♪ francine: written in reverse. the government tells the public to work from home if possible. pubs will close early tonight. jay powell says the u.s. economy is heading into uncharted territory. the nasdaq 100 may enter a bear market. european stocks spread global downward trend, three days of losses. good morning, everyone. welcome to bloomberg surveillance. andfocus is on the markets on these new restrictions across the world, especially in the

u.k. this is what we know and this is what we are waiting to find out from the prime minister. he has urged everyone to try to work from home if possible. you can see that playing out in the markets, although a lot of the selloff happened yesterday. stocks, 0.6%. european stocks actually rebounding from their temple on monday. a lot of the focus is on the tech stocks as well. let's get to the bloomberg first word news. here's leigh-ann gerrans. leigh-ann: good morning. movingnt trump is towards nominating amy coney barrett to replace ruth bader ginsburg on the supreme court. she's the favorite of antiabortion right activists who have been lobbying for her appointment. barrett is currently a judge on the seventh circuit court of appeals in chicago. federal reserve chairman jerome powell is set that the u.s. faces a long and uncertain economic recovery. his testimony alongside treasury

secretary steven mnuchin will begin later today. it comes as congress is deadlocked over another round of stimulus. st. louis fed president james bullard is not convinced fiscal support is needed. >> i'm hopeful that we still have enough in the pipeline to push us through, get the growth going in the second half of the year. that certainly seems to be what's happening in the third quarter and will continue in the fourth quarter and the first part of next year. leigh-ann: eu efforts to put pressure on fellow russian president are on pause. ministers failed to agree on sanctions against dozens of officials, that is as a separate crisis doubles up over how to handle turkish energy claims in the eastern mediterranean. cypress has refused to sign measures against belarus unless other member states expand an eu blacklist against turkey. global news 24 hours a day on air and on bloomberg quicktake

powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. francine: thank you. let's get back to our top story. britain in reverse. the government is advising workers to work from home if they can. prime minister boris johnson is bringing a new rules for bars and restaurants by thursday. they will have to close mby 10 p.m. the prime minister is holding an emergency kober meeting this morning, and then will make a broadcast to the nation tonight. we are delighted to be joined by michael strawbach. thank you for joining us. it is a difficult time for the markets because they are looking at things going on in technology. i'm not quite sure how they view the u.s. election and his possible second wave of restrictions. how difficult is it to navigate the market? michael: it is quite a

challenge, especially given that we know a lot of stimulus has already been provided. we believe we have seen a strong rebound in markets and economies, and we expected a slowdown in september. industrial production pretty much globally. that is normally a moment when risk off begin setting in. at the same time, it is clear, central banks are cautious about what are the next steps and before they start to signal more stimulus is on the way. i guess they want to see the economic news and data really play through. and markets were, in our view, overdue for a consolidation. francine: what kind of consolidation are you expecting? would it be a big correction or something that will come and go in the coming months? michael: no, i don't expect a

big correction. the we said in march, equation of the stimulus with the economic impact and the virus playing out, it is something we wanted to buy into and we did in the last week. we have taken that with us. we are more cautious in very late june, simply to take profit on this. i think markets are overdue for a pause. tech kept running until about two and a half, three weeks ago and now we are beginning to see some get back on those gains. i think that is only healthy. if we see 5% to 10% for the downside, that is an opportunity to buy. francine: what would you be buying? an industry or country? more,l: if tech corrects

i think we will think about going back in. we actually went more cautious. i still think there is healthy growth to be achieved in the health care sector. in general, we have begun to buy more cyclical, more value-oriented stocks simply because we feel at some point in time there will be a rotation. we have been a believer in chinese equities and the recovery that has been on the way for quite a while now. francine: so, for example, how do you play china? how do you buy into china? michael: in general, china plays are best

plays in and around china. also, directly investing into companies on listed stocks in hong kong and the like, simply to try to gain exposure. francine: michael, we are just getting some breaking news out of sterling. sterling is falling to the lowest level versus the dollar since late july. how you look at u.k. assets? part of it, the infection rate is going up and we could have, if not i lockdown, further restrictions on the economy. what happens by the end of the year? michael: i think u.k. is going into its own uncertainty because of the brexit situation. our view is that maybe you have hard chance of avoiding a brexit but time will tell. it has been put into the background of the whole coronavirus situation that markets have taken their eyes off it but that is not coming to the forefront again. around theion u.k. is obviously the pound.

i would have a view is if it becomes substantially cheaper, that would be a moment also to look into buying u.k. assets. francine: thank you so much, michael, from credit suisse stays with us. 9:30g up, we also speak at a.m. london time. we will talk luxury. this is bloomberg. ♪

francine: economics, finance, politics, this is bloomberg surveillance. here's leigh-ann gerrans. leigh-ann: hi. microsoft is buying zenimax media, the owner of bethesda

softworks, known for the elder scrolls and fallout series. it plans to use those titles to attract subscribers to the xbox game past. it is a $10 a month library of video games. the $7.5 billion deal brings the ipo of a netflix for gaming one step closer to her reality. >> you look at this gaming category and the strength that we have as this category is moving from device to player control, and our ability to deliver cloud game subscription to every gamer on the planet, this is a long-term growth category for microsoft and we are excited to continue to invest. ordered thesbc has social media blackout after fears of negative reactions. in a memo to staff, the firm told all staff posting on the social media account. the only exception was responding to banking customers. the blackout will stay in force

until at least 11 a.m. u.k. time tomorrow. airbus is warning in may have to cut more jobs after travel demand has declined since the end of the summer months and carriers are pushing back deliveries of new planes. thechief executive told situation has worsened. the playmaker will have to adapt its cost-cutting plan. that is your bloomberg business flash. francine: thank you. let's discuss the markets a bit more, european stocks in early trading. ash is leading the rebound, travel and leisure continues to decline on the prospect of fresh restrictions. we are back with michael from credit suisse. when you look at the main pitfalls in the main challenges for the markets for the next couple of months -- we have brexit, we saw possible lockdown restrictions, we talked about it. how do you trade the u.s. election amid uncertainty and

heightened tensions? michael: that is obviously the crucial question going into it. i don't think, honestly, that the outcome of the election over all will change the directionality of something like equity markets. i think are set to go up. we need to get through q4. virusd to see how is the situation overall playing up in the developed world as we start learning more about what it really means in having this virus with us. what are the infection rates doing? what will the response be from the government? march, the learning from april, may is that what really triggers this correction and the deeper session was the countrywide lockdowns.

if it grows to a situation of that nature again, markets will not like it. i don't think that will happen. i think we will see what many countries are doing, localized restrictions. recommendations to stay at home, etc. but not countrywide lockdowns. it is simply too costly, too risky. in terms of what further support is needed and therefore, governments will stay far away from that, i think. i think the election, coming back on that, is not set on a course -- a biden government, is trump going to get reelected? on the margins, we view it could be a biden government. the question then becomes what is the congress and what types of policies can the government really implement? on the margin, perhaps if it is a biden government, we will talk

more regulation on finance perhaps, but also talk more about tech coming into play. on the margin, i think there will be a little bit of a negative for markets in the short-term, but in the long term, we are set to go up from here. francine: talk to us about what you are expecting in terms of stimulus. if we have a second lockdown or second restriction -- at this point, it feels unlikely we go to full lockout either in the u.s. or europe or the u.k. like we had april, may, but what does it mean for a government stimulus? what is the interplay with central banks? michael: the stimulus, i think, will have to come from the fiscal side. we know what sort of challenges the central banks have. they have got almost more than all in -- thinking and thinking of raising interest rates. qe fully back as normal.

nothing on the horizon in terms of the whole debate of yield curve control and so on because yield is already very low. that means we need to see fiscal stimulus. we need to see some of these stimulus programs renewed that we saw in april, may, june be introduced. but we have to be realistic. continue to do this for a long period of time. therefore, we have to expect at some point, the bare minimum will be done. if the central banks see that t he recovery -- they will have very little incentive to do anything. therefore, i do believe q4, q1 is going to be critical for the path of this recovery and the time span we are looking at for economies to get back.

we think it will take two to three years to work our way through this. the next phase has to come from careful, cautious, measured stimulus, not piling on debt as we saw in april, may, june. francine: this is a question we are asking on our markets live blog. which affects wins central banks enter this new phase? michael: we think the euro, for sure, could be one of the currencies that wins. not that the european union is really excited about that. the ecb is truly not excited about the euro becoming ultra strong. given the weakness on the other side. the u.s. dollar, that is something to watch very carefully. the yen as well could be a currency that overall wins in this type of environment. end set to become

weaker is the u.s. dollar. francine: thank you so much, michael, global chief investment officer at credit suisse. we are expecting mr. johnson, the prime minister of the u.k., to address the nation at 8 p.m. u.k. time. his main opponent, the head of the labour party, is saying a second lockdown would be a sign of government failure. what we are talking about at the moment is not a lockdown, but extra restrictions being put in place. we will have to see whether that works or whether there is a second lockdown. here is mr. stormer right now -- starmer right now. tarier: the second thing i learned is the crisis reveals character like nothing else. ♪ ♪

>> we react a little less aggressively, i think that will lead to higher inflation, higher inflation expectations and we will wind up exceeding the target. if there was ever a time you thought maybe the ingredients for inflation are in play is we've got gigantic fiscal deficits combined with a more relaxed central bank and really rapid growth, off the charts rapid growth. so, you probably will get some inflation, i think, even in the near-term over the next year. so, i don't think it will be quite as quiescent as it was before the pandemic. >> you also said on friday that you see as many people do this

massive rebound in third-quarter gdp, people are looking 25%, 30%. and, you said another reason why it's going to help get inflation on track to 2%. i want to ask you a couple specifics about this. it doesn't look like there will be a stimulus package passed before the election and hard to say when it will be passed after. what difference does that make, if any, to your forecast? thinkllard: yeah, i original fiscal package that was passed in march, april, several bills altogether, but the cares act in particular was really calibrated to a bigger shock than the one that actually developed. we are certainly in a pandemic and it is a big shock, but not as big as what we were thinking at that time. doing was ended up

borrowing 10% to 14% of gdp. if you look at current forecasts for this year, it looks like gdp or national household income will only be down 3% to 4%. you really borrow quite a bit to cover quite a whole that is not look quite as big. i'm hopeful we still have enough in the pipeline to push us through, get the growth going in the second half of the year. that certainly seems to be what's happening in the third quarter and will continue in the fourth quarter and the first part of next year. i think we might be ok here. i don't think there is as much of an imperative about a new fiscal package as there might have been in july or as it might have seemed in august or july. kathleen: are you referring to the imperative for congress to do something maybe they don't feel it as much or are you also

saying given all the things you have said about the economy and the stimulus that was already passed, maybe it is not as necessary as we thought? many said -- officials said more stimulus is needed. it would put the recovery at risk. what exactly are you saying? mr. bullard: my point is what people were thinking was that 2020, at the end of the year, household income would be down 10%, 8%, something like that. we went out and borrowed 10% or more on international markets to try to cover that hole. now it only looks like household income will be down 3% to 4% at the end of the year. and we still went out and borrowed 10%. it seems like in some broad macro-economic type of

calculation, we have enough resources to cover that. it's unevenly distributed and there are many issues around exactly how it gets to households and that is very important, but as far as the total size, i think we might be ok and we might be able sustain our coverage. francine: that was james bullard speaking and conversation with kathleen hays. coming up, how do luxury brands adapt to the new covid reality? we discussed that with the chief executive. she's coming up next and this is bloomberg. ♪

francine: economics, finance, politics.

this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to first word news with leigh-ann gerrans. leigh-ann: the u.k. government is telling the public to work from home. bars and restaurants will have to close by 10:00 p.m. holding aninister is emergency meeting this morning. he will make a broadcast to the nation at 8:00 p.m. predicting some new habits will remain after the pandemic. speaking at the atlantic festival, tim cook says he doesn't think apple will return to the way things were but hopes most staff returned to the office eventually. ofi think the vast majority us cannot wait until we can be back in the office again. hopefully that occurs sometime next year. who knows exactly what the date may be. , 15% of ourout 10% population working in the office. at differentce

points during the week as well -- i am in the office at different points during the week as well. leigh-ann: tropical storm peter beforethe coast of texas it comes ashore. it will likely be there for several days, with heavy rain. atlantic's 23rd storm this year making it the most active season. to 1851.ck global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine: thank you so much, leann. an unusual fashion week kicks off today. with covert infections on the are havingon houses to blend offerings.

we are very pleased to be joined lemmi.ela le divelec thank you so much for joining us. when you look at some of the differences that we have seen because of the lockdown, how much revenue have you been able to do in china? francine,hank you, and i'm very happy to be with you here today. we see that china is -- sincevely seeking the start of the lockdown, we can easily talk about the events trending happening in china. of athe repatriation significant parts of the consumption which is to have been outside china. but having said that, it is true as well that in asia, the most s are customer-based market

as well picking up and picking up pretty significantly after the covid lockdown. francine: how do you expect ferragamo to change because of the lockdown? are you going to sell much more online, or are you going to be closing shops and airports? how will he change in the next two to three years? micaela: i think all in all we can say that the situation has already started to change our way of working, so since the try tof the pandemic, we be focused on the key activities that we ran in person. china, on the other side, to diversity activities, we can also act remotely. an entire complete collection, the fashion offer all the design as much of the development team as well as

trying to work remotely and putting the creativity at the service of the brand. all in all, i think what we see now is that there is a diversification of the experience and the consumers are more and more willing to buy safely in a way, but also to give meaning to their purchases. so we see that there is a reduced number -- we strive to be in contact with the customer on a daily basis. i would say not exactly daily, but to keep an engagement with a customer in order to be also able to serve them remotely. a newmeans of course that way of engaging through activities and capabilities. with our customer in the way and in the place they feel more safe. of course, the channel which is asia -- ithe most is

is highly affected. this is something that we are monitoring, and we are addressing. we need also to understand in this volatile market if and when the situation will be able to come back to normal, and what will be the new normal in order company, toor the serve the need of our customers in the proper way. francine: given everything that you've explained, what new opportunities do you see in china? i think you have launched a new e-commerce site in china. you are also very big in korea. doesn't mean you will focus on those strong markets and will he lead to more collaboration -- does it mean you will focus on the strong market in that it will lead to more collaboration? china is one of the leading market --

new e-commerce platform as much as we are trying to take advantage of the digital system in china. a few weeks ago, we launched our marketplace. as much as we are using all the are aannels, in a way we creature of the chinese market. ake the streaming, we have new way of communicating. engaging the customer. remotely. so i believe that we really need the new challenge, a new way of engaging customers going forward. as much as korea is concerned, korea is a strong market, very localized. the customer base is mainly korea. all the markets, where the local customer base is strong, the one in which we want to invest. as much as we need to develop

local customer base in the markets where we are being more dependent on tourism, like europe. so in each market, we will see system -- what the local will be. in korea, we announced a neighbor platform, as well as in japan, a developed line, which means that the number of cash points we had to engage, will increase very fast in the coming months, as much as we already made a lot of effort in order to accelerate these developments in which we know that some of the competitors are ahead of us. you -- francine: can you also give us an update on what you're seeing in the u.s. market, and whether some of the measures you took in place to deal with lockdown could be favorable in 2021? because it is more nimble, and you are saving on costs? micaela: the u.s. is the market

which is pretty much unique. i can say that it is a much more market, but it is also a market from which we need to learn a lot because we see that there are new trends that are coming out now that we need to take into consideration. saw --r the lockdown, we and after all the prophets in the events happening in the u.s., we saw the customer base that is currently working in our store is much younger than before. so we would probably need to adapt the way of communicating and dealing with this kind of customer segment, as much as leveraging on the character, traffic working in our store, in order to have a new layer of customers going forward. what is really interesting as far as the u.s. is concerned is that we have seen that the localization from the customer come as much as we see that we are able now to sell enterprise

items, which are pretty much to a customer who is attracted by the brand and has the first experience with the brand, we are selling also high price point items. so as much as -- so these are seeing,g that we are and the kind of consumer behavior in these moments is very much connected to the meaning which may be associated with the shopping experience, and in that respect, it is absolutely fundamental from a strategic standpoint that the brand is focusing on that, trying to leverage on the customer's meeting, getting new meanings to the purchase because we see that customers are looking for a reason why. luxury product. and going forward, i think that as much as we will be able to

come back to normal, this is something that we see. francine: there has always been speculation about ferragamo being part of a takeover target or the question whether it can survive alone. can it? could the company be taken over? micaela: this is a question to which i am not the right person to answer. the i can tell you is that standalone company in this particular moment, in which flexibility is a key goal to be successful -- we need absolutely to learn that it is in our capabilities to continue to invest in our core values in order to make us relevant again. i think your question, it should be addressed to our shareholder, not to me. much for thank you so

all of your time today, the chief executive of salvatori ferragamo. this is also coinciding with medline fashion week, and very, is showcasing in a couple of this. coming up, the deal between oracle and tiktok looks shaky. will we get a final agreement? we will discuss that next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." deal inbout oracle's taking over tiktok, as president trump says he may still renege on his approval. tona signaled its reluctance approve the agreement as a

threat to national security. the author of "this brave new and thehina, india, united states" joins us. what was decided between tiktok and oracle seemed like an elegant solution, to put it behind them. what happens if this gasoline's -- if this escalates? >> absolutely. things are having me. u.s.-china relations were deteriorating for the past few years, and now they are incomplete freefall, and you're absolutely right that the technology rate seems to be where the issues are joined. the tiktok deal must be so confusing for audiences outside the united states, as it is for us in the u.s. tiktok course is a hugely popular app that my preteens use to choreograph small dances.

their problem with tiktok? yes, theoretically, because of course chaney's companies have to coordinate with the chinese government, so theoretically they could pilfer the -- the chinese government could pilfer user data from tiktok or sensor content on the platform. there's no evidence that that has actually happened, and all of this talk about an american company taking over tiktok, of course, is seen by the chinese as highly biased and anti-china. much more of ais technology race, and is this technology race between the u.s. and china going to last 10 years? are we going to see many more tiktok cases? technology case, and i think that israel. the way the united states could play -- and i think that is real. the way the united states could play this right now with the trump administration is entirely

defensive. wechat, down tiktok and the department of commerce in the united states has put over 300 chinese companies on the entities list -- that means no american company is allowed to export to them, importantly, no one is allowed to send u.s. ed telecom chips to huawei and to others. so we are trying to build a wall around american technology. a much better solution would be for the u.s. and the west to include the u.k. and europe to stand up and say china is really progressing fast in key technologies, especially semi conductor, artificial intelligence, and others come and we need to do whatever we can as a group of allies and friends to make sure that we all remain competitive. francine: does the u.s. approach change significantly joe biden

-- if joe biden's president, or will it be more aggressive toward china and chinese technology? anja: a very good question. i do think the tone and the nuance in u.s. policy towards china would change substantially if joe biden were elected president. where thesome areas biden campaign has said they would like to continue to cooperate with china, in particular climate change, but it is very important. they probably would have handled the fallout from the pandemic very differently, first holding chinese feet to the fire to make sure we got all the information on the coronavirus, and then secondly saying we are all going to collaborate on a vaccine and what we need to do to get through this. in terms of the competition with china, and the view that china often has acted unfairly, and especially under xi jinping has become much more aggressive both on the technology side but also

what you're seeing in the south china sea militarily, with their incursions into india -- really dangerous stuff. the direction in policy under biden would be similarly tough, but the rhetoric would be much, much softer and more nuanced. francine: you have laid it up beautifully, the fact that the west needs a positive response to china's technology challenge. does that also come through with how we spend stimulus money, to adapt certain societies? is that what the u.s. election almost is all about, you change the u.s. composition and the economy going forward? anja: yeah, it does absolutely. what we could be doing with this stimulus -- we're spending trillions. and spent over 2 trillion and counting in the united states, similarly high numbers in europe . a lot of that has gone to income , which is absolutely important. but there are a few steps we

could be taking right now that would make us more competitive with china. for example, ensuring in the u.s. that there are scholarships to study science and technology for americans. longer studys no science and technology. a lot of those people getting phd's in the u.s. are chinese or other immigrants, so why wouldn't we incentivize more positive behavior? why wouldn't we have tax credits for our companies in europe and the u.s. to make the most advanced technologies? there is a whole series of things you could do positively, that i don't really see in our congress. for you in the u.k., i do think that the initiative that was announced on the d10 to work with other countries, 5g and securing supply chains, is a positive one that came out of the boris johnson administration. but i haven't heard much more about it, so i don't know if it has taken off.

those of the kinds of things that we should be pursuing. francine: thank you so much, joining us this morning, anja manuel. the bank of england governor says trending rates negative takes time and will involve quite a lot of technical complexities. up next, we talk about the merits but also backfiring of possible negative rates. this is bloomberg. ♪

take a little bit of time, and there is complexity in it, but it is important. i'm not going to have a yes, we havet says a headwind to do that. that is intolerable. francine: that was bank of england governor andrew bailey discussing negative rates this morning. joining us now to discuss the market is dani burger. what does it seem bailey is waiting for to tighten daily

policy? dani: in his own words moments ago, saw him speaking in a webinar to the british chamber of commerce, daily says he needs strong evidence that certainly rate cuts are an option, that they are going to use should they have to, but he seemed to walk a tight line here, talking on both sides of the coin, that the third-quarter recovery is strong than expected, the u.k. economy recovering quickly, but still saying unemployment was worse than it seemed. comments,egative rate he pushed back expectations that we get those. we saw money markets reflecting, now pricing in a zero rate policy in may. previously they had been in march, really because bailey was saying that they want to have this in the toolbox. it was almost a technical exercise, something that takes time because should they need them, they want to be able to. again, he said that the experience with other countries has been a mixed bag, so really

softening his stance on the u.k.'s plans to use negative rates. he has -- francine: he has talked in the past about the cycle, whether it would be better to use negative rates at all, when it was more in cycle and a different kind of growth pattern. what do we know is the economic impact of the restrictions the u.k. is considering, the 10 p.m. curfew at also asking people to work from home more? there is a report coming out, just looking at the impact of the 10:00 p.m. curfew, and they see 250 million pounds a day, extrapolated out in the northeast of england, but to be clear, that is only 10% of the total impact we saw during that april height of the lockdown in the u.k., but to them, the more important impact here -- and as well as asking workers to stay-at-home -- is a psychological one. have people who are prepared for the first lockdown because they

knew it would end. this makes an end to the various restrictions seem less likely. we have to remember a huge economy is built around people who go to their offices and to go to coffee or shopping on their brakes, francine. francine: dani burger with the on the u.k. the prime minister will else restrictions later today. sterling had a wobble. 1.2820., i'm also looking at crude oil, 39.63. "bloomberg surveillance" joins continues in the next hour. tom keene joins me as always from new york. we will talk about fed chair jay powell. 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: britain in reverse. the government tells the public

to work from home if possible. pubs will shut early. boris johnson will address the nation tonight. worse to come? jay powell says the u.s. economy is heading into uncharted territory. morgan stanley warns that the nasdaq 100 could enter a bear market. and european stocks break the global downward trend. markets tick higher after three days of losses. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. there is quite a lot going on in the markets, quite a lot going on with possible extra restrictions. let's get to first word news with ritika gupta. in all get onto her second. let me do a data check to bring you up-to-date with what happened in the markets. this is what i am looking at for the markets. european stocks are rebounding, u.s. equity futures stabilizing after the declines we saw, tech shares once again leaving the gains and the dolr