President trump slams beijing for coronavirus. Xi jinping hits back saying the pandemic should not be politicized, focusing instead on Carbon Neutral pledge. Do your part. Boris johnson calls on britons to obey the new virus rules, warning of many more deaths. Frankfurt. N good morning, one red line across the bloomberg terminal before we begin to the prevarication at the fed. Mersch is saying the Pandemic Program flexibility must not apply to qe. A couple of other lines. Lets begin to them. He says hes not aware of any push to extend. These are breaking lines. I know you are looking at these as well. What else have we got . Annmarie yes, he is a hawk, obviously, but he does not want the flexibility to apply to older asset purchasing programs. We are going to talk about the fed. An inflation debate taking place. Clearly, this is something we are seeing take place at the ecb also. Trillion in terms of emergency. What will happen next in terms of size and scope . Lets circle back. The hawks are flying, arent they . By the way, what happened to we are not even thinking about thinking about annmarie about hiking . I think helie evans, literally lit the torch under the dollar, lit the torch under obfuscation from the fed. Three names over the past few days. Bullard. Kaplan wants twoway capacity. Now Charlie Evans says the fed plan allows us to hike. What is average inflation targeted . This is obfuscation. Annmarie definitely. Powell said he is not even thinking about thinking about raising rates. Surveillance has an exclusive interview with Richard Clarida at 1 00 p. M. London time. This is going to be the interview you do not want to miss this morning. Lets take a look at where the markets stand. Evans, what we saw there, really broiled the markets yesterday. We are seeing a little bit of momentum coming into the futures. Ftse 100 futures, 0. 7 . Across assets is where we are seeing a lot of movement. We have the bloomberg dollar index headed to a twoweek high. Movementeen a lot of in the fx market in apac. They did say in august of they are actively preparing for negative rates. Aussie dollar under some pressure, as well. Bill evans, very influential. He predicted Central Banks would cut Interest Rates at its october 6 meeting. Contract the singapore down 2. 5 . Citi, they say priced at risk. We could potentially see a contraction in iron ore. That is something we will be watching. Apac of action across the trading day today. We want to stick with what happened with the fed. Yesterday, we did hear from jay powell. He testified to the House Financial Services committee alongside steve mnuchin. Here are the highlights. Morethink it is likely fiscal support will be needed. I think the next package should be must more much more targeted, areas of the economy that are much harder hit. The recovery will go faster if we have both tools continuing to Work Together. We are inclined to allow for additional flexibility on the money that has already gone out to state and local governments. We need to reopen the economy and we need to do it in a sustainable way. Mentioned before, chicago fed president Charlie Evans, he says that the fed guidance on Interest Rates allows a rate hike before inflation averages 2 . His comments point questions left unresolved by the guidance Jerome Powell issued in the last policy meeting. We sort of said we are looking to get inflation up to 2 , then after that, we could be raising rates and still have an accommodative setting of Monetary Policy. If you read the statement, that is in the cards. We could start raising rates before we start averaging 2 . It is still we need to discuss that. Manus listening to the guidance from Charlie Evans i sit back and i say, so i had no duration guidance, i had no limit on how hot they would run, now i have the fed, mr. Evans, i would say probably upending what is average inflation targeting. Why do you think he has blown a hole in the guidance . I think this is one of those examples where the market pay did little bit too much attention to what is really a technical issue from an operational monetary point of view in the sense that Monetary Policy works with a lag, so even if you think you are going to be a 2. 5 percent, 3 inflation two years from now, that would be a time when you might need to hike a year early before you actually reach 2 . The other thing worth keeping in mind is that the market is now thinking about whether or not the future there will be more inflation than the past and there are lots of reasons to think that will be the case and at some point you will get a bond market normalization. I dont think the fed would want to be signaling it is thinking about it anytime soon. We need toal issues, sort them from communication. I dont think this was meant to raise Interest Rate expectations, this was just a technical issue when it comes to Monetary Policy. Bernanke may 2013, floated this idea of tapering before congress and that set off the taper tantrum. For will be the catalyst markets really to start pricing in a rate hike . Kallum it is a good question. At the moment, we are still experiencing the disinflationary shocks from the pandemic and the lockdowns during spring. There is still a lot of excess supply in the Global Economy that will weigh on prices. Capacities will close and we will start to see more price pressure. The markets will think about inflation returning at the point when you reach the bottom of that trend and headline inflation starts to creep back up again. From the feds point of view, the best policy now is to sound a little bit reckless rather than hawkish if you want to ensure a recovery of inflation toward 2 . Manus and by the way, i dont disagree with you that he may have been talking about the technicalities of what they can wrong thingsay the in these markets and the risk what annmarie is talking about, that is the whole point. They are supposed to be cogent in what they say. I look at the differential between the 10year break even in the u. S. Sorry, the curve between the u. S. And europe. The curves in the u. S. Are the widest since 2015. The market seems to believe the fed will get there in the reflation journey before europe. We just had a problem with charts. Do you think the u. S. Will get the inflation mandate before europe . Kallum probably. There are a couple reasons. First, the u. S. Suffered from a disinflation program problem. Europe. Er in the recession was deeper and europe during spring than in the u. S. We think u. S. Gets back to prepandemic levels of gdp in 2021. For the euro zone, it is going to be more like 2022. If you think about that in inflation and output gap dynamics, that means you probably get higher inflation in 2021, 2022. N the by annmarie kallum Kallum Pickering stays with us. We will have more reaction to powells testimony. We will be speaking to Richard Clarida later this morning. An exclusive interview you dont want to miss. 1 00 p. M. London time. Manus yes, see whether he is as upset as kaplan was. Out 8. 4 fed shells billion to buy fixed income etfs. What did investors get . We discussed that on our weekly etf show, iq. 9 30 a. M. Laura wright has the first word news. Good morning. Prime minister Boris Johnson is warning of difficult months to come for the u. K. He appealed to citizens to obey the new restrictions and work from home where possible. The tightening of rules comes alongside tougher enforcement. He told parliament the restrictions could remain in place for six months. To those who say we dont need this stuff and we should leave people to take their own risks, i say these risks are not our own. The tragic reality of having covid is that your mild cough can be someone elses death note. Laura President Donald Trump plans to replace the late Justice Ginsburg are moving forward. Trump plans to announce his pick on saturday. As the race for a Coronavirus Vaccine continues, the Washington Post reports there will be new rules for emergency that will make it difficult for a drug to be cleared before election day. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Annmarie laura, thank you so much. Manus, lets recap some of the headlines we saw at the top of the hour. This is the man responsible for the ecbs Legal Services and what he is saying is that the ecb could risk legal trouble if it tries to extend the Emergency Powers of the pandemic bond buying plan to its other purchasing program and this is dropped at 6 00 a. M. London time. Manus it is indeed. Saying that the recovery this goes back to some of the data we have been getting in terms of the recovery path might be a bit closer to a mild scenario relative to some of the ones we have seen. The obvious Exchange Rate effects on inflation measurement so touching on philip lane, so philip lane is the torchbearer for fx intervention on behalf of the ecb. On thellar is not doing headlines at the moment. Coming up, it is all about the clash. The u. N. General assembly. It was virtual. Trump blames china for the coronavirus. Xi pushes back. This is bloomberg. Manus this is daybreak europe. Im manus cranny in dubai, Annmarie Hordern alongside with me from london hq. President trump attacked beijing over the virus. Aimeds in his speech squarely at u. S. Voters. We must hold accountable the nation which unleashed of this plague onto the world. China. In the earliest days of the virus, china locked down travel domestically while allowing flights to leave china and infect the world. Annmarie that was president trump. We also heard from chinese president xi jinping. Take a listen. Virus, we should enhance solidarity and follow the guidance of science, give play to the leading role of the world health organization, and launch a joint International Response to beat this pandemic. Any attempt of politicizing the issue or stigmatization must be rejected. Wordsie a divergence of at the u. N. Kallum pickering is still with us. We would like to dig into what is going on in china. There is this idea of chinese exceptionalism and what we have seen in growth from china. I wanted to ask about the fact that the chinese are sending a record amount of bonds. Hard to find those next projects. When do you think we will see consumers take over as the lead driver of growth in china versus the Government Spending . Questiont is a good for the three years heading into the pandemic. The Chinese Government was trying to shift the emphasis away from statesponsored investment products. Two things were happening. Allt, it was not working that well. Second, the underlying loss growth momentum was becoming and that wasible damaging. The commitment to a high growth rate is inconsistent with what the private consumer economy could provide. China is wealthier than it was. As a result, countries that become more developed end up with shallower and lower growth paths. But there are political issues in china which means it is difficult to accept a 2. 5 growth i think it is a long way shift as theou can main driver of the economy. Manus one thing the chinese have had, they tapped the brakes fixingthey sent a letter. Do you think their patients is running out . Kallum again, the big driver of demand for global trade is not the usual fundamental such as currencies or what labor costs are doing or whether or not there are new products. What is driving trade dynamics is the pay pace at which we recover from the global pandemic. The risk is heading into the winter where we had a little bit more time indoors. For the various hotspots get more numerous. Moderationgnificant in the Global Recovery from coronavirus. Reluctant tobe step up. I dont think the you in debate will hurt that much. Political tensions are rising, that is obvious. How should investors hedge themselves . Juliette saly has the answer. Juliet i have an answer from city today. They are saying perhaps gold is going to be your call here. We see a lot of uncertainty heading into the u. S. Election. The fact that the polls may not be accurately reflect thing all of these silent Trump Supporters and there could be a delay in the outcome. They are suggesting in their Fourth Quarter commodities outlook that gold could top its previous highs as we reach into the Fourth Quarter. They have a call of 2200 and five dollars per ounce. The market could be under appreciating how uncertain the outcome for this election could be. A Biden Victory would be more bullish for silver due to his infrastructure. Saying silverll could rise. They also remain bullish on palladium over the next 612 months. It will continue to be supported with strong investment demand. Recovery in steady china and india. A little bit of a bullish call on some of the metals. Do have gold trading below 1900 an ounce. City might be right that we could see more upside ahead of the u. S. Election. Coming up next, the muchhyped tesla battery day doesnt meet expectations, but it lays out a roadmap to build the first massmarket electric car. 25,000 price tag. Will elon musk do it . We will find out next. This is bloomberg. Manus this is daybreak europe. Asla announced it will build 25,000 massmarket car by 2023, part of the muchhyped battery day that did not quite meet investor expectations. One man tracking tesla is with us. What is the main takeaway . Battery day, but annmarie is excited. 25,000 car. Shows how central the battery pack is. A lot of tesla talked about were costcutting exercises. Things we have been waiting months for, they are actually more about reducing the cost of manufacturing and passing that on to the consumer in the form of a cheaper model. We dont expect it to come for around three years. The market was disappointed. I part of that is that elon musk had preempted it, tweeting that a lot of these feats of engineering would not manifest to themselves into products that were massproduced in still around 2022. Most analysts were expecting some kind of massproduced nextgeneration battery pack by the end of 2021. That was the focused. Cost cutting and reducing the cost of manufactured battery packs. Annmarie by the way, neither of you have clearly seen me drive. I dont think you want me in a tesla or any other car for that matter. 7 . His why the shares fell a lot of us expected in the model three has not exactly delivered what they said. The runup in shares has been around the anticipation of today. If you look at the preview notes, this was a sell the news event. A lot of the expectations were baked in. It was a high bar announcement for shares to move further higher. Of verygot was a series excited pipeline projects. Excited about the announcements they have done. They will continue to buy battery cells, but they are working on their own cells too. That is a project for one or two years down the line. As one investor put it to me today, a lot of the problem with tesla investors is they want these things tomorrow and that is not simply the case. We have to wait for this next generation. Longerterm, the outlook to cut the price is very positive. , thank you very much. It is all about the battery power. Ed ludlow tracking the story. Seearie, i cant wait to you in a smart car or a tesla or any car at all. It is all about the dollar. The dollar is on the longest winning streak in four months. But the backdrop is this. Huge corporate wealth. Yield curve control. It is also going to be the priority for them. The aussie tanks by zero. 4 . Annmarie bill evans is so important to the aussie market. People really listen to him. Coming up, obey the rules or many more deaths will come. That is the message from Boris Johnson. This is bloomberg. Good morning. Im Annmarie Hordern. This is bloomberg daybreak europe. Here are todays top stories. Charles evans sends the dollar higher saying the fed could hike before hitting its inflation goal. Jay powell keeps up his demand for more fiscal support. Temporary powers. The ecb says it risks legal trouble if it tries to extend crisis flexibility to regular bond buying. Keep calm and do your part. Calls on citizens to do their part and risks warns the risk of many more deaths. A few things to digest this wednesday morning. For us, we know it is all about the fed. What evans said yesterday is at odds with what jay powell said, we are not even thinking about thinking about raising rates. For me, it is about what Richard Clarida says on bloomberg surveillance. Manus our guest host Kallum Pickering bringing me back to about theo talking technicalities, the ability to raise rates, rather than me suggesting there were some kind of lampooning of average inflation targeting. But words matter and you reflect on the taper tantrum from bernanke, that cost 140 basis points. If you get it wrong, you are getting it completely wrong. I would put forward that they a lackwing that there is of a sheet that they read from. It is reflected in the markets. Lets take it to the equity and the bond markets. Equities are grappling with what happened. You saw the first backtoback gains in the nasdaq in quite a few days. You see asiapacific stocks come back to the green. Citigroup have a big piece of research out. 84 are showing extreme caution. Citigroup would say that may present a missed opportunity. Takessee how the market the comments. Have a look at the dollar. Charlie evans, the consciousness of the dollar bulls. Down, butis rolling get ready for an alltime high. Gold moves on of the back of the dollar. There is the pound. Down she goes. It is trying to find a new litmus lev