It is the big heavy weights adding weight to the downside. We are seeing apple down, alphabet down. 1. 44 ,xx 600 down by less heavy on tech. Yesterday higher. The cable rate also under pressure. Pressure on Boris Johnson right now as he prepares walk away potentially from an international treaty. The other thing worth bearing in mind is the financials are under pressure. We put the german 30 year in there. The curve flattening quite significantly today, and that is having an impact into those financials. Alix yes indeed. Also, watch aerospace. Boeing is apparently slowing streamliner deliveries to inspect a new factory flaw. That stock off by about 5 . If investors are positive on europe, it tends to lead with the European Recovery Fund and germany lifting the debt break. Germany has said it needs to take on significant in 2021, according to finance minister olaf scholz. He sat down with Francine Lacqua for an exclusive conversation. Olaf we will find a solution, and anyone knows that after taking a strong activity this of bigd taking a debt size this year, it is necessary that we will continue the next year, but as i said also for europe, i hope that we will come back to something which is more similar to the normal from 2022 on. But next year, there will be a lot of strong Activity Still needed. Francine how do you see this if you look at what is needed in terms of the stimulus . Do you need the recovery to be completely in place to be able to balance the books . Is it much longer than one year, two years . Does it take for years because you also want to transition the economy . Olaf we are working on the transition of our economy. We would do a lot of things which are important for creating an economy that is co2 neutral in 2050, which is very near to today. This means a lot of decisions are also related to future questions, for instance, in the question of renewable energies, and the electrifying of our mobility, the question of hydrogen, which i already mentioned. This is all part of the package we decided on in germany for developing our economy in this direction. Situationre it to the after the last crisis of 2008 and 2009, and the bankruptcy of lehman brothers, and all of the consequences for the World Economy and for the german and european one. Ourere able to increase debt to gdp ratio from up to 80 at that time, and we moved it down to 60 just before this crisis now started again. So it is absolutely reasonable onthink that we will be back 60 at some time. Francine if russian authorities do not help clarify the situation surrounding the poisoning of alexey navalny, the nordu cancel stream 2 project . Olaf this is something we will not accept. It is against all of the legal ideals we have, and it is something which is absolutely impossible. There is always the necessity for having the chance to oppose your own leaders. This is democracy, and the way we think democracy should be run , and so you could imagine that anyone of us is absolutely sad about this situation. We are happy that we were to help him recover. Hopefully this will be successful. No one knows at this stage. Now toworking very hard discuss about the consequent this. This is why we ask the russian government to give an answer, and to cooperate in understanding why it has happened, and to find out what happened exactly. This is why we discuss the outcomes of our research, together with our partners within the European Union and nato, and as i already said before, it is now the time where it is the European Union who has to discuss it, not a bilateral conversation between one or the other nation. It is europe that has to understand what is necessary now. Alix of course francine of course, but you, mr. Olaf scholz, would you block it . Olaf the big problem of the world we are living in is there are a lot of governments that are not following the ideas of freedom and of democracy we are following, and we have to act within this framework, supporting those who are fighting for their right to be free and to live as free citizens. Part of Francine Lacquas conversation with the german finance minister olaf scholz a couple of hours ago. Joining us to continue the conversation, Morgan Stanleys chief economic advisor. We are seeing today, and olaf scholz confirming it, a significant change in the way germany is approaching its debt this in. It is prepared to issue significantly more debt, prepared to invest money, prepared to get it its economy moving again. How significant is that going to be in the way we approach investment in the European Union next year . Is germany going to lead europes recovery and outperformance . Good afternoon to you, guy. Good to be with you. I think this is crucial. The big difference between the European Response to this crisis versus the European Response after the last crisis, i think the European Response has been. Aster, stronger it has had a much greater degree of cohesion, and a lot of that has been led by germany. In that sense, what we just olz isfrom minister sch very important. It is significant in terms of investment in europe Going Forward. Ill give you one example. This morning, our equity analysts published their forecast for european equities Going Forward the next two years. Based on the actions that europe is taking, based on what we understand of the Recovery Fund, based on the fiscal expansions that have been undertaken in example,e expect, for earningspershare to grow by 30 in europe next year, 20 the year after, so very significant, and the policy actions are behind the kind of copulation. Alix does that mean that you expect the debt break to be removed altogether, or is it just a temporary debt break . A very goods question in terms of the policysetting in europe. In the short run, it is very clear the commission has suspended the ability of growth, so it means it breaks the fiscal deficit targets are not operational. They have also said they will not bring it back next year, and the commission is talking about an overhaul of the entire stability and growth pact. If you have a monetary union, you do not have a fiscal union, you need some kind of fiscal framework to make sure that debt remains sustainable. So what is sensible to do bubbly is to have a framework which doesnt so much focus on specific targets for the deficit or for debt, but it focuses on debt sustainability, the path of debt growth in terms of bringing down the debt to gdp ratio. So i think the noise we are hearing from european capitals and the commission is positive. It looks as if we will be moving away from the traditional andility and growth pact, that makes sense from an economic perspective, and also from a market perspective. Guy youve got to keep Interest Rates very low to do that. The ecb has certainly been making sure that has been happening with a huge amount of buying that it has been doing. We are seeing a shift in focus towards maybe the ecbs concerns surrounding the currency. The euro popping north of 1. 20 a few days back. Philip lane, the ecb chief economist, stepping in with some jawboning comments to bring it back down. We are now seeing sub 1. 18. But do you think the ecb can stand in the way of a higher euro . Is that going to be problematic for europe . Reza we will have an ecb meeting later this week. We will get that perspective, i am sure. Madame lagarde will be asked about this issue. Circled,is in the ecb we at Morgan Stanley do not expect ecb to act, but we do expect them to have further action by the end of this year or the beginning of next year. Is, as youfor that rightly said, policy needs to remain very accommodative, and a key part of that is Interest RatesGoing Forward, and also the quantitative easing, particularly through the pet program through the pepp program they are doing. The last ecb meeting somewhat went under the radar, and part because the focus was very much on the Recovery Fund. But as you point out, this forthcoming ecb meeting, there will be a lot more attention paid to it, partially because of the Exchange Rate issue, but also partly because the Economic Data have not been good recently , or at best they had been volatile. The data in july were very good, both on growth and inflation. When the Exchange Rate is strengthening on top of lower inflation, core inflation was 0. 4 , incredibly low by european standards, by Global Standards in august. That gives an added perspective on the Exchange Rate, and part because the Exchange Rate in europe being a very large, open economy, feeds inflation expectations. I think your question is what can i do about it. What can they do about it. I think the focus will be on two issues, continued quantitative peppg i think the program has proved very successful. The way it has been designed, it can continue the on its current deadline of mid next year. Quantitative easing does have an impact on the Exchange Rate, and it has an impact on growth. But the final point, i think if europe is growing, if it is recovering, the current level of Exchange Rate dont think would be a concern. I think if the growth is not there, then you get much more concern about appreciating Exchange Rates, so the context is very important. Alix and as we see germany cases spiking, spain as well, france instituting lockdown measures. Thank you. Reza will be sticking with us. This is bloomberg. Alix some breaking news for you. Jp morgan is probing whether employees helped customers government programs. Protection, stimulus funds. Guy there were questions from theset go on how flexible funds were. You and i were talking about the news and the break. I think this will reflect also on what happens next area there was certainly a sense that the next stimulus package was likely to have significantly more draconian rules to avoid just this kind of thing happening, but certainly if this is found to be true, it doesnt reflect well on the bank, but i wonder if it is the only one. Alix usually we see these things cascade a little bit. Still with us to talk about it is his right amaq at them of Morgan Stanley is Reza Moghadam of Morgan Stanley. Do you see them extending the Furlough Program in the ok . Reza i think our view at Morgan Stanley is that the stimulus package will eventually get done before the recess, so i think we are building that into the shape of our recovery. We have a strong recovery in the u. S. Taking place already, and we are expecting the u. S. Precrisis be back to level of output i the Second Quarter of next year. If this doesnt happen, of course we will have to revise. On the u. K. , i think you mentioned the view, but i think generally iniety the u. K. Political circles, but also in the Monetary Policy committee meetings. So i think one attaches importance to his point of view, but i dont think one should interpret that as the view of the npc or the view of the bank of england the mpc or the view of the bank of england. As we have seen elsewhere, depending on the path of the recovery, depending on the strength of the recovery, Central Banks have reacted, so my guess is if the recovery is not as strong as the bank is hoping, some of these schemes are likely to be extended, and it is also likely that lsu support will be extended, but i think the degree of uncertainty as high. I think it is interesting to look at these views, but ultimately it depends on the actual weight in which the economic recovery evolves. Saying what you are that if this cultist deliver in the size the market if fiscal doesnt deliver in the size the market is hoping for, that monetary will compensate for that lack of fiscal . Reza not exactly what i meant. There is a limit to that. Factor aboutotable the strength of the recovery has been the strength of the policy action. That policy action has come from both the central bankers and the fiscal authorities, and that is what has helped for us to have the vshaped recovery so far. So it is not always possible to compensate by the other leg area you are likely to have a weaker recovery. Other leg. You are likely to have a weaker recovery. Of morgan moghadam stanley, thank you very much. This is bloomberg. Karina it is time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. Im karina mitchell. As the tech sector says off today, we spoke with the coceo of netflix about his companys structure. It is really dependent on the people. It is an unusual situation. But if you think of every family, there are generally two ceos running the family. They just have to be really close. We have been together for more than 20 years, and with the two of us, we are totally comfortable working. Karina we invite you to catch the full interview at 5 00 p. M. New york time on bloomberg technology. Tomorrow more and highlights with david rubenstein. Morgan stanley says carrere very Morgan Stanley says recovery from the coronavirus pandemic will be bumpy, but airlines will return once a vaccine is found. That is your Bloomberg Business flash. Guy thank you very much, indeed. Lets talk about the airline sector. Easyjet shares sinking after the company said it is cutting about city. Also dropping guidance. Joining us is rob bernard, Bloomberg Intelligence senior analyst. They are cutting significant amount of capacity. This decision as we approach the autumn, what is this likely to impact onn revenue . Rob most of the discount carriers are looking at a 50 decline in revenue this year because of the pandemic, and i think what we are seeing now is that we are probably not headed towards a quick recovery. Thatignal from easyjet is it is probably going to be tough. Weve got new quarantines coming into place that are really denting demand in the near term. Probably if you look out to 2021, 2022, we are not going to snap back into the 2019 level, so i think youre seeing Market Reaction to that. Alix which is why it was so surprising that we saw that upgrade for u. S. Domestic air travel, like for jetblue. Did that surprise you in terms of it being early, or is there really going to be a distinction between u. S. And european carriers once we really come out of this . Rob i think a lot of analysts are certainly trying to look for the bottom here and say, have Airline Stocks come off enough . But i think we are probably still looking at bad news for the european segment. I do think theres a little bit of an analog because just like the Morgan Stanley note had some pretty positive things to say about the discount carriers in the u. S. , i think we also look at the discount carriers here in europe, ryanair, easyjet, as being better positioned to recover more quickly on the long haul segment of travel, the transatlantic piece that british lufthansa are more exposed to. If you are looking for a faster recovery scenario, you probably should be looking at these discount carriers despite the reduced guidance from easyjet today. Agm as well,its talking about the fact that we need to get the transit lynda cruz up and running area i talked to shay weiss of virgin last week on the very same subject. How close to you think you are to do you think we are to reopening the atlantic . Rob i certainly have a keen personal interest in the topic. My sense is that we probably will spend some time away from business as usual, and what i would note is that even if the routes are allowed and you have lifting of quarantine restrictions, every indication is that businesses are going to be much more reticent to return to travel, even if the rules allow for it. So i would expect it to still be once the rules open up a little bit. Guy rob, we appreciate your time and your analysis. Rob barnett of Bloomberg Intelligence. European stocks are about to close. Looks like levels are holding on both sides of the atlantic. The european close is next. This is bloomberg. 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. The big events are back. Xfinity is your home for the return of live sports. 30 seconds to go until the end of regular trading here in europe. We are down but off our lows. Look at the chart on both sides of the atlantic. The nasdaq is holding its allow at the moment. You see Europe Holding friday lows as well. Will we see this as a floor to bounce off . The end of the session will determine that. Down by 1. 1 at the moment. In terms of the way it breaks off, there are competing factors. The ftse 100, 5926. Is outperform you because the pound is being smashed lower again. You have to take that drop, translate the revenue streams, and reprice the ftse off the back of that. The ftse does better but it is a mechanical process. Down 1. 6 . Day worth bearing in mind, seeing some action and what is happening with the euro. Down againrading today. Like he will potentially tear up recent deals that had been done in m