That runs the debate said the event would be virtual. Mr. Biden says he would take questions directly from voters on october 15 and is asking the Debate Commission to move the debate to october 22. The president says a virtual faceoff is not what debating is about. Mr. Biden says the president is trying to evade accountability and does not want to face questions about his failures on covid and the economy. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie it is 1 00 in new york 6 00 p. M. In london, and 1 00 , a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories from around the world we are following. The move toward a steady business. Morgan stanley announcing that it will by money manager eaton vance. We will talk to mike mayo about the acquisition and what is ahead for big Bank Earnings. President trump says he will skip next weeks debate with democratic nominee joe biden if it is not in person. Bidens campaign saying that the candidate will take questions from voters on october 15 instead. The campaign also saying it hopes the commission will move the town hall to october 22. The covid19 pandemic has taken an oversized bite out of the big apples Real Estate Market. To talk abouts us new york citys commercial real estate crisis. Lets get a quick check on the markets, begin with the airlines. That was one of the groups moving in the last 24 hours after President Trump suggested there would be targeted aid. Then nancy pelosi said that there was no way that she would sign onto a package just for targeted airline aid. Some enthusiasm still. Two thirds of 1 . Movementor some real on aid before deciding if there is a move for yield. Crude oil up 3 . Into one of our top story today, Morgan Stanleys acquisition of eaton vance, the second this year for james gorman. With us to talk about the motivation and what we can expect from Bank Earnings next week is mark mayo mike mayo of wells fargo securities. Your initial thoughts on the merger, the right choice . Transformedgorman Morgan Stanleys business more than any other large bank ceo the last decade. Who knows . That was led by the acquisition of smith barney. As opposed to the deal that was very inexpensive, this acquisition of a large asset manager, eaton vance, is very expensive. As the ceo said when i asked about it, he said you pay a quality price for a quality firm. This is a little bit different as Morgan Stanley transitions from optimizing the firm to growing by acquisition. It is a different skill set. It is not a make or break deal. It is not at large in the schema Morgan Stanley, but is large for its Asset Management business. A lot of mergers have not panned out well. Our take on the acquisition is it is a nice complement, high quality, but the jury is likely to remain out on whether it adds value or not. The trendperial says is either specializing or gaining shelf space. Will the fee revenues be enough . Is it appetizing enough . Morgan stanley transformed from one third annuitylike revenues to one half, and this will push them even higher. Enough . Say, is it in the case of Morgan Stanley or the industry, it is better than that volatile trading. If you had to take one dollar of earnings from trading or from Wealth Management, investment management, fees, you will take fees. That is the main motivation behind the decision today to buy eaton vance. Vonnie there were other potential options, im sure. Morgan stanley took a preliminary look at we know that invesco has an activist. Does it get convinced that it should merge with henderson . Mike i am shocked that we have not seen more murders in the financial industry. You have a variety of revenue headwinds. I see that front and center in the banking space. Bb tad the acquisition of and suntrust to form truist, and i thought we would see more murders. We have not seen that yet. Given the uncertain environment with covid, it might be put on pause. Then again, Morgan Stanley surprised everybody today. Vonnie we obviously are starting earnings season again. Im curious on what your thoughts on what we will hear. The Federal Reserve put the brakes on the dividends more. We also know that Interest Rates will be lower for a lot longer. What do you anticipate hearing from the big banks . The head,hit it on credit rate issues, regulatory issues. But for all of the lowered expectations at banks, we estimate there is a 200 billion dividend once the war on covid is won. Most of that comes through reduced what it costs for bad loans. We think the peak of those costs were in the first half of the year. Evidence of this view is the 25 trillion of fixed income assets, nongovernment, whose spreads have not only come in versus the march peaks, where they were three times higher, and not only lower against the Global Financial crisis when they were four to 10 times higher, but they have tightened this quarter by 10 . Fixed income market is saying borrowers are healthier than they were at the start of the quarter, which means those reserve bills that you saw before probably are not likely to happen when banks record earnings next week, which means at the low point for Bank Earnings was likely the Second Quarter of this year. It only gets better from there. Admittedly a low point. Vonnie do you anticipate any of them will surprise us more than we are expecting surprise to the upside for all of them . Negative biggest reflect the lower rate. Traditional banking revenues, Net Interest Margin is at the lowest level in modern history. Low rates are taking a toll. Loans are getting paid back. If you are involved in traditional banking, especially the smaller banks, its a struggle. On the other hand, the larger firms, more diversified firms, benefit from a variety of fees. The Mortgage Business is double about the usual level. The Capital Markets business manatt the same as the Second Quarter, but stays elevated. You have seen some green shoots with the economy. The payment activity should be better, even if it is not accelerating at quite the same pace as before. Fees are good and traditional banking revenues, net interest income, is bad. Vonnie we had an announcement from citi. Jane fraser taking over next year. Give us your thoughts. Hangry at citigroup, meaning i am hungry for more information as to why they had this regulatory Consent Order announced last night, and i am angry that the deficiencies in the system for not shared with investors sooner. But i think there is a Silver Lining to me and other investors being hangry, and you have an activist in the stock here. It gives anining is extra sense of urgency for the fraser, to go zeead and mckinseyi citigroup. She is no stranger to acquisitions and divestitures. Personally as i have said over the last decade and ive been on your show talking about it, too. It is time for citi to sell its nonus consumer businesses, starting with asia, possibly mexico, trim the fat, show a greater sense of urgency, and realize some of the value of the parts that we estimate are worth 50 more than the current value of citigroup today. We hope and expect that jane fraser will give citigroup a fresh look just like she would have done in her old days at mckinsey. Environment and the landscape for banking is changing drastically from fin tech entering the traditional banking space, merging with some of the traditional banks, to money management, collection of assets, like the swiss rate for assets. How do you see the next five years where we have differentiated investments in the u. S. , or are we looking at Something Different . Mike goliath is winning when it comes to banks. The largest banks, bank of america, j. P. Morgan, they are winning with digital banking. You are seeing disproportionate share by the largest players. They are also winning when it comes to marketing and the national scope. Even in areas like cybersecurity, they have been able to invest more. I know that we were talking about my big teacup. Me andies to teacups for also banks that we think will benefit the most in this environment. I guess you like big banks. Mike mayo, thank you. Gorman, chairman and ceo, coming up at 8 30 london time. Sanctions on 18 iranian Financial Institutions. 18 Financial Institutions in iran, doing business with iran, sanctioned by the trump administration. It will further choke off the iranian economy. Themove aimed at hindering return to the 2015 nuclear deal. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. In the last hour, House Speaker nancy pelosi joined us to give us an update on stimulus talks. She says there could be no action on a standalone bill to aid airlines without a broader agreement. Pelosi we want to help the airline workers. There was legislation in the cares act, which we hope we could continue for another six months or so. That expired at the end of september. Separately, but we cannot do it unless there is a big bill. It has to be a part of a bigger bill, or it could be separate from a timing standpoint. Isnie joining us now political contributor jeanne zaino. What is the House Speaker strategy here . Such a fascinating interview with all of these events moving quickly. The president tweeting the other day that he was backing away from negotiations and then quickly coming back to the table with this call for separate bills. The speaker really pushing back, saying, i thought, in a sober way, that both of these things need to happen. We need to address the people and help the people working at the airlines, but we also need the bigger bill, because we have a lot of challenges on our hands, as we heard from jerome powell. She is really holding her own, saying we will not back away from the fact that we need a broader bill. I will be curious to see how the Administration Responds to this. Vonnie does the Democratic Party have four weeks to spare with the American People . Weeks to goave four and it is astounding that we are in the midst of a pandemic facing evictions of 30 million or more, with the issues we have economically, medically, and congress has yet to pass either the skinny or the broader bills. It is utterly astounding. What people dont like about washington, d. C. Nancy pelosi has members in purple and red districts who are at home right now campaigning to be reelected. It is curious to see how their constituents are responding to the fact that they have not been able to get these bills passed. Vonnie at some point, it becomes untenable for the American People. That will come out in the polls, as well everything else, i imagine. Do you think the president at some point announces a unilateral package that helps everybody . If he wins, great. If he loses, he goes out on a high note . Jeanne you would think Anyone Running for president would want to put money in the pockets of American Voters who were going to the polls, and help them out of this very tough situation. That is why we were so astounded when he walked away the other day, and then walked back. I would not be surprised if this was some sort of strategy, or if the president does indeed turnaround on this. Andtop and take a look think about the situation we are in. That the supplemental insurance ran out july 31 supplemental unemployment ran out july 31 and we have yet to have this bill passed, it is utterly astounding congress cannot get this done. I think we will see a lot of frustration amongst voters at the polls. The question is do they vote for if they are frustrated . Vonnie we may hear from the candidates again october 16 or the 22nd, although President Trump says he will not waste his time if it is not in person. Joe biden is saying that the candidate can take questions from the voters instead, or may be happy to do it on october 22. What remains for the candidates to tell the American People that they had not told him already . We are not getting answers to many of the question being posed to the candidates. Is there any point even . Jeanne for the president and his campaign, there is all the reason to debate. I would not be surprised if he turns around on what he said this morning, that he would not debate remotely or online. Of course, he is the one behind in the polls and swing states. Those are supporters that he definitely needs. It doesnt matter how many rallies you do. You are not going to reach the millions that you do in a president ial debate. I wouldnt be surprised if he turns around on this. We dont know, but he is the one that will lose without a debate. Joe biden is ahead in the polls. When you are as low as the president is, according to the polls, you have all the reason to get out there and get your message to the public. He needs to reach suburban women, seniors, and stunningly, white and, who are starting to desert him. Vonnie Donald TrumpsCampaign Manager proposing that the debates be pushed back. Jeanne zaino, professor of clinical science at iona college, thank you. Looking to downsize as people continue to work from home. We stick to gil borok about the future of office space. This is bloomberg. Vonnie working from home has become the new normal. It is only natural then that a survey from cisco shows many are downsizing or planning to downsize office space. Joining us to discuss the commercial Real Estate Market is gil borok of colliers international. Give us some data. You just released your 2020 midyear outlook. What is it looking like for the Office Spaces that you oversee . True that there are a certain number of Companies Looking to downsize, because home has been so successful. We are hearing a number of folks are looking for new leases, probably anticipating post pandemic, that they will need more space per person, which is an offsetting factor. When you look at the long term, my feeling has been, things tend to return to the mean. We will see some more working from home, certainly. Are we going to see a huge move toward everybody working from home . I dont think so. Countries, are in 68 many affected by covid. The u. S. Is particularly affected in the last few months. What have you done to retain ts, loweredtenan pricing . We are effectively a landlord representative, so we dont own a lot of the real estate that we represent. But what we have seen is that the clients that represent the landlord are getting incentives signed. Ew leases being there is a differential between the market, retail rent, and the Effective Rent. The Effective Rent takes into account the discount. Those have definitely come down. The retail rent has remained relatively stable. Vonnie at some point, that will probably come down as well. The idea behind that is that all of this will go away and we can ignore those temporary discounts. Is that what you are anticipating . The long run, and we have seen this in past financial cycles, things will move through the cycle. At the moment, we are seeing Effective Rent coming down, retail rents, the price that you pay coming down, but eventually, as things normalize, it is my sense that rent will go up again. Air is a limited supply. After all, the price is dependent on the equilibrium between supply and demand. Asand will go up, i believe, the economy starts to grow again and as we hopefully have a therapeutic for the virus. You manage a Global Real Estate business, fourthlargest manager in the commercial space in the world. Are you looking to diversify into other types of commercial real estate, warehouses, for example, Storage Units . Gil its a good question. Thankfully, we have a very Large Industrial business. We represent owners and occupiers of warehouses. Traditional warehouses, many of them are converting, and other spaces are converting, to accommodate the significant rise in ecommerce. You have a lot of demand thankfully in that space from the likes of amazon, the last mile demand. Various other ecommerce demands. From that perspective, that part of the vonnie thank you. Leading indicator potentially. We will have you back to see how this progresses. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. It is looking less and less likely that there will be a debate next week between President Trump and joe biden. The president is refusing to take part after the commission that runs the debates said the event would be virtual. Mr. Biden says he would take questions directly from voters on october 15 and has asked the Debate Commission to move the debate to october 22. Mr. Trump says a virtual faceoff is not what debating is about. Mr. Biden says the president is trying to evade accountability and doesnt want to face questions about his failures on covid and the economy. Do notublican senators want to rush into passing an airlines similars package. Pat toomey and mike lee says lawmakers need to offer amendments to anything