Thankorgie about you for joining us. Worryingld we start about the amount of debt we are generating and the impact it will have on the economy longerterm . First, thank you for having me. The worries about debt levels going up are not for now. For now, the biggest worry is we do not do enough to support the economy until we have a durable exit from the health crisis. With Interest Rates being record and government can borrow inject hopefully not only a recovery, but a more potent, higher productivity based growth so they can repay the debt they are acquiring now. Case for lowhe Income Countries already in distress. Importanty it is so we make sure they are provided with relief and they are supported with grants and concessional financing, a big theme for our annual meeting spirit for our annual meetings. Francine what is the biggest risk to your outlook . You say the recovery will be uneven, but you have increased your projection . Kristalina the situation today is less dire than it was a couple of months ago, but dire nonetheless. We are projecting 4. 4 . As we all know, the big problem we face is we are not out of the woods of the pandemic yet. Until that happens, until we have a durable exit, we have to be concerned whether there is sufficient support for firms and workers so we do not keep a wall and asive bankruptcies massive increase in unemployment. This is my biggest worry. Longerterm, we are very the starring the crisis is bringing. There are sections of the economy very seriously impacted. Low skilled workers, women, young people. They are hit hardest. How we make sure that inequality does not expand dramatically as a result of this crisis with the Digital Economy and those who can work theyre doing well and the rest of the economy doing poorly. That requires sound policy right nowand making to prevent this scarring. Kristalina if we do francine if we do not have a covid19 vaccine in 2021, will it be another last year for the World Economy . Kristalina if it does have a vaccine but we sustain report at the level we have had during 2020, there will be recovery. This recovery is not going to be as potent as we need it to be. What do we project for next year . This will not bring us to the prepandemic, to the 2019 levels. In fact, we are projecting by 2025, we will have lost 28 trillion as a result of this change in trajectory because of the pandemic. Uncertain, recovery not enough to bring the vibrancy to our economy until we get vaccines or treatments so we can exit the crisis. Forecast in the World Economic outlook are on the premise there will be a peaceful transition of power post u. S. Election. Are you confident that is what will happen . Kristalina we are confident the al space,ates has fisc and has a welldefined monetary policy. We saw it in this previous month. It worked really well for the u. S. This is why we are seeing an improvement in our projections for the u. S. Economy with a very positive spillover on the rest of the world. We see this policy continuation to be something that the u. S. Can afford. What happens if theres not a peaceful transition of power . Kristalina as you said, it is not in our baseline scenario. Projecty we do different scenarios, but this is not in our baseline scenario. Are youna francine worried about the resilience of banks in this covid era . Kristalina what we see is quite remarkable. We were hit by a financial crisis, and then we regulated wereay out of risks that the reason we got in this crisis to begin with. The Financial System is strong and sound. We have stress tested it and it looks like we are in a good place. However, two things to worry about. Thefirst is part of Financial System, the nonbanking financial institutions, they are not as regulated, not as supervised. There is tail risk associated with them. To be 220his risk billion. We cannot take Financial Stability for granted. Are to notrds, if we retain our focus on the real economy, that we do not allow like atcies to hit us fast moving train. If we are careful about it, then we can be relatively comfortable about Financial Stability. This is why my message, francine, i am sure you hear it and your listeners hear it loud and clear. Do not withdraw support prematurely. Are we too optimistic on the Growth Outlook for china . They are an exporting company and risks depend on how the rest of the world are doing. Kristalina what we see is a recovery in china that surprised us on the upside. Driven by two things. One, successful containment of the pandemic. Two, a primarily manufacturing driven growth in the economy. Our message is for the next year, for the year after, we see manufacturing recovering much faster than services, and if we do not have a vaccine, contactdependent part of the economy is going to suffer. Recoveredanufacturing , exports recovered. se positive for the world demand from china for commodities has gone up, which has boosted commodity prices. Many countries, commodity exporters have breathing space as a result. The service part of the economy is still weaker in china, and this is what is Still Holding full recovery. We project for next year growth in china to beat 8. 8 . This is quite significant. It would help china but it would help asia and the rest of the world. Francine thank you so much. That was kristalina georgieva, the imf director. I will send it back to you in new york. Alix now we would write now we would like to bring in kid jukes who joins us from london. Kit, when you heard the head of the imf talking about the u. S. Fiscal space is welldefined and urging governments to not withdraw space prematurely, how do you take that plea into the reality of the u. S. President ial election and what the market is pricing in . Kit i think the market has been quite sanguine about the difficulty getting a deal agreed before the election. I think assuming there is going to be a deal after the election. If not now, then possibly something that works later. I think the difficulty will be if either side wins a clean sweep in the election and gets free reign. There are places in the world i worry about the ability to keep fiscal support going for long enough. The u. S. Is not at the top of that list by any stretch of the imagination. I think jay powell standing in his quarter his corner calling for it, the imf is calling for it. I suspect ones the immediate election politics is out of the way everybody gets the joke and it will be forthcoming. Why the presidency bad for the dollar . Kit bad because it is not the Trump Presidency but it is less competent in terms of its approach to trade, that is a positive. A biden presidency is more likely to have more household friendly fiscal policies, less business friendly fiscal policies. One switch at the margin on more likely to help demand, not as friendly forgetting capital to flow into the u. S. Financial system. I think the biggest piece of it is President Trump has been good for the dollar. Not always in a way that is positive at a global level, but he has been good for the dollar. A President Biden would not be the same. Alix we do want to take you to President Trump, delivering remarks to the Economic Club of new york from the rose garden. Kit juckes, stay tight with us. Lets listen to the president. President trump Economic Clubs of chicago, florida, pittsburgh, sheboygan, and washington, d. C. I know so many people that are proud members and they are great people. It is a great honor to be with you, especially in this strange year with what we have to do communication wise, to be doing it is quite nice. It is a nice way to do it. The choice facing america is simple. The choice between historic prosperity under my proamerican policies, or crippling poverty and a steep depression under the radical left. That is what you will have is a depression. I will deliver optimism, opportunity, growth. They will deliver pessimism, stagnation, decline, and high taxes. It is a choice between a socialist nightmare and the american dream. Under my leadership, we will have a safe and effective vaccine before the end of the year. We will swiftly defeat the china virus, end the pandemic, bring back our critical supply chains, and lift our economy to unprecedented new heights. If the left gains power they will shut down the economy, close our schools, delay the vaccine, prolong the pandemic, and impose the most extreme policies in the history of our country. Lets review the record. When i joined you in person last year our nation was enjoying the greatest economy in history. There was nothing like that. This was a stark contrast to the prior administration, which delivered the weakest recovery since the great depression. It was weak and it was sad. In my first three years, real incomes for the typical family increased 6,000, more than five times the danes during the entire previous administration. Think of that. Five times the gains. Grewe for black americans nine times more under my leadership than during the eight years before i took office. Their policies punish American Workers among my policies promote American Workers. At the end of the last administration, the Congressional Budget Office predicted fewer than 2 million jobs would be created. Alix it looks like we might be having some technical difficulties with the need. That was president with the feed. That was President Trump speaking to the Economic Club of new york, sounding more like a campaign speech. We will get you a q a and about half an hour. Kit juckes of socgen is still with us. We were just talking about how we were looking a weaker dollar with a biden presidency. What currency has the most to rerate on that. Where will we see the most upside . Piece,think the big whoever is the next president of the united states, is that the ripped the big advantage from the u. S. Had with high Interest Rates. By engaging fiscal policy the way we did and having to cut rates so dramatically as a result of the pandemic, the reasons for the dollar to be overvalued are taken out. The countries that are left high and dry come in other words forced to have stronger currencies come in the first instance are ones that cannot get real Interest Rates down, ones that cannot push up Inflation Expectations and ones that have zero room to cut rates. People like the swiss, people like the European Central bank, like the euro zone, like japan and places like sweden and even norway, these are the ones winning initially. That continues over the course of the coming months, with that Group Continuing to do well. The zero rate countries benefit when everybody gets zero rates. Apart from the few who just push below. The longer period of dollar weakness i would see over the coming years is the Positive Side of it, which is what happens when people get offered better Investment Opportunities overseas, and when emergingmarket start to recover. We were listening to the imf view about vaccines and what the lack of them does to growth potential. Nothing will unlock an emergingmarket rally like a vaccine in terms of the money wanting to flow, looking for opportunity. That is some way down the road now. At the moment i am relatively defensive in our view that the dollar will go down because the advantage the u. S. Had was much higher real Interest Rates than some of the other developed economies and it has been ripped away quickly. That is a good thing. Of other countries comes from the ones that have the most upside in growth once we can get the Global Economy moving properly. Guy can i include the euro zone within that . What gets us to 130 . 125 just onget to the negative side of the euro being stronger than the ecb one sent because europe has an account surplus and cannot get rate significantly lower and is in danger of seeing Inflation Expectations fall while they rise in the united states. That is a problem. By the time it gets to 1. 30 it has to be a more positive story about Global Economic activity and trade picking up that happens later, and i will be glad when it does. We will make most of the way drag by reversing the big from its only monetary policy. Cane is no fiscal policy we help the approach we have had from european policymakers. Alix what happens if it does not come through . It is not a done deal. We talked about that earlier in terms of the Recovery Fund. I wonder what the headwinds are, particularly when you wrap in brexit come into view see some kind of krach app, how that will affect the european economy as well as the u. K. Economy . Kit whether there is a Recovery Fund or not, we have easier fiscal policy in europe than we have had before. Germany has easy fiscal policy. The Recovery Fund will mean a grown up approach, or a step in the direction of a grown up approach to fiscal policy and would be a good thing. Will go back to suffering from concerns about its longterm viability if we get back if we make no progress at all. That would take a fair amount of political incompetence, that does not mean it is impossible. We have had most of these in fiscal policy most of the ease of fiscal policy in europe and the massive fall in real Interest Rates. One reason for thinking i would not want to bet upwards on the euro from where we are, markets are convinced we would get a brexit deal. The markets seem to be confident we can keep kicking the can down the road for a long time on brexit. Sterling is not falling. Exit, i get a no deal suspect the pound and the euro will go down in the short run. We still have uncertainty around a bunch of issues with u. S. Elections. The very near term is more uncertain. Next year looks better. Guy can i come back to the issue of the dollar. We got the call wrong going into the last election on what trump would deliver for financial markets. Im always slightly concerned about a consensus trade one way or the other. This time it is the dollar goes down. If joe biden delivers with a Senate Behind him, massive fiscal stimulus into the u. S. Economy and that has a positive effect, and we get growth coming out of the u. S. Economy and the curve starts to steepen as the market prices may be some intentional inflation in the united states, why with a market not reward that . Why would money not flow towards an economy that is potentially going to deliver more growth than we have priced in now . Kit it will have to because most of what a biden presidency the deliver is demand your trade deficit set to widen further. The u. S. Will need money coming in and that process. The big change is the fed has more or less guaranteed we have low nominal rates for a significant level of time, and are happy to see inflation rise if we get fiscal easing into an economy where we can do where we can get demand to push off in a rapid recovery. Then the market is likely only to steepen the curve because it is pushing up Inflation Expectations along the curve. , reals point in time Interest Rate differentials, particularly longterm, will dominate the currency market, as they did when they made the yen strength in. Europe andapanifying we are doing the opposite united states, think we end up with a strong yen, strong euro, weak dollar, until the u. S. Output in a more balanced way. That could come down the pipe further down. It is not impossible. Collectively,ong, with the Trump Presidency, was how successful he would be in getting fiscal policy to operate in an economy where that would allow the fed to be hiking rates when no one else could. Guy we will leave it there. I was appreciate your time. Thank you very much. Kit juckes of socgen. This is bloomberg. Alix i want to update you on stimulus talks in the u. S. Nancy pelosi and Steven Mnuchin reportedly spoke this morning by phone for over an hour. The hope is they will continue to speak. Pelosi said they will speak again tomorrow. On the Bank Earnings calls you could hear how important stimulus was to some of the cfos , bank of america saying we will not reduce reserves because there is so much uncertainty. Stimulus a big part of that. Guy we will also hear from Steve Mnuchin in just a moment at the conference that is very spread out. He will be speaking at that. Maybe we will get hints as to where we are. We keep going back to the same conversation. We are not talking about the senate. That is the pivotal part of this story. You can have mnuchin and nancy pelosi talking to each other, the president pushing for a big deal, but until you get the possibility everybody will be on the same page, including the senate, that it makes it hard to believe anything will get done. In terms of where we sit, we will be hearing from Steven Mnuchin shortly. This is where we sit with european markets as we head towards the end of trading in your. Ftse down, underperforming. We have seen Pound Strength today. That is the reason for that on thecontinent on continent, very flat session. The dax and the cac 40 going sideways. Well come up with details in a moment and talk individual stocks as well. European close is next. This is bloomberg. Guy 30 seconds until the end of regular trading in europe and another sideways session. An incredibly tight range. We are down. 1 for the stoxx 600 throug