Ask them, they know where they were that day. 9 11 is one of those rare moments, perhaps one of the only moments like it. Tom in washington, was a plane ascending with a plane ascending out of reagan, a flag unfurled along the west wall of the pentagon. Thee will be ceremonies at pentagon at the pentagon at 7 30 this morning. As you say, we moved to new york city. What a decidedly different 19th year of remembrance this is. With this pandemic, it will be a very different set of images this morning. Jonathan we will observe those moments of silence through the next several hours here on bloomberg tv and on bloomberg radio. Lisa, give us the day ahead. Consumer8 30, some price data. We are talking about a potential dynamite pillow, as we heard from albert gallo. Will we see the resurgence of inflation . At 2 00 p. M. , how big is the u. S. Deficit . We will get the august budget statement. Today, President Trump and former Vice President biden will be marking the 9 11 anniversary. I have to say, i grew up in new york city in the 1980s and 1990s. I live through 9 11 and the rebuilding. Today we are going to be hearing so much about resilience and unity, and it is going to resonate that much more this year. Hopefully 20 20 marks a turning point towards a new era hopefully 2020 marks a turning point towards a new area of a new era of rebuilding. Jonathan i think we all hope that. Up 0. 8 on the s p 500. We advanced 25 points. In the fx market, euro strength, and the ecb does not know what to do with it. We will talk about this a low bit later this morning. , didnte lagarde tried try that hard. Not much has happened since. Tom i am thunderstruck. But to theber day, business side of things, i am absolutely thunderstruck at this discussion at the 1. 18, 1. 19 handle. I expected 1. 22, and this discussion has come early. Jonathan 1. 20 got it done. Joining us now is enter sheets, Morgan Stanley is andrew sheets, Morgan Stanley chief man cross asset strategist. Andrew ask, and good morning. It is nice to be with you. While ithat we see is is very easy to ascribe some of the summer strength to easy central bank continued easing globally, i do think the major story of the summer strength has been surprisingly strong Economic Data that surprised to really a historically elevated degree. I think that means the continued strength of the data is really essential going forward. We cant simply coast on the expectation that Central Banks will solve all problems. I think this is what makes the debate around u. S. Fiscal policy so important. I think we are facing a really key Decision Point for how Economic Growth in the u. S. Could look going forward. We think that would matter for markets even if the fed keeps policy easy. Tom what does the decline in oil signal . It seems to be the one statistic removed from all of the gyrations of fed, centralbank, ecb, fiscal and that. What does Morgan Stanley say of wti . Andrew the oil market is interesting at the moment because i think what you see cross commodities, and i think this also goes back to the idea the supply dynamics really differ. You have very different supply dynamics in Something Like copper versus oil, where i think the challenge that oil has is that as soon as you move up around 40 a barrel, you have increased incentives for shale producers to hedge, and it is for members to continue cutting supply. That oilyou suggesting is not indicating global slowdown . Think so. Dont a lot of the other Economic Data we follow, the pmi data, a lot of other Global Retail sales data, that all still looks pretty good. We still think the Global Economic picture is strong, and that what is happening is loyal has a bit more to do with some of the micro fundamentals of supply in that market. Jonathan how do you price lisa how do you price in a slow down in Consumer Spending and possibly a downturn in the accomack data if we dont the Economic Data if we dont get another round of fiscal support, which looks quite likely . Andrew i think this is the reason why investors need to hold lighter positions this month. As you mentioned, this is a binary outcome. The difference between another cares package passing and not is the difference of trillions for u. S. Gdp over the coming months. That is the difference between betterthanexpected growth and growth starting to decline again. I think this is one of those issues where our base case is that another aid package will pass, but it is inherently uncertain. Because of that uncertainty, we need to tread a little more cautiously than we would otherwise in september, look for more clarity, and at that point it is easier to reengage more aggressively. Jonathan lighten up where . Means runningk it lower overall exposure to equity markets. Weve also reduced exposure in emerging markets. Emerging market foreignexchange i think could potentially suffer from the fact that the extra carry you are getting in those markets is historically quite weak. As you look across a lot of different asset classes, it is quite hard to find hedges given how low bond yields are, how high volatility is, so potentially emerging markets could suffer some as they look more attractive as a hedge. We have also dialed back some exposure in emergingmarket credit as those markets have gotten closer to our target. I think it is generally about not abandoning an early cycle thesis, but holding less of what you would otherwise and looking for a better opportunity as some of this uncertainty eases. Jonathan this is the story that the team has been telling now since we come out of the crisis in march, that the recession playbook will play out as it always played out. Is that still the case . The question i ask this week, what are you learning as this Journey Continues . Andrew we do still believe in that. We believe this will be a more normal cycle then maybe expected, despite all of the. Bvious abnormality of it a lot of the usual strategies that work them out of recession can work again. One thing that has surprised us, certainly surprised me, is i think the bond market has remained far more skeptical of the recovery than other parts of the market. I do think you still have a fundamental tension in the fact that some things that benefit from normalization have benefited. Smallcap stocks have rallied off of the lows. But a lot of the things you would buy if you expected things to remain abnormal for a long time, some of these highflying nasdaq names, elongated bond yields, those have also performed well. I do think we are approaching a key crunch time with the fiscal package, with the u. S. Election, where that cant continue. You will need to see more divergence, and ultimately we think the more procyclical strategies will ultimately work over the next six months. Lisa what is your inflationary backdrop in terms of supporting your view, given the fact there is so much dissent . Some people saying we are going to get deflation, some people say runaway inflation. Where are you . Andrew it is a wide market at the moment. We are definitely in the reflationary camp. That is actually very near term. Morgan stanley is above consensus on cpi numbers. Broadly, we think you will see more inflation over the next 12 to 24 months. It is not going to be 4 to 5 inflation, but we do think you could get closer to a 2 to 3 number on core pce faster than the market is expecting. I think that is a function of we actually think the Global Recovery is happening better and faster than the market has been expecting. We do think fiscal and Monetary Policy will remain quite easy into next year, and you could argue theres some shocks to both the demand side and the supplyside into next year. On the demandside, saving rates are high, so there could be pent up demand of things normalize. On the supply side, it has been very hard to invest and build up capacity this year. If anything, capacity has probably been reduced, and that could also be deflationary. Jonathan great to catch up as always. Andrew sheets of Morgan Stanley, thank you. You would have thought that the overwhelming that the overall inflation was this inflation, but andrew painted the picture of disinflation there. Tom theres very few signals. You touched on it with mr. Sheets, the idea of what signals do we look for in this journey through the autumn of 2020 . It is fascinating in inflation, in the market, the technical statistics of how it could go this way or that way. As a lot of that going on right now. Jonathan if you are making a short to mediumterm call on investment, maybe that is where the inflationary argument comes from right now. What is where does the extra supplyside come from . Gundlach onve jeff one side saying that the tips market is overpricing inflation. Hes betting on deflation. You have others coming out and saying honestly, jon, this is the most confusing market for me right now. Shortterm, near term, a labor market that has been absolutely decimated. I dont know. Jonathan i agree with you. I think that is the best response right now coming up on filion m, johnny fillion, ceoyves of bnp paribas. Ritika with the first word news, im ritika gupta. President trump wont extend the deadline for tiktoks u. S. Operations to be sold. Bytedanceent said if cant sell the unit by september 15, it will be shut down. Officials have been debating whether to extend the deadline. Bloomberg has learned a deal is unlikely by next week because new regulations complicated relations between bitter microsoft. Thats between b between bidder microsoft. Officials are trying to reassure the public that they will not given to political pressure to approve a vaccine prematurely. In the u. K. , Prime Minister ants to breachw International Law and rewrite the brexit deal. And, meant to the bill would give parliament an amendment to the bill would give parliament a veto. Both sides say they want a trade deal, but time is an issue. The transition phase ends in december. Built tesla model threes intended for delivery outside the country will likely start mass production in the fourth quarter. The markets include singapore, new zealand, and europe. Biden will mark the anniversary of the 9 11 attacks in the same place, but not at the same time, in pennsylvania, were one of the hijacked planes crashed. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. [laughter] pres. Trump so we will either close up tiktok or it will be sold. Im not extending deadlines. There will be no extension of the tiktok deadline. Jonathan see you next week. Thats the message from the president of United States on bytedances tiktok. Two hours away from the opening bell, this is the price action. We have a lift after a brutal week, up 0. 9 on the s p 500. The nasdaq heading for one of the worst weeks go another way back to march. In foreignexchange, eurodollar 1. 1860, a stronger single currency. Sterling breaking down aggressively this week. Now all the talk is no deal, no deal, and slowly pricing that in. Tom saw a 1. 27 and or earlier. Earlier. Handle different on this were a, and it is hugely different with the pandemic. Kevin cirilli joins us from washington. Jennifer epstein reporting with Vice President biden, i am not going to make any news today. I am not going to talk about anything but 9 11. Why cant we get these two candidates to shake hands in pennsylvania . Kevin of course, the Historic Site of the september 11 memorial, with regards to the other side on 9 11 in which the took downthat flight that plane, likely headed to washington, d. C. Last cycle in 2016, top u. S. Policymakers, new york city mayors, as well as then nominee Hillary Clinton and then nominee donald trump appearing at a Memorial Service together in new york city. So it could have been possible. Both campaigns behind the scenes have been somewhat open to it, but it doesnt appear likely, at least today. Such a crucial battleground state. Shanksville, pennsylvania located in a more rural area of somewhere in the southwestern portion. But this is a crucial state that relies heavily on the Energy Sector come on fracking. Democrats in the state early greencal of the more new deal type of democrats like freshers like freshman congers woman freshman congresswoman alexandria ocasiocortez. Are hoping to replicate turnout in 2020. Me, i was looking at the news flow. So extraordinary this morning, i was distracted. That happens with the bloomberg terminal. Kevin, i need to bring it back. Of course, jon ferro looking at china and tiktok. I think jon will bring that up in a moment. When we are done with our remembrances, how do we move forward to the sunday talk shows . 50 days to we breach the election next week. Kevin from a Foreign Policy standpoint, the conversation with regards to september 11 presents an opportunity for President Trump to discuss the troop withdrawal he announced several days ago with regards to iraq. We should also note the peace talks with the taliban in afghanistan this weekend. That could also present a potential breakthrough. In terms of the politics of the sunday shows, bob woodward is going to be continuing to talk, and i think that will continue to have more conversations in the coming days. Jonathan what just happened in the senate . Actionwell, nothing in happened in the senate. A skinny deal was dead on arrival, and wasnt able to break through. Steps, itf the next is increasingly unlikely that this is going to get to some type of deal by the end of the month, and they have to pass some type of funding bill to keep the government open. Both sides are saying they want to keep the government open, but ive seen this show before. It will definitely be interesting to see if democrats or republicans feel that there is incentive to keep the government open when they cant even get to some type of fiscal stimulus deal. But economists are saying that each time there doesnt appear to be fiscal stimulus, the more uncertainty it provides to the timing of a recovery. Jons point,d on isnt it in republicans best interest to pass a bill that gives a check to every american to flood the economy with money, keep Consumer Spending up so you dont get a slowdown in the Economic Data right ahead of the election, which is what economists are predicting without another round of fiscal support . Kevin precisely. In fact, it is really remarkable because this is where the down ballot races become incredibly important. There are ultraconservatives in districts looking at the price , 1 on some of these bills trillion upwards, and saying not going to happen. But at the end of the day, the president and his Reelection Campaign are looking at this and saying, that vshaped recovery they were so bullish on, at least in a particular time period, that could turn into a u. And now with the various pharmaceutical companies putting on hold, at least one of them, the vaccinations, that is really starting to look at the timing of potential movement between now and november 3. Jonathan lets talk about timing. The real deadline was at the end of july. It was a long time ago now. Its the deadline now for policymakers before they disappear and focus on the election . Kevin i pose that question to some staffers yesterday. In checking with my sources, again, if they can get it done by the end of the month, but it doesnt appear that likely. Increasingly this is looking like a lameduck type of fiscal stimulus, at least some type of monumental bill that would go through. I also think that, depending upon the outcome of the election is really when you start to talk about what with the First Initiative be for a reelected president or a firstterm joe biden, and would it be Something Like infrastructure, which would provide another vehicle for there to be more stimulus. So it is really unknown, but i can tell you that the lawmakers and their staffers, based upon conversations i am having on both sides of the aisle, incredibly frustrated about the inaction. Jonathan i ask every day, is it still a matter of when, not if . Kevin i still think that because the Senate Majority worth aut up a bill couple hundred billion, i still think that is worth something. I still think, to lisas point, that the president feels it is worth something as well. Jonathan great to catch up with you. We roll over a little bit on equity futures, up 25 on the s p. 0. 7 5 . 0. 3 amazing how little progress has been made in washington. Tom i get the politics of it, but the statistics that you, i, and lisa are looking at of the labor overlay, the published statistics plus the pandemic statistics on top of that, leads to a lot of jobless in america. Tom the conversation continues jonathan the conversation continues. Lets borrow a word that lisa used at the top of the hour, resilience, and the resilience of new york city. That conversation coming up next with jeanyves fillion, bnp paribas u. S. Ceo. This is bloomberg. Jonathan this is bloomberg surveillance, live on bloomberg tv and radio. Alongside tom keene and lisa abramowicz, im jonathan ferro. Two hours away from the cash open. Futures just with a little bit of a dip in the last 20 minutes or so. We are still elevated 22 on the is and p. We advance on the s p. 0. 7 . Ance inflation mandate, policy objective, eurodollar walking straight through it. In the bond market, slap bang in the middle of the last several months, around 70 basis points on tens. Bound centse range of that is were markable. Right now at a 0. 69 come around to get up to two digits. It is just a massive stasis in the bond market. Jonathan the upward of the range was 90 basis points. That was the top of all of that rotation talk. Since then, everything has faded, and the bond market hasnt cut back to those levels. Tom lisa, is it the same in your world of highyield and ig . Is at the same range bound cents . Lisa yes it is. It is a p