staff in london to work remotely, reversing course after the u.k. government appealed to britons to head back home if they can. temporary powers. ecb's yves mersch says the central bank risks legal trouble if it tries to extend crisis flexibility to its regular bond buying. and battery day with no sparks. elon musk disappoints as tesla fails to unveil any major innovations, but it does promise a mass-market car by 2023. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. tom, our other top story, moments ago we found out that j.p. morgan is looking to move about 230 billion dollars in assets to germany. this is in case they don't get passporting rights when negotiating with e.u. when it comes to the end of the brexit transition. $230ey do transfer the billion, they will be one of the

top banks in frankfurt. a brexit debate almost. there is huge symbolism. when you line up the five banks above j.p. morgan in germany, they clearly have a european heritage and they are the lone american bank. francine: we will have plenty more on that. others will follow suit. let's get to first word news in new york city with ritika gupta. prime minister boris johnson is warning difficult months to come for the u.k. in an address to the nation, he , theled to britons tightening of rules coming with higher enforcement and tightening -- said we do not need this stuff and we should leave people to take their own risks, i say these risks are not our own. tragic reality of having covid mild cough can be

someone else's death knell. andka: republican senator trump critic mitt romney says he supports moving forward with a confirmation vote, all the crushing democrat hopes for stalling and nominee until inauguration day. president trump plans to announce his pick on saturday. the u.s. pound -- to keep the government operating through -- the bill now goes to the senate. prevent ae would government shutdown just before the november 3 elections. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm ritikauntries, gupta. this is bloomberg. tom: thanks so much. i cannot convey enough, the

shock of what the prime minister said yesterday about shifting to march of next year. that will clearly be my theme through the day, including speaking with richard clara do. you see -- richard clarida. you see it through the data, with equities up 17. the safe haven is convoluted, to say the least, with gold down $22 in the short-term, and dollar stronger. the story of a complete reversal 94.04 weak dollar belief, . sterling was a 26 handle moments ago. that gets your attention as well. it is a most interesting market, francine. francine: it is. i'm looking at european stocks. they are rebounding. i'm also looking at dollar rebounding. treasuries higher. i'm not seeing much to do with europe, but we had a good interview that paul gordon the ecbus, worried that

is worried about the temporary powers because they will get a spot of legal trouble. it has not moved euro, but something to keep an eye on. gold slipping. running us to talk about these markets, but also to talk about what we heard in the ecb and the legality of how to do future crises, we're are joined by david riley, bluebay asset management chief investment strategist. i want to kick off with ecb because we had a pretty punchy mersch, ecbth yves executive board never, saying they would get a legal trouble if they tried to extend the bond buying plan. how does that limit what the ecb can do from now on? david: it is a challenge either thethe ecb -- as we know,

pandemic emergency purchase program has been extended to the middle of next year. i don't think the market is expecting that it will be expanded, expanded through to 2021, and there is a challenge there, but i think we had a blog a little bit while ago from the chief economist who said that even if the pandemic came to an end, and hopefully that is the case by the middle of next year, but that is still a pretty big if, then the legacy and the scarring and the economic impact of that would potentially persist beyond the -- that would justify continued pandemic related emergency support. i don't think this is really suggesting the ecb is completely sort of boxed in, and i think they still have some room to

maneuver. but i think it is highlighting .hat there is a debate going on we are getting mixed messaging coming from different members of the governing council. do with: what do you u.k. assets right now? it is clear that banks in london have halted a return to the office. and that is covid related. then we have this other brexit news, that j.p. morgan is set to move 230 billion dollars in assets to frankfurt because they worry about passporting rights. david: i think the outlook for the u.k. has looked pretty poor for some time. contracts byomy around 10% this year, so it is one of the hardest hit by the pandemic from an economic perspective. part of that i think is because the u.k. economy was not in a particular good space coming into this crisis either. to, the as you alluded

brexit concerns. , which shift of assets is reinforcing what we have been seeing more generally, which is that banks have been shifting pastor balance sheets to europe -- past their balance to europe. the other news that was reported yesterday was that, for example, lorries do not have the paperwork in the event of a lack of a trade deal to actually be able to ship goods across the channel into continental europe. so it is hard to get sort of bullish about u.k. assets. a deep value equity market, and sterling i think has got 20 of room to get meaningfully weaker if we don't -- has got plenty of room to get meaningfully weaker if we don't have progress in terms of

negotiations on brexit, and the deadline for that is coming up over the next several weeks. tom: david, tom keene in new york. good morning. a seismic change -- none of us have framed out to march of 2021 x vaccine.andemic how does that change your portfolio management to know that we have challenged these economies without fiscal stimulus out to march of next year. david: good question, tom. what it has done in terms of our thinking, something we have been debating a lot, that at what point do you start moving more decisively into what is a , --alled reopening trend reopening trade? a so-called normality trade? transport, airlines, leisure, gaming, hospitality, hotels,

etc. -- which actually have not really -- actually they have obviously lagged with the broader markets that we have seen, and potentially there is a lot of value to be had if we get a return, the normality post pandemic. and what yesterday's announcement reinforced by the british government, but i think will become more widely recognized across the northern hemisphere as we go into winter, is that is not happening anytime soon. that is at least another six month away, so it is too early to go into that reopening trade. so that means we are staying with the things that we like, each means more defensive, higher quality -- which means more defensive, higher quality. you bringing in duration bonds? it is fascinating how you bring the bond call here versus prime

minister johnson? do you bringing induration? david: we don't have a large positioning.ion -- [inaudible] tom: we have audio challenges with david rally. -- david riley. i don't know if it is my ears or is set up. it comes backa -- up sharply, 1.27 25. you heard david riley speak sterling. week the weaker the vice-chairman of the fed in the 8:00 hour, richard clarida on a robust evolution. this is bloomberg. good morning. ♪

>> i think it is likely more fiscal support will be needed. >> i think the next package should be much more targeted, focused on kids and jobs and areas of the economy that are still hard-hit. >> the recovery will go faster if we have tools, continuing to work together as they have so far. >> we are inclined to allow for additional looks ability on the money that has already going out to state and local governments. >> we need to reopen the economy so people can go back to work, and in a sustainable way. tom: an important conversation,

the federal reserve chairman and the secretary of the treasury. if there is a pandemic, and if it is extended, what is the place of fiscal policy? david riley is with us. i want to get in front of our conversation with the vice-chairman today. fiscal policy to the rescue. let's begin with the united kingdom and the urgency there. do you have optimism that you will see fiscal relief extended in the united kingdom? david: it does seem that the u.k. government is considering extend the either job protection scheme, the furlough scheme in the u.k., or introduce a short sort of short time working -- a sort of short time working, of the kind we see in countries in germany. in the u.k., the furlough scheme

support comes to an end at the end of october. , companies areow having to decide if the furlough scheme is coming to an end, we are going to have to start providing some redundancy. so the government is really running out of time and i think they need to make an announcement sooner rather than later. tom: what does the yield space tell you and our central bankers about the ability to reflate? vice-chairman clay rita has laid out the hopes and aspirations of the central bank to migrate yields higher with inflation higher. do you see that? david: no. skeptical,is deeply and that skepticism is no greater than in the bond market. central banks can, including the fed, get inflation not only to their target, but actually for a

period of time, moderately above their 2% target. that skepticism was a little bit fomcorced at the last meeting because the fed does not forecast that they will get inflation above 2%, but they also didn't signal that any more policy action was going to be forthcoming. i don't think they are waiting, in part because of what is going to happen in washington in terms of the election but also in terms of fiscal policy. howcine: on the election, will that move treasuries? david: that is an interesting question. i don't know if there is an easy answer to that. post election, it will depend on the electoral makeup. the presumption is that if there is a democratic party clean sweep of congress and the presidency, that we will get significant fiscal stimulus package, other things being

equal. with pressure on bond yields. i think that is a little bit too far away. i think right now what it is, it is quite a meaningful source of political policy uncertainty and the deadlock we are seeing in extensionsnow around . i don't think the markets are going anywhere. the central banks are a backstop, but we don't have any kind of incremental policy stimulus to drive markets higher, and the economic news from here is probably going to be on the disappointing side, as we have seen with the european pmi's, marginally disappointing. i think we're past the best in terms of the recovery part -- the recovery path. francine: in the u.k. there could be an extension -- i don't know if furlough programs have some kind of support, but given that there are so many new

restrictions to try and contain covid, we are expecting more on the stimulus side. effectively a lot of the stimulus is running off, so what we are expecting and anticipating is the u.k. government will provide some furlough extension, but it is going to be probably a less generous scheme, a less -- less significant in terms of the amount of public spending. think morew, i do generally, of course, within europe, more generally i think we have seen both germany and funde, and the ee recovery more kind of sustained and coherent fiscal policy response, which has been the more positive narrative around. but i think fundamentally we are in a situation where the pandemic isn't going away. it is going to be around for at least another six months, even if we have a vaccine announced by the end of the year, where we

are not going to get much more, at least near-term, from the u.s. in terms of fiscal support and i think from central banks at the end of the year. a lot of the good news has been priced in in terms of the recovery. so i think we kind of go sideways, and that the u.s. election is potentially big source of volatility for markets. tom: what is the language of negative rates right now? i mean, we get what prime minister johnson spoke of yesterday, which you just stated, six months without a vaccine. do negative rates must happen or could happen or should happen? what is the language you would use? david: i think in the case of if united kingdom, i think ,here is no resolution and deal word on brexit, post-brexit,

e.u.-u.k. trade relationship, then i think the bank of england policy response to that would include negative interest rates, and i think that is where they are going to keep their powder dry. that the righted measure -- but i think it is the to they would likely respond a no deal brexit outcome. so i think there is a way for that. and more generally, you're seeing other countries like new with the potential for negative rates. i think this underscores your previous question about where the bond market thinks we are going. it doesn't think we are in an inflationary world. it is getting that central banks can meaningfully increase inflation, and i think the central banks at some point are probably going to have to provide even more in the way of support.

for a lot of central banks, which are near zero in terms of their policy rates, then it would be to go to negative rates. much,ne: thank you so david riley. business,rom the sports, and entertainment world. speakers include ursula burns. in bank of america chairman -- and chief executive brian moynihan. that is at 7:00 a.m. in new york, 12:00 p.m. in london, and this is bloomberg. ♪

ritika: this is "bloomberg surveillance." here is the latest bloomberg business flash. the lofty goal of making a $25,000 car by 2023, according to tesla. this cheaper car will be available by cutting the cost in half with cheaper car batteries. the news came as the company's so-called battery day, but it lacks the sizzle that companies have come to expect from elon musk. joining goldman sachs in pausing the return to the u.k. office. appealing to britain's to work from home. the banks as critical work is supporting customers in branches and will continue to do so, but that most staff will remain at home. that age-related number business flash. tom: thanks so much. equities, bonds, currencies, commodities.

equities lift, dow futures up 96. the vix extort neri, from a 30.30 1 -- the vix to aordinary, from a 30.31 26.6. francine: sterling dropped to a two month low after we heard from the foreign secretary that the second british lockdown cannot be willed out. we will look at the markets and we will also focus on, change with a great new article. we will be speaking with mariana mazzucato. she is coming up next, and this is bloomberg. ♪ give you my world ♪

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time in 2020 and prime minister johnson yesterday with a bombshell, what to do, it's simple, read the value of everything. the value of everything is an extraordinary book, walk-through andcertitude of economics looking at the hope forward and possibly a measurement of society we are thrilled this morning. mariana, there are so me things to talk about, and your report and essay on climate change. the prime minister yesterday put the march of 2021. are our societies prepared for the economic damage of a pandemic of another six months? >> we have to ask ourselves what did we learn. prices no.

we are failing to actually structure the recovery funds in ways that really stronger systems on the ground. we should go country by country to see how we better resource our health care workers, the health care system, but make sure the recovery fund are both strengthening's the system but the underlying model. >> you talk about the economics of hope in your book. politicians are hoping right now. how do we do the hope of economics while providing income support? i don't see that in america and it is in question in europe as well. about the need to

rethink value, and health is a perfect area. when you have a public health system where we only know how to value the inputs, the cost, that is why we often talk about the cost of health care. we don't see it as an investment for the future. this need to revalue what matters to make our economies healthier, more resilient, but i think we should call a smart, healthy, green deal. it's not enough for a green deal, it has to be a healthy green deal. that makes our economy more hopeful without changing the structures on the ground it's, the business, corporate , but also theel too littlehimself, too late. we have to build, create, croak create -- co-creating with the private sector, shaping markets

to be more sustainable and stronger so that when we get to these crises, and there will be one for sure, you can react in ways that are not too reactive. francine: let me go to your piece and project syndicate mightyou argue the world need to lock onto tackle climate change. or another, radical change is inevitable you say. you say the task is to ensure we achieve the change we want always sought the choice. what has held us back so far? you talk about public-private partnerships, but do we have the right people in government to make the bold decisions you argue are needed? >> it's easy to look at government or just the private sector.

what i've been doing in my work for some years is pinpoint the changes we need amongst all of the different economic actors. in the book we were just talking about, i talk about value collectively created. let's look at the creative actors. finance continues to mainly finance itself. in the u.k., something like 80% of funds go back to the financial sector and financial concerns -- finance insurance real estates. we can talk about business models, stakeholder value all we want, but many companies continue to be short-term s's and folk -- short-termists. share buybacks continue to escalate at the expense of more longer ran investments. we can talk about the robots taking away jobs, but if done investing -- invest in the skills and people, the investments to govern these transitions, we are in trouble.

the figures are stark with the climate. last year, the intergovernmental panel on climate change argued we have 10 years left, yet it is 2019 -- 10 years left until climate breakdown is irreversible. in 2019, fossil fuel companies were estimated at $20 billion per year in the u.s. and 50 billion per year in the european union. and the fund allocated to energy gmpanies to the -- from the countries, 66% -- even those numbers doesn't make me think we are actually moving. -- i haven'tad looked at the numbers, but if those are the numbers, then why? is it difficult for the people that give out the money to see what they invest in? -- there's focus on

definitely a lot of these. you don't need me to come on the show to tell you that. let's focus on the government side, at least one of the people trying to change how governments operate. it is quite striking that in a moment, just like the financial crisis, we are taken by government into the system to stay about this crisis. very few countries put strong --ditionality's, governance government putting conditionality on the companies receiving the funds. mccrone was one of the courageous and said we are not here to bailout industries, we are here to transform it. the car manufacturer and air france, but they got tour owes conditional on carbon reduction. they were conditional on not using tax havens.

in the u.k., we gave a massive handout with no conditions attached. for the latter, that is the rule. the first i would say is that governments have to be more courageous and remember there is a deal. and we don't often get the right deal. tom: let's do this. so much to talk about about these historic times. later, richard clara. with our first word news in new york, ritika gupta. >> pressure is rising on the u.k. chancellor to set out how the government intends to protect jobs and businesses to the ottoman wisdom -- and autumn and winter. they previously warned the current level of support is not sustainable. jerome powell is calling for further support for the u.s. economy, seeing it has a long

way to go before fully recovering from the pandemic. he made the comments during testimony to the house finances -- financial committee. -- oversions overwrote a replacement for ruth bader ginsburg. president donald trump and xi jinping classed during a virtual united nations general assembly meeting. the u.s. president used a speech to accused beijing of polluting the oceans and lying to the world about the coronavirus. his chinese counterpart head back, slamming leaders who try to politicize the virus. global news, 24 hours a day, on air and on quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta and this is bloomberg. ritika.: thank you, we will talk about belarus shortly. coming up shortly, the former prime minister of sweden at 6:30

york.:30 a.m. in new this is bloomberg. ♪

tom: "bloomberg surveillance," and good morning everyone. futures up 16, dow futures up 199. at 33, butarling decidedly weak over the last number of days. it's a spectacular book, richard hoss's the world. it's a required walk through the history of economics in this case. ato, i can't say enough about the book. the secret for the book is like

lagarde, to france, to washington. she grew up in princeton, was forced at gunpoint to study physics by her father, and we are thrilled to have her join us, even though greatly associated with england and the continent of europe. income -- to explain why income replacement or relief is so difficult for all in the western world and particularly difficult for your united states of america. mariana: first of all, i did not study physics. i wish i had. my father does nuclear fusion and argues the only hope we have [inaudible] let's not go down that line. income support, one of the interesting things in the u.k. for example where the follow -- where the furlough scheme, the government paid 80% of the wages for people staying at home, it is interesting to see there were make sure thato

once that was up people would not be fired by the way. with all of these kinds of support, including the ones i mentioned before, for businesses and for citizens, we need to restructure these schemes to think about the after and not just the need. otherwise we get bandages. i think you are much more alluding to the revival of the discussion around universal basic income, and i think that is right. we need to make sure there is a floor under, which people do not go. humank that is what rights should be about. one of the things this crisis has highlighted is that working conditions really matter. if people have these scanty contracts with no benefits, so as soon as things get locked down, their whole life gets

locked, that doesn't work. tom: how do conservatives, whether voting for biden or trump, how do conservatives learn to trust government to affect these programs. mariana: as i'm sure -- programs? mariana: as i'm sure you know conservatives love government as long as it is doing what they want. this has never been about more or less government, we are talking about what kind. even deregulation is a particular type of government, government to steering in a particular direction. that's why i often say let's remember economic growth is not just a race but a direction. let's talk about that directionality. an ultra financial iced form of growth, which the u.s. has had, that was a cause of the , thatial crisis in 2008 requires a lot of government activity to move towards a financial eyes form -- fina ncialized form.

this week, we should be talking if we want a green transition and more sustainable form of growth, more inclusive form of growth, also innovation-driven growth. what are the types of private and public investments we need? this notion government is just there to fix market failures, set the rules of the game, and get the hell out of the way does not work. we would not have any technologies we had in our iphone, had there not been investmentive public in the internet, gps, touchscreen display, all of the things that make our smart products part and not stupid. francine: i want to talk about you helping the government to reshape the economy. this government, the just epic onto government, has not had -- no other government has had as much cash as this -- has had as much cash as this one did.

if the money is spent unwisely, it will not do that. you need to not support the old jobs but create new ones. this becomes tricky, right, for a government to put in place? mariana: yeah, tricky is a euphemism but a good word. of primecial advisor minister conte, and it has been a fascinating time. just for your viewers who don't now, this is an exceptional time in europe, because when the european commission released recovery funds before alongside the famous troika, they were conditional on the member states having to promise to cut their deficits. this is the first time the conditions around the next generation eu recovery funds, the total amount of recovery is 2 trillion's, but the next generation use about 800 billion, that is conditional on investment. countries have to come up with a plan around especially climate

and visualization in order for these funds from europe to be really stand land within the countries. i am hoping italy comes up with their own plan as well as help. a building on plans that actually exist but giving it more substance, framing, and overarching, mission oriented approach. i worked with the european commission to redesign some of their innovation funds, be less dispersive, and to be more mission oriented. having a mission around future mobility in country or carbon neutral cities will require lots of investment across many different sectors, as different as transport, real estate, construction materials, and nutrition. coming back to government capabilities, how do we redesign the tools on the ground and leverage governments have with procurement policies. and pure pure meant budgets are

huge, -- procurement budgets are huge. you could call these goals moon shots, i'm not a fan of the word because it tends to look like a silo project. if you think of what got us to the moon, that was a lot of activity across many different sectors and systems. tom: our mission is to go to break. that's what we do on television. [laughter] thank you so much. the value of everything, i can't say enough about it, of course with ucl in london. futures have a nice lift up, 19. i will say the dow leading the way, but that will change -- that's my change and we will have to see. i bloomberg radio today, feldman on the uproar in washington. our interview of the day. this is bloomberg. ♪ ♪

>> this is "bloomberg surveillance." i am ritika gupta with your bloomberg business flash. j.p. morgan chase is moving about $230 billion from u.k. i had a brexit. that will make it one of the

largest banks in germany with less than four months to go until the brexit transition period expires. national banks have been beeping up operations in the european -- beeping up operations in the european union. nike is bouncing back from its pandemic slump. the world's largest sportswear maker returns profit for the quarter, boasting far better revenue than expected. that was held by growth in china and sales by e-commerce. nike valued in late trading, giving a boost to other activewear companies as well. amazon is telling echelon fitness to stop selling the prime bike, an exercise bike promoted as a collaboration with the company. it is not related to amazon prime, and they are working to change the product branding. no comment yet from echelon. that's your latest bloomberg business flash. tom: thanks so much.

we have had 4, 5, 6 once-in-a-lifetime events. that means it is a good time to ourak to not send the lab -- next guest. here is our interview. >> you hear a lot of people complaining about money and the general process of renting money. i share your concern, but there are something few are saying, and that is the [inaudible] born?s a crisis it is like there like a forest fire to eliminate -- that's early that should not be there and accelerate the evolutionary process. so it should go bust now, and the cost will not be high on the shareholders, owners, and lease, everyone.

-- employees, everyone. so you fail early, that is the process by which those who need a favor by do allowing them to fail early. what the fed has been doing is the reverse. this should not be around, and eventually it will happen. stop that, they will and that is not part of the discussion. this country got strong because they had the highest rate of bankruptcy, because there's a high rate of bankruptcy in america. >> so you are speaking about the united states and not lebanon, yes. >> [inaudible] i forgot i was in a 12th-century monastery here. the united states, particularly within the united states tech

sector has the highest rate of bankruptcy, find. by fiddling with this -- plus the other thing is, i don't know if -- on your show when you were discussing the election years ago, and to five years listen, trump may bring socialism to america, you would never speak to me again. donald trump is the first dorican president to universal income and require --porations they bought paper of companies. that is not socialism. making sure everybody has an income is a central aspect of

socialism. we live in a strange world today, and everything is driven by covid. disorder on disorderly times. he is at new york university. futures of 19, dow futures up 230. what we will do as we get ready for our interview with the vice chairman of the federal reserve get an economic briefing with ian shepherdson, which rumor has it discussion on castle. stay with us. this is bloomberg. ♪

tom: this september morning, a

pandemic reset as the prime minister looks to march of next year. barclays another banks in london will abandon their london offices. worldwide, the reality only a vaccine will end this nightmare. prices, achange of under $1900r, gold an ounce, and the aspirations of jerome powell and the fed. later this morning, a crucial conversation with the vice chairman. this is "bloomberg surveillance." francine, the linkage of what we heard from the prime minister to what we will hear from the vice chairman today is absolutely extraordinary. to me, the prime minister change the landscape yesterday with his view for six months. francine: you are right. it is interesting to have