♪ >> nancy losey and steve mnuchin continue to narrow their differences but forecasters do not see a deal before the november 3 election. we will speak with the speaker of the house. crisis measures. ireland's government imposes some of the most imposing restrictions in europe. the coronavirus hits a new record. and triumphant exit. ubs posts better than expected fourth-quarter profits.

ande are very determined ouritted in implementing capital return policies. been flashing our intentions to have a good, solid cash dividend but also complemented with share buyback. >> welcome to surveillance. it is all about the u.s. fiscal stimulus and the possibility of another coronavirus relief package may be before the election. they are making progress but still disagreements and that is weighing on the market uncertainty, especially in the european space. european stocks down for the second day. u.s. equity futures pointed higher. leading the decline by region. tech outperforming. energy is the laggard. the yield in the u.s., they move down even amid some of the stronger risk off shifts we have seen. strong three to six month

treasury yields. aussie dollar is a standout in the fx space. central bank official said short-term rates may fall 20. what happened is the rba unsettled investors who counted on the cash rate reaching a genuine lower bound, quite a sizable move. brent crude short of $42 after the saudis warned of a precarious outlook and the need to be proactive. goldman sachs any substantive moves come january. some breaking lines or the order book of the eu social bonds. they are said to have exceeded 150 billion euros. this is the eu's first social bond sale. that is kicking up a wider sustainable debt bonanza. to reconfirm the order book set to exceed 150 billion euros. talking about an offering of 10

year debt, six basis points over missed the initial price guidance. we will get more reaction later in the program. let's get the first word news with leigh-ann gerrans. leigh-ann: the u.k. is holding out concessions from the eu before restarting brexit talks freedom the chief negotiator says he's willing to intensify talks and begin work on the legal text of an accord but that was not enough for prime minister boris johnson who says a trade deal looks unlikely. still his office feels talks were constructive. india has already seen a peak in the number of new coronavirus infections, according to a government panel of scientists that think the nation may be able to contain the world's second-largest operate by february. india's lockdown was the world's largest, forcing the economy to contract nearly 24%. ireland's government has imposed some of the most sweeping

pandemic restrictions in europe. none ascension stores, bars and restaurants will close their doors for at least six weeks. travel will be further restricted with people told to stay within five kilometers of their homes. 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 leigh-ann gerrans. this is bloomberg. yousef: thank you for that. says speaker nancy pelosi she and treasury secretary steven mnuchin have narrowed their differences on a relief package as time runs short. trying totrump is scapegoat his top infectious disease expert anthony fauci. the virus struggles sailing during campaign events. pres. trump: don't forget dr. fauci, what he said is don't close it to china. sorry, you're a wonderful man. i'm closing it. i saved thousands of lives.

he admitted that two months later. dr. fauci said don't put on masks. now he says put on masks. he is a wonderful guy. he just happens of a very bad arm. yousef: joe biden's campaign team quickly responding. using the president on words and said joe biden would listen to the scientists and dr. fauci, highlighting the difference between him and the president on how he would respond to the pandemic. two weeks until the vote. millions of americans have already voted. for more, derek wallbank joins us now. as the virus rages on in the u.s., we still don't have this stimulus deal. i am getting tired, not long to wait now. what is it looking like? derek: well, there is still a little bit aprart. nancy pelosi said last night there are still different values at play between the white house

and house democrats in what they are looking at. there has been some positive conversation, positive signals, but there's still a little bit of part -- apart. you mentioned it in the introduction. i'm really looking forward to seeing her on bloomberg tv to see what she's going to say no on deadline day -- now on deadline day to outline where things are. i'm looking forward to that. right now, there is still a way to go. i will say this as well -- in addition to those talks, what you have to not just watch is whether or not there is an agreement. that is certainly one thing to watch but understand and have to get past as well. it's got to go through the house, the senate and then trump has to sign it into law. the key middle part is who's not in that room. this is a house democrats white house the cushy asian. senate republicans continue to be a bit of wildcard here.

donald trump says he can get them on board to any deal he signs, but we've heard very clear talk from very senior senate republicans questioning how many votes would be there. yousef: early voting has already started in many parts of the country. are there some initial conclusions that you are able to draw from that? derek: well, there are. but, what we are doing at this moment right now two weeks before election day with the early vote pouring in, more than 30 million already cast. as you start taking off uncertainty. we knew that democrats would be motivated to vote. we knew they were pushing mail-in voting. how would that go? every single place we can see mail-in voting, democrats are voting in numbers not seen before. so, that part is real. the variable we are now waiting to see whether or not republicans will catch up during

the rest of the voting. if things move towards in person and then on election day. they do have some good signs in terms of party registration number in some of the swing states. a very good sign for republicans that the swing state numbers are a lot closer than the national numbers where joe biden leads by about, almost double digits in some polls. but, you certainly right now -- you are seeing democratic swing states. two weeks before election day in 2016 is when the polls really started moving a little bit away from hillary clinton. if there's going be movement, now is the time when it starts to happen. so far, you have not seen any though. yousef: leigh-ann: thank you for that -- yousef: thank you for that. let's get some additional perspective. joining us is the investment director at aberdeen standard investment.

to what extent has the market price them a deal for the election? a coronavirus relief package for the big vote? james: good morning. obviously, that is difficult to tease out given other things going on but we have seen the market has dropped when there have been headlines suggesting the deal is further away and has been bounced back where we've had cancer headlines suggesting pelosi and mission are getting closer and closer. it issit here right now, pricing the latter rather than the former. i do expect some disappointment in the equity market and risk market in general if today comes and goes and we still don't have a deal, which for what it's worth, i expected to happen. it is probably seen as politically expedient certainly for the democrats to not budge too far from their big numbers and broad-based stimulus. said,r reporter just

republicans have been fairly consistent on pushing back any notable size. yousef: there appears to be a growing narrative around the blue sweep but i begin to wonder when i look at the polls, at the end of the day, it's an impression of a range of expectations. the question is what if we get something out of that? what if mr. trump is able to pull through with an upset victory? is that something you are pointing to as well in your set of possibilities? james: absolutely. i think of the four likely outcomes, which is essentially in the whiteer house, and whether or not they can retain or switch the senate. i think one is very unlikely which is republicans having complete control of congress. i don't expect them to win the house at all. the other three are

possibilities. working out what that means for markets in those three outcomes is a bit more tricky. i think the blue sweep, market participants overwhelmingly see that at this stage as being more fiscal stimulus. they will deal with some of the potential negative, higher tax, corporate tax regulation at another date. now they just see dollar signs in their eyes and that is probably higher treasury yields and higher equity prices. the other where you have a split congress and potential trump win, a bit more tricky. maybe risk does not take those outcomes so well. yousef: going to follow-up on that because as much as we saw u.s. stocks go a little lower because there was not a clear deal on the physical side of things in the united states, treasury yields next shall he ran a little bit higher. that is counterintuitive. does that signal a substantial shift coming when it comes to u.s. sovereign security after months of being range bound? a question from the live team.

what is going to be the next big move for treasuries? an investor as myself, i would suggest that is the number one thing we have to get a handle on. very difficult because you have big risk events with almost binary outcomes. that yesterday was a somewhat strange day. the dollar was weaker because at the same time risk was weaker, same time treasury yields were higher which is not necessarily a combination you would expect from a sentiment perspective. i would observe the number of investors, strategist, people i speak with on the street expecting higher treasury yields, really looking for meaningful move higher largely contingent on their expectations for the u.s. election is growing. as you look at the data, observing what some of the bigger, steadier hands are doing in foreign institutional space,

you can see there has been significant selling of treasuries for a number of months now. the picture with respect to treasury definitely looks more balanced, shall we say. the fed still on the side of buying a reasonable amount of treasury. in my opinion, huge underlying economic damage which should keep a cap on treasury yields. i struggle to see a huge move higher in yields because i don't think the fed will feel comfortable with that. everything they are telling us today -- in itself is a conviction view and we appreciate on this program. hold that thought. we still have a lot to talk about. a bit of a snapshot of what's in the pipeline. later today, we speak with house speaker nancy pelosi, happening at 5:30 p.m. u.k. time. we will pick up the conversations around markets shortly. this is bloomberg. ♪

yousef: you are watching bloomberg surveillance. let's get to the conversation in europe because the pandemic there continues to roll on. ireland's government has imposed some of the most sweeping pandemic restrictions in europe. non-essential stores, bars and restaurants will close its doors for at least six weeks. travel will be further restricted with people staying within five kilometers of their home. in germany, new cases hit a record. in italy, government's new decrees urged mayors to closed streets at 9 p.m. to stop crowds gathering. still with us is james from aberdeen standard investment. you've got a pandemic that is continuing to march on, induce more and more damage.

you've got an ecb that appears to be looking for ideas on how to fan inflation. hardly the right timing for these two to overlap. james: no. the ecb's record with driving inflation higher has been very kind, unsuccessful. i could be more pejorative but i want. ecb's problems go back a lot longer than this recent period. they are much more structural than cyclical in nature. although cyclical problems don't help either. i don't think you can point to any economy worldwide that's a necessarily a great place to deal with something as disruptive as this virus has been. certainly, i think the euro zone's ability to deal with it on the monetary, political and physical side has reduced the truly independent sovereign nations just because of the nature of the region. inflation markets in europe have

been highly correlated with the u.s. and highly correlated with risk asset. 89 basis priced at points. that is definitely something i would be selling. yousef: in terms of the first social bond offering, we got breaking lines about 20 minutes ago and i want to recap that again. orders more than 150 billion euros. that is a record in the euro area. the books were large, that was expected. what other conclusions do you draw from this particular bond offer? james: yeah. i mean, i guess it is another grab for yield. if you look at the structure of this issue in terms of how it is backed up, how it guarantees -- guarantees from underlying countries and then you look at where it trades relative to

germany, relative to france. would suggest this is high quality paper with a yield pickup similar rated issuers in the region. for that reason alone, i think you will see good demand. yousef: i want to also get you to weigh in on what is going on in the earnings season. julius baer kicked off the banks. today, we have ubs beating expectations. is the risk reward for you are morepean banks now clear with dividends coming back into play? james: so glad you asked me that. i was hoping you would ask me about u.s. banks where the pictures a tiny bit clear. european banks is a dog that never barks. are they cheap enough now? no, the short answer. i still believe ultimately the

banking sector is going to be a function of the economic outlook, the interest rate outlook and regulatory outlook. with european banks, you have the added factor of balance sheets which are not clean. there are still skeletons in the closet in various banks across the region. the structure of the banking sector in europe is a bit too fragmented. sufficientseen mergers and acquisitions activity in the banking sector or big winners to emerge across the region. to me, there is still a heck of a lot of work for the european banking sector. h struggle to find banks wit business models with profitability you can hang your hat on. we appreciate that. you will still hang around for one more short discussion. james from aberdeen standard investment. coming up, the eu tries to restart brexit trade talks.

the u.k. government helms on for more concessions. we will break that down for you next. this is bloomberg. ♪

yousef: you are watching bloomberg surveillance. now let's focus on brexit. the u.k. has rebuffed the eu's attempt to restart trade talks, holding out for more concessions. the bloc's chief negotiator offered to begin drafting a legal text of the agreement, but her counterparts is the eu still needs to make a fundamental

change in its approach. brussels told bloomberg negotiations may resume in london by the end of next week. still with us is james from aberdeen standard investment. in many ways, investors and traders, part in pro's a what they do to filter out a lot of the noise. do i look to early november and say to myself, unless i get a resolution one way or another on this front by that day, i'm going to ignore it? agree or disagree? james: yeah, it is very tough because it depends how wide your investment is and how easy it is for you to ignore brexit issues if you manage a single u.k. government bond portfolio, it is probably tricky. we can to some degree do that. filtering out the noise in this negotiation is tough but the starting point for me is always that they will go to the last -- to the dropdead rate because they have to.

that is the nature of eu negotiations. a region which has to negotiate with itself first before it can even begin to sit down with the other side is a very tricky negotiation and the politics dictate it has to occur at the very last minute. the problem is we don't know if the last-minute is december 31 or if there are intermediate dates. it has not helped with drawing a line in the sand and allowing that to lapse. yousef: sure. james, really appreciate your time this morning. thank you for running through those ideas. investment director at aberdeen standard investment. payback time. ubs set aside some capital for share buyback. this is bloomberg. ♪

economics,

politics, and finance. let's get to leigh-ann gerrans. leigh-ann: the gap between democrats at the white house on a stimulus deal seems to be narrowing. a spokesman for to pelosi says there might be a bill passed by the end of the day on tuesday. republican lawmakers are favoring a smaller package, but if a deal is reached, president trump would lobby them to come on board. president donald trump is getting out at the government's expert,ctious disease anthony fauci, calling him an idiot, and repeatedly criticized in yesterday without explanation, saying that if he had followed his advice, hundreds of thousands more americans have died. anthony fauci is the most prominent government figure on coronavirus. a proactive response to the precarious oil market. it is and the alliance may change policy from next month, and that current agreements the group is set at almost 10

million barrels a day to global -- the uk'snuary paving the way for its first trials to deliberately infect people with coronavirus. these comments trials are to help speed up development of the vaccines, and they may start in the u.k. next year. have not decided which vaccine they may use yet. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. yousef? yousef: thank you very much. let's do an important corporate story as ubs posted third quarter profits that beat estimates. manus cranny spoke to the outgoing ceo, sergio ermotti, reflecting this time on the role.

sergio: if i were to go back i would balance more capital returns between a cash dividend and share buyback. since shareholders come and go, the one that has been staying around for nine years -- do think what is-- i important is the fact that going forward we will continue to deliver strong returns to our shareholders by executing our strategy. isus: part of that execution and it over to val con -- what is the truth to his management of lending more. are you letting more and taking more leverage? sergio: actually, iqbal khan is strong the team, a very

addition to the team. you look at lending, we had more than $10 million of lending this quarter. the strongest was coming from the americas, not the areas that are involved on a day-to-day basis. lending is a strategic priority for ubs and not for a single person or a single segment of our business. you say that my best decision was not to follow consensus. what is your non-consensus trade as you go out the door. you like credit and the hurly-burly, what is the nonconsensus of multi-trade as you leave? difficultat is quite to say, but i will say that in this environment, although it is cash, being to all ready to invest, if there is a

downturn, i think it is very important. and just give me a sense of global risk. bank of america's narrative was that we are begetting -- we are getting a bit greedy. with equity markets rising, is there a sense of greed in these markets? sergio: i don't think it is greediness. the liquidity and the money has to go somewhere, and it is almost inevitable that it is a huge flow of liquidity and money in the market that is creating asset inflation. we have been seeing that for a what iand in that sense mentioned before, we have to be balanced and diversified in the way we look at the market right now. there will be opportunities. there are opportunities, but they want us to be very selective and well diversified to navigate this kind of environment.

outgoinghat was the ubs ceo, sergio ermotti, speaking with manus cranny, who joins us now. with the highlights from the earnings, it really is about the dividend outlook and the willingness to put capital back to the route in terms of investor potential. and i thinkutely, that has been the bulwark and the hallmark of the sergio ermotti era, which has been about capital hitting etsy level -- hitting its key level. ourwe are flashing intention, that is the very first, that he made in the interview. -- theg our intentions determination to continue. they are putting money in reserve for buybacks, money in reserve for dividends. it is a question of when will the regulators allow that to be paid. if you remember back to jamie dimon last week, saying i am

either $10 billion over provided for a tough time in the economy, or $20 billion under provided. these guys had $89 million. the market had them penned in for $89 million. the visioning is a lot lower. the dividend story remains intact as he leaves for a new era, and he could not be drawn on that tawdry issue of m&a. the chairman is not looking for a bride. i just wonder who they would like to dance with. mean, i will see if i am in contention for that. 's terms of the stock performance, that is in line with the swiss index, pretty flat over the course of 12 months, although the analysts are bullish about the return potential. what does all this mean for the ceo's legacy, mr. sergio ermotti's legacy? you spoke with him many times? manus: i think when it comes to

shareholder return, sergio ermotti said he could have done something -- i said if he could have done something differently, what would it be? he said i would have tipped things in favor of cash versus share buybacks. his intention was to return money to shareholders. if you look at the stats under ermotti, under sergio i look at the numbers in the investment bank, goldman sachs fixed income commodities and currencies was up by 49 percent in this quarter. who went in and delivered an iv, reduced to risk-weighted assets, and the size -- does it remain the same? could that be the driver that takes ubs into the m&a market? sergio ermotti leaves with a good dividend story, but there is a litigation issue in france

which still hangs over the bank. yousef? youef: manus cranny, thank for that. he is my coanchor in the morning show, "daybreak." manus cranny. sagaf a ciga -- and of a -- end of a saga. this is bloomberg. ♪

yousef: you are watching "bloomberg surveillance." i'm

yousef: do now iodine in or by -- i'm yousef gamal iodine in dubai. -- a relief package -- they are making progress, but there is disagreement on part of the language. they don't believe that we are going to get anything before the election, at least nothing meaningful. stocks in europe just falling back from the initial losses. up .2%. -- we are in the bond space, we have news on the european union's first offering of social bonds, receiving orders of more than 150 billion euros, a record for a dual trench issue in the euro area. watch for some of those key metrics around core european bonds. $100 stand out after a surprise coming from the rba a few hours ago. currently we are lower by .2%, then grant crude -- then brent crude down .8%.

it is a bigfutures, week for earnings. we are waiting for netflix and progress around the u.s. stimulus package. where called just marginally higher. sizable he higher over the course of the last 30 minutes. let's get you the bloomberg crossss flash story can -- and cross out to leigh-ann gerrans. leigh-ann: softbank is charging ahead with its new public stock trading arm. it is increasing equity positions to more than $20 billion. that is despite the skeptical response from shareholders. we are called the during trading's data -- the current trading strategy is around a volatile third quarter trading season. brookfield is exploring a sale of its life sciences real estate portfolio. it is asked for about $3 billion for the asset. the alternative asset managers working with advisors to sell roughly 2.3 million square feet

and acquire it as part of its purchase of forrest city. no comment from brookfield. expecting results from -- moderna is expecting results from its vaccine trial. it could also authorize emergency use in december if results are positive. the vaccine is one of a handful in the so-called phase three trials. that is your bloomberg business flash. yousef? yousef: think you. another developing story from goldman sachs. they are poised to pay within $2 million for a probe. it has weight -- it has reached a long-awaited tech with the u.s. justice department that will avoid convictions, and is -- let's talkne to dani burger. where does this leave the total

tally of fines for goldman? dani: so far goldman looks poised to pay about $5 billion from various fines from different agencies. this is really the culmination of years of investigations and negotiations. you will remember the initial scandal took place in 2012 and 2013 when goldman raised about $6.5 billion for what was supposed to be a sovereign wealth fund for malaysia which allegedly saw it siphoned off by people close to the prime minister at the time for reportedly things like setting up the production company that would go on to make wolf of wall street. so this u.s. justice department fine comes on the heels of a july fine from malaysia, about $2.5 billion, and then september, malaysia dropped the criminal convictions as well. definitely --as

this would definitely help analysts. we're just trying to get clarity around the size of these fines. at the end of the day, it may not even be the end of it all, right? with the possibility of more fines. dani: spot on, yousef. authorities in singapore, people familiar, tell bloomberg that they are looking at possible fines as well to place on goldman sachs. they could also issue a warning with conditions. conditions that if goldman breaches, good face possible charges as well. it you mentioned, this has long been known that goldman would have to pay up for this. it has likely long been priced into their shares as well. getting more of a grip on what the final tally will be certainly helps remove some of the uncertainty about the fallout from their involvement in the scandal. dani burger, thank you for running us through those details. let's stay with what else we are going to be looking out for

today. u.s. earnings season. further in stride with netflix reporting earnings. investors will be watching the streaming platforms up a result for updates on growth in a slowdown in the second quarter. the streaming group has cautioned that investors -- the lockdown fueled subscriber growth, that will see a slowdown in the second half of the year. necklace has been one of the biggest beneficiaries of the covid -- netflix has been one of the biggest beneficiaries of the covid-19 crisis. i am one of them, due to the quarantined measures and the lack of new tv programming in the first half of the year. the question is whether that easy growth is in the past or not. up next, we will hear from the former fed chair, janet yellen, what she has to say about the prospect for greater stimulus, the health of the u.s. economy as well. again, that additional perspective that you are looking for. this is bloomberg. ♪

yousef: economics, finance, and politics. this is bloomberg surveillance. as we count down to a potential deal or no deal, either way we should be able to find whether we will get anything before the actual election day in terms of coronavirus relief package. what we have learned over the last few trading sessions is how central a lot of the price action across asset classes is contingent on whether you get a deal that is big enough to deal with an intensifying pandemic around the world. so are are higher and stocks in europe, trading higher by about .1%. yields are coming a bit under pressure, struggling. we will show you the equity picture in the u.s.. .oug jones futures up tech earnings will be the rotation for a trigger. it got strategists who foresaw

the last major correction -- saying after the september slump, the s&p may fall another 10% on a technical level, putting aside some of the fundamentals, circling back to the aussie dollar because we had a surprise announcement from an official at the rba, and it is unsettled investors counted on the cash rates, reaching a genuine lower bound. he said there is still room for compression and as a result, the aussie dollar we can substantially, take a look at that. .4%. as much as the bar was set high for opec-plus, we did not get anything at all other than a precarious outlook and a commitment to stay proactive. so the real needs are going to come later on in a few weeks time. here's what else we will be watching for today. course islicymaker of

going to be delivering a speech on the u.k. economic outlook. at 1:30 in the afternoon, we get housing starts and building permits data out of the united states. both are supposed to pick up in september as low mortgage rates continue to support demand. new york fed president john williams and making opening and closing remarks at 2:00 p.m. and we get third-quarter earnings from the streaming giant netflix. that is going to happen after the u.s. market close. let's get back to one of our top stories. the former federal reserve chair, janet yellen, is adding her voice to calls for more physical support for unemployed workers. she talked about what it takes to get the u.s. economy back on track. not working with the campaign. but you asked me what i think we need to do to get the economy

back on track. i would say what heads my list is dealing more effectively with the pandemic, with the health related issues, getting the infection level under control through contact tracing, testing, isolation of people who have it. i think we need a much more effective effort than we have had, and if we have that, it will be good not only for health, but for being able to open up the economy. and we have seen that in countries ranging from germany it hasa to china, that been successful. and then we need support for the economy, both for monetary and fiscal policy. monetary policy is already -- has already done a huge amount. fiscal policy response in the

united states has been extremely actually it is much larger, the physical supports and what we have done after the 2008-2009 financial crisis. -- has fiscal support is now lapsed. so far spending has held up. unemployed workers who got that extra $600 a week through the end of july -- they used that to stay current on their bills, to support their spending. they even stashed some of it away. they have been able to get through this last couple of months and pay their bills, but it is running out, and i think we need to do that. state and local governments also face huge budget shortfalls. i'm working on a task force with the governor of california to

address the pandemic. they face a $54 billion shortfall. i think that is very important, too. >> in the meantime, our guest said that if congress were to pass a two chilean dollars support plan, he expects the federal reserve -- a $2 trillion support plan, expect the federal reserve to buy that up to move things along. do you think those are viable steps? >> the fiscal reserve asset purchases, they have not made clear their plans going forward, and i'm expecting them to offer more guidance. but their objective there is going to be to try to keep both long and short interest rates at low levels to support an economic recovery. it is not their objective ever to directly try to help the federal government financed its budget deficit, and that would

be a very dangerous kind of support to provide. -- i think asset purchases have worked. they are holding down longer-term rates, and i expect there to be ongoing purchases. but probably not geared to the fiscal deficit. that was former fed chair janet yellen, speaking earlier. in the next hour, all eyes are going to be on similar stocks in the united states. don't miss our conversation with house speaker nettie pelosi. at the moment, equity futures and risk assets beginning to recover, getting momentum. this is bloomberg. ♪

tom: this morning, a muted

response to stimulus. dow declined 700 points yesterday. more hope today from the nguyen and pelosi. mnuchin and- from pelosi. to quote law.ts buttonre will be a mute at the national debate. itantage biden -- or is advantage trump? good morning, everyone. ," tomberg surveillance keene in new york. and borrowing jonathan ferro's mute button this morning, anna edwards. earlyk i need some of our -- and our early morning american viewers need an update. how grim is it up north? anna: well, there is up north and also wales, and in another part of europe there