I cannot underscore enough the originality of what was being accomplished yesterday, francine. I was sitting there with michael mckee, and his press conference question was superb. They are all dealing with what to do with inflation at no aggregate demand. It is a fascinating time. Francine we will have plenty more on that, but now lets get to first word news in new york city with ritika gupta. Ritika President Trump has slapped down some of his top health officials. He contradicted them at a news conference, saying that a Coronavirus Vaccine could be distribute it widely to the public by as early as next month. Cdc director Robert Redfield told congress that the vaccine would be distributed in the second and Third Quarter of next year. The president called those comments a mistake. At least one person was killed and hundreds were rescued after Hurricane Sally came ashore near the floridaalabama line. Heavy rain swamped pensacola, florida, and other cities in the region. Sally is now a tropical storm. It could drop up to a foot of rain in parts of alabama and georgia today. Attorney general william barr says the black lives Matter Movement doesnt care about black lives. Instead, barr says it wants to use africanamericans killed by police as props to advance its political agenda. He also suggested the issue of black on black crime is being overshadowed by Police Killings of minorities. Dealls of that proposed between oracle and tiktok are coming out. Merck has learned that oracle we get full access to bloomberg has learned that oracle will get full access to tiktoks source code. The Administration Still has not signed off on the agreement. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom thanks so much. Curt related risk off here. Equities, bonds, currencies, commodities. 2. 46. Ures vics up two big fears the vics up to big figures. Bonds adapt and adjust to what we saw yesterday from chairman powell. 10year yield remarkably stable,. 68 . Coming in off the enthusiasm yesterday. Turkish lira, it is off the radar. Ian bremmer on later. Im not going to waste dr. Bremmers time with lire, but lire is making news right now, weaker. Francine im looking at dollar steady, treasuries picking up. I think a lot of markets are focusing on the fact that it was pretty dovish for the fed chair jay powell, and he highlighted the uncertainty about the economic rebound. In europe it feels like they are picking up on that instead of the more specific guidance, which could maybe make his life a bit easier. Also looking at automakers in europe, they are down after data showed european car sales plunged by nearly a fifth for the month of august. In his news conference, fed chair jay powell says the economic recovery has been faster than feared, but the path ahead remains highly uncertain. We believe particularly this very strong Forward Guidance, very powerful Forward Guidance we have announced today provide strong support for the economy. Rates will remain accommodative until the economy as far along in its recovery, and that should be a powerful statement and supporting economic activity, with inflation running persistently below percent, we will aim to achieve inflation over time. So that it averages 2 over time remainsterm inflation over 2 . The labor market has improved, but it will be some time getting to full employment. The details are for congress, not for the fed. We believe the strong policy guidance we are providing today will serve the economy well by promoting our goals through the many possible paths the recovery may take. Francine lets get to joyce chang. Of jayd you make powells comments. Will it make it easier to reach those targets . Joyce i think all eyes are on the fiscal discussions in the congress. Youre seeing little or no progress on the negotiations here. You are running out of time. The house is supposed to recess in october on october 2, the senate on october 9, but mcconnell has said he might send everybody home early, maybe the last week of september, so there is a real possibility that you dont see something done on the fiscal side. The skinny bill, the 500 billion proposed by the senate, they could not get the super majority. Democratt get a single to crossover, so i think there is immediate focus on this. In our focus we had been to 1. 5ing 1 trillion that is that, so one of the immediate questions. Turning more to the fed statements, i think they have very much telegraphed this is something where the unemployment it iss are key here, and also multiple years. Before they deal with the first formal review, that will probably be like five years before you do even a review, so i think they have telegraphed this. There is capacity in the fed facilities which are not being fully utilized to do more, but the Forward Guidances, the path that i think they want to go, and the facilities they have already laid out if more needs to be done. What jay powell is talking about with the economy, does he have to deploy much more aggressive tools in order to ensure recovery . We have the most synchronized dramatic swing up and down in history, and what the market is focusing on right now is, is there a risk of a doubledip . Is it early 2021 . What ammunition will be left at that point in time . Cutting rates is not much of an option given how low we are right now. So i think that the fed will continue to rely on the Forward Guidance. The qe measures they have in place, i still see the possibility of the negative rates in the u. S. As being very low, and yield curves something they would not go to either. So i think you are going to see more of the type of messaging we have seen, the focus by the marketplace is on the fiscal package now. It will turn more to the election in the coming week, and the question is, is there a risk of a double dip that is out there that could mean your restrict could mean your restructuring of the Balance Sheet . Tom i love that im starting my morning with joyce chang here. This is going to be a two hour conversation, so make yourself comfortable. Lets go to aggregate demand right now. Theory,y, all of the monetary and fiscal come is about nothing more than aggregate demand. Does bruce kasman think the demand is going to be there . Joyce for this quarter you have had considerable pentup demand, and your good spending really good overshoot. So the question is, if it is going to spark a turn, will you see a rebound in capex . That is the question that the jury is really out on this. So you have had this historic surge, all 39 countries that we follow falling into this recession with a dramatic rebound, a surge in manufacturing, and the good sector activity that is underway. But whether that will result in a rebound, i think remains to be seen. Things with joyce chang here, and one of them is my essay of two summers ago, talking about the forecast and the model of the vector to lower interest rates. Is that model still in place, joyce chang . One ofhave been the casualties of all of this is going to be that that 60 40 Asset Allocation is one of the casualties of covid19. We have been looking at, for the last 45 years, if you did that traditional mix, you were getting about 10 return. We are looking at now 3. 5 percent. Whether you will have to do more in the equity markets, and we are seeing that play out this year, or some more of the hybrid fixed income that can give you more yield. And did very much play out, now we are talking about the consequences of that and what it means with respect to traditional Asset Allocation formula that has been in place for 45 years and whether you will have to see a decided shift away from that. Francine there are a lot of correlations out there that we never used to have in the past. What will it take for some of those bizarre correlations to break . All, i think first of what the development with the developed markets have done, the Central Banks, they have blurred the line on capital allocation. You would have to see more of a market shift away from policy. If anything, the central pings are laying out frameworks that really extend this into the mediumterm. That is still not going to solve the ultimate problem that we started talking about, that we see potential growth coming down further from here. And will we actually get that rebounding andex business spending regarding, now that we have had these vshaped all the way down and all the way up. Inflation is the other question, that inflation should near the growth volatility as good prices have been happening. Tom i really want to point out, on potential growth, our colleague, michael feroli, way out front on a reduced potential gdp, three or four years ago as well. This is fabulous. Joyce chang of j. P. Morgan in this hour. In our next hour, a substantial onversation with dr. Bremmer the american election. Ian bremmer on the changed new map of international relations. This is bloomberg. Good morning. Futures at 42. Surveillance, Francine Lacqua and tom keene. Lust is are out off the fed lots to talk about lots to talk about. Joyce chang to get your global wall street day started if i can get my bowtie straight there it is. Francine is going to take notes because she is good at latin. Im not. Joyce chang, i want to talk about the dissents. Neel kashkari yesterday, this is fed, a fedan ex post that wants to get in front of a debate or a fed that wants to wait to see the inflation actually there. Neel kashkari really took issue with the phds looking at the vectors changing as a time to act where he wants to wait to see inflation. Which will it ultimately be . I think core cpi inflation, we expected to settle half a percentage point lower as a result of the buildup in slack. This persistent slack does have the potential to the press gdp growth. I think you are going to see inflation mirror the growth haveility as good prices rebounded in the second half of the year. We saw some of that. I think the fed messaging is very clear. The low core inflation poses a very significant challenge to the countrys Central Banks. Tom this is so critical. It goes to lagarde and the bundesbank as well. Do we have a new policy where we are not going to raise rates until there is the actuality of tangible inflation . Joyce i think they are going to air more on that side. What covid19 has done has pointed to the credit easing policies with response to a sustained inflation under shoot. That is where the messaging has been going for the last six months, and the framework and the way they have gone to average inflation targeting really enforces that. I do think that this is a major paradigm shift for what the Central Banks have been doing, prepared. Tand they have laid out the benchmarks that they want to see more of a normalization in the unemployment rates. That normalization, what you are really facing here, is an incomplete recovery. We still think that relative to the prepandemic past, you are going to help local gdp, that she will have local gdp that is 4. 3 lower than it was, at the end of next year. Francine what does it mean for other Central Banks . The bank of england has a whole other set of problems right now. Joyce i think the bank of england has a whole other set of problems, and then you have the brexit risk as well. The question has been, are you going to see more upscaling of qe that needs to occur from the bank of england and going to negative rates . That is really the debate that is going on right now. But i think all eyes are on brexit right now after having appeared where there was not a lot of focus on this. And looking at the currencies as well. There is a heightened concern that you have the binary scenario in place. Will you get this barebones freetrade agreement, or could you have something that is worse with respect to what the outcome is, you know, and i mean the u. K. Is warning that the withdrawal cannot be treated as isrosanct if a trade deal not forthcoming. We see on the fiscal side, the timeline is lapsing on the fiscal package that is under discussion now. Francine given what we know about the bank of england and how you lay down brexit, what would be an ideal time for governor bailey to actually put extra stimulus . Joyce i think they are looking budget, the tax increases. It also seems it is harder in the u. K. Compared to some of the other countries in europe, controlling the rise in the covid19 section rates. So i think there is the brexit timeline, the fall budget. There is also what happens with covid, and as we get to this deadline, do you see both sides coming to some type of accommodation where you sort of get a barebones freetrade agreement . A lot a focus is on the currency right now as well, because you see further declines in the spot if there is not a deal. We are still looking at sterling, a Real Effective Exchange rate, 2 stronger than where it was post referendum. Tom joyce chang, is the phillips curve dead . Joyce i think right now you , andthe persistent slack all the dislocation you have had in the sectors is going to depress gdp growth, and that points to core cpi inflation settling lower as a result of that buildup in slack. And you are not going to work through this very quickly with respect to the global gdp growth. I think youre looking at potential growth coming down here. We have already come in our estimate on emerging markets, taken the potential growth forecast down by about. 4 because we see china slowing from 6 to 4 by the end of the decade. But it iss not dead, not going to be the nearterm focus right now, given the bigger macro issues we are discussing. So joyce chang, thank you much. Really appreciate it. Joyce chang will continue with us through this hour, and ian bremmer again with us later. As we drive forward on economics, all the u. S. Economy with barclays, michael gave will join us. For that later today. Futures 37. The vix up 1. 670 points. This is bloomberg. Ritika this is bloomberg surveillance. Here is your Bloomberg Business flash. It was a stock market a view to remember. Shares of the software company. Nowflake snowflake had a market cap of 17 billion, making more valuable than uber, dell, and general motors. In europe, automakers hit a stumbling block on their road to recovery. After surprisingly weak sales last month, new car registration punched 80 18 . Some of the subsidies have now ended. Barrel,ped below 40 a the government reporting a surprise decline in u. S. Crude stockpiled. That is your latest lumber business flash. Tom . Francine . True way to the tape today interrelated the dow went up 300 points off the fed release yesterday, and then settled back down to flat off of the Powell Comments in the press. We go back down further, a 250 points 254 points right now. 25,683. As francine mentioned earlier, the dollar turning. Francine looking at european stocks, they are suffering declines across all Industry Groups after the jay powell press conference. Automakers slumping after data showed european car sales plunged nearly a fifth in august. Coming up on bloomberg markets, will askone off we him about correlations in the markets. That is coming up at 10 00 a. M. In new york, that is 3 00 p. M. In london, and this is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Francine we were talking about the fed and the Monetary Policy across the bank of england. Joyce, what do you do with emerging markets right now . Joyce co. I think it has been a tale of two stores. The northeast the north Asian Countries led by china are recovering faster. But we are seeing questions about what are you facing, are you facing a loss decade in latin america which has underperformed . There was mention of turkey earlier. We are seeing doubledigit inflation as you have had the fx path to inflation. We have to take the we are you have a lot of variation depending on the region in north asia, likely to likely to grow more positively, but latin america is andg to underperform here, that is coming out in the inflation numbers. Have they seen a better overall handling of covid19 . Joyce co. You have had real prising joyce you have had real surprising it was Global Demand for medical surprise supplies, the pbe for personal protective equipment. First in an first out, china of the risks slowing as the year progresses. It is at an enormous cost, though. You could have china separate debt increased by 25 Percentage Points just this year. I think part of this is the management of covid, but part of it is also the manufacturing, the expert numbers have been a lot stronger than expected and you have these big current account surpluses right now in china as well. Tom joyce, the great debate is when does International Pop . This lag, lag, lag, and where international has done better, how do you advise j. P. Morgan Wealth Management on the when we will see a shift from u. S. Domestic over to International Investment . Joyce well, it has been winner takes all for the tech sector here, and we are estimating that cap, 45 in the market of the market cap if you spell that out in gdp terms, about 15 of global gdp. You have had this case shipped to recovery with the tech this k shaped recovery with the tech sector take all. Part of it is because you have had the companys here have really been able to create a liquidity buffer and build cash balances. We are actually back to 2 trillion where we were before balances. The cash we have also had to take the Corporate BondMarket Forecast on Capital Raising we had it at 1. 6 trillion, we took it up issuance llion of 1. 70 5 trillion of issuance. Usually august is debt quiet. It was a very active Market Capital activity. Companies have be