is in, quote, a deep hole coming up, the white houses top corona advisor said he is optimistic as a new ocatinulion enters a trial welcome back google says it is rethinking its Remote Working policies after twothirds of the staff said they do not want to return to the office on a fulltime basis. They are working on a, quote, hybrid working model that will allow employees to work from home and also maintaining the community feel in work places. It is said the hybrid work model is the future. We have been thrust into remote work without a lot of preparation, in some cases without underlying infrastructure or cloud platforms. What we are finding or for the organizations that have adapted. We are seeing there are better ways to get work done now that weve moved to this virtual way of working we used to have Business Travel and now quickly hopping on a web ex or skype call is more efficient. We have a lot of situations that box them in where normally you would be collaborating with people in a Conference Room but now you can move that to a slack channel and work with a hundred people you are building a more inclusive meeting and engaging with more on what you are executing on we are seeing more positive ways of working any tech company and any company globally wants to get back to some version of normal we certainly want offices to open up as quickly as possible we want to make sure we see our colleagues in person there is no way of going back to being productive the future is one of a hi brid work place where you go in for some purposes and have much more flexibility and be able to work remotely the digital work place will bridge those two worlds together a few developments in the vaccine space. Astrazeneca is still waiting for approval to resume the trial the tests were halted after a participant developed a serious side effect. Johnson johnson has began a final stage of its vaccine the fourth pharma group to reach this stage in the u. S. They plan to enroll 60,000 people in the trial and to know if the treatment works by the end of the year. Dr. Fauci said it may take some time before a vaccine is available to the public. Saying any drug will receive rigorous testing and there will be no cutting corners. Reporter facing allegations of bouing to white house pressure, top Doctors Today faced skeptical senators i want to assure you that every one of the decisions we have reached have been made by career fda scientists based on science and data, not politics repo under fire after the testing on covid and then again how corona is pred in the air. Responding to wearing of masks and accused of being part of a deep state these are dedicated men and women confronting the greatest Health Crisis of our time working 24 7 Many Americans remain except al finding 61 of likely voters are concerned the president is trying to push a vaccine too early to help election chances today a fourth drug maker Johnson Johnson started the final trial. Requiring one shot, not two. Have you seen any serious side affects so far that would be a concern to regulators no, we have not seen any side effect that is a concern the typical side effect like fever. 60,000 people are enrolled in the j j trial to apply for the fda approval next year on the national mall, 20,000 flags wave in the fall breeze representing the 200,000 americans that have died from covid. Cdc saying 90 of americans remain vulnerable. Dr. Fauci pushed back against republican senator for supporting lockdowns despite all weve done, the death rate is worst than sweden. Compare swedens death rate to other comparable scandinavian countries, its worst. It is not comparable to look at them against us. Most spread over the summer is among young people who likely transmitted that to older people as well. Is in italy, saying his government is prepared to order targeted closures but another lockdown remains unlikely. German economic minister are in quarantine he took to twitter to say hes felling well mass is selfisolating after one of his bodyguards tested positive postponing this weeks summit after a positive test. France unveils fresh danger zones and new restrictions put in place lets get to charlotte get us up to speed on the latest measures are like. Yesterday, the Health Minister presented a different level of alert preventing which would be at the level you have about 11 cities including paris under this restriction level. This would mean restaurants and bars will have to close at 10 00 p. M. 10 people maximum can meet in public spaces. Gyms and other sports places will shut. You have that area where restaurants and bars are completely shut from saturday. As weve seen the number of covid cases grow with more than 30,000 including yesterday above the 10,000 mark. Thousands in icu. About 1,000 in severe icu. We are seeing other countries putting lockdown in restriction of movement to try to handle this second wave the Health Minister said at the moment they are not looking at putting lockdowns into place including partial ones because of the concern on the economy and impact the measure can have. They try to balance this act and contain the one restarted over the summer as part of this that led to the french finance minister who is himself infected with covid19 and in isolation with the representative of the hospital at sector. Well have discussion with the ceo, so those are impacted trying to support while they are putting the restriction in place. So the balancing act trying to control and insisting that we are not in the spring trying to contain or support the economy so a difficult act to carry on thank you so much it will be interesting to see how this 10 00 p. M. Curfew will work out and how that will be imposed on the country thats what weve heard kicking in here as well. The European Central bank has reported an amazon style platform the goal would be to prevent distressed debt funds taking advantage and snatching up the loans at rock bottom prices. A few large players have dominated the bad loans market for too long coming up, the chief negotiator says he is ready for a deal as the next round of negotiations kicks off in london well have a preview after the break. At cdw, we get that employees working from the road are a major security concern. Cdw can assess your needs, then design and implement a secure Mobility Solution using the hp elitebook powered by intel 8th generation core processors. The hp elitebook features groundbreaking builtin security, like sure view to thwart visual hacking and cdw configures them to your companys specs. For mobile security, you need hp and it orchestration by cdw. [intel jingle] welcome back to street signs. Im Julianna Tatelbaum these are your headlines european equities come off a june low as hopes the continents largest economy may be stabilizing the dow loses over 500 points as big tech stocks take another leg down as the u. S. Warns the economy is in a deep hole. Tez law takes the trade war into its own hands suing the u. S. Government and Robert Lighthizer over tariffs on imports from china two protesters are shot after protesters and the jurys decision to clear three officers over the killing of black medical worker Breonna Taylor. Lets check on u. S. Futures and how we are posed on wall street after yesterdays brutal selloff after the drop 2. 4 . Driven by a 10 decline. The dow driven by more it looks as though the pace of selling has abated we are looking forward to powells final day of testimony. Yesterday, he rei had rated the economy needed more fiscal stimulus we are eyeing developments from u. S. Health officialsdo down playing hopes of a preelection vaccine. Lets look at european markets the ftse 100 down about. 7 . The cac and ftse mib also lower. Off the lows of the day. Every sector is trading down with the exception of utilities. Arguably one of the most defensive sectors in the market. We are seeing travel and leisure under particular selling in services and oil and gas as well as retail. In terms of politics, eu chief negotiator said he is determined to reach a post brexit trade deal ahead of the next round of talks. The two sides become dead locked on sides that would overrun. We have two tracks to be following here and we have the internal market and what happens next, what can we expect from the visit to london . He was here yesterday to ee sent essentially prepare for negotiations meant to take place in brussels next week. This is their final round of negotiations before that midoctober deadline that they impose themselves to come up with new trade arrangements. Well see if they manage to work against fisheries. We have developments around the internal market build. The legislation that government put forward and will override the parts of the exit agreement signed with the eu earlier this year they made it clear on different occasions that if the uk does not respect that previous agreement, it cannot sign the new trade arrangements with the uk well see what happened with the internal market. Lawmakers will discuss it once again and the expectation is that this bill will move to the house of lords lets see if the lords will ask for amendments to the current format of this bill. Without that, then the eu has, as i said before, cannot sign new trade deals with the uk. Well see the important meeting between both sides on monday regarding this internal market build. Well see what is happening there. Well be dusiiscussing later to with the european commissioner at 13 45 cet sunak has canceled the autumn b autumn budget and wants to focus on the Economic Impact new policies intended to replace the furlough scheme. Great to have you with us, weve seen sterling fall out of favor in the last month since the beginning of september what do you put that weakness down to . There has been a broad base of strength. Largely a technical rebound that led sterling and theyve sold off against europe and other currencies there have been two things the market started pricing in the premium. There has been an intense indication of covid19 cases the Market Pricing and an impact of the economy and restrictions that the uk government has put into place what has been priced in here when it comes to the negotiations is it pricing in a nodeal scenario at this point i wouldnt say it is pricing in it has moved into pricing higher odds of a Nodeal Brexit scenario as far as this is concerned. It remains we are going to see a basic deal between the eu and the uk wants a basic deal. The eu would take that into account. It is pretty much a deal making machine. It has proved that it will push and will try to move forward towards making a deal i think right now, potentially pricing in 20 to 30 of a Nodeal Brexit the odds are higher for a Nodeal Brexit they have increased over the last couple of months. I do think that remains significant deal what does that mean for the pound medium term . I think well, near term, there is going to be a rally. I have very little doubt about it i think this rally will pick up in the vicinity of 135, 137. I say this largely because the uk is facing a number of problems is it will be relative to the two issues irrespective of whether it will be the fda or something with the impact of the coronavirus and the deficit which is going to top 17 of the uk gdp. And i think there is an additional thing i think the bar has risen over the past few months. Meaning investors are feeling uncomfortable about the way the uk government is managing the crisis currently a lot rides on how the uk responds to rising case numbers. Bringing in the focus now. He canceled the budget set to reveal the new protection plans. What does that mean for the subsidy for example . I think it is not entirely similar. I think it is less generous. The way i see the uk from the top down perspective the stimulus was there in the spring and summer. It was fully justified based on what happened. The uk is facing its own fiscal move it will be more severely constrained. That will be something at the margin is going to help businesses in order to bring back some of the employees to work and the rest of the hours not actually work will be shared among them, the employee and the government it is not going to be the fiscal miracle that we came close to in the spring and summer. That is quite important. If you look at developments in trade weighted sterling, you can see it started rallying and the moment the Economic Data started outpacing the world but this is not going to last. Lets move across the pond and take a closer look at what is happening with the dollar President Trump has refused to commit to a peaceful transmission of power adding to the uncertainty we are already fashion. How do you see the green back trading around and what are you advising clients to do right there are many parameters here to consider. We think the dollar is overvalued by 10 to 15 . Largely because u. S. Railways have totally collapsed the green back has lost that advantage. Having said that, we have seen significant buildup. We are seeing a squeeze and technical rebound. I think until the elections, we will have an increasing volatility largely the uncertainty about the result of this election including what you just mentioned about the acceptance of the result and what is happening on the covid19 front. If we do get a democratic sweep, if indeed, this socalled second wave doesnt prove to be that much disturbing, in the aftermath, well start seeing the dollar weakening again on a monthtomonth basis what does this mean for the euro the concerns and the focus of how ecb might react. It has come off since the last meeting when they said they are monitoring but not targeting how do you see that over the next couple of months. Two things we have to consider here. The euro dollar which is really what they should be monitoring the broad traded index in the euro has been on theize for a year now largely because that has been performing strongly against emerging markets i think emerging markets have lagged and if we see the potential tariffs are worse and theyll start finding some support. This is going to take off the pressure from the ecb because the euro emerging markets will start coming off long story short, i think that is going to go a bit higher. Unless we get a big catalyst, most election will be a big story. Well leave it there and look forward to having you on head of fx strategy. Salesforce ceo has praised oracle over the deal to buy into the tiktok business with walmart saying Larry Ellison set an example for companies that are interested in vesting in companies during the pandemic. I dont understand everything going on but im so impressed seeing them and everyone else make these aggressive moves im mostly worried about the companies that arent making these moves. Larry el Larry Ellison is the master of releva relevance. Tiktok requests a halt to White Housedown load ban for more on the story, said to cnbc for full coverage tesla is using the u. S. Government and Robert Lighthizer over trump admin strir terrif on goods imported from china. A range of items including Raw Materials and electric components volvo, ford and mercedes have filed similar complaints we did see a drop yesterday in tesla shares about 10 and in frankfurt listed shares about 5 coming up, protests ring out in the u. S. After a kentucky jury bring no charges in the death of black medical worker Breonna Taylor the big events are back. Xfinity is your home for the return of live sports. Protests broke out across the u. S. After a kentucky grand jury brought no charges against three Police Officers over the shooting of black medical worker Breonna Taylor two officers were shot and wounded overnight. The shooting has prompted demonstrations across the state and country for over 190 days. Reporter anger spilling into the streets of louisville. I dont have words. Its crazy two louisville officers hit by gun fire as protesters clash with the police and national guard. As they were deploying to investigate what was going on at first and broadway, shots range out and two officers were shot after a grand jurys decision that no Louisville Police officer will be directly charged in the death of Breonna Taylor every Single Person who fears police and being murdered by police deserved better than we got today. It has been more than six months since they stormed the apartment. Her boyfriend thinking it was a break in fired at officers shot and they fired back killing taylor the three officers who opened fire only hankenson was fired on three counts of wanton endangerment for firing into a neighboring apartment. The finding was that it was a justified use of force after being fired upon the family calls it outrageous we have work to do. We have justice for breonna and the fbi investigation. This community promises to continue saying her name Breonna Taylor. Jay gray, nbc news, louisville citi has pledged 1 billion to help close the racial wealth gap in america greater investment in blackowned businesses and homeownership aimed to create a fair and Inclusive Society estimating that 5 trillion could be added to the u. S. Economy if the racial wealth gap was closed today u. S. President has again refused to commit to a peaceful transmission of power if he loses the election he said, quote, he would have to see and ib sifted that mailin ballots would undermine the outcome. Thousands gathered to pay respects to the late Justice Ruth Bader ginsburg. The political battle over her successor has intensified. President trump tying his efforts to quickly fill the Supreme Court seat over the attempts to clamp down this scam the democrats are pulling, the scam will be before the United States Supreme Court. Having a fourfour situation is a good situation squoo. Five states with a mix of democratic and republican senators have sent ballots and reported no issues of fraud. Only one, nevada is considered a key battleground President Trump will pay respects tomorrow even as hes ignoring the wish that the next president pick her successor after meeting with the president earlier this week. Senators are agreeing to a speedy decision before the election joe biden is giving this warning. A vote for the nominees womens rights as it relates to everything from medical health care will be gone. Embracing the endorsement of cindy mccain, john mccains widow. Im deeply concerned. I want to feel like my president cares about me and this country and joe biden does the president who famously den greated mccains service dismisses the endorsement. I hardly know cindy and never a fan of john. Cindy can have sleepy joe. This friday, just ginsburg will be the first woman to lie in state at the capitol. What will the process look like for her replacement. So friday will be a formal ceremony to recognize her being the first woman to lie in repossess. Never a woman who has received that honor because of the coronavirus, it will be a small ceremony by invitation only happening on saturday President Trump said he wants to wait until all of the memorials and honors are over before he moves into the next political step, which is naming his replacement. It is increasingly looking like chicago judge amy coney barrett. He has a list of five women. That announcement is coming on saturday in terms of the time line of what is next since democrats dont really have the support to block this republicans have said theyll schedule a hearing likely a hearing in october with a final vote coming in the last week of october days before the election it will be controversial either way but it looks like the Majority Party in the Senate Republicans have the support they need and thats their plan at this point. Thank you for giving us the latest appreciate your reporting as always well look at u. S. Futures yesterday, we saw a brutal selloff. A lot of that came off the european markets close we are looking at more weakness on the board the pace of selling looks like it will abate as the dow jones looks to open about 20 points lower. Leading the losses in europe, we are eyeing the chancellor reportedly looking at a germanstyle Wage Subsidy Program as the furlough scheme winds down we have some strength coming back into sterling currently up 10 basis points standing around 1. 2735 the euro under a little Pressure Versus the dollar art 1. 1653 this comes as Dollar Strength has been the theme looking at u. S. Equities red across the board ftse 100 down about 0. 8 dax down 0. 6 we did see markets continue to recoup against losses at 0. 5 . They did close off the highs and did close up shop amid that deep selloff. In terms of the day ahead, we have the governor to speak this afternoon. In the u. S. , powell the head of the Federal Reserve due to give testimony before congress. Yesterday, he rei had rated ttet they needed more support from congress thats it for todays show im Julianna Tatelbaum Worldwide Exchange is coming up next where our coverage of the market will resume thank you. See you tomorrow at cdw, we get that employees working from the road are a major security concern. Cdw can assess your needs, then design and implement a secure Mobility Solution using the hp elitebook powered by intel 8th generation core processors. The hp elitebook features groundbreaking builtin security, like sure view to thwart visual hacking and cdw configures them to your companys specs. For mobile security, you need hp and it orchestration by cdw. [intel jingle] it is 5 00 at cnbc big swings in stock futures overnight. The dow dropping over 500 points Corporate America versus donald trump causing the president to roll back tariffs on chinese goods. The tiktok drama is not over what the video app is doing to try to stay in business. This is not your
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