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 level and a new floor, one could say. To the u. K. Government and that story, tightening measures to combat the spread of coronavirus. Britons have been ordered to work from home wherever possible. Pubs will close each night at 10 00 p. M. Prime minister Boris Johnson has appealed to the public to obey the new restrictions if the country wants to avoid a new national lockdown. For those who say we dont need this stuff and we should leave people to take their own risks, i would say these risks are not our own. The tragic reality of having covid is that your mild cough could be someone elses death knell. Annmarie meanwhile, the uks Hospitality Industry is warning that extended restrictions will devastate the sector without more government help. The Worlds Largest brewer is upping the impact will not be a severe. Ibev ceo. To the ab n confident we could potentially see a pickup. Kallum pickering is back with us. Clearly, there is more pain likely in store for the hospitality sector, in store for the u. K. Economy. Extend thetime to Furlough Program to help those that are out of work and suffering from the closing up of shops and businesses due to the pandemic . Kallum there is definitely a good argument to provide more Government Support for the jobs market, for the sectors suffering the most because of these renewed restrictions. The key point is the u. K. So far has been inclined to end the furlough scheme at the end of october with the hope that the economy is dynamic, it is flexible, the labor markets are regulated. Problem is that to allow the process to take place, you need the economy to be dynamic and flexible, you need to be confident in the solid recovery and with the renewed restrictions, that is in question. Sensible to couple it with continued fiscal support , especially for the jobs market to keep incomes higher. Schemedoes that furlough need to morph into something much more specific . Lots of people are saying, emulate the germans. Im looking at a former ,olleague writing this morning a german style wage subsidy to replace a furlough scheme doesnt need to be much more nuanced . Juliette it really depends kallum it really depends on what happens next. If the u. K. Requires a second nationwide lockdown, the broadbrush approach probably is the best policy, but if we continue with more modest measures, there will be specific sectors that will suffer a lot where you would expect in the future demand for labor would increase. The hospitality sector, the entertainment sector. It is also like instore retail. The pandemic has accelerated the trend away from instore shopping to online. There is an argument to not artificially prolong the unproductive and tried to bring those workers into new sectors, but again, that dynamic approach to the labor market will be inhibited by the renewed lockdowns. Let me make a broader point. This is now also an experiment in whether or not you continue and economic recovery, you can control the virus with modest measures. If that happens, if three or four weeks from now, the virus cases are down because of these measures and the economies continue to recover, the fear that there could be nationwide lockdowns will be lower everywhere across the advanced world. This is what happened in the u. S. Spiked,eks ago, cases modest measures were introduced, the recovery continued and the cases came down. Lets be helpful we dont need a second nationwide lockdown. Annmarie where does this leave the boe . Does this force them to step up what they need to do . The number of items they can use in their toolbox, what would be the first port of call, do you think . I think you will get an extra 100 billion in qe in november, i think that is sensible. Lets get back to full employment as quickly as possible. This is a huge recession we are coming off the back of. Debate about negative rates is completely overblown. Conditions that let other Central Banks to impose negative rates are not present in the u. K. , they were zone dunking it back at the ecb and it made sense to penalize them with a negative deposit rate. It is not the case in the u. K. Credit is flowing to those who need it. More liquidity measures should suffice. Rates are already low enough. With that said, would negative rates, which remain within the toolkit, you say we are over blowing the argument, would negative rates have a negative feedback loop in the u. K. . Would they just not perform well in a u. K. Context . Kallum there are some benefits in the sense that you can bring Interest Rates even lower. The problem we have is that we risk getting stuck in a slow growth equilibrium after a big economic shock, but i have to say if you are going to go for an extreme measure, i would favor Something Like yield curve targeting rather than negative rates because what you want to achieve is keeping longterm benchmark rates, which private lenders use to benchmark low as the economic recovery builds momentum. What happens is the gap between benchmark rates means that Monetary Policy is getting easier. You dont guarantee that with the negative Interest Rates. The long end of the curve can still do whatever it wants to do. Ok, well that is all working on the assumption that the banks transmitted to annmarie and myself at a reasonable rate. Thank you very much. Senior columnist, Kallum Pickering. The u. K. Hospitality industry is warning that extended restrictions will devastate the sector without more help from the government. The Worlds Largest brewer is hoping the impact wont be as severe. s ceo is confident consumers will adapt. Are talkingtries about some restrictions, but not fall lockdowns. Likely the pubs will have to close at 10 00, but they will still open. Pubs also will learn how to live with social distancing. They were able to put tables outside, the mayors allow that. Trying to Work Together in partnerships. The only way to bridge this will be through partnerships. Bars need to expand their footprint so customers can come in, but people can have their social activity, but with social distance. For example, during the lockdown in the u. K. And other countries, we did your vouchers. You could buy vouchers during the lockdown for the pub near your home and we would buy match 121. Then when the pub reopened, you could redeem that voucher with food and drinks at your favorite pub. So, we tried to facilitate and connect consumers with their favorite restaurants and pubs to help the establishments go through this tough period and be there when the situation comes to a new normal. Your catchphrase really has been bringing people together. Do you think you will have to produce less beer if people cant see their friends . No, i dont think so. I think consumers will find a way. If there are restrictions, consumers are smart and they will learn to live with those restrictions. I think some will migrate. I think they will arrive early at the pub and well go from the pub to home and continue with a Smaller Group at home. I think consumers will find a way. At the end of the day when you think about the human being, we are a consequence of millions and millions of years of the way humanrain is wired, beings. We need social interaction. There is so much, there is only so much that zoom can replace. At some point, people have to be together again. It could be in the home, it could be in the pub, it could be Smaller Groups or bigger groups with social distancing and wearing masks, but people will always try to go back to what brought us here. Inbevs ceo speaking to francine lacqua. The full interview coming up on leaders with lacqua. Laura wright has our first word news. Laura thanks. The u. S. House has passed a stopgap funding bill to keep the government operating through december 11. The bill now goes to the senate. The passage would avert a Government Shutdown just before the november election. Amazon is telling echelon a bike to stop selling promoted as a collaboration with the company. They say it is not an amazon product and they are working with echelon to clarify and change product branding. No comments yet from echelon. There could be a snap election but they say the majority is convincing in malaysia. 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. Laura, thanks. Coming up, women in leadership. We will hear from the former Prime Minister of australia and former finance minister of nigeria on the lack of women at the top. That is Annmarie Horderns conversation. That is next. Women in power. This is bloomberg. Good morning. This is bloomberg daybreak europe. Im Annmarie Hordern in london. Manus cranny alongside me in dubai. I recently spoke to the former Prime Minister of australia and the woman running to be the next wto chief. We spoke about obstacles women face on the road to becoming leaders. Two of them both coauthored this book, women in leadership. The book has just been published and we spoke about this in this long, in detail conversation. Take a listen. We need to increase the pace of change. I think we need to do two things. The business of politics has been structured around mens lives, not womens lives, so we politics totem of reach out and to change to make it a profession you can engage in, balance work and family life. Second, we have all got to get out of the backs of our brains sexist stereotypes, which means that when we look at Women Leaders, we tend to project on them baggage that they should not bear. We are more interested in their appearance, their family structures. We are predisposed to concluding they are unlikable. Those sexistt stereotypes out of our head and give women a fair run for leadership. Recently interviewed the two women who wrote a report about how Women Leaders were better at controlling the deaths from covid19. Do you think out of this pandemic, we will see more countries be willing to elect female leaders . I hope so. I think we are having a very good debate about female leadership arising out of the data that those researchers have brought to the forefront, showing countries led by women are faring better during this dreadful pandemic. Im always a little bit careful here. Cant say that Women Leaders are always going to be more empathetic or nurturing, because that is that of weaving the gender stereotypes through. But the fact that Women Leaders have been lauded in this pandemic, the fact that we are reevaluating the importance of caring through our society. We know who has got us through. Disproportionately, the women work on the front lines in caring positions. The fact also that we have real experience now. And we could take the best of it to enable work and family life should be better balanced. If we want to, we could come out of this pandemic era turbocharging gender equality for the future. For sure. I would like to add something to what was said. If you look at these women, there is also something that is important. They build trust with our society over time. Solving the problem of this pandemic also has a lot to do with trust. Society trusting what information you give them. Is your society willing to obey and do things for the public good when you say so . I think the Women Leaders, if you look at their careers have also built up a level of trust. Annmarie you said women are only giving given leadership roles when things go wrong . How much of a problem do you nextee this year and the 510 years to come . Well, thank you. We actually say it tends to be the case. There have been some women who earned leadership roles when things were going right, but you notice a lot that women are given an opportunity when no one else wants to do the job. We have this unusual year, the pandemic. Countries, it is going to be really dire. In many countries all over the world, economic consequences are really severe, so would be interesting to watch what will happen in countries where the fierce andts more more murky or more difficult. Who will come forward. Will women have a chance to come in and say or will people vote for women to lead . We will want to watch that and see what happens. Looking even in the run im making for the wto, the wto is not without challenges. It is interesting to see what happens with the election of the leadership. Is it going to be a woman . I always say you should not elect a woman unless they are competent ever get so lets see a competent woman get elected. Annmarie that was the former Prime Minister of australia and a candidate to be the wtos next director general, also the former finance minister of nigeria. Tune into our quality coverage he quality coverage. The bloomberg all that he summit kicks off mid day u. K. Time. You do not want to miss it. This is bloomberg. Manus this is bloomberg daybreak europe. Man has secured another investment from one of the worlds biggest kkr investing 750 million in reliant retail ventures. Dani has been looking at the numbers. Dani this is an interesting move. It is more or less a bet on indias consumer sector. What we have to keep in mind is that the business is really focused in some ways on the Digital Transformation of the way we shop, the way we Access Services like education and health care, and that is likely what is behind kkr taking a 1. 28 stake. They have also invested in reliances mobile and technology unit, as well. Kkr is not the only one. So for like also this month investing 1 billion. Annmarie very quickly before the show ends, i know you are tracking where bankers are working. We had Goldman Sachs out with the statement. What are they saying . Dani goldman is keeping their London Office open. Otherwise, they are reversing plans to bring everybody back in. They had about 20 capacity at the moment in plumtree court. Since Boris Johnson announced he wants people to work from home, it is possible goldman which was one of the first to be aggressive about getting people in is no longer pushing for that. It is another step back in their plan to get people into the office. You will recall goldman had to send some of its manhattan trader some after someone there tested positive for coronavirus. Annmarie dani burger tracking everyones quest back to the office or back home. Manus, that is it for daybreak europe. European equity futures higher this morning. Stoxx 50 up. Ftse 100 up 0. 9 . Flash pmis coming up from france and germany. Looking forward to it. Manus indeed. Matt and anna would take you through the market open. The dollar is on a tear. The pound is a little lighter. 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. Anna good morning. Welcome to Bloomberg Markets european open. Matt today the markets say do your part. Sterling holds near lows as Boris Johnson warns of tough times ahead in the u. K. European futures point to another day of gains. Stronger this time
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