00:00♪ > > LEAKED DOCUMENTS RELATED TO MORE THAN $2 TRILLION. BANKS KEPT PROFITING EVEN AFTER THE U.S. INTRODUCED PENALTIES. LOCKDOWN TWO POINT OH. THE U.K. WILL SOUND THE ALARM ON RISING INFECTIONS TODAY. WITH JUST SIX WEEKS TO GO INTO THE U.S. ELECTION, THE SUPREME COURT HAS EMERGED AS A CRITICAL BATTLE AFTER THE DEATH OF JUSTICE RUTH BADER GINSBURG. WELCOME TO "BLOOMBERG SURVEILLANCE." THERE'S PLENTY GOING ON IN THE MARKETS, NOT WITHHOLDING EVERYTHING GOING ON WITH THE SUPREME COURT, AND WE ARE JUST ABOUT 46 OR 45 DAYS AWAY FROM THAT IMPORTANT U.S. ELECTION. THE PICTURE ON THE MARKET IS NOT GREAT FOR BANKS. YOU CAN SEE ACTUALLY BANKS WERE DOWN FROM 4.1%. IF YOU LOOK AT SOME OF THE THINGS WE SHOULD BE WATCHING OUT FOR, EUROPEAN STOCKS ARE DROPPING FOR A THIRD DAY. I'M CONCERNED RISING VIRUS CASES WILL LEAD TO TOUGHER TRAVEL RESTRICTIONS. LET'S GET TO FIRST WORD NEWS HERE IN LONDON. LEANNE: CONCERNS ARE MOUNTING THE U.K. MAY NEED A SECOND LOCKDOWN TO STOP THE SPREAD OF CORONAVIRUS. PRIME MINISTER BORIS JOHNSON IS SET TO BE TOLD TODAY THAT THE NATION IS AT A CRITICAL POINT IN THE PANDEMIC. THERE ARE EXPECTATIONS THAT LOCAL RESTRICTIONS COULD BE EXTENDED INTO LONDON. PRESIDENT TRUMP IS CELEBRATING THE TIKTOK DEAL, DESPITE IT FALLING SHORT ON SOME OF HIS KEY DEMANDS. THE APP'S CHINESE OWNERS WILL STILL HAVE AN 80% STAKE IN THE NEW COMPANY, BUT THE U.S. SOURCE FOR THE BUSINESS MEANS NEW JOBS. THE EUROPEAN CENTRAL BANK IS REPORTEDLY LAUNCHING A REVIEW OF ITS PANDEMIC BOND BUYING PROGRAM . ACCORDING TO "THE FINANCIAL TIMES" IT IS LOOKING INTO HOW LONG IT SHOULD CONTINUE AND IF IT'S FLEXIBILITY SHOULD BE EXTENDED TO OTHER PROGRAMS. IT WAS EXEMPTED FROM SOME OF THE SELF-IMPOSED RULES THAT CONSTRAINED ASSET PURCHASES. FRANCINE: THANK YOU SO MUCH. RUTH BADER GINSBURG, THE 87-YEAR-OLD SUPREME COURT JUSTICE, LIBERAL ICON, AND POP CULTURE PHENOMENON, DIED FRIDAY AFTER A BATTLE WITH PANCREATIC CANCER. THIS PUSHES THE SUPREME COURT FRONT AND CENTER IN THE PRESIDENTIAL RACE. TRUMP HAS SAID HE WILL NOMINATE A SUCCESSOR FOR GINSBERG DESPITE THE REPUBLICAN SENATE REFUSING TO CONSIDER BARACK OBAMA'S PICK FOR YEARS AGO. > > VOTERS SHOULD PICK THE PRESIDENT, AND THE PRESIDENT SHOULD PICK THE JUSTICE FOR THE SENATE TO CONSIDER. THIS WAS THE POSITION THE REPUBLICAN SENATE TOOK IN 2016 WHEN THERE WERE ALMOST 10 MONTHS TO GO BEFORE THE ELECTION. THAT'S THE POSITION THE UNITED STATES SENATE MUST TAKE TODAY. > > WE WILL UPHOLD EQUAL JUSTICE UNDER THE LAW FOR CITIZENS OF EVERY RACE, COLOR, RELIGION, AND CREED. I WILL BE PUTTING FORTH A NOMINEE NEXT WEEK. IT WILL BE A WOMAN. FRANCINE: JOINING US NOW IS DEREK WALLBANK, WHO HAS COVERED WASHINGTON IN THE PAST. WHAT HAVE WE LEARNED SINCE FRIDAY ABOUT HOW LIKELY IT IS PRESIDENT TRUMP'S SUPREME COURT PICK WILL GET CONFIRMED AND WHY THIS IS SUCH A CONTENTIOUS ISSUE. DEREK: IT LOOKS LIKE MITCH MCCONNELL AND SENATE REPUBLICANS ARE GOING TO MOVE FORWARD WITH A REPLACEMENT, WHOEVER DONALD TRUMP NOMINATES TO REPLACE RUTH BADER GINSBURG. I WOULD IMAGINE IT TO COME OFF SOME NAMES CURRENTLY IN CIRCULATION. DONALD TRUMP HAS DONE A VERY CLEAR JOB OF TELEGRAPHING THE SORTS OF JURISTS HE MIGHT PICK, INCLUDING RELEASING NAMES OF PEOPLE, SAYING, "HERE'S MY SHORTLIST." I DON'T THINK WE WILL SEE ANY SURPRISES IN TERMS OF HIS PICK, BUT IT'S LIKELY SOMEONE WHO'S OPINIONS ON ISSUES ARE LIKELY TO BE 180 DEGREES ON WHAT RUTH BADER GINSBURG WOULD HAVE DONE. YOU ARE LIKELY TO LOOK AT A 5-4 SPLIT BECOME A 6-3 REPUBLICAN MAJORITY, FIVE OF WHOM WOULD BE CONSIDERED VERY CONSERVATIVE. THERE'S THE POTENTIAL FOR A GENERATION PUT -- GENERATION SYMPATHETIC TO THE CONSERVATIVE POINT OF VIEW ON LEGAL DECISIONS. US -- THIS HAS DEMOCRATS FURIOUS, ESPECIALLY SINCE MAYOR GARLAND WAS NOT GIVEN A HEARING IN PRESIDENT OBAMA'S FINAL YEAR. THE SIMPLE FACT OF THE MATTER IS THAT REPUBLICANS, IF THEY FEEL LIKE THEY HAVE THE VOTES, ARE GOING TO GO PUT THIS PERSON ON THE SUPREME COURT. FRANCINE: WHAT WOULD YOU BE WATCHING FOR? > > I THINK A LOT OF PEOPLE ARE GOING TO TALK ABOUT SOCIAL ISSUES STRAIGHT OFF. THEY ARE GOING TO TALK ABOUT ROE V. WADE, WHICH IS THE DECISION THAT SORT OF UNDERPINS ABORTION RIGHTS IN THE UNITED STATES, BUT ONE OF THE THINGS I'M WATCHING IS ON FEDERAL REGULATIONS, SPECIFICALLY THE SCOPE OF REGULATION. REPUBLICANS HAVE BEEN TRYING FOR A LONG TIME -- PEOPLE WHO HAVE BEEN SEARCHING FOR CONSERVATIVE JURISTS HAVE BEEN TRYING TO NARROW THE SCOPE OF FEDERAL REGULATION WHEN IT IS NOT EXQUISITELY STATED IN TEXT. THIS IS SOMETHING YOU WILL HEAR IN THE NEWS. IT MEANS THE SCOPE OF FEDERAL RULEMAKING ABILITY RELATED TO OLD STATUTES, SO YOU'RE LOOKING AT SOMEBODY WHO CAN REALLY NARROW THAT, NARROW THE SCOPE OF FEDERAL REGULATIONS. THAT SHOWS UP IN A LOT OF WAYS, THAT SHOWS UP IN ENVIRONMENTAL REGULATION. THAT SHOWS UP IN THE SCOPE OF REGULATIONS OTHERWISE SUCH AS OBAMACARE, SUCH AS HEALTH CARE, ANYTHING LIKE THAT, THE SCOPE OF WHAT CONGRESS IS ABLE TO DO. I WOULD EXPECT DEMOCRATS ARE NOT GOING TO TAKE ALL THIS LYING DOWN. THERE IS A REAL CHANCE THEY COULD WIN THE PRESIDENCY. IF ANYTHING, JOE BIDEN IS FAVORED RIGHT NOW. THERE'S ALSO A CHANCE THEY COULD BEEF UP THE SENATE. THAT'S MORE A COIN FLIP AT THIS POINT, BUT IF DEMOCRATS WIN THE SENATE AND TAKE THE WHITE HOUSE, THEY ARE TALKING ABOUT IF YOU HAPPEN TO CONSIDER OUR COURT PICKS FAIRLY AND THEY FEEL LIKE THEY'VE LOST TWO SEATS, EXPECT SOME REAL MOVEMENT FROM DEMOCRATS IN TERMS OF CONSIDERING EXPANDING THE SIZE OF THE SUPREME COURT. MAYBE MOVING FORWARD ON STATEHOOD FOR THE DISTRICT OF COLUMBIA OR PUERTO RICO OR OTHER MEASURES. I DON'T EXPECT DEMOCRATS TO SIT DOWN ON THIS. LAST THING I WILL SAY IS THIS -- YOU HAVE SEEN $100 MILLION POUR INTO DEMOCRATIC COFFERS IN THE DAYS SINCE RUTH MURDER -- RUTH BADER GINSBURG PASSED AWAY. THERE'S A REAL URGENCY ON THE DEMOCRATIC SIDE TO DO THINGS. IN 2020, YOU ARE SEEING PROGRESSIVES LIKE AOC GO OUT AND PUT OUT VIDEOS SAYING, LOOK, THIS IS EXISTENTIAL. WE NEED JOE BIDEN RIGHT NOW. IF ANYTHING, THIS HAS ENERGIZED DEMOCRATS WHO MIGHT HAVE BEEN SKEPTICAL ABOUT BIDEN, WHO ARE NOW SAYING LOOK, THE CHOICE COULD NOT BE CLEARER, COULD IT? FRANCINE: THANKS VERY MUCH. LET'S TALK ABOUT THE ELECTION AND WHAT IT MEANS FOR THE MARKETS. JOINING US THIS MORNING, THE HEAD OF GLOBAL MARKET STRATEGY EM EA. WHAT DOES THIS SUPREME COURT OF PEOPLE MEAN FOR THE MARKETS? > > THERE'S BEEN A LOT OF COMMENTARY AROUND HOW A BIDEN WIN COULD LEAD TO HIGHER CORPORATE TAXES, BUT THE KEY ISSUE FOR THE CORP. -- FOR THE U.S. ECONOMY IS THE FACT WE HAVE SEEN THE FISCAL STIMULUS EBBING, SO ACTUALLY, WERE WE TO SEE A DEMOCRAT WIN WHERE BIDEN WON THE PRESIDENCY AND DEMOCRATS TOOK THE SENATE AND HOUSE, I THINK ABOUT THE FISCAL STIMULUS YOU WOULD LIKELY -- YOU WOULD BE LIKELY TO SEE IN THAT SCENARIO. IF YOU GOT A REPUBLICAN SUITE AS WELL, YOU WILL PROBABLY STILL SEE FISCAL STIMULUS, SO IN MY MIND, THE MOST IMPORTANT THING FOR THE MARKET IS THAT WE DO NOT END UP THEY DIVIDED SENATE -- WITH DIVIDED SENATE OR A SITUATION WHERE THE SENATE IS BLOCKING FURTHER STIMULUS POTENTIALLY IF WE HAD BIDEN AS PRESIDENT. FRANCINE: AT THE MOMENT, WHAT IS THE MARKET PRICING IN, AND ACTUALLY, DO YOU TRUST THE POLLS OR EXPECT THEM TO NARROW EVEN FURTHER? > > THE MARKET IS AWARE THAT IT'S GOING TO BE A PRETTY CLOSE RACE, SO I THINK THE MARKET IS -- YOU LOOK AT THE ODDS AT THE MOMENT, IT SUGGESTS THE MOST LIKELY OUTCOME AT THE MOMENT IS THAT YOU ARE GOING TO GET A TIE IN THE SENATE AND THAT THEREFORE, WHOEVER WINS THE ELECTION FOR THE PRESIDENCY IS GOING TO HAVE THE DECIDING VOTE. I THINK THAT IS WHAT THE MARKET IS PROBABLY PRICING IN AS A BASE CASE, THAT IF THE ELECTION WERE HELD TODAY AND THOSE PREDICTED ODDS WERE CORRECT, WOODEN PIE -- WOOD IMPLY BIDEN AS PRESIDENT, OR CUT CONTROL OF THE SENATE AND HOUSE. IT'S BECAUSE THE MARKET IS STARTING TO MOVE TO A VIEW, THE FISCAL STIMULUS WOULD TRUMP ANY POTENTIAL INCREASE IN TAXES ON THE CORPORATE SIDE IN TERMS OF IMPACT ON THE ECONOMY, BUT THAT HAS NOT PROVED PROBLEMATIC IN TERMS OF THE MARKET OVER THE LAST FEW WEEKS OR MONTHS. FRANCINE: WHAT HAPPENS TO THE DOLLAR? > > I THINK THAT -- THERE'S A LOT OF FACTORS. THE DOLLAR TENDS TO PERFORM WELL IN A SORT OF RISK OFF ENVIRONMENT, SO IF WE SEE A VACCINE AND WE SEE A DEMOCRAT SWEEP WITH A BIG FISCAL STIMULUS, THEN I THINK YOU PROBABLY SEE DOWNWARD PRESSURE ON THE DOLLAR. IF WE DON'T GET A VACCINE AND WE GOT TROUBLE AROUND THE WINTER WAVE OF INFECTIONS, AS WE ARE SEEING IN THE EUROPE AT U.K. AT THE MOMENT, AND THAT LEADS PEOPLE TO QUESTION THE NARRATIVE THAT WE ARE GOING TO SEE A CONTINUED ECONOMIC RECOVERY FROM HERE, IN THAT SCENARIO, THE DOLLAR COULD FARE WHOLE LOT BETTER. FRANCINE: THANKS VERY MUCH. COMING UP, A CRIPPLE POINT IN THE CORONAVIRUS PANDEMIC. U.K.'S CHIEF MEDICAL OFFICER FRANCINE: ECONOMICS, FINANCE, POLITICS -- THIS IS "BLOOMBERG SURVEILLANCE." WE ARE JUST GETTING A BIT OF HEADLINE NEWS OUT OF EUROPEAN MARKETS. THE FTSE INDEX 600 HAS FALLEN TODAY, THE MOST SINCE JULY 30, AND EUROPEAN STOCKS ARE DROPPING UNCONCERNED RISING VIRUS CASES WILL LEAD TO TOUGHER TRAVEL RESTRICTIONS. I'M ALSO LOOKING AT OIL RETREATING, TREASURIES RISING. LET'S TALK ABOUT A SECOND POSSIBLE LOCKDOWN, A POSSIBLE TRAVEL RESTRICTION, WHAT EXACTLY IS THE MARKET LOOKING AT RIGHT NOW? PART OF IT IS, OF COURSE, THE NUMBER OF INFECTIONS RISING. SECOND FULL LOCKDOWN, AND AS ANYTHING SHORT OF A SECOND FULL LOCKDOWN GOING TO BE SEEN AS STIMULUS FOR THE MARKETS? > > AT DEFINITELY ON MARKET CONCERN. THEY'VE BEEN OPERATING A -- UNDER THE ASSUMPTION THAT WE WOULD NOT SEE A RETURN TO FURTHER LOCKDOWNS AND THAT IT WOULD BE DEALT WITH AT A LOCAL LEVEL AND WITH LESS SEVERE MEASURES AND WE'VE SEEN IN THE PAST. IT'S NOT JUST THE INFECTION RATES, WHICH WE SEEM TAKING UP IN THE U.K. AND ALSO PARTS OF EUROPE, PARTICULARLY FRANCE AND SPAIN, BUT THE MARKET, PARTICULARLY IN EUROPE, HAS BEEN FOCUSED ON THE IDEA THAT WHILE THE NUMBER OF DEATHS REMAINED LOW, THAT IT WAS UNLIKELY TO TURN INTO FURTHER LOCKDOWN MEASURES, BUT THE NEWS WE ARE SEEING COMING OUT OF THE U.K. OVER THE WEEKEND THAT POTENTIALLY THERE IS A RISK OF MORE SEVERE LOCKDOWN MEASURES BEING PUT IN PLACE I THINK IS CAUSING INVESTORS TO QUESTION THAT NARRATIVE AND INCREASED FEARS THIS COULD BE A DIFFICULT AUTUMN AND WINTER. FRANCINE: WE ALSO HAVE THAT LOOMING DEADLINE FOR BREXIT. AS FAR AS WE KNOW, THERE WAS A HOPE FOR A DEAL. WHAT DO YOU DO WITH ASSETS RIGHT NOW IN THE U.K.? > > MY FIRST POINT WOULD BE I WOULD BE CAUTIOUS ABOUT BEING OVERWEIGHT THE DOMESTIC U.K. REVENUES, BUT OF COURSE, THE FTSE 100 ACTUALLY GETS THE MAJORITY OF ITS REVENUES FROM OUTSIDE OF THE U.K. SOME OF THOSE WOULD STILL BE EXPOSED TO BREXIT IN THE FORM OF EUROPEAN REVENUES, BUT STILL, MORE THAN HALF OF THE REVENUES IN THE FTSE 100 COME FROM OUTSIDE THE U.K. OR EUROPE, PLACES LIKE THE EMERGING MARKETS AND U.S. AS THE SOURCE FOR A LARGE PART OF U.K. REVENUES. I WOULD BE TILTED MORE TOWARDS THOSE INTERNATIONAL EX-U.K., EX-EUROPE REVENUES AS A WAY OF MINIMIZING THAT EXPOSURE TO A POTENTIAL NO DEAL BREXIT FALLOUT OR, INDEED, THE HIT WHICH I THINK COULD COME THROUGH IF WE DON'T SEE AN EXTENSION. THE RISKS CURRENTLY IN MY MIND ARE TWOFOLD, CURRENTLY THAT WE SEE ANOTHER HIT TO THE ECONOMY FROM THE VIRUS AND POTENTIAL LOCKDOWN MEASURES, BUT EVEN WITHOUT THAT, I THINK WE COULD SEE A HIT AS THE INCOMES THAT HAVE BEEN PROPPED UP SO FAR FRANCINE: WHEN DO WE START WORRYING ABOUT INFLATION? IF WE EVER START WORRYING ABOUT INFLATION. > > THERE'S GOING TO BE A POTENTIAL TICK -- TEMPORARY PICKUP IN INFLATION AT SOME POINT IN THE NEXT 12 MONTHS, BUT LOOKING OUT ON THE MORE IMMEDIATE TERM, I THINK INFLATION IS ONLY A CONCERN IF UNEMPLOYMENT IS KEPT LOW. WERE WE TO GET THROUGH THIS COVID DISRUPTION WITH THE UNEMPLOYMENT RATE HAVING BEEN KEPT AT A LOW LEVEL BECAUSE OF FURTHER FISCAL SUPPORT, THEN ONCE WE GET A VACCINE, WE COULD SEE A BIG SNAPBACK IN DEMAND, AND THAT COULD LEAD TO A PICKUP IN INFLATION BECAUSE THE UNEMPLOYMENT RATE IS SUPPOSED TO BE LOW, BUT IF THE UNEMPLOYMENT RATE IS ALLOWED TO RISE SUBSTANTIALLY BECAUSE FISCAL STIMULUS WAS ABSORBED TOO SOON, THAT I THINK IT WILL TAKE SEVERAL YEARS FOR US TO HAVE TO WORRY ABOUT INFLATION FRANCINE: IN THIS KIND OF ENVIRONMENT, WHAT DO YOU DO WITH GOLD? > > I THINK GOLD IS FASCINATING. IT HAD QUITE A STRONG PERIOD OF PERFORMANCE, BUT IT'S BEING DRIVEN BY DECLINE IN REAL YIELD. DECLINE IN REAL YIELD COMES IN TWO PHASES. THE FIRST PART WAS NOMINAL YIELDS WELL, THE SECOND PART WAS INFLATION EXPECTATION GROWS. THE PROBLEM HERE, I THINK GOLD IS A HEDGE AGAINST FURTHER MONETIZATION OF FISCAL DEFICIT, WHICH WOULD KEEP GUM AT -- GOVERNMENT NOMINAL YIELDS LOW BUT LEAD TO A FURTHER RISE IN INFLATION EXPECTATION. IF INFLATION EXPECTATION FALLS FROM HERE, THAT COULD ACTUALLY PROVE NEGATIVE FOR GOLD BECAUSE IT WOULD PUT UPWARD PRESSURE ON REAL YIELD. FUNDAMENTALLY, THE CORRELATION HAS RISEN AS WE HAVE SHIFTED INTO THIS PHASE OF REAL YIELD TO BEING DRIVEN BY INFLATION EXPECTATIONS. FRANCINE: THANK YOU SO MUCH, GLOBAL MARKET STRATEGIST FOR EMEA AT J.P. MORGAN. COMING UP, HOW SOME OF THE WORLDS BIGGEST BANKS HAVE FRANCINE: THIS IS "BLOOMBERG SURVEILLANCE." IF YOU LOOK AT WHAT EXACTLY WE'VE BEEN SEEING, THE INDEX DOWN THE MOST SINCE EARLIER IN THE SUMMER. U.S. 30-YEAR TREASURIES RALLYING. THAT YIELD AT 1.40, AND IT IS SOMETHING WE KEEP AN EYE ON. MAINLY THE MARKET SEEMS TO BE IN A RISK OFF MOVE, PARTLY TO DO WITH THE BANKING STORY WE WILL GET YOU IN A SECOND, PARTLY ALSO DUE TO WHAT HAS BEEN HAPPENING WITH INFECTION RATES, AND THEY WORRY ABOUT A POSSIBLE SECOND LOCKDOWN. LEAKED DOCUMENTS INVOLVING ABOUT $2 TRILLION IN TRANSACTIONS REVEAL HOW SOME OF THE WORLD'S BIGGEST BANKS HAVE ALLOWED CRIMINALS TO MOVE DIRTY MONEY AROUND THE WORLD. DANNY, GOOD MORNING TO YOU. WHAT DO WE ACTUALLY KNOW? DANI: THESE FILES OBTAINED BY BUZZFEED NEWS AND SHARED WITH AN INTERNATIONAL CONSORTIUM OF LENDERS. LENDERS FILED THESE SUSPICIOUS ACTIVITY REPORTS TO THE FINANCIAL CRIME ENFORCEMENT NETWORK, AND THESE WILL BE REPORTS ON ANYTHING THAT LOOKS SUSPICIOUS, ANYTHING THAT MIGHT INDICATE MONEY LAUNDERING OR ANY OTHER SORT OF INITIAL CRIME, SO THERE'S EVERYTHING FROM PROFITS FROM DEADLY DRUG WARS, EMBEZZLED FORTUNES FROM DEVELOPING COUNTRIES, ENABLEMENT OF PONZI SCHEMES, SO ANYTHING THAT LOOKS SUSPICIOUS, $2 TRILLION WORTH, BUZZFEED WAS ABLE TO SEE. THEY HAVE BEEN REALLY SHIELDED FROM THE PUBLIC EYE. THIS IS THE FIRST DETAILS WE ARE REALLY LEARNING FROM. THE CONCERN IS OVER WHAT ACTION HAPPENS AFTER THEY ARE FILED. ACCORDING TO THIS REPORT, OFTEN, NOT A LOT OF ACTIONS ARE TAKEN. SOME OF THESE REPORTS ARE SHARED WITH CRIME ENFORCEMENT NETWORKS. HOWEVER, IN TERMS OF STOPPING MONEY LAUNDERING ITSELF, THAT'S THE REACTION THAT IS NOT EXACTLY SEEN. SOME OF THE DETAILS IN HERE, STANDARD CHARTERED ACCUSED OF MOVING MONEY ON BEHALF OF THE ALEX RONEY EXCHANGE, WHICH IS A DUBAI-BASED BUSINESS LEADER ACCUSED OF HELPING LAUNDER MONEY FOR THE TALIBAN. HSBC'S HONG KONG BRANCH TRANSFERRING ABOUT $15 MILLION, ALLOWING A PONZI SCHEME TO HAPPEN. SOME OF THOSE EXPLOSIVE REPORTS, AND REAL CONCERN ABOUT WHAT ACTION WAS TAKEN AFTERWARDS. FRANCINE: OUR DANI BURGER ON THE NEWS REALLY ROCKING BANKS. THIS IS WHAT EUROPEAN BANKING STOCKS ARE DOING. ONE OF THE BIGGEST LOSERS IN TERMS OF THE INDUSTRIES IS, OF COURSE, THE BANKS. THIS IS WHAT WE ARE SEEING ON THE FTSE 100, DOWN TWO .7%. THE DAX ALSO DOWN 2.5 PERCENT. A LOT OF THE FOCUS IS ON THIS POSSIBLE SECOND LOCKDOWN FOR LONDON. U.S. FRANCINE: THIS IS BLOOMBERG SURVEILLANCE. WE ARE LOOKING AT U.S. EQUITY FUTURES SINKING AND TREASURIES RISING. HE FTSE DOWN SOME 2.8%. IT REALLY IS LED BY AIRLINES AND TRAVEL COMPANIES. THOSE ARE LEADING THE LOSSES IN THE EUROPEAN STOXX 600. PART OF IT OF COURSE IS AS CONCERN OF A SECOND LOCKDOWN, AND I'M ALSO LOOKING AT SOME OF THE BANKING STOCKS. HSBC FALLING TO THE LOWEST SINCE 95. EUROPEAN SHARES OF BANKS DOWN FOLLOWING THE STORY OF INTERNATIONAL CONSORTIUM OF INTERNATIONAL -- OF JOURNALISTS ON LEX'S IN INTERNATIONAL ACTIVITY REPORTS. LET'S GET TO FIRST WORD NEWS WITH LEIGH-ANN GERRANS. LEIGH-ANN: CONCERNS ARE MOUNTING THAT THE U.K. MAY NEED A SECOND LOCKDOWN STOP THE SPREAD OF CORONAVIRUS. PRIME MINISTER ORIS JOHNSON IS SET TO BE TOLD TODAY -- PRIME MINISTER BORIS JOHNSON IS SAID TO BE TOLD TODAY THAT THE NATION IS AT A CRITICAL POINT IN THE PANDEMIC, LOCAL RESTRICTIONS COULD BE EXTENDED TO LONDON. LONDON MAYOR SADIQ KHAN COULD BE TIGHTENING THE RULES TODAY. MIKE POMPEO IS HITTING OUT EUROPE TO SUPPORT THAT SHE SAYS GOVERNMENTS ARE PROPERLY TOLD HIM THAT THE U.S. IS RIGHT EVEN IF THEY WILL NOT PUBLICLY ACKNOWLEDGE IT. THE U.S. PLANS TO TIGHTEN RESTRICTIONS WHEN IT COMES TO A SNAPBACK OF SANCTIONS ON THE COUNTRY. CHINA IS RATCHETING UP TENSIONS IN THE TAIWAN STRAIT, HOPING TO DETER TAIPEI FROM DEEPER TIES WITH U.S. AND A SERIES OF MILITARY EXERCISES. CHINA REPEATEDLY BRINGS -- BEIJING REGARDS THE ISLAND AS PART OF ITS TERRITORY, EVEN THOUGH IT HAS BEEN RULED SEPARATELY FOR MORE THAN 70 YEARS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, I AM LEIGH-ANN GERRANS. THIS IS BLOOMBERG. FRANCINE? FRANCINE: WE ARE GETTING BREAKING NEWS OUT OF LEE UNILEVER -- OUT OF UNILEVER. THERE WAS TALK ABOUT MOVING THE HEADQUARTERS, AND THAT GOT PUSHED BACK. IT SEEMS NOW THE DUTCH SHAREHOLDERS JUST PUTS A VOLT -- A VOTE ARE ALL ON BOARD. LET'S GET BACK TO THE U.S., 42 DAYS AWAY FROM THE ELECTION AND EARLY VOTING IS ALREADY UNDERWAY IN SEVERAL STATES. THE DEATH OF RUTH BADER GINSBURG MAY RESHAPE THE CAMPAIGN FOR PRESIDENT TRUMP AND HIS OPPONENT, JOE BIDEN. JOINING US NOW IS STEPHANIE KELLY, SENIOR POLITICAL ECONOMIST AT ABERDEEN STANDARD INVESTMENT. GREAT TO HAVE YOU ON THE PROGRAM. THIS COULD RESHAPE THE ELECTION CAMPAIGNS. STEPHANIE: I THINK IT CERTAINLY COULD, PARTICULARLY IF WE LOOK AT THE ELECTION CAMPAIGN OVER THE LAST FEW MONTHS AND HOW INCREDIBLY STABLE IT HAS BEEN. REMARKABLY SO. WE ARE WONDERING WHAT MIGHT THINK SHAGS SHAKE THINGS UP. IN TERMS OF PRESIDENT TRUMP'S ELECTION STRATEGY, IS NOW VERY CLEAR. AS A WIN PARTICULAR FOR CONSERVATIVE VOTERS TRYING TO MOTIVATE IS VERY LARGE CONSISTORY -- CONSISTENCY OF WHITE EVANGELICAL VOTERS. FRANCINE: WHAT DOES THIS DO IN THE MINDS OF PEOPLE WHO DID NOT KNOW WHO TO VOTE FOR? STEPHANIE: IT IS TRICKY IN THAT REGARD BECAUSE IF WE LOOK AT 2018 WHEN A JUSTICE WAS CONFIRMED, WHEN WE LOOK AT RED STATES, THE REPUBLICANS DID WELL AND RED STATES, THEY -- THE DEMOCRATS DID WELL IN BLUE STATES. IT'S HARD TO DRAW A CONCLUSION, PARTICULARLY WITH SWING VOTERS IN THE MIDDLE WHO ARE NOT OVER IDEOLOGICAL EITHER WAY. NOT OVERLY CONSERVATIVE AND OVERLY LIV LIBERAL. THOSE WHO SAID THEY WERE GOING TO VOTE FELT CERTAIN OF WHO THEY WERE GOING TO VOTE FOR. EVERYTHING IN THE NEXT FOUR WEEKS WILL BE CLEAR AT THE MARGINS, TRYING TO REACH THE SWING VOTERS. FRANCINE: WILL THIS NARROW THE POLLS GOING FORWARD? STEPHANIE: IT COULD. I FELT INCLINED TO PAUSE IN TERMS OF WHETHER IT ABSOLUTELY WILL OR IT ABSOLUTELY WON'T. IT IS A HUGE WHEN LONGER-TERM, ELECTION ASIDE. HOWEVER, DEMOCRATS ARE VERY UNHAPPY ABOUT THIS, AND INDEED RELATIVELY LIBERAL SWING VOTERS ARE PERHAPS UNHAPPY WITH THE WAY THIS IS DONE, BECAUSE IN 2016 PRESIDENT OBAMA COULD NOT EVEN GET A HEARING IN THE SENATE BECAUSE REPUBLICAN SAID IT WAS THE WRONG TIME , BUT NOW THAT SHE WAS ON THE OTHER FOOT. IT COULD HAVE AN IMPACT WITH DEMOCRATIC SYMPATHETIC VOTERS. IF THERE IS AN IS EVER AN EVENT TO BREAK VOLATILITY TO THE POLLS, THIS IS PROBABLY IT. I ALSO -- FRANCINE: I ALSO WANT TO ASK YOU ABOUT THE U.K., LOOKING AT A POSSIBLE SECOND LOCKDOWN FOR LONDON. DOES THIS CHANGE THE NARRATIVE FOR BREXIT? IS THERE A TURNING POINT WHERE IF WE GO IN LOCKDOWN, THEN THE PRIME MINISTER CAN AFFORD TO GO MUCH HARDER ON BREXIT BECAUSE HE WANTS THAT TO BE HIS LEGACY? STEPHANIE: I THINK IT IS TRICKIER TO SAY THAT HE WANTS TO GO HARDER ON BREXIT. IF ANYTHING, THE FACT THAT YOUR FACING POTENTIAL LOCKDOWNS WITH SOME OF THE RESTRICTIONS WITH SCOTLAND AND IRELAND, ALL OF THAT IS TENSIONED WITH -- IS POTENTIALLY PROBLEMATIC FOR JOHNSON, AGAINST THE ECONOMIC BACKDROP, IT IS JUST ANOTHER FACTOR THAT WOULD LOOK LIKE -- ALTHOUGH DESPITE A COUPLE OF PARTS OF THE VOTER BASE, THE REALITY IS THAT THERE ARE NO MORE EXTENSIONS HERE. IT IS JUST ABOUT IF YOU GET A DEAL OR YOU DO NOT GET A DEAL. FRANCINE: WE ARE KIND OF JUMPING AROUND BECAUSE I WANT TO BRING YOU ALL THE BIG STORIES FROM AROUND THE WORLD. WHAT IS YOUR TAKE ON TIKTOK? PRESIDENT TRUMP KIND OF GAVE IT HIS BLESSING. IS THAT A DONE DEAL, OR ARE WE GOING TO SEE THE ADMINISTRATION GOING AFTER SIMILAR COMPANIES? STEPHANIE: THAT IS THE KIND OF MESSAGE. NOT JUST TIKTOK IN THE U.S., BUT ALSO OVER THE WEEKEND WE SAW AND CHINA IN TERMS OF BEING -- REALLY, WHAT WE SHOULD CONTINUE TO EXPECT IS CONTINUATION OF THE ONGOING TARIFF TRADE WAR. THE REALITY IS THAT THESE KINDS OF MOVES REALLY POLITICIZE THE TREND, POLITICIZE BUSINESS DECISIONS, AND CREATE LONG-TERM BARRIERS BETWEEN THE TWO COUNTRIES THAT I THINK ARE ONLY LIKELY TO ESCALATE. EVEN UNDER A BITE ADMINISTRATION. YOU SEE THAT CONTINUED PRESSURE TO CONTINUE TO EKE OUT NONTARIFF BARRIERS SO THAT THE TWO ECONOMIES REALLY CONTRACT. FRANCINE: STEPHANIE KELLY FROM ABERDEEN STANDARD INVESTMENT STAY WITH US. WE ARE SEEING A SELLOFF IN EUROPEAN MARKETS EXTENDING TO U.S. FUTURES. IF YOU LOOK AT THE INDUSTRIES DOWN THE MOST, WE HAVE INDUSTRIES, AIRLINES, AND WE ALSO HAVE BANKS. FRANCINE: THIS IS "BLOOMBERG SURVEILLANCE," I'M FRANCINE LACQUA IN LONDON. LET'S GET TO THE BLOOMBERG BUSINESS LEIGH-ANN GERRANS. LEIGH-ANN: A GLOBAL CRACKDOWN ON BANKS DOES NOT SEEM TO HAVE CURBED SUSPICIOUS ACTIVITY. LEAKED DOCUMENTS TIED TO MORE THAN $2 TRILLION OF TRANSACTIONS SHOW SOME LENDERS CONTINUE TO PROFIT EVEN AFTER THE U.S. IMPOSED PENALTIES ON THEM. THE SO-CALLED FEN FILES WERE RELEASED OVER THE WEEKEND BY A CONSORTIUM OF INVESTOR NEGATED JOURNALISTS. AFTER BEING OBTAINED BY BUSBY NEWS. THE CEO OF -- DECEIVING INVESTORS ABOUT ITS PROSPECTS. THOSE CLAIMS ARE NOW SUBJECT TO A PROBE BY THE SEC, AND REPORTEDLY ALSO THE DEPARTMENT OF JUSTICE. AND A WHISTLEBLOWER AT BOEING IS URGING AVIATION REGULATORS TO ADD ADDITIONAL PROTECTIONS TO THE GROUNDED 747 MAX -- 737 MAX. HE SAID THE PROPOSED FIXES DO NOT ADDRESS MULTIPLE HAZARDS IDENTIFIED IN TWO FATAL ACCIDENTS. THE FAA HAS TO REVIEW MORE THAN 160 COMMENTS THAT HAVE BEEN FILED BEFORE DECIDING WHETHER TO APPROVE THE PLANE'S RETURNED TO SERVICE. THAT IS YOUR BLOOMBERG BUSINESS FLASH. FRANCINE? FRANCINE: LET'S GETS MORE -- LET'S GET MORE ON THIS MORNING'S MARKET ACTION. A REPORT ON BANK ALLEGATIONS AND SIGNS THAT LONDON IS HEADING FOR A SECOND LOCKDOWN. U.S. TREASURIES GETTING IN THE RISK OFF MOVE. DANI BURGER, WHAT ARE THE MARKETS WORRIED ABOUT? DANI: IT IS THIS NARRATIVE ABOUT MARKETS AND TRADERS WAKING TO THE REALITY THAT ON THE NORTHERN HEMISPHERE AS WE ENTER THE WINTER, CASES OF CORONAVIRUS ARE NOT GOING TO GET MUCH BETTER. AS YOU MENTIONED, CONCERNS OF ANOTHER LOCKDOWN IN LONDON, AND BROADLY ACROSS THE U.K., WHICH WOULD HURT THE ECONOMY A LOT. YOU ADD INTO THIS THE LATEST REPORT FROM THE ICI J, THE INTERNATIONAL CONSORTIUM OF INVESTIGATIVE JOURNALISM, BUZZFEED, OVER CONCERNS OVER AREAS MONEY LAUNDERING SCHEMES. BUT BESIDES THAT, THIS IS HISTORICALLY A BEARISH PERIOD. THE NEXT 20 DAYS AFTER SEPTEMBER 25 IS THE MOST DIFFICULT TIME FOR TRADERS TO TURN A PROFIT, HISTORICALLY, ACCORDING TO A XI INVESTMENTS. HE ALSO HAD INTO A PERIOD WHERE YOU HAVE A U.S. ELECTION, AND HEDGING INCREASES FOR THAT IN INCREASED VOLATILITY. ALL OF THAT TO SAY THAT WHEN WE GET ANY SORT OF INCREASES, ANY SORT OF GAIN IN STOCKS THAT WE ARE SEEING, WHAT WE ARE SEEING MORE OFTEN THAN NOT IS THAT STARTING TO FADE, SO THE LOSSES REALLY RAMPED UP WHEN EUROPE CAME INTO LINE, AND THE QUESTION WILL BE WHEN MORE U.S. TRADERS COME INTO THE LINE, THE -- THE SOLID BEARISH SCENARIO AND ARGUMENT THAT YOU COULD MAKE WITH ALL THESE RISKS, AND I THINK THAT IS REALLY HELPING TO SEE ALL OF THESE SECTORS. THE WIDER MARKET CONTINUING TO DRIFT DOWN THIS MORNING. FRANCINE: DANI BURGER WITH THE LATEST ON THE MARKETS. BRIAN MOYNIHAN, CHAIRMAN AND CHIEF EXECUTIVE OF BANK OF AMERICA, TOLD BLOOMBERG THERE SHOULD BE ANOTHER ROUND OF FEDERAL STIMULUS TO HELP THE U.S. REACH A FULL ECONOMIC RECOVERY FROM THE CORONAVIRUS PANDEMIC. WE CAUGHT UP WITH HIM AHEAD OF THIS WEEK'S UP A BLOOMBERG EQUALITY SUMMIT. > > OUR RESEARCH TEAM SAYS THAT THE UNITED STATES WILL BE DOWN 4% FOR THE YEAR, THAN NEXT YEAR OF 5% OR SO. BUT THE KEY IS TO THINK ABOUT A QUARTER BY QUARTER. YOU HAD A DEEP DROP IN THE ECONOMY LAST QUARTER, YOU ARE BACK UP TO 95% OF THE ECONOMY RESTORED ON A QUARTERLY BASIS, AND THEN WE ARE GOING TO WORK OUT FROM THERE. THE HIGH NET WAS A 1% TO 2% GROWTH ECONOMY. SO THE IDEA THAT IT IS RECOVERING THAT LAST FIVE PERCENTAGE POINTS TOMORROW MORNING, HE WILL TAKE A WHILE TO GRIND THROUGH THAT. EVERY ESTIMATE, INCLUDING WHAT YOU HEARD FROM CHAIRMAN POWELL YESTERDAY, HAS GOTTEN BETTER RATHER THAN WORSE. WHY IS THAT? BECAUSE CONSUMER ACTIVITY STAYS STRONG. THE FISCAL STIMULUS, MONETARY STIMULUS, PROGRAMS THE FED HAS BETWEEN THE GOVERNMENT, THE ADMINISTRATION, CONGRESS, AND WHAT THE FED DID, THEY FILLED THE WHOLE, FOR LACK OF BETTER TERM, TO BRING THE ECONOMY BACK UP TO LEVEL, AND I WE'VE GOT TO LET IT WORK OUT FROM THERE THEY PROBABLY NEED MORE STIMULUS FOR VERY DEFINED PLACES THAT ARE STILL IN DIFFICULTY -- RESTAURANTS, STATE AND LOCAL GOVERNMENTS, SCHOOLS, PERFORMING EVENTS, VENUES, INDUSTRIES, AIRLINES AND OTHER THINGS THAT YOU JUST CANNOT HAVE PEOPLE DEAL WITH AT THE RATE THAT WE HAD BEFORE. WHAT DO WE SEE? CONSUMER SPENDING IS UP YEAR-OVER-YEAR. THAT IS UP YEAR-OVER-YEAR. THAT'S GOOD NEWS. WE ARE SEEING CONSTRUCTIVE GROWTH FINALLY. IT WAS GROWING AT 10%, IT FELL, AND IT HAS WORKED BACK TO EVEN AND WE WILL PROBABLY SEE IT GROW YEAR-OVER-YEAR. THAT IS GOOD NEWS FOR THE ECONOMY, MEANING THAT AMOUNT OF ACTIVITY GOING ON IN OUR ECONOMY IS RESTORED. DAVID: YOU SAID -- CHAIRMAN POWELL SAID THAT THERE IS A LOT OF UNCERTAINTY OUT THERE. HOW BADLY DO WE NEED STIMULUS? WE HAVE AN ELECTION COMING UP, AND THERE IS A CORONAVIRUS. WE DON'T KNOW ABOUT A VACCINE. BRIAN: THIS IS A HEALTH CARE CRISIS, AND I SAID IT BACK IN MARCH AND I SAID IT WITH YOU A FEW MONTHS AGO. PEOPLE CANNOT FORGET THAT. THIS IS A HEALTH CARE CRISIS. WHAT HAS HAPPENED OVER THE LAST SIX MONTHS WITH A HEALTH CARE CRISIS, YOU'RE SEEING THE POTENTIAL FOR VACCINE, BUT YOU ARE SEEING BETTER BEHAVIOR TO CONTINUE TO KEEP THINGS FOR SPREADING AS FAST. IN THE NORTHEAST YOU HAVE SEEN THAT INFECTION RATES ARE MUCH DIFFERENT THAN THEY WERE EARLY ON. YOU'RE SEEING THE TREATMENT REGIMENS IS DIFFERENT AND ALSO BECAUSE OF PERSONAL BEHAVIOR, PEOPLE HIGH-RISK, STAYING EVEN MORE CAREFUL, THE IMPACT OF THE VIRUS IS STILL HUGELY HURTFUL TO PEOPLE WHO GET IT. BUT NOT AS BAD OUTCOMES. THAT IS GOOD NEWS AS WE WAIT FOR THE VACCINE, WHICH IS SOMETIME OUT THERE OVER THE NEXT SEVERAL MONTHS. THAT WOULD BE GOOD NEWS. UNTIL THEN, YOU ARE STILL GOING TO HAVE THE DRAG OF PEOPLE GOING BACK TO THEIR BEHAVIOR BEFORE. THAT IS THE ONE THING. WHAT WE NEED I THINK IS PRETTY STRAIGHTFORWARD. YOU NEED MORE STIMULUS FOR THE PEOPLE. YOU THINK ABOUT THE ANALOGY, WE ARE ALL ON ONE SIDE OF THE RIVER AND WE ALL HAVE TO CROSS THE RIVER, WE ALL NEED A BRIDGE. A LOT OF PEOPLE ARE ACROSS THE RIVER. CERTAIN SEGMENTS OF THE ECONOMY ARE DOING EVEN BETTER THAN BEFORE THE CRISIS. OTHER SEGMENT ARE DOING JUST FINE. THE MEDICAL INDUSTRY IS WHOLLY BACK TO NORMAL BECAUSE -- THE HOUSING INDUSTRY IS STRONG, THE CONSTRUCTION INDUSTRY IS STRONG. THOSE ARE ACROSS THE RIVER, SO LET THEM GO. WHAT NEEDS HELP IS RESTAURANTS AND THINGS LIKE THAT. THE NEXT ROUND OF STIMULUS ARE TO BE FOCUSED ON THE AREAS THAT NEED THE MOST HELP. SO PPP, THE NEXT ROUND, THERE SHOULD BE STIMULUS FOR CERTAIN COMPANY'S BECAUSE THIS IS GOING ON LONGER THAN WE THOUGHT IT WOULD GO ON. FRANCINE: THAT WAS BRIAN MOYNIHAN OF BANK OF AMERICA SPEAKING TO BLOOMBERG, HEAD OF THE EQUALITY SUMMIT. YOU CAN TUNE INTO EQUALITY COVERAGE ON WEDNESDAY, SEPTEMBER 23. YOU SEE A BIG SELLOFF IN EUROPEAN STOCKS. YOUR PAEAN STOCKS ARE HAVING A BIT OF A MELTDOWN WITH U.S. FUTURES, TRAVEL, AND LEISURE, AND ALSO BANKS, TWO CULPRITS THAT WILL KEEP PLAYING ON THE STOXX 600 SHORT-TERM, ACCORDING TO SOME OF OUR SPECIALISTS. IF YOU LOOK AT SOME OF THE CONCERNS OUT THERE, OF COURSE IT IS CORONAVIRUS. YOU CAN SEE A RISING WAVE OF VIRUS CASES IS HITTING AIRLINES AND HOTELS. STOCKS ARE BEING HIT AMID FEARS OF A SECOND LOCKDOWN THAT MAY BE NEEDED, BUT THE SIGN OF THOSE CONCERNS BEING -- OF BANKS BEING PRESSURED. THIS IS BLOOMBERG. FRANCINE: EUROPEAN STOCKS DROPPING THE MOST SINCE JULY. S & P FUTURES EXTENDING LOSSES, NOW DOWN SOME 2%. YOU CAN TWEAK A LOOK AT THE GRR FUNCTION ON THE BLOOMBERG AND SEE WHICH EUROPEAN SECTORS ARE DOWN THE MOST. ALL 19 INDUSTRY GROUPS TRENDING LOWER THIS MORNING, TRAVEL AND LEISURE STOCKS PLUNGING MORE THAN 5% WITH BANK -- INSURERS GETTING HIT HARD. RISING VIRUSES CASES REKINDLE ON TOP OF LOCKDOWNS -- THAT WOULD CRIPPLE RECOVERY EFFORTS, AND THAT IS WHAT WE ARE SEEING ON THE MARKETS. STILL WITH US, STEPHANIE KELLY OF ABERDEEN INVESTMENTS. WHEN YOU LOOK AT THE MARKETS, HOW MUCH DOES IT HAVE TO DO WITH BANKS AND HOW MUCH DOES IT HAVE TO DO WITH A POTENTIAL SECOND LOCKDOWN? STEPHANIE: GIVEN THE AMOUNT OF COVERAGE THIS MORNING, LOCKDOWN FEARS, THAT IS -- THAT IS ONE OF THE THINGS CONTRIBUTE THINK. DIFF THIS WAS TO MOST IN THE U.S. AGAINST THE BACKDROP OF WHAT HAPPENED OVER THE WAKEN WITH THE DEATH OF JUSTICE GINSBURG, THEN YOU HAVE THESE POCKETS OF BAD NEWS. I THINK OVERALL IS MAKING FOR -- FRANCINE: WHAT WILL THE MARKET TAKE THEIR CUE ON FOR THE NEXT COUPLE OF DAYS? IS IT LOCKDOWNS, OR IS IT WHAT IS HAPPENING WITH THE VIX? STEPHANIE: ONE THING WE NEED TO BE MINDFUL OF FROM AN INVESTMENT PERSPECTIVE IS WITH WHAT WE HAVE SEEN WITH BAD NEWS WITH THE CRISIS COME UP IN PARTICULAR WHEN WE HAVE IN THE U.K. FOR EXAMPLE, THAT IS AN ENVIRONMENT WHERE PEOPLE MIGHT START TO GET WERE BULLISH ABOUT A VACCINE HAPPENING MORE QUICKLY BECAUSE THERE ARE MORE CASES, THEY HAVE A BETTER CHANCE OF BEING EXPOSED TO THE VIRUS. THAT HAS BEEN AN ISSUE. AND IN THE U.K. AS WELL, IF WE LOST FISCAL STIMULUS, IT IS CLEAR FROM THE U.K. GOVERNMENT THAT THEY WANT TO AVOID A NATIONAL LOCKDOWN, BUT ALSO THAT THEY HAVE WANTED TO KIND OF ROLLBACK ON THINGS LIKE -- IF THERE IS GENUINE PUSH FOR A MUCH MORE EXPANSIVE RESTRICTION, MAYBE NOT FULL LOCKDOWN BUT RESTRICTION OF ACTIVITY, ESPECIALLY FOR CERTAIN SECTORS, THAT IS PROBABLY AN ENVIRONMENT IN WHICH THERE IS MUCH MORE PRESSURE, WHERE THEY WILL HAVE MORE SUPPORT THERE, SO MAYBE FISCAL MIGHT ALSO COME DOWN A LITTLE BIT. FRANCINE: IF YOU LOOK AT WHAT IS HAPPENING WITH TRAVEL AND LEISURE STOCKS, THEY ARE SEVERELY UNDER PRESSURE. CAN THEY IMPACT THE REST OF THE MARKET TOWARD DECEMBER? IS THIS ONE OF WHAT WE CALL THE SCARRING THINGS, AND WILL THAT EVER RECOVER? STEPHANIE: THAT IS ONE OF THE HARDEST THINGS WITH THE TRAVEL AND LEISURE SECTOR. IF YOU HAVE A HOLIDAY THAT GETS CANCELED, YOU CANNOT GET IT BACK, YOU CANNOT GO ALL DAY AGAIN, YOU'RE NOT NECESSARILY GOING TO GO TWICE. IT IS ONE OF THOSE PARTS OF THE ECONOMY THAT IS REALLY HARD TO RE-CREATE, REBUILD WHAT IS LOST. SO THAT BEING SAID, BROADER TERMS, YOU LOOK AT THE SECTOR, IT COULD BE MUCH MORE DRIVEN I THINGS LIKE CONSUMER DEMAND, AND I THINK PARTICULARLY IF YOU THINK ABOUT THE SHORT-TERM VERSUS THE LONG-TERM, OWING INTO WINTER, NOT THE MOST OBVIOUS TIME FOR TRAVEL AND LEISURE ANYWAY. IT WILL GET A BIT OF A BOOST WITH THREE OPENING AT THE RIGHT TIME FOR THAT SECTOR, BUT GOING FORWARD IT IS JUST NATURALLY A PLACE WHERE IT GETS SQUEEZE, PARTICULAR WITH THE MAKEUP OF THE U.K. GOVERNMENT IN PARTICULAR, REALLY PUSHING FOR THIS IDEA THAT THINGS WILL STAY OPEN AND OTHER THINGS REALLY HAVE TO TAKE THE HIT AS A RESULT. FRANCINE: THANK YOU SO MUCH FOR YOUR TIME, STEPHANIE KELLY, SENIOR POLITICAL IT, AT ABERDEEN STANDARD INVESTMENT. AS WE HEAD TO THE BREAK, LET'S LOOK AT THE MARKETS. EUROPEAN STEP -- EUROPEAN STOCKS DEEP IN THE RED, S & P DOWN 2%. 30 YEAR BONDS GAINING, RISK OFF TAKING HOLD. IF YOU TAKE A LOOK AT THE GRR FUNCTION ON THE BLOOMBERG, CAN ALSO SEE WHICH EUROPEAN SECTORS ARE DOWN THE MOST. ALL 19 GROUPS ARE LOWER THIS MORNING. TRAVEL AND LEISURE STOCKS PLUNGING MORE THAN 5%. FOCUS IS ALSO ON SOME OF THE FIXED INCOME. BONES AND BTP'S ARE LIKELY TO GAIN IN THE FUTURE AFTER THE ECB IS REVIEWING, REPORTEDLY, -- BLOOMBERG SURVEILLANCE CONTINUES IN THE NEXT HOUR. TOM KEENE JOINS ME OUT OF NEW FRANCINE: BANKS BRUISED. LEAKED DOCUMENTS RELATED TO MORE THAN $2 TRILLION IN TRANSACTIONS SHOW BANKS KEPT PROFITING FROM POWERFUL AND DANGEROUS ACTORS, EVEN AFTER THE U.S. INTRODUCED PENALTIES. HSBC SHARES SINK. LOCKDOWN 2.0? THE U.K. WILL SOUND THE ALARM ON RISING INFECTIONS TODAY. THE LONDON MAYOR, SADIQ KHAN, IS SET TO RECOMMEND MORE RESTRICTIONS. AND WITH JUST SIX WEEKS TO GO UNTIL THE U.S. ELECTION, THE SUPREME COURT HAS EMERGED AS A PIVOTAL BATTLE AFTER THE DEATH OF LIBERAL JUSTICE RUTH BADER GINSBURG. GOOD MORNING AND WELCOME TO "BLOOMBERG SURVEILLANCE." I'M FRANCINE LACQUA IN LONDON. TOM KEENE IS IN NEW YORK. I'M LOOKING AT THE MARKETS AND WE WILL DO MARKET AND DATA CHECKS EVERY 15 MINUTES BECAUSE IT IS AN ABSOLUTE BLOODBATH. SOME INDUSTRIES ARE DOWN 5%. I'M LOOKING AT TRAVEL AND LEISURE, ESPECIALLY IN THE U.K. COME ON THE BACK OF THE POSSIBLE ANNOUNCEMENT OF LOCKDOWN MEASURES. TOM: THE SET OF ISSUES LEADING TO WHERE WE ARE, THE DOW DOWN 580 POINTS. DOWN 600 POINTS RECENTLY. WE ARE NOT NEAR A CORRECTION YET ON S & P, BUT WE ARE GETTING THERE RAPIDLY. I DON'T THINK THIS CAN BE UNDERPLAYED -- THE VIRUS, THE PANDEMIC IS REALLY FRONT AND CENTER ON A GLOBAL BASIS, EVEN WITH AN AMERICA DISTRACTED BY AN HISTORIC MOMENT. FRANCINE: AND A HISTORIC MOMENT THAT COULD POSSIBLY SWAY THE ELECTION. LET'S GET TO THE BLOOMBERG FIRST WORD NEWS IN NEW YORK CITY WITH RITIKA GUPTA. RITIKA: GOOD MORNING. THE DEATH OF JUSTICE RUTH BADER GINSBURG HAS THRUST THE SUPREME COURT INTO THE POLITICAL SPOTLIGHT. REPUBLICAN LEADERS IN THE SENATE ARE HOPING TO RUSH THROUGH A REPLACEMENT WITH PRESIDENT TRUMP EXPECTED TO NOMINATE HIS PICK THIS WEEK. DEMOCRATS ARE WARNING OF A CONSTITUTIONAL CRISIS. IF JOE BUDDEN WINS THE ELECTION BUT A TRUMP CANDIDATE IS STILL CONFIRMED TO THE SUPREME COURT. PRESIDENT TRUMP IS CELEBRATING THE TIKTOK DEAL, DESPITE IT FALLING SHORT ON SOME OF ITS KEY DEMANDS. THE WHITE HOUSE GETS -- A PROMISE OF NEW JOBS -- SOURCES HAVE TOLD BLOOMBERG THAT TIKTOK IS TAKING A VALUATION OF $60 BILLION AS PART OF THE U.S. DEAL CONCERNS ARE MOUNTING THAT U.K. MAY NEED A SECOND LOCKDOWN TO STOP THE SPREAD OF CORONAVIRUS. PRIME MINISTER BORIS JOHNSON IS SET TO BE TOLD TODAY THAT THE NATION IS AT A CRITICAL POINT IN THE PANDEMIC. THERE ARE EXCEPTIONS THAT LOCALLY RESTRICTIONS COULD BE EXTENDED TO LONDON. IT IS REPORTED THAT MAYOR SADIQ KHAN WILL BE TIGHTENING THE RULES TODAY. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, I AM RITIKA GUPTA. THIS IS BLOOMBERG. FRANCINE? TOM? TOM: LET'S LOOK AT THE DATA RIGHT NOW. IT HAS BEEN A REAL DETERIORATION IN THE LAST 20 MINUTES. S & P FUTURES COME AND DIG OF 61. -- S & P FUTURES, DOWN 61. YOU SEE IT WITH THE VIX REALLY UP, FOUR BIG FIGURES, 4.42 ON THE VIX, 32.25, AND THAT IS NOT A GOOD STATISTIC. WE'VE GOT SUBSTANTIAL CORRELATION ACROSS BONDS WITH CURVE FLATTENING, DOWN TO 52 POINT 54 ON THE TWO CENT SPREAD. I WANT TO POINT OUT, YEN, 104.17 REALLY GETS MY ATTENTION. NOT TO SOME BREAKOUT, BUT NEVERTHELESS, DOLLAR-YEN SHOWING SIGNIFICANT SAFE HAVEN ACTION. FRANCINE: LOOKING AT EUROPEAN STOCKS, THEY ARE FOLLOWING THE MOST SINCE JULY, BUT IF YOU LOOK AT TRAVEL AND AIRLINE COMPANIES, THEY ARE LEADING LOSSES ON THE EUROPEAN STOCKS. THIS IS ON WORRIES OF A POTENTIAL SECOND LOCKDOWN OR FURTHER RESTRICTIONS BEING PUT IN PLACE. AND THE EUROPEAN BANKING SHARES ARE ALSO DROPPING. HSBC, THE LOWEST SINCE 1995 IN TERMS OF HOW SHARE PRICES ARE TRADING, AND THIS IS AFTER A STORY BY THE INTERNATIONAL CONSORTIUM OF INVESTIGATIVE JOURNALISTS SHOWING SOME LAPSES IN SUSPICIOUS ACTIVITY REPORTS. AND IT IS VERY CLEAR THAT TREASURIES ARE RISING. THERE IS A RISK OFF MOOD OUT THERE. RUTH BADER GINSBURG, THE 87-YEAR-OLD SUPREME COURT JUSTICE, LIBERAL ICON, AND POP CULTURE PHENOMENON, DIED FRIDAY AFTER A LONG BATTLE WITH CANCER. HER DEATH PUTS THE SUPREME COURT FRONT AND CENTER IN THE PRESIDENTIAL RACE SIX WEEKS BEFORE ELECTION DAY. PRESIDENT TRUMP HAS SAID HE WILL NOMINATE A SUCCESSOR. PRES. TRUMP: I THINK WE ARE GOING TO START THE PROCESS EXTREMELY SOON, AND WE WILL HAVE A NOMINEE VERY SOON. I COULD SEE MOST LIKELY IT WOULD BE A WOMAN. I THINK I CAN SAY THAT, IT WOULD BE A WOMAN. IF SOMEBODY WERE TO ASK ME NOW, I WOULD SAY THAT THEY WOMAN WOULD BE IN FIRST PLACE, YES. THE CHOICE OF A WOMAN, I WOULD SAY, WOULD CERTAINLY BE APPROPRIATE. FRANCINE: FOR MORE, WE'RE JOINED BY PETER TRUBOWITZ. THANK YOU FOR JOINING US. CAN THIS ACTUALLY CHANGE THE ELECTION OUTCOME, OR DOES IT REINFORCE TRENDS? PETER: I THINK IT WILL MORE REINFORCE. I DON'T THINK IT IS GOING TO BE A GAME CHANGER. THERE WAS A POLL OVER THE WEEKEND, A REUTERS POLL, 62% OF AMERICANS THINK THAT THEY CAN SEE THAT THE COURT SHOULD BE FILLED BY THE WINNER OF THE NOVEMBER ELECTION. WHAT IS INTERESTING ABOUT THAT POLL IS IT INCLUDES 50% OF REPUBLICANS. IF YOU ARE LOOKING AT THE MARKETS, I KNOW YOU ARE FOCUSED ON THE STOCK MARKET, BUT THE PREDICTIVE MARKETS ARE REALLY -- HAVE REALLY NOT CHANGED. IF ANYTHING, THEY ARE MOVING IN BIDEN'S FAVOR. WHAT I WOULD SAY IS THAT WHAT THIS DOES FOR TRUMP, IT DOES CHANGE THE CONVERSATION, IT MOVES IT MORE AWAY FROM HIS MISMANAGEMENT OF THE PANDEMIC AND THE ECONOMY. IT WILL FIRE UP THE REPUBLICAN BASE AND SOME KEY SENATE -- IN SOME KEY SENATE ELECTIONS, BUT IT WILL ALSO FIRE OF THE DEMOCRATIC BASE, AND WE SAW THAT OVER THE WEEKEND WITH THIS REPORT FROM THE DEMOCRATIC FUNDRAISING ORGANIZATION. WE CAN EXPECT TRUMP TO PLAY THIS CARD BECAUSE FRANKLY, IT IS THE BEST CARD HE'S GOT IN A PRETTY LOUSY HAND. FRANCINE: DOES IT SWAY THE UNDECIDED VOTER AT ALL, OR NOT? PETER: WELL, YOU KNOW, THERE WAS ANOTHER POLL, A WALL STREET JOURNAL POLL, NBC POLL OVER THE WEEKEND, 90% OF AMERICANS HAVE MADE UP THEIR MINDS. NOTHING IS GOING TO CHANGE IT, THEY SAY, INCLUDING THE DEBATES. LIKE IF BIDEN FAILED IN THE DEBATE OR TRUMP. THERE IS THE POSSIBILITY OF SOME MOVEMENT THERE. BUT IT IS JUST NOT OBVIOUS HOW THIS CUTS. IF YOU ARE IN -- IF YOU ARE SUSAN COLLINS IN MAINE, HAVING TO VOTE ON THIS BEFORE THE ELECTION DOES NOT HELP YOU AT ALL, AND THAT IS TRUE IN A NUMBER OF OTHER CAMPAIGNS. YOU KNOW, I THINK IT IS A LITTLE TOO EASY TO SAY THAT THIS IS GOING TO HELP TRUMP WITH UNDECIDED VOTERS. I THINK WHAT IT DOES IS IT HELPS HIM WITH HIS BASE, AND GIVEN THAT HIS BASE, THE WORRY IS THAT SOME OF THOSE PEOPLE ARE JUST NOT GOING TO VOTE. YOU COULD SAY THAT ON BALANCE IT HELPS HIM THERE, BUT IN TERMS OF UNDECIDED VOTERS, I THINK IT IS A CRAPSHOOT. TOM: PETER, GOOD MORNING. THRILLED THAT YOU ARE HERE TO START MY COVERAGE WITH RUTH BADER GINSBURG AND WHERE WE ARE GOING AFTERWARDS. I WANT TO GO BACK TO AUSTIN, TEXAS, AND YOUR STUDY OF GOVERNMENT. ONE OF THE GREAT MOMENTS IN HISTORY WAS IKE HAVING TO PICK WILLIAM BRENNAN BECAUSE HE NEEDED A CATHOLIC VOTE IN THE NORTHEAST, MY GUESS IN 1956. DOES TRUMP HAVE TO PICK A WOMAN FROM FLORIDA TO GARNER FLORIDA'S EDGE? PETER: I WOULD GO WITH THE CATHOLIC LADY BECAUSE HE HAS ALREADY GOT THE CUBAN VOTE. IT IS A GREAT QUESTION, AND IF YOU PLAY INTO THE POLITICS OF IT, IT IS CLOSE IN FLORIDA, BUT BIDEN IS HAVING A LOT OF TROUBLE WITH HISPANIC VOTERS IN FLORIDA AND ESPECIALLY WITH CUBA. AND I THINK THAT TRUMP HAS GOT TO FIND ONE OF THESE BIG INDUSTRIAL STATES THAT HE IS GOING TO PULL. RIGHT NOW MICHIGAN IS STARTING TO LOOK LIKE IT IS OUT OF REACH. WISCONSIN IS A PROBLEM. MAYBE PENNSYLVANIA. I THINK TO ANSWER YOUR QUESTION, IT IS NOT OBVIOUS, GOING WITH THE GENTLEWOMAN FROM FLORIDA IS THE RIGHT MOVE. TOM: IT IS INTERESTING TO SEE HOW THIS LINES UP IN THE COMING DAYS. WHAT WILL THE HEARINGS BE LIKE IF WE SELECT THE PROFESSOR FROM THE UNIVERSITY OF NOTRE DAME? FINE, WHAT DO YOU THINK THOSE HEARINGS WILL BE LIKE? SHE HAS BEEN HUGELY VETTED, RIGHT? PETER: I THINK THEY WILL BE A MESS, AND WE DON'T KNOW -- WHAT WE KNOW IS THAT TRUMP IS SAYING HE WILL PICK A NOMINEE THIS WEEK , AND HE WANTS THIS TO GO, YOU KNOW, TO HAVE A VOTE BEFORE THE ELECTION, A CONFIRMATION HEARING, AND A CONFIRMATION VOTE BEFORE THE ELECTION. MCCONNELL HAS KEPT HIS POWDER DRY ON THIS. HE HAS NOT SAID WHAT HE IS GOING TO DO. IT MAY BE THAT FOR MCCONNELL IT MAKE MORE SENSE TO PUT THIS OFF UNTIL AFTER THE ELECTION. HIS INTERESTS DO NOT NECESSARILY LINEUP WITH TRUMP. TRUMP NEEDS THE ADDED INSURANCE, WITH CONTESTED ELECTION RESULTS, WITH ANOTHER CONSERVATIVE JUSTICE. MCCONNELL WANTS TO HOLD ONTO THE SENATE. IF HE PUSHES THIS THING AND RUNS THE RISK OF LOSING SENATE SEATS, I THINK HE HOLDS OFF UNTIL AFTER THE ELECTION. OF COURSE, IF TRUMP LOSES THE ELECTION, IT MAKES IT EVEN MORE COMPLICATED TO TRY TO US THIS THING THROUGH AFTERWARDS. BUT IF THERE ARE HEARINGS, THEY WILL BE INCREDIBLY CONTESTED, AND THE GENTLEWOMAN FROM NOTRE DAME WILL BE IN THE HOT SEAT AND WILL BE PRESSED VERY, VERY HARD. FRANCINE: PETER, WE ARE LOOKING AT THE MARKETS, AND PART OF IT IS OF COURSE BECAUSE NEW RESTRICTIONS -- SOME PEOPLE TAKE ISSUE WITH THE FACT THAT WE EVEN CALL IT LOCKDOWN HEARINGS -- IN EUROPE AND THINGS LIKE THAT. HOW WILL TRUMP BE JUDGED ON ELECTION DAY ON COVID-19? IT IS STILL 48 DAYS AWAY. PEOPLE REMEMBER THE LAST COUPLE OF MONTHS, OR DO THEY HAVE A LONG MEMORY? PETER: PERSONALLY, I THINK THAT STILL REMAINS THE BIG STRUCTURAL IMPEDIMENT FOR HIM. WE WILL HIT EITHER TODAY OR TOMORROW, 200,000 AMERICANS THAT HAVE DIED. IN SOME WAYS, THE SUPREME COURT PICK PROVIDES BIDEN WITH AN OPPORTUNITY, BECAUSE THE SMART MOVE RIGHT NOW FOR A DEMOCRAT IS TO CONNECT THE SUPREME COURT DECISION TO HEALTH CARE. AND I THINK THAT IS WHAT WE ARE GOING TO SEE. IT KIND OF POINTED IN THAT DIRECTION YESTERDAY IN THAT SPEECH IN PHILADELPHIA. NANCY PELOSI IS ALREADY TALKING ABOUT IT. THESE BATTLEGROUND STATES LIKE ARIZONA, FLORIDA, NORTH CAROLINA, THERE ARE A LOT OF RETIREES WHO ARE WORRIED ABOUT HEALTH CARE. WHAT HE NEEDS TO DO, BIDEN, AND WHAT I THINK HE WILL DO IS TO REMIND THOSE VOTERS THAT THE MORE CONSERVATIVE THE SUPREME COURT, THE MORE LIKELY OBAMACARE WILL BE STRUCK DOWN. TOM: ONE FINAL QUESTION, SOMETHING THAT HAS BEEN THROUGH MY MIND ALL OVER THE WEEKEND. THAT PRESIDENT TRUMP CANNOT CONTROL JUSTICE PICKS -- WHETHER LIBERAL OR CONSERVATIVE, THEY CAN SHIFT OVER TIME. HAS THIS CHANGED? ARE WE SO POLARIZED AS A NATION THAT THE PRESIDENT CAN GO INTO HIS SELECTION KNOWING IT WILL BE A LOCK FOR CONSERVATIVE THOUGHT AND THEORY? PETER: I AGREE WITH YOU. THERE WAS A DAY WITH AND -- THERE WAS A DAY AND TIME WHERE THE PRESIDENT WOULD FIRST SOUND OUT THE OTHER SIDE WITH RESPECT TO A POSSIBLE PICK AND SO FORTH. THERE IS NONE OF THAT NOW, AND WE ARE IN -- PERSONALLY I THINK WE ARE IN DANGER. IF TRUMP AND MCCONNELL PUSH FORWARD ON THIS, AND THE REPUBLICANS LOSE THE SENATE, I THINK WE CAN EXPECT DEMOCRATS TO TALK ABOUT INCREASING THE SIZE OF THE SUPREME COURT. I DON'T THINK THESE ARE GOOD THINGS FOR THE UNITED STATES. FOR EITHER SIDE. THIS IS JUST NOT WHAT THE COUNTRY NEEDS AT THIS POINT. BUT I AM AFRAID WE ARE RIGHT ON THAT EDGE RIGHT NOW. TOM: PETER TRUBOWITZ OF THE LONDON SCHOOL OF ECONOMICS. WE ARE THRILLED THAT HE COULD JOIN US THIS MORNING. CERTAINLY A SET OF IDEAS FLOATING AROUND FOR DEMOCRATS, IF THEY TAKE THE PRESIDENCY, IF THEY TAKE THE SENATE, OF SOME FORM OF PERMANENCE TO THE CHANGE IN THE PROCESS. WE WILL BE LOOKING AT THE LEGAL PROCESS IN THE COMING DAYS. THRILLED THAT DAVID WESTIN WILL BE JOINING US IN THE SICK A CLOCK HOUR. HOW ABOUT AN IMPORTANT INTERVIEW AT THE CENTER, ROBERT KAPLAN. I BELIEVE THESE ARE HIS FIRST COMMENTS SINCE HIS DISSENT, THE MEETING LAST WEEK. THIS IS AN EXTREMELY IMPORTANT INTERVIEW. MICHAEL MCKEE IN CONVERSATION WITH PRESIDENT KAPLAN OF THE DALLAS FED. TOM: GOOD MORNING, EVERYONE. "BLOOMBERG SURVEILLANCE." WE ARE WATCHING MARKETS, WHICH ARE MORE THAN DIFFICULT. THE VIX ON FOUR BIG FIGURES, NEGATIVE THREE .60 RIGHT NOW, 29.43. SOME REAL UPSET NOT ONLY ABOUT THE PANDEMIC AND POTENTIAL LOCKDOWNS, INCLUDING IN THE UNITED KINGDOM, BUT ALSO STIMULUS HAS DRIFTED AWAY AND THOUGHT IN AMERICA, OF COURSE, OVER THE UPROAR OVER THE DEATH OF RUTH BADER GINSBURG AND WHO WILL REPLACE HER. ON THE BANKING FRONT, THERE IS ANY NUMBER OF REPORTS. JOINING US, JONATHAN TYCE OF BLOOMBERG INTELLIGENCE. I HATE TO SAY IT, BUT IT IS AN ELEGANT CHART, AND THAT IS THE PLUNGE AND PERSISTENCY OF PLUNGE OF HSBC. I WOULD SUGGEST THAT IF THAT BANK WERE AN AMERICAN BANK, IT WOULD BE FRONT AND CENTER ON THE MIND OF INSTITUTIONAL AUTHORITIES. THE BRITISH -- ARE THOSE IN CHINA CONCERNED ABOUT THE DISSENT OF HSBC? > > I THINK YOU WOULD BE HARD-PRESSED TO FIND A BANK THAT IS MORE SQUEEZED. YOU THINK ABOUT CHINA, SANCTIONS, NEGATIVE RATES NOW IN THE U.K., AS YOU PUT ON TOP OF THAT MORE, ALTHOUGH THE BANK IS SAYING WITH ALL OF THE DATA PREDATED BY THEIR PROSECUTION AGREEMENT FROM 2017, IT IS A PERFECT STORM OF INTERNATIONAL SANCTIONS, RISK, INTERNATIONAL RELATIONS BETWEEN THE U.S. AND CHINA, JUST A HORRIBLE PLACE AND TIME TO BE A BANK ANYWAY. FRANCINE: IF YOU ARE THE CHIEF EXECUTIVE OF HSBC, FAIRLY NEW IN THE JOB, HOW DO YOU GET AHEAD OF THIS WITH INVESTORS? JONATHAN: WELL HE HAS BEEN WITH A BANK FOR 30 YEARS. THERE IS NOT AN EASY FIX FOR THIS. WE HAVE PUBLISHED AND SOME OF OUR REPORTS THAT, WOULD YOU BUILD A BANK LIKE THIS TODAY? THE ANSWER IS NO, SO YOU HAVE TO RETHINK, DO YOU HAVE A LISTING IN THE U.K. AND IN CHINA, WHEN QUITE CLEARLY THE GROWTH SENTIMENT IN CHINA, THE CHINESE WERE NOT HAPPY ABOUT THE PR OF TELLING THE BANK TO STOP PAYING DIVIDENDS, FOR EXAMPLE, AND THE STRESS CONTINUES, I MEAN, YOU DO HAVE TO WONDER ABOUT WHETHER THIS IS A SUSTAINABLE STRUCTURE FOR THE BANK. TOM: EXACTLY. IT IS STUNNING TO SEE BARCLAYS WITH A LOWER RATIO. JONATHAN TYCE, THERE HAS TO BE REGULATORY EFFORT HERE TO SAY TO THESE BANKS, DO SOMETHING, CONSOLIDATE, COMBINE, WHATEVER IT IS. IS THAT TENSION OUT THERE? ARE THERE AUTHORITIES SAYING HSBC, THIS IS UNTENABLE? PETER: HSBC -- JONATHAN: HSBC IS VERY WELL-CAPITALIZED. YOU HAVE GOT DIFFERENT SORT OF MARKETS. YOU HAVE THE U.K., EUROPEAN ANGLE, AND THEN LET'S NOT FORGET, THEY HAVE SAID WE ARE GOING TO CUT $4.5 BILLION IN COSTS. HSBC DOES NOT MAKE ANY SENSE OF ANYTHING. YOU LOOK AT THE U.S. AND SAY WHY IS SOME OF THAT THERE. THE BANK HAS ALREADY PUT HIS HAND UP AND SAID ALL THIS. AS EVER WITH HSBC, THEY ARE TAKING THEIR TIME. THEY ARE NOT GOING TO GIVE A NEW STRATEGY WITHOUT RESULTS. TOM: I CANNOT CONVEY ENOUGH THE IMPORTANCE OF WHAT JON TICE JUST SAID. -- OF WHAT JON TYCE JUST SAID. FRANCINE: IF YOU LOOK AT THE THINGS THAT CAME OUT WITH THE INTERNATIONAL CONSORTIUM OF JOURNALISTS, YOU SAID A LOT OF IT WE KNEW, BUT DOES IT IMPLICATE U.S. BANKS AS WELL? JONATHAN: I THINK WHAT IT DOES, IT REMINDS US THAT WE ARE SEEING ALL THESE SANCTIONS, MULTIBILLION'S AND FINDS, BUT IF YOU WERE ALLOWED TO FLAG THE REGULATORS THAT THERE IS A SUSPICIOUS TRANSACTION SO KEEP HE KNEW -- SO CONTINUE ACTING ON BEHALF OF THE CLIENT, I THINK THERE IS SOMETHING WRONG WITH THE SYSTEM. HSBC IS PROBABLY SITTING THERE WONDERING WHAT HAPPENS WITH THE ELECTION. DOES THE WHOLE ANGLE WITH CHINA -U.S. CHANGE? I BELIEVE THAT IS THE CASE. FROM THAT PERSPECTIVE, THEY CANNOT UNDO THEIR GLOBAL FOOTPRINT. THEY CAN OVER THE NEXT 18 MONTHS CUT A LOT OF COSTS. THEY NEED CHINA FOR GROWTH, AND AT THE MOMENT CHINA HAS THEM OVER A BARREL. YOU HAVE THE U.K. REGULATOR LOOKING AT THAT CLOSELY. FRANCINE: JONATHAN, THANK YOU SO MUCH. WE WILL HAVE PLENTY MORE OF JONATHAN TYCE COMING IN THE DAYS AND WEEKS AND MONTHS. COMING UP, CHRISTINE LAGARDE WILL BE MEETING WITH THE FRENCH PRESIDENT TODAY. ONE OF THE THINGS THAT SHE COULD TALK ABOUT IS -- WE WILL RITIKA: THIS IS BLOOMBERG SURVEILLANCE. A GLOBAL CRACKDOWN ON BANKS DOESN'T SEEM TO HAVE CURB SUSPICIOUS ACTIVITY. LEAKED DOCUMENTS TIED TO MORE THAN $2 TRILLION OF TRANSACTIONS SHOWS SOME LENDERS CONTINUED TO PROFIT EVEN AFTER THE U.S. IMPOSED PENALTIES ON THEM. THE SO-CALLED FINCEN FILES WERE RELEASED OVER THE WEEKEND BY A CONSORTIUM OF INVESTIGATIVE JOURNALISTS AFTER BEING OBTAINED BY BUZZFEED NEWS. THE FOUNDER OF A LECTOR VEHICLE COMPANY NICOLA IS STEPPING DOWN AS CHAIRMAN AS THE COMPANY FINDS ITSELF IN THE CROSSHAIRS OF A SHORT SELLER WHO SAYS IT DECEIVED INVESTORS ABOUT PROSPECTS. THAT IS YOUR LATEST BLOOMBERG BUSINESS FLASH. TOM? FRANCINE? TOM: ON THE DATA, WHILE WE HAVE IMPROVED OVER THE LAST HALF-HOUR, -600 ON THE DOW, -461. S & P FUTURES -48 AS WELL. THE VIX, UP THREE BIG FIGURES. FRANCINE: EUROPEAN STOCKS ARE FOLLOWING THE MOST SINCE JULY. AIRLINES, TRAVEL COMPANIES LEADING LOSSES. WE ALSO HAD A COUPLE OF CONCERNS ABOUT THE BANKS. WE SPOKE WITH JONATHAN TYCE ABOUT IT. VIRUS CASES IN GENERAL ARE CLIMBING ACROSS EUROPE. COMING UP, WE SPEAK WITH STEPHEN KING. FRANCINE: THIS IS "BLOOMBERG SURVEILLANCE." TOM AND FRANCINE FROM LONDON AND NEW YORK. VIRUS RESTRICTIONS COULD BE COMING TO LONDON. ANY NEW MEASURES WILL BE DIFFERENT TO THE FIRST LOCKDOWN. JOINING US NOW IS STEPHEN KING, HSBC SENIOR ECONOMIC ADVISOR. THANK YOU SO MUCH FOR JOINING US. IT IS QUITE A LOT GOING ON WHEN YOU LOOK AT ECONOMIES AROUND THE WORLD. I MEAN, I GUESS A LOT OF YOUR ECONOMIC ASSUMPTIONS WERE BASED ON A GRADUAL RECOVERY. IF WE DO HAVE EXTRA RESTRICTIONS OR EVEN A POSSIBLE SECOND LOCKDOWN IN EUROPE, WHAT DOES THAT MEAN FOR FORECAST? STEPHEN: IT BASICALLY MEANS THAT MOST ECONOMISTS SHOULD HIRE SOME EPIDEMIOLOGISTS TO HELP THEM, BECAUSE AT THE END OF THE DAY, THE LOCKDOWNS ARE VERY MUCH DETERMINING THE ECONOMIC TRAJECTORY. IF YOU GO BACK TO FEBRUARY OR MARCH AND YOU THINK ABOUT WHAT WE DIDN'T KNOW AT THAT STAGE, WHAT WE SHOULD HAVE KNOWN, THE LOCKDOWN POLICIES WERE EQUALLY INCREDIBLY IMPORTANT. IT TURNS OUT THAT HEALTH ADVISERS SUGGEST THAT WE SHOULD HAVE EITHER A PARTIAL LOCKDOWN OR A FULL LOCKDOWN. THAT CHANGES COMPLETELY THE KINDS OF ECONOMIC ASSUMPTIONS THAT PEOPLE HAVE BEEN MAKING. BEAR IN MIND THAT MOST ECONOMISTS HAVE SAID THE GRADUAL RETURN TO NORMAL, OR PROVIDED WE GET TO A POINT WHEREBY WE WILL HAVE SOME KIND OF VACCINE, WE NOW KNOW PARTLY THROUGH THE EXPERIENCES OF FRANCE, ALSO INCREASINGLY IN THE U.K., BUT EVEN THOUGH INFECTIONS HAVE FADED AWAY OVER THE SUMMER, IT IS COMING BACK PRETTY RAPIDLY. FRANCINE: DOES IT ALSO MEAN THAT WE NEED TO LEARN HOW TO LIVE WITH THE VIRUS, AND DOES IT CHANGE THE COMPOSITIONS OF OUR ECONOMY? STEPHEN: I THINK THOSE THINGS ARE ALREADY CHANGING TO A DEGREE. ONE OF THE THINGS THAT I THINK RISHI SUNAK IS BEGINNING TO RECOGNIZE IS THAT IF FURTHER SCHEMES ARE BLUNT INSTRUMENTS, YOU CAN EFFECTIVELY KEY PEOPLE AT HOME AND PAY THEM AS IF THEY WERE AT WORK, BUT BY DOING THAT, YOU ARE NOT NECESSARILY CREATING THE KINDS OF SIGNALS THAT WILL SHIFT FROM ONE PART OF THE ECONOMY TO ANOTHER, SO WE NEED MORE IN THE WAY OF DELIVERY DRIVERS AND FEWER IN THE WAVE AIRLINE PILOTS BASICALLY. THAT SORT OF THING PROBABLY WILL HAVE TO CHANGE IN THE YEARS AHEAD. OF COURSE, GETTING WHAT THE WORLD LOOKS LIKE AFTER THE PANDEMIC IS OVER IS TRICKY. I THINK WE DO NOW KNOW THAT YOU CAN DO THINGS THROUGH ZOOM THAT DID NOT SEEM TO BE PLAUSIBLE JUST A HANDFUL OF MONTHS AGO, AND AS ZOOM TAKES OFF AND OTHER RELATED CONNECTIONS TAKE OFF, YOU CAN IMAGINE THAT THINGS LIKE BUSINESS TRAVEL WILL BE MUCH LOWER IN VOLUME IN THE FUTURE THAN THEY HAVE BEEN IN THE RECENT PAST. TONKA STEPHEN KING, GOOD MORNING. TOM KEENE IN NEW YORK. ASHTON LINED TOM: STEPHEN KING, GOOD MORNING. TOM KEENE IN NEW YORK. THE UNITED KINGDOM HAS CLEARLY DONE THIS BETTER THAN THE UNITED STATES. IS THERE ABILITY, GIVEN THE TURNING OF THE PANDEMIC, TO CONTINUE INCOME SUPPORT? STEPHEN: IT GETS INCREASINGLY EXPENSIVE BECAUSE THE MORE THAT YOU DEAL WITH THIS, THE MORE YOU ARE ADDING TO THE BUDGET DEFICIT AND BUILDING UP HIGHER LEVELS OF GOVERNMENT DEBT. IF I WORKED AT TREASURY, I WOULD BE A LITTLE UNEASY ABOUT THAT, THE IDEA OF CONTINUOUS -- I SUSPECT WHAT IS GOING TO HAPPEN, AS THE FURLOUGH SCENE COMES TO AN END, AND IT WILL BY THE END OF OCTOBER, THEY WILL REPLACE IT WITH SOMETHING ELSE, PERHAPS SOMETHING CLOSER TO ALLOWING THE MARKET TO PLAY SOME KIND OF ROLE. ONE POSSIBILITY, WE MIGHT HAVE A NEGATIVE EMPLOYER NATIONAL INSURANCE CONTRIBUTION, THE GOVERNMENT SUBSIDIZING EMPLOYERS TO BRING WORKERS BACK, TO ACTUALLY HAVING THEM DO WORK RATHER THAN BEING FURLOUGHED AT HOME. A SUBSIDY MEANS THAT SOME PEOPLE WHO OTHERWISE WOULD HAVE LOST THEIR JOBS WILL KEEP THEIR JOBS, BUT THERE WILL BE NO GUARANTEE THAT EVERYONE WILL KEEP THEIR JOBS. BUT PERHAPS THOSE WHO ARE IN THE MORE VULNERABLE AREAS, FRANKLY, THEY NEED TO LOOK FOR OPPORTUNITIES ELSEWHERE, NO MATTER HOW DIFFICULT THAT MAY BE NEAR-TERM. TOM: TELL ME ABOUT THE BRAVE NEW UNITED KINGDOM. THERE IS A LOT GOING ON HERE, A LOT OF FUN -- A LOT TO UNPACK. AND YOU MODEL WEAK STERLING? IS THAT WHAT DAVID BLUM IS TELLING YOU? STEPHEN: THE ISSUE WITH STERLING IS THAT THE GOVERNMENT AND THE BANK OF ENGLAND ARE TRYING TO DO THINGS THAT TO MY MIND WOULD SUGGEST STERLING IS A VULNERABLE AREA. A GOVERNMENT THAT IS HAVING -- IS MORE INTO BORROWING THAN TO DEBT, AND A BANK OFFERING NEGATIVE INTEREST RATES -- THEY HAVE NOT GOT THERE YET, BUT NEVERTHELESS THE BANK OF ENGLAND IS MAKING NOISE IN THAT DIRECTION. THAT COMBINATION OF LOOSE POLICY WITH THE SOFTENING OF THE CURRENCY -- AS TO THAT, THE POSSIBILITY OF A NO DEAL BREXIT, THE DEPARTURE FROM THE E.U. SINGLE MARKET, AND THE POSSIBILITY AS A CONSEQUENCE OF THAT, YOU HAVE WEAKER EXPORT VOLUMES THAT WOULD OTHERWISE BE THE CASE. THE IMPLICATION WOULD BE A WIDER BUDGET DEFICIT, LOWER INTEREST RATES, AND THAT COMBINATION NORMALLY WILL HAVE A STRONGER CURRENCY. FRANCINE: DO WE NEED TO START WORRYING ABOUT ALL THE EXTRA DEBT, OR IS IT A PROBLEM FOR 2020 ONE AND BEYOND? STEPHEN: I THINK THERE IS A LONGER-TERM QUESTION AS TO EXACTLY HOW GOVERNMENTS MANAGE THE HIGHER LEVELS OF DEBT. IN THE SHORT-TERM, I DON'T THINK IT IS A PROBLEM AT ALL BECAUSE INTEREST RATES ARE SO INCREDIBLY LOW, IT IS THE RIGHT THING TO OFFER THAT KIND OF SUPPORT. ON THE ASSUMPTION THAT EVENTUALLY WE WILL HAVE SOME KIND OF EFFECTIVE ANTIVIRAL DRUG OR VACCINE, WHATEVER MIGHT BE COMING OUR WAY IN THE MONTHS AHEAD. BUT WHEN YOU HAVE THESE BIG INCREASES IN GOVERNMENT DEBT, THERE IS NORMALLY SOME KIND OF REACTION THAT SOME WAY IN WHICH THAT GOVERNMENT DEBT IS MANAGED BACK DOWN AGAIN -- IN A VERY OPTIMISTIC SCENARIO, YOU HAVE A STRONG REBOUND, STRONG GROWTH OVER MANY YEARS, AND THAT GIVES YOU THE REVENUE GROWTH. FRANCINE: STEPHEN KING, THANK YOU SO MUCH. HE STAYS WITH US. LET'S GET TO FIRST WORD NEWS WITH RITIKA GUPTA. RITIKA: RATCHETING UP TENSIONS IN THE TAIWAN STRAIT, CHINA HOPING TO DETER THAI -- HOPING TO DETER TAIPEI FROM DEEPER CONNECTIONS WITH THE U.S. BEIJING REGARDS THE ISLAND AS PART OF ITS TERRITORY, EVEN THOUGH IT HAS BEEN RULED SEPARATELY FOR MORE THAN 70 YEARS. INDIA ADDED ANOTHER 87,000 CORONAVIRUS CASES TO ITS TALLY TODAY. THAT PUSHES THE COUNTRY'S TOTAL TO NEARLY 5.5 MILLION. INDIA HAS THE WORLD'S LARGEST COVID-19 OUTBREAK BEHIND THE UNITED STATES. THE COUNTRY SAYS THREE VACCINES ARE IN DIFFERENT STAGES OF CLINICAL TRIALS. AND A WOMAN SUSPECTED OF SENDING AN ENVELOPE TO THE WHITE HOUSE CONTAINING THE POISON RICIN WAS ARRESTED OVER THE WEEKEND. OFFICIALS SAY SHE WAS TAKEN INTO CUSTODY AT THE U.S.-CANADIAN BORDER WHILE TRYING TO ENTER THE UNITED STATES. HER NAME WAS NOT RELEASED, BUT OFFICIALS SAY HER ARREST COMES NEARLY A YEAR AFTER SHE WAS DEPORTED FROM THE U.S. FOR ENGAGING IN CRIMINAL ACTIVITY. THE LETTER WAS INTERCEPTED LAST WEEK BEFORE IT REACHED THE WHITE HOUSE. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, I'M RITIKA GUPTA. THIS IS BLOOMBERG. TOM: THANK YOU SO MUCH. MUCH MORE TO COME, PARTICULARLY ON THE DEBATES IN WASHINGTON, D.C. DAVID WESTIN WILL BE JOINING US IN THE NEXT HOUR. > > YOU NEED HELP WITH RESTAURANTS AND THINGS LIKE THAT, SO THE NEXT ROUND OF STIMULUS NEED TO BE FOCUSED ON THE AREAS THAT NEED THE MOST HELP. SO PPP, THE NEXT ROUND -- I THINK SO, FOR CERTAIN OTHER COMPANIES BECAUSE THIS WENT ON LONGER THAN WE EXPECTED. TOM: BRIAN MOYNAHAN IN CONVERSATION WITH DAVID WESTIN ON THE CHANGES WE ARE SEEING, AND OF COURSE THE HUGE SHIFT OVER THE WEEKEND AS STIMULUS DRIFTS AWAY. FUTURES AT -58, DOW FUTURES AT -555. THE VIX UP A SOLID FOUR POINTS. THIS IS CORRELATED. I WANT TO DRAW YOUR ATTENTION, THAT THE 10-YEAR REAL YIELD IS FINALLY BREAKING DOWN. I HAVEN'T LOOKED AT THE CHART YET, WHAT A NEGATIVE 1.02 ON THE REAL YIELD IS REALLY IMPORTANT THAT A REALLY IMPORTANT STATISTIC. WE WILL HAVE TO WATCH THAT CLOSELY WITH DOLLAR STRENGTH. WITH US IS STEPHEN KING, WITH HSBC, THEIR SENIOR ECONOMIC ADVISOR, COMING TO US AFTER A TWO-HOUR ROMP. KING WITH HIS GORGEOUS PIANO BEHIND HIM AS WELL, KILLING ME HERE, WITH ALL OF THE TIME HE HAS TO SPEND QUARANTINED AWAY TO WORK ON PIANO. STEPHEN KING, I WANT TO GO TO THE BRAVE NEW WORLD. AS I HAVE BEEN TALKING ABOUT DIGITAL DOMINANCE, WHICH CAN BE POSITIVE OR NEGATIVE, YOU HAVE SPOKEN OF THE DARK SIDE OF TECHNOLOGY. GIVE US AN UPDATE ON THE CHALLENGES OF TECHNOLOGY, GIVEN THE CHALLENGES WE SEE NOW IN OUR POLITICAL ECONOMY. STEPHEN: ONE CHALLENGE OF TECHNOLOGY IS SOCIAL MEDIA. SOCIAL MEDIA TENDS TO ENCOURAGE HURTING AND IT TENDS TO ENCOURAGE PEOPLE TO FIND PEOPLE THEY ALREADY AGREE WITH, RATHER THAN PEOPLE WHO MIGHT CHALLENGE THEIR VIEWS. AS A CONSEQUENCE, YOU END UP WITH VIEWS BEING REINFORCED RATHER THAN CHALLENGED, AND YOU GET THAT KIND OF POLARIZATION IN SOCIETY, WHICH IT CLEARLY HAS SEEN OVER THE LAST FEW YEARS. ECONOMICALLY, ONE OF THE BIG CHANGES COMING THROUGH IS A MOVE TOWARD MORE IN THE WAY OF REASSURING, SO THE RISE OF AI AND ROBOTICS MEANS THAT COMPANIES WHO WERE LOOKING FOR CHEAP WORKERS ELSEWHERE IN THE WORLD COULD INSTALL EVEN CHEAPER MACHINES AT HOME. COVID-19 THROUGH ITS EMPHASIS ON GLOBAL SURPRISE CHAINS -- GLOBAL SUPPLY CHAINS AND VULNERABILITY, AND VULNERABILITY, ENCOURAGE INVESTMENT BACK HOME. PARTICULARLY FOR MANY PARTS OF THE EMERGING WORLD, THAT MAY BE MORE DIFFICULT TO ATTRACT THE KIND OF CAPITAL THEY MIGHT HAVE HOPED TO HAVE ATTRACTED OVER PREVIOUS DECADES. TOM: THE TECHNOLOGY CAN CHANGE, AND THAT MAY BE FINE, BUT, STEPHEN KING, IT IS BEING BUFFETED NOW BY ALL OF THESE ISSUES THAT WE HAVE. DO YOU JUST PRESUME SUBPAR ECONOMIC GROWTH, AND DO YOU PRESUME THAT FOR A LONG TIME? STEPHEN: I DON'T PRESUME IT, BUT I THINK THE EVIDENCE IS ALREADY THERE AND HAS BEEN THERE FOR QUITE SOME TIME. IF YOU GO BACK TO THE BEGINNINGS OF THE U.S. ECONOMIC SLOWDOWN ON A STRUCTURAL BASIS, IT PROBABLY BEGAN IN 2002 OR 2003, LONG BEFORE THE GLOBAL FINANCIAL CRISIS. ARGUABLY, THE ATTEMPT TO TRY TO BOOST THE U.S. ECONOMY AFTER THE TECH BUBBLE BURST BY LEADING TO A HOUSING BOOM ACTUALLY UNDERMINED IT EVEN FURTHER, THE GROWTH POTENTIAL OF THE U.S. ECONOMY. ONE THING THAT IS WORTH NOTING HERE, TECHNOLOGY ALONE IS NOT A GUARANTEE OF RETURNS. THE KIND OF FAST GROWTH THAT THE U.S. AND EUROPE EXPERIENCED IN THE 1950'S THROUGH TO THE 1990'S, THAT IS ALSO DEPENDED ON DEMOGRAPHICS, THE MASSIVE RATCHETING UP OF WORLD TRADE, EDUCATION, CHANGING OF LOCATION TO GET MORE WOMEN IN THE WORKFORCE. IT IS DIFFICULT TO REPEAT IT DECADE AFTER DECADE AFTER DECADE. SOME OF THAT IMPETUS HAS FADED, EVEN ALLOWING FOR THE FACT THAT TECHNOLOGY CONTINUES TO ADVANCE. FRANCINE: WHEN YOU LOOK AT SOME OF THE DOWNFALL OF TRADE AND SOME OF THE PROTECTION STAND, IS THIS PANDEMIC AND THE RECESSION GOING TO HAVE A LOT MORE COUNTRIES BEING EVEN MORE INWARD LOOKING? STEPHEN: I THINK THERE WILL BE MUCH MORE LANGUAGE OF THE KIND YOU TALK, OF NATURAL -- OF NATIONAL CHAMPIONS OF INDUSTRY, LIKE THE 1950'S AND 1960'S, FRANKLY. THERE ARE OTHER ISSUES OUT THERE THAT PREDATE THE COVID-19 CRISIS, WHICH HAS BEEN PUT AWAY FOR QUITE A LONG PERIOD OF TIME. U.S. RELATIONS, THE FACT THAT THE U.S. IS NOT SURE WHAT IT'S LEADERSHIP ROLE IN THE WORLD OUGHT TO BE COMPARED WITH THE LAST FEW DECADES. ALL OF THESE THINGS MATTER, AND I THINK ALSO THERE ARE DIFFERING VIEWS AS TO THE KIND OF ROLE THAT INTERNATIONAL INSTITUTIONS SHOULD BE PAYING -- PLAYING IN THE 21ST CENTURY, PRETTY IMPORTANT FOR THE YEARS AHEAD. FRANCINE: STEPHEN KING, THANK YOU SO MUCH. HSBC SENIOR ECONOMIC ADVISOR. COMING UP THIS EVENING, THE ST. LOUIS FED PRESIDENT AT 6:30 P.M. IN NEW YORK, 11: 30 P.M. IN LONDON, AND THIS IS BLOOMBERG. TOM: GOOD MORNING, EVERYONE. BLOOMBERG SURVEILLANCE WITH FRANCINE LACQUA IN LONDON, TOM KEENE IN NEW YORK. IT IS AN EXTRAORDINARY MONDAY, THE BE THE BUSIEST NEWS FLOW I HAVE SEEN ON A MONDAY IN 5, 6, 7, 8 YEARS. S & P FUTURES AT -63, THE LEVEL 3253. DELL FUTURES GIVE ME A -600 ON THE DOW, 27,011. WE ARE NEAR BUT NOT AT A 10% CORRECTION ON THE S PERCENT -- ON THE S & P 500. I WANT TO POINT OUT THE REAL YIELD, 1.02%. I STILL HAVE NOT HAD TIME TO CHART THAT TO FIND OUT WHERE THAT SUPPORT IS, IF THERE IS ANY. OIL PLEASE WEAKER, 42.22. DOLLAR STRONGER. THAT IS IMPORTANT WITH ATTENDANT YEN STRENGTH. FRANCINE LOOKING AT STERLING, 1.2840. RIGHT NOW, TO SYNTHESIZE THE WEEKEND, THERE IS NOTHING -- NO ONE BETTER THAN MARTIN SCHENKER, OUR CHIEF CONTENT OFFICER AND HAS THE ABILITY TO IN POLITICS WITH ECONOMICS AND THE MARKETS AS WELL. MARTY, I WANT TO START WITH WHAT YOU LEARNED FROM THE BLOOMBERG LEGAL TEAM, WHICH IS FIRST RATE, WHETHER IT IS CASS SUNSTEIN AT HARVARD OR THE WONDERFUL GREG STOHR. WHAT HAS YOUR ATTENTION ON THIS MONDAY MORNING? MARTY: WELL, CLEARLY THE POLITICAL LANDSCAPE CHANGED OVER THE WEEKEND WITH RUTH BADER GINSBURG'S DEBT. THE QUESTION I HAVE IS REALLY HOW MUCH IS THIS ASKED -- RUTH BADER GINSBURG'S DEATH. THE QUESTION I HAVE IS REALLY HOW MUCH IS THIS GOING TO CHANGE WHO PEOPLE ARE GOING TO VOTE FOR ON NOVEMBER 4. I HAVE A SUSPICION IT WILL NOT HAVE A HUGE IMPACT AND THAT THERE ARE SOME BREAD-AND-BUTTER ISSUES THAT YOU CANNOT IGNORE ONCE YOU GET PAST THE SUPREME COURT. TOM: WHAT ARE THOSE BREAD-AND-BUTTER ISSUES? MARTY: THE FACT THAT 10 OR SO -- 10 MILLION OR SO AMERICANS DON'T HAVE A JOB, THAT COME TO VARIOUS CASES MAY FORCE A NATIONAL LOCKDOWN, AND THE PROSPECT OF RESURGENCE IN THE VIRUS HERE COULD VERY WELL CHANGE THE BY DYNAMIC OF THE ELECTION THAN THE SUPREME COURT CONTROVERSY. FRANCINE: BUT, MARTY, WHY ARE THE POLLS SO CLOSE? MARTY: WELL, IF YOU LOOK AT THE POLLS, IT IS SINGLE DIGITS WHEN YOU TALK TO TRUMP SUPPORTERS AND BIDEN SUPPORTERS. IS ANYTHING GOING TO CHANGE YOUR VOTE? PEOPLE ARE REALLY LOCKED INTO THEIR POSITIONS, REGARDLESS OF WHAT IS HAPPENING. AND TRUMP HAS 40% TO 45% OF THE VOTE LOCKED IN, AND JOE BIDEN HAS SLIGHTLY HIGHER THAN THAT. IT IS GOING TO COME DOWN TO THE BATTLEGROUND STATES THAT WE ALL KNOW. FRANCINE: ONE THING THAT WE HAVE BEEN TRYING TO FIGURE OUT -- CAN PRESIDENT TRUMP ACTUALLY REPLACE RUTH BADER GINSBURG BEFORE THE ELECTION? MARTY: THERE IS NO QUESTION HE IS GOING TO TRY TO DO THAT. AND FRANKLY, ONE OF THE THINGS TO REFLECT ON IS, WHAT IF THIS WAS BARACK OBAMA, AND HE HAD A VACANCY LEADING INTO A SECOND TERM? THE DISCUSSION WOULD BE QUITE DIFFERENT, I THINK. SO HE IS GOING TO MOVE AHEAD. WHAT REALLY IS STARTLING IS YOU MAY GET A CONFIRMATION VOTE AFTER NOVEMBER 3, WHEN MANY MEMBERS OF THE SENATE MAY BE CASTING THEIR VOTE AS LAME DUCKS, AND I THINK THAT THAT IS NOT A HAPPY PROSPECT FOR THE REPETITION OF THE COURT -- FOR THE REPUTATION OF THE COURT. TOM: THE REPUTATION OF THE COURT, AND PART OF THIS IS PART OF THE REPUTATION OF THE POLITICAL ECONOMY THAT WE LIVE IN AS WELL. WITH THE MARKETS WE ARE SEEING THE IMPACT TODAY. I'M GOING TO GO GREENSPAN ON YOU. DO YOU BELIEVE THAT THE STOCK MARKET, AND CLEARLY THE PRESENT FOLLOWS IT, BUT IS IT A MEASUREMENT OF THESE TENSIONS THAT AMERICA FACES? MARTY: IT IS. AS LONG AS I HAVE BEEN DOING THIS, WE HAVE ALWAYS CONSIDERED THE STOCK MARKET A PRECURSOR RATHER THAN A BACKWARD LOOKING INDICATOR. SO, YOU KNOW, THIS IS ONE MORNING IT LOOKS PRETTY GRIM, BUT IF THIS CONTINUES -- AND AS WE TALKED ABOUT BEFORE, THE SUPREME COURT CONTROVERSY WILL GO INTO THE BACKGROUND AND PEOPLE WILL START FOCUSING ON THEIR 401K'S AND THEIR OWN ECONOMIC WELL-BEING. TOM: AND AGAIN, IT COMES DOWN TO THE STATISTIC YOU JUST GAVE, WHICH IS 10 MILLION, WHICH IS WE GO BACK TO CONVENTIONAL ECONOMICS. WHEN YOU TALK TO CRAIG GORDON, A WASHINGTON TEAM, OUR ECONOMIC TEAM, TODAY -- DO THEY PRESUME TO SLOW DOWN ARE SPEAKING OF? MARTY: CERTAINLY THAT WAS JAY POWELL'S VIEW. IN HIS POLICY STATEMENT HE WAS CLEARLY SIGNALING A CONCERN OVER A POSSIBLE DOWNTURN, AND HE WAS DOING EVERYTHING HE COULD TO MAKE SURE THAT THEY MAKE CONDITIONS ACCOMMODATIVE TO COUNTER THAT. BUT I THINK THAT THERE IS A REAL CONCERN THAT WE MAY GET ANOTHER DOWNTURN IN THIS ECONOMY, WHICH LEADING INTO NOVEMBER 3, WOULD BE BAD NEWS FOR DONALD TRUMP. FRANCINE: MARTY, I MEAN, WHAT DOES DONALD TRUMP HAVE TO DO IN THE NEXT COUPLE OF WEEKS? EVEN IF THE ECONOMY TURNS, COULD HE SPIN IT WITH TAX CUTS? MARTY: I DON'T THINK THERE IS ENOUGH TIME TO DO ANYTHING WITH TAX CUTS OR POLICY CHANGES. I MEAN, AMONG OTHER THINGS, THE SENATE IS GOING TO -- AND TO A CERTAIN EXTENT, THE HOUSE -- IS GOING TO BE OBSESSED WITH THE SUPREME COURT NOMINATION. AND WE KNOW THAT STIMULUS WAS BASICALLY BEING PUT OFF UNTIL AFTER THE ELECTION REGARDLESS. I DON'T THINK THERE IS THE PROSPECT OF DONALD TRUMP PRODUCING ANY KIND OF OCTOBER SURPRISE FROM A POLICY STANDPOINT. BUT THIS DOES AFFORD HIM AN OPPORTUNITY TO SOLIDIFY HIS FACE -- HIS BASE FOR SURE. FRANCINE: DOES THE TIKTOK DEAL FILTER THROUGH THE ELECTION? MARTY: AS I SAID EARLIER, THERE IS A TENDENCY TO OVEREMPHASIZE THE SUPREME COURT ISSUE OVER LOCAL ISSUES. I MEAN, THE SAYING IS ALL POLITICS IS LOCAL, AND NOTHING IS MORE TRUE AMONG UNDECIDED VOTERS. IT IS HAPPENING IN THEIR HOMES, IN THEIR FAMILIES, -- IT IS WHAT IS HAPPENING IN THEIR HOMES, AND THEIR FAMILIES, IN THEIR LOCAL DISTRICTS THAT WILL DETERMINE WHAT IS GOING TO WIN THIS ELECTION. FRANCINE: MARTY SCHENKER -- TOM: MARTY SCHENKER, THANK YOU SO MUCH. IT IS GOING TO BE AN EVENTFUL WEEK. GET YOUR FLAK JACKET ON, WE NEED TO MAKE NOTE OF THE DATE OF 40 SOME DAYS UNTIL THE ELECTION. NOT AS IMPORTANTLY, SEPTEMBER 29 BECKONS. I HAVEN'T DONE THE ACCOUNT ON THE SAME BLOOMBERG CALENDAR, BUT I THINK I CAN SAY 29, TAKEAWAY 21, THAT IS EIGHT DAYS? EIGHT DAYS A WEEK? EIGHT DAYS UNTIL THE PRESIDENTIAL DEBATE, WHICH IS QUITE EXTRAORDINARY, MAYBE SHOULD BE FRONT AND CENTER. FRONT AND CENTER FOR THE BLOOMBERG WORLD -- I'M GOING BACK-AND-FORTH WITH JON FERRO RIGHT NOW, WITH FUTURES -57, DOW FUTURES -534. -- DOW FUTURES -5.34. I'M WATCHING THE 10-YEAR REAL YIELD BREAKING DOWN FROM -1.00 TO -1.02. REALLY NICE DOLLAR STRENGTH AS WELL. TOM: THIS MORNING, SUDDENLY A DIFFERENT ELECTION, A DIFFERENT FIRST DEBATE IN EIGHT DAYS. IT WILL BE A DIFFERENT 43-DAY DASH. REPUBLICANS COUNT SENATE VOTES. DEMOCRATS THREATEN A REVOLUTION. REPLACING RUTH BADER GINSBURG. MARCUS REACT IN THE LAST HOURS. THE HOPE FOR FISCAL STIMULUS EVAPORATES AGAIN -- MARKETS REACT IN THE LAST HOURS. THE HOST FOR FOR SUE -- THE HOPE FOR FISCAL STEMLESS. YES, THE UNITED KINGDOM -- THEY CONSIDER RENEWED LOCKDOWNS. GOOD MORNING, EVERYONE. "BLOOMBERG SURVEILLANCE," AND EXTRAORDINARY MONDAY MORNING. TOM IN NEW YORK, FRANCINE LACQUA IN LONDON. FUTURES -57. WE MUST FOCUS ON WASHINGTON, BUT I WOULD SUGGEST THE NEWS FLOW OUT OF THE UNITED KINGDOM IS ABSOLUTELY EXTRAORDINARY. WHAT ARE THE PEOPLE OF THE UNITED KINGDOM LISTENING TO FOR MR. HANCOCK AS HE HELPS HIS PRIME MINISTER? FRANCINE: GOING BACK TO THE MARKETS, I THINK EVERYTHING IS IN FLUX. THERE IS VERY LITTLE UNCERTAINTY ABOUT HOW THE DEATH OF THE JUSTICE, RUTH BADER GINSBURG, WILL PLAY ON THE ELECTION. THERE ARE UNKNOWNS AS TO WHETHER WE GO INTO SOME KIND OF LOCKDOWN, FURTHER RESTRICTED IN LONDON AND THE U.K. COME AND THAT IS WHAT PEOPLE WANT TO KNOW FOR MR. HANCOCK. PEOPLE ALSO WANT TO UNDERSTAND WHAT IT MEANS FOR TRAVEL AND LEISURE COMPANIES. THERE IS A LOT OF UNCERTAINTY FOR THE U.K. AND OTHER PARTS OF THE WORLD, AND IT IS PLAYING OUT IN THE FOREFRONT OF THE MARKETS. TOM: IT TO PERCENT MOVE IN THE TECH SPACE. WE ARE NOT TO A CORRECTION WITH THE STANDARD & POOR'S 500, BUT TRULY ON THE CUSP EVERY FORMAL -- OF A FORMAL CORRECTION. FIRST WORD NEWS WITH RITIKA GUPTA. RITIKA: THE DEATH OF JUSTICE RUTH BADER GINSBURG HAS THRUST THE SUPREME COURT INTO THE POLITICAL SPOTLIGHT. REPUBLICAN LEADERS IN THE SENATE ARE HOPING TO RUSH THROUGH A REPLACEMENT WITH PRESIDENT DONALD TRUMP EXPECTED TO NOMINATE HIS PICK THIS WEEK. DEMOCRATS ARE WARNING OF A CONSTITUTIONAL CRISIS IF JOE BIDEN WINS THE ELECTION BUT TRUMP'S CANDIDATE IS STILL CONFIRMED TO THE SUPREME COURT. PRESIDENT TRUMP IS CELEBRATING THE TIKTOK DEAL DESPITE IT FALLING SHORT ON SOME OF HIS KEY DEMANDS. THE CHINESE OWNER WAS TO HAVE AN 80% STAKE IN THE NEW COMPANY. SOURCES HAVE TOLD BLOOMBERG THAT TIKTOK IS SEEKING A VALUATION OF $60 BILLION AS PART OF THE U.S. DEAL. AND U.S. SECRETARY OF STATE MIKE POMPEO IS LASHING OUT AT EUROPE FOR SUPPORTING WHAT HE CAUSED THE SILLY IRAN DEAL. HE SAYS GOVERNMENT HAVE PRIVATELY TOLD HIM THAT THE U.S. IS RIGHT, EVEN IF THEY WILL NOT PUBLICLY ACKNOWLEDGE IT. THE U.S. PLANS TIGHTER RESTRICTIONS ON IRAN, WHAT HE CALLS A SNAPBACK OF SANCTIONS ON THE COUNTRY. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, I'M RITIKA GUPTA. THIS IS BLOOMBERG. FRANCINE? TOM? TOM: LET ME LOOK AT THE DATA RIGHT NOW. FUTURES -61, DOW FUTURES -- IT REVERTS BACK TO THE ATTENTION OF 10, 15 DAYS AGO. THEY'RE REAL YIELD, NEGATIVE ONE POINT 01. I'M WATCHING IT VERY CAREFULLY. CALCULUS OF THE NOMINAL 10 YEAR YIELD WITH THE INFLATION BREAKEVEN. BUT THE REAL POINT TODAY IS THE LITMUS PAPER OF THE DOLLAR. LET ME BEGIN WITH THE DEVELOPED COUNTRIES. YEN 104.16. WEAKER EURO, 1.1787. TURKISH LIRA MOMENTS AGO, 7.60 -- 7.40, TO 7.50, TO 7.60 WITH DISTRESSING SPEED. FRANCINE: OIL IS DROPPING TO $40 A BARREL IN EUROPE ON DEMAND FOR CONCERN -- HEADWINDS, UNCERTAINTY COMING TO THE FOREFRONT ALL THAT ONCE, AND I'M ALSO LOOKING AT SOME BANKING STOCKS DROPPING FOLLOWING A STORY BY THE INTERNATIONAL CONSORTIUM OF INVESTIGATIVE JOURNALISTS. TOM: WE ARE GOING TO BEGIN OUR COVERAGE, FOCUSED ON THE MARKETS TODAY WITH MOVES. WE HAVE OTHER THINGS TO SPEAK OF. DAVID WESTIN WILL JOIN US, SCHEDULED TO BE AT THE BOTTOM OF THIS HOUR. I RIGHT NOW WE NEED TO FIND SOMEONE WHO IS BREATHING THE SAME AIR OF THE HALLWAYS OF COLUMBIA LAW SCHOOL, AS RUTH BADER GINSBURG DID. WE ARE THRILLED TO BRING YOU KIMBERLY ROBINSON TO HELP US WITH BLOOMBERG LAW. KIMBERLY, ONE OF THE GREAT MOMENTS HERE IN ALL OF THIS IS THE PATH OF RUTH BADER GINSBURG FROM GENDER ISSUES AND DISCRIMINATION ISSUES OVER TO VOTING RIGHTS. I THINK THAT HAS BEEN UNDERPLAYED. TELL US ABOUT RUTH BADER GINSBURG IN HER FINAL YEARS, ADDRESSING THE VOTER RIGHTS DEBATE. KIMBERLY: SURE. I THINK IT MAY COME AS A SURPRISE TO SOME LISTENERS THAT RUTH BADER GINSBURG WAS ACTUALLY KNOWN AS THE CONSENSUS NOMINEE WHENEVER SHE WAS FORCED ON THE COURT. SHE WAS SEEN AS SOMEBODY WHO COULD REALLY BRIDGE THE GAP BETWEEN THE LEFT AND THE RIGHT. DEATH THE MEMBERSHIP ON THE COURT SHIFTED AROUND HER -- BUT AS THE MEMBERSHIP ON THE COURT SHIFTED AROUND HER, SHE CAME TO BE KNOWN AS THE GREAT DISSENTER. WITH A CASE DEALING WITH THE VOTING RIGHTS ACT, SHE REALLY TOOK ON THE KIND OF POP POP ICON STATUS THAT WE KNOW TODAY. WHAT BROUGHT HER A LOT OF FAME WAS ONE IN THE VOTING RIGHTS CASE WHERE SHE CHIDED THE MAJORITY FOR DOING AWAY WITH THE VOTING RIGHTS ACT, EVEN THOUGH IT WAS WORKING. SHE SAID IT WAS SOMETHING AKIN TO THROWING AWAY YOUR UMBRELLA IN A RAINSTORM JUST BECAUSE YOU ARE NOT GETTING WET. FRANCINE: WHEN YOU LOOK AT SOME OF THE THINGS THAT WE ALSO NEED TO LOOK AT, KIMBERLY, CAN TRUMP ACTUALLY REPLACE HER BEFORE THE ELECTION? DOES HE HAVE TIME TO REPLACE HER? KIMBERLY: WELL, IF YOU ARE SPEAKING CONSTITUTIONALLY, THERE ARE REALLY FEW RULES ABOUT WHAT A PRESIDENT CAN DO AND WHAT THE SENATE CAN DO, ALTHOUGH WE ARE HEARING A LOT ABOUT WHAT THE HISTORY HAS BEEN. CERTAINLY THE PRESIDENT CAN NOMINATE SOMEONE THIS CLOSE TO THE ELECTION. AT THE TIMING IS A PROBLEM. WE HAVE SEEN OVER THE MODERN ERA THAT IT TAKES ABOUT 70 DAYS ON AVERAGE TO CONFIRM SOMEONE, SO THAT IS A REALLY TIGHT DEADLINE BEFORE THE ELECTION, OR EVEN BEFORE THE NEW CONGRESS TAKES OVER IN JANUARY. TOM: I WANT TO GO TO YOUR LEGAL EXPERTISE, AND WE ARE THRILLED -- I HAVE TO SAY THIS, FOLKS -- TO HAVE KIMBERLY ROBINSON AND GREG STOHR WITH US IS TO OUR ADVANTAGE. THE OTHERS IN THE INDUSTRY, LINDA GREEN HEARSE -- LINDA GREEN AT "THE NEW YORK TIMES" -- DO ALL OF YOU TOGETHER RESUME THAT A CONSERVATIVE APPOINTED WILL STAY FOREVER CONSERVATIVE, OR A LIBERAL APPOINTEE WILL STAY FOREVER LIBERAL, OR CAN WE SEE THE SHOCK THAT YOU STUDIED THAT JUSTICES CHANGE OVER TIME. IS THAT ERA OVER? KIMBERLY: THERE HAS BEEN A CONCERTED PUSH ON THE RIGHT TO MAKE SURE THAT THAT ERA IS OVER. WE SEE A LOT OF PEOPLE WHO ARE LOOKING FOR NOMINEES WHO DO HAVE SOME KIND OF A TANGIBLE TRACK RECORD SO THAT THEY CAN ASSURE THAT THIS NOMINEE IS GOING TO BE CONSERVATIVE, OR AT LEAST AS CONSERVATIVE AS POSSIBLE. BUT ONCE A SUPREME COURT NOMINEE GETS ON THE COURT, THEY ARE THERE FOR LIFE, SO WE HAVE SEEN EVEN PRESIDENT TRUMP'S NOMINEES STRAY FROM WHAT YOU MIGHT EXPECT TO BE THE CONSERVATIVE LINE. AND HERE I AM SPEAKING MOST NOTABLY ABOUT JUSTICE NEIL GORSUCH, WHO IN THE LAST TERM VOTED TO EXTEND PROTECTIONS IN EMPLOYMENT TO LGBT WORKERS. SO IT IS REALLY A QUESTION MARK ONCE THE NOMINEES GET ON THE COURT WITH LIFETIME APPOINTMENTS. TOM: I'M SURE WE WILL BE SPEAKING TO YOU IN THE COMING WEEKS WITH THIS HISTORIC MOMENT FOR THE NATION, WRITING FOR BLOOMBERG NEWS. COMING UP, ROBERT KAPLAN, THE QUESTION, THE ECONOMIC -- IN TOM: GOOD MORNING, EVERYONE. "BLOOMBERG SURVEILLANCE." FRANCINE LACQUA AND TOM KEENE WITH A DISTRESSING MARKET TO SAY THE LEAST. FUTURES NEGATIVE 58. WORSE EARLIER, BUT TRENDING NEAR WEAKNESS FOR THE DAY. RIGHT NOW ON THE MARKETS, MOVING FORWARD IN THE CACOPHONY OF THIS NEWS, RONALD TEMPLE JOINS US, LAZARD ASSET MANAGEMENT COHEAD OF ASSET MANAGEMENT AND ALL OTHER U.S. EQUITY STRATEGY. WHAT DO YOU DO WHEN THE NEWS FLOWS LIKE THIS? RON: IT IS IMPORTANT TO STEP BACK AND THINK ABOUT WHAT YOU WANT TO OWN IN THE MARKET AND UNDERSTAND WHAT THE SHORT-TERM MOVEMENTS CAN MEAN IN TERMS OF TIMING TO GET INTO NEW POSITIONS YOU MIGHT WANT OR EXIT SOME OTHER ONES. I THINK IT IS IMPORTANT TO ZOOM OUT AND TAKE EVERYTHING INTO ACCOUNT OVER THE LONG-TERM TERM IN UNDERSTANDING WHAT YOU ARE PAYING AND WHAT YOU'RE GETTING. THERE IS ALWAYS NOISE IN THE MARKET, ALWAYS VOLATILITY. THERE HAS ALWAYS BEEN THAT -- MY VIEW HAS ALWAYS BEEN THAT VOLATILITY IS CREATED -- TOM: I BELIEVE WE ARE 9.5% DOWN FROM THE PEAK. A CORRECTION IS OPPORTUNITY, BUT WE FREEZE IN OUR TRACKS IN FEAR. WHERE IS THE GREATEST OPPORTUNITY, GIVEN THIS CORRECTION, SO I CAN U. UNFEAR MYSELF? RON: IF WE LOOK AT WHAT HAPPENED OVER THE WEEKEND WITH THE LOSS OF RUTH BADER GINSBURG, TRULY A GIANT ON THE SUPREME COURT, WHATEVER OXYGEN WAS LEFT IN THE ROOM HAS BEEN SIPHONED OUT OF THE ROOM IN D.C. IF I THINK ABOUT THAT COMBINED WITH THE RESEARCH IN COVID PANDEMIC IN EUROPE, THE ARRIVAL OF FLU SEASON IN THE U.S., YOU HAVE QUITE A FEW THINGS LINING UP AGAINST THE OPTIMISTIC VIEW. I DO THINK IN TERMS OF SUCKING THE OXYGEN OUT OF THE ROOM IN D.C., THE PROBABILITY OF ANOTHER STIMULUS ACT PROBABLY IS GOING DOWN EVEN MORE WITH THIS NEWS. WITH ALL OF THAT IN THE BACKDROP, WHEN I LOOK AT THE MARKET, I THINK WHAT WE SAW IN THE LAST WEEKS AND MONTHS WAS A SPECULATIVE FROTH AROUND SOME OF THE GROWTH STOCKS IN THE MARKET, AND IN PARTICULAR WHAT WE SAW IN AUGUST WITH RETAIL BUYING SIGNIFICANT AMOUNTS OF ON-CALL OPTIONS, LITERALLY WITH ONE OR TWO DAYS TO MATURITY, THEY MIGHT HAVE BEEN PLAYING -- THEY MIGHT AS WELL AS BEEN PLAYING A SLOT MACHINE. I THINK THE GROWTH STOCKS ARE PROBABLY PARTICULARLY VULNERABLE , IN PARTICULAR THOSE GROWTH STOCKS WHERE THERE IS NO CURRENT NET EARNINGS, NO CURRENT CASH FLOW. IT IS ALL HOPE FOR THE FUTURE. I THINK THAT IS WHERE THE DOWNSIDE RISK IS. BUT OTHER PARTS OF THE MARKET HAVE BEEN PRETTY MUCH LEFT HIND IN THIS RALLY. IF YOU LOOK AT THE S & P, WE ARE STILL UP YEAR TO DATE I ABOUT 3% , BUT THE MEDIAN STOCK IS DOWN 5%. I THINK YOU CAN FIND SOME REAL HIGH QUALITY COMPANIES WITH GOOD CURRENT CASH FLOW, DECENT EARNINGS GROWTH IN THE FUTURE, WHO JUST ARE NOT IN THIS KIND OF REALLY EXCITING FROTHY PARTS OF THE MARKET. THAT IS WHERE I WOULD FOCUS ATTENTION. FRANCINE: RON, LOOKING FORWARD TO WHAT THE NEXT COUPLE OF MONTHS WILL BRING, HOW MUCH MORE OF A MARKET CORRECTION COULD WE EXPECT? RON: I WAS JUST LOOKING THROUGH THIS MORNING, THE NASDAQ ROSE 83% FROM THE MARTIN THAT FROM THE BOTTOM OF MARCH -- FROM THE BOTTOM OF MARCH TO SEPTEMBER 21. THE S & P WAS UP 16%. WITH THIS MORNING'S OPEN, THE S & P WILL BE DOWN JUST SHY OF 10%. WE COULD HAVE ANOTHER 5% TO 10% DOWNSIDE FROM HERE IF NOT A BIT MORE, DEPENDING ON THE NEWS FLOW. I THINK THE MARKET -- I HAVE SAID THIS BEFORE -- HAS BEEN SURPRISED AT HOW RESILIENT AND SURPRISED -- RESILIENT THE MARKET HAS BEEN. WITH THE IMPROVEMENT FROM APRIL TO JULY IN THE U.S. ECONOMY AND LAST WEEK WITH THE FOMC MEETING -- THERE WAS AN EXPECTATION THAT THE FED WOULD ALWAYS BE THERE TO PROVIDE THE NEXT ROUND OF LIQUIDITY TO KEEP THE HIGH GOING. IT LOOKS LIKE THE DEALER STEPPED AWAY FROM THE JUNKIE THIS WEEKEND, AND MAYBE WE WILL HAVE TO SOBER UP A BIT IN TERMS OF THE MARKET. VINCENT: ONE IS NATIONAL IN FRANCINE: WHAT IS THE ONE THING -- IS THERE ANYTHING APART FROM TECH STOCKS THAT WE SHOULD BE WATCHING OUT FOR? I DON'T KNOW WHAT YOU DO WITH GOLD RIGHT NOW. RON: I WANT TO BE CAREFUL WITH TECH STOCKS. NOT ALL TECH STOCKS ARE INAPPROPRIATELY VALUED. WHAT IS QUITE SURPRISING IS HOW MUCH PEOPLE HAVE BEEN WILLING TO BID UP COMPANIES THAT HAVE MORE OF THE BUSINESS PLAN THAN AN ACTUAL BUSINESS. I DO THINK THERE HAS BEEN EXCESSIVE OPTIMISM AROUND THOSE STOCKS. NOT ALL OF THE TECH SECTOR IS OVERVALUED. WHAT IS DIFFERENT ABOUT THIS RALLY THEN THE TMT BUBBLE IS HOW MUCH CASH FLOW SOME OF THESE BIG TECH COMPANIES DO HAVE AND HOW STRONG THEIR BALANCE SHEETS ARE. IN TERMS OF WHERE THE MISPRICING IS, WE HAVE HAD AN ENORMOUS DIVERGENCE BETWEEN GROWTH STOCKS AND VALUE STOCKS, AND I TYPICALLY DON'T LIKE TO TALK ABOUT THIS BECAUSE I THINK SOMETIMES THERE IS A FALSE CHOICE, YOU CAN OWN A GROWTH STOCK THAT IS A GOOD VALUE STOCK. BUT COMPANIES AND THAT VALUE SECTOR WHERE YOU CAN SEE HIS SICKLE WILL BE REBOUND -- A CYCLICAL REBOUND RELATIVE TO GROWTH -- IN OUR ANALYSIS OVER THE LAST 20 OR 30 YEARS -- EVEN 40 YEARS IN THE U.S. -- TYPICALLY QUALITY HAS BEEN THE BEST PLACE TO BE, SO RATHER THAN THINKING ABOUT VALUE OR GROWTH, FOCUSING ON QUALITY AND FINDING COMPANIES WITH HIGH RETURNS ON CAPITAL THAT CAN BE SUSTAINED INTO THE FUTURE. I THINK TRYING TO NAVIGATE THE DOLLAR SECURITY SELECTION EXERCISE, FINDING WHICH COMPANIES HAVE THE QUALITY BALANCE SHEETS AND INCOME STATEMENTS AND ARE STILL TRADING AT ATTRACTIVE VALUATIONS, YOU CAN FIND THEM, IT HAS JUST BEEN TOUGHER MORE RECENTLY EVEN THE RALLY WE HAVE SEEN. TOM: ARE BONDS AN ASSET? RON: THAT IS A TOUGH QUESTION. I THINK PEOPLE NEED TO REEVALUATE THE OLD 60/40 ASSET ALLOCATION MODEL. WHEN YOU LOOK AT SOVEREIGN DEBT, TRADING AT THESE YIELDS, TECHNICALLY FROM AN ACCOUNTING PERSPECTIVE THEY ARE AN ASSET, WHAT THEY ARE PRETTY MUCH GUARANTEED TO GIVE YOU A NEGATIVE REAL RETURN IF YOU HOLD THEM TO MATURITY. YOU CAN BUY A 10-YEAR U.S. TREASURY AND HOPE IT GETS FROM 66 BASIS POINTS TO 46, AND YOU WOULD MAKE MONEY FROM THE CAPITAL GAINS PER ACTIVE -- CAPITAL GAINS PERSPECTIVE. THE WORLD IS UPSIDE DOWN WHEN YOU BUY BONDS FOR CAPITAL APPRECIATION AND WHEN YOU'RE BUYING SUCKS FOR INCOME. IT SEEMS THAT THAT IS THE POINT WE HAVE REACHED FOR INVESTORS -- BUYING STOCKS FOR INCOME. IT SEEMS THAT THAT IS THE POINT THAT WE HAVE REACHED FOR INVESTORS. FRANCINE: COMING UP, CHRISTINE LAGARDE FRANCINE: THIS IS "BLOOMBERG SURVEILLANCE." TOM AND FRANCINE FROM LONDON AND NEW YORK. WE ARE TALKING ABOUT A COUPLE THINGS MAKING THEIR WAY IN THE MARKETS AND THE DYNAMICS GOING FORWARD. RON TEMPLE JOINS US. HOW DO YOU SEE THIS DILEMMA PLAYING OUT OVER THE NEXT 12 TO 18 MONTHS? RON: I DO WORRY THAT EXITING THIS CRISIS WE WILL SEE BALANCE SHEETS MORE HEAVILY BURDENED BY DEBT, WHETHER IT BE SOLID BALANCE SHEETS GLOBALLY AND ACROSS EMERGING MARKETS. THAT WE WILL SEE CORPORATE SENT HOUSEHOLDS WITH MORE DEBT, BUT COUNTERINTUITIVELY, ONE OF THE THINGS I AM HOPING WE SEE AFTER WE GET THROUGH THE FOURTH QUARTER AND THE ELECTIONS IN THE U.S. IS A PIVOT IN TERMS OF POLICY. I THINK IT WILL BE VERY POSITIVE FOR THE U.S. ECONOMY, FOR WASHINGTON TO RECOGNIZE THAT WE HAVE UNDER INVESTED FOR DECADES AND OUR PUBLIC INFRASTRUCTURE AND ROADS, BRIDGES, SEWER SYSTEMS, WATER SYSTEMS, BROADBAND. IF ANYTHING THIS PANDEMIC SHOULD HAVE BROUGHT HOME HOW IMPORTANT IT IS TO HAVE FAST, RELIABLE BROADBAND FOR THE ECONOMY TO WORK. I WOULD LOVE TO SEE A MASSIVE INFRASTRUCTURE PROGRAM TO TRY TO RAISE PRODUCTIVITY GROWTH RATES. HISTORICALLY THIS WAS A VERY BIPARTISAN TOPIC IN THE U.S. IN TERMS OF IF YOU COULD RAISE PRODUCTIVITY GROWTH, YOU RAISE INCOME GROWTH FOR THE ECONOMY AS A WHOLE OVER THE FUTURE, AND THIS WILL BE POSITIVE. WE HAVE ALREADY SEEN A POSITIVE STEP IN THAT REGARD WITH THE E.U. RECOVERY FUND. THAT IS WHERE I'M HOPEFUL. IT IS IRONIC THAT I'M WORRIED ABOUT SO MUCH DEBT, BUT I HOPE THERE IS MORE OF IT NEXT YEAR. THE KEY BEING THAT WE NEED TO USE THAT FOR INFRASTRUCTURE. FRANCINE: I WAS GOING TO ASK YOU ABOUT THE GREEN RECOVERY FUND WE SAW IN EUROPE. DOES IT PUT EUROPE ON A BETTER FOOTING COMPARED TO OTHER PARTS OF THE WORLD? RON: I HAVE TO SAY THE E.U. RECOVERY FUND WAS A PRETTY PIVOTAL TRIGGER FOR THE FIRST TIME IN A LONG TIME, TO SAY I THINK I SEE STRONG THING -- I SEE SOMETHING STRUCTURALLY POSITIVE HERE. EUROPE HAS TO TAKE THE LEAD IN TECHNOLOGY FROM THE U.S. AS IT RELATES TO GREEN TECHNOLOGY. EUROPE HAS LED IN MANY WAYS IN SOLAR POWER AND OTHER RENEWABLE ENERGY SOURCES BECAUSE OF GOVERNMENT INVOLVEMENT, AND I THINK THAT IS A POSITIVE FOR EUROPE AND THE U.S. SHOULD NOT MISS THIS MOMENT IN TIME. WE CAN CREATE A TREMENDOUS NUMBER OF JOBS IN TERMS OF WEANING OURSELVES FROM FOSSIL FUELS AND THE CLIMATE CHANGE ISSUES WE ARE ALL GOING TO FACE. I THINK CLIMATE CHANGE IS THE EXISTENTIAL ISSUE OF OUR LIFETIME COME AT THE U.S. NEEDS TO GET UP ITS GAME TO COMPETE WITH EUROPE ON THIS FRONT, BUT I THINK RIGHT NOW EUROPE IS IN THE LEAD. TOM: RON, WHAT DO YOU THINK OF ESG? A LOT OF BANKS ARE COMMITTED TO ESG AND YOU ARE ON THE OTHER SITE OF IT. IS IT OF VALUE? RON: I THINK ESG IS A CORE PART OF ANALYZING EQUITIES. IF YOU GO BACK 30 YEARS AGO, WE HAD SOCIALLY RESPONSIBLE INVESTING, AND THAT WAS THE DOMAIN OF RELIGIOUS GROUPS, TYPICALLY THOUGHT OF AS THE NUNS AND ORPHANS WHO DID NOT WANT TO OWN CERTAIN STOCKS. IT WAS MORE ABOUT RESTRICTING CHOICES. ESG IS -- HAS EVOLVED. THIS IS ABOUT NOT SAYING WE ARE NOT GOING TO OWN COMPANIES BECAUSE THEY ARE PEOPLE OR ON A BAD LIST. IN SAID -- INSTEAD, IT IS ABOUT IDENTIFYING WHICH ISSUES FOR A COMPANY ARE MATERIAL TO THEIR FUTURE FINANCIAL RETURNS. TO ME IT IS PART OF A FINANCIAL ANALYSIS. WITH CLIMATE CHANGE, IT IS GOING TO BE THIS EXISTENTIAL CHALLENGE WHICH I THINK IT IS -- HOW DOES CLIMATE CHANGE AFFECT THE PROFITABILITY OF THE COMPANY IN THE FUTURE? DOES IT CREATE OPPORTUNITIES BECAUSE THEIR PRODUCTS DO BETTER IN A WORLD THAT IS ADAPTING OR MITIGATE IN CLIMATE CHANGE, OR DOES IT CREATE HAZARDS? AND THEN FOLDING THAT INTO YOUR VALUATION AND SAYING THE TARGET PRICE IS DIFFERENT THAN WHAT I WOULD HAVE THOUGHT WITHOUT CONSIDERING THESE FACTORS. I THINK ESG IS PRICKLY IMPORTANT TO ANALYZING STOCKS, AND WE ARE WORKING TO TRY TO -- IS PARTICULARLY IMPORTANT TO ANALYZING STOCKS, AND WE ARE WORKING TO TRY TO CREATE ANALYSIS AT OUR FIRM. TRYING TO UNDERSTAND WHICH COMPANIES ARE ALIGNING THEMSELVES WITH THE MORE SUSTAINABLE FUTURE IN TERMS OF HOW THEY MANAGE NOT ONLY THEIR FINANCIAL CAPITAL, BUT ALSO THEIR HUMAN AND NATURAL CAPITAL. THE LONG ANSWER IS TO SAY IT IS IMPORTANT, BUT I THINK WHAT IS ALSO IMPORTANT IS NOT JUST RELYING ON EXTERNAL ESG RATINGS. IF YOU LOOK AT BOND RATINGS, THERE IS AN 80% OR 90% CORRELATION WITH MOODY'S. YOU HAVE TO UNDERSTAND THE REALITY IN CONTEXT. TOM: RON TEMPLETON -- RON TEMPLE FROM LAZARD. A LOW CORRELATION WHERE YOU CAN ADD SOME RESEARCH VALUE. HE IS WITH LAZARD. FUTURES -60, -52 IS AN UGLY NUMBER, DELL FUTURES -5.25. RIGHT ON THE EDGE OF A CORRECTION. DOW FUTURES -5.25, RIGHT ON THE EDGE OF A CORRECTION. EN-104 .10. GO DOWN $25, 19 .37. DESCENDED FROM TENNESSEE LATER THIS AFTERNOON. RITIKA: THIS IS "BLOOMBERG SURVEILLANCE." CHINA IS RATCHETING UP TENSIONS IN THE TAIWAN STRAIT HOPING TO DETER TAIPEI FROM DEEPER TIES WITH THE U.S. IN A SERIES OF MILITARY EXERCISES, CHINA REPEATEDLY BREACHED THE MEDIAN LINE SEPARATING THE COUNTRIES. BEIJING REGARDS THE ISLAND AS PART OF ITS TERRITORY EVEN THOUGH IT HAS BEEN RULED SEPARATELY FOR MORE THAN 70 YEARS. INDIA ADDED ANOTHER 80,000 CORONAVIRUS CASES TO ITS TALLY, PUSHING THE COUNTRY'S TOTAL TO NEARLY 5.5 MILLION. INDIA HAS THE WORLD'S SECOND-LARGEST COVID-19 OUTBREAK BEHIND THE UNITED STATES. THE COUNTRY SAYS THREE VACCINES ARE IN DIFFERENT STAGES OF CLINICAL TRIAL. A WOMAN SUSPECTED OF SENDING AN ENVELOPE TO THE WHITE HOUSE CONTAINING THE POISON RICIN WAS ARRESTED OVER THE WEEKEND. SHE WAS TAKEN INTO CUSTODY AT THE U.S.-CANADIAN BORDER WHILST TRYING TO ENTER THE UNITED STATES. HER NAME WAS NOT RELEASED, BUT OFFICIALS SAY HER ARREST COMES NEARLY A YEAR AFTER SHE WAS DEPORTED FROM THE U.S. FOR ENGAGING IN CRIMINAL ACTIVITY. THE LETTER WAS INTERCEPTED LAST WEEK BEFORE IT REACHED THE WHITE HOUSE. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND AT QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. TOM: THANK YOU SO MUCH. I WANT TO SAY GOOD MORNING TO ALL OF YOU WORLDWIDE. OVER THE NEXT NUMBER OF DAYS AND WEEKS, ALL OF US WILL BE LOOKING AT THE HERITAGE, HISTORY OF RUTH BADER GINSBURG AND HER PAST. LET'S LISTEN TO COMMENTS FROM THIS WEEKEND. > > I THINK WE ARE GOING TO START THE PROCESS EXTREMELY SOON AND WE WILL HAVE A NOMINEE VERY SOON. I COULD SEE IT WOULD BE I WILL -- WOULD BE A WOMAN. IF SOMEBODY WERE TO ASK ME NOW, I WOULD SAY THAT A WOMAN WOULD BE IN FIRST PLACE. THE CHOICE OF A WOMAN, I WOULD SAY WOULD CERTAINLY BE APPROPRIATE. > > THE PRESIDENT IS RUSHING TO MAKE SOME KIND OF A DECISION BECAUSE NOVEMBER 10 IS WHEN THE ORAL ARGUMENTS AGAIN ON THE AFFORDABLE CARE ACT. HE DOESN'T WANT TO CRUSH THE VIRUS, HE WANTS TO CRUSH THE AFFORDABLE CARE ACT. > > I BELIEVE WE WELL. I THINK IT IS PARTICULARLY IMPORTANT THIS SENATE TAKE IT UP AND CONFIRM THIS NOMINATION BEFORE THE ELECTION. TOM: SOME VOICES THERE, IMPORTANTLY, SENATOR CRUZ CONSIDERED TO BE ON THE LIST OF CONSIDERATION BY THE PRESIDENT. WE HAVE GREG AND KIMBERLY, AUTHORITIES LIKE NOAH FELDMAN AT BLOOMBERG OPINION AND THE WONDERFUL KATZENSTEIN, BUT NONE OF THEM COMPARED TO THE HISTORY OF ACTUALLY DOING IT LIKE DAVID WESTIN. YOU KNOW HIM FROM "BALANCE OF POWER," BUT WHAT YOU MAY NOT KNOW IS A STERLING ACADEMIC ABILITY OUT OF THE UNIVERSITY OF MICHIGAN. THEY DRAGGED HIM TO WASHINGTON FOR THE PRIVILEGE OF CLERKING FOR POWELL BACK WHEN POWELL REALLY MATTERED, WITH A GUY NAMED WARREN BURGER. WE LOOK BACK WITH DAVID WESTIN RIGHT NOW. EXTRAORDINARY OPPORTUNITY FOR YOU TO OBSERVE A YOUNG ATTORNEY FROM NEW YORK WITH A CERTAIN INTENSITY. WHAT WAS IT LIKE TO SEE RUTH BADER GINSBURG IN ACTION? DAVID: IT WAS A GREAT PRIVILEGE TO CLERK FOR JUSTICE POWELL AND SHE HAD ONE OF HER SIX ARGUMENTS WHEN I WAS THERE. I WAS ASSIGNED TO JUSTICE POWELL FOR THAT CASE. THE CASE WAS ONE SHE WAS GOING TO WIN ANYWAY. YOU HAVE TO REMEMBER SHE CHANGED THE ENTIRE LEGAL WORLD. IT IS HARD TO IMAGINE, BUT SHE PERSUADED THE COURT TO SAY, THE CONSTITUTION DOES BRING SOME EQUALITY TO MEN AND WOMEN. TOM: I WANT YOU TO GIVE US SOME OF THE TENSION. DAVID: IT IS IRONIC BECAUSE WAS A WHITE WAS GIVING HER A TOUGH TIME IN THE ARGUMENT, BUT THE QUESTION IS, SHOULD WOMEN BE EXCUSED FROM GRAND JURY SERVICE. IT WAS THOUGHT THAT WAS DOING A FAVOR FOR WOMEN. HER WHOLE THEME FOR HER WHOLE BODY OF WORK WAS, DON'T DO US ANY FAVORS. TOM: HERE IS THE MONEY QUESTION, AND I GO BACK TO EISENHOWER AND THE STUDY WITH CARDINAL SPELLMAN OF, HE NEEDED A CATHOLIC VOTE IN I BELIEVE 1956 WHEN BRENNAN OF NEW JERSEY WAS SELECTED AS WELL. CAN WE HAVE THE SURPRISE INJUSTICES TODAY WHERE THEY ARE PAID FOR CERTAIN VIEW, WHETHER A PROFESSOR FROM NOTRE DAME OR THE DAUGHTER OF A CUBAN EXILE, CAN THEY KNOW WITH SERVITUDE HOW THEY ARE GOING TO ASK NOW, OR ARE WE SO POLARIZED THAT IS GOING TO BE DIFFERENT? DAVID: I WILL GIVE YOU ONE PERHAPS EXAMPLE, CHIEF JUSTICE ROBERTS. RIGHT NOW, THERE ARE A FEW -- FAIR NUMBER OF REPUBLICANS WHO HAVE SAID HE IS A SURPRISE. TOM: I WAS GOING TO ASK YOU EARLIER THIS MORNING, BUT WE HAVE A LISTING OF FIVE CONSERVATIVES AND THREE LIBERALS, I WOULD ASSUME ROBERTS IS NOT ON THE LIST OF CONSERVATIVES. DAVID: I THINK CHIEF JUSTICE ROBERTS IS MORE COMMITTED TO THE INSTITUTION AS AN INSTITUTION. A LOT OF HIS VOTES CAN BE GIVEN TO WHAT IS GOOD FOR THE SUPREME COURT. FRANCINE: GOOD MORNING FROM LONDON. FOR ALL OF OUR INTERNATIONAL VIEWERS, I KNOW ALL OF THE PAPERS ALSO COVERED WHAT HAPPENED OVER THE WEEKEND. ONCE YOU BECOME A SUPREME COURT JUSTICE, ARE YOU A POLITICAL? DAVID: YOU CAN EVER BE, BUT CERTAINLY, PEOPLE DO NOT OVERTLY TALK ABOUT THEIR POLITICS. I WOULD SAY AS WE THINK ABOUT THE INFLUENCE OF RUTH BADER GINSBURG, IT STRIKES ME THAT DONALD J. TRUMP WOULD NOT BE OUT THERE SAYING IT HAS TO BE A WOMAN BUT FOR RUTH BADER GINSBURG. EVEN PRESIDENT TRUMP IS SAYING IT HAS TO BE A WOMAN. THERE WAS A TIME THAT WOULD NOT HAVE BEEN RELEVANT. FRANCINE: IF YOU LOOK AT PAST APPOINTMENTS, DOES PRESIDENT TRUMP -- HE WILL TRY TO REPLACE HER VERY QUICKLY, BUT IS THERE ENOUGH TIME TO GET IT DONE? DAVID: HISTORICALLY, NO. IF YOU LOOK AT THE AVERAGES ABOUT 70 DAYS OR SO, THERE IS NOT ENOUGH TIME. BUT AT THIS POINT IN WASHINGTON, WE DON'T KNOW WHAT THE RULES ARE. TOM: THIS IS A REALLY IMPORTANT CASE AS WELL. THERE IS A BELIEF NOW THAT THE GENTLELADY FROM NOTRE DAME WILL USE PRESIDENT -- PRECEDENT ON ROE V. WADE. DO YOU BUY THE IDEA THAT THE CONSERVATOR JUSTICE LOOKS AT PRECEDENT, OR IS THE EVANGELICAL RIGHT SUGGESTING HE NEEDS TO DO SOMETHING SO THE COURT LACKED? DAVID: THE SEVENTH CIRCUIT COURT OF APPEALS JUDGE OR TALKING ABOUT, WE BELIEVE IS VERY HOSTILE TO ABORTION. I HAVE ALWAYS THOUGHT, EVEN CONSERVATIVES, IF THEY ARE SMART, DO NOT WANT TO OVERTURN IT, THEY WANT TO WHITTLE IT AWAY AND DO IT INCREMENTALLY. AN OVERTURN WITH MARSHALL SO MUCH OPPOSITION. I DON’'T THINK THAT IS THE SMART WAY TO GO. TOM: I DON'T WANT YOUR OPINION, BUT WHAT WOULD YOU EXPECT VICE PRESIDENT BIDEN TO DO IN THE COMING DAYS? DAVID: I CHALLENGE FOR VICE PRESIDENT BIDEN IS HE WAS TRYING TO MAKE THIS ALL ABOUT THE CORONAVIRUS. PRESIDENT TRUMP IS DEALING WITH THE CORONAVIRUS. NOW HE IS OFF ON THE SUPREME COURT. THE QUESTION IS, CAN HE WRAP THE TWO TOGETHER? THERE WAS A CHALLENGE BEFORE THE SUPREME COURT RIGHT NOW. HE CAN BRING IT BACK AND SAY, DO YOU REALLY WANT TO TAKE AWAY THE AFFORDABLE CARE ACT? THAT IS WHAT THIS VOTE MEANS TO YOU. TOM: MOST IMPORTANT, WHAT IS THE NUMBER ONE THING MERE MORTALS LIKE ME GET WRONG ABOUT THE SUPREME COURT? DAVID: MOST OF THE WORK OF THE SUPREME COURT IS ACTUALLY FAIRLY MECHANICAL, JUST DEALING WITH THE DAY-TO-DAY. WE ALL FOCUS ON THE BIG ABORTION CASES WHEN A LOT OF IT IS JUST SPECIAL INVITATIONS ON HOW DO YOU INTERPRET IT. TOM: YOU ARE -- YOU RAN TO THE COLUMN OF MEDIA? [LAUGHTER] WE WILL CONTINUE THIS DIALOGUE NOT ONLY WITH "BALANCE OF POWER," BUT THAT WAS AN INSIDE JOKE. WE WILL CONTINUE FORWARD WITH VALUE PERSPECTIVE OF MR. WESTON. COMING UP, THE VALUE PERSPECTIVE ON WECHAT, MICHAEL WOLFF. TIMELY. ♪ TOM: "BLOOMBERG SURVEILLANCE." GOOD MORNING, EVERYONE. EXTRAORDINARY NEWS FLOW INCLUDING OUT OF THE UNITED KINGDOM. THERE ARE ACTUAL MEETINGS GOING ON RIGHT NOW IN THE UNITED KINGDOM. IS THIS A DAY WHERE THEY DECIDE ON LOCKDOWN? FRANCINE: IT COULD BE A DAY WHERE THEY DECIDE ON SOME SORT OF RESTRICTIONS. THERE HAS BEEN RESTRICTED -- THERE HAS BEEN PUSHED BACK ON NOT CALLING IT LOCKDOWN, THE IDEA IS THAT MAYBE HAVE A CURFEW. BARS CLOSE AT 10:00 P.M. TO STOP THE TRANSMISSION WHILST NOT KEEPING CHILDREN AT HOME. IT WOULDN'T BE LOCKED DOWN AS FAR AS WE UNDERSTAND IT LIKE WE SAW IN APRIL AND MAY. TOM: IN THE MARKETS AGAIN, FUTURES AT -51. RIGHT NOW, WITH THIS EXTRAORDINARY NEWS FLOW ON CHINA, PARTICULARLY ON THE STRUCTURE OF OUR TECHNOLOGICAL COMPANIES, MICHAEL WOLF JOINS US. HERE UNDER DESCRIBES HIS COMMITMENT TO PRIVATE EQUITY INTO INVESTMENT AND INNOVATION AND TECHNOLOGY. YOU ARE THE RIGHT GUY TO SPEAK TO RIGHT NOW. WECHAT IS AN APP. I JUDGE OVER THE WEEKEND SAID WECHAT IS A BUSINESS. YOU HAVE TO SHOW SOME NATIONAL SECURITY PROVED ELIMINATED. WHAT ARE YOUR THOUGHTS ON IT AS A BUSINESS? MICHAEL: WECHAT IS USED BY OVER 1.2 BILLION PEOPLE, MAINLY IN CHINA. PEOPLE DON'T UNDERSTAND THAT IN CHINA, IT IS ALMOST LIKE THE INTERNET ITSELF BECAUSE PEOPLE USE WECHAT FOR PAYMENTS, THEIR APPS INSIDE OF IT, THEY USE IT TO TALK, FOR VOICE, FOR COMMERCE. BY BANNING WECHAT IN THE U.S., YOU ARE IMPACTING NOT ONLY THE 20 MILLION OR SO PEOPLE IN THE U.S. WHO USE IT, MAINLY PEOPLE WHO HAVE TO COMMUNICATE WITH CHINA, BUT YOU ARE HURTING AMERICAN COMPANIES' CHANCES OF DOING BUSINESS IN CHINA GIVEN THE FACT THAT SO MUCH COMMERCE TAKES PLACE ON WECHAT ITSELF. TOM: THIS IS A LEGAL DISCUSSION. YOU HAVE TO REVIEW ALL OF THE DOCUMENTS ON ANY TRANSACTION. WHAT IS WECHAT'S VOICE IN AMERICA? WHO REPRESENTS THEM TO THE TRUMP ADMINISTRATION? MICHAEL: CLEARLY, THERE HAS BEEN LEGAL REPRESENTATION IN THE LAST WEEK. THE JUDGE DELAYED THE BANNING OF WECHAT AS A FIRST AMENDMENT ISSUE. I THINK THE BROADER ISSUE IS WHAT -- THE RECENT MOVES AGAINST WECHAT AS WELL AS WHAT WE SAW IN TERMS OF TIKTOK. THE ISSUE IS THAT ALL WE ARE GOING TO DO IS THROW FLAMES AGAINST -- MORE GAS ON THE FLAMES OF THIS CHINESE TECHNO NATIONALISM WHERE WE END UP WITH THE U.S. INTERNET AND THE CHINESE INTERNET AND INTERNET AND THE REST OF THE WORLD BEING VERY SEPARATE. THE CHINESE ARE NOT GOING TO LET THIS HAPPEN SO EASILY, AND WE SHOULD EXPECT THEY ARE GOING TO DO THE SAME THING TO US. THEY ARE GOING TO SAY AMERICAN COMPANIES THAT ARE BASED IN CHINA SHOULD EITHER BE BANNED OR SHOULD BE OWNED BY LOCAL COMPANIES. FRANCINE: DO YOU SEE -- WHATEVER HAPPENS IN NOVEMBER WITH THE U.S. ELECTION, DO YOU SEE MUCH MORE ANTAGONIZING RELATIONSHIPS BETWEEN THE U.S. AND CHINA WHEN IT COMES TO TECHNOLOGY? MICHAEL: THERE IS A LOT OF SUBSTANTIAL ISSUES ABOUT CHINA. THERE ARE THESE ISSUES ABOUT SECURITY. THERE ARE THESE ISSUES ABOUT INTELLECTUAL PROPERTY, BUT THEY NEED TO BE NEGOTIATED. CHINESE IS COMPANIES LIKE WECHAT AND TIKTOK AS WHAT THEY CALL THEIR TECHNOLOGY CHAMPIONS. BY TRYING TO PUT THEM OUT OF BUSINESS IN THE UNITED STATES, WE REALLY ARE IN A NEGOTIATING POSITION AND IT IS NOT THE SAME. IN THE FUTURE, WE ARE ABLE TO FIND WAYS IN WHICH THERE IS REAL REGULATORY REGIME THAT GETS FOLLOWED. WHICHEVER ADMINISTRATION IS IN PLACE, THERE IS NOT GOING TO BE -- THOSE ISSUES ARE GOING TO REMAIN, BUT AT THE SAME TIME, THERE IS GOING TO BE A DIFFERENT APPROACH ON HOW TO DEAL WITH THEM. FRANCINE: WITH TIKTOK IN THE FULL OCEANS FOUND THERE WITH ORACLE AND ELEGANT WAY TO FIND THE SOLUTION THAT IS ACTUALLY ACCEPTABLE TO BOTH SIDES. MICHAEL: I THINK ADMINISTRATION FAILED IN ITS GOAL IN MAKING TIKTOK A COMPANY OWNED BY U.S. COMPANIES. WHAT WE END UP WITH IS REALLY SORT OF AN UNCLEAR OWNERSHIP THAT WE ARE NOT SURE HOW MUCH ANYONE IS GOING TO INVENT -- INVEST. BETWEEN ORACLE AND WALMART, THEY END UP OWNING 20% OF THE COMPANY, BUT THAT IS REALLY JUST A RIGHT FOR THEM TO INVEST IN THE FUTURE. WE END UP WITH ORACLE OWNING ABOUT 12.5% AND WALMART OWNING 7.5%. YES, THE U.S. TIKTOK IS GOING TO BE MANAGED HERE, BUT IT REALLY DOESN'T CHANGE THE NATURE OF THE OVERALL OWNERSHIP. WE ARE IN A POSITION TODAY WHERE TIKTOK IS GOING TO CONTINUE TO BE IMPORTANT, ALMOST 100 MILLION PEOPLE USE IT IN THE U.S.. WHAT IS MOST VALUABLE IN TIKTOK, WHICH DIDN'T BECOME PART OF THIS U.S. STEEL, IS THE ARTIFICIAL INTELLIGENCE, THE ALGORITHM THAT SURFACES TIKTOK'S VIDEOS TO ITS USERS. THE DATA IS IMPORTANT, BUT THE DATA IS STILL GOING TO BE IN TRICKLE TO THE OPERATION OF HOW TIKTOK NOT ONLY SURFACES THOSE VIDEOS, THEY GET YOU TO STAY IN FRONT OF YOUR PHONE CONTINUING TO WATCH MORE AND MORE TIKTOK VIDEOS. FRANCINE: DO YOU SEE CHINA RETALIATING? IF THEY SAY THE SOLUTION COULD BE PALATABLE, DO YOU SEE THEM RETALIATING AGAINST U.S. TECH STOCKS IN THE FUTURE? MICHAEL: I THINK IT IS GOING TO BE LESS AGAINST TECH STOCKS, AND THE RETALIATION IS GOING TO BE MORE ABOUT TRYING TO -- MUCH MORE OVERT WAYS IN LIMITING AMERICAN COMPANY'S PRESENCE IN CHINA. THIS IS PART OF A TREND THAT IS VERY TROUBLING FROM THE U.S. PERSPECTIVE. BANNING HUAWEI, STOPPING BROADCOM FROM MAKING ITS ACQUISITION OF QUALCOMM. ALL IT ENDS UP DOING IS SEPARATING OFF FROM THE U.S. FROM CHINA. FROM THE INTERNET PERSPECTIVE OR TECHNOLOGY PERSPECTIVE, THIS IS ONE GLOBAL ECOSYSTEM AND WE NEED TO BE PART OF IT. FRANCINE: THANK YOU SO MUCH FOR JOINING US. UP NEXT, WE TRACK COVID-19 WITH > > THIS IS DONE BASED ON A SERIES OF SCIENTIFIC EVIDENCE IN THE COMMUNITY THAT THE CONDITIONS ARE THERE THAT THE CDC WOULD REQUIRE, THAT THE LOCAL GOVERNMENT REQUIRES, AND THEN WE HAVE ADDITIONAL CONDITIONS ON TOP OF IT, ANYTHING FROM INFECTION RATES TO HOSPITAL CAPACITY TO THINGS WE MEASURE TO MAKE SURE WE ARE COMFORTABLE WE CAN HANDLE IT. KNOCK ON WOOD, IT HAS BEEN GOING WELL. FRANCINE: THAT WAS THE BANK OF AMERICA CHAIRMAN SPEAKING EXCLUSIVELY TO DAVID WESTIN AHEAD OF THE EQUALITY SUMMIT. COVERAGE STARTS THIS WEDNESDAY, 7:00 A.M. IN NEW YORK, 12:00 P.M. IN LONDON. IT JOINING US FOR MORE ON THE VIRUS IS DR. JOSHUA SHARFSTEIN, JOHNS HOPKINS LYSINE FOR PUBLIC HEALTH PRACTICE. A LITTLE BIT OF A TOUGH TURN, BUT WE TRACK THE VIRUS EVERY DAY AND IT DOES SEEM WE ARE LOOKING AT A POSSIBLE RESTRICTIONS HERE IN LONDON BECAUSE THE NUMBER OF CASES ARE REALLY SOARING IN THE U.K.. OVERALL, IS THERE A CONCERN THAT IF WE LOOK AT THE R NUMBER AND ONCE IT IS ABOVE 1.5 OR EVEN 1.7, THAT THINGS GET OUT OF CONTROL. AT WHAT IS THE MAGIC NUMBER THAT SHOULD MAKE PEOPLE REALLY WORRY? DR. SHARFSTEIN: I THINK YOU ARE RIGHT BECAUSE WHAT THAT MEANS IS THERE IS EXPONENTIAL GROWTH AND THE CURVE IS PRETTY STEEP. WITHIN A FEW DAYS, YOU CAN GET TO DOUBLE THE NUMBER OF CASES THAT YOU HAD BEFORE. YOU HAVE TO REALLY DO SOMETHING TO CONTROL THE SPREAD AT THAT POINT BEFORE YOU REALLY START TO SEE A TAKEOVER. FRANCINE: WHEN YOU LOOK AT SOME OF THE THINGS THAT WE HAVE BEEN TALKING ABOUT, SOME OF THE VACCINES OR THESE RESTRICTIONS, WHETHER THEY WORK OR NOT, WHAT DO WE UNDERSTAND ABOUT WHY MORE PEOPLE CATCH IT, BUT LESS PEOPLE END UP IN HOSPITAL? IS IT JUST BECAUSE IT IS LAGGARD OR A DIFFERENT TYPE OF POPULATION CATCHING THE VIRUS RIGHT NOW? DR. SHARFSTEIN: I THINK IT IS A COMBINATION OF FACTORS. ONE IS CERTAINLY THAT WE ARE FINDING THE VIRUS AND MORE PEOPLE WHO ARE AT LOWER RISK. THE RATE OF PEOPLE GETTING VERY SICK IS LOWER. THE OTHER THING IS THAT THERE IS JUST A BETTER UNDERSTANDING OF THE VIRUS. FOR PEOPLE WHO DO GET SICK, THEY CAN GET OXYGEN FASTER, AND IF THEY GO INTO THE HOSPITAL, THERE IS BETTER TREATMENT FOR THEM. IT IS STILL PRETTY DEADLY AND IT IS STILL A DISEASE THAT EVERYBODY IS SORT OF ROLLING THE DICE IF THEY'D GET IT BECAUSE EVEN YOUNGER PEOPLE CAN GET QUITE SICK. FRANCINE: TALK TO ME A LITTLE BIT ABOUT SOME OF THE VACCINE TRIALS. WHY ARE SOME OF THE TRIALS PAUSED IN THE U.S. BUT NOT THE U.K.? DR. SHARFSTEIN: IT IS A GREAT QUESTION. THERE IS OBVIOUS CONCERN ABOUT THE POTENTIAL ADVERSE EFFECTS, THINKING ABOUT THE NEUROLOGICAL CONDITIONS THAT SHOWED UP IN THE TRIAL. IN THE U.K., THEY MAY FEEL COMFORTABLE MOVING FORWARD AND THE U.S. MAY STILL BE ASKING FOR INFORMATION. I THINK IT WOULD BE GREAT FOR BOTH REGULATORS TO EXPLAIN WHAT THEY ARE THINKING, OTHERWISE, IT CAN LOOK CONFUSING. FRANCINE: IF THERE IS ONE THING WE ARE TRYING TO UNDERSTAND IS THAT THERE IS SO MUCH OF A DISPUTE ABOUT THE TIMELINE, DOES IT REALLY MATTER TO KEEPING PEOPLE HEALTHY IF WE HAVE IT IN DECEMBER OR THE FIRST QUARTER OF 2021? DR. SHARFSTEIN: WE WOULD LIKE A SAFE AND EFFECTIVE VACCINE AS QUICK AS WE CAN GET IT, BUT IT HAS TO BE QUICK AND EFFECTIVE. I THINK THE ELECTION TIMELINE IS DISTORTED AND THE U.S., BUT I THINK MOST PEOPLE BELIEVE THEY ARE ON TRACK TO DELIVER RESULTS THIS FALL AND DRIVE WHAT WOULD HAPPEN AFTER THAT. WE'RE IN FOR A PERIOD WHERE WE ARE GOING TO BE HEARING ABOUT MULTIPLE VACCINES, TRYING TO SET UP A DISTRIBUTION SYSTEM, WHICH WILL BE CHALLENGING FOR EIGHT SEPARATE KINDS OF VACCINES AND PEOPLE ARE GOING TO HAVE A LOT OF QUESTIONS. IT IS JUST REALLY IMPORTANT FOR US TO HAVE A CLEAR, CONSISTENT, SCIENTIFIC VOICE GUIDING THAT TO INSPIRE CONFIDENCE NOT JUST TO THE GENERAL PUBLIC, BUT IN THE HEALTH CARE SYSTEM SO PEOPLE CAN TURN AROUND AND RECOMMEND IT WITH FULL CONFIDENCE TO THEIR PATIENTS. FRANCINE: THANK YOU SO MUCH. BE SURE TO CHECK OUT VRUSGO ON THE BLOOMBERG FOR MORE INFORMATION. YOU CAN ALSO TUNE IN EVERY DAY WITH CONVERSATION WITH JOHNS HOPKINS EXPERTS. IT HAS BEEN QUITE A DAY WHEN IT COMES TO MARKET VOLATILITY AND A CLEAR RISK OFF MOOD. EUROPEAN STOCKS FALLING THE MOST SINCE JULY. INVESTORS REALLY WORRYING ABOUT TIGHTER VIRUS RESTRICTIONS AND REPORTING A SUSPICIOUS TRANSACTION OF INTERNATIONAL BANKS. TREASURIES RISING, THE DOLLAR STRENGTHENING. THIS IS BLOOMBERG.

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'Bloomberg Surveillance' Full Show (09/21/2020)

Stocks, bonds, currencies and commodities. This is Bloomberg Surveillance. Live every morning from New York to London. Tom Keene and Francine Lacqua deliver insight on the markets with leaders in global finance and economics. Peter Trubowitz, London School of Economics Professor of International Relations, says we can expect Democrats to request an increase in Supreme Court seats if Republicans succeed in filling the vacancy left by Justice Ruth Bader Ginsburg. Stephen King, HSBC Senior Economic Adviser, says governments should not worry about debt levels in the short-term because interest rates are incredibly low. Ron Temple, Lazard Asset Management Co-Head of Multi-Asset and Head of U.S. Equity, says growth stocks are particularly volatile at this time and we could have a cyclical rebound relative to growth. (Source: Bloomberg)