francine: china's economic recovery from the depths of the covid crisis continues. third-quarter gdp rose 4.9%, missing expectations, but faster than the expansion seen in the second quarter. restrictions tighten as virus cases surge around europe. italy is the latest government to add lockdown measures that prioritize its struggling economy. and shifting the deadline. nancy pelosi sets a tuesday time limit for more progress on u.s. fiscal stimulus if the president wants a deal before the election. good morning, everyone, and happy monday. this is "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. the other big story is euronext. because of a technical glitch, stocks and derivatives are not changing -- are not trading on most of the european markets where euronext is present. portugal, the netherlands, ireland, and -- they are. tom: nasdaq is at a solid 1%

plus, so that is a little bit of a lift that is maybe not identified within the euronext. go, kevin cirilli could not sleep this weekend. this is exciting. ranting cap it is exciting. i have been excited for the last two weeks before this because it is the polls, it is the final stretch. how much campaigning are joe biden and donald trump doing in the next two weeks? tom: it is going to be huge. these guys are in the final stretch. money is an issue. we will talk a lot about that. martin schenker joining us in the next hour. what is exciting about this is it gets back to basics. president trump is out there in nevada this weekend. he is in arizona today. francine: there are very few undecided voters from what i understand, and several people have already gotten out the vote. 52% of those are women. let's get to first word news with ritika gupta.

ritika: good morning. in china, economic recovery from the pandemic continued in the third quarter. ago,ose 4.9% from a year less than expected but higher than the second quarter number. china retail sales grew 3.3% in september. industrial production was up almost 7%. house speaker nancy pelosi has set a deadline if president trump once a pre-election stimulus plan. she says there has to be more progress with the white house on a deal by tomorrow. the president has said he is willing to go higher than the $1.8 trillion is team has been trying to offer pelosi. senate republicans may not go along with some things that large. global federal bankers are under no illusion that that through the fallout -- debt grew throughout the fallout of coronavirus. warnings were issued about new government restrictions, struggling recoveries, and the

threats to job. -- two jobs. bloomberg learned that british officials are prepared to water down boris johnson's controversial lawbreaking brexit legislation, a move that could revise failing talks with the european union. johnson's internal market rewrites the deal he struck with e.u. last year. 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. francine: thanks so much -- tom: thanks so much. equities, bonds, currencies, commodities we have a lift to equities. it is all stimulus. the vix flat. 27.50. the nasdaq, as we get used to this number, near 11,000, -- .ear 12,000

rounded up. stocks, i will0 let you try to figure out. no figure out, who is the three stocks in the nasdaq 100. renminbi also stronger today come out to new strengths earlier this morning. francine: jeopardy, i like that, tom. chinese stocks sweeping after the country's gdp was good but still missed expectations, although the move was muted as retail sales and industrial production moved. i will look at pound. this is because of chaz it -- because of exit trade talks are like -- because of exit trade talks next week. euronext trading has been halted, in all products, because of a technical issue. it doesn't mean that all stock markets are closed, but this

glitch affected european marketing builder, fridge, the netherlands, portugal, and ireland's. talking about the movement in the market, aren't guest joins us. james, thank you so much for coming on. i want to ask you about china and about pound. the one thing i'm looking at is the u.s. election, 15 days away. how is the market playing it right now? james: the market appears to be discounting a biden victory. the issue is not just the presidency but who will take control of the senate. as to biden will unveil his degrom -- mr. biden will unveil his program of change, and he needs the senate on his side, and that is certainly not in the bag. i would not be at all surprised if we got a biden presidency but republicans retaining control of the senate.

i suspect that business might welcome that, slowing the pace -- it would allow business to do what it has to do which is to .evelop real long-term growth francine: if you look at -- if there is a blue sweep, and so we have emma kratz taking the senate and democratic president, what does that do to stocks? are certain industry growths going to be adversely affected? james: undoubtedly. three things would happen. first of all, mr. biden would spend a lot of money, but not necessarily a vastly larger amount as trump would spend anyway. and portly, he would put up taxes, and i would suggest we would be talking about $10 of corporate tax pain, the s&p 500 index level, expecting $155 of corporate earnings for 2021.

that would get shaved back to $145. that means a real focus on dollar growth, high quality companies, and decent free cash flow. that is what i have position currently, so it is a good handful of the top tech companies. together with some of the medical diagnostics companies. we are also buying at the moment, u.s. utilities and infrastructure plays on the basis that they are likely to be -- under mr. the biden certainly, and not losers under mr.. tom: what is so important here is your ability to stay in the market. what sectors -- for people afraid, what sectors of the soket now provide comfort that they can participate in the market? james: i would say there are three sorts of stock to encourage people to consider

owning. there would be the solid long-term growth opportunities, and they don't cheap at the moment. in terms of their ongoing free cash flow, in terms of their theyh characteristics, would be names like amazon and alphabet. there are companies which are exposed to secular growth trends but are not as expensive, makinges like strycova, parts. the third area people should be considering our stocks that relate to the resurgence of infrastructure spending. we know that the u.s. market has been on fire. i have considered some of those opportunities to be strong. i think the good-quality certainlycompanies just for consideration, because of change to clean energy, and upswing that i

think the biden administration would bring. tom: that's a date to see the parallel to president obama if we get a president widen. -- if we get a president biden. does that just assume the health care outperform? james: i think that health care is well-placed to perform under a biden presidency, and it is not a loser under a trump presidency. i am looking to find beneficiaries of a shift in policy but not to lose if mr. trump is reelected. francine: what do you do with technology stocks? there i would say that are three sorts of technology stocks. there are those that are disruptive and making money for their investors, which obviously i will put alphabet and amazon at the top. i would say that there are than a series of opportunities which are, from my point of view, still unable to demonstrate that they can make sustained value. i would put companies like uber

into that arena. they are very structured, but i have yet to be convinced that they can make money. the third grouping are the up and comers, the companies that are engaged in delivering new solutions, and many old companies that are prospering very directly from the covid-19 crisis. that peoplehe one use to associated only with windows. it has risen to the fore in audio and business lines along with its media platforms. francine: figuring out what they do if there is a downturn in the economy, meant to put extra oil barrels on the market early next year, plus -- coming back online in certain parts. what do we understand about the stand on-- the biden's energy in the u.s.?

james: we certainly know that biden wishes to keep the u.s. within the paris agreement on climate change, and he would be driving a shift away from coal and away from the heavy end of the hydrocarbon continuum. look atink that -- i the incremental return on capital oil and the oil majors, and it is six distantly poor. i want companies to generate excellent long-term value, but that value is reflected in the share process. i would bet on that next year, and i know his recent thoughts on covid? tom: james bevan, i want to talk portfolio construction and also active versus passive index funds as well. coming up, two ideas here. we will be covering the election a lot, but also a conversation

with the former chair of the federal reserve system's. janet yellen with exquisite thinking recently on climate change and how it links into our economy, and also we must speak to her about hans nichols' report over the weekend. could it be secretary of the treasury janet yellen? look for that in the 8:00 hour. futures up 31. close. francine, go home. this is bloomberg. good morning. ♪

the recoveryinue is anticipated, which will benefit the global recovery. the risk that we see right now

macro leverage ratio is increasing. >> the risks remain very heavily skewed toward the downside. >> the -- what you could take and may you are not going to take in october. the financial system becomes unstable, the economy could fall into -- >> if you were to grasp this after the decline we saw in march and april, the recovery looks something like this. tom: central bankers waxing fiscal, and we will talk to innet yellen about that the 8:00 hour. look for that coming up this morning. away from economics, what to do with your money. tim's bevan us.

what is the active advantage right now? -- a faird talk about round of active management out there. i am hearing that active is doing better. i would say quite simply the evidence that active management works is overwhelming , unless you are too big to who onnt with people paper -- to identify companies that are cheap relative price and overall run, subject to being able to buy enough product. the problems that these markets have is that they simply don't have enough liquidity available to implement in the scale. so i would say that active is now primarily the reserve for the small player, and a large player who prospers has to rely

on momentum where they are able to keep share prices that they already hold. tom: one of the great advantages to alpha gaining on active is that they are less diversified to own fewer things. is that true? james: i would say there is a textbook expectation if you can get away with 30 names, that constitutes an adequately diversified portfolio. i don't think 30 name portfolios have too much idiosyncratic risk simply because there are things we cannot know and do not see. it in a global context is much more likely. beyond that, i think it begins to dissipate the value of really understanding what you will buy and getting exposure with the secular growth trends that will drive things long-term. francine: if the rest of the world is becoming more like

japan, what kind of stocks, what kind of assets do well in a japan-like world? james: it is certainly secular growth. theou were to look at passage of what happened in japan, the government bond market to distort neural well, but th japan bought virtually every bond issued. people who have bonds at low levels continue to make money on the -- the ultimate buyer of course being the bank of japan. but good quality export stories, they were able to deliver product out of japan into the rest of the world, and investors did are seemly well. there are specialist companies that people recognize, market leaders, and that is cane real stock market accrue. francine: how much do you think about the possibility that we

are putting the seeds for the next financial crisis because of depressed yields, people in the search for you'll go into risky markets and risky assets in the next downturn, and this will all end up in a financial system crisis? james: i worry all the time about these challenges. drawnk that the cut that i on the current environment is that we mapped out central banks and governments working together. and working in a manner that is consistent with an expectation that they care about the financial systems. ofnking about prior periods material meltdowns such as in the 1930's, that is when governments and central banks were set on the gold price. now they are much more set on the prices of assets, and the bond levelsdex at are what the government used to compile policy. tom: james bevan, thank you so much. what he said there about

diversification is really important. he is with ccla. futures up 32. euro has shut down with a technical glitch. watson, headrilyn of fundamental fixed income. fixed income, i say, strategy. stay with us on a monday. this is bloomberg. ♪

ritika: this is bloomberg surveillance. we are one step closer to what could be the world's largest ipo. jack ma's group has won approval from chinese relators. they say it can list shares in hong kong and also planned to list shares in shanghai at the same time. the company could raise 35 billion dollars from the dual listing. one of the world's largest alternative asset managers is watching a new partnership with american equity investment life holding. brookdale's asset management will require a 19.9% stake in the insurer. a proposed $3 billion takeover was just rejected from massmutual. third-quarter profit based estimates. a dutch company sees high demand for medical gear in the coming years. the reason, the lingering impact of coronavirus and changes in

the way health care is delivered. that is the latest bloomberg business flash. futures up 32 with a lift in the last hour. where are we? we are above the center tendency back six weeks. toures up 32, dow futures up .26. we are above the center tendency of the last six weeks. are we going to break out? don't ask me. what i can tell you is that we start the week constructively. renminbi stronger off gdp reports. francine: euronext trading has been halted on all products because of a technical issue. tom: it is just a great song. uanou say you i say renminbi ♪ francine: yuan is interesting, if you want to say that, because of that better than expected

story. although gdp -- tom: oh, come on. francine: i'm a harsh critic, tom. u.k. is ready to rewrite this lawbreaking brexit bill, and talks could be restarting and so we see a bit of movement on pound as well. coming up on "balance of power," kenneth benson at 12 clock p.m. in new york, 5:00 p.m. in london. don't forget, 15 days until the u.s. election. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." i know we have to talk about brexit, but i was distracted by

this cat on twitter. that is a whole other story. government officials are preparing to water down prime minister boris johnson's legislation that could revive trade talks with the eu. the bill begins its process through the lord's today. a reallybeen lasting long time through twists and turns. we understand now they are not talking about the u.k. and the eu, but talks could continue later. >> that is correct. bulger left the door open to negotiations to restart friday. and -- areegotiator going to have a conversation this afternoon. the talks will resume. intensifyu has to talks.

suggest it iss to prepared to compromise. that again is something angela merkel suggested the block due friday. two of three conditions have some way to be met. tasks besides the legal -- legal text -- you could see a path to talks resume and but the problem is the deadline is fast approaching. at transition period ends the end of the year. that puts the perspective deadline at the end of october. there is not much time to restart talks. the risk here is that we get to that deadline at the end of this month without talks restarting. francine: australia, canada, all the -- are these semantics? are companies moving out of london and the u.k. because they can't deal with uncertainty? >> they are facing a lot of uncertainty.

the key thing here to remember is that even if there is a deal, he a lot of things are going to change her business. specifically for people exporting into the eu. britain is going to be outside -- whatever happens -- outside the eu's single market union which means goods going across the border >> -- are subject to customs checks. this is something businesses have not had to deal with for three decades. add to the fact they have been dealing with covid at the same time and you've got a lot of unhappiness amongst businesses. week isrnment this starting its advertising out."gn, "time is running unexpectedcan be the like today with west ham and the last one against the spurs of tottenham. what is the unexpected here for boris johnson? what is the westham for boris

johnson? >> i'm going to stay clear of soccer metaphors. is that theed here two sides could be closer than it appears. the twoook at it, issues are fishing and state aid. like they are pretty close on state aid. fishing was always going to be the difficult last one to crack in part because of french sensitivities on that subject. itmay be this is just -- could be that this is the final explosion. -- as a dummyrkel on this i'm like ok, great. is the one because of fishing policy, is merkel caught in the middle? is it somebody else? >> merkel is the one who does look as though she is edging toward compromise. of everything friday, her

comments were the most interesting. she was suggesting there is a recognition on the eu's parts that britain is going to go a separate way. that is going to require a different way of enforcing any agreement. that is a big give from the eu and a sign that may for the first time merkel is prepared to help the british in these negotiations. one recurring theme is that britain hopes germany will ride to the rescue and doesn't. it looks like this time that if not, they are not riding to rescue, there is suggestion they might be prepared to compromise. francine: just to understand on the u.k. site, are they ready to compromise? because it johnson, is his legacy, be ok with going under wto rules come january? he isnson has been clear

prepared to go out of the eu without a deal. i think if you look at michael gove in the cabinet who is responsible for preparations, he has been more cautious about that. weekend, leading without a deal would be no picnic. this would be a very big disruption for business and there would be meaningful disruption at the end of the year. changed theayed -- calculations here. johnson is fighting a lot of political fires now on different fronts. you've got a big argument over government's handling of covid, a big fight between the government and mayors in the north of the country over lockdowns. is brexit one fight you particularly want to have at this moment? that is an open question. francine: thank you so much, edward evans.

let's get straight to the first world news. pelosi has given the is nohouse -- if there more progress on a stimulus package, it won't get done before the election. and thet just the house administration, senate republicans are all looking at the size of the package. rusty says he is confident. -- president trump says he is confident. president trump trying to put a positive spin on his budget deficit. he said to supporters he could raise money quickly but does not want to be beholden to donors. the trump campaign raised a combined -- in september, well short of biden's $383 million. between armenia and azerbaijan has fallen apart. it is the second truce broken by pressure that failed -- brokered by pressure that failed to stop

the violence. violence broke out over a disputed region. opec and its allies meet to ease output cuts. reports .2s internal -- and private, delicate say they are open to an increase in production. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. ♪ ♪

tom: good morning everyone. francine lacqua and tom keene. --have been covering ebony any number of topics. there is one thing that will not go away, the persistency of the pandemic. we are thrilled to bring you from the university of brighton andcturer in microbiology research fellow sarah pitch. thank you for joining us today. idea of seconde wave-third wave. what is not a wave, this resilience, this persistency of this virus? wave is not really a because it never really went away.

it has just come back again in greater numbers. is very resilient because it is very infectious. opportunity for it to be transferred from person to person, the virus will take it. world, people are giving at that opportunity by coming in relatively close contact and allowing it to spread from person-to-person. you are definitive in clinical microbiology, you work with parasites across all of these bugs. you know the number one issue is pneumonia. infection. secondary what have we learned from february and march about the overlay of this virus with pneumonia, and particularly as we go into the winter? >> what we are seeing in this virus, it is not secondary pneumonia. it is caused by the inflammation of the body which is causing the

damage in the lungs. it is not the same as influenza. with influenza, the main problem is a bacterial will come in while your immune system is trying to cope with influenza, come in andial will cause secondary pneumonia. oft is the major cause fatalities with influenza, but not with this one. francine:francine: what we have to understand about why certain people get really bad and in others it is barely a cold? >> there are lots of factors involved. we do not really know the answer. those things we probably won't know the answer to until we can sit down and reflect on all of the information that has come in. they after day there is new information coming in. new epidemiological data. we are just reacting to it.

when it has time died down, we will be able to reflect on all of the information that is coming through and then we might have a better idea. observingent we are these things happening and trying to do something about having detailed scientific explanations of why they are happening. francine: it seems that we were warned at the start of the pandemic that people will have lockdown fatigue, they won't take guidance seriously after a long period of time. how do we get people back on track? >> you have to really explain to them that anyone can catch it. anyone can spread it. even if people do not have serious illness themselves, they can still pass it on to others. it is very infectious. know who istually

going to end up with serious illness. it is true that most of the people that have died have had and/oring conditions have been older. however, young people are dying. what we are coming up with is this idea of the post viral syndrome that can go on for months which they call long covid in the u.k. maybe 10% of people end up with side effects which have not gone away yet. they might go away in time, but it is too early to say. not just is -- we are talking a bunch of fancy theory, we are talking sarah pitt in the trenches of clinical microbiology. it an equivalency to mononucleosis? >> no. [indiscernible] >> possibly.

viralmore like post fatigue syndrome. me and those. sometimes people's organs have been affected, but the main -- there are several different types of things people experience. there is lethargy, difficulty in breathing which you do not get with mono. feeling out of , but for quite a long time it is not affecting all of your organs and all of your body and the way that some people are experiencing. not all. tom: one final question. for is with immense respect the trenches of clinical microbiology.

long ago, i put a stain on the ceiling and they said no, this is not for you. [laughter] what has humbled you in this pandemic? in parasitesass and things we are afraid about, what is the one thing about this virus that scares you? >> scares me? mainly the way people have reacted to it. and the fact that some people are just not taking it seriously and trying to say it is not real , not actually facing up to the reality of it. more giving the virus chance to spread from person-to-person. i think it is something we can it isder control because very -- and itas no sars one went away. tells me, particularly my husband that i am being optimistic and idealistic, but i

think we can get rid of it. do notu've got to go, we allow optimism on this show. universityfrom the of brighton, we appreciate it. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." an extraordinary move during a pandemic, motivated investors find new opportunities to mitigate risk. spoker great voice exclusively. thatworry about the fact rates are so low today, the wind that has been at our back as investors of falling rates, we don't have that. investment rate is inside of 2%. you have duration risks, you are making long-term decisions and you do not today know how long rates are going to stay the slow. i worry that you see rates start to pick up, with i do not think is going to happen in the near

term, but over time as rates take up, fixed income exposures are going to have to be careful because you are not going to get a lot of yield to offset the decrease in pricing caused by an increase in rate. i am cautious about that. >> how does that change the way you underwrite your expectations? >> once again, it gets us back to the difference between the private world and the public world. on our public strategies, we are definitely moving higher in the value chain. we want better companies and better management, strong sponsors in our leverage loan business because we believe those businesses will outperform and grow into their capital structures, or grow into less leverage. that is how we are managing data. on our private side, we are able to jump in there and make -- take advantage of dislocation. if a company is coming to the market, if a sponsor of a private equity firm wants to buy a public company, they can't really finance that in the bank

markets because they need full committed capital. we can step in there and provides -- provide significant capital. we did that for a large chemical acquisition in europe this year where we provided half of the financing they needed before they made their bed, and they went out and stash the rest of it later. -- and -- the rest of it later. this kind of market is where we will be more aggressive. >> was about to ask, in the heat of the pandemic, what kind of risk is not worth taking? you pointed to an opportunity. it is worth asking, what opportunities are you seeing are the most investable? seeing -- i want to be careful. we are being cautious. we have been talking to investors about this concept of cautiously active for six months. as, we describe it that were worried about this pandemic

lead, we do not have great insight as to when we will be back in theaters, so we have been cautious. we have been active because the higher quality names traded off with a lower quality names and we were able to invest in those. the private markets shut down and began to reopen and we were able to invest in that. we believe there is always going to be opportunity. blackstone, ins credit, life sciences and other businesses, we provided $2 billion to a company in the middle of the crisis in the form of a royalty, a loan and equity. that's $2 billion was critical to that company to push through this cycle and to grow. we will always see those opportunities and try to make sure we use the value of our platform, the scale, the broad nature of our products because those things will give us those one-off, take a shot and do

something important in these markets. at the same time, we continue to make investments in the public side. therene: dwight scott with blackstone. risk on, futures up 30. nasdaq 100 doing its usual ballet. yell to come back three basis points higher. 10 year, 0.77%. stay with us. ofis a most eventful end october. a conversation on economics, finance, politics, politics and more politics. christopher of around with a chart of the election. good morning. ♪

♪ morning, thes locomotive is underway as china

delivers economic growth. pelosi and trump deliver stimulus chat. move to breakl, " the logjam." stocks hi, yields as well. from prescott to tucson, the dashes 200 miles. biden will spend 200 minutes and debate preparation. de?about that vo ja are "waitingy they in the wings." good morning everyone. this is "bloomberg: surveillance." 15 days out from the election. how was the election playing in london? does anybody care? are they wrapped up with westham? francine: