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tv   Bloomberg Surveillance  Bloomberg  October 15, 2020 5:00am-6:00am EDT

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is getting tighter virus measures. they will be in place by saturday morning. in germany, new cases rise by a record amount. no deal. steve mnuchin downplays chances of fresh stimulus ahead of the election. nancy pelosi says the white house offer remains significantly short. there are 19 days until the u.s. elections. and brexit roundabout. boris johnson seems willing to overlook his self-imposed brexit deadline. germany's finance minister tells bloomberg a breakthrough could happen at the last moment. good morning, everyone, and welcome to "bloomberg surveillance." tom and francine from london and new york. tom, in the last couple minutes we had confirmation there would be much stricter measures on london from saturday. remember the three tearing system we were talking about? currently we are at one, which means it is only six people meeting at the same time indoors and outdoors from saturday. that is over, so restaurants remain open, schools remain open, but two households or two
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bubbles cannot mix unless at work. tom: i'm speechless. i was just talking to jon ferro, just getting up at the crack of 9:00 a.m. in london, about the uniqueness of it. there are two separate parallel worlds and the united states, where europe and the pandemic is off the radar. clearly in europe it is unraveling. francine: it is. we are all dealing with the same virus, having the same effect on people, but if you look at germany come it is different on how they decide to do with it, compared to macron, with tighter measures. now let's get to the bloomberg first word news with ritika gupta. ritika: the chances of congress passing a pre-election stimulus are all but gone. treasury secretary steven mnuchin is blaming politics. he says democrats don't want to give president trump something to brag about in his campaign. democrats say the white house never took the need for another
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stimulus seriously enough to push for a compromise. senate democrats are all but powerless to keep amy coney barrett off the supreme court. they will use the final day of aboutoning to grill her statements made about her by president trump. london reportedly will be placed on what are called high coronavirus restrictions. one of the curbs is said to be a ban on two separate households meeting indoors. averageill soon hit an of 100 cases per 100,000 people. british prime minister boris johnson told e.u. leaders he is disappointed by the slow progress of brexit trade talks. johnson says he will decide e.u. summit this week whether it is worth continuing to work for a deal. previously, johnson threatens to walk out today if there was no
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clear agreement inside. 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 uber. tom: thanks so much -- this is bloomberg. tom: thanks. equities, bonds, currencies, commodities. pullss -40, everything back here on a percentage basis. dollar with some strength. swiss franc, euro swissie comes in strong, swiss franc, four days in a row. nothing to write home about, but we are watching that trend. also on euroyen, we are looking at stronger yen and a weaker euro. socgen writing up on the ramifications of a 1.16 handle on euro, and we are not there right now. one quick note, the real yield in the united states goes back -1.00%.l
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that will be noted today. francine: i wanted to show you some of the bayous on the european bonds. have not really seen anything -- of the buyouts on the european bonds. we have not really seen anything like it. i'm distracted of what is happening in london. that is impacting european stocks in general, after receiving -- after we are seeing measure after measure of lockdown, starting to take hold london is being banned from also gatherings this weekend. also the prospect for the stimulus from d.c.. so quite a lot going on for thursday. we are delighted it could not better day to speak with sir howard davies. the worldunderstand we are living in. we want to talk to you about
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brexit, but before we get to that come in the last 10 minutes we found out that london will go ono this tier to phase saturday. is there worry that between brexit and london being a big city affected by covid, that we will lose london in 12, 13 months from now? well, i'm not quite sure how to interpret your statement that there could not have been a better day to have me. is that because you associate with bad news in some way? i would certainly say that on the lockdown measures it is quite difficult to keep up, and there do seem to be a lot of different and rather confusing changes in the regime. we all have to reflect on how that is. theon the upside come on optimistic side, what i observe is that people are now finding ways of carrying on their business in the midst of all of
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these restrictions, and not ignoring the restrictions, but nonetheless finding ways of working around them. so i don't think that a second lockdown is going to be anything like the one at the end of march and in april, where basically the economy simply froze. people are finding ways of working, people are much better working at home, a lot more can get done. we observed that within the bank. while it is bad news clearly that we are moving into a more difficult environment as far as managing the virus concerns, i personally don't think that these lockdown measures will have as damaging economic consequences as the first wave did. that is for 70% of the economy. what about the other 20%, 30%, making it more difficult than thinking about the arts and travel and leisure. what does that mean for the bank
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of england? are they worried there will be default from that? howard: we certainly feel that, and there are clearly businesses in cities, sandwich bars, airlines, and the travel industry that are going to suffer. everyone just feels for them because they have been desperately planning in imaginative ways to reopen, and that looks as though that is going to be put on hold. that is a chunk of the economy that will not work. as for bad debts, most banks i --ded at the first half f a large portion -- i think all banks would say that the lived experience is not as bad as the provision. --t the actual grip sees at that the actual bankruptcies -- there have been some, but we have not seen a great wave of them.
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that is because the economies have been largely anesthetized because the provision of liquidity on the one hand by the central banks and the other hand provision by the government support, the economy at the moment is on life-support support, if you would like. i think probably governments will have to continue with that. that is dangerous, from a fiscal point of view, but clearly if the governments are going to lockdown again, then they will have to put in place extensions of the various measures they have had in order to support the economy. at the moment, i think most next -- and i have been talking to a lot recently because it is the where we normally would be on a s speed dating course in washington. i think everybody is in a similar position, well provided in terms of -- not seeing those losses coming through yet. we are worried about next year,
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but not overanxious about the position of the international sector. tom: tom keene in new york. good morning to you, and thank you so much for this generous time this morning. i don't know at manchester grammar school if you were forced at gunpoint to read a play by albert camus, but there are wonderful points where things unravel, and there is feeling on morning about the silliness of the lockdown on saturday versus thursday -- do we completely misjudge the need for fiscal stimulus now, just to actually jettison austerity to get to a vaccine? howard: well, it is disappointing that we -- that the u.s. stimulus will be delayed, and i think many in the markets have been hoping that there would be an agreement before the election. it does not seem to be the case, but after all the election is not far off. i do think it is a position
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where governments are going to have to continue with their fiscal stimulus. that is going to be difficult for some countries, because the a 1.3s, i put in place trillion euro package. the germans have got plenty of room to continue to support their economy. the u.k. is not in such a good position, but i think probably given that we are interlaced, we have a huge debt to gdp ratio. we can continue on a lower scale. other countries in europe may be under more pressure. i think my worry now is not so much an aggregate worry or a worry particularly about the u.k. and germany. it is that we will now identify weak spots in the european economy which will require help from the center. the 700 50ooka of billion euro communitywide package is there, and i think that is going to have to be
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used. if i were in brussels today, i would make sure that that is going to be mobilized as quickly as possible to help the people who are in trouble. that won't be germany, but it might be some other southern european countries. tom: many themes to talk about in this half-hour, and for all of you in the united kingdom and across europe, extraordinary pandemic announcements today. the mayor of london speaking right now and we will bring you those headlines as they evolve. coming up later, what a wonderful day. howard davies with us. and then anne richards will join us from fidelity international, chief executive officer on asset management. but also anne richards on some of the unique mathematics of the investment business. we will do that in the six are very hour. puget in at -37. please stay with us -- futures in a -37. please they with us. this is bloomberg. ♪
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>> there are a number of weeks left in this negotiation, not a number of days, so when the european council meets at the end of this week, there will be a detailed stock take on where we are in these negotiations. but certainly i don't see that there will be any major breakthroughs this week. i think there has been some progress on the level playing field issues. there has been little or no progress, unfortunately come on fishing. both sides are still very far apart. the message was clear for member states. we value fishermen, we value their contribution across the european union, and certainly e.u. fishermen are not going to be sold out in an effort to
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guess -- to get an agreement on a future relationship with the u.k. on trade. is always right to ask questions that are difficult up to the last moment, and my experience is sometimes at the last moment you will find a solution. francine: the irish prime minister and the german finance minister discussing the aspects of a brexit breakthrough. we also want to bring you up-to-date with the headlines from the london mayor, sadiq khan, commenting in assembly meeting. this one especially important after we heard that london will go into a tear to other level, meaning from saturday come as far as we understand it, households cannot mix. you can still meet people outside, but no more than six people at a time, including yourself and six people in total. there will be a number of more provisions. i'm trying to follow all the headlines from mayor khan in
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london. he has called for a national virus circuit breaker, called for by a number of people, including the leader of the opposition, that people would be in lockdown for two weeks and traveling would be restricted to make sure that there is not a rise in the number of cases. asking ministers from more financial support. let's get back to talk not only about these extra restrictions on london, but also brexit. we are back with howard davies. sir howard, thank you for staying with us. when you look at brexit, and the next 24 hours we are on tenterhooks to find out whether there is a deal or no deal. are all banks prepared? a lot of banks have actually left because they worry about passporting and equivalency and they cannot afford to find out at the last minute. i think banks are as prepared as they can be. what is disappointing to us is that when you hear the noises
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coming out of these negotiations, they mainly have a sort of fishy smell to them, or indeed they are about state aid, which is not particularly relevant to us. what you don't hear much about is the important question of financial sector equivalents, and that is a very important outcome if we can secure it. we just don't know whether that will happen or not. as a result, banks have had to prepare the prospect of no equivalents, and in the european financial markets, and so we have a subsidiary in the netherlands which we can do our business. it is not as convenient as doing it through london, but we are ready for that. so many people have prepared for it, and our optimal solutions. aer time, they will produce drift of business into other european centers from london if we haven't got equivalents in .hese big directives
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it is very disappointing to us that we are hearing nothing, and it doesn't seem as though much negotiating effort is being put into that question. fishermenhing against because i eat a lot of fish, but nonetheless, the financial sector is a larger share of the economy and the fishing sector. i look at where we are in banking and the bank earnings stream of the united states of america, and there is a wide perception that u.s. banks can compete and take market share, take business in continental europe as well. can the united kingdom banks do the same thing? are you guys in a position to be like the american banks and really compete for business? on the continent? two or three things are relevant here. as in many things, the u.k. is halfway across the atlantic.
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our banks are pretty well-capitalized, better than some banks in europe. but there are several differences going on. one is that of course there is a dividend ban in the u.k. and in europe, and there isn't in the u.s. u.s. banks have continued to pay out ordinary dividends, and that has helped their position in the markets. the second thing is that we in the u.k. have a handicap as a result of the legislation which requires us to separate our investment banking operations from commercial banking operations, and it places a cost of capital penalty on those investment banking operations, and that has had an impact on the market share of u.k. banks and investment banking markets. and so what you have seen is with u.s. banks, they have been relentlessly increasing their share of the investment banking wallet in europe at the expense
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of some continental european banks, who have been short of capital to deploy in that area, and the expense of u.k. banks, who have the penalty. those have been big drivers of the changes in market share. francine: howard davies -- tom: howard davies with us here. he is the netlist group chairman. a truly breaking news across the united kingdom, and quite frankly, waiting for comment as well this morning from other european leaders on a pandemic, a new effect, a new impact on europe. on bloomberg surveillance today, vitor gaspar of the international monetary fund. very importantly, there director of fiscal affairs on the austerity and reality of need for stimulus worldwide. futures at -38. stay with us. from new york and from london, this is bloomberg. good morning. ♪
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ritika: this is "bloomberg surveillance." wells fargo his fired more than 100 workers suspected of improperly collecting coronavirus relief funds. according to an internal memo, the bank determined the workers defrauded the small business administration. the memo said what happened with personnel actions that were personnel actions and don't involve bank customers.
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ready to jump on a travel rebound while writing out the unprecedented industry slump. united's third-quarter loss was worse than expected, but the airline loaded daily cash flow rate to $25 million. plus it had more than $19 billion in liquidity at the end of september. goldman sachs warns that a number of policy and economic shifts will temporarily put an end to the outperformance of technology stocks. autoan says banking and shares will be lifted. and upgraded his recommendation on those stocks to overweight. strategists cut tech stocks to neutral. that is the latest bloomberg business flash. tom: there is nothing more than a risk off giveback today. there is no other way to put it. with stronger swiss franc, all sorts of safe havens, not through distress, but nevertheless giving it back. -1.0013 on that
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inflation barometer claims at 8:30 this money. futures deteriorate over the last 20 minute, -40 now on the standard & poor's futures. francine: if you look at european stocks, they are down by more than u.s. futures. we had some pretty disappointing earnings news. we have also had some clampdown's of some of the largest cities in europe, and then at the same time, we were hoping for some stimulus in the u.s., and actually that prospect is wilting pretty quickly. so we are seeing quite a lot of pressure on european stocks. coming up on bloomberg markets, joyce chang, j.p. morgan securities global research chair. don't miss that interview. that is at 4:30 p.m. in new york. this is bloomberg. ♪
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tom: good morning everyone. with aerg surveillance" most interesting london,
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monitoring headlines from the mayor and many in government today on the pandemic. west, wevies from net are thrilled he could join. sir howard, i looked at the five year, five year breakevens. transatlantic tension on inflation, i am thinking irving fisher, is one indicator of a society/economy, just in the last number of days, reaffirmation of disinflation. year,y, swiss year 20 yields.year, yo ar lower the oddest time. tell us what a gap in expectations means? howard: conventionally, one would say it is likely to weaken the euro.
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people are looking at the prospects of zero interest rates in europe, as far as i can see. normally, that would weaken the euro. there are other things going on in relation to the dollar and u.s. economy broadly, upsetting that. the school answer to your question is we should be looking at a weaker euro. that inan understand conventional times. this is not conventional times. how does your bank expect this to unfold? lower for longer? strategically planning for pronounced disinflation? can you be more optimistic on a three-year plan? we are expecting lower for longer. i would say lower forever. i am not sure. forever is a long time.
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which is our principal focus, there are potentially some offsets. weak and couldeen weaken further, given our open tendency tohave a import inflation. for any rates at zero, reasonable planning, there could be, worse than that. bank of england have been asking us to think about how we would cope with negative interest rates. i hope we don't go there. that is clearly possible. most banks would be looking at effectively zero interest rates for the perceivable future. are you worried about resilience of u.k. banks or euro
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banks to covid? howard: i'm not worried about resilience of u.k. banks. high capital ratios. the number was well over 16% last year, really high. banks are not quite as high. there were some reasons we were high. we were expecting to buy back some shares from the government. we had money socked away for that. we were highly capitalize going in, which has turned out to be a good thing. the big u.k. banks are in a solid position, as far as i am aware. we have reports coming up. in europe, the picture is mixed. there are moves to consolidate in order to cope with weaker
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brethren. you see that in spain/italy. that is likely to continue. it is difficult to give a single answer. there are strongly capitalized banks and weaker ones that cause concern to the ecb. the ecb is often talking about the need for consolidation of the european banking sector. francine: if we have a no deal brexit, what with the u.k. economy look like in three years? -- what would u.k. economy look like in three years? what incentives with the u.k. need to thrive? everyone's analysis is an ideal brexit would be diversion to the economy. year, thene gdp this forecast they came out with
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yesterday, the u.k. being more effective than other euro economies, the brexit effect is somewhat lost, because people were talking about 2%, brexit, for the first year, a little bit continuing. it is hard at the moment given the fog of the crisis to identify particular brexit effects. we still don't know whether we will have tariffs or not. hoping wevery much come out with a deal. the prime minister's prepared to carry on negotiating, even though we have not reached a deal. there is still great uncertainty. i don't think this is a good thing, economically. it will have a damaging effect on the u.k. economy. the scale of that is uncertain and depends on the outcome of these talks. tom: sir howard, a generous
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amount of time. thank you so much. affiliated with the london school of economics, oxford. , s&poff feeling, -40 futures, all sorts of correlations. ritika: don't count on another pandemic stimulus package before the election. they areosi told msnbc far apart on workers safety, funding and strategic testing plans. steve mnuchin says democrats don't want to give the president something he can brag about in the last weeks of the campaign. brought in a record $383 million last month. the massive fundraising calls
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have helped reverse the financial advantage. parisnce, a curfew in and other major studies, as part of new measures aimed at containing the spread of coronavirus. robert smith will pay $140 million to end a tax investigation. he will have to admit wrongdoing. ceo of a private equity firm. global news, 24 hours a day, on air and on quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: risk off, u.s., 10 year we have been.70%,
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focused on the pandemic, the continent, the news out of the u.k. in the last hour. turning to american politics, stephanie kelly will join us, senior political economist. s& over 1.2%, -41 this is bloomberg. ♪
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>> we are trying to help, trying to get stimulus money, which i think is important for certain industries, certainly the airline business. people are not exactly hopping into airplanes to travel. you go to europe, you have to quarantine for two weeks. who is going to do that?
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no one in the world is going to do that. gettingis point, something done before the election, executing on that, would be difficult given where we are. we're going to try to continue to work through these issues. tom: secretary-treasurer removing markets yesterday, no question. new lows today, futures, -44, down 3.15 as we speak. stephanie kelly with us, aberdeen standard, looking at u.s. politics. difficult now. so money crosscurrents. a more removed vice president biden with measured speeches. mr. trump, really out there but some would say with conflicting messages. what do you observe is the
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message the president needs now? clearly, the message they want is anything that is not covid. anything to get away from covid, economic damage, health damage -- clearly what the campaign is shooting for. that means you end up with different messages coming through. is challenge is, the risk none of the messages hit anyone in particular. the biden campaign has played this cautious approach of standing back, allowing the trump campaign to attempt to get through this period. with a 10 percentage point lead for biden, it is working. tom: you may be getting beauty rest tonight. francine lacqua will be up, watching each and every minute
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of this historic moment; the oddity of a non-debate on two separate channels. for, what will you listen for out of this historic moment? stephanie: i thought in the last debate trump's aggressive approach helped biden. there were moments it looks like he was about to be in a corner answering questions he did not want to, then trump would step in and it would give him time to direct back at trump instead. i'm interested to see how biden deals with airtime. this is his race to lose. crazy things can happen at the last minute. anything where you have a
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candidate hidden away, these are risky moments. for trump, this is more around, can he settle on a specific idea? does he continue to push campaign messages that have not landed about joe biden being socialist? is this about solidifying your base? making sure people turn out to vote no matter what? stephanie: yeah. honestly, i am always skeptical of the impact of debate. it is mobilization campaign. to ar than trying to get new base. a lot of it will be, we have already seen the biden campaign pushing for people to vote. early voting has been taking place already. for trump, it will be a race to
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energize the base. the extent to which you can do that in this context, it is always like watching media snippets spread widely the next day. chances are most people are not watching live. they look up the main headlines. that is what can have an impact. trusting the polls, worrying about turnout, the economy -- ? stephanie: the polling question is an interesting one. we get it a lot. 2016, the polls were totally wrong. at the national level, they were not that far off. they were within a normal margin of error. investors are not used to the idea that polls can be right, even if they are 3% off. level; a crucial
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differentiator between trump voters and non-trump voters. we don't know how much this changes. will they get it right? it is a goldilocks pulling moment. until thet know day of. with a 10 percentage point lead, it is hard to buy the idea that biden is doing better than the polling shows. 10 percentage points, he has a lot of room to maneuver, even if the polls are wrong by three points. tom: the story will be different tomorrow. stephanie kelly, thank you so much. 19 days until the election. the next real debate, october 22. bloomberg business flash. ritika: taiwan's semiconductor manufacturing has raised its full-year forecast, 36% increase
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in profits. it was boosted by orders from apple. greenwich, the strongest quarter in more than a decade. searching for extra space. single-family houses rose 70% in the third quarter. the median price, a little more than $2.1 million. increase in quarter expenses at wells fargo. the bank addressed old scandals and another $17 million restructuring. profits plunged 16%. things have been below analyst expectations. our charge-offs were 29 basis points in the quarter, which mirrors the best of times. we are not out of the woods. uncertainty, in terms of the path.
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it feels better than it did. ritika: that is your latest bloomberg business flash. tom: thanks. we greatly appreciate that. there is an election. tonight, historic moment. miami,sident, in or from nbc. , former vice president biden with abc. david westin drives the conversation. look for that in the 12:30 p.m. hour this afternoon. futures -43, from new york and london, considering a new forum of the pandemic, this is bloomberg. good morning. ♪
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>> if we need to act, it is important to halt the spread of the virus to protect others, sometimes ourselves, the elderly, vulnerable, those in a precarious situation.
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secondly, we need to protect our care workers, our health care system. francine: that was emmanuel macron imposing a curfew on paris and other 8 major cities. casesy has seen a record after angela merkel warned germany's economy could not handle a second wave. in the last 55 minutes, extra restrictions on london. berlin, thank you for coming on. we are all dealing with the same problem. sick or end up in the hospital. why are the remedies so different? chad: the real answer is everyone is taking a stab in the dark trying to come up with remedies that will try to bring the virus under control but
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avoids the lockdowns we saw earlier this year. economies across the region, the world, took a huge hit during lockdowns. everyone is saying, what can we do to stem the virus in hotspots that won't impact the economy? that is why we are seeing such different responses across the region. clearly, the one thing we will see more of are localized lockdowns, primarily in the biggest cities around europe. we have dr.u.s., fauci and the president battling in the heat of the election. on the continent, are politicians listening to scientists? .had: that is a good question there is no discussion about
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whether to wear masks. every politician is doing it. there is no question about distancing. there are political disagreements. the real discussion in europe is about the measures that go beyond that. do we close down restaurants? for how long? do we allow people to travel? if so, where? when it comes to the question of defiance, you have all the leaders following that. angela merkel is a scientist, the leader here in germany, and she has very much said, we have to follow it scientists tell us. francine: we had a great conversation with sir howard davies and he said even if there is a second lockdown in the u.k., and that would be similar for france and germany, it would be a different kind of lockdown, different restrictions because we have learned to live with it more. how do you see that? that is very true.
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we know so much more about the virus. we are learning to live with the number of cases. number,passed the daily the record they had set earlier in the year. while they are talking about restrictions, no one is talking about complete lockdown. while hospitalizations and deaths are creeping up, it is nothing like we saw earlier in the year. we know more about the virus and are doing a better job of dealing with it when people get it. it is generally younger people who are getting the virus now. tom: thank you so much. miller, early in the london morning, from berlin, each and every day. -40, down 2.83. deterioration real yield in the
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u.s., 1.00 on real yield, big change over 4 days, almost this inflationary tendencies, rampant. can you imagine a 1.16 handle on europe? francine: i was looking at euro levels. something we could hear more about. yieldsickly, some of the on european bonds, absolutely extraordinary. there could be something more drastic underneath that. tom: ann richards of fidelity international, we could talk about disinflation in europe. stay with us on the american elections. this is bloomberg. ♪ so you're a small business,
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or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america.
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but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business. tom: this morning, there is no
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debate. actually, there is no debate tonight. but there is zero debate, there wave of earlys voting." north one in five in carolina that did not vote in 2016. markets call it risk off. the real yield once more -1.00 %.even talk about socially distancing. cbs willandidates, offer big brother, the houseguest. they are sequestered. they are not allowed to watch any trump or biden campaign ads. punishment, i say. ," tomberg surveillance keene in new york, francine lacqua and london. i can forget about brexit. it is gone.


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