Well. Down as we have seen some more dollar weakness. We are kind of teetering. The market is kind of nervous about whether we are seen stretched positions in the dollar. And we are now, as you can see, still negative when it comes to the jones, but the data generally generally positive today out of germany. Lets talk more about what is happening in the industrial heartland of europe. Lets get more insight on what is happening with that german data. On efo president earlier about things improving. Lets listen. The recovery is on track. With the gdp progress slightly better than what we had a couple weeks ago and the revision and the Climate Index continues to increase, to recover, this time it is not just the expectation. It is really the situation that is improving. Guy a little bit earlier on, i mentioned the mixed news we are getting out of the li sector. We have now out of the airline sector. Airlines in america cutting jobs if federal aid lapses. October 1, we could potentially see job cuts. Torican airlines plenty cut 19,000 jobs if that federal aid those labs. There is talk about an extension, but as we know, the stimulus talks in washington very much stalled at the moment. That will be a factor that will play into what happens this week as well. Lets talk about what is happening when it comes to the european economy in more detail. We will see philip lane. We will also see the governor of the bank of england at jackson hole. Both of those gentlemen will have a great deal. That George Buckley joins us now to give his assessment. Would you agree . Dr. Buckley well, the Current Conditions index is looking perkier, plus it is still well below levels we saw at the start of before the start of this crisis. So things are recovering. I think it is also worth bearing in mind that those countries that have seen the largest fall to see the largest rise in output as well. For example, germany. Germany has done well. Of climb in gdp was just shy 10 . Compare that to other countries like france, which we saw between 12 and 14 declines. The u. K. , where it was 20 . Germany is welloff germany has come off relatively lightly when it comes to gdp, and i expect the bounce will be a little bit lighter relative to some of the bounces in the countries the lost a huge minute output. Kailey elsewhere in europe and in germany, were seeing a resurgence in virus cases. That narrative of europe handling the virus better than the u. S. Seems to be going a bit the other way. What happens to this recovery if we see lockdowns being reinstated . Dr. Buckley you see this clearly in concerns and the forecast. In spain, where the virus numbers have most obviously increased, you have seen consecutive downgrades and expectations for where gdp will be in 2021. Astaking the entire recovery a whole, it looks like expectations have been revised downward substantially. So i think the risk of more lockdowns, although they may not be quite as widespread as they were before, because who knows where this is going, could obviously create more thingsinty, risks to like investments and Consumer Spending and employment, which would jeopardize the recovery. Guy there is a meeting this afternoon in berlin, which we think will probably give the green light to an extension of the current support the German Government is providing. Convinced we need to see that extended. Do you think it would be foolish for governments to decide at this point that it is time to walk away from that kind of support . Dr. Buckley there are risks in both directions. If you look at the u. K. , they are by far the by far the biggest line item of all the thing the government has done on a discretionary basis to support the economy has been job retention. These schemes are really quite expensive, and therefore governments are in a bind. They have to decide whether they should continue to support these schemes at a huge cost to the public purse or whether they should get rid of them and hope that none of limit does not rise. But look at what happened to germany back in the Global Financial crisis. It restricted the rise in unemployment to less than one percentage point, despite multiple percentage point declines in gdp. So they have been successful in the past and governments do need to think about whether they should be keeping these things were not, but it is a fine balancing act to decide whether it is working, because they are very expensive. Guy we are getting news coming through regarding Virgin Atlantic. Basically, they have decided to back the current bailout scheme that is being talked about for Virgin Atlantic. That the key date is the fourth, but this is a huge step in the positive direction for the carrier as it tries to figure out what it will do next. It needed these creditors to come along. Remember, it was pursuing a process,insolvency, a in which the judge could force this through. It looks like the creditors are backing it. Track tolt, we are on see this airline continuing to be able to provide operation, but, as i say, i am told the fourth is a big date, kaylee. Kailey a lot of news on the airline front. George, put together everything you have just told us. What does this mean for the ecb Going Forward . What we need to seek additional stimulus from them toward the end of the year . See additional stimulus . Dr. Buckley they have wound down some purchases. In consecutive weeks, they have come down to lower levels of asset purchases the then seen before. Before. Seen the marginal tool is no longer Interest Rates, it is whether they need to step up purchases. Some of the decline of the number of purchases over the summer has been seasonal. He would not expect to see so many purchases over the summer when markets are on holiday, but the ability of them to step up purchases if they want to is there. We seegs get worse, if peripheral yield spreads widen, if we see the economies worsen, if we see the need for further lockdowns, then they can respond to that quite effectively by upping purchases. The same is true for the bank of england. Got that if they want to to provide further monetary stimulus. Guy governor bailey will be speaking at jackson hole. Well be looking at clues as to where we go next. Inyou think the rate story the u. K. Economy is a nonstarter . Do you think we are as far as we can go as far as cutting rates . Dr. Buckley that is pretty reasonable based on what the policy report said earlier this month. They put a box, the bank of england put a box in the report, which basically summarized the pros and cons of lowering Interest Rates. It was pretty clear that they thought there were more cons than there were pros. Fed, it seems unlikely that the bank of england is going to want to sanction, like the ecb has, negative Interest Rates because they think the risks are too high. After all, you are lowering Interest Rates to what, maybe 30 basis points . There is a limit to how far they can go. Is it worth taking those risks just for a few extra basis points when you can probably generate the extra stimulus you want by doing more asset purchases . The debate is still there, but is expect i suspect it is largely heading to the asset purchases rather than negative Interest Rates idea. Kailey we will leave a pen in this conversation and talk about what to expect from the fed in jackson hole next. This is George Buckley of nomura. This is bloomberg. Live from new york, i am kailey leinz with guy johnson and london. This is the european close on bloomberg markets. Back with us now is George Buckley, chief economist at nomura. I want to shift our focus to jackson hole, to fed chair powells speech. We went to hear something about we wanted to hear about reworking the framework. In the question of whether the stimulus will lead to higher prices or the lack thereof. Where you fall in that discussion . Dr. Buckley we have the fed and the ecb both looking into what they should be doing about inflation. It seems that the fed, over the course of the next month, will shift to a course of average inflation targeting model, where they try to make up lost ground. If inflation has not met its they will the past, do more stimulus for longer to bring up higher levels of inflation. Powell sayhat mr. Something about that. There also be questions about what is in the feds toolkit. Are they using the right tools . Quantitative easing. Will there be anything on guidance, yield curve control . Probably not. But potentially. It also has big consequences potentially for the European Central bank. If the fed goes down the route of average inflation targeting, it may be that the ecb wants to do that as well. I suspect it could be tricky. If they decide to raise the inflation target 2 in europe, it might be a bit of a challenge to get the whole continent to also say lets go down the route of average inflation targeting as well. Guy how do i think about this i am trying to wonder what the best way of portraying what is about to happen and if it is significant. Is this the mirror image, the intense this is the antithesis, of voelker . Is it that kind of impact we should be thinking about this . Inflation toing run hot for an extended period of time. Dr. Buckley i do not expect they will run it too hot because then the expect tatian is it will start to run away from you the expectation is it will start to run away from you. This is one of the big risks. And anyone year, you may not be targeting inflation. You may be targeting something higher to offset previous years. Communing that communicating that might be tricky. If you start to say that inflation is 2. 5 , do people then think, our new target is now at the level . They may not understand that the average is 2 and in this particular year youre trying to achieve a higher level. I think there are big risks in achieving and inflation target an inflation target on average over time. Warytainly would be very suchifting to sasha a target. Kailey could be tricky. I want to talk about communication. The kind of communications we are getting on real yields in the u. S. Hovering around 100 basis points. What does that tell us . Dr. Buckley they do not need guidance. Interest rates will stay exceptionally low for a long time. The big question is, of course, Central Banks are inflation targets. They need to think about achieving that target. There is plenty of debate about whether inflation will go up or will it go down because of the virus. It may be on the one hand that we see a bigger supply hit than demand. Demand might come back quickly, as we have seen in retail everywhere, including the u. S. In which case, if you get a weaker supply, that will push upwards on inflation. The other argument to reinforce that, some people are suggesting that when you get sizable increases in the money supply that also, just like after the first and second world wars, generate inflation. If demand is weekends demand is weak and supply is not that week and, we have not actually lost capacity it may be that could it may be that weaker demand has a bigger impact. It is difficult to work out where inflation will be and therefore where Monetary Policy needs to be set in the future. Guy we will leave it there. Thank you for your time. We look forward to jackson hole. George buckley, chief u. K. And eu economist for tomorrow. Nomura. This is bloomberg. It is time for the Bloomberg Business flash. I am ritika gupta. Assailingelling after Quarterly Sales soar. Burstynefited from the housing upgrades, but the company says the boost it will not last through the quarter. Jewelry chain lower today. That raised alarms almost three that he planned to might not survive the endemic. Agreed to pay 16 billion for tiffany. Tiffany extended the deadline for the deal by four months. Recordbreaking ipo could be in hong kong and shanghai. 29 billion dollars raised by saudi aramco. If plans to use the money to bolster his lead in chinas Largest Online payment platform. That is your business flash, guy. Guy lets get back to the airline sector. They have expanded to Gatwick Airport from one plaintiff 20 in the year. Edwards and matt miller talked with the company and its ceo a little bit earlier. Certainly, we are pushing for in the u. K. It will get expended into the medium period. The market should decide, and it should not be decided there is a use it or lose it principle behind this. Euis a complex web of regulations and protocol. Who are you talking to to trying get the slots and the rules around them changed . At this point in time, this is a decision caused by the European Commission. We are also looking to national in various countries, including the u. K. , and certainly also approaching if you think about this, and therefore is a public property, and the right to use it should not be privatized for the sake of processing those slots. You can cooperate, and i think those two should. Can you confirm a ballpark figure of how much you want to expand, joseph . You told chris 20 plans at gatwick within six to 12 months. What is the Bigger Picture expansion . If you look at our operations in london at this point in time, we have 10, 11 planes. We have around 22 airplanes going to london. Clear looking at doubling that over the course of the next three to four years. First six months, we will be ready to deploy around 20 a month. Would a good strategy for you to be buying up failed airline . Are there any you are interested in . But thoselicly, should be returned to the market, returned free of charge. In expansion mode, i am assuming you do not have to cut any jobs. Have you had to during the pandemic at all . Do you plan to do any kind of restructuring . At the beginning, we had to weaknesshe economic caused by coronavirus. But we would be looking at adding that labor back to the system, and they thosebe rehiring people we laid off on a very basis earlier this year. Z speakingf wiz earlier on there. It is fascinating. Looking to maybe take slots at gatwick. One airline that has withdrawn from gatwick is Virgin Atlantic today, saying all of its creditors back its bailout. Virgin atlantic saying it is sufficient to restore its balance sheet. The fascinating thing will be whether or not ultimately the ceo at version decides to stick with at version decides to stick with terminal three, or whether he decides to return to gatwick. And if he does not return to gatwick, where did those slots go . Do they go to joseph . Gin atlantic saying all four creditor groups have backed bailouts. American Airlines Says it plans to cut 19,000 jobs if the do laps at benefits the end of september into october. So the significant dip we are seeing in this space continues. Cfo as hear from sass we close the European Markets. The European Market closes coming up next. This is bloomberg. We are about shut down for the day. We are going into the auction process, a turnaround we have seen in the last hour or so. Data outmer confidence of the United States has provided capitalists for that. To have aly possible Strong Economy . We know how important the consumers to the u. S. Economy. Certainly turned around a bit. London being the prime catalyst for that, around the 6000 mark. We have seen miners coming down and gas coming under pressure as well. Boyainly looking a lot more boorish early in the day. Now trading at fresh record highs. I am just putting this up here today to show you what is going on. Company, down by. 8 today but really it has been one of the prime drivers for the chemical sector. Lvmh, we were just hearing talking about the fact there is an extension on the tiffany deal. Potentially push that further out. The Market Street beginning to worry may be acquisition if tiffany does not get done, down today but lvmh trading higher. The Scandinavian Airline up today. The numbers certainly today werent great but the market have feared that it could be worse. Havecompany still does not a great deal of visibility but it could have been worse in the market rewarding the business. Certainly trading strongly. I spoke to the ceo about the impact of a is having. We started by talking about what demand looks like right now. We are dependent on travel restrictions imposed by governments and countries. They walk rather uncoordinated and it creates a lot of uncertainty among customers. To the beginning of july, we saw a number of european countries, which created a rather significant request for demand. But atwanted to travel the end of the month, when the whole thing shifted in some countries started to reimpose , they spoke again rather quickly. It is volatile and makes it hard to plan and predict. We enter, we are fairly dependent on business traffic and the behavior shifted their that people tend to book travel very close to do parch or. So we have limited visibility into future months. October, november, and december. It makes it difficult to plan. Uncoordinated activities among governments is a key issue for us. Ask how do you think demand would react if there were a vaccine widely available . I think it would make a huge difference. A would be required to get more stable situation. That is why we plan for a fairly slow rampup and demand that would continue throughout this year and the whole of 2021 to 2022, when we believe we may have some more stability in demand and levels that are at least comparable to precovid19. Not 100 there but maybe 90 of what it was back then. We need to have seen a global vaccine. Pursuinge currently something you need your creditors to sign onto. This is the financial i find wired to keep the airline going. What feedback are you getting in terms of whether or not this will get accepted . Trying to get all of the different stakeholders to align and build back a robust recapitalization plan. We were able to announce a plan fully backed by our shareholders. The government of sweden and denmark. Endorsed by fully the eu commissions. Withis actually compatible state regulation an