Month high and europe a different story. The economy lost momentum unexpectedly. Michael is here for the breakdown. Michael the narrative in europe playing out as europeans forecasted. They are now seeing a covid come back and slowing Economic Data. Indexes, thetiment pmis, is this month better than last month or worse . The consensus is it was not as good or worse. You can see all of us the euro zone in france, germany, they saw declines in the manufacturing and services pmi and france taking a big hit, dropping into contraction territory for the manufacturing pmi. Germany a little better. Manufacturing improved but services and composite well. Composite in all three areas following the weakest representing three position of lockdown measures due to the current flareup of the virus in europe. Those of the countries that a lot of in the curve. We saw in the minutes earlier this week at the ecb that policymakers are reluctant to embrace the forecast at the july meeting because they were unsure what would happen with the virus. It looks like i was the right thing to do. Here, itof the virus played out but not in terms of the numbers. The u. S. Pmi strongerthanexpected, stronger than last month. Manufacturing and service pmis rising significantly and the composite rises to 54. 7. The narrative of a covidslowing economy not playing out as much of the u. S. Data today. Same story with existing home sales. 25 . Sales surged in july 5. 60 8 million annually unit eyes rate, the strongest since 2006. Inventories are dire. Existing homes on the market down 2. 6 for june and 21 from a year ago. The 3. 1 month supply is. 1 of the alltime low. People want to seem to want to move to the suburbs and buy houses. It would suggest Stronger Economic activity ahead because not only are people going to be buying nurture, carpets and things like that, but if inventories are that low, it a push Home Builders to build more. Alix the prices in new york are dropping, dropping. Michael the rest of the country, prices are going up. Alix we appreciate that. Or more on that Economic Data, we have ethan harris joining us. I look at the charts, the u. S. Pmi and the housing data, that is a v and the european charts are no longer a v. What gives . Ethan you have to be careful of the data. In the housing market, the covid crisis has helped housing. People are at home more. They would like to be in a place where they can live their life with some kind of freedom. That means buying a house instead of being stuck in an apartment. You can see this dramatically in the new york area with the week market in new york city and the strong market in the suburbs. That is part of the story there. On the pmis, the pmis have gotten strange in recent months. We should have been getting hugely strong pmis in june, early july. When you have an economy coming out of the shutdown, you were supposed to measure the month over month change in activity. Where was the big search that should have happened tomorrow now we are seeing should have happened . Now we are seeing them chop around in the 50s. You are seeing that the u. S. And europe are in a choppy, slow recovery. This data looks bad for europe and good for the u. S. , but neither region is having a truly vshaped recovery now that we are past the reopening phase. Alix i wonder, the narrative for a hot and it was that europe is dealing with the virus better, they were coming out of lockdowns earlier and their economy will be better. We saw that backup with closing to european equities in the euro. Is that narrative real or are we going to have to reverse that narrative now . Ethan i think it is partly real, partly illusionary. It is still the case that cases in europe are only one quarter of what they are in the united states, even though testing regimes are similar in terms of the number of people being checked out. Europeah, the fact that had looked like it had things really contained, cases down to 2000 a day and the big five economies now running at 10 housing per day from the covid last seven days, you know, we are still running at 45,000. We are not exactly looking fantastic. Margins, everyone has got to deal with this virus. Itis not gone in europe, and really is not gone in the u. S. Alix we noticed that unemployment declined for six straight once in the european pmi and france in particular saw orders declined and continued. Ob cuts what is your expectation for the underlying economy in terms of job growth and then tying that to the Furlough Programs in france and germany . Ethan remember that in europe, peoples jobs were protected a lot more diligently than the u. S. When you get a big shock of layoffs and how they played out over a longer period of time, so so you had dramatic layoffs in the u. S. , unprecedented, and now you are getting some jobs back, whereas, europe is still feeling the initial shock. I would not look at the jobs numbers kind of indicating that europe is still collapsing in the u. S. Is recovering. I think it is more a sign of the way the market works. But, you know, the underlying picture for both the u. S. And european job market is pretty bad. You are slow or upfront, the number of distressed households is quite high with regions. Good you said, is a it is a good point not to look at the job data, but can we say who is doing a better, either on a Furlough Program, or you are supported by the states, or in the u. S. , where it is supported by the government . Isan i think the reality that socialism, for want of a better word, works better in recession, so if you protect jobs, if you protect industries during recessions, you tend to cushion the blow, and the European Economic system has more of those protections built in. So you do not need to pass the legislation to compose those basic supports. The thing that is really disappointing for the u. S. Is not what we have done so far, where we moved ahead and quickly put in place really good support system for Small Businesses and for the job market and for unemployed, but the problem is what is going on in washington right now area bayer on august recess at a time when programs are ready now. We need to reup the programs in europe, the rolloff programs are smaller in europe. Here, we are going cold turkey the on these bonus unemployment benefits. That is troubling. They have got to get back to washington and get a bill. Alix what is interesting to me is i do not know when we will start feeling that because the rhetoric was, it stimulus checks when out, the next week we would see it in the economy, etc. , but we have not, particularly in the stock market. Why . Ethan in terms of the dataflow, what you have seen is a leveling off of the economy in the first half of august. There is going to be a lag. People are getting pretty generous unemployment benefits. It was the most generous and unemployment programs in the united states, the 600 dollars benefit, so there must have been money left over in these households from the end of august. I would be surprised if the data is significantly weaker in the second half of the month as we get that lag data coming in, and we have kind of a mini recession in august, where the economy dipped slightly in the u. S. Because not just because of unemployment benefits, but the whole fiscal packages running out of funds. It is state and local governments, Small Businesses. There is a lot of stuff rolling off right now. So if they do not do a package in the next few weeks, hopefully by Early September or something, then september is going to be another negative month for the economy, so they really need to get going. I think for the equity market, the story is the equity market feels a lot of support from the fed and app until recently, could count on fiscal policy for equally dramatic support. The risk of the market now is the fiscal policy does not deliver. That is where the market gets into trouble. Right now, i think people still assume that something happens, but if they do not deliver in the next few weeks, the market is losing one of its most important supports. Alix the question then becomes, how do we pay for it . We will break that down. Ethan harris, bank of America Securities of global economics, thank you. Coming up, the repeat of the last three years. Brexit negotiators see little progress after a week of discussions. We will break that down and what it means for the u. K. Economy and the rising debt level. This is bloomberg. York, i amfrom new alix steel. This is the european close on bloomberg markets. No progress at your negotiations on the shape of the eu and britains relationships. They spoke earlier. It is as if we were going back more than forwards. , likethe short time left i said longterm in july, remains true. Today, at this stage, an agreement between the u. K. And European Union seems unlikely. Alix joining us from brussels is ian wishart. Ian, what happened . Ian you have heard this before, havent you . Know, they have made very little progress since negotiations started in march and since june, when Boris Johnson, the british prime minister, intervened and made it known he was determined to get the deal. They were quite optimistic. Even since then, there really has been no movement at all, and any positivity from the process is still really disagreeing on two massive issues. When i say disagree, really they made no progress since the start. The two issues are access to british fishing waters and how closely the u. K. Should stick to the eus rules in a lot of areas. Those two things have to be sold before they even solved before they even start looking forward. It is pessimistic now. Alix i thought they were going to deal with a consolidated text, or at least the u. K. A slimmeddown place to start, did i not happen . Ian that did happen. The consolidated text basically is what they think the final verse with the treaty might look columns toith two show the differences between the two sides. However, that only really works if both sides are happy to do it. What the eu said today was this is just the u. K. Acting unilaterally, so it is not really consolidated, but on the other hand, the british said, well, we just want to do something. We want to spark for negotiations into life, and this is our way of doing it. It did not do harm but i dont think it reflects the fact that there has been any positive progress yet. Continues. Ountdown six or seven weeks until a deal can be ratified by all the countries in the eu, so what will be the spark now . Ian well, i think we are heading for a crunch where leaders need to intervene. That means chancellor merkel in germany and president macron in france meets Boris Johnson and between them, say, look, are we really going to do this . Are we going to make compromises . Ultimately, that is going to have to happen if there will be a solution before it is too late. Alix good. Repeatlike it is of the last four years now. Thank you, ian wishart. Lets get more insight on the u. K. Economy. The Government Debt past two trillion pounds for the first time. Quite significant. A milestone that will add to the debate of how the chancellor could finance the unprecedented support that the u. K. Has been getting to the economy. Ethan harris, bank of america head of Securities Bank of economics, is still with us. This amplifies that there is a lot of pressure to and the Furlough Program in october for the u. K. The debt is rising, 2 trillion pounds now. What happened . Ethan i think it is a mistake to pull back at all on the fiscal support of the economy right now. I mean, it is true we are not in complete lockdown now, but we are a long way from a recovery. Certainly, the u. K. Has had a particularly deep recession. I do not think we should say, ok, now we have to focus on the budget deficit again. This isnt the right time to do that. The reality is if you look at the developed world, whether the u. K. , European Union, or the u. S. , governments have a lot of capacity to borrow the world with effectively zero interest rates. It is not good, but it is necessary. It is too early to start on that path of fiscal consolidation. I do not think they should pull back. Alix there is an argument made that you cannot sustain this level of spending for too long much longer. Ethan i dont know what the trigger is for that. Up until now, Capital Markets have been happy to fund massive debt. They have accepted the idea of Central Banks monetizing a big chunk of debt. If you put this movie on the planet from 20 years ago and when i looked at this for the first time and said, i cannot believe this, but over time, the marks have learned to ledge with large budget deficits and an aggressive central bank, and they have accepted and financed huge deficits. The u. K. Does not stand out particularly. Japan led to foray into crazy high deficits and now the rest of the developed world is following them. I do not know when the credit withcomes to error, but zero rates, it makes it a lot easier to stretch out your debt. Alix it brings the question for me, what happened with the fed minutes we saw . You are right, that is a narrative in the market, but it feels like what we saw with the fed minutes when we did not see the yield curve conversation heat up, the bond market yields moved higher and basically how much is the market relying on Central Banks to continue to finance the debt . How sensitive are we to that not happening and what is the risk . Ethan i think what you saw what the fed is they looked at the situation and said, you know what . Financial markets are red hot. We do not need to throw gasoline on here and introduce a new program at this point. We can introduce it later in an environment where there is more need for the markets. The markets are a bit disappointed because there have been hints dropped about the potential movement to some kind of yield curve control or other guidance coming forward, so yields go up a bit. But, i do know and what the market is counting on, they are correctly counting that it will start to rise in a fast, scary manner from the fed perspective, they will intervene and stop the increase. Ultimately, if they have to, they will do yield curve control to stop the increase. I do think this is a tactical move in the markets, not a big change in the picture. Alix is there one central bank boeountry, specifically the , the cbm the fed ecb, fed, that had the upper hand in monetizing the debt to pay for all of this . Ethan the u. S. Always plays a little better role than everyone else because we are the Center Mobile capital market. People forget what a great thing it is to be the center of the capital market, so that when things go bad, people move their money into your country. Ecb and the bank of england and the boj all to some extent and if it from that safe haven quality and from this being center market, the u. S. Is the primo on that, and it gives us more room to be responsible way and mored a rope to hang us with i guess, but there is no evidence that that ability to kind of stretch rules has changed. The u. S. Seems to be able to borrow pretty much as much as it needs. Alix well said. Ethan harris, bank of America Securities, head of mobile economics, thank you. Happy friday. This is bloomberg. Bloombergime for the is this flash, look at the biggest business stories in the news. Wells fargo started their long awaited jobs cuts. Some of the biggest rivals have held back terminations in the midst of the pandemic. Wells fargo is under pressure to reduce costs. A spokesperson said terminations resumed in early august. Bloomberg reported they may cut tens of thousands of jobs. Farmargest maker of equipment has cut their costs. They have stayed resilient despite the coronavirus pandemic. Their net income be the highest analyst estimates. Now, uber and lyft are taking their fight in california to the ballot box. The state Appeals Court cap them from having to comply with the law that would hire them to classify drivers as employees, not independent contractors. It is up to california voters. They will decide in november thater to give back a law would offer some drivers benefits but not as many as regular employees. That is your Bloomberg Business flash. Alix thank you. Something else to keep tracking is the race for the coronavirus vaccine. It is getting closer to the finish line. Johnson johnson planning a testing vaccine in as many as 60,000 people, twice the number of other big trials. At the same time, pfizer and biontech said there vaccine is on track for regulatory review in october. According to earlystage test data, it is well tolerated with mild to moderate either in fewer than 20 of participants. You wonder what is priced into the market. If we get a vaccine, do we really get a backup and yield like what we saw with the fed minutes on wednesday . In the markets as we head into the european those this friday, volume is a terrible for european stocks. Volume is up 25 versus the 10 day average. European stocks are lower on the day, down by. 4. Other equity markets are despite the weaker pmis. This is bloomberg. Alix live from new york, i am alix steel. Guy johnson is off. Stops finishing up the trading day in europe not as bad as they could have been. Stocks. Lows despite weaker than expected pmi. The cac 40 is down. 5 . France pmi was not great on a composite level. Job loss continuing. Sentiment indicator not great as well. We will talk about travel issues in europe in a second, but spain seeing more of the epicenter of the virus breakout. Watching the stock market. Switch up the board. The pmi did have a Ripple Effect within the currency market. Eurodollar down. 6 . We were kissing 1. 20, now we are back down to 1. 17. Not as bad as it could have been in the u. K. , but you are having a breakdown in brexit toalks. I did want to highlight what is happening in the bond market. We talked about how much debt the government is accruing and the pressure that puts on the Furlough Program which should end at the end of october and you are still seeing a bit into those markets with yields down one basis points. Concernslecting demand , down almost 3 . I want to dig deeper into the big movers in your. Here is abigail doolittle. Abigail it is friday, not monday, happy friday. We do have some m a news. Akbar and intercontinental, it is thought they ma