The dollar down is dead, people are beginning to upgrade their forecast on the dollar. The german 10year yeilds are unchanged. A lot of volatility in the equity markets and the foreign exchange. Bond markets are remaining repressed but the Central Banks are doing what they are doing and that is no surprise. Alix a few weeks ago we are talking about 120 for the year. Let us get the latest on the virus resurgence. The french government expected to announce new measures including restrictions on alcohol sales plus public gatherings. Joining us now is maria. Dig into what we can Pay Attention to. We know that the Health Minister will give a press conference and we know that there will be more restrictions, and this is the thing to highlight, this is not for the entire country, but for the region and city of paris, because the population density is high and that is where cases are spreading fats. What they are going to say is you have to scale back social contacts with other people and when it comes to public gatherings you will scale that back too. And when you look at alcohol sales, because when you have too many drinks you are not respecting social distancing, sales could be curtailed just up until 8 00 p. M. Until then you will find it difficult to buy alcohol than a supermarket. All of this is happening because the french president made it clear that he does not want to see a national lockdown, and what he is stressing is that the key is to do one million tests a week, that is what they target, and reduce the amount of time you have to wait from the moment you get tested until the point you get a result. That is really what he has been focusing on. Is trying toy figure that one out and it is turning out to be harder in a u. K. Than we thought. Andus focus on the u. K. Now figure out exactly where we are going. Banks are pausing bringing workers back to the office. Boris johnson saying the new restrictions are needed to control the virus. Pm johnson to those who say we do not need this stuff and we should leave people to take their own risks, i say these risks are not our own. They are tragic the tragic reality of having covid is that your mild cough could be someone elses death knell. Joining guy joining us from london is rob wood, thank you for taking the time today. The chancellor of the exchequer says that he will update the house of commons on the plans to project job protect jobs throughout the winter. He tweeted that out and it looks to be on thursday. What does he need to deliver now that we have these restrictions in place if we will not see a huge kind of rise in u. K. Unemployment . Rob i think with the new restrictions that are being put in place on activity once the local and local lockdowns as well, i think that is an extension of the furlough scheme and the writing of unemployment is inevitable. What the government is planning to do and you can see that in the reports is try to cut it as much as they can, that i think that they seem to be stepping back from that furlough scheme which would avoid it entirely and focusing more on wage subsidy schemes. I think it is likely that we will see Something Like that where the government tops of the wages of people only able to work part time, for instance. This will obviously help so that employers can employ people parttime and their incomes are protected. And the problem is for employees who cannot work part time, so i think the rising unemployment is inevitable. Alix you had a note out that talked about how you spent zero growth on the fourth and First Quarter in the u. K. And you were among the most bearish on the street. What did it factoring in terms of stimulus and health . Rob the bank of england is out of ammunition. Thatd Andrew Dailey saying they are not looking at cutting Interest Rates anytime soon. More qe will not do much, so there is not much coming from the bank of england. We will get more fiscal stimulus and that will be announced later this week. But it is likely to be a significant reduction in support from the 4 billion a month we are getting from the Job Retention scheme. What we are also factoring in is that there will be more restrictions on activity than in the third quarter. Covid cases are higher and fiscal stimulus is lower. It seems to be a pretty big ask to the u. K. Economy to keep growing through that. If we get a massive fiscal stimulus, that will help, but it has to be quick. Put hopefully they can something in place to help, and that will deliver more vital policies, which is that we flatlined rather than the economy contracting, but they do need to act quick for that. Guy you are one of the more bearish on the u. K. Economy on the street. What are others missing or they or are they not updating their forecasts . Rob these have been moving quickly, and we have ticket reconsider our forecasts. As i say, the three key things for me are the fiscal stimulus being withdrawn, we are waiting to see what extra things can be put in place later this week. At the moment it looks like it will be a significant reduction. We have more restrictions on daily life, and we have brexit uncertainty. At bank of america, we run a proprietary u. K. Consumer survey in real time as well. What that shows us are two important things, Consumer Confidence remains depressed overall, second, fears of unemployment are elevated. These things are likely to keep consumers cautious and i think further restrictions will do the same. The key point is not the restrictions and selves stopping activity, it is how people react to the covid cases and to those, so they may as well stay at home more than they are asked to, for instance, and that can have a big effect. Boe, when you bring up the how much do they need to cut. You mentioned him stepping back from that kind of thing, but do we need to see negative rates in this meaningful way . Is thathink the point the bank of england does not have much any Mission Ammunition left. They might go to zero and that might make some difference. We could have a long debate on whether negative rates help or not. If they do, it is smaller than conventional rate cuts and it usually comes to depreciating the currency a bit more, which the u. K. Probably does not need right now. Thinke bank of england, i they are running on fumes. They really do not have a lot left, so it is really over to the government, and they do need to step up the stimulus to keep the recovery going. And they are planning to announce more stimulus later this week, i think it is the schemes that have been trialed so far and implies quite a reduction, but maybe it goes further than that and they pull a rabbit out of the hat later this week. Guy michael is talking about parks and hugery consternation in terms of getting goods in and out of the u. K. Even a skinny deal, i am starting to wonder what impact that will have the impact of brexit on the u. K. Economy . What are you modeling right now . What is the upside and downside . So, this is one that does not cause immediate disruption, so it comes with some period of phasing in the arrangement so you do not get massive immediate disruption like the type described on day one. But, it is costly in the long run. A skinny deal will mean a significant worsening in trade terms, each here i am still relatively pessimistic. It is not the only thing affecting it, but it is just more drag. No deal would be considerably worse in the long term, and in the disruption it would cause. And that is the key thing in the short run, the disruption that infects you affects q4 and q1. Of course, businesses coming out of the depths of q2, considering what investment projects that they have to bring back, brexit uncertainty brings back more uncertainty and why q4 might not be the safe pickup that we were hoping for three or four months ago. You look at the issue of state aid in future u. K. Growth as they want to be able to do state aid to develop certain industries. Does that develop does that justify blowing up brexit . Economically, the way i look at the most important thing for future growth is ensure that we have smooth trade terms, and of course the government has various economic programs that it wants to do, and to see economic benefits from then, and the things we can modify by far is new trade terms, and that is the need for my forecast. Doesifferences is that it not seem that freedom on state aid is going to make that much of a difference. So, that is absolutely key in the long 1 long run. It is the ability to freely trade and the implications of that. On ision and so absolutely vital. Skinny deal, and no deal, there is a difference between them, and the big picture that both my mind impose marginal Term Economic costs on the u. K. Bank of america, and u. K. Economist. And a nice cherry on top, new virus cases rise by 6000 up from 4900 up from yesterday. Market implications of new virus restrictions. Christina dudley will be joining us. Alix live from new york, i am alix steel. This is the european close. The euro areas economic 50. 1,ry did stall to worse than forecast and services were especially week, joining us now is Christina Dudley a portfolio manager. That was a backward looking look, but it was no surprise that services would be weak with the exception of germany, and now you have a virus resurgence, what do you do with the equities . Kartina we want to see what is underlying covid cases. We have had a gradual reopening of these economies and these are they in terms of have a positive correlation in contact with each other. You have the reopening of School Districts and the other aspect that we are looking at is that as it gets colder, people are more likely to head back indoors and that is likely to see a rise in cases, the death rate is not rising, which is positive. From our perspective you can have a rise in cases but not the same level of mortality and that is positive. As we look at the services economy, in a u. K. , for example, is spain, the rise in cases negative to sentiment and for peoples willingness to travel, form large groups, go to concerts, entertainment venues, and restaurants. I think that the rising cases, even though it does not have the same level of mortality has negative implications for the Services Sector in the u. K. And spain. Guy does this undermined the case undermine the case that there was a lot of consensus that you want to rotate out of u. S. Equities and into european equities as we approach the election. Is that being undermined . Kartina i think it puts a pause, but there are so many other things about european equities that make it a positive market. Let us go through some of them. First of all they have handled covid cases better than the u. S. And that is generally accepted. The second is the european recovery fund, which is positive. There is another aspect of the European Market that makes it affect attractive for investors. And then finally, earnings season, we have had a small dip manufacturing that we are still bullish about earnings as we go into the seasons. Alix does earning apply to cyclicals or growth . Kartina growth and defensive names have had a good time. Most of these businesses have either not seen revenues fall and have seen a resilient business model. Them sawcals, many of temporary drops in manufacturing, and we saw them selloff disproportionately. A number of equities have come back but the number of businesses has not. What we are trying to assess is what is the market baking in . We could have a small pause in the Fourth Quarter caused by the fact that a lot of investments in the industrial sector are global companies. He talked about the u. S. Election, and while we are not looking at it directly impacting europe, and impacts the mindset of a ceo looking to make that incremental investment in the u. S. Market and they might want to see who ends up in the white house and whether or not the senate or congress turn red or blue. Europe is set in green, but let us not talk about the currency. 120 onup towards three eurodollar and faded off of that. I am wondering what your view on view is on where the euro goes from here . Does it strengthen . I wonder whether the dollar reverses course, and how big a headwind that is for europe. Europe, asthink that we look at the recovery, that is positive in terms that actually gives the euro a reserve currency status. When i think about a longterm, second to theme secular theme, i would be bullish on it as it has this reserved curve status that was underpinned by this status and the response to the pandemic. I would be long euro. Alix how do you look at the central Bank Reaction function. Charlie evans is speaking in the u. S. And it is back putting and saying that you need inflation over 2 for a longer period of time. He is talking about 2. 5 inflation. You had an ecb board member in a speech talking about potentially and thee European FundPandemic Recovery fund actually permanent. A it a con is it contribution is any competition . Kartina i do not think that europeans like to go into competition with the fed. As we look we are having a very long and hard discussion about inflation. There are reasons that we can see disinflation or low levels of inflation. And demandthe supply imbalance and we have a lot of supply and not as much demand. We look at unemployment rates and those are things that dampen down inflation especially wage inflation. As we look to the longer term we look at what the fed has said. We have looked at average in place and inflation targeting when we have had such an average number below target and we would tolerate tolerated above target. As we bring that over into equity markets, higher levels of inflation, i would say, phaser affect fixed assets where these have high levels of intensity, and have businesses where they can get pricing power, and can pass on the inflation to their customer. Guy we will leave it there. We appreciate your time today. Katrina dudley of franklin mutual. This is bloomberg. It is time for the Bloomberg Business flash, a look at some of the biggest business stories in the news. Wells fargo chief executive officer is apologizing for comments he made about struggling to find experienced black executives. He apologized for what he called his insensitive comment in a june memo that set new diversity targets and tied executive pay to improving those metrics. He said there was a very limited pool of lack tenant talent black talent to recruit from. Bloomberg has learned that the fintech giant is confident that there will be 20 of demand for one of the largest equity deals. They will stake to lock in seek to lock in corner stern cornerstone investors. J. P. Morgan chase is moving to hundred 30 billion to frankfurt ahead of brexit. The shift would make it one of the largest banks in germany with less than four months to go before the brexit transition period expires. Thanks have been bp beefing up operations in case u. K. Forms firms have been unable to retain rights. That is your latest business flash. Guy that is one of those interested when translating everything into dollars does not work because it undermines the story. You are moving pounds into euros, and that is why the foreignexchange story was so active a little bit early on. Shooting first and asking questions later. The other story surrounding banks has been that a bunch have said that we will halt return to the office programs. Deutsches,s, citi, etc. They are saying that all facilities will remain open, my sense is that those that are already back, and i am pointing towards traders, might stay back. Those that were coming back are likely not to. Alix it depends on how the virus goes. In new york i feel like there was a feeling that we were doing well and we could reopen and it would be ok and we got news from our mayor that there are clusters in queens and brooklyn that they have to watch and take urgent action on which sounded a little different. And also, talking about the different pain in new york city, it will have to furlough workers because of lack of federal aid, which brings into focus how important it is for government to help on a state level. It is interesting, remember we have had those businesses who were saying to new york city, you have to get your act together, we want to bring people back but it has to be done in a safe way, so that will work against that process. Needsansit Authority Funding and if it does not get that, it will be harder to bring people into the office. Alix youve had to blah zero say that you guys cannot take cars, not people will be people cannot actually drive because they will be a lot of traffic. Guy European Markets getting ready to shut up shop for the day. These are the numbers, quite positive in europe, outperforming the united states. We will deal with the details in a moment. This is bloomberg. Guy 30 seconds until the end of regular trading in europe this wednesday. We were up at one point around 1. 5 . We faded as the day has gone on. Early on, we dismissed the negative pmi data we got, but it seems to be, with the changing buyer situation and the rate of change, really aggressive at the moment. The pmi data is very much Rearview Mirror at the moment. Nevertheless, we have faded. Probably u. S. Influence in all of that. Lets take a look at the individual markets around europe. A little spread. Back, fadecks coming in the bank story still, ftse up by 1. 32 . In the foreignexchange market, relatively flat. A bit of movement in the euro, but relative quiet relatively quiet the last few days. 5 to. 75 . Banks at the bottom end of the story. Lets take a look at how it breaks down from a sector point of view. This is the grr. It has been beaten up over the last couple days, but there has been talk over the last 24 hours andt accelerated testing, disallowing may be the opportunity to reopen some of the travel corridors. A number of other people have been talking about this. That seems to provide a little more positive momentum. We will talk about this tomorrow with the World Aviation festival. Banks of the bottom, real estate at the bottom as well. In terms of individual names, read eva trading down a little bit and there was a conference early on. Management was talking about the idea that if the right deal was there, we could see consolidation. This conversation comes up time and time again when you look at what is happening in the banking sector. You can see the deal over in spain, as there is more of that to come through. Policies earli