set to tighten u.k. restrictions after a spike in coronavirus cases. written's other hat -- britain's other headache. a crucial summit takes place used -- tuesday. president trump speaker pelosi blame each other for lack of progress with 22 days to go until the election. trump trails biden in a national poll. welcome to bloomberg surveillance. i'm francine lacqua in london, tom keene in new york. there's a lot going on. we have christine lagarde speaking later. we have the brexit deadline. we're something like 22 days away from that november election. i'm being told three days after halloween. tom: you buried the lead, francine lacqua with an exceptional panel. it will be a virtual meeting,

virtual intelligence with francine as we drive to the world's challenges coming out of the imf. what is amazing to me today, just one observation, it is incredible in the major media on a monday morning, 22 days into the election, how joe biden's schedule, how his policies are buried. it is 100% trump, top to bottom, in the zeitgeist. you wonder how vice president biden manages that in ohio over the next 24 hours. francine: i remember at the all hasg, telling us it to do with a referendum on president trump. tom: never seen it. francine: turnout on november 3. plenty more on that. let's get to first word news with corinna mitchell. corinna: president trump and nancy pelosi are blaming each other.

republicans are having a hard time with pelosi. pelosi called the offer grossly inadequate. the two sides are about $400 billion apart. even if there is an agreement, is not certain republicans would approve. neel kashkari warns it needs stimulus. the economic recovery has flattened out. he says we will see a slow ofrovement with thousands businesses going bankrupt. senate confirmation hearings begin today for president trump's supreme court nominate. will keep herett personal views out of ruling. democrats are concerned she will rule against abortion rights if she is confirmed as expected. in the u.k., prime minister boris johnson set to increase restrictions to contain the spread of the coronavirus. he will announce the new tiered system of alert levels.

global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm corinna mitchell. this is bloomberg. tom? tom: thank you so much. bonds like today, he nine states closed for the columbus day holiday. we trade in equities, red and green on the screen right now. futures, as nasdaq well, s&p futures up 10 points, let's call it. the dollar is weaker and it is weaker in an interesting way, 93.15. we had a 93.0 on the a moment ago. 118. 11.nds out does china act over the weekend over the renminbi? -- that goldman sachs is talking about.

francine: that's a good question. we're no weight near the moves we saw. a lot of the market participants are focused on the prospect from our stimulus, but also improving corporate earnings. the central bank took steps to restrain the recent rally elsewhere. we have crude oil declining, dollar steady and treasuries are close for u.s. holiday today. let's talk about the markets, the faultlines we can see in the future. joining us now is the co-chief investment officer. thank you so much for coming in. does it all depend on stimulus and stimulus in the u.s.? andrew: i think the markets are focused on stingless. you had the reflationary moves we've seen in the last couple of weeks, really since the presidential debate. i think you can see the markets pricing in the higher

only of ay and not biden presidency, but a democratic sweep taking the senate. and that kind of context, you know, rather than worrying too much about whether there's stimulus before or after the election, if there is a very solid outcome for the democrats, then the market will be anticipating their fiscal package quickly. bidenuture president would get through the inauguration. francine: andrew, what does it all mean for treasuries? where do you expect treasuries to be in the next couple of quarters? andrew: i think they'll probably be very range bound. you have the clear signals from the federal reserve that it's going to be different in the cycle compared with their efforts if you years ago to tighten policy. the anchoring affect of

short-term rates. swing factors, something we highlighted at pimco, developments on covid in terms of vaccines and treatments and fiscal policy, not just in the u.s., but globally. so, you can think of an environment where you have better news on covid, more fiscal stimulus in that kind of context. you can see yields higher. you can see yields higher, anticipating this on a biden election victory. and [indiscernible] central banks anchoring the front end, but the markets pricing in more reflation further outing the curve. we're positioned for that kind of outcome in our portfolios. tom: wonderful day for economics, a nobel prize here. we'll give you full coverage of

that. michael mckee will stop by. so much of the understanding of economics is on the x axis. you talk in your wonderful new essay about the long climb. did we grossly underestimate the length of the x axis to come? andrew: we think it's going to be long. we think that the end of next year, or early in 2022 is when we may get back to the levels of gdp that we were at at the start of this year. so, it was a short recession, a massive short recession, but a very long climb to recovery. the other thing we are concerned about, call it economic scarring. there's going to be impacts in terms of labor markets, in terms of whole sectors of the economy, where it may be very long and difficult recovery.

this goes back to the fiscal question. part of the reason to try to do more fiscal stimulus is to avoid big rise, period of unemployment. people lose skills, order to get back to work. the same in the corporate sector. clearly, the hospitality type sectors, transport phase very difficult challenges. so, our baseline will be it's a long climb to recovery. the upside risk related to breakthroughs on covid, fiscal policy. but also downside risks related to this economic scarring. tom: andrew, then, to take it back to a pimco phrase, the new normal, with the new new normal, do we have a an understanding of where gdp is? do you ratchet it down? or can there be an optimism china and the rest will drag us forward to a better outcome than

what the new new normal will describe? andrew: so, i think the next couple of years, we're still in this new normal environment, new normal 2.0. and i think in terms of growth rate, in terms of central bank policy rate, in terms of expectations for interest rates, you have to move all of this down. the markets have done that. so, i think the next couple of years, we're in this post covid recovery. where it gets interesting, and it's hard to invest on a long-term view. the where it gets interesting is in a few years forward, if you get to a point where there's better news on the macro front, there is a semblance of upside in inflation risk, and what happens in terms of fiscal policy? how does it react then? at the moment, it's easy. you have fiscal dominance. the interests are aligned.

everyone wants the same thing, filling in this whole we've got -- hole we've got. the more difficult challenges would be if a couple years forward, you have the fiscal policy aimed at getting over the long-term effects of the scarring at a time when you do have upside inflation, upside inflation risk. we never got to this point in japan, when there was a real conflict, but we make it to that, particularly the english-speaking countries. francine: when is that a problem for? when do we start focusing on what you're talking about? is it twelve-month down the line, 18 month done the line? will it take longer? andrew: i think markets are forward-looking. for the moment, you're filling in the hole. there's not a lot of concern about inflation. i do think you can get to a point a year from now where hopefully things are looking better on the macro front, much

better on the global health front, and then you start to ask questions about whether there's going to be a real conflict here. newof our speakers, the advice to pimco was mark carney. if you remember 10 years ago at the bank of canada, when they promised not to raise interest rates after 2008, the data got better and they did. the year from now, maybe looking forward, you may get these difficult trade-offs. at a minimum, i think one thing we can certainly say is we've had a long period of low volatility, macro volatility. we've had 10 years in which financial assets have done much better than macro outcomes. looking forward, beyond the covid recovery, there is no necessity that you have an ongoing period of low volatility, low macro volatility.

it may well be we have a much investmentult to than the one we've been living in the last 10 years. tom: andrew to get us started on this columbus day in the united states, and in a lockdown debate united kingdom. we're going to continue this debate, an important week for the world bank. on the9:00 hour, challenges facing the world bank amid the pandemic. stay with us from london. from new york futures, red and green on the screen. this is bloomberg. ♪

♪ >> the data is very clear.

the strong recovery we saw in june and july has really flattened out. the virus is climbing now again around the country, especially here in my region, in minnesota, the dakotas, wisconsin. so you're seeing consumers fall back. unfortunately, we still have a long way to go in this pandemic, and that means we need continued assistance. tom: the aerospace engineer from minneapolis, neel kashkari, with margaret brennan on face the nation. you can. on bloomberg radio. this is hugely -- you can hear it on bloomberg radio. this is hugely popular. the inflation dynamic, andrew with pimco. to me, it's the great conundrum, the trans line -- transatlantic divide between the whisper nations and the united states and the europe, as well. how long can that be sustained?

andrew: so, we've seen that in the past. the u.s., the u.k., and others outside of the continental european union have been better at generating inflations. inflation expectations were already low in europe, such a long up a of low inflation expectations. it seems reasonably likely that will continue. that said, i do think there's been some relatively positive signs on european growth. this year, the european policy response, we may be less pessimistic at pimco on the european outlook. so, that could lead to some greater reflation in europe over time. time,ell, it can be over but the fact is we see a disinflation and an inflation. is it a partition of goods and services?

or is there something else going on, for example, productivity? andrew: so, i think you had this big hit across a number of sectors, so just technically, you have certain sectors with very low inflation. it'd be great if there were signs of high volatility growth. if that could happen coming out of this crisis, that would be a great positive. i'm not sure i'd leave much room for that kind of optimism at the moment. and you have a big sledgehammer in terms of labor markets. that is going to keep inflation, which is already been pretty low in terms of wage inflation, pretty low. so, i think on the u.s. side, as well as the european side, i wouldn't have any great expectations for inflation in the next year or so. youthe longer-term period, can see more positive outcomes,

higher inflation outcomes, and there are some things we can do in portfolios to kind of position for that. one of them is just having curve steepening positions in bond portfolios to anticipate the market over time, pricing in these more reflationary, or slightly more optimistic outcomes. you can also attack -- stagflationary type outcomes. the again, i don't see a lot of evidence for that at the moment. sorry. francine: there's a lot of talk about negative rates in the u.k. is it something you are interested in at the moment, u.k. gilts? andrew: i think it's interesting. the bank of england is talking a lot about negative rates. i'm not quite sure why. in the past, they decided it would do more harm than good. a lot of their current to liberation's, i get the clear -- current deliberations, i get the

clear implication it'd will -- it will do more harm than good. we think the negative policy rates do more harm than good. so, the way i intend to interpret it is forward guidance. never say never on negative policy rates. because if we do overtime have better news, it's a way to signal they'll be slow to tighten policy. but i can't quite understand having settled this issue in the u.k. before. i can understand why there's a lot of focus on it at the moment other than the signaling effect. longyields alone, we have taken the view we would rather have u.s. interest rate risk rather than the u.k. we had that in their portfolios this year. it's worked well. better news on brexit, if overtime this is confirmed, provides the, again the impetus

for some higher u.k. yields, but there's a relative value trade long u.s. and underweight duration. i still think it's a pretty good position to have. francine: is there anything, andrew, amongst european bonds? bcp's, bunds that you like right now, that you'd be buying/ andrew: i think bcp's look reasonable. we've been overweight in some of our portfolios. you had a big shock in europe, massive shock in terms of covid, and they managed to have a reasonable response to the central banking side and reasonable response to the fiscal side. compared to the experience after 2009 and all the games of chicken, a more coherent response this year i think is quite good sign. so, having some idyllic exposure

looks pretty reasonable. outlookee europe, our is often one steps forward, two steps back. be flexible. be ready to change the view if, going into next year, there more fiscal conflict rather than physical cooperation, as we been saying. tom: andrew, thanks so much with pimco. see that out on pimco on disruption. dean will join us here on this columbus day on volatility, and things have changed. we finally come in from 29 level. with futures up 13, maybe we'll migrate to eight when he for handle. dean, a path to an 18 vix. stay with us. a nobel prize in economics in our next half hour. this is bloomberg. ♪

♪ corinna: this is bloomberg surveillance. i'm corinna mitchell with the bloomberg flash. to company is looking resolve lawsuits from thousands of patients. it's vowed to fight claims it vowed to overcome the -- move towards settlement. and it is the biggest takeover this year in the banking industry. todi arabia is bank agree

buy it for $15 billion. and that is your bloomberg business flash. francine: thanks so much. coming up, a university professor of anthropology will talk about covid, how we track and trace it and some of the pitfalls that we've seen certain countries do. [indiscernible] a number of infections rise in the u.k., possible sanctions announced by boris johnson -- restrictions announced by boris johnson. this is bloomberg. ♪

♪ this is bloomberg surveillance, tom and francine from london and new york. tom, european leaders stepping up to contain the virus and

boris is expected to announce a boris johnson is expected to announce a new ti er system. we have a professor of theoretical opinion knowledge a. thank you so much for joining us today. as far as i understand it, we need to protect the vulnerable and the rest of us should get on with their life. is that getting traction among certain parts of politicians were certain countries? prof. gupta: well, certainly the numbers of signatures has grown to the point that it's no longer able to display the. last i looked -- display them. last i looked, it was 950,000. so yes, people are signing up for it. so much to sayt come and join us, but let's put this on the table and talk about this as an alternative strategy

in a situation where we are really struggling to find a permanent solution for pressing boris johnson [indiscernible] tracing iscking, and proving to be impossible to affect and also, most important, the cold rural damage is most importantly, -- most importantly, the collateral damage is most profound. population level immunity, the technical term for it is herd immunity. when enough people are immune, the risk to the vulnerable people is low enough for them to also resume normal lives. we think this can be achieved in a period of 3-6 months judging how it plays out in various parts of the world. if in that short period of time, we concentrate efforts on protecting the vulnerable and allowing those who are not

vulnerable to build immunity, which is great for everybody, but also allows those not vulnerable to protect their jobs, education and everything, right? francine: professor, a couple of questions. first of all, how many have to die to reach herd immunity? second of all, we don't understand enough to understand the long-haul effects of people who recover don't die, but left with legacy covid for we don't know how long. prof. gupta: so, very important question. so, how many people have to die to achieve herd immunity? . for question. is solution we're offering hopefully that fraction is very, very low indeed. we live with a number of infectious diseases and they kill vulnerable people, and we have to accept that this happens. but we don't want this, while it's being affected, to kill

vastly more people in excess. we think we can prevent that by putting in place measures of infections, better hospital a short, temporary period of time, having vulnerable people self-isolate, or at least take commensurate protective measures. we think we can get that death toll right down. so that's what we are proposing, is we're reaching herd immunity without people dying. isg covid sufferers, that something that's well-known and rare an outcome of viral infection. is i think while that something we need to pay attention to at the level of primary health care aand -- and also state investment in people who have, unfortunately, got this were disease, it is not a reason -- when you balance it against the 130 million people

who will starve to death who will starve to death right now without these restrictions, [indiscernible] gupta, we are. thrilled to have you on. you are crucial in the debate of the ratio, and the young. do you put a lot of weight in the case analysis that's going on right now? should we focus more on the improving death dynamic and calm down? prof. gupta: yes, there are lots of problems with the analysis of cases. first of all, cases by which mean testing positive to the virus doesn't actually reflect. it's not an accurate reflection of who is infectious. it also depends on who your testing, how much your testing, -- who you're testing, how much

you're testing, and how it can be analyzed. it should be made transparent once it's been curated and analyzed. but if what we're trying to prevent are deaths -- we must be united in that. we must prevent deaths. we need to get away from the notion that stopping the spread of the disease is going to prevent death. it may do so in the short term. but in the longer term, what we want is a buildup of immunity. get youwould love to. back on again. we're out of time. worldwide, over lockdown, over cases, and over deaths in this pandemic. with the first word news in new york city, here's corinna mitchell. corinna: they are expected to

a stingless about check edge -- stimulus package. president trump and nancy pelosi are blaming each other over the lack of progress. joe biden is maintaining a double-digit lead in the polls. a new survey has the democratic candidate leading president trump, 54-42 nationally. meanwhile, a poll by cbs shows biden ahead by six points, and tied in iowa, a state president trump easily won in 2016. and president trump tweeted he is now immune to the coronavirus since he's already had it. but twitter took exception to the presidential tweet on the matter. the company marked it a rules violation for spreading misleading and potentially harmful information related to the virus. and in pro basketball, the los angeles lakers have won their

first nba title in a decade. they beat the miami heat in the best-of-seven series. king james, lebron james, led the lakers and was named the most valuable player. the nba suspended its season for performance before resuming in a self-contained bubble at disney world. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm corinna mitchell. this is bloomberg. tom, francine? tom: this is really interesting and i give a major shout out to the united kingdom and what you've done with premier league. sports in the united states is a complete and total train wreck. there's no other way to put it. the ratings for the nba are down, down, down. i don't have the numbers in front of me. you have to have the name michael to understand this stuff. all i know is that they're terrible. but all these seasons are just

disjoint. they're having an nba title in october? that's un-american. there's other issues like politics and black lives matter, this or that, but i tell you, it is just really strange. francine: it's strange. [indiscernible] it's certainly something that captures the imagination of a lot of europeans. it's so different the way you do sports in the u.s. you should do a whole show on that so i get better at it and you can analyze it. tom: they're going to blow up the premier league, as well. there is your sports report for this morning. coming up, we'll dive deeper into the pandemic, the battle over cases and deaths. michael mckee coming up in a moment on the nobel prize. this is bloomberg. ♪

♪ surveillance, good morning, everyone. i'm tom keene it in new york. right now, quickly in china as we're on the nobel prize watch, looking at the political economics of china. enda curran, strong remember the and action by the chinese. what was the form of action they took to demand enough on stronger yuan? enda: so, essentially what's going on, china has tight control over the currency's value and it's been on a rally and the central bank is taking steps to slow that assent. they changed the rule to make it less expensive. they don't want a one way trade

on it. so the central bank once more volatility in the yuan. but at the same time, they don't want it to become too weak, because it gets around political insensitivity. but they don't want it to strong because then you're courting exporters too much. they are trying for the middle ground at the moment. tom: is a middle ground, but it do with economic growth. there is a published number and the real number. what is your reporting? i'll let you look at the stephen miller china beijing book on the growth of china right now? enda: getting a handle on the specifics is tough, tom, but the broad trend is china's recovery is continuing. it's somewhat steady. we know that the demand-side is slowly coming back. consumers are on holidays, for example. that's what's helping the currency.

it's putting strength on the yuan. interest rate differential, that's attracting inbound money. and of course, china hasn't been putting the brakes on the assent of the one. uan. the -- y it gives the yuan some legs. authorities are comfortable with a strong yuan only up to a point. interesting to see how they handle it from here, especially with an election. francine: is there a worry if they do much more, it will cause panic? is [inaudible]s did tweet their valuation. it caused all kinds of panic. the devaluation triggered a rush

to get money out of the country. a lot of that has been changed since then. it's a reinforced china's capital account, can't move money in or out too easily. but at the same time, china wants to internationalize foreign markets. it wants the yuan to be used more around the world. freeing up the bond market, getting into global indexes. but at the same time, keeping a tight grip on valuations because they don't want to lose control and don't want to trigger any type of panic that will have money flowing out of the country. all indications are they are in a tweet spot. they don't want a one way bet that's maybe too strong at the moment. at the same time, they don't want to send a message they are going to allow the currency to go into freefall. there's a middle ground of trying to balance and, given how stable the currency has been,

they've had a pretty solid year from that point of view. francine: i think last time i had you on, we talked about the divide between suburbia, or places that are more rural in china, as opposed to the big cities. how is that shaping up? are we seeing that gap widen? enda: obviously, it's a very diverse economy. no doubt there's different stories, idiosyncratic stories all around. leno consistently coming out of this, there are a couple takeaways. the manufacturing story has been one. export story has been one. it's been more than a recovery. they're winning market share, china is, globally. we've got trade figures tomorrow which are expected to be pretty good. and then consumer is coming back. some say it's more fragile than you might think. others say they are making

progress. there's no doubt, tying it all together, be it the regions or cities, employment is a concern. authorities frequently make the point they are worried about jobs for young people coming out of college. they are worried about a jobless rate in general. the official jobless rate doesn't capture what's going on on the ground. when authorities are speaking about the need to create jobs, we know unemployment is a problem. tom: enda, thank you so much. this is going to be a huge, huge theme into q4 and into next year, here and people scream about currency dynamics as well. right now, futures up 10. nasdaq futures up 120. futures, now, dow rather, -17. what we're going to do is begin

the discussion of the nobel prize. we'll go to break and hopefully come back with winners. waking up winners. this is bloomberg. ♪

♪ year, veryg in this much they wake up early in palo alto. it is a victory for stanford. among the people considered here was the wonderful work in business economics and organization economics. here with us, michael mckee. no surprise here to see wilson and milgram take this award. michael: robert wilson and paul milgram, professors at stanford, who were experts in game theory, especially in auction theory.

it's a bit of an esoteric nobel, but without a couple of winners along those lines in recent years. they designed the auction that was most recently used by the federal communications commission in united states to determine which phone companies get which cellular frequencies. they also designed an auction to reallocate frequencies from the tv broadcast band to the cellular band. so, a lot of different auction devices they've worked on over the years as partners. silson was actually milgrom' thesis advisor in college. so, they have known each other for a very long time. milgrom is 72. wilson is 83. and they have taken the nobel of economics this year. [indiscernible] this is always interesting, michael.

what i would really suggest with wilson and milgrom is we're an organization. it is so associated with stanford university. michael mckee and i know the work of john cho been an john taylor in monetary economics. when we use the word organization, or organizational in our economics, what do we mean? michael: you're looking at ways to functionalized society in a way that enables prediction. that's what people are looking for. what they have done in economics in terms of auctions is create a system that maximizes values for customers and maximizes revenue for whoever is doing the auction. that was the case in the fcc auction, that raised a lot of money for the united states. francine: we had a wonderful opinion piece by tyler cohen yesterday, saying nobel prizes are attracting less suspense. they're less watched and less in

status. is there any truth to that? michael: i don't know. they year, they criticize nobel prize of economics because it was included by nobel. it was honoring the field of economics in 1969. it's not a real nobel. the point that tyler is making is that we have had so many famous people, like paul samuelson and kenneth arrow, john hicks, milton freeman win it in the past, when you get it down to things like auction theory, it is less impressive, shall we say, than the giants of economics that created the basic understandings of the field. but i think everybody in economics will still agree it is a very prestigious prize, the best thing you can win in the field. tom: let's take a moment to talk about the path to economics. these are guests we speak to

every day and the names we toss around. the answer is, as you're identified as a phd dance, and you and i know that from the economics association, and somewhere in the vicinity of 40, award. john bates clark is that a [indiscernible] i'ts for the best economist under 40 years old. some of the winners have won medal, but most have not. i think all of the nobel winners have been over the age of 55 or 60. tom: you look at the people we talk to, michael, and what we find extraordinary here is the monetary theory, the stuff we grain out each and every day seems to have been ignored the last couple of years. paul: they've gotten --michael: they've gotten into much more esoteric prizes fields because

the field has divided itself into so many little areas. people have become specialists. but they have, at this point, continued to give the prize to people who have been in the business for a very long time. you usually win for something you did earlier in your career. prize, based on the idea of fcc auctions, was fairly recent. francine: michael, thank you so much. michael mckee joining us today on this nobel economics prize. let's look at the data. when you look at data, the focus is on what china has been doing the last couple of hours. the focus is on that and on the weaker remember the. i'm looking at -- remedy -- remedy. european stocks are still rising, of course, on the process of more stimulus and improving corporate earnings. seeing.he latest we're

treasuries closed for u.s. holiday. tom: very good. we'll have to see as we move forward. i should mention, futures up, pushing on 1% of 108 point, with the euro 18.03. we've got much more to speak of through the morning. we're looking at lockdowns in the united kingdom's. we're looking at the politics in america. martin shanker expected to be with us to give us an update. also, andrew will join us from morgan stanley. a good overview. stay with us. this is bloomberg. ♪ so you're a small business,

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sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business. tom: this morning, 22 days to the election, the president is

behind and must turn out white and working-class american will campaign each day, florida schedule today and joe biden scheduled for ohio. advance on the dollar finds new weakness and its columbus day. manchester city, liverpool at a theing point, not futbol, prime minister's and dices lock down. good morning morning, bloomberg surveillance in new york. me inne lacqua is with london. i try to understand what they are doing in the united kingdom on lockdowns and i guess i am not baffled, is this a way to run a country? francine: the problem is the rules are complicated and the rules are different if you are in scotland or