lose igweht, look great, and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. ♪ >> the v-shaped recovery path looks very much secure. inseem huge holes blown global economies, and now we are trying to back them up -- to patch them up. > we are in this for the long haul. >> once we get stimulus, once we get a vaccine, the action is going to move very quickly. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. everyone.morning, jonathan ferro, lisa abramowicz, and tom keene. a simulcast, bloomberg radio, bloomberg television worldwide. 15 days to the election, but so

.uch more going on in this hour, chair yellen will join us. i will ask about the speculation of her taking a position within the biden administration. yes, we will talk about climate change and the nobel laureate's process. i want to go to the equity markets right now, and ben laidler talking about a multiple. is this morning the beginning of a melt up? jonathan: not for me to call that. the habit talk around -- the happy talk around more stimulus, maybe. this market just wants to go higher. market participants find a narrative to tell us why is going higher. three months ago, a blue wave was bearish. three months forward, a blue wave potentially is now bullish. i think that is this -- i think that is just the mood of market

because of its right now. tom: what is so important then is to see the china gdp statistic today. 4.x percent is 4.x percent. jonathan: we have been talking about the global economy as one complete entity. there is so much divergence right now. . the chinese economy is really well-recognized. the u.s. momentum i think has been underappreciated. but what is happening in europe, that is truly depressing. that data and that recovery was stalling before the new restrictions that have gone on to places like france, germany, the u.k., italy and spain. the data at the back half of this week, the pmi's did come a little later this week. i think it is really important to get a read on where we are heading. tom: futures up 25. the vix pricing 25.50.

on a look back, we are above the center tendency. there is a lift to this market when you look at the trading envelope or the bands we look at within the equity market. all of that is linked to fixed income as well. what is your read to this monday morning and a fixed income? lisa: that this is all about the central bank, and it will continue to push people in. you see the lowest of junk rated debt rallying disproportionately. last week, and i feel at this is important, the fed balance sheet rose by nearly $100 billion to the highest level since june. it has been pretty much flat for a while, creeping higher. if my schumacher -- if mike schumacher is right and there is very little barrier for them going up billions of dollars with very little impetus, why

the mood and all of the political uncertainty? tom: the swamp we are in in economics and investment leads us to a need for clarity lisa: marilyn watson -- for clarity. marilyn watson is the blackrock head of global fundamental research. she is here ahead of their find out -- i of their foundational position in debt. what is your assessment of the last two weeks? marilyn: good morning. i think what we see is a changing tone to the u.s. elections. lisa hit the nail on the head when she said central banks really continue to drive investor sentiment. i think when you look forward, you obviously have the u.s. election. we have increased fears of a second wave of covid cases globally, and particularly in europe, we are continuing to see further shutdowns across the continent. we continue to see geopolitical

tensions as well. when you look against the fact that investors are trying to find yield, trying to find income, against the backdrop of central banks continuing to really ensure that rates remain low for a very long time, and they could do more. i think we really have this , investors demand have money they need to put to work. theset that, we have ranges of different risk. jonathan: this is the problem for a lot of investors right now, whether central banks can keep investments loose even if economic conditions break down again. can they? banks could central really do as much as they need ecb --ink the fed, the as much as they need to. i think the fed, the ecb have said as much. , and weinteresting now

have seen this in the chatter this morning, the debate around fiscal stimulus. fed seeing itthe as increasingly important. but i think the market as well is really heavily scrutinizing .ow i thing it is import to focus on the fiscal stimulus -- it is important to focus on the fiscal stimulus. they can obviously do a lot more , but on the fiscal side that is really the main question. jonathan: but ultimately, if you believe the central banks can just keep financial conditions loose regardless of economic conditions, i don't mean to go too far with this, do you mean

we have centrally planned financial markets now? does it go that far? marilyn: i don't think they are centrally planned. for that, you would also need to see even greater coordination between the fiscal and the monetary policy as well. that being said, i think the central banks, and terms of what they can do in interest rates, they do have less room to move. they could continue to cut rates. they could go further negative. you could see further asset purchase programs and things. i don't think we are anywhere economy, but you do get to see a far greater coordination if that does happen. i think we are at the stage where central banks are doing everything they can, but really on the fiscal side, we need to know what can be done for them as well. lisa: there's a question of whether buying the risk yet debt

-- the riskiest at at this point in the cycle and default send a link wednesdays is a bet that the federal reserve and the ecb will never withdraw from their support of the markets, and never shrink their balance sheet, never raise rates, at least not in the next two to four years. is that accurate? marilyn: certainly central bank actions have pushed investors further down the risk spectrum, and we have seen some very demandperformance and for high-yield in other assets. i think we will continue to see that. however, i think it is hardest to see the returns we have had going forward as well because we have already seen a huge amount descompression since the wi that we saw a few months ago. investors do continue to look for yield. they continue to look for income. given the risks that we have already outlined, i think maybe focusing on higher quality

sources of carry at the moment, focusing on avoiding too much duration risk given the extension of risk we have seen their, and i think, as you point and looking at defaults what might happen in terms of trajectory, and what we might see in terms of corporate outlooks. i think it is very in focus -- i think it is very important to focus on that part of the world. we will see volatility going forward in the market, but that creates opportunity as well. i think investors continue to demand yield, continue to demand income. you are not getting at and some of the assets. but i do think it is important at the moment to really focus on quality and understand the risks around the assets you are buying. does quality mean, given the fact that there is duration risk? marilyn: it is incredibly

important, but also understanding the risks around volatility, the risks around liquidity, whether there's actually the prospect for compression or price -- i thinkn versus liquidity is one of the most important things we are focusing on now. but when you look at the environment as a whole, duration is the only risk, but it is certainly a very large one. risk, as welledit .s really under understanding the risks of what would happen if it windows her as well. went as well.f it

jonathan: thank you very much. we are seeing global financial assets five times gdp. that would imply that real economies tail. what happens in that determines the reality. the markets can shape the events they anticipate, which is why these markets have been handled and managed right now by central banks in the federal reserve. tom: carl weinberg watching this morning, good morning. he makes very clear, just as you describe, it is about aggregate demand and how you get there. maybe it is markets within commercial banking and big negative rates that gets aggregate demand in europe to be weaker than expected. jonathan: i got a very bearish note from mr. weinberg overnight. did you get that? tom: i didn't get that one. i was too busy worrying about mookie betts. jonathan: i would read car

weinberg. i think maybe mookie betts might depress you even more. tom: weinberg does that. but then there's betts, and look at the tots. jonathan: you know the definition of spursy? to consistently and inevitably fail to live up to expectation. [laughter] lisa: checks out. jonathan: just so you know. i thought we would put that on a red banner on tv. alongside tom keene and lisa abramowicz, i'm jonathan ferro. tom: arsenal, red. why not? why can't we have blue? equities up 0.75%. this is "bloomberg surveillance ." ritika: with the first word news, i'm ritika gupta. it is the largest deal in the shale industry since the collapse in energy demand earlier this year. conocophillips has agreed to buy

concho for $9.7 billion in stock. the drilling -- the deal will create a giant in the largest drilling fields in the permian basin of texas and new mexico. nancy pelosi has set a deadline w president trump stimulusants -- wants stimulus before the election. senate republicans may not go on with something that large. recovery economic continued for the third quarter. it rose 4.9% from a year ago. that is less expected, but higher than the second quarter number. meanwhile, china's retail sales grew 3% in september and industrial production was up almost 7%. the number of coronavirus cases around the world has now hit 40 million. infections have been picking up

in europe and the u.s. midwest. it took six months to reach the -- toto million cases reach 3.2 million cases. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ this is bloomberg. ♪

pres. trump: i love the republicans. they have to learn to stick together. we have some stupid people. mr. biden: i am running as a proud democrat, but i will

govern as an american president. no blue states. just the united states. jonathan: the president of the , andd states, donald trump joe biden from the campaign trail this weekend. good morning to you all. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures with a lift this morning on the s&p 500. we events 25 on the s&p, up 0.75%. 0.77% on the 10 year. some headlines from white house chief of staff mark meadows. he says he spoke to the president about stimulus for an hour yesterday. hopeful for an agreement in the next 48 hours. that's the latest on that front. and i say that half smiling because how many times have we been here over the last several months? tom: i've got a big wall here of

47 tv networks. in paris, not that i understand a word of it. of got fox biz, and i guess that is the conduit for the administration. where is leader mcconnell? jonathan: leader mcconnell was talking somewhere in the range of $500 billion. . i imagine he will listen. he said he will take a look at it. but leader mcconnell has to get it through the senate. there has been no evidence the last several months that he has the votes in his core constituencies in that senate right now to pass a bill of $2 trillion. on the stimulus with jonathan lieber of eurasia group. we are thrilled he can join us this morning. what is the chance anybody is going to listen to the drum and joined the band? jonathan l: i think it is a little late for this right now.

you had the chance for a fairly large deal early in the summer, but with president trump's chances cratering, i think it is going to be a heavy lift to get anything close to a deal through the senate right now. does the stimulus benefit vice president biden? jonathan l: no, i don't think so. i think biden gets done one way or the other, but there's a risk that if it is some kind of bipartisan deal, president trump strikes a few weeks before the election, and that helps him. can you imagine being nancy pelosi, you cut a deal with the president two weeks before the election, and then he wins? i just don't think this is something pelosi really want to do. i think it is really a risk for biden if it happens. jonathan: i am so naive.

i thought policy was about helping the country, not just winning the election. forgive me. [laughter] 15 days to go, and last time around, those polls narrowed 'sgressively in the president favor in the final two weeks. does doubling down on the existing strategy get it done? jonathan l: there's a lot of differences between now and 2016, one being the size and consistency of biden's national lead. it has been seven to nine points since he clinched the nomination. there were points in 2016 where trump was within two, and that is not happening. there's not been much variance. so it would be really surprising to see a titan suddenly without a major change in the narrative suddenly it tighten without a major change in narrative. lisa: let's say markets are

right that president trump loses the election, that former vice president biden wins, that we get some sort of blue wave. our markets adequately pricing -- are markets adequately pricing in a democratic majority senate right now, given where people are positioning? are they gaming this out correctly? jonathan l: i think the variable here is that most of our clients we are talking to are expecting a really large stimulus in q1 of next year. that is positive for the economy. that is probably good for earnings. once you start looking through that, six to 12 to 18 months, that is when you start seeing the tax increases and the new levels of regulation starting to bite. i would expect markets may be a little slow to catch up to that, given that there is going to be a flow of cash in the first half of the year. lisa: you are uniquely positioned to talk about this because you helped craft tax policy under former president barack obama's regime. which types of companies could

get hardest by a new tax regime such as the like that joe biden is proposing? jonathan l: the biggest threats biden is making our two multinational companies. you are raising the corporate tax rate to lower than it was during the obama administration, but higher than today. you are changing the ways that they tax overseas earnings in the u.s. that is going to make it harder for them to compete in foreign markets. i think that in a year or two, once we are under this regime, we will be back to the old days of talking about inversion and losing companies to foreign companies. there will be rules in place to stop that happening, but that is a bad look for the multinationals of the u.s. tom: very quickly here, and very important, on the first wednesday of november, whatever the results are, everybody is going to dash to 2022. what is that going to look like? jonathan l: the democrats are

fairly well positioned, if you look at the senate. they will have the opportunity to redistrict coming out of the census in 2020, which should help them in the house. the trend here is that -- the trend here is that presidents lose seats in the first election. jonathan f: don't worry, i'm working on it. i will get that one day. tom: gerrymandering. jonathan f: eurasia group, united states director. one hour at a time. we will just do this slowly. start doing the 8:00 just lisa and me. [laughter] then we allow 30 minutes with tom. tom: back it up. can you bring my walker over

here? "surveillance"y, senses. jonathan f: that note that came from carl weinberg, want to bring it to you. a miraculous intervention to check this next outbreak. there will be a decline in all of the major economies in the fourth quarter, returning to the low levels of her -- low levels observed in april and may. the big call from this is that the next round of virus will affect our economies directly by shutting down businesses. his point isn't that policymakers will shut down businesses. is that as you get the infection , in anproduction line office, the whole office has to clear out. that is what he's concerned about going into the colder winter months. tom: that is the issue, the weather. it is a natural disaster, and we are moving towards the winter months. interview to interview, that is

what we hear. jonathan: we see it in the northern hemisphere. from london and new york this morning, good morning. a really important conversation coming up with janet yellen, the former fed reserve chairwoman. that is coming up shortly on bloomberg. ♪ - i sent your new prescription to the pharmacy.

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jonathan: from new york and london for our audience worldwide, good morning, good morning. live on bloomberg tv and radio this is "bloomberg surveillance." alongside tom keene and lisa abramowicz i'm jonathan ferro. price action on the equity market come up 26, we advance .75%. adding a little weight to the s&p 500 after three weeks of gains. in the bond market, more happy talk around the stimulus situation on capitol hill. yields higher by two basis points. i know for many of you getting annoyed by the fact that we are still talking about this, my job is to tell you what people are saying. your job if it will happen or not. mix headr euro in the of the data this week. tom: very good. jonathan ferro, thank you so

much. right now steve ricchiuto joins us. this is before we speak to chair yellen. we will speak about the speculation of her future employment in a joe biden administration, and we will talk to her about fancy economics around climate change. before that we will talk about the american economy. i want to go back to the janet yellen slack. she is most identified with the slack in the labor economy with her tenure at the fed. how is the slack in the american labor economy? steven: there is no doubt the unemployment rate is elevated from where it was in the covid environment. you have to remember a good deal of the slack in terms of temporary layoffs has been reversed. in april we had 18 million workers on temporary layoff. at the end of september we had 4.5 million workers on temporary layoff. in september we saw a drop below

1.5 billion workers. as more and more of the economy has continued to open up you see this happening. part of the issue in terms of the slack in the labor market that i think is more important is the slack is bigger than that. it is a global excess supply. during the janet yellen tenure we had been in an environment where the global economy was starting to recover in a nice fashion. in this environment you have two major economies, china and the u.s., where you are seeing positive changes in the direction unfolding. therefore the global excess supply is much bigger than we saw. that is one of the big concerns, the deflationary concerns the fed is addressing. tom: we could go on day -- we could go all day on this. if that is the case, what is it due to global trade and how does that compute into american gdp?

steven: what you are seeing is the currency has to be the equilibrium factor. that is the focus behind the fed policy shift. the fit has to make sure investors understand they will do everything they can to go down the deep deflation path. if you avoid the deflation path, the currency gets weaker. if the currency gets weaker, that helps immunize the u.s. economy from global deflationary pressures and competitive pressures. that is the path we are going down. that is why the fed credibility is so important. looking for the weak dollar, but that is what steeper to talking about. jonathan: it is europe, it is japan, we have seen this movie atjapanese, once you stick zero, you stay there. steven: you are 100% right.

the thing to understand is they will be using things beyond interest rates at this point. the balance sheet is very critical. quantitative easing worked. quantitative easing worked to offset deflationary pressures before and we continue to believe it will work going forward. i think the fed has made that commitment and therefore it will be the balance sheet that helps , a favorite measure on bloomberg in terms of where the currency is. i think we will hit 90 and i think we will eventually trade through 90 and get back down to the 84 levels. jonathan: the only variable at central banks could be the balance sheet. asset purchases. when it comes to interest rates, we might be done. steven: 100% correct. it is the balance sheet. the balance sheet is the primary driving tool. there are also specialized pd's

the fed has created in terms of the covid environment and what needs to be done to keep markets liquid. the real driver and terms of the direction of the currency, the direction of how much accommodation there is is the balance sheet, and i think we have a lot more we can do. in the will do more, if conversation we had earlier about an additional round of stimulus, i think the fed will be willing to purchase all of that. if we do it $2 trillion deal, the balance sheet could go up $2 trillion. of theinancialization u.s. economy. if we do not get a fiscal deal come in a vacuum, how much of the quantitative easing purchases helping the economy? steven: i think they're helping keep the currency on the weaker path. the domestic currency has a healthy balance. household balance sheets improved even in the covid environment. corporate balance sheets levered long, were able to refinance. lower debt service burden since

the 1970's. those are healthy conditions. banking balance sheets are very healthy. their coverage ratios have gone up. the net result is there is the good fundamental credit position to keep the economy growing, at least to trend on an ongoing basis. the stimulus simply move us above trend. in the interim, it is the currency that keeps us in this environment where we continue to grow slightly above trend and therefore use up excess capacity that tom began this question and answer period with overtime like we did in the last recovery phase. lisa: let's say the fed does monetize the entirety of any deficit the u.s. takes on with an additional round of fiscal support. there was a university of chicago study that came out that found that 76% of workers who received unemployment insurance got more than they would have otherwise gotten paid. this is the underpinning of morgan stanley's bullish call,

saying households have a lot of cash to spend in lower income households tend to spend more. you think this type of policy is better? distribute the cash to lower income households so they can actually go out, spend, and that will support the economy the most? 100% but a lot of people who received the benefits received more than they would've gotten under normal pay. that is the reason the household balance is better. that is why nonperforming loan balance has gone down. that is constructive development. making a decision as to which is the right way to go forward in terms of additional stimulus, clearly what we are trying to do is not a traditional macro economic stimulus because we are getting over a covid divide where incomes are being restrained because of lockdown type environments. therefore it is a natural process to try to replace that through these kind of transfer payments, and therefore it seems to be the right way to go in terms of additional stimulus

going forward. the real problem is once we get beyond the covid divide, you are all concerned in terms of what happens in terms of the winter, is second wave, the answer if we continue going down the stimulus path after we get past that and we transit from a traditional keynesian fiscal policy into modern monetary theory policy, that is when we have to worry about the next concerns that will come out. the last time we went down these mmt paths, which was the johnson great society experiment, we wound up with double-digit inflation and eventually stagflation and 26% short-term interest rates to break the back of inflation. at some point we will have to transition away from keynesian policy and worry about moving into mmt. jonathan: great to catch up. steve ricchiuto.

i lost count of the amount of wows we had to use in that conversation. $2 trillion in stimulus. picture that. 2 trillion in fiscal, the fed buys it all. ricchiutois why steve is truly world-class. i have done panels where he stops the audiences. his discussion of currency, this is not an editorial, but the idea the u.s. has an exorbitant privilege is malarkey. if you run japan yen through 100, through 90, and even get to a stronger yen, the japanese government will react. no buts about that. jonathan: this was the appetizer, next is the main course with janet yellen. live on bloomberg tv and radio. looking forward to that. comelondon and new york

equity futures advancing on the s&p 500. advancing27 points, around .8%. alongside tom keene and lisa abramowicz, i'm jonathan ferro. heard on bloomberg radio, seen on bloomberg tv, this is bloomberg. ritika: with the first word news, i am ritika gupta. nancy pelosi has given the white house a deadline. if there is no more progress on a stimulus package by tomorrow it will not get done before the election. it is up to the house and the administration that are involved. senate republicans are balking at the size of the package. president trump is confident he could persuade the senators to back a good deal. president trump is trying to put a positive spin on his fundraising deficit to joe biden , telling supporters he could raise money quickly but he does not want to be beholden to donors. the trump campaign and the republican national committee

raised a combined $240 million in september, well short of joe biden's $383 million. yours trading resumed on next markets after a three-hour shut down called by a technical issue. the market is in france, belgium, the netherlands, and islands. exchanges in tokyo and mexico city suffered outages. we are one step closer to what could be the world's largest ipo. a key approval from chinese regulators. it can list shares in hong kong and shanghai. the company could raise $35 billion. american airlines has plans to debut the revamped boeing 737 max at the end of the year. it will be the first flight with the max since the plane was grounded in march of 2019. the airline will fly the plane

on the new york-miami route. 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. i am ritika gupta. this is bloomberg. ♪ tom: bloomberg surveillance, good morning on radio and television worldwide. , tom keene, and jonathan ferro. a wonderful opportunity to speak to the 15th chairman of the federal reserve system. janet yellen, fed chair through one of the most difficult years of this nation. we mentioned her work on an american labor economy to bring it out of that slack. of yalellen of gail, -- and now at the brookings institution with important work on the group of 30 on climate.

i want to get to that in a moment. i must ask about the weekend speculation of treasury secretary janet yellen. if we were to get a joe biden administration, would you be willing to serve for a president biden? ms. yellen: i appreciate your asking and the notion it is a job i could do. i have no comment on that. i am sorry. tom: that would be good, and we knew that would be the gracious answer from janet yellen. away from the monetary discussion, and maybe we will touch on that a bit, we must speak on this important research. you were steeped in this long ago and far away. a nobel laureate introduced us to auction theory. speaking about richard scary and children's books in a nobel prize speech in stockholm. this is long ago and far away. ms. yellen: you are very right.

one the nobel prize and discussed the relevance of richard scarry. a wonderful -- tom: a wonderful speech of what we are talking about. are a smallilgram school across the pond. just took the trophy. can auction theory help us solve climate change by fixing carbon pricing? i see no evidence it can do it. can we actually get to a legitimate, workable option market for climate change through carbon pricing? ms. yellen: let me say, referring to the group of 30 report we just put out, we urge governments to take the steps necessary to get the transition to net euro, and carbon pricing is central to that. we believe every government

should price emissions. while that is not the only policy that is necessary, that is critical to create the right transition to a net euro. there are different ways of doing it. you said auction theory. one way to do this is to limit permitss by requiring andmit greenhouse gases those would create a market in which they would be priced. it is possible to auction the permits. if the permits are auctioned, i am not aware of any country's that now, but that would generate revenue that could be

used for many different purposes, including low income people. a more straightforward way to do this, and it is what i would recommend for the united states, that hopefully we will go in this direction, is simply to put in place a carbon tax. it is a very efficient way to price carbon -- would be to go heads, where energy that creates carbon emissions enters the economy and to simply levy a tax. i think that is an easier and more efficient way than auctioning permits. we thinkr the other, carbon pricing is important. tom: with your report with governor carney and all of the efforts of the group of 30, if we say auction pricing has failed, where is the evidence

these societies will do a carbon tax? are you optimistic we can get a carbon tax initiated country to country? ms. yellen: different countries have taken different approaches. what we are looking for is carbon pricing. for the united states that does not have this in place, and other countries that have not started going down this route, i think a carbon tax is a reasonably way to go. , simplyng off permits putting in place a system where there needs to be a permit to emit, that is an approach we see in many european countries and we are not criticizing that as an alternative. lisa: as i was reading this report, i was struck by the firepower of the people who co-authored this. who is who in central banking

weighing in on policy. i know you have been called on to weigh in on other important policy in the united states. it was reported you at conversations with the biden-harris camp on how to fix the economy going forward. can you share anything on what you think we should do to get the economy back on track? ms. yellen: let me say i did with -- i did meet with joe biden and harris and brief them with issues, but i'm not working with the campaign. you asked me what i think we need to do to get the economy back on track. say what hits my list is dealing more effectively with the pandemic, with the health related issues, getting the infection level under control through contact tracing, isolation of people who have it.

we need a much more effective effort than we have had, and if we have that, not only for health, but being able to open up the economy, and we have seen that in countries ranging from germany to korea to china. then we need support for the economy, both for monetary and fiscal policy, and monetary policy has already done a huge amount. fiscal policy response in the united states has been extremely thanssive, but much larger what was done after the 2008 financial crisis. the fiscal support has now far spending has held up. unemployed workers who got that

extra $600 a week through the end of july, they use that to stay current on their bills and support their spending. they stashed some of it away so they have been able to get through this last couple of months. it is running out, and i think we need to do that. state and local governments also face huge budget shortfalls. i am working on a task force with the governor of california to address the pandemic. they face a $54 billion shortfall this year. i think that is very important. lisa: in the meantime, steve ricchiuto was just on. he said of congress were to pass a $2 trillion physical support plan, he expects the federal reserve to buy up all of that in order to help things along. do you think that is an advisable step?

ms. yellen: the federal reserve's asset purchases, they have not made clear their plans going forward. i am expecting them to offer more guidance. their objective is going to be to try to keep both long and short interest rates at low levels to support an economic recovery. ever,not their objective, to directly try to help the federal government finances budget deficit, and that would be a very dangerous kind of support. --o expect asset purchases they have worked, holding down long-term rates, and i expect there to be ongoing purchases. to they not geared federal deficit. tom: we are rebuilding our

institutions out of this natural disaster. i want to go back to james tobin a few years ago. he introduced a measure of our welfare system. simply thinking about the welfare state within a capitalistic market. we now come up to where we are in this historic election, and we have the democrats trying to get back to some form of social construct, and mr. trump and others with a lockean individualistic nature as well. how do you perceive how we move forward with our new capitalism, our new welfare state, given the fiscal deficits, given the trade deficit where it is, and given a monetary theory that seems to be extended and exhausted. what does the new system look like for you in the next few years? hardellen: that is a very

and comprehensive question, but i would say i think fiscal policy needs to play an active role. once upon a time, starting in the 1980's, there was a view that the fed can handle the job of keeping the economy operating at full employment, that fiscal policy should focus on allocating issues. now we are faced with a world characterized by secular stagnation. much saving in the global economy, especially among developed countries and weak investment demand. it has been pushing down real rates of interest and surprising monetary policy of a lot of the ability it had -- depriving monetary policy of a lot of the ability it had to address economic week is.

i would never have imagined -- economic weakness. i would never have imagined short plates would stay at 0% for years, and here we are back again with zero short rates. there are unconventional tools, asset purchases, forward guidance, that expand what monetary policy can do. there are some limits. it is important for fiscal policy to fill in that gap. while the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support. will be beyond that necessary. therest rates reduces interest burden of the debt, and makes it possible -- it is not a short run phenomenon, it is something that will probably be

with us for years to come and we can afford we can have more debt than we used to think is sustainable. tom: janet yellen, thank you so much. the most generous conversation. in celebration of her group of 30 report with governor carney on our place moving forward with climate control. i did not expect with chair yellen to have that much discussion about the current state of affairs. usually x chairman holdback. she did not. lisa: i will say this is shifting and we are seeing the township in the federal reserve given the fact they are saying we need the fiscal response. if we do not get it, there is only so much we can do. that has been consistent. tom: extraordinary conversation with chair yellen. the news item where she is simply not going to talk about the speculation. roger ferguson mentioned, a gentleman from the land of fed,

dr. bostic as well. lisa: tom keene? tom: no. you took jonathan ferro kool-aid? coming up, the gentleman from delta. this is bloomberg radio -- this is bloomberg surveillance on bloomberg radio and television. ♪

♪ jonathan: from new york and

london for our audience worldwide, good morning, good morning. the countdown to the open starts right now. already minutes away from the opening bell with equity futures up 23. we advanced .7%. wrestling with a second wave, setting records throughout much of europe. millions facing tighter restrictions. italy implementing more targeted containment and ireland implementing toughest measures. to central bank has pledged maintain strong support as the pandemic threatens cars on the economy. the fate of additional stimulus for the u.s. economy before the election said to be decided later this week. nancy pelosi announcing a tuesday deadline. pelosi: this only relates to if we want to get it done before the election. we have to decide on some of these things, are we going with it or not, and what is the language? jonathan: the