the fed on the need for more stimulus ignite fresh jitters. powell and mnuchin take the stage again today. president trump refuses to commit a peaceful transfer of power postelection. he's currently trailing joe biden in national polls. the election is 40 days away. and rishi sunak's winter economic plan is coming. the chancellor will set out a new crisis plan to protect jobs today. measures could include extending employee wage supports. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. it was pretty stunning to hear that from the fed. i guess not supporting the markets because they worry about monetary policy come of the essential -- the second phase of central banks that they were talking about and what they can do on the physical front. tom: there is so much going on, you wonder what is the cause or the effect and maybe the re-cause. as we were talking yesterday, across all of surveillance, the united kingdom clearly out in front of the debate versus what we see in the united states.

francine: we will have plenty more on that throughout the day. let's get to first word news with ritika gupta. ritika: no murder charges in the fatal shooting of breonna taylor . a kentucky grand jury chose not to file the indictments against any of the police officers involved. a single officer was charged with wanton endangerment for firing into neighboring apartments. the decision has sparked outrage and renewed violence. at least two police officers have been shot. president trump says the supreme court will likely have to decide the outcome of the november election. he's arguing he needs to confirm a new justice to replace ruth bader ginsburg. he's casting doubt on the validity of the election, reiterating his criticism of mail-in voting. idea of challenging the virus is gaining.

the study speeding up research but raises ethical questions about exposing people to a potentially fatal virus. 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: equities, bonds, currencies, commodities. i'm going to go through this quickly. 3.221. you can rounded to 10% if you choose. knew thatnothing, we coming in. oil is an indicator of that stronger dollar, and what we see in the data check is expressed in foreign exchange with dxy up at 94.40. if there is one thing that has changed, suddenly in four days, e.m. gives way, and it really can look at any emerging markets that give way. we focus on turkish lira with

the important bank meeting happening i believe momentarily. 7.71 is new weakness on turkish lira. it's amazing to cem join the developed nations in weakness against a strong dollar. francine: and also there is a turkey decision later today. i know you have been watching the turkish lira very closely, so don't forget that. we will bring it to you as it breaks. i'm looking at a similar data check. stocks are falling. futures are down. this has to do with what we heard from the fed and the warning of more fiscal stimulus being needed, and crude oil dropping below $40 a barrel. that's what we should be looking at. let's get the latest on the u.s. presidential election. president trump has refused to commit to a peaceful transfer of power. -- ifocrat beau biden democrat joe biden wins the election in november. there is president trump and joe biden's response. pres. trump: we are going to have to see what happens.

i've been complaining very strongly about the ballots, and the ballots are a disaster. >> but people are rioting. will you commit to making sure there is a peaceful transfer of power? pres. trump: get rid of the ballots and there won't be a transfer. there will be a continuation. the ballots are out of control. you know it, and you know who knows it better than anybody else? the democrats know it better than anybody else. are ween: what country in? i'm being facetious. i said what country are we in. he says the most irrational things. i don't know what to say. it doesn't surprise me. francine: joining us now is elliot hentov. thank you for joining us. who does this play to? this is president trump saying basically if he doesn't win, it is rigged and there will not be a smooth transition of power. we have never really seen

anything like it in modern u.s. history. does it energize his base or convince the undecideds to vote for biden? we have first of all, never seen it in u.s. history, but we've seen it in emerging markets, so i think we have a how, deep -- knowing emerging-market stands. this is not an electoral play. the idea is not to change public patterns, it is to lay the groundwork for the postelection day strategy. bear in mind, trump has had the most stable approval ratings in u.s. polling history. low but incredibly stable. so this is not about winning new voters, swaying independents. on that front it could even backfire. the remaining small group of sweet voters have not tuned in yet -- of suede voters have not

tuned in yet. both parties are particularly -- but particularly the rnc, the republican national committee, has been fundraising for the legal fund for the day after. instead of fundraising for campaigning, they have set aside a sizable cash buffer to be able to contest in a variety of states legally the processing and certification of the results. francine: if the race is very contested, how will it affect the markets in the days after the election? we have been flagging the u.s. election as a major macro risk this year, and of course we had a global pandemic, so it pales in comparison to the coronavirus. and frankly, for good reason, the pandemic has been dominating market thinking. what is interesting, you talked about the recent market reversal the past few days, and we are still seeing this traditional risk off pattern.

e.m. sells off, equities go down, the yield stays flat. the dollar rises. that pattern is unlikely to replicate itself in november as we get a protracted dispute. what matters is a dispute where markets are spooked in the belief that there will not be certainty by early december, mid december, or come january. a range of scenarios remains wide open, widen certainty as to how a dispute would play out. it is fine, there is a few days of back and forth, and the markets can tolerate that. but i would say about five to seven days in, the end game is not predicable by margins, then you'll start to see not only high volatility but some real risk off pattern. but in reverse, the dollywood decline in parallel. -- the dollar would decline in parallel. fascinating, and

i take issue not from you, but from the punditry, who says that this has not been seen before. anyone who saw the atoms to jefferson trend -- the transition from john adams to jefferson would see it has happened before. impute in a massive fiscal program, whether it is president biden or president trump come in february or march of next year? elliott: yes, i think that has to be the market assumption. frankly, if you look at where we are, you said the correction. overcorrection of 10% is an all-time high. i am comfortable with market valuations. there does not need to be a stimulus now. that stimulus in the coming months, data will be weaker.

whatever president can establish himself in january, there will be a support program to substitute for the missing stimulus in 2020. there will be one frontloaded. by the way, remember, it will be retroactive. how will businesses dip into savings now? some of that will be replenished. you that into market analysis? what do you do with a marketing correction? well, as long as you have confidence that the u.s. macro,n will pass as a the rest of the fundamentalist points will -- both inequities and elsewhere, you have the macro recovery, the vaccine development, and a few other fundamentals that are moving in the right direction, more in the right direction than in the wrong direction. right now policy is moving in the wrong direction, but the

direction points upwards. hentov, stateot street global advisors head of global policy research. henry,up next, janet global chief economist. she is coming up next, and this is bloomberg. ♪

>> equal to 2%. our label market indicators, with them to be consistent with maximum employment in the labor market. so we have been very clear about

that. if you will, that is the whites of their eyes. we want to see actual inflation at 2%. about 11 million jobs have returned, but there is still a deep hole. we have a very high rate of unemployment, a lot of small and medium-size businesses that are suffering, so yes, and additional fiscal support will likely be needed. clarida there, the vice chair of the fed. i want to thank -- for the whites of their eyes. this is the really interesting idea. buried in that comment was the layer that the american labor economy. now joining us, janet henry of hsbc. she and her team right veer -- right piercing essays. on this thursday with jobless claims coming up, i want to go to the hsbc determination of the millions of unemployed that are out there. is it a depression unemployed within this pandemic?

are certainly not forecasting a depression because the policy stimulus that came through has so far successfully avoided a depression. withve seen a strong bank growth in the fourth quarter. it is still a very deep recession, we are still a very long way from a solid recovery. tom: but to the millions of unemployed, jon ferro has talked about the unappointed statistics in the united kingdom, but i would suggest in the hsbc world there is a real question about the employment dynamics that the fed and other banks have to deal with. what is the level of grim that they are? janet: well, the difficulty we have with the data -- you are right, we know there are millions unemployed, the on up limit stats are everywhere. you know, we are focusing on weekly jobless claims in a way that we never have in the past, even though we know there are distortions. in europe, you cannot even see

the numbers because when people are temporarily unemployed, they count as employed. it looks like unemployment rates have risen. in the u.s., the on appointment rate -- we know that there is a lot of excess labor, and that is why we keep hearing all of these calls for a more fiscal stimulus to support labor income, to prevent an ongoing inflation in the economy so that a certain level of demand can hold up, and gradually demand for some of these jobs return. do you worryt about the most? we see in a lot of european places extra boost actions, the number of infected going up. does that hit consumption first, but -- or does it go to bankruptcies directly? janet: well, initially it tends to hit growth. we talk about the pandemic and the impact of it, but the hit gdp is a huge one that we saw in

the second quarter. it was much more about the degree of government restrictions that were put in place. could notsome cases consume certain goods and services even if they actually wanted to. now the second round that we are seeing is -- in some countries, the rising cases, the renewed localized lockdowns, that will impact on activity. based on the pmi services we have seen for august and september yesterday from the eurozone, there are signs that -- social distancing reaction by consumers is starting to hit the service sector again. but it is different in the emerging economies. 90,000 cases a day in india, and they are still reopening the taj mahal. francine: when should we worry about debt? janet: we always worry about debt. you've got to remember, i'm an economist, so at some point, especially in the emerging economies already, there is

going to be renewed concern, if it slows down come about the risk of cap flows, emerging economies, short-term flows with large external financing requirements. even in advanced economies, we need to worry about the level of debt. when the level of debt is high, there is a desire to pay down .hat debt rather than to invest the consumers' desire to keep rates high and pay down debt enough to -- but we have seen from behavior of other countries already, the tax rises can wait. it was a couple of months ago that the u.k. tax rises would be on the way. but instead in the u.k., we are not going to have an autumn budget. we are going to have an extension of some of these schemes. there isn't time in the advanced economies to address what we know is a larger growing debt problem. give us an update on the

unique experience of hsbc in china. relying on the marginal dynamic with china, how is it going? janet: the chinese recovery is continuing to come through. you've got to remember the chinese stimulus has been different from what we have seen in advanced economies, which have been aimed much more at ordering and household incomes. in china, the policy has been more about keeping credit going and directing a lot of the investment into the fixed investment and infrastructure investment in particular. also in china, because they were first in the pandemic and first out, to a large degree, they were able to get production side of the economy -- the production side of the economy back on stream and benefit from the increased demand for some of the things that we needed during the lockdown in particular, whether it is ppe or home computers so that we could all continue to work from home. the chinese recovery is on track. othere than some of the

advanced economies, they have an eye on financial stability. we may not get the huge fiscal's to mills that the rest of the the huge fiscal stimulus that the rest of the world gets. dynamic, is the trade off the core of the united states, when you saw exports and imports, what is that dynamic right now? can we benished or more optimistic? more: china will provide of a lift and global trade then any other country. exports and imports tend to run in line with global trade, but it obviously does matter. it is still the largest economy in the world. that is what we are seeing in the markets at the moment. in cases, bute because the u.s. fiscal stimulus is delayed. if we don't get that u.s. fiscal stimulus, then growth which is already going to be slower in

the fourth quarter, quite significantly so, without a fiscal stimulus, that will be even slower and that will hit demand elsewhere in the world. francine: janet, thank you so much. janet henry of hsbc stays with us. don't miss some of our big interviews ahead. guy johnson will speak exclusively with airline chief executives at the world aviation festival. this comes at the outlook for airlines is turning increasingly grim with new restrictions and dashed hopes for a recovery. that is throughout the day. this is bloomberg. ♪

ritika: this is "bloomberg surveillance." over thes apologized struggle to find -- the struggle to find black executives is down to a limited talent pool. he issued an apology saying they were insensitive and showed unconscious bias. j.p.morgan is set to pay close to $1 billion to resolve market manipulation investigations. record potential settlement involving alleged spoofing. the accord would end probes by the justice department in industry regulators into what are metals and treasuries traded -- that is your latest bloomberg business flash. arecine: this is what we

looking at in the markets. a bit of a downward session when futures -- when you are looking at futures and some of the european stocks. much more than that, they are looking at what we heard from jay powell at the fed yesterday, warning that more fiscal stimulus is needed to sustain the economic recovery, and that also came out in tom's fantastic interview with richard clarida, vice president of the fed. what i'm looking at as well is a bit of -- gold is a bit depressed, and you can see oil holding below $40 a barrel. tom: let's make clear that the fantastic interview was because of lisa abramowicz, who asked him three times about fiscal policy," the vice chairman was clear about the need for fiscal policy. what we have in the data, it is the deepest of the markets. the foreign-exchange market tells so much. janet henry just with us, what david blum has done on hsbc on a resilient u.s. dollar, certainly

not a weaker dollar, rings true at least this morning. index,at big country exit em and x china, the number gets your attention. sterling with a little rally off the shock of prime minister johnson's comments. i want to focus on the deterioration of em, where the you look at brazilian rail, mexican peso, and a beleaguered turkish lira. 7.7 one on turkish lira is extraordinary. ed phelps ofour, columbia is fired up. this is bloomberg. good morning. ♪

>> janet, we were talking about the fed had said and in terms of significance of dollar dynamics. janet, you are also talking risinghe number of cases but the taj mahal being open, which is a story i missed. how much do you worry about emerging markets right now? always tend to worry in the world if we are turning risk off, because any emerging markets that have any external deficit reliant on capital finance, that deficit, particularly if they have any high inflation in the past or whether they are embarking on any kind of unusual policy makes, those are always a country's going to be a little more vulnerable. i also know emerging markets are where the great opportunities are.

even in this extraordinary world we are in, we have higher growth forecast in emerging-market stand for these economies. >> does china become the real winner in this because they got out of the virus much earlier? they seem to have a handle on it, so the economy can be on a much stronger footing more quickly. >> it certainly is coming out the recovery more strongly than other advanced economies, but the difficulty we have at the moment is that when we are thinking about a different country, there are different paths for the story. in some cases, the extent of the construction -- contraction is much more a degree of government . rather than the level cases. what we saw in china was a your coney and locked down in the first quarter and intense

contraction of gdp, but as it ,pread to the rest of the world china was starting to come back. industrial production in particular, and they were producing goods that the rest of the world were demanding. the policy stimulus did not put labor -- support labor incomes in the same way it has impacted fiscal stimulus in the advanced economy, but with private investment starting to improve a public infrastructure spending seeming quite strong, we have seen the recovery -- economy start to recover. china does have the best picture in 2020 and 2021 as well. tom: only go back to the claret comments yesterday, particularly his speech august 31 at the peterson institute without imposing. janet, what is so foundation -- institute with adam pozen.

--et, what is is the reason we are so aware of negative rates because of our predominance of money market funds in our system? also,t is part of it, but when you look back, it is hard to find an example of any ever gone intos negative interest rates that has come out of it. so when we look at, certainly in our outlook for the next couple years, the bank of england talked about the possibility so much. the latest feet from the governor suggested no hurry, something that will come to the country later. we are not forecasting rates from the u.s. or u.k. because of

the reasons we mentioned -- you mentioned. in new zealand, we think we could get -- tom: i want to show you a headline. what is important is the statistic around it. the european central bank is --ding over 174.5 million billion. whether it would be 50 billion bloomberg, under paul gordon's watch, with a superb story today. janet, what is missing in the supply dynamics of giving out many billions of dollars of loans to europe under these targeted loans is the demand for loans. the demand for loans, is it there? not at thisappear point in time.

i think you raise a good point, tom. we talk about demand and supply. worse, get be inflation or deflationary. measures put in place are all about the supply side, keeping jobs, companies and business, keeping the supply side going. the demand, whether it is consumer damond -- demand, is not there. companies will issue vast amounts of paper this year, but cash reserves at the moment demand the funds for investment spending i don't believe is there until there is more clarity about the outlook. francine: is there a danger we are spending money to prop up companies that won't survive anyway or were not healthy companies? >> of course there is. are tense year, there if not hundreds of thousands on companies -- of companies that

don't make it. when you are in the midst of a global pandemic, it's not easy for governments or financial institutions to try to pick winners and losers, because if transformation on the front, the companies that weren't viable are all of a sudden viable again. it's so they can keep them all alive forever -- so they can keep them all alive forever, but at this point when the recovery is so fragile and the best of the upturn is already starting to falter, it is difficult to take those are decisions that may raise unemployment even further or accelerate the rise in unemployment coming through in europe. it's likely we wait for sometime. tom: janet henry, thank you so much, hsbc, sharp there today on many of these themes that are addressed in the middle and late september as well.

quickly, francine, here are moves against the dollar. critically, it does not move that much again sterling. sterling has its own challenging, but a euro here, 116.38 is a breakdown. i looked across eastern europe, .nd i do not see any dynamic this is very much a euro and dollars story. there is a nice chart. it's amazing how our team can dazzle with these charts. you preach and it appears. [laughter] francine: and let's get straight to the bloomberg first word news. is ritika gupta. >> by is asking a federal judge to stop president trump from banning the video app, removing it from u.s. app stores this weekend. this comes as beijing is threatening to kill off the deal over what the media calls dirty tactics. and an american trap.

still aiktok is contentious issue. japan's new prime minister held his first phone call with the southard -- south korean counterpart since taking office. he told moon jae-in they should work to resolve their relations. is the first contact in nine months between leaders of the two countries. officials are reiterating the need for more fiscal stimulus, saying it is critical for sustaining economic recovery, but there is pessimism. congress couldat deliver on a new package. officials are concerned that it won't be ready until next year. 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. tom: thank you so much. on the correction curve, it is a good time to speak with someone with decades of experience. david is joining us from goldman sachs. it's a normal correction and there is no need to panic, it is fine. the vix is 28.99. david later, must watch, must mustn -- david kostin, watch, must listen. this is bloomberg. good morning. ♪

tom: morning, everyone, "bloomberg surveillance". francine lacqua and tom keene. the supply of money coming into the system is extraordinary, 174

billion. news,ro is weaker on the 116.38. one of the phrases here, and this comes from the 20th century, the 1930's, is pushing on a string. joining us now is our chief pushing on a string correspondent joins us now. brilliantly for bloomberg opinion. marcus, the whole things like pushing on a string. string as institutions stumble into the fourth quarter of 2020. what will greet them? what does a q4 of the markets look like? confusionfortunately, in the context, i doubt as many corporate's as the u.k. government -- corporates as the u.k. government like will pay attention to the work from home ruling. the momentum is just starting to build up to the 25%-30% of staff

coming in. a new problem with graduates coming in this time of year, how do you put them into culture, how do you keep the culture going? everything has worked brilliantly as far as technology , zoom, and all of the other manners of compliance issues seem to work effectively from all of this disaster recovery planning the banks have done. however, there is a limit to keeping your business going. tom: the model here was there was a bridge and we are supposed to ignore everything, waltz over the bridge, and the bridge was out there somewhere. where is the end of the bridge for marcus ashworth? [laughter] marcus: i think this goes back like procedures are going to be difficult this time. i think the u.k. economy will

the firsto 20% in quarter and then straight back to zero in the fourth quarter if this continues at this pace. i do not want to see this into the first quarter, no one does. i think that is where we have a real issue where scarring will done on a permanent -- will be done on a permanent basis. the cities and towns will feel like the worst. francine: what is the market looking at right now? there is a shift in tone for market participants going from expecting a recovery from questioning the basic assumptions of the recovery that had underpinned the rally in the last couple months. marcus: i think that's important to look at, particularly in europe. the euro benefited hugely for the perception that the euro -- that europe is doing better than the united states. that's no longer the case. the difference between europe is not quite so obvious.

see the central banks at the moment trying to dry down and this is about dollar strength. why do we have dollar strength? this is not good news dollar strength. it's a little protection and the little panic. tom: that's why i love having marcus on. i will be that phrase to death for the next week. this is not a good news dollar. francine: with royalties, markets, what you do with some of the havens? i'm thinking of swiss franc, yen, how will it be for the swiss national bank to try to defend this currency? marcus: you're exactly right. i worry. i think we have -- tom: i think we have some audio problems right now. a good perspective right there, ashworth driving the dollar index to 94.54.

i have to get the chart out and see where the level is. the euro off the european news, weaker, 116.36 on the euro. this is an important conversation with the governor of the central bank of norway. we will do that here next. important, timely conversation, mainly rates unchanged. futures are negative seven and this is bloomberg. good morning. ♪

francine: this is "bloomberg surveillance," tom inferencing from london and new york. central banks ruled any -- it ruled out any increase in rates for years to come. joining us now for his first broadcast interview of the day -- isaste and olson, governor olson. do you think, given what you said today, you are diverging and you see things differently

to other major central banks? i think just now they're not that many differences. a we go back to march, we had different situation, a policy rate of 1.5. given the pandemic, during the winter and spring, most of us are now close to zero. have taken a we number of, let's call them unconventional measures, measures linked to monetary policy. that is what we have done for quite some time. governor, talk to me about inflation. would you become tribble with inflation overshooting from the with- be comfortable

inflation overshooting from the fed? >> one brief indication of that is that it flexed -- reflects having a flexible inflation target. we have our own version of what you can call inflation targeting with sufficient focus on the real economy.he we have been flexible with achieving a specific number for the inflation. keene in new, tom york, thank you, sir. -- is dollarrength strength intrusive upon you? resilienceersistent in the dollar, does that limit

the norwegian toolkit? that's a hard question. we have not enough small open economy, and when the -- moves, our currency and others move as well. [inaudible] i think there's no drama. it's nothing similar to the situation here in march or we had to intervene for the first time since the late 1990's. in our view, in the current well, closeng quite to normal, we are in a very different situation. tom: when i look at the advantages of norway, and we understand hydrocarbons and such, you have your own fiscal

calculus. tell us about the fiscal pressure you face, given the surge, relative surge in unemployment near 5%. are you the last nation you would think so, under physical -- are you, the last nation you would think so, under fiscal pressure? as a central bank. >> as a central bank, there is no pressure for many authority coming closer to what we can call contributing to fiscal policy. as you know, our consideration is that we have abundant research. [inaudible] so yes, fiscal policy has been [inaudible]

but unlike other countries, we assets.ets, huge francine: when you look at some of the imbalances that may be we have served because of ultra rates for longer, is there anything we are under appreciating? is there anything you worry about we are not looking at yet? are always things to worry about from our point of view. we are an extreme -- in an extreme situation. i think we all have to worry about the pandemic and how it develops. developments in most countries, including our own, have been quite worrying this summer. that made uncertainty. sharp downturn a

in our economy, like many other countries, and that has been handled by secret policy and monetary policy, which in our case has contributed to downturn. there's always more specific worries as well. one specific area we mentioned in our recent report is, so far, have had ay we downturn in the housing market, beenusing prices have somewhat stronger than we anticipated in the summer. but that's a worry is that growth continues, tuned by low a rise inates and debt by households.

we have to focus on that, but so far, the development in our country. tom: thank you for joining us. we appreciate the visit each time the norwegian central bank speaks. governor olson is from the norwegian special bank -- central bank. in the fixed income markets, the stereotype is it is asleep. it is not. bor down. stay with us, this is bloomberg. ♪

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♪ go your own way your wireless. your rules. only with xfinity mobile. tom: this morning, the stock markets, at the point of

correction. can equities find a bid? is there anyone that does not want the dollar stronger? suddenly emerging-market currencies are weaker. the turkish lira is flat out grim. this morning, newly unemployed claims, and michael mckee will explain that with double and even triple counting we don't know how many millions are unemployed. with 40 days until the election, five days until the nor debate, trump and biden battle in the battleground states. good morning, everyone. this is "bloomberg surveillance." from new york, francine lacqua in london. the chancellor will wander out with something all of america desires. tell us what his goal is this morning. willine: the chancellor want to lay out how he supports the economy.