aftermath of the pandemic. these include how to set policy in a world of possibly permanently higher levels of public debt and what is the appropriate design of europe's fiscal framework? why sincee reason restarting our strategy review, we introduced the new work stream of monetary/fiscal interactions, precisely to address these questions. conclude. sometried to lay out preliminary considerations that and atding our strategy this stage, as i sat at the outset, it is too early to draw any firm condition -- conclusions. i rather attempted to identify some of the key issues that the governing council will aim to

address in the next few months. one issue onver which i can be decisive today. and i think all members of the governing council will agree with me. we must explain much better to the general public what we are doing and why we are doing it. people thattalk to we do not normally reach. this imperative has to cascade the role elements of our review, our inflation name, our inflation measure, our tools, and their effectiveness, and how we take into account new challenges that people actually care about. the housing costs, but also climate change and inequality. i'm fully committed to that. monetary policy can only be credible, mind you, if we ensure that our goals are truly

understood and shared by the people we serve. i think you very much for your attention. that was christine lagarde, the president of the european central bank with an important speech of about 40-45 minutes. the focus has been on inflation. there are a couple of things we need to look into and we have reaction from laura cooper. ecb willay that the consider allowing inflation to overshoot. good morning to you. i know we listened to that speech together. are we any closer to more easing from the ecb? laura: i think it certainly is the case, but the take away is that it was a very dovish commentary from lagarde. there are two key takeaways i'm seeing. one is that there is this continued willingness to do more because she did note the

fundamental challenges around this low inflation outlook and the fact that they do seem willing to have this inflation targeting regime, average inflation targeting regime, like we are seeing from the fed, because she did note that such a strategy could strengthen the capacity of monetary policy to spur the economy given the constraint of the zero lower bound. the negative lower bound. it is quite interesting because she also noted that inflation expectations are becoming un -anchored. if they were to pursue that strategy, that would be a way to get the inflation expectations higher. i think the market reaction is muted. looking likeis more easing is in the pipeline after the comments today. francine: we also heard from the french bank governor saying he signaled he is open to letting inflation rise above the ecb goal.

without be in line with what the fed is trying to do. laura: that would certainly be the case. the fact that we are seeing core inflation prints, we are seeing these headline numbers come in negative. clearly just the fact of this degree of slack in the economy and challenging headwinds ahead, that it is going to be quite difficult for them to get anywhere near their current target of below 2%, so not even approaching the above 2%. clearly they want to have flexibility in terms of their policy guidance to anchor and ration expectations. aancine: were you expecting

bit more on euro strength. or is a very delicate for central bankers right now? notably after the u.s. debate we did see the dollar catch someone of a bed. at the same time we are seeing reports coming out. there are likely to be challenging negotiations ahead. those assumptions are going to be challenged. given the uncertain backdrop that is unlikely to be the case. francine: laura cooper there from our mliv team. to get more analysis, let's get straight to our emea strategist

from jp morgan asset management. when you listen to madame lagarde signaling that they could overshoot inflation to get to their goal, what does that actually mean for your portfolio building? well, i think laura summed it up. it is all very well saying you would tolerate higher inflation, but the key is that even getting inflation close to its 2% target. what moreestion is are you willing to do? it seems that negative rates are off the table at least for now. they could talk about expanding their asset program. this is not just with regard to the ecb, it is with regard to the central banks. is to maintain these low interest rates and support the government.

whether wey about are going to see governments using low interest rates. that is going to happen, that is going to have economic implications and market implications. what more can you do? francine: what more can they do? will they have to rely much more on fiscal stimulus? fiscal stimulus i guess is there? i think it is all about fiscal stimulus. this is a potent and powerful tool. the labor market ramifications, the overspending ramifications globally were very limited because essentially it is the loss over corporate balance sheets.

we maintained a decent level of economic activity. i think fiscal policy is absolutely potent. there are going to be waves of spending that are going to have more impact than others. i think europe at combination in place. it is employment support schemes doing a very good job of keeping unemployment low. they are also complementing that with long-term visions in terms of spending. they have been providing the foundations about how to build that better and stimulate recovery. i would say the shape of the fiscal stimulus and europe is adequate. we may over the coming months find out it just needs to be -- [indiscernible] francine: we had the first u.s. presidential debate. we have the ecb. there is a lot of news out there. what did actually change the markets or what could be a

catalyst for a correction? is that the u.s. election? is it just more volatility to come? how do you see the next three months going? >> yes, you are absolutely right. we are going to know a lot more by christmas on multiple fronts. after 4.5ow that years of trying, the eu and the u.k. can achieve a brexit solution. we will find out if there is a medical solution to covid-19. we will find out who the president of the united states is and how that will shape relations with the rest of the world. there are key events that could lead to some big rotations in markets. and so what we are really advising clients is just focus on balance. it has definitely been -- the policy backdrop, the political backdrop has been volatile this year. let's be mindful of some of

those risks. they won't necessarily be downsides. all of those factors could create a very strong q4. just being balanced so we are not too heavily tilted toward a particular style or particular region given that cocktail of uncertainty we are facing. francine: karen ward from jp morgan stays with us. we bring you up to speed on all you need to know from last night's contentious presidential debate in ohio. >> everybody knows he is a liar. >> you are the liar. last in your class. >> mr. president, can you let him finish? >> he doesn't know how to do that. >> right. >> the wrong guy, the wrong night, the wrong time. ♪

>> if we would have listened to you, the country would have been left wide open, millions of people would have died, not 200,000. and 1000 people a day are dying. he said it is what it is. it is what it is because you are who you are. >> many of your democratic governors said president trump did a phenomenal job. we got the gowns, we got the masks. he would not have made ventilators. now we are weeks away from a vaccine. >> get out of your bunker and get out of a sand trap and get out of the golf course and go in the oval office and bring together the democrats and republicans and fund what needs to be done to save lives. >> you could have never done the job we did. you don't have it in your blood. we are going to deliver it right away. we have your military that delivers soldiers and they can do 200,000 a day. >> this is the same man that

sent by easter this would be gone away, by the warm weather it would be gone, like a miracle. by the way, may be inject some bleach in your arm and that would take care of it. francine: some highlights of the first presidential debate. but what does that all mean for the markets? which for the markets, candidate has a better chance close to november 3? i find a healthy degree of skepticism about the polls, not only the night before, but certainly as many weeks out as we are and a lot can change. in terms of the debate, i think perhaps what would have been comforting would be to hear

about infrastructure plans, policy, spending plans postelection, but clearly that is not what we ended up with. it was a much more personal discussion and the only thing the market really got is this idea of a contested election. and that puts ongoing uncertainty which is something that it is hard for investors to deal with. francine: so, if president trump has a second term, what is the for fourositioning years of a trump administration? >> i think the only thing you could probably say, at least the initial market reaction would be that the market would probably think it is good for domestic u.s., it may not be good for the rest of the world. that will be the initial market reaction. we have been here before. trade wars are much easier to talk about.

the economic ramifications for the u.s. are trying to cut out china. it comes back to bite at home. thatnk that will be relative story. the u.s. versus the rest of the world. it is a common narrative and we have been there before. francine: wouldn't a movement of the back of a second term for president trump? the targeted action of the eu , just how the eu is interlinked with china and broader emerging , it has done a good job reorienting its economy. strives andpe

europe asset markets strive when we talk about synchronized global recovery. if it was the case that the markets started to question that synchronized global story or if we were looking at a more hostile trade, i think that is when european markets could suffer in that environment, but i don't necessarily think that is a given. it may not be a priority for president trump if he did get his second term -- he has tried trade hostilities before. it did not play out in terms of how it affected his domestic economy and domestic stock market. particularly if he sweeps and gets control of both houses and he has more options with regard to domestic policy. i think it is very difficult to say anything with much certainty about either of the candidates are what they are going to mean

for markets. it is going to be a lot of learning another day and see what happens. coming up, the future of u.s.-eu relations. interview later in this hour. this is bloomberg. ♪

this is "bloomberg

surveillance," i'm francine lacqua in london. let's get straight to the bloomberg business flash. laura: shall is cutting up to 9000 jobs as coronavirus accelerates a companywide restructuring. reductions expected by the end of 2022 and the aim is to make an annual saving of $2 billion. the ceo says he wants to build a more streamlined and competitive organization. jobs ins cutting 28,000 it slumping u.s. resort business, one of the deepest cuts of the covid-19 era. it affects theme parks, cruise lines, and retail businesses. 67% of those being terminated are part-time workers. some disney parks are open and it still has not got clearance to open flagship resorts in california. francine: let's focus on the u.k. and boris johnson is braced for a defeat in parliament over his controversial plan to rewrite the brexit withdrawal agreement. the u.k. prime minister has also

been warned by conservative lawmakers that he also faces a rebellion on his covid regulations today. ward from us is karen j.p. morgan asset management. how do you deal with u.k. assets right now? we have all this uncertainty with a growing rebellion within the conservative party and then we face a brexit deadline. >> yes, exactly. it is the perfect storm in terms of the u.k. outlook at the moment. our core assumption is still that a brexit deal does get done. the deal itself is looking increasingly narrowed. it is still going to be disruptive. but my car assumption is that compromises are made on both sides. certainly four key sectors, strategic industries that need to maintain that flow of trade and there is agreement on regulatory alignment in those sectors, but i think both sides will also agree to transitional

arrangements just to ease the burden of the day one change for all those companies that will be affected. let's face it, there is a lot going on for businesses right now. various --g that the very pragmatic approach will madet in compromises to be on both sides. i could be wrong. i think it is easier to think about the ramifications for sterling than it is necessarily for the u.k. stock market. if we were to see a narrow deal go through to the upside, may be in the region of 6% or 7%, certainly against its major counterparts. on the downside, if we were to see no deal and it was a more disruptive outcome at year-end, we would see 10% off sterling. how that translates is a little bit more tricky. i think it really depends on the extent to which the market perceives this to be a global event and it is going to damage global confidence and global

sentiment because three quarters of ftse 100 revenues come from outside of the u.k., so if the rest of the world is unaffected and it ends up being a u.k. problem, the ftse could do quite well. but if it ends up being more isbal, then i think that more necessarily assured. there is another element of uncertainty. quickly, if there is a no deal brexit, is that automatically inflationary? u.k. iuld say for the think it is. it will be quite a significant supply stock -- shock. if there are not transitional measures that are put in place, i do think the decline in sterling, the rise in import see will main that we do

inflationary pressures in the short term. the only question is the degree to which demand suffers at homes which stops those price increases filtering through into something more sustained, but initially, i would think so. francine: thank you so much for today. toing up, we bring you up speed on all you need to know from last night's contentious presidential debate in ohio. much more with us shortly. this is bloomberg. ♪

francine: chaos in cleveland.

president trump and joe biden's first debate, 90 minutes, and they candidates class on everything from climate change to covid. -- the is set to inflation rate falls further below zero, adding that more needs to be done, christine lagarde argues for inflation dynamics. shed up to 9000 jobs as the crisis takes its toll. good morning, welcome to bloomberg surveillance. i'm francine lacqua in london. we'rerkets, partly what looking at christine lagarde and partly looking at what we also heard in the debate overnight. this is the picture overall if you look at the european stocks, definitely under a bit more pressure after the delivery -- after the debate. it was an acrimonious american presidential