♪ >> leaked documents related to more than $2 trillion. banks kept profiting even after the u.s. introduced penalties. lockdown two point oh. the u.k. will sound the alarm on rising infections today. weeks to go into the u.s. election, the supreme court has emerged as a critical battle after the death of justice ruth bader ginsburg.

welcome to "bloomberg surveillance." there's plenty going on in the markets, not withholding everything going on with the supreme court, and we are just about 46 or 45 days away from that important u.s. election. the picture on the market is not great for banks. you can see actually banks were down from 4.1%. if you look at some of the things we should be watching out for, european stocks are dropping for a third day. rising virus cases will lead to tougher travel restrictions. let's get to first word news here in london. leanne: concerns are mounting the u.k. may need a second lockdown to stop the spread of coronavirus. prime minister boris johnson is set to be told today that the nation is at a critical point in the pandemic. there are expectations that local restrictions could be extended into london.

president trump is celebrating the tiktok deal, despite it falling short on some of his key demands. the app's chinese owners will still have an 80% stake in the the u.s. source new jobs.siness means the european central bank is reportedly launching a review of its pandemic bond buying program . according to "the financial times" it is looking into how long it should continue and if it's flexibility should be extended to other programs. it was exempted from some of the self-imposed rules that constrained asset purchases.

francine: thank you so much. ruth bader ginsburg, the 87-year-old supreme court justice, liberal icon, and pop culture phenomenon, died friday after a battle with pancreatic cancer. this pushes the supreme court front and center in the presidential race. trump has said he will nominate a successor for ginsberg despite the republican senate refusing to consider barack obama's pick for years ago. >> voters should pick the president, and the president should pick the justice for the senate to consider. this was the position the republican senate took in 2016 when there were almost 10 months to go before the election. that's the position the united states senate must take today. >> we will uphold equal justice

under the law for citizens of every race, color, religion, and creed. i will be putting forth a nominee next week. it will be a woman. now ise: joining us derek wallbank, who has covered washington in the past. what have we learned since friday about how likely it is president trump's supreme court pick will get confirmed and why this is such a contentious issue. derek: it looks like mitch mcconnell and senate republicans are going to move forward with a replacement, whoever donald trump nominates to replace ruth bader ginsburg. i would imagine it to come off some names currently in circulation. donald trump has done a very clear job of telegraphing the jurists he might pick, including releasing names of , saying, "here's my

shortlist." i don't think we will see any surprises in terms of his pick, but it's likely issues who's opinions on are likely to be 180 degrees on what ruth bader ginsburg would have done. you are likely to look at a 5-4 split become a 6-3 republican whom would be of considered very conservative. there's the potential for a generation put -- generation sympathetic to the conservative point of view on legal decisions. us -- this has democrats furious, especially since mayor garland was not given a hearing in president obama's final year. the simple fact of the matter is

that republicans, if they feel like they have the votes, are going to go put this person on the supreme court. francine: what would you be watching for? >> i think a lot of people are going to talk about social issues straight off. they are going to talk about roe v. wade, which is the decision that sort of underpins abortion rights in the united states, but one of the things i'm watching is on federal regulations, specifically the scope of regulation. republicans have been trying for a long time -- people who have been searching for conservative jurists have been trying to narrow the scope of federal regulation when it is not exquisitely stated in text. this is something you will hear in the news. it means the scope of federal rulemaking ability related to old statutes, so you're looking at somebody who can really

narrow that, narrow the scope of federal regulations. that shows up in a lot of ways, that shows up in environmental regulation. that shows up in the scope of regulations otherwise such as care,are, such as health anything like that, the scope of what congress is able to do. i would expect democrats are not going to take all this lying down. there is a real chance they could win the presidency. if anything, joe biden is favored right now. there's also a chance they could beef up the senate. that's more a coin flip at this point, but if democrats win the senate and take the white house, they are talking about if you happen to consider our court picks fairly and they feel like they've lost two seats, expect some real movement from democrats in terms of considering expanding the size of the supreme court. onbe moving forward statehood for the district of columbia or puerto rico or other measures.

i don't expect democrats to sit down on this. last thing i will say is this -- you have seen $100 million pour into democratic coffers in the days since ruth murder -- ruth bader ginsburg passed away. there's a real urgency on the democratic side to do things. in 2020, you are seeing progressives like aoc go out and , look, videos saying this is existential. we need joe biden right now. if anything, this has energized democrats who might have been skeptical about biden, who are now saying look, the choice could not be clearer, could it? francine: thanks very much. let's talk about the election and what it means for the markets. theing us this morning, head of global market strategy .m ea

what does this supreme court of people mean for the markets? >> there's been a lot of commentary around how a biden win could lead to higher corporate taxes, but the key issue for the corp. -- for the u.s. economy is the fact we have seen the fiscal stimulus ebbing, a actually, were we to see democrat win where biden won the presidency and democrats took the senate and house, i think about the fiscal stimulus you would likely -- you would be likely to see in that scenario. if you got a republican suite as well, you will probably still see fiscal stimulus, so in my mind, the most important thing for the market is that we do not end up they divided senate -- ath divided senate or

situation where the senate is blocking further stimulus potentially if we had biden as president. francine: at the moment, what is the market pricing in, and the pollsdo you trust or expect them to narrow even further? >> the market is aware that it's going to be a pretty close race, so i think the market is -- you look at the odds at the moment, it suggests the most likely outcome at the moment is that you are going to get a tie in the senate and that therefore, whoever wins the election for the presidency is going to have the deciding vote. i think that is what the market is probably pricing in as a base case, that if the election were held today and those predicted odds were correct, wooden pie -- wood imply biden as president, or cut control of the senate and house. it's because the market is starting to move to a view, the

fiscal stimulus would trump any onential increase in taxes the corporate side in terms of impact on the economy, but that has not proved problematic in terms of the market over the last few weeks or months. francine: what happens to the dollar? that -- there's a lot of factors. the dollar tends to perform well in a sort of risk off environment, so if we see a vaccine and we see a democrat sweep with a big fiscal stimulus, then i think you probably see downward pressure on the dollar. if we don't get a vaccine and we got trouble around the winter wave of infections, as we are seeing in the europe at u.k. at the moment, and that leads people to question the narrative that we are going to see a continued economic recovery from here, in that scenario, the dollar could fare whole lot

better. francine: thanks very much. coming up, a cripple point in the coronavirus pandemic. u.k.'s chief medical officer warns infection data are headed in the wrong direction. london's mayor calls for more restrictions, and we will discuss that next. this is bloomberg. ♪

francine: economics, finance, politics -- this is "bloomberg surveillance." we are just getting a bit of headline news out of european markets. the ftse index 600 has fallen today, the most since july 30, and european stocks are dropping unconcerned rising virus cases will lead to tougher travel

restrictions. i'm also looking at oil retreating, treasuries rising. let's talk about a second possible lockdown, a possible travel restriction, what exactly is the market looking at right now? part of it is, of course, the number of infections rising. is the market afraid of a second full lockdown, and as anything short of a second full lockdown going to be seen as stimulus for the markets? >> at definitely on market concern. a --ve been operating under the assumption that we would not see a return to further lockdowns and that it would be dealt with at a local level and with less severe measures and we've seen in the past. it's not just the infection rates, which we seem taking up in the u.k. and also parts of europe, particularly france and spain, but the market, particularly in europe, has been focused on the idea that while

the number of deaths remained low, that it was unlikely to turn into further lockdown measures, but the news we are seeing coming out of the u.k. over the weekend that potentially there is a risk of more severe lockdown measures being put in place i think is causing investors to question that narrative and increased fears this could be a difficult autumn and winter. francine: we also have that looming deadline for brexit. as far as we know, there was a glimmer of hope last week with the commission president saying there's still time or still hope for a deal. what do you do with assets right now in the u.k.? would be i point would be cautious about being overweight the domestic u.k. revenues, but of course, the ftse 100 actually gets the majority of its revenues from outside of the u.k. some of those would still be exposed to brexit in the form of european revenues, but still,

more than half of the revenues in the ftse 100 come from outside the u.k. or europe, places like the emerging markets and u.s. as the source for a large part of u.k. revenues. i would be tilted more towards those international ex-u.k., ex-europe revenues as a way of minimizing that exposure to a potential no deal brexit fallout or, indeed, the hit which i think could come through if we extension.n the risks currently in my mind are twofold, currently that we see another hit to the economy from the virus and potential lockdown measures, but even , i think we could see a hit as the incomes that have been propped up so far fall many people become unemployed. francine: when do we start worrying about inflation? if we ever start worrying about

inflation. be aere's going to potential tick -- temporary pickup in inflation at some point in the next 12 months, but looking out on the more immediate term, i think inflation is only a concern if unemployment is kept low. were we to get through this covid disruption with the unemployment rate having been kept at a low level because of , thenr fiscal support once we get a vaccine, we could see a big snapback in demand, and that could lead to a pickup in inflation because the unemployment rate is supposed to be low, but if the unemployment rate is allowed to rise substantially because fiscal stimulus was absorbed too soon, that i think it will take several years for us to have to worry about inflation because the unemployment rate is going to take some time to come back down. francine: in this kind of environment, what do you do with gold?

>> i think gold is fascinating. it had quite a strong period of performance, but it's being driven by decline in real yield. decline in real yield comes in two phases. the first part was nominal yields well, the second part was inflation expectation grows. the problem here, i think gold is a hedge against further monetization of fiscal deficit, which would keep gum at -- government nominal yields low but lead to a further rise in inflation expectation. if inflation expectation falls from here, that could actually prove negative for gold because it would put upward pressure on real yield. fundamentally, the correlation has risen as we have shifted into this phase of real yield to being driven by inflation expectations. much,ne: thank you so

global market strategist for emea at j.p. morgan. coming up, how some of the worlds biggest banks have allowed criminals to move dirty money around the world. we discuss that next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." look at what exactly we've been seeing, the index

down the most since earlier in the summer. u.s. 30-year treasuries rallying. that yield at 1.40, and it is something we keep an eye on. mainly the market seems to be in a risk off move, partly to do with the banking story we will get you in a second, partly also due to what has been happening with infection rates, and they worry about a possible second lockdown. leaked documents involving about $2 trillion in transactions reveal how some of the world's biggest banks have allowed criminals to move dirty money around the world. danny, good morning to you. what do we actually know? these files obtained by buzzfeed news and shared with an international consortium of lenders. lenders filed these suspicious activity reports to the financial crime enforcement network, and these will be reports on anything that looks

suspicious, anything that might indicate money laundering or any other sort of initial crime, so there's everything from profits from deadly drug wars, embezzled fortunes from developing countries, enablement of ponzi schemes, so anything that looks suspicious, $2 trillion worth, buzzfeed was able to see. they have been really shielded from the public eye. this is the first details we are really learning from. the concern is over what action happens after they are filed. according to this report, often, not a lot of actions are taken. some of these reports are shared with crime enforcement networks. however, in terms of stopping money laundering itself, that's the reaction that is not exactly seen. some of the details in here, standard chartered accused of moving money on behalf of the alex roney exchange, which is a dubai-based business leader accused of helping launder money for the taliban.

hsbc's hong kong branch transferring about $15 million, allowing a ponzi scheme to happen. some of those explosive reports, and real concern about what action was taken afterwards. francine: our dani burger on the news really rocking banks. this is what european banking stocks are doing. one of the biggest losers in terms of the industries is, of course, the banks. this is what we are seeing on the ftse 100, down two .7%. the dax also down 2.5 percent. a lot of the focus is on this forible second lockdown london. u.s. futures are down, treasuries are rising. this is bloomberg. ♪ so you're a small business,

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francine: this is bloomberg surveillance. we are looking at u.s. equity futures sinking and treasuries rising. he ftse down some 2.8%. it really is led by airlines and travel companies. those are leading the losses in the european stoxx 600. part of it of course is as concern of a second lockdown, and i'm also looking at some of the banking stocks. hsbc falling to the lowest since 95. european shares of banks down following the story of international consortium of international -- of journalists on lex's in international activity reports. let's get to first word news with leigh-ann gerrans. leigh-ann: concerns are mounting that the u.k. may need a second lockdown stop the spread of coronavirus. prime minister oris johnson is set to be told today -- prime minister boris johnson is said to be told today that the nation is at a critical point in the pandemic, local restrictions could be extended to london. london mayor sadiq khan could be

tightening the rules today. out pompeo is hitting europe to support that she says governments are properly told him that the u.s. is right even if they will not publicly acknowledge it. the u.s. plans to tighten to aictions when it comes snapback of sanctions on the country. china is ratcheting up tensions in the taiwan strait, hoping to deter taipei from deeper ties with u.s. and a series of military exercises. china repeatedly brings -- beijing regards the island as part of its territory, even though it has been ruled separately for more than 70 years. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am120 countries, leigh-ann gerrans. this is bloomberg. francine? francine: we are getting breaking news out of lee

unilever.- out of there was talk about moving the headquarters, and that got pushed back. it seems now the dutch volt --ders just puts a a vote are all on board. let's get back to the u.s., 42 days away from the election and early voting is already underway in several states. of ruth bader ginsburg may reshape the campaign for president trump and his opponent, joe biden. joining us now is stephanie kelly, senior political economist at aberdeen standard investment. great to have you on the program. this could reshape the election campaigns. stephanie: i think it certainly could, particularly if we look at the election campaign over the last few months and how incredibly stable it has been. remarkably so. we are wondering what might shake things up.

president trump's election strategy, is now very clear. as a win particular for conservative voters trying to motivate is very large consistory -- consistency of white evangelical voters. francine: what does this do in the minds of people who did not know who to vote for? in thate: it is tricky regard because if we look at 2018 when a justice was confirmed, when we look at red states, the republicans did well and red states, they -- the democrats did well in blue states. it's hard to draw a conclusion, particularly with swing voters in the middle who are not over ideological either way. not overly conservative and

liberal.vabl said they were going to vote felt certain of who they were going to vote for. everything in the next four weeks will be clear at the margins, trying to reach the swing voters. francine: will this narrow the polls going forward? could.ie: it i felt inclined to pause in terms of whether it absolutely will or it absolutely won't. longer-term,when election aside. however, democrats are very unhappy about this, and indeed relatively liberal swing voters are perhaps unhappy with the way 2016is done, because in

president obama could not even get a hearing in the senate because republican said it was , but now that she was on the other foot. withuld have an impact democratic sympathetic voters. ever an event is to break volatility to the polls, this is probably it. i also -- francine: i also want to ask you about the u.k., looking at a possible second lockdown for london. does this change the narrative for brexit? is there a turning point where if we go in lockdown, then the prime minister can afford to go much harder on brexit because he wants that to be his legacy? stephanie: i think it is trickier to say that he wants to go harder on brexit. if anything, the fact that your

facing potential lockdowns with some of the restrictions with scotland and ireland, all of that is tensioned with -- is potentially problematic for johnson, against the economic backdrop, it is just another --tor that would look like ofhough despite a couple parts of the voter base, the reality is that there are no more extensions here. it is just about if you get a deal or you do not get a deal. francine: we are kind of jumping around because i want to bring you all the big stories from around the world. what is your take on tiktok? president trump kind of gave it his blessing. is that a done deal, or are we going to see the administration going after similar companies? stephanie: that is the kind of

message. not just tiktok in the u.s., but also over the weekend we saw and china in terms of being -- really, what we should continue thexpect is continuation of ongoing tariff trade war. the reality is that these kinds of moves really politicize the trend, politicize business decisions, and create long-term barriers between the two countries that i think are only likely to escalate. even under a bite administration. pressurehat continued to continue to eke out nontariff barriers so that the two economies really contract. francine: stephanie kelly from aberdeen standard investment stay with us. we are seeing a selloff in

european markets extending to u.s. futures. if you look at the industries down the most, we have industries, airlines, and we also have banks. this is bloomberg. ♪

francine: this is "bloomberg surveillance," i'm francine lacqua in london. let's get to the bloomberg business leigh-ann gerrans. leigh-ann: a global crackdown on banks does not seem to have curbed suspicious activity. leaked documents tied to more than $2 trillion of transactions

show some lenders continue to profit even after the u.s. imposed penalties on them. the so-called fen files were released over the weekend by a consortium of investor negated journalists. after being obtained by busby news. the ceo of -- deceiving investors about its prospects. those claims are now subject to a probe by the sec, and reportedly also the department of justice. boeing istleblower at urging aviation regulators to add additional protections to the grounded 747 max -- 737 max. he said the proposed fixes do not address multiple hazards identified in two fatal accidents. the faa has to review more than 160 comments that have been filed before deciding whether to approve the plane's returned to service. that is your bloomberg business

flash. francine? more --: let's gets let's get more on this morning's market action. a report on bank allegations and signs that london is heading for a second lockdown. u.s. treasuries getting in the risk off move. dani burger, what are the markets worried about? dani: it is this narrative about markets and traders waking to the reality that on the northern hemisphere as we enter the winter, cases of coronavirus are not going to get much better. as you mentioned, concerns of another lockdown in london, and broadly across the u.k., which would hurt the economy a lot. you add into this the latest report from the ici j, the international consortium of investigative journalism, buzzfeed, over concerns over areas money laundering schemes. but besides that, this is historically a bearish period. the next 20 days after september

25 is the most difficult time for traders to turn a profit, historically, according to a xi investments. he also had into a period where you have a u.s. election, and hedging increases for that in increased volatility. all of that to say that when we get any sort of increases, any sort of gain in stocks that we are seeing, what we are seeing more often than not is that starting to fade, so the losses really ramped up when europe came into line, and the question will be when more u.s. traders -- theto the line, the solid bearish scenario and argument that you could make with all these risks, and i think that is really helping to see all of these sectors. the wider market continuing to drift down this morning. francine: dani burger with the latest on the markets. brian moynihan, chairman and chief executive of bank of america, told bloomberg there

should be another round of federal stimulus to help the u.s. reach a full economic recovery from the coronavirus pandemic. we caught up with him ahead of this week's up a bloomberg equality summit. says thatearch team the united states will be down 4% for the year, than next year of 5% or so. but the key is to think about a quarter by quarter. you had a deep drop in the economy last quarter, you are back up to 95% of the economy restored on a quarterly basis, and then we are going to work out from there. the high net was a 1% to 2% growth economy. so the idea that it is recovering that last five percentage points tomorrow morning, he will take a while to grind through that. every estimate, including what you heard from chairman powell yesterday, has gotten better rather than worse. why is that? because consumer activity stays strong. the fiscal stimulus, monetary stimulus, programs the fed has between the government, the

administration, congress, and what the fed did, they filled the whole, for lack of better term, to bring the economy back up to level, and i we've got to let it work out from there they probably need more stimulus for very defined places that are still in difficulty -- restaurants, state and local governments, schools, performing events, venues, industries, airlines and other things that you just cannot have people deal with at the rate that we had before. see?do we consumer spending is up year-over-year. that is up year-over-year. that's good news. we are seeing constructive growth finally. it was growing at 10%, it fell, and it has worked back to even and we will probably see it grow year-over-year. that is good news for the economy, meaning that amount of activity going on in our economy is restored. david: you said -- chairman powell said that there is a lot

of uncertainty out there. how badly do we need stimulus? we have an election coming up, and there is a coronavirus. we don't know about a vaccine. brian: this is a health care crisis, and i said it back in march and i said it with you a few months ago. people cannot forget that. this is a health care crisis. what has happened over the last six months with a health care crisis, you're seeing the potential for vaccine, but you are seeing better behavior to continue to keep things for spreading as fast. in the northeast you have seen that infection rates are much different than they were early on. treatmenting the regimens is different and also because of personal behavior, people high-risk, staying even more careful, the impact of the virus is still hugely hurtful to people who get it. but not as bad outcomes.

that is good news as we wait for the vaccine, which is sometime out there over the next several months. that would be good news. until then, you are still going to have the drag of people going back to their behavior before. that is the one thing. what we need i think is pretty straightforward. you need more stimulus for the people. you think about the analogy, we are all on one side of the river and we all have to cross the river, we all need a bridge. a lot of people are across the river. certain segments of the economy are doing even better than before the crisis. other segment are doing just fine. the medical industry is wholly -- the normal because housing industry is strong, the construction industry is strong. those are across the river, so let them go. what needs help is restaurants and things like that. the next round of stimulus are to be focused on the areas that need the most help. round, thereext

should be stimulus for certain company's because this is going on longer than we thought it would go on. francine: that was brian moynihan of bank of america speaking to bloomberg, head of the equality summit. you can tune into equality coverage on wednesday, september 23. selloff inig european stocks. your paean stocks are having a bit of a meltdown with u.s. futures, travel, and leisure, and also banks, two culprits that will keep playing on the stoxx 600 short-term, according to some of our specialists. if you look at some of the concerns out there, of course it is coronavirus. you can see a rising wave of virus cases is hitting airlines and hotels. stocks are being hit amid fears of a second lockdown that may be needed, but the sign of those concerns being -- of banks being pressured. this is bloomberg. ♪

francine: european stocks dropping the most since july. s&p futures extending losses, now down some 2%. you can tweak a look at the grr function on the bloomberg and see which european sectors are down the most. all 19 industry groups trending lower this morning, travel and leisure stocks plunging more insurersith bank -- getting hit hard. cases rekindle on top of lockdowns -- that would cripple recovery efforts, and that is what we are seeing on the markets. still with us, stephanie kelly of aberdeen investments. when you look at the markets, how much does it have to do with banks and how much does it have to do with a potential second lockdown? ofphanie: given the amount coverage this morning, lockdown -- that is one of the things contribute think.

diff this was to most in the u.s. against the backdrop of what happened over the waken with the death of justice ginsburg, then you have these pockets of bad news. i think overall is making for -- francine: what will the market take their cue on for the next couple of days? is it lockdowns, or is it what is happening with the vix? stephanie: one thing we need to be mindful of from an investment perspective is with what we have seen with bad news with the crisis come up in particular when we have in the u.k. for example, that is an environment where people might start to get were bullish about a vaccine happening more quickly because there are more cases, they have exposed chance of being to the virus. that has been an issue.

and in the u.k. as well, if we lost fiscal stimulus, it is clear from the u.k. government that they want to avoid a national lockdown, but also that they have wanted to kind of rollback on things like -- if there is genuine push for a much more expansive restriction, maybe not full lockdown but restriction of activity, especially for certain sectors, that is probably an environment in which there is much more pressure, where they will have more support there, so maybe fiscal might also come down a little bit. francine: if you look at what is happening with travel and leisure stocks, they are severely under pressure. can they impact the rest of the market toward december? is this one of what we call the scarring things, and will that ever recover? that is one of the hardest things with the travel and leisure sector. if you have a holiday that gets get itd, you cannot

back, you cannot go all day again, you're not necessarily going to go twice. is one of those parts of the economy that is really hard to re-create, rebuild what is lost. so that being said, broader terms, you look at the sector, it could be much more driven i things like consumer demand, and i think particularly if you think about the short-term versus the long-term, owing into winter, not the most obvious time for travel and leisure anyway. it will get a bit of a boost with three opening at the right time for that sector, but going forward it is just naturally a place where it gets squeeze, particular with the makeup of the u.k. government in particular, really pushing for this idea that things will stay open and other things really have to take the hit as a result. thank you so much for your time, stephanie kelly, senior political it, at aberdeen standard investment. as we head to the break, let's

look at the markets. european step -- european stocks deep in the red, s&p down 2%. 30 year bonds gaining, risk off taking hold. if you take a look at the grr function on the bloomberg, can also see which european sectors are down the most. all 19 groups are lower this morning. travel and leisure stocks plunging more than 5%. focus is also on some of the fixed income. bones and btp's are likely to gain in the future after the ecb --reviewing, reportedly, bloomberg surveillance continues in the next hour. tom keene joins me out of new york, and later, a conversation with robert kaplan. this is bloomberg. ♪ ♪ you can go your own way

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switch and save up to $400 a year on your wireless bill. with the carrier rated #1 in customer satisfaction. call, click, or visit your local xfinity store today. francine: banks bruised.

leaked documents related to more than $2 trillion in transactions show banks kept profiting from powerful and dangerous actors, even after the u.s. introduced penalties. hsbc shares sink. lockdown 2.0? the u.k. will sound the alarm on rising infections today. the london mayor, sadiq khan, is set to recommend more restrictions. and with just six weeks to go until the u.s. election, the supreme court has emerged as a pivotal battle after the death of liberal justice ruth bader ginsburg. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. i'm looking at the markets and we will do market and data checks every 15 minutes because it is an absolute bloodbath. some industries are down 5%. i'm looking at travel and leisure, especially in the u.k. come on the back of the possible announcement of lockdown measures. tom: the set of issues leading to where we are, the dow down 580 points.