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 dollar extending

his biggest daily advance in three months. let's bring you the bloomberg first word news and the u.k. government is telling the -- to work from home if possible -- telling the public to work from home with possible full to the prime ministers holding an emergency cobra meeting this morning for briefing parliament, thewill make a broadcast to public at 8:00 p.m. local time. the billion-dollar initiative to the polio vaccine around the world is moving to the next phase. over 150 countries and regions including 64 higher income nations are taking part. solutionis to find a to covid a little sooner than we were expecting. pressure onto put alexander lukashenko are on pause. ministers on monday failed to agree. on how to handle turkey's energy

claims in them eastern -- eastern mediterranean. that is global news 24 hours a day on air and on bloomberg quicktake. we will have plenty more on the markets and we will go over some of the other news we are watching. tom, good morning. tom: francine, good morning to you. it is wonderful to be here. what a day yesterday, and the recovery. we saw the big jump in stocks. equities, bonds, currencies, commodities. futures negative six, dow futures -83. we are focused on the vix, which is out at the 30 level, and 28.18 on theay, vix. the bond market, remarkable, that story just unchanging as we see in oil. west texas intermediate on demand, 39.63, still under $40 a barrel.

francine, i will let you talk. strong dollar, turkish lira is beyond difficult, from 7.60 in a matter of hours after 7.65. that is something to watch very carefully. francine: the u.k. government is taking hold of the surgeon coronavirus cases, pubs and restaurants closing early, and the public is being urged to work from home again. thank you for joining us. we were just hearing from the ,ater -- the labour party head saying that if we go back into lockdown, this will be a big failing from the government. it is a fine line, trying to find tune the restriction so that people do not get infected, but keeping the economy open. what will boris johnson actually be judged on? >> he is going to be judged probably first on whether schools can stay open, and

second, on the overall cost to the economy. actually, on both fronts it is not looking very good. we are hearing stories of children being sent home from schools because somebody in there bubble or peer tested positive, then having to work from home in this sort of hybrid schooling. it is not clear that these schools are going to be able to sustain this. if infections get worse through the winter. that is going to be one big test. and then obviously the economy, and we are seeing huge pressure on rishi sunak to extend the furlough. he is now providing more business loan support extension, but it is not clear that what they're are doing is going to be these lockdowns impose -- a big hit to consumer confidence. francine: we don't have enough testing. it seems that there are huge

delays. is the government going to get a handle on that? is the government once again ill prepared for this scenario? righte: i think that goes to the heart of the labour party message today, saying that this time it is on boris johnson. the first lockdown, people understood was due to the epidemiological situation and thought it was temporary. this time a lockdown -- a partial lockdown is coming partly because there has been such a failure in the testing system. labs are not turning testing around enough. could the government have anticipated this? almost certainly it should have. it is going to be very hard for the government to inspire people to come back to work, allow shops and restaurants to operate as normal, and we are still not clear when that is going to be fixed. boris johnson promised 500,000 test by the end of october, but he has made a lot of promises.

tom: tom keene in new york. not that i have ever experienced a last call in a bar, i wouldn't know what that means. but the thing to me that is remarkably illogical is the closing of pubs at 10:00 p.m., my ability to get the virus at 8:00 p.m. or at midnight. this is like cinderella. why 10:00 p.m.? behind 10:00logic p.m. is the main vector for spreading the virus is young people, who spread out into the street. they come in late. but with the smallest impact on the bottom line at pubs and restaurants -- remember, they make most of their revenue from food sales at tables rather than the beer at the bar, so the government figures this way it can still let people out without having too much of an impact. the in the united states,

scientific community is at odds with president trump, to be kind. withis the relationship the scientific community, that we talk to every day, with the government? therese: here is the other disturbing thing. the chief scientific advisor, the chief medical advisor, gave a press conference yesterday where they laid out the scientific evidence, but they did not lay out questions. -- they did not take questions. these are not political figures, but they did not take questions as well from journalists in the journalistsedia or with scientific backgrounds, so they are not that transparent about the data, the assumptions they are making, they are not subjecting them to full scrutiny, and i think that's where the government, if it is proved to be mistaken in its partial lockdown, if it needs to go to a full lockdown, and on many other things, is opening itself to even more criticism. verythank you so much,

much appreciate it, the prime minister speaking at 8:00 p.m. their time. francine lacqua time tonight. coming up, it will not be across the atlantic, it will be here in the united states of america. this is important. federal reserve chairman jerome powell and the treasury secretary of the united states, steven mnuchin, they will testify to the house financial services committee. look for that at 10:30 a.m. this morning. after the two malt yesterday, they recovery green on the screen for the nasdaq. on the close -- that is what we see right now. red and green on the screen. good morning. this is bloomberg. ♪

francine: this is "bloomberg

surveillance." a couple things going on in the markets. first of all, we had basically media reports of what boris johnson will announce at the house of commons, but also later today at a national address at 8:00 p.m. london time, further restrictions on pubs and restaurants. this is the impact on sterling. it had a bit of initial impact. encouraging news out of europe, -- actually come out of the u.s., and technology stocks are leading the gains in europe. joining us now to talk about the markets is luke hickmore. great to have you on "surveillance." when you look at what the market is trying to figure out, how do you price in further restrictions, possible second lockdown, even if not a full lockdown like we had the first time. how difficult is it going to be for the u.k. economy? you saw the market trying to react to this yesterday with a leader stocks getting hit pretty hard.

consumerhat was related areas of the market, it was a tough day, and some of that is kind of getting a way this morning. if we shut the pubs at 10:00 at night, they are still open for most of the day, and other restrictions that we are yet to see how bad it gets. some of the stuff i have seen from the scottish government suggests it could actually be pretty harsh, but very short in terms of its time, which i think we could probably get over pretty quickly. so maybe this short, sharp hit to risk assets in the u.k. could also be short, reflecting the short timescale with the lockdown. how much more pressure are we going to see on pound, given the restrictions of movement, given the closures of pubs at 10:00 p.m., and given brexit? brexit was blamed for a

lot of it, but it may well be more to do with bailey's comments this morning about negative interest rates. if they are bucking for negative interest rates in the short term, we could see the recovery poised over the next few weeks. brexit headlines have been with us for four years. none of this could be a surprise, and yet the currency does seem to get the heavy lifting for it. next6th of october, the important dates for brexit. we may get a little bit of a pausing brexit impact for the pound, and this focus on what the bank of england is going to do could overweight that. tom: thank you so much for being with us, tom keene in new york. i want to talk about tina. there is no alternative. the big pup that we saw in tech was led by apple and perhaps, just perhaps, folks, stepping in on share buybacks. if there is no alternative for the bullish case, is it nothing more than use of cash, and on

any pullback we are going to see companies deployed to buy back shares? really think it is difficult for investors to do much other than think about credit, think about equity. if you want any positive returns, what else can you do? it may be that companies don't backback shares, they buy debt. if they borrow in the spring this year to get their liquidity up because suddenly the economy stops, but actually they did not need as much, we are starting to see that happen. a study recently and some of the other big issue is around the world, they have been there, too. it may not just be equity. the benefits the buyback activity that we are going to see over the next four to five months. if the second wave approves -- if the second wave proves to be really bad, all but could be happening as well. do you that is the case, fundamentally have a bullish stance at aberdeen standard? how do you adapt your portfolios

to the great buyback? luke: from a credit perspective, we definitely have a bullish start for the moment. alternative, really applies to investment-grade credit. i see a lot of buyers around, orther central banks companies themselves. from an equity perspective, it remains difficult. some of the big areas in the market outside tech are still struggling. hang seng left few days have been a storyboard for that. few daysafter the last have been a storyboard for that. but for credit, there is lots to do, lots to go for in the banking sector still. will we get more stimulus from governments? what will that do to the markets? luke: i think we will. bailey was implying it a little bit. the 10 billion he has done in buying credit so far, i think he will do that again. he has reached his limit. when we get into november as a

way of awarding going there with the negative interest rates right now, i think he increases his buying program again in november. the ecb picks up the pace again as we have kind of gone into september, markets have reopened, and the fed again, part of this may be this average inflation targeting may well he having to step up even more corporate bond buying and the large amounts they have done already. francine: thank you so much, luke hickmore stays with us. coming up wednesday, a conversation with the federal reserve vice chairman, richard clarida. york, 1:00 in new p.m. in london, and this is bloomberg. ♪

tom: "bloomberg surveillance." good morning, everyone. we are waiting for the speech by the prime minister tonight on a shutdown versus a lockdown. francine, what's the difference between a shutdown down anti-lockdown? francine: a shut down anti-lockdown are pretty similar. this one is different because it sets restrictions on bars and pubs, closing at 10:00 p.m. to avoid those hours. that aer thing is lockdown would imply what we went through in april, may, june, which is a closure of schools, and this is one thing that the prime minister wants to remain open. he is trying to adapt the economy to minimize risk while

keeping the economy going and schools open to let kids go to class. tom: what a mess. 1.2807. right now, luke hickmore with us. i want to talk about the great mystery out there. we have a huge bounce back, we are going to get a join norma's -- a ginormous gdp number. how does the standard revenue growth in an adult way out to 2021 -- are you just throwing in the towel? luke: it is really tough. i cover the airline sector. you can imagine how hard that is. a finger in the air at the moment. you have to go off of your baseline economic forecast, where you see all sorts of different types of recoveries that are possible, all the lessons of the alphabet that seem to be thrown a bit.

but your base case of a recovery building through 2020 -- you want to be thinking of revenues, may be sub 5% growth just to be on the cautious and safe side for more industries. if you go more than that, your surprise could come in pretty hard. tom: but to the airline business, good luck with that right now. not to pick your brain off of a single sector, but the value of those frequent flyer mile programs -- is that going to be the salvation of the big airlines? luke: we have seen spirit come off the back of it, and we have seen delta come out and do another one, a massive new issue off of their frequent flyer programs, and it has helped them. one of the biggest programs, british airways, they have not done it at all.

they have gone straight to equity. i think that is a better longer-term balance sheet revival approach than selling off what could actually be your family silver eventually. familye: talking about silver, what do you do with gold right now? luke: gold is really tied up with this whole tech story, tied up with peoples fear on inflation. if we see a further lockdown, you could actually see gold pop up a little bit, but i'm not sure it is going to last. nalist.t an inflatio i just don't see that the conditions are ripe for unemployment or -- for inflation to grab hold. we might get a spike going into the spring, but it doesn't feel like we will have anything to worry about until 2021, 2022. in that case, why buy gold? tom: luke, is there any way we

could convince her to share ways to bring back the gorgeousity of the 747? luke: the queen of the skies. they are all parked at my home airport at shelton. it is sad to see. they are not bringing them back. they are too inefficient. they have been around a long time, they have depreciated to nothing. unfortunately, tom, i think you may have had your last 747 flight. tom: killing me. killing me. francine, you are just killing me. francine: luke, please continue. you probably caught that last flight and there probably will be no more. talk in general about whether you see opportunities in general. --na seems to have that seems to have gotten rid of covid-19 in a more sustainable way, at least for now. does it mean you can find

opportunities if you play the chinese market? luke: i think the experience all of asia had has really paid off this time. they acted early, they acted hard, and i think there are more opportunities coming along, whether it is in china or whether it is more about how manufacturing will probably out of china, to kind of relate to what is going on with the u.s.-china trade wars. but from a chinese bond market, there are growing opportunities. we just opened an office in beijing in the last few years, and where finding more opportunities for credit investors in the far east. and there is some really interesting stuff coming through, whether it is sovereign type stuff or pure credit, there are some good opportunities left out there, for a market that hasn't had the focus that the western developed and credit markets have seen over the last 10 years. we are seeing stuff out there for sure. even chinese government bond market, it is still too much 20

basis points more than u.s. treasury yields, probably one for the brave, the government controlled rates, shall we say. much,ne: thank you so luke hickmore. join us later for the equality summit. if day conference. it will foster forward-looking conversations, like influential leaders who are trying to pave the way to advance equality. the coverage begins later, ends tomorrow. this is bloomberg. ♪ give you my world ♪

♪ how can i, when you won't take it from me ♪ ♪ you can go your own way ♪

♪ go your own way your wireless. your rules. only with xfinity mobile. ♪ --nciene: isika: president trump moving towards nominating amy coney barrett to replace roof --

to replace ruth bader ginsburg. of is a favorite antiabortion advocates who have been lobbying for her appointment. barrett is currently a judge in chicago. the bank of england is not close to negativing -- negative interest rates despite proved -- ritika: boe governor andrew --ely it is going to take a little bit of time. but, it is important. [indiscernible] ritika: bailey spoke in a webinar shortly after the governor urged people to work from home again, if possible.

the federal aviation administration's engineers do not believe the 737 max changes are enough according to a statement filed by the union. they feel it should have to adhere to tougher standards on caulk -- cockpit alerts. toy say it could still lead pilot confusion. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. , this iska gupta bloomberg. tom: long ago and far away, i was sitting in a chair in davos, switzerland talking to a bunch of family -- a bunch of handsy people on banking. there was an assumption that there would be mergers in europe and there would be bank combinations nation to nation. that hasn't happened. us --art news he joins

elisa martinuzzi joins us. book valueain wreck, stunningloomberg is a 2.9%. these guys are lucky they are in business. how is the government, with majority ownership of a smaller bank, going to affect a combination of these 2 --? >> i think the one deal that is not surprising that we are hearing about is the deal we are reporting on today. to buyernment is trying up --, which it bailed out a couple of years ago. unfortunately, there is not much -- left in italy who could buy it.

the other big rival, being busy with the phone merger is acquiring a smaller bank. this is the one deal we have been waiting for. time is running out. there is still a lot of uncertainty because -- is sitting on 10 billion a year rose worth of legal risk that clearly nobody wants to touch. franciene: there is so much going on with the banks, what would cause them to catch a break? >> we saw yesterday, in the cen leaks af the fin broad selloff of european banks. going to gete stability soon from the european banks as to whether some banks but theme dividends,

ongoing uncertainty to the level of provisions and bad loans that are building up in this economy are clearly a concern. parts of that are also affecting shares in the last couple of days has we have seen economies and countries go back and to, if not locked down restrictive measures. thisiene: she rich wonderful -- you wrote this wonderful piece yesterday. is there anyone who is getting it right and is affecting share price? >> i think it is hard to tell who is getting a fair price. what we saw in those leaks is that banks now report, flag more concerns about deutsche bank money. ares not clear whether they doing that quickly enough and maybe they are overreporting.

from the european side, there are cases lingering. the best guesses is that the moment, the concern more generally is just another reason to get out. court go back to -- economic theory which is that this is about profitability. asked to pick on the italians, but across europe, is anybody focused on making money? is there any desire to actually profitofit to sustain and grow profit? >> i think you're are being a little harsh. if you look at some of the french banks, the -- for example, clearly the negative rate environment that europe has been subjected to has been -- [indiscernible]

they might want to be more aggressive in that regard, and they can. when there were discussions between deutsche bank and commerzbank with the labor unions pushing hard on the scale of the job cuts. tom: to me, it is extraordinary. bnp paribas i is so european percent book. europe would basically kill francine for citigroup's performance. franciene: i don't know whether this goes back to negative rates are another tax rebate, or just another business model because what they do in finance, there is high finance on wall street, it is widely different from what the european banks do. >> yes, but they often have, the

domestic markets to fall back on that the europeans do not have. i am talking about the consumer market, which is a very commission rich and fee rich market. franciene: thank you so much. elisa martinuzzi. up next, simon hoare. northern ireland committee chair. this is bloomberg. ♪

♪ franciene: -- persuadedffany has the judge to -- it's a lawsuit for canceling its $16 billion buyout. -- u.s. luxury jewelers says jewelry maker says the french giant is relying on a faulty legal pretext to back out of the deal. fortile -- the trial is set 2021. lvmh says it is confident.

unicredit is conducting an internal analysis to assess the pros and cons, but we understand the bank won't be interested if there isn't capital mutual. no comment yet. tim cook says he is impressed by his staff's ability to work from home, predicting some new habits will remain after the pandemic. speaking at the atlantic festival, cook says he does not think apple will return to the way things were, but hopes most staff returned to the office eventually. majority ofhe vast 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 ourbout 10%,

population working today in the office. i am in the office. -- at different points during the week. that is the bloomberg business flash. franciene: theresa may has found boris johnson's plan to break international law over brexit. she says the government didn't really understand the deal. other conservative lawmakers who have criticized the plan is simon hoare. he joins us now. simon, thank you for joining us. we need to start talking also about restrictions. given what has been going on with the government openly admitting they are ok with breaking international law, and the number of restrictions in place that could go up this week as we do with infections whilst trying not to kill the economy, what is the level of anxiety? split onk there is a

the latter point with regards to covered controls between those who are anxious about infringement upon civil liberties. i am not one of those conservatives. thought, school of which i do subscribe to, is that this is a public health crisis. the scientific data and advice and paramount focus on protecting public health has to be the -- franciene: what i am trying to -- without that, it is just that there is a second lockdown. the opposition leader basically says it is on the government because it didn't handle the first time correctly. what are we actually dealing with? how difficult is it? >> i do not necessarily agree with -- assessment.

this is an entirely new phenomenon. we have not had a pandemic on this scale in our history. of last was the spanish flu 1917-1918. this is the first in the modern era. susceptibility has to be the key thing. the gas on,u put and sometimes you take your foot off the gas and apply the brake. fluidity and flexibility is important. i accept that that is disconcerting to the -- to the general public. it can often be infuriating to businesses who are trying to work out their plans. i am afraid this is a week by week thing now, particularly as we are approaching the turn of the seasons and moving into our autumn-winter months where the weather is going to get colder, which is the breeding ground for

respiratory diseases. i am told that some of the data and predictions showing covid and ordinary flu running in tandem. enormoushe most pressure on our national health service. we have to make sure the health services not fall over us a result of the increase in demand. tom: from north gorsuch to the tip of scotland, from the east to ireland, what is the risk of disunion? is there a tangible risk of disunion? >> there is. rampant, in scotland now , whether that is just a kickback -- part of the kick back of things that the government is doing the fact we have a tory government, i do not know. in demographics

with respect to northern ireland. northern ireland, with scotland, both rib -- both voted to remain with the eu. welshman -- there is no mood in wales saying if scotland and northern ireland can have a go at this, what about us? i think we are incredibly uncharted and in dangerous waters as far as the long-term unity of the united kingdom. it pains me to say this as a unionist politician, but we are in uncharted waters. tom: what is the union prescription to get everyone on board? unders the solution here all of these challenges, to coalesce around the union view? first, one has to make, as i

described, the romantic poetic case. the u.k. ares of stronger together, our values are shared, our blood is similar, so we should stay together. the second is the economic stroke. also, this is a problem that goes back to our gap in narrative which really goes back to when devolution was introduced by tony blair. we have failed to make the case runningong devolution in parallel to a strong westminster can deliver the best of both worlds in wales, scotland and northern ireland. i think that is where we have to turn our thoughts. how do we say these are the things that are best and politically? there are certain things that are best done nationally, let us

focus on that and realize we are stronger across united kingdom with those two forms of government working closely together. of course, having differences on bits of policy, but broadly accepting the trust that arelution and westminster not alien, they are two sides of the same coin. franciene: what is the elegant solution for this? there are a number of people from the conservative party who think the government should not break international law under any circumstance. what are the implications if it does? how do you deal with this almost impossible situation? fall within that cap ashcamp. -- camp. i think people still look to the u.k. as a defender and bastion of rule of law, where our word

is our bond. are starting to hear from businesses and other organizations about the ripple effect of the -- of this. i would argue on the flimsiest of premises. that is dangerous. i think it is particularly dangerous if we are seeking to sidestep arbitration processes and put things on a statutory footing. forms of arbitration for any country considering entering into a free-trade agreement with us. moment, the reader cross could easily be landed on this idea that the british government

will abide by international law and its obligations as long as decisions are going in its own way. if it doesn't, and if things come out which the u.k. finds difficult or not necessarily totally in their favor, they will pick up the ball, tucking under their shirt and run home to mommy. tom: thank you so much. we greatly appreciate it. united kingdom conservative party and the northern ireland committee chair. standard and poors of five points. nasdaq leading the way. does, ap, as he often dr. ingles --ith this is bloomberg ♪ .

♪ we should keep the current ofting of said funds -- set

fed rates at 0% until we are well on track to achieve full employment and price stability. that probably is going to take 2.5-3 years. solid growth in the third quarter, a strong fourth quarter, above trend growth in 2021. my own forecast by 2023, and i know that is going out along ways, we could start to approach ,n unemployment rate below 4% 3.5%-4%. if you are a market participant, it gives you a signal you are going to need to take more risk. my concern is about building up access risk taking which could create fragility's and excesses in the system that are easier to see in hindsight that could create issues for us to meet our goals. tom: a strong day for michael

mckean at kaplan hayes. bollard. james i think it has a good chance of working. i think the simple version of this is that the fed will be much less preemptive about trying to raise rates to contain inflation when inflation is below target. i am hopeful we still have enough in the pipeline to push us through, get the growth going in the second half of the year. that seems to be what is happening. continuing into the first part of next year. i do not think there is much of an area about fiscal packages as there might have been. or august.

it seems in some broad macroeconomic type of calculation, we have enough resources to cover this. tom: bullard in st. louis and kaplan in dallas. i love the way bloomberg has committed to this conversation. richard --, the vice chairman will join us tomorrow. that will be an important interview to get clarity on the dynamics. futures up two. futures go negative. francine and i are watching strong u.s. dollar. sterling craters. i am kidding, 1.27%.

♪ >> this morning, the stark --

the stock market plunges. this tuesday brings not relative calm. the u.s. dollar breaks resistance. the u.s. dollar surges stronger. when is ated kingdom, shutdown not a lot down? you will be able to catch the virus before 10:00 p.m. at the pub of your choice. the chief medical officer considers march 2021. mcconnell in kentucky goes radio silent as schumer looks for "the end of the supposedly great deliberative body." good morning. this is "bloomberg: surveillance." justice ginsburg, the battle over the supreme court come the united states economy, none of it matters. francine, explain to our american audience the significance of a 10:00 p.m. pub closing. franciene: