Onnce places restrictions more cities. Pedro sanchez calling an extraordinary meeting. House signals it is open to a comprehensive plan shifting its stance as a result. Pushed higher. Gorman goes hunting. Morgan stanley steals a 7 billion deal for the purchase of eaton vance. From our interview with the ceo itself. Himself. Lets look at what futures are doing. Green arrows. See, they are incredibly slight. Not even 0. 1 . The percent missed price indicating a higher open then futures are showing you right now. U. S. Futurest the after stimulus talk. It will more directly affect the u. S. Economy. Nasdaq, dow jones and futures up 0. 4. Breaking news coming through. Lets get to that. First on the macro front. The u. K. Economy, clocking in some growth figures looking to be much worse than the market anticipated. The u. K. Economy grew at 2. 1 in the month of august. The estimate was 4. 6 . We were expecting that rate of growth compared to previous months to come down. A bounce in june, the expectation being for another bounce here. Maybe the last. 4. 6 . Instead, we get 2. 1 . Is the conservative part of the economy that is running into trouble. Services, index of rising 2. 4 . The estimate was for something up five. Services underperforming versus expectations. Lets get to some breaking corporate news. Of 4. 235 equity value euros that is still happening, by the end of 2020 or 2021. It is expected to close. Of 2021. Rst half interesting detail coming through. Whether they would get rid of the italian business. In london. Story lets look at where we are. We saw u. S. Stocks rise, european stocks rise. Pointing slightly to the upside. A lot of talk of stimulus stateside. Chinese stocks bouncing. Assets of all varieties bouncing. The yuan stronger permit the dollar is a little weaker as a result. Gold tickingd higher. Far fromocks, not alltime highs we saw last month. Joining us now is kristine aquino. Before we get to everything data, a spikeu. K. In covid cases, let me get your take on the u. S. Stimulus. It is getting confusing what nancy pelosi and donald trump are expected to agree on. What are we looking at now . Movement we have seen, especially in equity markets and the u. S. , does reflect that. A bit of a whipsaw kind of describe theple headlines. The idea of a bigger than expected package would be positive. Is thattion is how long going to last . The talks could turn any minute. We see that happen lots of times already. No stopping that from happening again. Anyone following the headlines and trading on this must be very busy by now. The poundfollowing perhaps a little dizzy. Any data we for got. There is a great deal of artistry involved trying to estimate growth numbers. Analystxcuse the community for being wide at the mark. Negative . E anything the pound has not really moved. In terms of the fundamentals, of course it is worrying. We are seeing from this set of data, largely misses across the board. Mild revisions lower, which tells us something about the slowing momentum and the u. K. Economy. That is before we get to the idea of brexit. When it comes to the pound, it has been an interesting story. Betse seeing those bullish and the offshore market, the positioning markets. Very resilient, perhaps a little of that is the and, thereness story does seem to be quite a bit of resilience built into the currency. I think the question, the kicker will be what happens with brexit and whether that will lead to a breakdown in those positions. Gets skewedket toward one direction, the risk is when something happens that is surprising going the other way, we see a quick liquidation of those positions. We are kind of getting to that set up where we see a lot of positive sentiment. Last,r that is going to we will see. We are going to talk to more to stops, pushing Climate Change. Your question, which assets will win as climates change . What are you hearing . Very interesting. Blog is itus in the is going to be about those companies that speak to necessities. Are talking about food in particular. Agriculturally related. Ofre is going to be a lot insecurity around that. If we see the effects of Climate Change ramp up. We are seeing the sense people get when they feel something is at a shortage. We speak about shortages in the u. K. That is likely to be a similar picture once we see the effects of the Climate Change story ramp up over the next decade or so. That looked to be speaking to that need for necessities, serving that need, would probably be one of the key winners in the story. Thank you very much for joining us. Runs bloombergs mliv. Lets get the first word newss. The top stories from laura wright. Is uncertain if the next president ial debate will happen. The commission that organizes it insists it will be virtual. But President Trump insists he will not take place in a remote debate. Plan. Den rejecting that saying it was the president who pulled out, not biden. 18 iraniannctioning banks in a move to choke out the economy. The news had been flagged in advance, with officials waiting for weeks. I ran faces so many sanctions, more will not make a difference. Virus program a backed by the world health administration. It hopes to give lower Income Countries the same access as wealthier nations. Details were not immediately disclosed 13 men have been charged in a plot to overthrow the government of michigan and kidnap the governor. Their alleged plan was to storm the Capital Building and try Governor Whitmer for treason. They planned to destroy Police Vehicles with molotov cocktails. Day,l news, 24 hours a powered by more than 2700 journalists and analysts. This is bloomberg. Thank you very much. Laura wright. Up next, spains Prime Minister calls for an extraordinary meeting. Yields continue to fall. The lowest since march. We will discuss europes virus resurgence. Welcome back to bloomberg markets. This is the European Market open. We are looking at a mixed picture in terms of futures. U. S. Futures on the rise. European futures having a difficult time choosing direction. That is possibly because what is going on covid wise. France placing more cities on maximum alert. Restrictions are being added in and grenoble. Meanwhile, in spain, the Prime Minister has called for an emergency Cabinet Meeting which could call for the declaration of a state of emergency in madrid. Yields in the spanish 10 year note fall to the lowest level since march. The covid cases are causing real concern. We are joined by rebeccas chaz worth. Rebecca chaz worth. Markets had been focused on the shruggingssues and off virus rates. Is it now more of a concern . Definitely more of a concern. What we have seen and what will help the market bring backup is recovery. What we have seen is net upgrades and recovery. Thank goodness, not seen the deaths but still seeing restrictions to the economy. Still seeing reasons why Companies Might see results downgraded. We may have seen some uptick, which is going to come back up again. A strange time in the market. So many parts of uncertainty. As we can see concern around what is going to happen in madrid, paris, london and elsewhere, we see yields coming down. The spanish yields coming down this morning. Attention. There are other examples. Is that because the market makes an assumption, the ecb will be there. Fiscal and monetary stabilizers will act . That is something very important to the market. The Central Banks the ecb and will havegland, they said we will do whatever it takes. Not at the moment, we do just have that focus on qe, we have a focus on fiscal stimulus. Will or wont we get stimulus is driving u. S. Markets day today. In europe, we have the huge recovery package. There needs to be that agreement on budgets. There are so Many Companies that could benefit from that now. See ets as a way to work around that confusion. The stimulus to what he. Explain. There is one part of the hit the nail on the head. Dividing the market in 11 sectors. You saw sectors really take off four years ago. The trump victory, that was quite a surprise. People wanted to orientate their portfolio to the winners. Those were areas that would see deregulation tax rises. Energy benefits. Fromcials benefited deregulation. A lot of Companies Running ahead of the tax cuts. Areas such asaw utilities come off. They were too defensive in that environment. Maybe we will see the opposite this time. Sectors clearly loom into view. I have been reading about how the fx markets, traders are pulling out the trump playbook. They are turning it on their head. Mexican peso and focus. What is in focus for you in terms of the u. S. Election at the moment . You have utilities energy. Time. Has had a rotten to get anynot going better. If you see a biden elected. Also, the full democratic suite, you are going to see and green policies, taxes against carbon. Spending on renewables and battery technology. That will benefit utilities who were early in this game. Look at the rerating of european utilities. You can pair that with energy. And Gas Companies are so late, they are going to end up assets. Anded financials, you could get a different market. The consumer might be in play as well. Both sides are talking about are we going to benefit the consumer. Either by a tax cut or paying them the minimum wage. Seen that in the market this wake. Anything planned by biden or trump is being pushed to one side. Matters is getting that fiscal deal. It does seem as if we have conflicting reporting about how urgently that might come. She stays with us on the program. Coming up, how trade uncertainties might impact investing. This is bloomberg. Welcome back to the European Market open. Theres point modestly to upside certainly in paris. Strategy. Investment there are a lot of risks on the horizon. Outcomes best be anticipated . What are the risks one of the risks you talk about is the dividend. What i you expecting in the Fourth Quarter . Is it too soon to expect evidence to return . Unfortunately it probably is. That is one of the known unknowns. Will we see growth dividends is too early for them. We are expected to get stress test but we will not hear about that straight away. Banks in the euro area have been restricted from paying dividends. We have a large oil and Gas Companies. One would think where it will prices are, predicting a biden presidency, it is too early for them as well. All is not lost. Interestingher areas like utilities and health care. How much does health care i dont want to say profit off of, but benefit from this crisis . I think we moved beyond those early days. April, may, we felt there might be a vaccine. That would be it. Everyone is expecting in the meantime, in the you have built up huge facilities which have been paid for actually by people throwing money into this. You have accelerated lots of r d. You have bought a lot of goodwill. Previously, 34 weeks after the election we would have been renervous about what a biden lead administration or democratic wave could do to the health care market, what they could unleash, and this environment you have almost bought time and goodwill. Vaccine. Wants that vaccineu have the coming you need testing. People are still looking for the cure. Even with the vaccine, you need the cure. Drugs he used have brought those to the forefront. Is a lot of interest in technology. I could ask you about that. Im going to take the opportunity to ask you about utilities. We dont talk about the sector is much as maybe we should given the hunt for yield. It has never been so exciting with that comes mainly from the sgm. If you think about what is driving a lot of the flows in this market, esq is a real feature. If you think about the environmental side, utilities give you the option to transition to green energy. Giving unstable cash flow, that is all terribly important when you are paying a dividend. A yield, and get some cases, it is almost twice the local market. These companies have is very interesting at the moment. Having you, as always. Happy friday to you and yours. Editorior equities joining us with some of her strategy and sites. Up next, the u. S. Government has taken an equity stake in a Battery Metals company that undercuts dependence on china for key materials. This is bloomberg. Welcome back to European Market open. Little bit of news on the Banking Sector coming through from switzerland. The ebs chairman will not comment on talks. A mergert looking for target. He had previously reported they were discussing a merger of equals, your favorite phrase. Line slightly an unclear what this means. Safe to say this is a conversation for investors. I think it is fascinating. Byl weber had been reported an investment magazine as merger, which is really an acquisition of either a number of banks ranging from Credit Suisse to deutsche bank, which has been discussed in the last year. Now he says he is not looking for an acquisition target that goes counter to what we had previously thought he was considering. Watch bank shares this morning. They could react to Something Like this. Do it sally joins us out of singapore. China is back. It seems a solid start to october. What data do you have for us . Watching these big moves. It has been a long golden week holiday. With what we saw in the one the, strengthening against dollar. This as we had a strongerthanexpected fix from the pboc showing authorities are happy with their recent appreciation. When we have a look at what stocks have been doing, we have in the keyolid moves indexes and china. The 10 year yield reaching its highest level since december. I want to show you what has been happening in the tech heavy china index. A lot of money going into risk assets. Track for its best day since july. What about the rest of the chinese economy . Have you got a sense how gold has been for the chinese economy . I was reading statistics about the number of chinese who managed to get away. Before golden week. 630 7 million, quite incredible. We saw those pictures of people packing airports. City says there were a lot more tourists than they were expecting. Top pick is a they areism looking to get into ashares once you have the listing in november. Cic a little disappointed with what you are seeing and macau. A lot of border closures. People are not at the casinos. They are expecting the gaming revenue to fall 7080 year on year. Thank you, Juliette Saly and singapore. Lets get the first word newss. The top stories for you from laura wright in london. Are back on. Ops the white house has versed its stance. With donald trump wanting a comprehensive deal. It came after nancy pelosi pushed back on individual measures for different parts of the economy. Placing people on maximum alert as coronavirus cases top 18,004 second day. Restrictions are being added in grenoble. Cinemas face stricter controls. Italy and spain have reported the most cases since april. Warnings of leading a sustained increase. Potentially closing restaurants and bars. There is a growing backlash over the rules and anger over boris handling of the pandemic. Global news, 24 hours a day powered by more than 2700 journalists and analysts who read this is bloomberg provide thank you. Laura wright with your update. The u. S. Government has taken an equity stake in a company the Company Received a 25 Million Dollar investment from the u. S. Government. Brazilianvelop a nickel and cobalt mine. Cobalt is an important ingredient in electric batteries. It is largely under chinas control. It is a move to reduce alliance geopoliticalst rival for key materials. Great to speak to you. Asyou see your is this having to pick a side here . Does this investment come with a lot of Strings Attached . We are fully allied with u. S. Interests. Of japan and other nonindustrial. A recognition of of geopolitical significance the overwhelming chinese control of the pipeline of supply, intoegic materials that go electric vehicles, battery storage. Normally, i would expect the ceo to say he does not want to take political sides. Considering that is your beategy, this election must important to you. Donald trump has championed that paradigm. Joe biden, maybe not so much. I dont think that is entirely true. The recognition of the importance of balancing chinas dominant position, areas that has been baked into the bipartisan political landscape. I dont get is really a political issue, it is a National Security issue. Does it hurt your business interests . To take an antichina stands at all . Are at the producer and, everybody once an alternative. Able nd user is everybody likewise once diversity. Position would increase in terms ofby china competitiveness. Potentially being involved in an escalating global trade conflict. It is the product of a geopolitical reality that will be with us for years and decades to come. Can you explain to a layperson, how rare are these metals . How difficult are they to get . Is there enough supply in this earth to meet the demand for electric cars coming up . We produce, process, and recycle. In the u. S. And canada, it is an important part of the equation. On minedot dependent resources, but in decommissioned batteries coming into the pipeline. Of the scale of geological occurrence. Certainly production will be there to meet the estimated to growth in demand driven by batteries. Electric vehicles, Renewable Energy systems. It will require higher prices to meet that demand. It is not so much one of , the issue is one of the capital and technology, pricing of the product to create economic viability thank you for bringing the story. Moreg up in the program, restrictions around the virus. As thewidens its curbs virus minces europe once again. This is bloomberg. Welcome back to the open. We are about 18 minutes to go equityhe start of cash trading across europe. Morgan stanley has struck its second mega deal in 10 months of acquiring an asset manager. The ceo of the bank said how the deals could reshape that and the other, Morgan Stanley in the coming years. This has been a 10 year strategy to take what is an extraordinary business, clean that up. Takeaway the trading, use the capital more effectively. It is doing unbelievably well. We had to pivot to build up the Wealth Management business. E trade, which gave us a digital platform. We are doing it in the Asset Management side. On thesmall boutique west coast. Excitedly for 2030 specifically, you will find a very stable, feebased institution. With strong liquidity. Explained to me the strategy. Are you making Morgan Stanley for the masses . Are you trying to be all things to everybody . Not at all. Deals, we sold will storage and transportation businesses. Mortgaging services. We told sold european private banks. And so on. Theave been reshaping portfolio. Capitalabout managing for individuals. Institutions and governments around the world. Being in the trading space, it is all consistent. It is part of that process. Are a morethink we focused company. We dealn the pierce set with. This has been an expensive deal. At the end of the day, it is what it will deal to shareholders. How do you explain the economics and the longer term . I have met people who want to buy Great Companies cheaply. If you are going to buy a great for 90it has been around years. Huge talent. Complementary businesses. They will be very little dislocation. Great growth. This was a nobrainer. We paid full dollar for it. That is what you have to do if you want to buy highquality businesses. They came to us. They wanted to be part of the Morgan Stanley business. Up about 100 basis points. Our core capital ratio. We have crated about 100 basis points this year. We are back to neutral. It is going to be a terrific deal over the long run. Makes it above 1. 2 trillion dollars at this point. Where lackction of rock and even j. P. Morgan r. They are completely different businesses. To be the trying biggest. Not do strategy through envy. You do it based on what works and what is important to your institution. Care if there are others who are bigger. The point is are we generating the returns we need for our shareholders . , it is this deal absolutely happening. That was the Morgan Stanley chairman and ceo speaking to us. A quick line on the u. K. Response to the virus. Chancellor will announce a job support plan for lockdown hit areas. There has been criticism when lockdowns have been announced, measures have not been put in details affect those will be set out friday. France will place more cities on maximum alert after maximum daily cases rose above 18,004 the second day. Pandemic threatens to spiral out of control and europe once again. Lets get to maria. Was the latest situation . I have mentioned some of the hotspots around europe. A crossbecoming continent conversation. That would be the takeaway. This is not just a story happening in spain or france. It is happening across continental europe. Saying, we are concerned about the numbers. We need everyone to wear a mask. There is a tone that has shifted over the past two weeks. 2, weer thing i would are seeing the measures we are supposed to be that were supposed to be tightened and temporary are going to be more they are going to be here a long time. Day is not just a 15 situation, it is probably going to stretch beyond that. I wonder what is going on in spain. There was a state of emergency. Regional leaders were complaining. Now all the regional leaders seem to be begging for a state of emergency. This is the situation happening in madrid. The Prime Minister announced the madrid the government will have more powers. This is how bad politics got in the way of crisis management. There has been a backandforth. People, companies have been with last about what to do Going Forward with the crisis has been exacerbated by the bad politics. If you are someone in madrid, you are confused about what to do as a company. I absolutely love madrid. Country and hope i can go back as a tourist. Thank you for joining us. Our brussels reporter on the ground. We are minutes away from the open. We will get your stocks to watch including the Online Clothing retailer. Raising outlook after a covid fueled fashion boom. This is bloomberg. Back to the European Market open. Eight minutes until the start of equities trading. Lets take a moment to think about what is going on with the bond market. European continental bonds drifting lower. Yesterday, it was the turn of greece. We spotted the spanish yields sliding. Crosss concern about a continental wave if the coronavirus continues to dominate news flow. Minutes away from the start of equity trading. Lets get to dani burger. Where should we start . For the second time this see, raising outlook, we sales growth of 22 . Previously, a maximum of 20 . It is no secret the Online Fashion industry is doing well. People are returning less clothes. They are actually keeping them. That has allowed them to see a more sunny outlook for the remainder of the year. That is the story. In sales itself. Lsc isave announced likely to announce the outcome of their sale. Selling for an equity value of about 4 billion euros in cash. Lsc says they are going to pay down some of the debt they used related to some items. Gets something needed to approval. Likely to see a sizable bounce today with the final terms of that deal announced. I feel like it was only yesterday they bought the italian boss. British they own a lot of retail properties, which have been struggling. Reinstate the to dividend, semi annual. This is the key. They say football is 21 of the benchmark. Recovered, 86 of their stores, commercial property they own, are back open. There balance street eat is strong. Really, asserting they are in a strong position even as coronavirus cases surge. Thank you very much. Dani burger giving an update about some of the stocks you want to watch in the market open. That happens in five minutes. This is bloomberg. Minute to go into the start of cash equities trading. Here are your top headlines. The Trump Administration continues to shift its stance on stimulus. U. S. Treasuries put higher. Minister prime the spanish Prime Minister could declare a state of emergency for the madrid region. Spanish and italian yields fall. London Stock Exchange inches closer to getting eu approval deal. S 27 billion matt take a look at European Equity index futures. They have been pretty mixed so far this session. You are still seeing ftse futures up. 1 ,. 2 . You are not getting a lot of direction from the futures picture, but the ftse mix price looks a little better than that. Lets see if they open up higher this morning. Take a look at the global macro column holds a risk asset class. You can see the far lefthand column has the equity indexes in it. The ftse does indeed open up. 2 . And forthouncing back between gains and losses, though the covid situation obviously is relatively bad in spain. As a result, you can see more concern poured into that index this morning as the ftse continues to gain strength. Cac 24 up after france reported relatively large numbers of coronavirus cases for itouple days in a row, and is actually holding up at that level. Little changed this morning. European markets may be mixed to higher. That as new infections in spain and italy hit a sixmonth high. The pandemic threatening to spiral out of control in many parts of the continent. Thanks for joining us on this friday. Let me ask your take on you know, we have been dealing with. His for six or seven m now markets had sort of been brushing off the infection spike for the last few sessions. Instead, choosing to focus on the possibility of stimulus. Now it looks like even with trump coming back to the table, covid is starting to worry people again. What do you think . I think the answer is thats right. One has to look at what is the theomic impact and also policy response an Economic Impact in europe and the united states. Asia obviously is a completely separate discussion, but in europe and the u. S. , i think for the Fourth Quarter, we are going to see slower economic growth. My own view is that we will probably see that only as a Fourth Quarter event and as we go into 2021, im fairly optimistic we will see growth reaccelerate again, but i think for october and november at least, u. S. And European Economic numbers are probably going to be very moderate indeed. I dont think we are going to go back to recession. I dont think we are going to go back to the very bad economic numbers we saw in march and april, but certainly, the vshaped recovery that we saw in june and july is now easing up. Anna good morning to you. If we think about where we are in the u. S. , the stimulus conversation seems to be on again off again and keeps going up and down. Might we be kept waiting mentiot president ial inaugurations do not happen until january. Is it possible to get something before then . This is quite an exceptional time. I wonder if that leads to more productivity in the meantime. I think there was a very clear speech by Jerome Powell last week or earlier this week where the position of the fed is that further fiscal stimulus is required and reasonably quickly, and we have had that bill passed by democrats in the house. That, frankly, is not going to go through, but i do think there is a chance that prior to the early november election that we could see parts of a bill go through. If fiscal stimulus is delayed until a new president comes in, clearly, there will be quite a negative impact on the u. S. Economy, so i think we will see parts of a bill coming. Hrough over the next few weeks the fed policy response probably will be to provide support for the economy by increasing their volley of quantitative easing. I would not surprised if we see an increase in treasury and bond spending. Matt i want to ask specifically about the election. The other day, we were talking with a chief economist over at unicredit, and he said he did resultnk we would have a from the november 3 election until at least a month later, so going through until december with still no result does that concern you . Do you think it concerns markets . Have threeyou scenarios. The first is a very clear biden victory. Certainly, if you look at the opinion polls, those are the betting odds. They are pointing to a clear biden victory. I think its quite interesting. Skeptical, quite rightly, of the opinion polls, but there is a focus on the betting odds, which actually have a much better track record in predicting the results, and those have kept it in favor of biden over the last two weeks. Scenario one is a clear biden victory. Scenario two, which at the moment is looking unlikely, is a clear trump victory. Scenario three, which i think is going to have a worrying effect on markets, is no clear result or a delayed result. I think there is a chance of that. I would put it down as a sort of h probability 20 or 30 but if it does happen, it will create further uncertainty for investors. I think you can see the shortterm market fall. Anna thank you very much for your thoughts. We will be back with bob shortly. Coming up, the u. K. And france reporting more than 7000 new coronavirus cases in a day. We will discuss the impact on the Banking Sector next. Matt welcome back to bloomberg markets. This is the european open. We are eight and a half minutes into the session and looking at some green arrows across the screen. The ftse up 32 points. Point. Gaining 44 the cac 24 gaining in paris. Gathering pilot distressed credit threatens europes financial industry. Weakness could undermine government efforts to prevent an economic meltdown. Dani burger joins us to talk about this. What kind of clarity do we have so far on the damage to Bank Balance Sheets . Unfortunately, we dont have a lot of insight. A lot of it is just trajectory at this point, but the heart of the issue is that there is so much uncertainty. Analysts think they could deal ofh about 300 billion euros more underperforming bad debt, but according to the ecb, we could see an additional 1 trillion added to Bank Balance Sheets in terms of nonperforming loans, and that pile of debt is note high because they have completely gotten rid of nonperforming loans. One analyst bloomberg spoke to said it might be a decade before these things are able to clear before these banks are able to clear this debt off their Balance Sheet. The issue is the explosion in what banks owned making it difficult to grease the wheels of the economic picture. That could perhaps cause another credit crunch, and banks themselves have spoken out about this. Bmp has warned about their exposure to aviation and tourism and commerce bank, for its part, expects more defaults, so certainly a lot of concern here. We have heard about a sizable deal for Morgan Stanley, another one. Morgan stanley announcing his asset managery eaton vance for 7 million. What is the reasoning being given for this . Its all about the consolidation we are seeing in the Asset Management industry. 38 an stanley paid a premium for eaton vance, so james gorman himself said that absolutely, the premium paid was worth it. The industry has been under pressure, and that itself is prompting more m a throughout the industry. Morgan stanley, though, has threatened to move away from fees and the income from more volatile trading and likes the more steady income it can get from investment and Wealth Management. It purchased e trade, the deal completed a couple of months ago, the brokerage, Online Broker accounts, and now they are going to integrate eaton vance and e trade and this is the stance Morgan Stanley has been moving toward, putting their eggs in that basket, saying this is where more stability in terms of income is going to come. Matt thank you very much. Dani burger talking about the concerns for bank stocks and the m a going on in the bank industry. Is still with us. Think about these concerns . The likelihood of another lockdown seems to me, at least depending on how you define lockdown, and maybe if you look at it regionally, very high. Are you worried Bank Balance Sheets could suffer . The first point just on lockdowns, i think its fairly inevitable we will see regional aslocal lockdowns continue, we have already seen particularly in france, spain, and the u. K. Having said that, i think the governments are particularly anxious to avoid the sort of National Lockdowns that we saw in march and april, which, obviously, had a catastrophic effect. I think in terms of your question of the impact on bank number sheets, i think a of observations. If we look at the situation back at the end of last year, the beginning of this year, precoronavirus, the banks still were running very large positions in delinquencies and bad debt. The Balance Sheet had not been completely cleared up. Came through with a Scenario Analysis of the potential impact of delinquencies due to the coronavirus on Bank Balance Sheets, and obviously, there are a number of different scenarios. Having said that, i think it is inevitable that delinquencies and defaults will increase over the next six months to one year, particularly from those very vulnerable sectors. Yes, delinquencies are going to rise. Arguably, however, that is reflected in very cheap valuations at the moment. If you look at eurozone financials, the price to earnings ratio is less than 10. Anna just as weve had a conversation about the time period over which the government should look to pay back its borrowing, do you think there is a conversation to be had about the time period over which banks should write down these bad deaths . Do you think they should be given longer to do that . The answer is absolutely yes. I think two factors. This will i think really encourage the ecb to ease Monetary Policy further, by increasing liquidity into the banking system. And then there is the regulatory response. Its fairly obvious, if ive got a bad debt situation. Lets say i have one billion euros and i have to write it off over the next month, ive got a problem, but if i write it off over 10 years, my problem is much less. I do think the regulatory response is going to allow the banks to write these off over a longer period of time. We come back to this key question, which is do we have Systemic Risk in the Banking Sector the banking system, and i think the answer is very much less than it was in 20082009. Having said that, i do think that regulators, the ecb, and National Governments are not going to stand in the way of bank m a activity, and i think as we have discussed in the past, that is certainly going to increase with banks also under to cut further. Matt thank you very much to us on this friday morning. We are going to get also bobs conviction calls, and i think a really interesting under the radar call as well on bloomberg radio. Efinitely turn in for that m a lets get to a big story. Agreeddon Stock Exchange to sell a property to your next hopefully hoping to get closer to European Union approval. What does the euronext hope to get out of this . Joins usf euronext now. I think this deal will give you a quarter of all european stock trading. How much will satisfy your growth ambitions . Is there a limit to how big it makes sense for you to get . Euronext is very enthusiastic about this transaction because it accelerates the delivery of our plans. Our plan has always been to expand the footprint of euronext to build the backbone of the Capital Markets in europe to add power to european Capital Markets to finance a real economy, and the addition of a g7 economy is going to be a game changer. The other objective was to diversify, has always been to diversify our revenue, and in this respect, it also will take that box. On boardingt we are a very strong territory in a very strong trading platform, so above and beyond the exchange itself, which is again the exchange of a g7 country, there are various assets which are thatstrong and profitable are going to change materially of profile and proclivity the euronext group. Matt it is nonetheless i mean, by any measure, it is expensive, right . But it is at the higher end of what we would have expected. I know that you are going to sell debt and make a private placement as part of this deal. Are you going to need to cut costs as well . Will there be job cuts as well . Some of the numbers released over the past few weeks were massively underestimating the numbers of the company that were released on the occasion of this announcement. The real numbers are anything between 50 and 20 higher than what had been rumored by analysts. To attractare going cost synergy and extract revenue synergies. We believe the revenue side, there are welldocumented areas where we can get to scale within , where weusinesses can accelerate the deployment of , and on the cost side, most of the synergies would come again,the switch, but the final element of the price uniquewas a very Strategic Value of the asset because the future is fundamentally different after the acquisition. Anna when you look at your growth prospects, do you assume that the lsc will lose its many europeande stocks as a result of brexit . Comment to make on that. Assumptionsst have youre making about what growth is possible and therefore where trade takes place. Are you assuming less trade will take place in london . No, i dont think any comments on the discussion which is in progress between the European Union and the london authorities. Matt i just wanted to repeat the question i asked earlier because you gave us a great answer about cost synergies and revenue synergies, but you did not say anything about you did not answer the question are you going to have to cut jobs . Are you going to have to cut costs actively here . We are going to leverage the capabilities of the group. We are going to extract synergies with different transactions everywhere across the group, not only italy, but also within the other parts of the euronext business. Those synergies will come from byraction of new revenues the acceleration of deployment products across europe and also by cost synergies mainly driven by technology. Much for yourery time. We appreciate it. Coming up on the program, rollsroyce surges again and investors are bargainhunting. The stock is up 100 this week. We will get your stock movers next. This is bloomberg. Back to thee European Market open. Lets get to rollsroyce. It seems a lot of bargainhunting taking place. This stock up an incredible amount this morning. A reduced short position from one particular investor, but also pointing to the fact that it was so weak at the start of this week. Matt retailers saying they will do better than they previously expected, better than the streets expected it is a covidfueled fashion boom apparently that is driving up stock in both of those retailers. Anna up next, we will talk with jennifer wu, global head of j. P. Inable investing at morgan management. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. S into the30 minute trading day, youre still seeing gains, not the kind of gains we had seen earlier, but up. 4 . We are still seeing major equity indexes well, actually all European Equity indexes boast green arrows. Lets get to bloomberg first word news, your top stories from the bloomberg terminal. For that, we go to laura wright. Laura stimulus talks are back on. The white house has reversed its stance with donald trump now wanting a comprehensive deal after nancy pelosi pushed back on the deal for individual measures for different economy. On maximum alert as a daily coronavirus cases topped 18,000 for a second straight day. Close andasinos will restaurant space stricter controls. Italy and spain have reported the most daily cases since april. The u. S. Has sanctioned 18 iranian banks in a move to shut down the nations economy to pressure the nation into entering a new deal to constrain its nuclear ambition. Critics say iran already faces so many sanctions any more will not make much difference. 13 men have been charged in a plot to overthrow the government of michigan and kidnapping governor. There alleged plan was to overthrow the government the governorcharge as a traitor. Hours a day on air and at Bloomberg Quicktake powered by more than 2700 journalists and analysts in more than 120 countries. Matt thanks very much. G30 is calling for urgent action on Climate Change to tottrack the Global Economy net zero carbon. The group today released a report asking governments and businesses to take practical steps towards economic sustainability. J. P. Morgan Asset Management provided direction to the project, which was cochaired by mark carney and janet yellen. The Company Announced this week that it is adopting a commitment to align its Financing Activities in oil, electric power, and autos with the goal of the Paris Agreement. Joining us now is the global head of Sustainable Investing at j. P. Morgan Asset Management. Thanks for joining us. I just wonder what exactly it ofns to align your holdings, for example, big oil holdings with the paris climate agreement. Does that mean you will be selling your big oil shares . Thank you for having me. First and foremost, yes, j. P. Morgan chase this week announced its ambition to align to the Paris Agreement targets. The means that across financing portfolios j. P. Morgan chase has, it will set targets for the identified sectors and financingphase out of to these heavily carbon intensive sectors and companies. Anna good morning. You are recommending to your clients that investors should move early to take advantage. What framework should they base those moves around . Yes, its pretty clear that not only you have Companies Looking to better align their own businesses with the transition to a net zero framework, but also, you have policy in many different markets whereby all of these policies are going to create what we call winners and losers as it relates to impact on financial return. The framework we are speaking to clients about is it will not be enough just focusing on individual companies in specific of, for but as a result example, what we are seeing in europe, every sector will go through its own transformation. Very important to focus on it through the two cornerstones of investment management. The first one is obviously looking at individual companies who will better benefit from the transition to a low Carbon Economy and who is not so prepared, but also on top of that, it is important to look from a topdown approach, how you think about asset allocations, which country is better positioned and which countries have more physical headroom to effectively help them to go through this transition. Matt i think one of the interesting things in the report use the if governments stick approach, the report assesses a drop in gdp of about 1 by 2030. If governments use the carrot approach, the report expects an 2030. Se in gdp by are you identifying countries that are using the carrot approach than, and can you tell us which countries you think will be the winners here . Like you said, the analysis we have done is while we know all of these Climate Mitigation policies are going to generate longterm benefits to the economy and the environment, what we are also curious about is the shorterterm impacts. What we have done is to look at a wide range of climate policies, including carbon tax, which is more what we classify as a stickbased approach, but investing in Green Renewables as well as low infrastructure, which is what we categorize as carrotbased approach. Combining this different policy options together, what we were able to find is that by 2030, at the aggregate level, the impact be up andgdp will down 1 . What we have found is that certain countries have put out plans and are already investing in green energy as well as providing financing to the private sector by way of incentives for them to really further invest into these spaces, so there are certain countries that will truly benefit. If we look at countries that will be hardest hit by the transition, the likes of russia, south africa, australia, canada, and india, you can clearly see a difference between these countries whereby australia and canada have more physical headroom to effectively raise debt to alleviate shortterm pain arising from having to pay for a less carbon efficient economy, whereas the others do not have that option to them. Anna thanks very much for joining us. It is 8 37 here in london, 9 37 in paris or berlin. Next up, chocolate manufacturers have long faced criticism. A Dutch Company is striving to make 100 slavefree and child laborfree production. We will talk about it next. This is bloomberg. Anna welcome back to the European Market open. 40 minutes into the European Equity trading session, and we have some modest gains. A bit of confusion as to if there will be further stimulus coming before the election. Increasingly looking like something for after the election. Different, theng chocolate industry. Businesses have traditionally collect cap information on their supply chain close to the chest. For have faced criticism their supply practices. The key ingredient is mainly grown in west africa by farmers. Ho struggle with poverty one Small Company in the netherlands is trying to shine a light on this darker side of chocolate. Thanks very much for joining us. You are waging this campaign with very laudable aims, but there are others in the sector, really big players, who have their own target for 2025 and trying to get on top of some of the bad practice in the supply chain. Is your stance different from the rest of the chocolate industry . We applaud any, industry that improves the livelihoods of the farmers in western africa, but many of these players take very voluntary steps, and unfortunately, that does not lead to the change we need to see on the ground. These people are still caught in a very vicious cycle of property of poverty and theres no change on the ground, whatever the big players say they are doing to improve it. Matt i wonder what that leads to. It is one thing for parents to make their kids work on the farm. Its another thing to use slavery. Thehat happening in chocolate industry to a substantial extent . Yes, unfortunately very substantial. Coast producey about 60 of the cocoa in the world. One of the farms, theres 2. 3 million children, of which 90 work under illegal circumstances. And there are worse cases that could be called or considered modern slavery. Yes, unfortunately, it is a very wide problem facing the industry today, and unfortunately, it is not improving or not improving fast enough. West paid more for its chocolates, with things change . What do you think it should be . A living income Reference Price every year that really is more than just a fair trade price in itself, but it takes more than paying a higher price. It means really building longterm relationships with farmers, helping them increase pay for farmers. Theres more steps that need to taken. Also really built longterm relationships so they are not as. Ependent it takes a lot more than just a fair price. Matt great point, and its good, i think, to raise awareness of this, which i guess is exactly what you do as chief evangelist. ,hanks so much for joining us talking about eradicating child labor, slavery, and deforestation from the chocolate industry, which i think so many people probably unknowingly support by buying chocolate bars all the time, you know, me included. Coming up, new fed data suggests the covid19 crisis has disproportionately rewarded a small class of billionaires. Up next, we are going to talk about we are going to discuss Wealth Distribution in the u. S. This is bloomberg. As we grow, thanking is coming to our telephones. My 13yearold banks through her phone. I bank through brickandmortar places and as they take brickandmortar places from our communities, we feel the loss. Their goal is to grow into a lender for automobiles for homes, homes being the first that manyalth firstgeneration americans or many firstgeneration homeowners can leave to their children. Grammyhat was awardwinning killer mike discussing the new business he several others have developed to serve africanamerican communities. Data from the Federal Reserve covid19 has transformed the economy in ways that have disproportionately rewarded a small class of billionaires. The central bank has taken a look at u. S. Well through the first half of 2020, and it has shown stark disparities by race, age, and class. Ourmore, lets get to quicktake reporter. Ofk us through the breakdown this data. The latest fed data provides more evidence about this kshaped recovery we have been hearing economist talk about for a few weeks now. As you mentioned, the top 1 of americans are worse now more than half the country. People. Bout 165 million according to this data, their combined net worth, they are worth about 34. 2 trillion dollars. Compare that with the bottom 50 of earners. As you mention, just 50 of the richest americans are worth about 2 trillion, the same amount as the bottom 50 . The data shows the widening wealth gap in the country. That is just wealth and class. When you look at race and age, disparities are even greater. One of the reasons is that a majority of americans just are not benefiting from the stock market. Many of them do not even have exposure to it. Compare that to the top 1 , who equity more than 50 of in corporations. Here. I will pick it up i wanted to ask about i know its not an economic issue but a soquel issue social issue. Princeton has named a Residential College after a finance executive. Did they drop the president s name from that institution as well . Jennifer they actually voted to drop Woodrow Wilsons name back in june. Just announced on thursday, they announced they were renaming the building that previously honored Woodrow Wilson with melody thomsons name. Shes an alumni who graduated with a class of 1991. She had been in talks with the schools about a major donation she had planned to make. This is really historic for hobson. The university has said she is becoming the first black woman to have a Residential College named after her. This quote she put out really sums up the historic nature of it. She said, my hope is that my name over mind future generations of students, especially those who are black and brown and the first in their families, that they, too, belong. It is a pretty big step for the school and for hobson. Anna thanks very much for bringing the story. Bloombergsow, markets live currency and rates strategist. When we look at what is happening for risk assets this morning, we see a little bit of an uptick this morning, but we have been swung left, right, and center by the conversation over stimulus. Where do you think we have got to over that stimulus conversation in the u. S. . I think we expect this kind of flashy nature in assets and risk assets in the couple weeks, and the markets are likely to position themselves for a considerable stimulus package if joe biden becomes president. Such a package would also be inflationary. What that essentially means is that the dollar will weaken. And otherian krone Commodity Currencies will strengthen, so the curve will strengthen. Gold will be supported as Inflation Expectations relative to nominal bonds will climb, and , shortterm least bonds may do well. Matt very good stuff. You have a macro view out on that stuff today that i encourage our viewers to check out. You also had earlier this week a forecast that 10year yields in italy would drop, as they have now. What happens Going Forward and why . Italian bonds faced a very Interesting Development in the next few weeks, and they have nothing to do with what happens in the euro area. Rather who the next occupant of the white house is matters more. Why do i say that . The long end of the Treasury Curve may steepen, as i was just saying. That means the german curve and italian yield curves will also tend to steepen. A biting victory may actually be a bit bearish for italian bonds over the next few weeks a biting victory a biden victory. Anna as we see the 10year horizon dropping, the yield on the 10year horizon dropping across europe, is that the same trend in banks . We saw greece at an alltime low yesterday. We saw the spanish yields dropping. Is it all to do with the global picture, the white house story, rather than anything to do with europe . Its interesting we see these yields dropping at a time where there is increasing concern about a virus spike and resurgence in europe. Absolutely. The correlation between what is happening between u. S. Treasuries and euro area curves has increased in recent weeks, and that is what is driving financials at the moment. I expect these correlations to increasinglyeans will comethe cues from the u. S. And what happens in the u. S. Curves will increasingly matter more than european securities. Matt let me finally ask you what is going on in terms of the question of the day which assets will win as climates change . What are you hearing and what is your take . What i hear from other investors is that they find is a particularly tricky area to get a handle on because we are still learning about the implications of Climate Change and we know even less about the ripple effects it will have on specific sectors. To me, it is not clear how much additional returns companies can generate from switching to alternative sources of energy. With the b and put to work, things can change very quickly, and we are still learning about this, and it is difficult to come up with hard numbers. J. P. In the language of morgan Asset Management, it will be interesting to see if the government takes a more carrotbased approach to incentivize governments. Thank you for joining us. Markets madety some modest gains. U. S. Futures similarly modest. Expectations so far . Matt we will see what happens in the u. S. Because futures were higher than what we saw here in europe. That is it the european open im pretty sure thats it. Is that it for the european thats it for the european open. Stay with bloomberg television. Bloomberg surveillance is up next. Anna is going to leave the shot and shes going to go and to the radio studio. Anna thanks very much, matt. That is it from the European Market open. Surveillance is next. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Francine shifting on stimulus. Tellsary Steve MnuchinSpeaker Nancy Pelosi the president is once again interested. Can european stocks get a boost despite a spike in coronavirus cases across the continent . France puts more cities on maximum alert. Madrid readies for state of emergency. And debating the debate, President Trump plans a rally on saturday as