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tv   Bloomberg Surveillance  Bloomberg  September 11, 2020 4:00am-5:00am EDT

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theyl blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) francine: heading for a chaotic split in the european union, giving boris johnson ntil the end of the month to break down the brexit deal. the first woman to run a major wall street bank. pressure over the destruction of australian aboriginal sites. good morning, everyone. welcome to bloomberg "surveillance." i'm francine lacqua in london. happy friday, everyone.
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it feels like a long week but second week of september. european stocks are prep flat. we had a mixed week overall. there have been concerns over evaluations in some pockets of the market, global and technology stuff and then the other big question is what happens to euro? christine lagarde delivered relatively mild comments on the currency surge. and headed for the biggest weekly drop since march. let's get to bloomberg first word. >> europe has overtaken the u.s. in terms of coronavirus infections. the e.u., norway, iceland and lichtenstein reported more than 27,000 cases on wednesday compared to 26,000 in the u.s. the region has remerged as a
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global hot spot after bringing the pandemic under control earlier in the year. the odds of another round of u.s. fiscal stimulus has dropped. senators dropped a republican proposal for slimmed down support in the region of 500 billion to 700 billion dollars. temperatures are looking for -- temperatures are looking or 2.2 trillion. the u.k. economy surged in july. g.d.p. rode rose 6.6% from june. coronavirus restrictions were eased. a triple threat of mounting job losses, rising virus cases and the risk of a mex messy brexit mean the rest may prove difficult. england's football teams take to the field this weekend for
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the start over the premier league. it is unclear when spectators will be allowed back. the c.e.o. hopes there will be a small number by at least october but without fans, he sees the world's richest football computation taking a hit of 700 million pounds. global news 24 hours a day, on airpowered by more than 2700 journal estes and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. brexit trade deal talks are set to continue next week despite the u.k. rejecting the e.u.'s ultimatum. the e.u. is not working for a hard brexit. they told bloomberg it is up to the british government to re-establish trust between the two sides. very ed, the bill was
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trust y damaging between the u.k. and the e.u.. now it is up to the british government to work to re-establish this trust. time is running because our assessment is either we reach this agreement within one month from now, you know, the formal deadline is the end of the year, but to have an agreement, we need to have decision taken at the beginning of next month, the beginning of october. the re-establishing of trust which means the changes in is bill produced in recent
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days is of essence and it is very urgent. >> if the u.k. does not back down, will there be a hard brexit? well, as we always said those not the european proposal. it is not the european will. this is not the solution that we envision. but you need two parts to have a deal. -- in ere is not any respecting the agreement on the basis over the negotiation that is now going on, i think things will get very difficult among the e.u. and ub. -- u.k..
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we are not working for this not at all. we're not working for a hard rexit, but we need to have a trustful partner to have a deal. >> we heard today from the e.c.b. that they revised upwards their 2020 forecast but they see the stabilization of any rebounds next year. what is your assessment of the european economy right now? what letter of recovery are we in? in general, a similar analysis, the e.c.b., our evaluation, we will have our winter forecast beginning of norv. our evaluation is that we have a rather fast recovery, butcially in june an july
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perhaps according to high frequency data and new data, is speed of the recovery slowed down in recent weeks, in august. so i think we still have in front of us, uncertainty the d the strength and speed of recovery and our task is to bring forth confidence in the markets in the city and business communities. and this is what with our recovery plans we will try do n the next weeks because uncertainty is still there and we are not sure of the speed of the recovery which is
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underway. francine: that was the e.u. commissioner for finance spoge to guy johnson and alix steel. thank you so much for joining us. i have like a million questions. let's start with brexit. after the summer lull, it is back to something we need to focus on. what does it mean for your world? are there opportunities in u.k. assets? >> there are. first of all, the brexit -- that we have seen emerging now, it is one of the political hurdles and risk events that we have on the alendar. assets have done really, really well since the middle of march. we have started trimming down
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a little bit of risk around the edge. still positive on u.k. fixed assets. the very strong support that providing to the market. if you take into account what we're seeing with brexit as well as the fact that we are going to see unemployment rising in the u.k. and the developed markets. it is likely we're going to start seeing some bad news creeping in to the numbers. that makes us more cautious than we were earlier in the year. francine: a little bit more cautious because you have not figured out when this is a negotiating tactic or whether we'll have a w.t.o. agreement come january. >> really how that negotiation will move on.
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on the basis of evaluations and on the basis that we're going to have going forward, it is reasonable to -- lock in some of this. a strong performance from some of the assets. the risk assets -- the middle of march. e can see opportunity. francine: where do you see the biggest value? we'll talk about the e.c.b. shortly. if you look at fixed income space, is there something that at the moment looks like it could be a good deal? >> there is a few areas which i think we're highlighting. in general, we are going through what is a -- what we ave seen in japan. uying a lot of debt.
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people are saving more. the savings need to go somewhere. some areas of the high yield market. first ing the first -- out of the covid crisis. the markets still offer value. they are still far from where they were before the crisis. evaluations, they are not as cheap as they were earlier in the year. francine: thanks so much. coming up, as prepares to mark the anniversary over the worst terrorist attack on american soil, we'll speak with a hairman.
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>> the balance of risks to the euro global outlook is still on the downside. we decided to maintain our monetary policy and our -- and under certain circumstances it is very likely that the full envelope of that will be used for the purpose of developing
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those policies. we do not target exchange rate. our mandate is price stability. and clearly to the extent that aappreciation of the euro exercised a negative push on prices, we have to monitor carefully, the strength over the recovery remains surrounded by significant uncertainty as it continues to be highly dependent on the future evolution of the pandemic and the success of ontainment policies. rancine: that was the e.c.b. christine lagarde. there seems to be this belief in the market now that maybe president lagarde could have been a bit stronger to condemn the strength, how quickly it
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rose. do you agree with that? how much would that have changed? >> no, i think we could not ignore that the euro has strengthened significantly over the last few weeks or onths. the ukraine was more vocal around the currency. t in general, a stronger currency does find -- that does lower inflation expectations. they have it on the radar and it is part of the things that will drive it forward if it keeps going up. they will become more and more vocal about it. francine: what does that mean for how the e.c.b. is handling the crisis overall and where you see value in european fixed incomes?
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>> the e.c.b. like other central banks will remain in place as a strong, strong support to the markets. what does this mean to fixed incomes? ranges in government bonds. yields with real yields likely to remain in negative for tory and in general, fixed income, credit markets new home for the -- looking to place savings. more so given the evaluations. it is -- we have a very strong view at the moment.
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francine: we did have stronger words on euro strength from the chief economist of the european central bank. he warned that the euro's appreciation has dampened the outlook. do you think they will step up their outlook and do something about it? >> they see not going to do currency intervention but it will just prompt them to be more active in terms of keeping real yields low to in europe more -- the strength of the currency is part of things that we look at this terms of financial conditions and inflation expectation. it will be a driver like it has been in the past. the e.c.b. will continue to be ore and more active.
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this is a cycle that is unlikely to be -- in the future. francine: thank you so much for all of your insight. coming up, a crack in the glass ceiling. the first female executive of a major wall street bank. details next. this is bloomberg. ♪
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francine: this is bloomberg "surveillance". i'm francine lacqua in london. let's get to one of our other top stories. jane up has named as c.e.o. of their bank. thank you so much for joining us. what does it have to say about how far wall street has come on gender issues? >> thanks for having me. i think it has been the case that citigroup has made in this announcement. it is part of a sweeping change in america. 31 women already lead s&p 500 companies. at the same time, i have to say that her presence emphasizes how rare it is. the financial industry in the u.s. much of the world has a long
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way to go to reach gender equality and equity. that is not just the case for the c.e.o. but ranks of senior management. if you look at the top groups, siti is the only place among s&p 500 banks. what is next for jpmorgan or bank of america or morgan stanley or other banks? francine: what kind of experience does fraser bring to the job? >> she has international experience. he joined citigroup in 2004.
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the lender faces loan defaults after the coronavirus pandemic. she demonstrated over the past decade that she can manage just about any business. this poim is a testament -- appointment is a testament to her ability. francine: what are the challenges for her ahead? >> the fallout of the pam to ever a gate. -- of the pandemic to avigate. this year, it abandoned the target for improving return on equity and its stockpiles are less than what it was before the 2008 crisis.
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i think she really has her job cut out for her. francine: thank you so much. coming up, how can global capital help fund the ransition to low carbon? that is coming up next. this is bloomberg. ♪
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francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to the bloomberg first
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word news with leigh-ann gerrans. leigh-ann: europe has overtaken the u.s. in terms of new coronavirus infections. the e.u., norway, iceland, liechtenstein reported more than 27,000 cases wednesday compared to just over 26,000 in the u.s. the region has reemerged as a global hotspot after bringing the pandemic under control earlier this year with resurgence infections in countries including both spain and france. rio tinto's ceo is stepping down amid concerns over the destruction of australian aboriginal heritage sites. sebastian jack came under after explosions at a mining area, which archaeologists say are the among the most significant of their type in the country. jack will remain in his role until next year if no successor is appointed by then.
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and taking to the field this weekend for the start of the premier league, but it is unclear when spectators will actually be allowed back. ceo richard masters says he hopes there will be a small number by at least october, but without fans he sees the world's richest football competition taking a hit of about 700 million pounds. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? francine: let's talk all things green and how can global b mobilized to fund the transition to a low carbon economy. new papermething in a by credit suisse and the bonds initiative. capital flows have been directed at activities which are already green. calls for changes to debt forets to give confidence
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investors and clarity for bankers. marissa drew joins us. thank you so much. you've done so much work to try and capture the essence of what the financial services can do to transition the economy. talk to me about this new paper. what do you do next -- what do you need? the genesis of the paper was recognition that there is a gap in the market. we have a trillion dollar green market, buteen bond at the same time we were seeing the regulatory community asking the capital markets practitioners to really accelerate the finance of the corporate transition. so these are the high carbon industries. it is widely recognized that we must in addition to financing alternative energy, we've got to
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finance the corporate transition, the so this paper set out to create the framework and the discussion to develop a common set of principles and industry adopted standards in order to create a transition bond market that would sit side-by-side with the today green bond market. francine: how do you get the market to adopt this? started by trying to take the lessons learned from the scaling of the green bond theet and apply those to transition concept, but it's hard because it is pretty clear what is already green. but in the transition discussion, we want to make sure we are setting out a rigorous set of standards for what it transition means. of a in the absence commonly adopted framework and set of principles, we see a number of labeled issuances coming out, but they are self labeled issuances. you have these idiosyncratic issuances with labels that are not widely adopted or
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understood, that is going to be a limiter on the market's ability to scale. the idea is we have used science and we have used academia to underpin the thinking on the principles, and then we have solicited input from all sorts of practitioners and stakeholders, whether it be front leaders, academics, scientists, bankers, and so on, to give us feedback on the first cut of this paper, and now have launched this week in the market and are seeking further input and consultation from all the other stakeholders that would have an interest in this and an interest in seeing the market scale to give us their feedback. we like to incorporate that and ratify this and get it to market. francine: this is hand-in-hand with some of the things that the e.u. will do on taxonomy and things like that. how is this different from the transition bond market? thesa: it is part of
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transition bond market, so the e.u. is certainly -- they have taxonomy for green, they are exploring the taxonomy as well for the concept of transition, and we want to work hand-in-hand with the prevailing best practice, so we will be incorporating that as it comes to pass into the thinking on the framework. we wanted to get started and get the ball rolling so that we can invite in all of those, not just the regulatory community but all the practitioners so that we have something that's very robust. withine: how do you do possible greenwashing? this comes up in conversations when you talk about green investment, so how do you avoid people signing up and not delivering? respects this is a response to a fear of greenwashing because if there isn't a commonly adopted
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standard or metric or terminology for what green or transition looks like, it certainly could open the door for less than well-intentioned actors or those who really are not robust and how they are looking at it. so we have five principles that underpin the framework. number one, for a transition to be credible, and ultimately be qualified to get this label, you have got to be in line with the paris trajectory, so you have to have a clear path. your transition has got to be underpinned by science. we do not count offsets because offsets in some respects is just moving the buck to somebody else. this has to be a net zero economy that we are striving for, and we say that technology trumps economic cost, and the sense that if there is a viable pathway, it may come at a cost, but we cannot use the excuse it is more expensive as a reason not to do it. we've got to move these
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companies quickly. finally, the action has to be backed up by hard metrics. we cannot have promises that have no substance. if an issuer meets all of those with the transition plan, and our minds they would qualify for the transition label. the transition label is something that would apply -- we want this to apply not just to the use of proceeds transactions but to whole entities, so as we roadp next week on the talking about a wholesale corporate transition to a cleaner energy company, and it is these types of transitions that we want to support and finance. there is going to be needed over $100 trillion to be invested between energy sector now and 2050, and what we would like to see is that the investment is going toward the greener solutions so that ultimately we really can achieve this net zero target by 2050. that's the real goal.
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francine: i want to talk about what you see in terms of demand from investors. esg products have significantly increased, the demand for them. you have launched the ocean engagement fund, in partnership with the rockefeller asset management. do you feel like investors want to be invested in more specific products like this? do people say i want to put something in oceans, in solar? marisa: it's a great question. in general, esg strategies, those that take into account governmental strategies, that has exploded, and we have seen an enormous amount of capital come into these strategies, even in the depths of the crisis and the recovery. we see investors also wanting to go further than that, and lining their capital thematically with the things they care about, particular he on a private
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client side. we see these topics are quite response of so the this ocean engagement fund is very much one that is meeting demand or request from our clients, particularly the next generation. you have kept the topic of ocean health and the plastic in the spotlight. people say i'm try to be parted -- i'm trying to be part of the solution here and how do i get involved, beyond philanthropic's donations? i would really love the ability to align my investing with these passions and these things i care about. so the ocean engagement fund is the first of its kind, we believe, that links engagement with impact. partner withed to rockefeller asset management, who's had a 40 year track record in engagement very successfully, and through their engagement, they have demonstrable
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performance that comes with the companies who are responsive to the topics they have surfaced as one's they think will create real value. the idea behind the fund is that we will seek out those companies who, through engagement, we believe can be better stewards of ocean health. we are very excited to go down this journey with such a credible partner as rockefeller. francine: marisa drew, thank you for joining us today. we have course remember that morning of september 11, and you are looking at live pictures of manhattan as the city wakes up. we will bring you full coverage of 9/11 memorial events throughout the day. this is bloomberg. ♪
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francine: this is "bloomberg surveillance." as investors watch for comments from several ecb officials later today, we will focus on the future of high-yield and leveraged finance. our next test is taking part of the j.p.morgan high-yield leverage conference later this year. we are delighted to be joined by klaus hessberger of j.p.morgan group. what kind of market are you looking at? who has the most cash to deploy, and are they ready to spend it? klaus: good morning, francine. it was different than the last crisis and that nowadays the private equity industry as a whole has about $1.5 trillion in
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equities ready to invest, which is more than double that amount we had in the last crisis, so the sector has been pretty busy. francine: what does it mean for the high po -- for the ipo markets? before we see the u.s. election, which is about 50 days away? klaus: the low interest environment is a good driver for equities, and therefore of course ipo's, especially across stories like you see in the text -- in the test space because investors get low yield on the debt market. they want to get return, and is an opportunity for the field market to come back. the volatility is still relatively low, and you see -- you might have seen we launched an action in the u.k. last week
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which is going well and more transactions are expected to come. but it's not on the ipo's, it is also minority transactions and private equity funds thinking about launching other transactions again. francine: and about private equity, are there specific sectors that pe's are trying to focus on the next round of buyouts? klaus: they are looking at corporate's, so they have to diverse -- they have to to divest efforts. they are focusing a lot on the tax space, and they have a guest space where investments are coming in. lookwould say that when i at our exit pipeline, it is about 40% on the more industrials, the services space, and the rest consumer retail and health care. so you see a broad distribution across sectors. private: do you see equity firms struggling to raise the financing needs they need
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for large deals because of more caution? klaus: the good news is they ,ave more firepower than ever and i think liquidity is -- you see funds doing them alone, so you don't see so many big consortiums anymore. they get the support of -- the driver is liquidity, that is not the problem. it is probably more a scarcity of assets available, especially on assets in which they want to we expect to come out of corporate's being slowed down with recent events. otherwise liquidity is the driver. francine: so you don't see pe having to use more equity for biopsy ec buyouts? markets have also been on fire before the summer
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and tightened the last four weeks, so we are even tighter than we were back in may pre-crisis. so the market has been pretty supportive and the most recent dealmaking's, so i wouldn't say that is a problem with the most recent announcement. we were able to go to the market. francine: how do you see the next three months evolving? months,he next three i'm quite bullish because on the one hand you see companies who have done well over the last six months, being ready for exit, so there are a lot of transactions to happen. secondly, the ipo market has been quite strong, so people are thinking about floating companies. certainly what is also different , we see new funds like infrastructure funds and also family office and minority funds being active, so i expect much more flow over the next three to
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six months than we have seen before. francine: how different is this crisis from 2008? is there a danger that we are going to see defaults or companies in trouble that are actually healthy? klaus: the good news is in the alsocrisis -- and i have seen the crisis in 2000, so for me it is the third crisis -- the difference is in the last crisis, all the private equity funds spent all the money, and when there was a crisis, they could not -- it took them longer. in this crisis, most funds have enough cash that can support them. worried the other factor which is helpful is there was not such a big leverage in the market like we have seen in the last crisis, so debt markets have also been quite supportive. i'm quite bullish here. the question is it is a big ask on valuations. assets are quite in spence of -- are quite expensive.
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but i am not bearish on liquidity. francine: klaus hessberger, thank you so much for joining us today, j.p.morgan corporate head of strategic investors group. twitter ontaking to companies he collaborates with on like a representation. that is coming up next, and this is bloomberg. ♪
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francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. next week is going to be a big one for central banks. the fed holds its last meeting on wednesday before the presidential election. we also get brazil's rate decision, and also the boj, the bank of england. we could see a rate cut in south africa after gdp shrank an annualized 51% in the second quarter. announcedand taiwan as well. let's talk diversity. kanye west has taken to twitter to address the lack of black representation in board rooms.
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for more on all this, our quicktake reporter. kanye west is calling this out. kanye west is calling out the fact that he still doesn't have a seat on the board. on twitter, -- on thursday he took to twitter to call them out, referencing the black lives matter movement by saying in part, blackboard seats matter. with adidas and his upcoming apparel line with gap, gave both companies quite a boost and he knows that. he has threatened to walk away from the partnership recently if he was not granted a board seat. this is significant, especially given the fact that companies are facing increasing pressure to diversify their boards and address systemic racism. adidas faced heat from internal
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employees for their handling of diversity related issues. still, gap and adidas have pledged to step up representation of underrepresented groups without explicitly mentioning their board makeups. and a final note, in 2019 black directors made up only 10% of board seats, so there is still a long way to go and you can anticipate that kanye is going to continue to speak out on this. francine: earlier this week we also heard that rules for awarding oscars changed to drive diversity in the industry. what have we learned? klaus: this came about -- jennifer:'s came about five years after the lack of diversity came to a head. put -- they academy put forth new rules. may 2024, best picture nominees will have to meet two of four specific diversity requirements either on-screen or offscreen.
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reaction was mixed in hollywood. some people said it is progress, other people we're pretty critical and said this is going to stifle artist creativity. others said this does not go far enough, and specifically i wanted to mention dr. stacy smith who commended the academy but said we are still not seeing anything that will push the conversation forward. i mention dr. smith because she has an annual report on diversity and inclusion in hollywood, and the lid latest report came out a few days ago and it is still showing that progress is quite slow. but the academy leadership is hoping these reforms really help create lasting change. they are mirrored off of something the british film institute instituted back in 2014, but her recent report found that even those rules did not do much to address racial inequality. we are going to have to see where this goes and how this debate plays out into awards season. francine: jennifer, thank you so much.
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our bloomberg quicktake reporter in new york. you can catch all our coverage from around the world. tuning to this week's bloomberg quicktake show at 6:00 p.m. tonight on facebook and 6:00 p.m. u.k. sunday on youtube. the market is focusing on what we heard from christine lagarde of the central bank yesterday, a lot of the focus also on brexit talks, the fact that it has not been going so well, meaning that u.k., buttocks in the also the pound is under pressure. i'm looking at pound. it is still down. core european bonds are gaining. treasuries are steady. traders will be closely watching comments from the ecb officials after christine lagarde had a rally in the euro with relatively mild comments. ♪
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a chaoticheading for
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split, the european union is giving boris johnson until the end of the month to back down off the controversial brexit bill. makes jane fraser the first woman to run a major wall street bank. an exit at rio. the chief executive and other senior leaders are under pressure to leave after the destruction of aboriginal sites in australia. this is bloomberg surveillance. it has been 19 years since the horrific day on september 11. i know we will have tribute throughout the day. anniversary, 19th remembrance of september 11. it is about the pandemic, still affecting new york city as london, and also it is about the election year. it will be interesting to see the visibility today, the president of the united states and vice president biden as well. we will have our usual treatment
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