Little bit of buying pressure, 1. 61 . The s p is up by 6 10 of 1 . If you take a look at the sector breakdown, it will be a little more defensive than the headline numbers will indicate. , talking about the fact that the ecb is taking the currencies single level into account. Alsolso ha watching what is happening with the pound as well, and the russian ruble, because we have seen the ruble coming under pressure as a result of what is going on with the navalny poisoning, germany confirming unequivocally that as a result of recent tests, they are now able to confirm that he was wasd with not a poisoned. Will that result in sanctions . A big move, big move against the ruble. We will come back and talk about that later in the program, alex. Alix Prime MinisterBoris Johnson and Opposition Leader are facing off today in the house of commons for the First Time Since july, and that comes as johnsons government announced another uturn and policy, as you were just saying, keeping local lockdown rules in place as covid cases still rise. Johnsons policy was blasted. A wastedas been summer. The government should have been spending it preparing for the winter, but they lurched from crisis to crisis, you turn to uturn. One error, even two might make sense, but 12 uturns and rising, the only conclusion is serial incompetence, which is Holding Britain back. Will the Prime Minister take responsibility and finally get a grip . Alix that is called not missing any words. Joining us now is our u. K. Government reporter, tim ross. Can you outline what is on Boris Johnsons agenda . What are the problems he has to tackle asap . Tim first, it is making sure that the pandemic itself is kept under control. The uturn he is talking about there is the region position, one that came immediately after he spoke, and that is putting back restrictions on Peoples Movement in one part of the country. It is crucial that johnson can manage the pandemic while making sure his lockdown measures work as needed. You turning on that particular uturning on that issue again today puts him a lot under a lot of pressure. They have promised today that there will not be a horror show of tax rises, and at the same time, clearly we are back with gregs talks going rough. Brexit talks going rough. There is plenty for johnson to deal with. Yeah. He is going to be fairly busy. It will be interesting to see ultimately this gets priced in the u. K. Assets. Our thanks to tim ross. Lets talk more about what is happening in the u. K. And a little bit more detail. Lets bring in geoffrey yu. Lets talk about where the u. K. Is right now and then lets talk about where u. K. Assets are. We have had a disastrous series of government uturns. The virus has not been particularly handled well. We are not seeing people coming back to work in the kind of numbers that the government would have hoped for. Brexit is coming up and there is more talk of a Scottish Independence referendum. Do you think that is adequately reflected in where u. K. Assets are right now . Geoff it is not adequately reflected in sterling. If you look at the options market, with respect to the ftse, we do [indiscernible] will not be the best or flexion of where the u. K. Is right now, but going back to the point, does there need to be a bigger risk premium in the u. K. . Absolutely, especially in sterling. Alix so why isnt there . Geoff two things. Firstly, it is a broader dollar view. Tracking whatever the dollar is doing right now and the grand scheme of things. If you are an investor, you can make the argument that how the dollar cycle is in the mediumterm, the longer term is more important than shortterm u. K. Gyrations. Especially when it comes to brexit talks, it feels like you are in a normal economic cycle, the brexit had to growth would be significant, and that needs to be priced into u. K. Assets. Given that we already have a recordbreaking recession, especially a drawdown in the economy, a few more Percentage Points from brexit does not seem like too much. On a marginal impact, it is certainly a lot weaker compared to know pandemic scenarios. Elements the two limiting further downside in sterling right now. December 31 is not far away. Michel barnier was in europe this week. Lets listen to what he had to say. We have no more time to lose. We must have a final agreement by the end of october, if we are byhave a new partnership 2021. Since the start of these negotiations, the u. K. Has been extremely reluctant to include disputeingful settlement mechanisms and our future agreements. Guy geoffrey yu, how big is the cliff the u. K. Could potentially face . Barnier talking today about a big difference between deal or no deal. Geoff the cliff is potentially by the end of next month. Various prospects of further improvements or further accommodations and talks barnier might ask himself, is there any point in extending it to october . Right now, we do think there is a Framework Agreement and that is still possible. It will be barebones, but it can lay the ground for future agreements to come. Barnier hinted at these things in his speeches today, but his point about their resolution mechanism, that really is a sticking point. That would change the level Playing Field argument as well. The uks suspicion is is the eu is still demanding when judgments are made under such mechanisms, the u. K. Will have to refer to deciding judgment from the ecj. Redline,ight a but for the time being, we still think there is a scope for a framework up ahead. But the clock is ticking. Alix is also the reason why we are not seeing the risk period in certain Asset Classes because of the boe . We get the headline today from andrew bailey, saying negative rates are still in the toolbox, david ranson talking about they can step up the pace of qe. Is that the reason why . The advantage of one is massive qe, of course, but if you look at the maturity profile, it is twice the length and the maturity profile that is a g7 average. Going back to sterling, sterling options, why isnt there more volatility being reflected . The view right now from the bank of england, you contain across all Asset Classes. I think that is asking a bit too much. Are we looking at a twist in terms of cable, sterling gold . Term,k in the shorter boris has to deal with the labor market, because compared to what the labor market can do, i think brexit, that is actually the lesser. Guy the u. K. Has its own currency, so in some ways this next question is redundant, but if the u. K. Gets sustainable at current debt levels, we talked just a moment to go tim ross about a moment to go with tim ross about taxes going up. Axes are going to have to rise how much room do you think the market will give the u. K. Government . Geoff i dont worry about the u. K. In that situation. The risk premium will be reflected in terms of liquidity preferences, i think that will take into account how sterling is going to behave. We will see it in sterling rather than the gold market alone. The problem right now is the government, especially the treasury, they will really have to define the balance between ofplanting the displacement the demand that has been the pandemic. You can hit demand by taxation as well. It is where you find middle ground, not just in the u. K. , but all governments have to take this into account. Australia, the rba said we need to do more fiscal. Dont worry about borrowing. Alix we are getting a question from a viewer, if we can go back to brexit for a second. Do you think they will get a deal because there will be something at the last minute, between the u. K. And the eu, like we see in u. S. Congress . Geoff it could come down to the wire, and no one had an idea what the deal could look like. It could be an ambitious deal or a barebones deal, but that is the deal,. The deal, full stop. Compared to brexit toward the end of last year, that was far more binary. Something very, very minimum can be put together, but it will be at the last moment. I do think more concessions from both sides will be needed, especially on the level playing will and the role of the ecj. Those are the biggest tumbling blocks right now. B why amffrey yu of mellon, you are sticking with us. This is bloomberg. Ritika lets check in on the blurring word bloomberg first word news. President trump has cut into joe bidens lead in the race for the white house. The poll from usa today in Suffolk University has biden with the 50 to 43 lead, down from a 12 point advantage of the democratic nominee held in june. Officials in germany said tests showed unequivocally that russian Opposition LeaderAlexey Navalny was poisoned by a nerve agent. The German Government will consult with the European Union and nato to come up with a response. Brazils Central Bank Says the economy will improve over the next few quarters. Bloomberg spoke with him today. For next year, we also think that our growth is better than the forecast. It all depends on a lot of external factors and in general, factors related to the way the program, the credibility we can generate and the way the variables interact. Ritika in the second quarter, brazils economy shrank 11. 4 from a year ago. By 2700 journalists and analysts in more than 120 countries, i am ritika gupta, this is bloomberg. Alix european stocks surging in the most in the month, and the eurodollar rate does matter. And into our global european forecast, that does feed into our Monetary Policy setting. With us is geoffrey yu, bny market senior strategists. How long does this last for . Next i think until the ecb. They are going to make the next ecb, they are approaching it to making it a live meeting so things can change, which is not the case for the one in july, for example, where they were waiting for results from the summit. One quarters worth of observation, where we saw the 10 tomove from below 1 120, and may have damaged Inflation Expectations on a margin. If something is going to be much more extended, we could see that, but it is a bit too early. Is there going to be a signal this is a new regime and the new regime that could deal with the euro. Guy is there further intervention right now . Markets arenk the under appreciating what the euro can do as a reinflation trade. , forat the euro swiss example, one euro can achieve in terms of growth, it is reflection of growth. Markets arent buying it right now. If i look at the options market, a oneyear route, and that will take into account the flows. The ecb will try to encourage some optimism, but at the same time they have to recognize that if the euro goes to strong, too quickly t o strong, too quickly, it could be. Guy it feels like the alix it feels like the u. S. Is outpacing everybody. Like the fed is more likely to believe investors than the ecb. Has the ecb changed that . Bring the bank ofdin japan into the equation, their longterm Inflation Expectations remain at 1 . The euro, the ecb will not need to go to great lengths. They talk about changes in the average inflation target, and what the framework is going to be. Ultimately, i think the market needs to give them a bit more benefit of the doubt. The recovery package, half a trillion being employed over the next few years, that could actually come through and it will have an impact on growth and prices. Guy how much of what we have seen thus far has been alluding to what you are talking about, the rerating of the euro as the result of the single currency area finally getting its act together on some form of joint issuance . There was always going to be a rerating. Have we had it . Are we done with that part of the trade . Geoff no we have not and we are not done with that part of the trade. In the options market, there is no interest in owning euros. [indiscernible] trade, broader reflation the joint issuance, there can be more discretion from a Central European treasury. There is a lot of skepticism on that, and rightly so. It does take time for things to come together, and officials have stressed that this is a oneoff, they will have more flexibility up ahead. Germany is about to issue a green bond to try to lead a Green Recovery, and they will dominate green bond issuance. The European Union is issuing as well. Quite a few things are coming together, but it will take time and these few years. I think the markets are not looking that far out right now. Alix i can barely see light tomorrow. When you mentioned the green bond, the issue is around 0 , against the benchmark. They gave 45 basis points. What does this view you have mean for yields, whether you are looking at bunds or treasuries . Geoff with the framework in place across the board, i dont see any sharp moves. Curves fors in yield the time being sharp moves in yield curves for the time being. You look at what denmark is doing, issuing a green certificate along with a conventional bond. The danish and german economies are joined at the hip. They have had a currency link for decades, and have gone in completely Different Directions with respect to green issuance. Recovery innd price respect to green bonds, i think it will take some time. But money is heading in this direction. We are going to see the Green Recovery driven by europe, and this is a reserve act. Dont be surprised if european will start outperform. Off, we are going to leave it there. Thankey yu of bny mellon, you very much indeed. This is bloomberg. Ritika its time for the Bloomberg Business flash, look at some of the biggest business stories and the in the news right now. Basketball legend Michael Jordan has taken a stake in draft kings, the Fantasy Sports betting company. Jordan will provide creative and strategic input. Morning,s jumped this draft kings was up 245 . Spending one point 2 billion to eliminate the use of fossil fuels and the production of detergent. This is part of the Consumer Product giants goal of zeroing out Carbon Emissions by 2039. Report, costs down on the idea that socially responsible investing is beating the overall stock market. It says u. S. Equities with higher calls on environmental, social, and governance metrics did not sustain much in the First Quarter selloff. It also found that esgs goals associated with negative returns in the second quarter. Contrary to widespread claims, esg is not an important determinant of prices returns. That is no lot a lot of cold water. Alix it is. I reached out to bloomberg intelligence, and she took me through two things. One, you are right. In better environments, esg does not work as well. It in periods of crisis, does. Things got better in april, but we take a look at europe, the bottom panel, which is european esg. The top panel is the underperformance of u. S. Esg. You did not see much of a recovery in europe in terms of the markets like we did in the u. S. I thought that was interesting. The worse you do over there, the better esg does. Guy thats interesting, europe also pushing along pretty strongly when it comes to the environmental side of things. Certainly a big part of the policy mix going forward. We just talked to geoffrey yu about green bonds. The another interesting part the other interesting part is inat products has played esgs. But i think you have to strip that out from what we have seen. Alix they dont have energy and they do have tech, which would make sense and an esg funds, but when you have a huge reflation rally, esg funds are not going to do well. Alex,uropean markets, replacing today, equity markets to the upside. A nice little bounce coming through. Some of this, maybe a lot of this down to the fact of the euro, backing away from 120 as part of the summit we saw from the ecb chief economist. This is bloomberg. Welcome back. The market is about to close here in europe. We will recap in just a moment. European stocks up today. See the euro coming lower. That is a positive for european stocks. It is less of an effect in the pound today. We are seeing some effect there as well. We climbed early on, we faded a little bit since then. Nevertheless, a positive performance being delivered by european indices. Lets look at what is going on in terms of markets. Ftse 100 underperforming a little bit. Still shy of the 6000 mark. The dax is up by 90. The euro probably has a bigger effect into what is happening with the dax. The cac trading up as well. Lets show you the euro effect. We got through 120 and subsequent he faded. There you go. The u. S. Dollar against the euro now trading 118. 33. This has got a big reversal. 6 ,. 7 . On both sides of the atlantic, it is interesting what kind of picture we are getting for health care, personal household s and goods. These are stocks outperforming today. These are big Global Companies that are going to feel the effect. Also, a similar story in the states. This is a rally built on defense rather than offense. Somerms of single stocks, of the other names we are going to be watching, we will talk about daimler. Is that going to make a difference . Do you think elon musk is tumbling in his boots . U. K. Housing data. The worry is that it is pent up demand coming through and then it is going to fade. The saga with is the genoa bridge. 16 . Y surging, up by it looks like we are getting close to some sort of agreement there. As a result of which, atlantia had been trading really well on the back of this. Daimler up by over 1 today. Alix some breaking news on a couple of fronts. United airlines is planning to furlough more than 16,000 employees. They have already furloughed about 7500, 7400. Shouldft voluntarily, i say. These are involuntary cuts that will take effect october 1. United airlines had forecasted this and said if they didnt get another round of bailout from the u. S. Government, they would have to furlough some workers. It appears this is the case. It also comes on the heels of ford having to lay off about 14,000 workers. Angela mer