Top banks in frankfurt. A Brexit Debate almost. There is huge symbolism. When you line up the five banks above j. P. Morgan in germany, they clearly have a european heritage and they are the lone american bank. Francine we will have plenty more on that. Others will follow suit. Lets get to first word news in new york city with ritika gupta. Prime minister Boris Johnson is warning difficult months to come for the u. K. In an address to the nation, he , theled to britons tightening of rules coming with higher enforcement and tightening said we do not need this stuff and we should leave people to take their own risks, i say these risks are not our own. Tragic reality of having covid mild cough can be someone elses death knell. Andka republican senator trump critic mitt romney says he supports moving forward with a confirmation vote, all the crushing democrat hopes for stalling and nominee until inauguration day. President trump plans to announce his pick on saturday. The u. S. Pound to keep the government operating through the bill now goes to the senate. Prevent ae would Government Shutdown just before the november 3 elections. 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. I cannot convey enough, the shock of what the Prime Minister said yesterday about shifting to march of next year. That will clearly be my theme through the day, including speaking with Richard Clara do. You see Richard Clarida. You see it through the data, with equities up 17. The safe haven is convoluted, to say the least, with gold down 22 in the shortterm, and dollar stronger. The story of a complete reversal 94. 04 weak dollar belief,. Sterling was a 26 handle moments ago. That gets your attention as well. It is a most interesting market, francine. Francine it is. Im looking at european stocks. They are rebounding. Im also looking at dollar rebounding. Treasuries higher. Im not seeing much to do with europe, but we had a good interview that paul gordon the ecbus, worried that is worried about the temporary powers because they will get a spot of legal trouble. It has not moved euro, but something to keep an eye on. Gold slipping. Running us to talk about these markets, but also to talk about what we heard in the ecb and the legality of how to do future crises, were are joined by david riley, Bluebay Asset Management chief investment strategist. I want to kick off with ecb because we had a pretty punchy mersch, ecbth yves executive board never, saying they would get a legal trouble if they tried to extend the bond buying plan. How does that limit what the ecb can do from now on . David it is a challenge either thethe ecb as we know, Pandemic Emergency Purchase Program has been extended to the middle of next year. I dont think the market is expecting that it will be expanded, expanded through to 2021, and there is a challenge there, but i think we had a blog a little bit while ago from the chief economist who said that even if the pandemic came to an end, and hopefully that is the case by the middle of next year, but that is still a pretty big if, then the legacy and the scarring and the Economic Impact of that would potentially persist beyond the that would justify continued pandemic related emergency support. I dont think this is really suggesting the ecb is completely sort of boxed in, and i think they still have some room to maneuver. But i think it is highlighting. Hat there is a debate going on we are getting mixed messaging coming from different members of the governing council. Do with what do you u. K. Assets right now . It is clear that banks in london have halted a return to the office. And that is covid related. Then we have this other brexit news, that j. P. Morgan is set to move 230 billion dollars in assets to frankfurt because they worry about passporting rights. David i think the outlook for the u. K. Has looked pretty poor for some time. Contracts byomy around 10 this year, so it is one of the hardest hit by the pandemic from an economic perspective. Part of that i think is because the u. K. Economy was not in a particular good space coming into this crisis either. To, the as you alluded brexit concerns. , which shift of assets is reinforcing what we have been seeing more generally, which is that banks have been shifting pastor Balance Sheets to europe past their balance to europe. The other news that was reported yesterday was that, for example, lorries do not have the paperwork in the event of a lack of a trade deal to actually be able to ship goods across the channel into continental europe. So it is hard to get sort of bullish about u. K. Assets. A deep value equity market, and sterling i think has got 20 of room to get meaningfully weaker if we dont has got plenty of room to get meaningfully weaker if we dont have progress in terms of negotiations on brexit, and the deadline for that is coming up over the next several weeks. Tom david, tom keene in new york. Good morning. A seismic change none of us have framed out to march of 2021 x vaccine. Andemic how does that change your Portfolio Management to know that we have challenged these economies without fiscal stimulus out to march of next year. David good question, tom. What it has done in terms of our thinking, something we have been debating a lot, that at what point do you start moving more decisively into what is a , alled reopening trend reopening trade . A socalled normality trade . Transport, airlines, leisure, gaming, hospitality, hotels, etc. Which actually have not really actually they have obviously lagged with the broader markets that we have seen, and potentially there is a lot of value to be had if we get a return, the normality post pandemic. And what yesterdays announcement reinforced by the british government, but i think will become more widely recognized across the Northern Hemisphere as we go into winter, is that is not happening anytime soon. That is at least another six month away, so it is too early to go into that reopening trade. So that means we are staying with the things that we like, each means more defensive, Higher Quality which means more defensive, Higher Quality. You bringing in Duration Bonds . It is fascinating how you bring the bond call here versus Prime Minister johnson . Do you bringing induration . David we dont have a large positioning. Ion [inaudible] tom we have audio challenges with david rally. David riley. I dont know if it is my ears or is set up. It comes backa up sharply, 1. 27 25. You heard david riley speak sterling. Week the weaker the vicechairman of the fed in the 8 00 hour, Richard Clarida on a robust evolution. This is bloomberg. Good morning. I think it is likely more fiscal support will be needed. I think the next package should be much more targeted, focused on kids and jobs and areas of the economy that are still hardhit. The recovery will go faster if we have tools, continuing to Work Together as they have so far. We are inclined to allow for additional looks ability on the money that has already going out to state and local governments. We need to reopen the economy so people can go back to work, and in a sustainable way. Tom an important conversation, the Federal Reserve chairman and the secretary of the treasury. If there is a pandemic, and if it is extended, what is the place of fiscal policy . David riley is with us. I want to get in front of our conversation with the vicechairman today. Fiscal policy to the rescue. Lets begin with the United Kingdom and the urgency there. Do you have optimism that you will see Fiscal Relief extended in the United Kingdom . David it does seem that the u. K. Government is considering extend the either job protection scheme, the furlough scheme in the u. K. , or introduce a short sort of short time working a sort of short time working, of the kind we see in countries in germany. In the u. K. , the furlough scheme support comes to an end at the end of october. , companies areow having to decide if the furlough scheme is coming to an end, we are going to have to start providing some redundancy. So the government is really running out of time and i think they need to make an announcement sooner rather than later. Tom what does the yield space tell you and our central bankers about the ability to reflate . Vicechairman clay rita has laid out the hopes and aspirations of the central bank to migrate yields higher with inflation higher. Do you see that . David no. Skeptical,is deeply and that skepticism is no greater than in the bond market. Central banks can, including the fed, get inflation not only to their target, but actually for a period of time, moderately above their 2 target. That skepticism was a little bit fomcorced at the last meeting because the fed does not forecast that they will get inflation above 2 , but they also didnt signal that any more policy action was going to be forthcoming. I dont think they are waiting, in part because of what is going to happen in washington in terms of the election but also in terms of fiscal policy. Howcine on the election, will that move treasuries . David that is an interesting question. I dont know if there is an easy answer to that. Post election, it will depend on the electoral makeup. The presumption is that if there is a Democratic Party clean sweep of congress and the presidency, that we will get significant fiscal stimulus package, other things being equal. With pressure on bond yields. I think that is a little bit too far away. I think right now what it is, it is quite a meaningful source of political policy uncertainty and the deadlock we are seeing in extensionsnow around. I dont think the markets are going anywhere. The Central Banks are a backstop, but we dont have any kind of incremental policy stimulus to drive markets higher, and the Economic News from here is probably going to be on the disappointing side, as we have seen with the european pmis, marginally disappointing. I think were past the best in terms of the recovery part the recovery path. Francine in the u. K. There could be an extension i dont know if furlough programs have some kind of support, but given that there are so many new restrictions to try and contain covid, we are expecting more on the stimulus side. Effectively a lot of the stimulus is running off, so what we are expecting and anticipating is the u. K. Government will provide some furlough extension, but it is going to be probably a less generous scheme, a less less significant in terms of the amount of public spending. Think morew, i do generally, of course, within europe, more generally i think we have seen both germany and funde, and the ee recovery more kind of sustained and coherent fiscal policy response, which has been the more positive narrative around. But i think fundamentally we are in a situation where the pandemic isnt going away. It is going to be around for at least another six months, even if we have a vaccine announced by the end of the year, where we are not going to get much more, at least nearterm, from the u. S. In terms of fiscal support and i think from Central Banks at the end of the year. A lot of the good news has been priced in in terms of the recovery. So i think we kind of go sideways, and that the u. S. Election is potentially big source of volatility for markets. Tom what is the language of negative rates right now . I mean, we get what Prime Minister johnson spoke of yesterday, which you just stated, six months without a vaccine. Do negative rates must happen or could happen or should happen . What is the language you would use . David i think in the case of if United Kingdom, i think ,here is no resolution and deal word on brexit, postbrexit, e. U. U. K. Trade relationship, then i think the bank of england policy response to that would include negative interest rates, and i think that is where they are going to keep their powder dry. That the righted measure but i think it is the to they would likely respond a no deal brexit outcome. So i think there is a way for that. And more generally, youre seeing other countries like new with the potential for negative rates. I think this underscores your previous question about where the bond market thinks we are going. It doesnt think we are in an inflationary world. It is getting that Central Banks can meaningfully increase inflation, and i think the Central Banks at some point are probably going to have to provide even more in the way of support. For a lot of Central Banks, which are near zero in terms of their policy rates, then it would be to go to negative rates. Much,ne thank you so david riley. Business,rom the sports, and entertainment world. Speakers include ursula burns. In bank of america chairman and chief executive brian moynihan. That is at 7 00 a. M. In new york, 12 00 p. M. In london, and this is bloomberg. Ritika this is bloomberg surveillance. Here is the latest Bloomberg Business flash. The lofty goal of making a 25,000 car by 2023, according to tesla. This cheaper car will be available by cutting the cost in half with cheaper car batteries. The news came as the companys socalled battery day, but it lacks the sizzle that companies have come to expect from elon musk. Joining Goldman Sachs in pausing the return to the u. K. Office. Appealing to britains to work from home. The banks as critical work is supporting customers in branches and will continue to do so, but that most staff will remain at home. That agerelated number business flash. Tom thanks so much. Equities, bonds, currencies, commodities. Equities lift, dow futures up 96. The vix extort neri, from a 30. 30 1 the vix to aordinary, from a 30. 31 26. 6. Francine sterling dropped to a two month low after we heard from the foreign secretary that the second british lockdown cannot be willed out. We will look at the markets and we will also focus on, change with a great new article. We will be speaking with mariana mazzucato. She is coming up next, 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. The bloomberg surveillance. Its a tumultuous time in 2020 and Prime Minister johnson yesterday with a bombshell, what to do, its simple, read the value of everything. The value of everything is an extraordinary book, walkthrough andcertitude of economics looking at the hope forward and possibly a measurement of society we are thrilled this morning. Mariana, there are so me things to talk about, and your report and essay on Climate Change. The Prime Minister yesterday put the march of 2021. Are our societies prepared for the economic damage of a pandemic of another six months . We have to ask ourselves what did we learn. Prices no. We are failing to actually structure the Recovery Funds in ways that really stronger systems on the ground. We should go country by country to see how we better resource our health care workers, the health care system, but make sure the Recovery Fund are both strengthenings the system but the underlying model. You talk about the economics of hope in your book. Politicians are hoping right now. How do we do the hope of economics while providing income support . I dont see that in america and it is in question in europe as well. About the need to rethink value, and health is a perfect area. When you have a Public Health system where we only know how to value the inputs, the cost, that is why we often talk about the cost of health care. We dont see it as an investment for the future. This need to revalue what matters to make our economies healthier, more resilient, but i think we should call a smart, healthy, green deal. Its not enough for a green deal, it has to be a healthy green deal. That makes our economy more hopeful without changing the structures on the ground its, the business, corporate , but also theel too littlehimself, too late. We have to build, create, croak create cocreating with the private sector, shaping markets to be more sustainable and stronger so that when we get to these crises, and there will be one for sure, you can react in ways that are not too reactive. Francine let me go to your piece and project syndicate mightyou argue the world need to lock onto tackle Climate Change. Or another, radical change is inevitable you say. You say the task is to ensure we achieve the change we want always sought the choice. What has held us back so far . You talk about publicprivate partnerships, but do we have the right people in government to make the bold decisions you argue are needed . Its easy to look at government or just the private sector. What ive been doing in my work for some years is pinpoint the changes we need amongst all of the different economic actors. In the book we were just talking about, i talk about value collectively created. Lets look at the creative actors. Finance continues to mainly finance itself. In the u. K. , Something Like 80 of funds go back to the Financial Sector and financial concerns finance insurance real estates. We can talk about business models, stakeholder value all we want, but Many Companies continue to be shortterm ss and folk shorttermists. Share buybacks continue to escalate at the expense of more longer ran investments. We can talk about the robots taking away jobs, but if done investing invest in the skills and pe