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00:00> > WHAT WE ARE SEEING THE MOMENT IS THE SUGAR HIGH. IT DOESN'T TELL ANYTHING ABOUT THE MEDIUM-TERM TRAJECTORY FOR ECONOMIES. > > WE KNOW THERE ARE LARGE SWATHES OF THE PRICE DATA BEING MADE UP, LITERALLY MADE UP. > > IT'S GOT TO BE THE REAL ECONOMY THAT PERFORMS. OTHERWISE, NONE OF THESE COMPANIES WILL BE ABLE TO MAKE IT THROUGH TO 2020. > > THIS IS "BLOOMBERG SURVEILLANCE," WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE ." WE ARE LIVE ON BLOOMBERG TV AND RADIO. ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. TOM KEENE, IN 30 MINUTES WE WILL HEAR FROM THE BRITISH CHANCELLOR, AND THIS IS SIGNIFICANT WHETHER YOU ARE INSIDE OR OUTSIDE OF THE U.K.. IT WILL DISPLAY CONTINUED COMMITMENT BY FISCAL AUTHORITIES TO SUPPORT THIS ECONOMY, AND OFFER A SUBTLE HINT OF THE SHIFT IN POLICY AS WE GO FROM SHUT DOWN TO REOPEN. TOM: THERE'S NO QUESTION ABOUT THAT. WHAT IS REALLY IMPORTANT, MOVING FROM THE UNITED KINGDOM TO THE UNITED STATES, PRESUMED TO BE AUGUST INTO SEPTEMBER. I NOTICED THE MUSIC USE FOR "BLOOMBERG SURVEILLANCE," YOU START TALKING, AND THE MARKET FLIPS FROM RED TO GREEN. BUT THE BACKDROP OF THIS, AND THIS GOES TO THE STIMULUS IMPULSE WE ARE SEEING RIGHT NOW, IS GOLD DOESN'T GO UP. GOLD SPIKES TODAY UP TO $1814. JONATHAN: THE REOPENING ROTATION HAS STALLED. THE STEEPNESS IN THE YIELD CURVE COMING INTO JUNE HAS FADED. A LITTLE BIT OF NERVOUSNESS STARTING TO BUILD IN THE LAST SEVERAL WEEKS, THE PAST MONTH. LISA: WE ARE SEEING THAT IN THE MOBILITY DATA, THE SOFT DATA THAT PEOPLE ARE INCREASINGLY LOOKING AT TO GAUGE ECONOMIC ACTIVITY IN THE UNITED STATES. THIS IS LEADING TO SOME SKITTISHNESS AROUND OIL IN PARTICULAR. COMING UP, I AM VERY CURIOUS TO SEE WHAT WE SEE IN TERMS OF CRUDE OIL INVENTORIES IN THE U.S. AT 10:30. 1:00 P.M., U.S. 10 YEAR NOTES GETTING AUCTIONED OFF, $29 BILLION. THIS FOLLOWS A THREE YEAR AUCTION YESTERDAY WITH A YIELD AT A RECORD LOW FOR THE UNITED STATES FOR BORROWING AT 3.19%. THIS EVENING, PRESIDENT TRUMP WILL BE HOSTING A DINNER WITH MEXICAN PRESIDENT LOPEZ OVER DOOR -- PRESIDENT LOPEZ OBRADOR. VERY INTERESTING, AND THIS IS VERY MUCH ON THE FOREFRONT, THE COOPERATION BETWEEN NATIONS ON HOW TO COMBAT CORONAVIRUS, WHICH IS SPREADING IN BOTH COUNTRIES AND IS NOT NECESSARILY ISOLATED TO ONE TERRITORY. JONATHAN: AND I UNDERSTAND MR. TRUDEAU WILL NOT BE THERE, WHICH IS INTERESTING CONSIDERING WE ARE TALKING ABOUT USMCA. IN THIS MARKET RIGHT NOW, WE DO TURN POSITIVE BY THREE POINTS ON THE S & P 500, UP BY ONE POINT -- UP BY 0.1%. IF YOU JUST LOOK AT THE PEOPLE WAITED S & P 500 IN THE INDIVIDUAL CONSTITUENCIES, -- IF YOU JUST LOOK AT THE EQUAL WEIGHTED S & P 500 IN THE INDIVIDUAL CONSTITUENCIES -- WE START THE CONVERSATION THIS MORNING WITH TONY CRESCENZI OF PIMCO. TALK ABOUT WHAT IS SLOWLY STARTING TO CREEP INTO THIS MARKET OR BROADLY. ANTHONY: WHEN ONE DOES LOOK AT THE NASDAQ, THE DOES TO BE RAYS OF HOPE IN THE MARKET PLACE. GOING BACK TO TELL US ABOUT THE STATE OF MARKETS, BOTH TO THE IDEA OF LIQUIDITY PROVIDE BY THE CENTRAL BANKS. RADICAL UNCERTAINTY VERSUS ORDINARY ANSWER. -- VERSUS ORDINARY UNCERTAINTY. THE ORDINARY LEVEL OF UNCERTAINTY, WE STILL DON'T KNOW WHAT THE FUTURE HOLDS FOR THIS VIRUS, BUT IT DOESN'T FEEL AS RADICAL AT THE MOMENT. 150 YEARS AGO, WHEN WE SPOKE TO THE IDEA OF LIQUIDITY, WE KNOW THAT STORY QUITE WELL. FINALLY, THE CONFIDENCE ANGLE, THIS COMES FROM US HUMAN BEINGS. IN "THE WEALTH OF NATIONS," IT WAS PEOPLE GOING OUT THERE, TRYING TO BE HAPPY AND ENJOY THEMSELVES AND BETTER THEIR LIVES FOR THEIR FAMILIES. THIS IS WHAT IS DRIVING MARKETS, AND THESE ARE TYPICAL DRIVERS OF MARKETS. THE KEY IS THE UNCERTAINTY ELEMENT AND THE DEGREE TO WHICH IT DISSIPATES. ONE COULD SAY MARKETS ARE IN A BIT OF A HOLDING PATTERN GIVEN THE SURGE OF CASES IN THE UNITED STATES, BUT THE LACK OF SEARCH ELSEWHERE IS WHAT IS PROBABLY KEEPING IT FROM BEING WORK. -- FROM BEING WORSE. JONATHAN: DO YOU SEE BUSINESS CONFIDENCE STARTING TO FADE AS THE REOPENING STALLS IN MANY STATES ACROSS AMERICA? TONY: TO SOME EXTENT, BUT WHEN WE LOOK THROUGHOUT HISTORY, AND THE TERRIBLE SITUATION IN 19 17, 1918, ONCE THE VIRUS PAST, PEOPLE WENT ABOUT THEIR DAILY LIVES. WAR IS FAR WORSE SCENARIO FOR MANY NATIONS. YOU SEE REBOUNDS IN THE AFTERMATH THERE AS WELL. SO MANY CASES IN HISTORY WERE HUMAN BEINGS HAVE GONE ABOUT THEIR BUSINESS ONCE THE UNCERTAINTIES AND ANXIETY OF RELATED SOURCES WENT AWAY. ONE SHOULDN'T EXPECT THIS TO CHANGE. IT IS SOMEWHAT HOPEFUL IF YOU THINK ABOUT THE TECHNOLOGIES, THE NASDAQ. THERE IS THIS IDEA OF 5G TECHNOLOGY, AND WHO KNOWS? MAYBE THERE WILL BE PRODUCT OF IT HE GROWTH -- MAYBE THERE WILL BE PRODUCTIVITY GROWTH FROM COMPANIES THAT HELP US DO THINGS BETTER. TOM: I WILL TAKE JON'S OBSERVATION THERE ABOUT HOW THE S & P 500 DOING VERSUS GLORY STOCKS. ONE OF THE MOST IMPORTANT ONES OF THE YEAR FOR ME WAS AT DAVOS WITH BOB PRINCE. HE TALKED ABOUT A DAMPENING OF EVERYTHING IN THE FINANCIAL SYSTEM BECAUSE WE ARE AT THE ZERO BOUND. I AM CERTAINLY OBSERVING A LETHARGY IN THE U.S. BOND MARKET. ARE WE BECOMING JAPAN LIKE BECAUSE OF THE CHANGES WE HAVE SEEN IN BILLS, NOTES AND BONDS? TONY: CENTRAL BANKS HAVE CROSSED THE RUBICON AS THE BANK OF JAPAN DID MANY YEARS AGO. MONETARY POLICY, TO SOME EXTENT, IS THE NEW FISCAL POLICY. IT IS NOT A TERRY FINANCE THIS GO POLICY -- IT IS MONETARY FINANCE FISCAL POLICY. THE GOVERNMENT BUYS THE BONDS TO GAIN THAT FUNDING. IT IS THE ALCHEMY OF MONETARY POLICY. I CALL IT THE KEYNESIAN ENDPOINT. NATIONS SUCH AS GREECE LEARNED ON MOST 10 YEARS AGO THAT IT COULD NOT BORROW FROM MARKETS IN THE WAY THAT JAPAN, THE U.S., AND THE REST OF EUROPE IS. IT REACHES THE KEYNESIAN ENDPOINT. INVESTORS ARE SAYING AGAIN THAT IT IS OK TO PRINT MONEY TO BUY THE BONDS THAT GOVERNMENTS NEED TO ISSUE, THAT THEY WILL BE ABLE TO STAVE OFF THIS ENDPOINT FOR LONGER, BUT WHEN WILL IT HIT THE FAN? MANY COULD SAY PERHAPS IT ALREADY HAS. THAT IT PREVENTS SPENDING OF THE SORT THAT WOULD PROVIDE FOR GROWTH IN THE LONG RUN. CURRENTLY THERE IS A LOT OF MONEY BEING DISTRIBUTED TO INDIVIDUALS, BUT THE BENEFIT TO THE ECONOMY WILL NOT BE LONG-LASTING. A BROAD SYSTEM, A NEW -- A BROADBAND SYSTEM, A NEW TUNNEL TO MANHATTAN, THINGS LIKE THAT WOULD PROVIDE LONG-LASTING BENEFITS TO THE ECONOMY, AND THE INDEBTEDNESS PREVENTS THAT SORT OF INVESTMENT. LISA: SO THE KEYNESIAN ENDPOINT, ANOTHER WAY OF SAYING WHEN DOES THAT MATTER. YOUR ANSWER IS IT ALREADY HAS DAMPENED PRODUCTIVITY. THEY'RE HAS BEEN A QUESTION ABOUT DEBT INSECURITIES IN THE SYSTEM AND HOW VIOLENTLY THINGS CAN REPRICE. WE ARE NOT SEEING THAT RIGHT NOW IN BOND YIELDS. WHEN DO WE START TO SEE THE NEXT VIOLENT REPRICING AT A TIME WHEN THE FED IS REALLY DAMPENING THAT VOLATILITY IN A MAJOR WAY? TONY: IT'S A REALLY GOOD POINT TO BRING UP. CHAOTIC ENDINGS TO CREDIT CYCLES, IT MAY BECOME THE NORM BECAUSE OF THE EXISTENCE OF LARGE AMOUNTS OF DEBT SECURITIES THAT THE FINANCIAL SYSTEM CAN HANDLE. THEY MUST PASS THROUGH FROM TIME TO TIME, SO SELLING WILL ERUPT AGAIN SOMEDAY FOR SOME REASON, AND THE SYSTEM WILL HAVE TO TRY TO HANDLE IT, AND IT FINDS IT DIFFICULT TO DO SO, IN PART BECAUSE REGULATORS HAVE TOLD INTERMEDIARIES, DON'T HOLD THAT MANY SECURITIES. WE DON'T WANT YOU TO. THESE INVESTMENT BANKS HAVE CHANGED THEIR BUSINESS MODELS. THINK ABOUT CORPORATE BOND ISSUANCE THIS YEAR IN THE UNITED STATES MY INVESTMENT GRADE -- IN THE UNITED STATES, INVESTMENT GRADE, $1.2 TRILLION. DOUBLE LAST YEAR. WHO WILL BUY THOSE WHEN THEY WANT TO SELL? SO THE IDEA THAT THERE WILL BE CHAOTIC ENDINGS TO CYCLES IN THE FUTURE WHEN THEY END, SO INVESTORS SHOULD ALWAYS LEAVE DRY POWDER FOR THOSE PERIODS TO GAIN A FLIGHT IN THEIR PORTFOLIO -- TO GAIN OUT FOR IN THERE PER POLIO. JONATHAN: THANK YOU FOR JOINING US. THAT IS TONY CRESCENZI OF PIMCO. WE ARE HAVING A DISCUSSION ABOUT JUDGMENTS ON THE FUTURE. IN ABOUT 30 MINUTES, THE CHANCELLOR OF THE EXCHEQUER WILL TALK ABOUT DOING MORE. LISA: IF YOU TAKE A LOOK AT 30 YEAR YIELDS IN THE UNITED KINGDOM, THEY HAVE COME IN TO WHERE JAPAN'S YIELDS WERE, WHICH RAISES THE QUESTION ON WHY NOT BORROW MORE. WHY NOT SPEND MORE? INVESTORS ARE HANDING THEM FREE MONEY, AND I THINK THAT IS THE DILEMMA. TO TONY'S POINT, YES, IT MATTERS WITH PRODUCTIVITY, BUT WHAT IS THE ALTERNATIVE AT THIS POINT TO SPENDING? JONATHAN: AND THE MAN FOR DURATION IS FAIRLY RESILIENT. WE HAD A 30 YEAR JGB AUCTION IN JAPAN. IT WENT FAIRLY NICELY, EVEN WHEN ALL OF THE FISCAL AUTHORITIES AROUND THE WORLD ARE STILL PUSHING TO DO A WHOLE LOT MORE. TOM: THERE'S NO QUESTION ABOUT IT, THAT THE FINANCIAL SYSTEM IS IN OPERATION. AGAIN, WE SEE GOLD AT $1800. I AM FASCINATED I THE DIFFERENCE BETWEEN HOW THEY DO FISCAL STIMULUS IN YOUR COUNTRY VERSUS MY COUNTRY. JONATHAN: WE WILL HEAR FROM THE CHANCELLOR IN AROUND 20 MINUTES, HERE ON BLOOMBERG TV AND RADIO. A LITTLE LATER, EBRAHIM OR BARI -- A LITTLE LATER, EBRAHIM RAHBA RI FROM CITI IN A CONVERSATION YOU DO NOT WANT TO MISS. RITIKA: THE U.S. IS SEEING A CORONAVIRUS SURGE IN THREE STATES HIT HARD BY THE PANDEMIC. TEMPORARY TESTING SITES ARE BEING SET UP THAT COULD HELP EXPERTS GET A CLEARER PICTURE OF HOW THE CORONAVIRUS IS MOVING THROUGH THE POPULATION. MEANWHILE, OFFICIALS ARE WEIGHING HOW QUICKLY TO ROLL BACK THE ECONOMY. IN BRAZIL, PRESIDENT JAIR BOLSONARO IS DEFENDING HIS HANDLING OF THE VIRUS DESPITE THE FACT IT HAS KILLED MILLIONS AND HAS LEFT HIM WITH THE VIRUS. HE HAS CALLED IT A LITTLE FLU. THE TRUMP ADMINISTRATION IS CONSIDERING ANOTHER WAY TO PUNISH CHINA FOR IMPOSING THAT NATIONAL SECURITY LAW ON HONG KONG. BLOOMBERG HAS LEARNED SOME TOP ADVISORS TO PRESIDENT TRUMP WANT TO UNDERMINE THE HONG KONG PEG TO THE U.S. DOLLAR. SOME THINK THE MOVE WOULD ONLY HURT HONG KONG'S THINK AND THE U.S., AND NOT CHINA. ALLSTATE IS BOOSTING ITS PROPERTY AND LIABILITY OPERATIONS. THEY HAVE AGREED TO BY NATIONAL GENERAL HOLDINGS FOR ABOUT $4 BILLION IN CASH. THAT COMES OUT TO A 69% PREMIUM OVER NATIONAL GENERAL OVER NATIONAL GENERAL'S CLOSE IN THE U.S. YESTERDAY. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > PEOPLE ARE GETTING NERVOUS AGAIN. BUSINESS LEADERS ARE GETTING WORRIED, CONSUMERS ARE GETTING WORRIED, AND THERE IS A REAL SENSE THAT THIS MIGHT GO ON LONGER THAN WE HAD HOPED. JONATHAN: RAPHAEL BOSTIC THERE, SOUNDING SOME CAUTIOUS WORDS YESTERDAY ALONGSIDE FEDERAL RESERVE COLLEAGUES. GOOD MORNING TO YOU ALL. ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. IN YOUR EQUITY MARKET, WE BUILD ON SOME OF THE GAINS OF THE LAST HOUR, ADVANCING AROUND 0.1%. A MILD MOVE HIGHER AFTER A CHOPPY SESSION OVERNIGHT, UP AROUND FIVE POINTS ON THE S & P. TREASURY YIELDS BREAKING LOWER IN YESTERDAY'S SESSION TO AROUND 0.65%. IN G10 AND FOREIGN EXCHANGE, THE U.S. DOLLAR IS MIXED. THE EURO ADVANCING NOT EVEN 0.1%. STERLING GOING NOWHERE 12 MINUTES AWAY FROM HEARING FROM THE CHANCELLOR. TOM: I AM QUITE TAKEN BY THE RESILIENCY WE ARE SEEING IN DXY TODAY, A 96, ALMOST UP TO A 97. I DON'T WANT TO OVERSELL IT, BUT WE HAVE A LITTLE BIT OF A SAFE HAVEN TONE OUT THERE, EVEN WITH GREEN ON THE SCREEN IN FUTURES EVER SO SLIGHTLY. RIGHT NOW IS AN IMPORTANT CONVERSATION, AND IT IS WITH MAX NISEN OF BLOOMBERG OPINION, WHO WRITES BRILLIANTLY ON HEALTH CARE AND THE VIRUS. WHAT IS SO IMPORTANT TO ME IS THE CACOPHONY OF STORIES, THE CACOPHONY OF NEWS FLOWS. WHICH IS THE ONE THAT MATTERS ON THIS PANDEMIC? MAX: THERE ARE A FEW, AND IT DEPENDS ON WHAT ISSUE YOU ARE FOLLOWING. I THINK THAT THE THING TO ALWAYS LOOK OUT FOR IS THE OVERALL TRAJECTORY OF THE VIRUS, AND HAVING GOOD METRICS FOR THAT. THE MOST IMPORTANT THING TO KEEP IN MIND IS HOW LONG IT TAKES FOR DATA TO TURN INTO TRENDS. HOW MUCH DATA CAN LAG, AND HOW EASY IT IS TO TAKE ANY BIT OF INFORMATION THAT CONFIRMS YOUR PRIORS OR YOUR HOPES, AND FOCUS ON THAT AS OPPOSED TO TAKING A LONGER, BROADER VIEW. I THINK THE EXAMPLE THAT STANDS OUT FOR ME IS THAT PEOPLE HAVE BEEN REALLY FOCUSED ON THE SORT OF DOWNTURN IN THE TRAJECTORY OF DEATH RATES IN THE UNITED STATES, INDICATING THAT THAT IS SOME REASON FOR DIMINISHED WORRY GOING FORWARD, WHEN REALLY, IT VERY MUCH IS A LAGGING INDICATOR, ONE THAT IS ALREADY TICKING UP IN HOTSPOT STATES. IT SHOWS THAT THIS IS REALLY THE SAME VIRUS WE HAVE DEALT WITH THE WHOLE TIME, JUST FACING DIFFERENT CONDITIONS, AND YOU HAVE TO KIND OF ADJUST FOR THAT WHENEVER YOU'RE LOOKING AT THE DATA. LISA: WHEN WE TALK ABOUT THE DATA, WE ARE ALSO TALKING ABOUT THE RENEWED FEDERAL PUSH FOR A BOOST IN TESTING TO GAUGE JUST HOW WIDESPREAD THE VIRUS IS. AND YET THE MORE TESTING THAT THE UNITED STATES DOES, THE LONGER IT HAS BEEN TAKING TO PROCESS THESE TESTS AND GET THE RESULTS BACK. IF ANYONE GOES TO THEIR LOCAL MD OR WHATEVER YOU HAVE, IT MIGHT TAKE FIVE OR SIX DAYS. BY THAT TIME, IT IS ALMOST USELESS. HOW BIG OF A POLICY CONCERN IS THIS? MAX: IT IS ENORMOUS, AND IT SPEAKS TO THE LAG IN THE DATA WE ARE SEEING. ANYTHING YOU ARE SEEING NOW, EVEN ON CASES, WHICH IS ONE OF THE MORE TRYING PIECES OF DATA, EVEN THAT LEG SUBS -- EVEN THAT LAGS SUBSTANTIALLY, AND EVEN MORE WHEN THERE IS AN ACUTE OUTBREAK. PEOPLE HAVE TO KNOW SO THEY CAN CHANGE THEIR BEHAVIOR. IF THEY ARE WAITING A WEEK FOR A TEST, THEY MAY MAKE THE NATURAL ASSUMPTION UNLESS THEY ARE HEAVILY SOME THEMATIC, WELL, I AM OK. THAT IS HOW YOU GET REALLY BROAD AND CONCERNING COMMUNITY TRANSMISSION. ESPECIALLY AS WE HOPE TO RETURN MORE BROADLY, THAT IS WHEN YOU REALLY GET A QUICKER TURNAROUND ON TESTS SO PEOPLE CAN ACTUALLY GET INFORMED AND RESPONSIBLE. JONATHAN: THE APPROACH AROUND THE WORLD SEEMS TO BE DIFFERENT STILL. IT IS JULY, AND YET WHAT WE SEE IN THE UNITED STATES IS DIFFERENT WHAT WE SEE IN AUSTRALIA, BEIJING. WHY IS THE APPROACH SO DIFFERENT , EVEN THOUGH EVERYBODY IS TALKING ABOUT THE SAME SCIENCE? MAX: IT COMES DOWN TO THE EXTENT TO WHICH YOU LISTEN TO THAT SCIENCE AND THE RECOMMENDATIONS OF PUBLIC HEALTH EXPERTS. IF DIFFERENT PEOPLE WERE SETTING POLICY IN THE UNITED STATES AND THEY WERE LISTENING TO HEALTH EXPERTS, WE WOULD HAVE POLICY THAT WAS CLOSER TO AUSTRALIA, CHINA, AND WOULD HAVE FROM THE START. I THINK THAT IS REALLY WHAT IT COMES DOWN TO BECAUSE THE SCIENCE GENERALLY HAS BEEN CONSENSUS. TOM: THIS IS REALLY IMPORTANT, THESE STATEMENTS YOU ARE MAKING. I WILL TRY TO KEEP THE POLITICS OUT OF IT AS WELL. THERE IS A SHERIFF OUT THERE, I CAN'T REMEMBER THE DETAILS, SCREAMING "NO MASKS," AND IN THE LAST 24 HOURS, HAS TURNED AROUND TO MASKS. WHAT WOULD HAPPEN IF THE PRESIDENT SHOWED UP TO AN EVENT WITH A MASK ON? HOW WOULD THAT CHANGE THE DIALOGUE ON THE SCIENCE, AS YOU PUT IT? MAX: I HOPE IT WOULD CHANGE IT SUBSTANTIALLY BECAUSE THIS IS THE THING ON WHICH THERE SHOULD PROBABLY BE THE LEAST AMOUNT OF DISAGREEMENT, JUST WEARING A MASK WHEN YOU ARE IN A CONGREGANT SETTING, ESPECIALLY INSIDE. IT IS SUCH A SMALL STEP, AND ONE THAT DATA HAS GROWN TO SUPPORT MORE STRONGLY OVER TIME AS PEOPLE HAVE THESE SORT OF NATURAL EXPERIMENTS IN GERMANY AND IN THE UNITED STATES, THAT HAVE PROVIDED PRETTY CONVINCING EVIDENCE THAT ON A LARGE SCALE, MASKING DOES WORK AGAINST THE VIRUS. IT IS IN LINE WITH EVERYONE'S PRIORITY, WHICH IS GETTING BACK TO NORMAL, HAVING THE MOST OPEN ECONOMY YOU CAN THROUGH WHAT WILL STILL BE A SIGNIFICANT WAVE UNTIL A VACCINE. JONATHAN: WE HAVE TO ACCEPT THAT AUTHORITIES ON EVERY POLITICAL SPECTRUM, WHETHER IT IS HEALTH AUTHORITIES, POLITICIANS, EVERYBODY MESSED UP THE MESSAGING ON MASKING WHEN THEY MADE THE PUBLIC FEEL GUILTY ABOUT BUYING MASKS BECAUSE THEY DIDN'T HAVE ENOUGH TO PROTECT HEALTH CARE WORKERS, AND NOW THEY ARE TELLING EVERYONE TO COVER THEIR FACE. HOW DID WE GET IT SO WRONG SEVERAL MONTHS AGO? MAX: THAT WAS ONE OF THE REALLY BIG ERRORS IN HEALTH COMMUNICATION FROM THE VERY START. I THINK THE EVIDENCE WAS A LITTLE BIT LESS CONCRETE, AND THERE WAS GENUINE CONCERN ABOUT MASK SHORTAGE. IF YOU LOOK AT AREAS HAVING MORE SUCCESS IN CONTAINING IT, IT DID GIVE HER EARLY INDICATION TO THE FACT THAT THIS WAS DROPLET BASED , AND THAT MASKS WOULD HAVE BEEN USEFUL. THAT IS HOW SCIENCE WORKS. PEOPLE UPDATE BASED ON EVIDENCE. THAT IS WHAT SHOULD INFORM POLICY, AND WHAT SHOULD INFORM BEHAVIOR RATHER THAN FIGHTING ABOUT WHAT HAPPENED A FEW MONTHS AGO. IT IS A MISTAKE, BUT ONE THAT SINCE HAS BEEN RECTIFIED IN COMMUNICATION, AND WE SHOULD USE THE EVIDENCE WE HAVE TWO HOPEFULLY CONVINCE PEOPLE THAT THIS IS SOMETHING THAT NEEDS TO BE PART OF DAILY LIFE FOR SOME TIME TO COME. WE ALL WANT TO BE ABLE TO GET BACK TO NORMAL LIFE. JONATHAN: MAX, APPRECIATE YOUR INPUT. WE ALL WANT THAT, FOR SURE. QUITE CLEARLY, IT IS A MESSAGING PROBLEM WE ARE STILL TRYING TO RECOVER FROM, NOT JUST IN AMERICA, BUT ELSEWHERE, TOO. TOM: OF COURSE, WE SEE THAT WITH A SERIOUS INFECTION IN THE PRESIDENT OF BRAZIL. TONY CRESCENZI WAS GOING ON ON THE HISTORY, ON ADAM SMITH AND SUCH. THERE IS A WHOLE HISTORY IN THIS NATION OF ANTI-INTELLECTUALISM AND ANTI-SCIENCE THAT WE ARE LIVING RIGHT NOW. JONATHAN: THAT IS NOT UNIQUE TO AMERICA, TOM. I CAN TELL YOU THAT. THAT IS SHARED WORLDWIDE OVER THE LAST DECADE OR SO. FROM NEW YORK CITY, GOOD MORNING TO YOU WHILE. EQUITY FUTURES UNCHANGED. ♪ JONATHAN: WE'VE GOT A CHOPPY SESSION THIS WEDNESDAY MORNING. GOOD MORNING TO YOU ALL. THIS IS "BLOOMBERG SURVEILLANCE ." LIVE ON BLOOMBERG TV AND RADIO, ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. IN YOUR EQUITY MARKET, WE STALL OUT A LITTLE BIT, UNCHANGED ON THE S & P. POSITIVE JUST A SINGLE POINT. THE CSI 300 STREAMING TOGETHER A SEVENTH STRAIGHT DAY OF GAINS. OUTSIDE OF EQUITIES, OUTSIDE THE BOND MARKET, LOOK AT THE GOLD MARKET. BRIEFLY THROUGH $1800 ON GOLD. RIGHT NOW, $1801. RIGHT NOW, WE ARE WAITING FOR RISHI SUNAK TO ADDRESS PARLIAMENT. CABLE, $1.2542. TOM: I AM GLAD YOU MENTIONED THAT. EBRAHIM RAHBARI OF CITIGROUP HAS BEEN WITH US MANY TIMES, WORKING WITH CATHERINE MANN AND A GREAT TEAM ON PETROLEUM AND HYDROCARBONS. LET ME TALK ABOUT A GRAVER IDEA OF STIMULUS AND ENDLESS DEBT, EVEN AT A LOW INTEREST RATE. DOES THAT JUST ASSUME CURRENCY APPRECIATION OR POTENTIAL DEVALUATION? EBRAHIM: GOOD TO BE ON ONCE AGAIN. THAT IS A GREAT QUESTION. MY SHORT ANSWER IS NO, IT DOES NOT. THAT IS A POINT WE HAVE BEEN MAKING FOR OUR CURRENCY FORECAST, THAT IN MANY CASES, IT IS THE ABILITY TO STABILIZE THE ECONOMY THROUGH THESE VERY AGGRESSIVE STIMULUS MEASURES THAT WILL PULL IN CAPITAL INFLOWS AND HAVE SUPPORT FOR ASSET PRICES. SO I DON'T THINK IT IS TRUE WE SHOULD ASSUME CURRENCY DEPRECIATION. THAT BEING SAID, I THINK THE AGGRESSIVE ACTIONS BY THE FED HAVE CERTAINLY BEEN ONE MAJOR FACTOR THAT CREATES MORE CONFIDENCE TO INVEST IN THE DOLLAR. SO I THINK IT HAS CERTAINLY CONTRIBUTED TO THE RECENT SELLOFF. TOM: THE MATHEMATICS OF THIS LIFT IN GOLD OFF THE MARCH LOWS, WHEN YOU LOOK AT GOLD, DO YOU ASCRIBE IT SIMPLY TO THE COMMON LOW REAL YIELDS ACROSS THE ENTIRE SYSTEM? IS THAT WHAT IS DRIVING GOLD HIGHER? EBRAHIM: I THINK IT IS CERTAINLY A VERY IMPORTANT FACTOR. IF YOU LOOK AT THE CHARTS, YOU SEE THAT THEY CORRELATION WITH REAL YIELDS CONTINUES TO BE VERY STRONG, AND EVEN MORE RECENTLY IN THE LAST FEW WEEKS, THE LATEST INCREASE IN GOLD PRICES HAS BEEN COMING ALONGSIDE THE PREVIOUS DECLINE IN REAL YIELDS AS WELL. YOU HAVE THE PRICE DRIVER ON THE REAL INTEREST RATE SIDE. THERE IS A MASSIVE INCREASE IN CENTRAL BANK LIQUIDITY. VERY LOW REAL YIELDS , BUT ALSO TO SOME DEGREE, SOME OF THE CURVED OCCURRENCE. JONATHAN: EXTRA REASONS PEOPLE ARE LOOKING TO SHUN THE DOLLAR IN THIS ENVIRONMENT, IT IS BELIEF THAT THE U.S. COMES THE SOURCE OF INSTABILITY AS THE REOPENING EFFORT STARTS TO STALL. WE'VE HAD SO MANY GUESTS ON THIS PROGRAM IN THE LAST 48 HOURS TALK UP THE SHIFT AWAY FROM THE UNITED STATES TOWARDS EUROPE AND ELSEWHERE BECAUSE OF HOW BADLY THE REOPENING PROCESS IS GOING IN AMERICA. FOR THAT REASON, PEOPLE ARE LOOKING TO FADE THE U.S. DOLLAR. DOES THAT RESONATE WITH YOU? EBRAHIM: I WOULD SAY A VERSION OF THE ARGUMENT RESONATES WITH ME, BUT PROBABLY IT IS A LITTLE MORE FLATTERING TO THE U.S.. I THINK WE SHOULD CONTINUE TO ASCRIBE A FAIRLY EXCEPTIONAL POSITION TO THE U.S. OUTLOOK. WE THINK THE U.S. ECONOMY WILL BOUNCE BACK EARLIER AND MORE STRONGLY THAN MUCH OF THE REST OF THE WORLD. WHAT IS TRUE FROM AN INVESTMENT STANDPOINT IS THAT THE REST OF THE WORLD IS UNUSUALLY HEAVILY EXPOSED TO THE REST -- TO THE U.S. THERE ARE A COUPLE OF CLOUDS ON THE U.S. HORIZON, INCLUDING A FAIRLY UNCERTAIN ELECTION, BUT IT MAKES A GREAT DEAL OF SENSE TO DIVERSIFY AWAY FROM THE U.S. WE ARE SEEING SOME DIVERSIFICATION GIVEN THESE UNUSUALLY HIGH VALUATIONS AND HIGH EXPOSURES FROM THE U.S. WE ALSO THINK THAT SHOULD GIVE YOU SOME FURTHER UPSIDE FOR THE EURO AGAINST THE DOLLAR, BUT I DON'T THINK IT IS EQUIVALENT TO WRITING OFF THE UNITED STATES. IN FACT, WE THINK THE U.S. GROWTH EXCEPTIONALISM PROBABLY STILL HAS SOME LEGS LEFT COMING OUT OF THE ELECTION. BUT FOR THE NEXT COUPLE OF MONTHS, IT DOES PUT THE U.S. ON THE BACK FOOT. LISA: THE WEAKENING OF THE U.S. DOLLAR HAS BEEN SOMETHING A LOT OF PEOPLE ARE TRYING TO UNDERSTAND IN ORDER TO FIGURE OUT HOW LONG IT HAS TO RUN. LOOKING AT BANK OF AMERICA GLOBAL RESEARCH, THEY CAME OUT AND SAID THAT THE FED STIMULUS, AS YOU WERE TALKING ABOUT, COMPRESSING REAL RATES WAS THE MAIN DRIVER OF THE WEAKENING IN THE DOLLAR, WHICH RAISES THE QUESTION, HOW MUCH CURVIER -- HOW MUCH FURTHER CAN THE FED DEPRESS REAL YIELD IN THE MONTHS TO COME? SO WHAT IS THE ANSWER? EBRAHIM: AS FOR REAL YIELDS, I SHOULD SAY WE WERE A LITTLE SURPRISED HOW MUCH FURTHER THEY HAVE DECLINED. IN PARTICULAR, THE DECLINE IN REAL YIELDS OF LATE HAS BEEN DRIVEN BY A PICKUP IN INFLATION EXPECTATIONS. IN AN ENVIRONMENT WHERE I THINK MANY OF US EXPECT INFLATION TO PICK UP, THE REAL DRIVER IN THE DECLINE OF REAL YIELDS IS PROBABLY RUNNING OUT OF STEAM, AND THAT MEANS MAY BE THE NOMINAL INTEREST RATES HAVE TO DO MORE OF THAT WORK. BUT WE DO THINK THAT THE BULK OF THE MOVE HAS TAKEN PLACE. THERE MIGHT BE ANOTHER 10, 20 BASIS POINTS IN THERE, BUT WE REALLY DON'T EXPECT A LOT FURTHER IN TERMS OF REAL YIELD DOWNSIDES. BUT IT IS ALSO NOT THE ONLY DRIVER. BUT I WAS ALLUDING TO IN TERMS OF DRIVERS OF THE U.S. DOLLAR DOWN, I THINK THERE IS ALSO A SHIFT IN TERMS OF EXPECTATIONS OF GROWTH, PERHAPS SOME OPTIMISM FOR EU MEASURES COMING INTO PLAY AS WELL. SO IF THE DOLLAR SELLS OFF, INCREASINGLY HAS TO COME FROM SOME OF THESE OTHER ELEMENTS RATHER THAN A FURTHER DECLINE IN REAL YIELDS. JONATHAN: EBRAHIM RAHBARI HEAR FROM CITIGROUP. IN A MOMENT, WE WILL HEAR FROM THE CHANCELLOR OF THE EXCHEQUER IN THE U.K., RISHI SUNAK. WE'LL WAIT FOR THE CHANCELLOR TO UNVEIL THE NEXT MOVES IN THE U.K. ON THE FISCAL FRONT. TOM: I DON'T THINK THERE HAS EVER BEEN A MOMENT SINCE I HAVE BEEN DOING THIS WHERE THERE IS SUCH A STARK DIFFERENCE ON HOW GOVERNMENTS OPERATE. I WANT YOU TO EXPLAIN WITH DR. RAHBARI RIGHT NOW THE MASSIVE FISTFIGHT OVER FISCAL STIMULUS HERE VERSUS HOW BRITAIN, WITH A MAJORITY GOVERNMENT, JUST MOVES IT FORWARD. EXPLAIN THAT, AND GO TO DR. BARI ON THAT -- GO TO DR. RAHBARI ON THAT. JONATHAN: I THINK THAT IS THE MAJOR DIFFERENCE, TO KEEP IT REALLY SIMPLE. WITH THAT IN MIND, WE HAVE TO DISCUSS HOW POLICY NEEDS TO EVOLVE WHEN YOU GO FROM A SITUATION OF BEING SHUT DOWN TO REOPENING, YOU NEED TO GO FROM INSULATING DID COME ANY TO -- INSULATING THE ECONOMY TO STIMULATING THE ECONOMY. EBRAHIM: THAT IS A CRITICAL QUESTION. ONCE AGAIN, I THINK PROBABLY AN AREA OR EVENTUALLY, THE U.S. WILL HAVE AN ADVANTAGE. THAT IS BECAUSE I THINK THE ABILITY OF THE ECONOMY TO ADAPT IS PROBABLY A LOT MORE ACTIVE THEN IT CAN BE ACROSS EUROPE. WE SHOULD KEEP IN MIND THAT OVER THE LAST FEW YEARS, THE END RESULT IN THE U.S. HAS VERY OFTEN BEEN IN AGREEMENT ON MAJOR EASING. I WOULDN'T WRITE OFF THE EXPECTATION THAT THAT IS WHAT WILL HAPPEN IN THE U.S. FOR PHASE FOUR AS WELL. OBVIOUSLY THE ELECTION MAKES EVERYTHING A LITTLE MURKIER, BUT CERTAINLY HAD EXPECTATION THAT WE WILL SEE ANOTHER $1 TRILLION OR SO IN STIMULUS IN THE U.S. TOM: WE ARE THRILLED YOU ARE WITH US AT THIS MOMENT FOR THE UNITED KINGDOM, AS THEY STRUGGLE FORWARD, AS CARL WEINBERG SAID EARLIER THIS WEEK. JUST A BASIC QUESTION FOR YOU, AND MAYBE FOR DR. MANN AS WELL. CAN THE UNITED KINGDOM FORWARD -- THE UNITED KINGDOM AFFORD THIS BLUNT SALVATION OF THEIR MARKET? CAN THEY SUPPORT STIMULUS FORWARD TO SUPPORT THE UNEMPLOYED? EBRAHIM: I THINK THE SHORT ANSWER IS YES. WHEN WE TALK ABOUT THE ABILITY OF SOCIETIES, ECONOMIES, AND GOVERNMENT TO SUPPORT ADDITIONAL FISCAL EASING, THE ALTERNATIVE OF NOT DOING ENOUGH IS A LOT MORE COSTLY OVER TIME. I THINK THAT APPLIES TO THE U.K. DESPITE THE VERY LARGE DEFICITS. THERE IS A QUESTION, HOWEVER, ABOUT THE ABILITY TO SUSTAIN GROWTH IN THE U.K. THAT QUESTION, ALONGSIDE THE FUTURE TRADE RELATION, IS MORE ASTUTE THAN ELSEWHERE. THE U.K. HAS TO AFFORD MORE PERSISTENT SUPPORT FOR THE LABOR MARKET IN THE COMING MONTHS, AND IN FACT, THERE HAS BEEN A QUESTION MARK OVER HOW LONG SOME OF THE EXCEPTIONAL MEASURES TO SUPPORT JOBS, BUT ALSO WAGES, WILL CONTINUE IN THE U.K. LISA: A LOT OF PEOPLE HAVE BEEN TALKING ABOUT STERLING. I KNOW JON HAS MENTIONED THIS AS THE EMERGING MARKET CURRENCY OF EUROPE, GIVEN THE FACT THAT THE UNITED KINGDOM IS UNIFIED BEHIND FISCAL STIMULUS, DOES WANT TO COMMIT TO BRINGING JOBS BACK. WILL THAT GIVE MORE STABILITY TO THE CURRENCY, ESPECIALLY AT A TIME WHEN YOU SEE THE ENTIRE WORLD SUFFERING WITH THE SAME ISSUES? EBRAHIM: WE THINK IN THE SHORT-TERM, SOME OF THESE FACTORS ARE SUPPORTIVE FOR STERLING, BUT AGAINST THE BACKDROP WHERE MOST INVESTORS REALLY HAVE BEEN VERY BEARISH ON STERLING FOR A LONG TIME, US INCLUDED, I SHOULD EMPHASIZE WE STILL THINK THE POSITION THE U.K. AND HABITS IN THE GLOBAL ECONOMY RIGHT NOW IS A PRETTY FRAGILE ONE, AND THE PROSPECT OF POTENTIALLY NEGATIVE INTEREST RATES OVER TIME, AND PROBABLY MORE BREXIT ATTENTION, WILL PROBABLY WEIGH ON STERLING ONCE AGAIN. THERE MIGHT BE A BIT OF THE WINDOW TO GET FISCAL STIMULUS. YOU GET PROBABLY NOT A WHOLE LOT OF BREXIT MOMENTUM, AND THAT MAY GIVE YOU THIS WINDOW OF STERLING NORMALIZATION. WE THINK OF IT REALLY IS MORE OF A SUMMER WINDOW, BUT FOR THE TIME BEING, IT LOOKS LIKE STERLING MAY HAVE FOUND ITS BOTTOM. JONATHAN: CHANCELLOR SUE NOT -- CHANCELLOR SUNAK ADDRESSING THE HOUSE OF COMMONS RIGHT NOW, SAYING WE WILL DO ALL WE CAN TO GIVE EVERYONE A JOB. YOU CAN FOLLOW THAT LIVE ON THE BLOOMBERG TERMINAL. WE WILL CONTINUE TO GIVE THE HEADLINES. THE TOTAL PLAN IS WORTH 160 BILLION STERLING. THESE ARE HUGE NUMBERS, AND THEY ARE GOING TO GET BIGGER IN THE MONTHS TO COME. I THINK THE WORRY THAT MOST PEOPLE SHARE IS THAT SOME OF THE EFFORT OF THE LAST SEVERAL MONTHS HAS DONE A FANTASTIC JOB OF OFFSETTING THE INCOME. WE WILL SEE -- WILL WE SEE THAT COLLECTIVE WILL, OR WILL HE TRANSITION AWAY FROM THAT TOO QUICKLY AND OPEN UP AN AIR POCKET OF CONSUMER DEMAND LATER THIS SUMMER? IS THAT A FAIR YOU HAVE NOT JUST FOR THE U.K., BUT PERHAPS IN THE U.S. AS WELL? EBRAHIM: IT IS CERTAINLY A CONCERN, AND PROBABLY MY SECONDARY CONCERN. MY FIRST CONCERN IS THAT SOME OF THESE MEASURES TURN OUT TO BE INSUFFICIENTLY EFFECTIVE. SO ANYWAY, IT IS MORE IN THE DIRECTION OF WE ARE NOT DOING ENOUGH NOT BECAUSE WE ARE DOING LESS OVER TIME, BUT BECAUSE EVEN MORE STIMULUS WOULD BE REQUIRED OVER TIME. THAT SAID, THERE'S CLEARLY ROOM FOR POLICY MISTAKES. I THINK THAT IS PROBABLY MOST EVIDENT IN THE U.S., WHERE WE HAVE EXPECTATION, BUT NO CERTAINTY THAT MORE STIMULUS WILL COME ALONG. BUT IN THE U.K., THERE ARE THESE QUESTION MARKS THAT YOU ALLUDED TO EARLIER ON. ARE WE ABLE TO PIVOT TOWARDS SOMETHING THAT ACTUALLY LEADS US INTO SELF RESIGNED GROWTH AS OPPOSED TO JUST MAKING SURE THAT NO MORE JOBS ARE LOST IN THE SHORT TERM? JONATHAN: EBRAHIM RAHBARI OF CITI, FANTASTIC TO CATCH UP WITH YOU. WHAT WE ARE SEEING IN THE U.K. RIGHT NOW IS JUST AN EXAMPLE OF WHAT WE WILL SEE PLAY OUT IN THE UNITED STATES IN THE MONTHS TO COME, AND WORLDWIDE, AS FISCAL AUTHORITIES CONTINUE TO UNDERLINE THEIR COMMITMENT TO DO MORE TO HELP THIS ECONOMY. WE WILL BRING YOU MORE OF THE HEADLINES FROM THE CHANCELLOR OF THE EXCHEQUER IN THE U.K. AS HE ADDRESSES THE HOUSE OF COMMONS ON WHAT'S NEXT. THIS IS BLOOMBERG. ♪ > > IT IS PART OF OUR FIGHT TO REBUILD AFTER CORONAVIRUS. ♪ > > WE ARE SEEING DEMAND FOR REFINED PRODUCT COME BACK IN A VERY AGGRESSIVE WAY, AND THAT CONTINUES TO INCREASE AS PEOPLE GET OUT AND ABOUT AND HE CAN TIE -- AND THE ECONOMIES CONTINUE TO OPEN. JONATHAN: THE ENERGY SECRETARY ON THE SITUATION AS WE CONTINUE TO REOPEN AND NORMALIZE NOT JUST IN THE UNITED STATES, BUT WORLDWIDE. GOOD MORNING TO YOU ALL. ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I’'M JONATHAN FERRO. IN YOUR EQUITY MARKET, UP AROUND EIGHT POINTS ON THE S & P 500, UP ABOUT 0.25%. FOLLOWING SOME COMMENTS FROM THE CHANCELLOR OF THE EXCHEQUER ON THE U.K. NEXT STEPS, IT IS ALL ABOUT POLICY AS YOU GO FROM SHUT DOWN TO REOPEN COME YOU GO FROM INSULATING THE ECONOMY TO STIMULATING THE ECONOMY, AND YOU HAVE TO TRY TO INCENTIVIZE THE RETURN TO WORK. THE ADMINISTRATION VERY MUCH IN THE CENTER OF THAT EFFORT. THIS IS WHAT WE ARE HEARING FROM THE U.K. AT THE MOMENT. THEY ARE GOING TO OFFER A 1000 POUND BONUS PER EMPLOYEE FOR FIRMS BRINGING STAFF BACK. A TOTAL RETENTION BONUS PLAN COULD BE 9 BILLION STERLING. QUITE CLEARLY, WHAT WE ARE TRYING TO DO IS NOT JUST OFFSET THE SHOCK TO INCOME, BUT ALSO INCENTIVIZE THE RETURN TO WORK. THIS IS IMPORTANT BECAUSE IT IS NOT JUST A CONVERSATION FOR THE U.K. IT IS WHAT WE ARE ABOUT TO SEE PLAY OUT IN AMERICA OVER THE NEXT FEW WEEKS. TOM: PARTICULARLY IF YOU TAKE OUT HOSPITALITY AND SUCH, IT WILL BE INTERESTING TO SEE HOW YOU GO FROM FURLOUGH TO LAYOFF, OR FROM LAYOFF TO A JOB. IT IS JUST GOING TO BE AN EXCEPTIONAL DYNAMIC. BUT THE KEY DYNAMIC IS THE PROCESS IN THE UNITED KINGDOM WHERE THE MAJORITY GOVERNMENT IS EXTREMELY DIFFERENT FROM WHAT KEVIN CIRILLI IS GOING TO REPORT ON IN WASHINGTON. RIGHT NOW WE WANT TO LOOK AT OIL . WE WANT TO LOOK AT HYDROCARBONS. ONE OF THE GREAT TRUISMS IS YOU HAVE TO HEAD YOUR RISK ALONG THE WAY. REBECCA BABIN IS WITH CIBC PRIVATE WEALTH MANAGEMENT. SHE HAS A REALLY INTERESTING CAREER WITH GOLDMAN SACHS, PIMCO, AND NOW CIBC OF HEDGING OUT IN HYDROCARBONS. THANK YOU FOR JOINING US. I AM ABSOLUTELY FASCINATED THAT WITH YOUR EXPERIENCE, IF YOU FEEL LIKE THE OIL AND GAS BUSINESS IS SO DEAD IT IS NEVER GOING TO COME BACK, DOOM AND GLOOM AND ALL OF THAT, THAT IT IS ALMOST WORTH NOT HEDGING. IS THAT TRUE? REBECCA: I DON'T THINK THAT IS TRUE, AND I WILL CHALLENGE AT LEAST THE FIRST PREMISE. YOU STILL NEED TO ACTIVELY HEDGE YOUR COMMODITY EXPOSURE IF YOU ARE INVESTING IN ENERGY EQUITIES, AND YOU STILL NEED TO BE VERY CAUTIOUS ABOUT HOW YOU PICK YOUR SECURITIES BECAUSE THERE CONTINUES TO BE A BIFURCATION IN THE SECTOR OF WHO IS GOING TO SURVIVE AND WHO'S NOT. THERE'S NO DOUBT THE GROUP AND THE SECTOR IS IN THE MIDDLE OF A TRANSFORMATION. IT WOULD BE COMPLETELY IGNORANT TO NOT ACKNOWLEDGE THAT THINGS ARE CHANGING. HOWEVER, THAT DOES NOT MEAN THE SECTOR DOES NOT STILL PRESENT SIGNIFICANT AND COMPELLING OPPORTUNITIES, AND ALWAYS, YOU WANT TO HEDGE WHERE YOU CAN OPPORTUNISTICALLY ACROSS THAT. LISA: I WANT TO GET INTO SOME OF THOSE OPPORTUNITIES AND THE WEEDING OUT OF THE WEAKER PLAYERS FROM THE STRONG WITHIN THE SHALE PATCH. WE REALLY WANT TO PAINT THE PICTURE OF WHERE WE ARE IN THE SUPPLY/DEMAND DYNAMIC. YOU ARE SEEING UNPRECEDENTED DECLINE IN SHALE OUTPUT IN THE UNITED STATES. YOU ARE SEEING THOSE OUTPUT CUTS IMPLEMENT IT ACROSS THE MIDDLE EAST THIS MONTH, AND YET YOU ALSO SEE SUDDEN DECLINE IN DEMAND, WITH GASOLINE DEMAND LOWER THAN PEOPLE EXPECT IT OVER THE KEY JULY 4 WEEKEND. REBECCA: I WOULD SAY WHERE WE ARE IN THAT BALANCE, THE FIRST THINGS YOU MENTIONED, WHICH IS THE FACT THAT DEMAND CAME BACK OFF THE LOWS MORE QUICKLY THAN PEOPLE FEARED, AND WE HAVE HAD SUPPLY CUTS AND OPEC-PLUS START TO REALLY COMPLY WITH ALL OF THEIR RESTRICTIONS. THAT IS PRETTY MUCH PRICED INTO THE MARKET. WHAT IS MORE UNCERTAIN IS THE SECOND POINT YOU MADE IN REGARDS TO WHERE WE GO FROM HERE IS NOT SPECTACULAR, ESPECIALLY WITH THE PEAK OF SUMMER DRIVING SEASON. FROM UNITED AIRLINES LAST NIGHT, THEY WALKED BACK SOME OF THE SLIGHT INCREASES THEY HAD SAID THEY WOULD PUT IN PLACE FOR AUGUST, SAYING THEY SAW A LOT OF DEMAND, PARTICULARLY INCHOATE RELATED STATES. THIRDLY, CALIFORNIA, TEXAS, AND FLORIDA ARE THE TOP THREE GAS CONSUMPTION STATES IN THE UNITED STATES, MAKING UP OVER 25% OF GAS CONSUMPTION. AS WE SEE CASES RISING THOSE STATES, WE MIGHT START TO SEE DATA THAT HAS BEEN FUELING THE RALLY IN WTI AND BRENT STARTED TO FADE A LITTLE BIT. LISA: SO IF THIS DATA IS A HARBINGER OF WHAT IS TO COME WITH RESPECT TO GASOLINE DEMAND, HOW LOW COULD YOU SEE CRUDE GO AT THIS POINT? WHAT THAT MEAN IN TERMS OF BANKRUPTCIES IN THE SHALE PATCH? REBECCA: I THINK THE DIFFERENCE BETWEEN NOW AND MAY BE THE SELLOFF WE SAW IN APRIL IS THE MARKET IS MUCH MORE PREPARED FOR SOME OF THIS DATA TO SLOW DOWN, AND WE HAVE OPEC+ NOW ALL WORKING AND SINGING FROM THE SAME SONG SHEET, SO I DON'T THINK YOU SEE THE SAME TYPE OF VOLATILITY WE SAW IN APRIL. WE COULD SEE SOMETHING TREND BACK TO THE 30'S IN WTI, AND MAY MID 30'S AND BRENT. HOWEVER, THAT DOES HAVE A SIGNIFICANT IMPACT ON BANKRUPTCIES. I THINK YOU WILL SEE A LARGER PERCENTAGE OF COMPANIES START TO FILE IF WE FALL INTO THAT CATEGORY ACROSS THE SHALE PATCH. WE NEED WTI OUT ON THE LONGER PART OF THE CURVE TO BE ABOVE $50 TO SAVE SOME OF THESE COMPANIES CURRENTLY IN JEOPARDY. JONATHAN: REBECCA, APPRECIATE YOUR TIME THIS MORNING ON AN IMPORTANT CONVERSATION. REBECCA BABIN OF CIBC ON THIS MARKET. POLICY HAVE TO SHIFT, EVOLVE AS WE TRY TO REOPEN ECONOMIES AND GET PEOPLE BACK TO WORK. THE CHANCELLOR ANNOUNCING, MEDICO -- ANNOUNCING A MOMENT AGO AN INCENTIVE TO BRING EMPLOYEES BACK. AS YOU LOOK AT THE LABOR MARKET, THERE'S A PARTICULAR DEMOGRAPHIC THAT IS GOING TO BE HARD-HIT IN THE MONTHS AND MAYBE YEARS TO COME, THE YOUNGER DEMOGRAPHIC WHO WILL FIND IT HARD TO GET EXPERIENCE AND GET AN ENTRY-LEVEL JOB. SOMETHING THE U.K. ARE LOOKING AT DOING IS A KICKSTART PROGRAM TO PAY FIRMS TO HIRE YOUNG PEOPLE. I DO THINK THIS IS A MARKER FOR FISCAL AUTHORITIES ELSEWHERE TO SEE HOW THEY FOLLOW UP SOME OF THESE IDEAS COME TO THE SURFACE AS WE MOVE FORWARD. TOM: LIKE SO MANY THINGS IN THIS CRISIS, THIS IS SOMETHING THAT WAS THERE BEFORE THE PANDEMIC, AND THE PANDEMIC HAS JUST MASSIVELY ACCENTUATED IT. I HAVE BEEN TALKING ABOUT THIS FOR YEARS, ABOUT LOOK AT ME. NOBODY IS EVER GOING TO RETIRE. YOU WILL CARRY ME OUT OF HERE IN THE "SURVEILLANCE" CASKET. IT IS TOUGH FOR KIDS. EVERYONE WATCHING THOSE THAT. JONATHAN: A BIT DARK, BUT IT WOULD BE AN HONOR TO CARRY ON WORKING WITH YOU THREW TWO-YEAR-OLD, OLD, OLD AGE -- THROUGH TO YOUR OLD, OLD, OLD AGE. TOM: AND WHAT IS GREAT IS IT IS TOTTENHAM BLUE, THE COLOR THEY GOT. JONATHAN: WE WILL TALK ABOUT THIS LATER. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. THIS IS BLOOMBERG. > > WHAT WE ARE SEEING AT THE MOMENT IS THE SUGAR HIGH. IT DOESN'T REALLY TELL US ABOUT THE MEDIUM-TERM TRAJECTORY FOR ECONOMIES. > > WE KNOW THERE ARE LARGE SWAYS OF THE PRICE DATA THAT ARE BEING MADE UP, LITERALLY MADE UP. > > IT'S GOT TO BE THE REAL ECONOMY THAT PERFORMS. OTHERWISE, NONE OF THESE COMPANIES WILL BE ABLE TO MAKE IT THROUGH 222 ANYONE. > > -- THROUGH TO 2021. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. TOM: GOOD MORNING EVERYONE. WILL YOU ARE WITH US. A MOST INTERESTING DAY. IT STARTED OUT BORING EARLIER THIS MORNING. IT IS NOT BORING ANYMORE. JOHN WILL DO -- JON WILL DO A DATA CHECK. THE NASDAQ 100 UP A GOOD 0.5% IN THE LAST 30, 40 MINUTES. I AM GOING TO SAY THAT THE CHANCELLOR OF THE EXCHEQUER, OR THE EGG SHELLS, WHATEVER IT IS, GIVING A SPEECH IN THE UNITED KINGDOM REALLY TALKS ABOUT THE STIMULUS TO COME. THAT HAS BEEN THE UNDERPINNING TO A GOOD FEELING ABOUT THIS MARKET. JONATHAN: THIS IS SMART POLICY WE ARE SEEING FROM THE U.K., AND IT LAYS DOWN A MARKET FOR FISCAL AUTHORITIES ELSEWHERE AS WELL. LET'S START WITH THE LABOR MARKET AND WITH THE CHANCELLOR IS DOING TODAY. THE CHANCELLOR IS INCENTIVIZING -- THE GOVERNMENT IS INCENTIVIZING COMPANIES TO BRING BACK EMPLOYEES. THEY ARE REALLY TRYING TO HELP THE YOUNG. THE COMPANIES WILL WANT TO BE INCENTIVIZED AS WELL. HOW DO YOU INCENTIVIZE THEM? YOU OFFER THEM MONEY TO HELP HIRE YOUNG PEOPLE. THAT IS AN IMPORTANT STEP AS WELL. NOW WE'VE GOT TO TALK ABOUT THE INDUSTRY GETTING REALLY BEATEN UP. RESTAURANTS, HOSPITALITY, TOURISM. THE CHANCELLOR ESSENTIALLY ANNOUNCING SOME TAX RELIEF FOR THOSE PARTICULAR INDUSTRIES AS WELL. THIS IS WHAT WE ARE LIKELY TO SEE IN THE COMING WEEKS AND MONTHS OUTSIDE OF THE U.K., LOOKING TO MAKE THIS FISCAL TRANSITION AS YOU GO FROM INSULATING THE ECONOMY TO STIMULATING IT. THE SMART POLICY IS TO LOOK AT THE SPECIFIC AREAS OF THIS ECONOMY YOU NEED TO STIMULATE. AT THE EPICENTER OF THAT, HOSPITALITY AND TOURISM. TOM: WHAT'S FASCINATING ABOUT THIS IS THE PROCESS IS DIFFERENT IN EACH NATION. NOT JUST THE UNITED STATES, BUT EVERY NATION IS DIFFERENT FROM THE APPARENT SMOOTHNESS WE SEE IN THE UNITED KINGDOM. THIS GOES TO THE 10 YEAR OPTION YOU MENTIONED EARLIER THAT WILL SEE -- THAT WE WILL SEE I BELIEVE TODAY, AND THE FINANCIAL SYSTEM IN THE UNITED STATES APPEARS TO BE RUNNING SMOOTHLY AS WE AWAIT THE NEXT $1 TRILLION OR $1.5 TRILLION OF STIMULUS. LISA: ANOTHER WAY OF SAYING THAT YIELDS ARE A DRUG AUTUMN, MEANING IT HAS NEVER BEEN CHEAPER FOR THESE GOVERNMENTS TO BORROW MONEY, SO WHY NOT DO IT? RAISING THE EXISTENTIAL QUESTION OF WINDOWS DEBT MATTER. WE HAVE BEEN TALKING ABOUT THAT THROUGHOUT THE PROGRAM. BUT THE ISSUE IS HOW THESE ARE TARGETED. WE TALKED ABOUT THE ENHANCED UNEMPLOYMENT BENEFIT, SET TO RUN OUT AT THE END OF THIS MONTH. THE $600 BENEFIT PER INDIVIDUAL IN ADDITION TO THE NORMAL UNEMPLOYMENT BENEFIT THAT HAVE FINANCED ABILITIES TO SPEND. HOW MUCH WILL THAT ENCOURAGE PEOPLE TO GET REHIRED AS THE UNITED KINGDOM IS TRYING TO DO? TOM: A LOT TO TALK ABOUT TODAY, AND PART OF OUR GOOD CONVERSATION WITH MARKETS ELEVATED. I DO WANT TO MENTION GOLD OUT TO $1815 AT ONE POINT. RIGHT NOW, JIM BIANCO JOINS US WITH BIANCO RESEARCH. FILTERING IN ECONOMICS, FINANCE, AND INVESTMENT WITH GREAT PRESCIENCE. THANK YOU FOR JOINING US TODAY. I WANT YOU TO TALK ABOUT THE CONFIDENCE YOU HAVE THAT THESE MARKETS, AND PARTICULARLY THIS EQUITY MARKET, CAN RUN AS IT HAS BEEN RUNNING GIVEN THE ASSUMPTION OF STIMULUS. IS THAT A GIVEN? JIM: IT IS A GIVEN. I THINK THAT IS EXACTLY WHAT HAS BEEN DRIVING THIS MARKET. IF YOU LOOK APOSTOLIC OF THE RECOVERY, YOU COULD REALLY MAKE THE CASE THAT THE ECONOMY IS PLATEAUING, IF NOT ROLLING OVER. BUT THEN YOU THROW INTO THAT MIX THAT YOU'VE GOT CENTRAL-BANK STIMULUS, BAILOUTS. LOOK AT WHAT HAPPENED IN THE U.K. TODAY. PROMISES OF TAX CUTS AND INCENTIVES TO HIRE PEOPLE. ALL OF THAT GETS WASHED AWAY, AND THESE MARKETS POWER HIGHER. THAT BEGS THE QUESTION, WHAT CHANGES THIS? THE THING THAT I THINK CHANGES THIS IS IF WE WERE TO GET AN INFLATION FEAR AND/OR HIGHER INTEREST RATES. AS LONG AS RATES STAY LOW, GOVERNMENTS AND CENTRAL BANKS CAN CONTINUE THIS EXTRAORDINARY ACTION AND MARKETS WILL RESPOND POSITIVELY. JONATHAN: I AGREE WITH YOU THAT MONETARY POLICY HAS EXACERBATED THE TREND IN VALUATION, BUT I THINK IT WOULD BE DISINGENUOUS OF ME TO SAY THE EQUITY MARKET HAS NOT PICKED UP ON THE STUMBLE. IN AMERICA, IF YOU NEUTRALIZE THE MUSCLE TECH AND LOOK AT THE EQUAL WEIGHTED S & P 500, WE ARE DOWN ABOUT 10% OVER THE LAST MONTH AREA THE MARKET IS PICKING UP ON THIS, ISN'T IT? JIM: IT IS. THIS IS NOT THE LATE 1990'S BULL MARKET OF TECHNOLOGY, WHERE EVERYTHING IS GOING TO THE MOON. THERE'S THE FAANG STOCKS PLUS MAYBE TESLA, SQUARE, AND A COUPLE OTHER NAMES POWERING HIGHER. BUT THE RISK MARKET HAS RECOVERED OVER THE PREVIOUS DECLINE WE HAD IN FEBRUARY AND MARCH, AND IT SEEMS TO BE HOLDING IT UP. THAT IS REALLY THE NUMBER ONE THING GOING ON, SO LOOKING BEYOND THIS, IT IS NOT ALL JUST WONDERFUL NEWS. IT IS STILL THE BIG STORY PUSHING THIS MARKET HIGHER. LISA: IT IS THE BIG STORY PUSHING THE BEST COMPANIES THAT HAVE A CHANCE TO SURVIVE HIGHER. BROOKS BROTHERS JUST FILING FOR CHAPTER 11, THIS CROSSING THE BLOOMBERG TERMINAL RIGHT NOW. AT WHAT POINT DOES THE CASCADE OF BANKRUPTCIES BECOME SYSTEMIC RISK, AFFECTING EVEN SOME OF THE HIGHER RATED COMPANIES THAT HAVE ENJOYED RECORD LOW BORROWING COSTS, AS WELL AS FED AND GOVERNMENT SUPPORT? JIM: I THINK WHEN THE GENERAL LEVEL OF INTEREST RATES GOES UP, THAT IS THE BOND MARKET SENDING A SIGNAL THAT THEY ARE GOING TO REJECT ALL OF THE BORROWING AND THEY ARE AFRAID THAT THERE IS INFLATION. WE DON'T HAVE THAT RIGHT NOW, SO THAT DOESN'T SEEM TO BE AN ISSUE. BUT ON THE INFLATION FRONT, LET ME OFFER YOU ONE ANECDOTE. SHAKE SHACK REPORTED A SEAM STORE SALE DECLINE. THAT IS JUST ONE EXAMPLE, BUT YOU KEEP REPEATING THAT EXAMPLE LONG ENOUGH AND WE MIGHT GET THAT INFLATION FEAR THAT EVERYBODY SEEMS TO BE TALKING ABOUT. THAT WOULD SHOW UP WITH THE BOND MARKET AND HIGHER YIELDS. BUT AGAIN, THAT IS NOT HAPPENING RIGHT NOW. JONATHAN: I LOVE CATCHING UP WITH YOU, BUT THE LINE IS A LITTLE BIT FLAKY, SO WE ARE GOING TO HAVE TO LET YOU GO. WE WILL TRY TO GET YOU BACK ON THE SHOW VERY SOON. WE ARE FOCUSED ON THE NEXT FISCAL STEPS WORLDWIDE AND HOW THINGS WILL DEVELOP IN THE COMING MONTHS. IN THE UNITED KINGDOM, THE CHANCELLOR WRAPPING UP HIS ADDRESS TO THE HOUSE OF COMMONS, INCENTIVIZING REHIRING AND OFFERING TARGETED TAX RELIEF TO THE INDUSTRIES THAT WILL STRUGGLE IN THE MONTHS AND MAYBE YEARS TO COME. TOM: THERE'S NO QUESTION ABOUT IT. I AM GOING TO GO INTO THE IDEA THAT WE WILL SEE NOTHING LIKE THIS OUT OF WASHINGTON. BECAUSE IT IS AN ELECTION YEAR AS WELL, I WOULD REALLY LOOK FOR SECRETARY MNUCHIN, THE SOMEWHAT EQUIVALENT TO THE CHANCELLOR OF THE EXCHEQUER, TO REALLY BE FRONT AND CENTER IN THIS PROCESS, DRIVING IT FORWARD GIVEN AN ELECTION YEAR. JONATHAN: THERE IS 1.I THINK THIS ADMINISTRATION MAY BE VERY WELL ALIGNED WITH WHAT THE U.K. IS DOING THIS MORNING, AND THAT IS INCENTIVIZING REHIRING. THERE IS A RELUCTANCE TO CARRY OVER THE ENHANCED ON AND PLAY MY BENEFITS, BUT THERE IS CONSENSUS ON THE NEED TO INCENTIVIZE REHIRING. I JUST WONDER WHETHER SOME OF THE IDEAS THIS MORNING FROM THE U.K. RESONATE WITH FISCAL POLICY MAKERS ELSEWHERE. LISA: YOU HAVE ON ONE HAND THIS IDEA OF HOW YOU FINANCIALLY ENCOURAGE COMPANIES TO REHIRE INDIVIDUALS. ON THE OTHER SIDE, YOU HAVE THE VIRUS, WHICH CONTINUES. IF PEOPLE DON'T WANT TO GO TO RESTAURANTS BECAUSE THEY ARE SCARED OF GETTING SICK, THEY ARE NOT GOING TO GO EVEN IF THEY HAVE VOUCHERS TO DO SO. THIS IS THE BIG CONUNDRUM, WHICH IS HOW MUCH DO YOU SUPPORT INDUSTRIES THAT ARE NOT GOING TO SEE THE FOOT TRAFFIC BECAUSE OF THE PENDANT AREA -- OF THE PANDEMIC WHEREIN? IT IS SUCH A CHALLENGING SITUATION TO CRAFT THE APPROPRIATE PROGRAM AROUND. JONATHAN: THIS IS WHAT UNDERLINES THE NEED FOR CONTINUED FISCAL SUPPORT. AHEAD OF THE ELECTION YOU MENTIONED IN NOVEMBER, THAT IS WHY THIS ADMINISTRATION WILL HAVE TO CONTINUE TO STEP UP AND STEP IN AND HELP VARIOUS INDUSTRIES, AND STILL SUPPORT THE SHOCKS TO INCOME ACROSS THIS NATION. BEST CASE, EVEN AMONG STEEPLES -- AMONGST THE BULLS, THEIR BEST CASE IS SOMETHING AROUND 9%, AND 9% UNEMPLOYMENT IN AMERICA IS NOT GOOD ENOUGH. TOM: I AM SO GLAD YOU BROUGHT THIS UP. THE MOST IMPORTANT NUMBER OF THE WEEK IS TOMORROW AT 8:30, WHERE WE REALLY NEED TO SEE WHAT CLAIMS DO. THIS IS HIGH-FREQUENCY DATA, AND THAT WILL DIRECTLY INVOLVE THE FISCAL DEBATE. EVERYONE WILL BE PAYING ATTENTION TO HOW THOSE FORECASTS CHANGE. THEY ARE NOT GOING TO CHANGE OFF THE MONTHLY JOBS REPORT. THEY ARE GOING TO CHANGE OFF THE HIGH-FREQUENCY DATA. JONATHAN: AND WHAT THE CLAIMS DATA WILL SPEAK TO IS THE HUGE AMOUNT OF CHURN THAT ELLEN ZENTNER OF MORGAN STANLEY LAST WEEK WAS ADDRESSING. BENEATH THE SURFACE, THE AMOUNT OF JOBS COMING OFF, THE PERMANENT JOB LOSSES, THE CLAIMS THAT ARE STILL ELEVATED WEEK AFTER WEEK, THIS IS AN ECONOMY THAT WILL STILL NEED SUPPORT. JONATHAN: --LISA: IT IS DEVASTATING BECAUSE WHAT THAT MEANS IS PEOPLE ARE MOVING FROM JUST LAYING OFF WORKERS IN AN EMERGENCY SETTING AND TAKING A LOOK AT THEIR BUSINESS AND SAYING IT IS GOING TO BE SMALLER GOING FORWARD. I THINK ABOUT THE AIRLINE INDUSTRY IN PARTICULAR, WHICH HAS BEEN TRYING TO GENERATE ENOUGH CASH TO SURVIVE, BUT YOU SEE A SURGE OF DISTRESSED DEBT ABOUNDING WITHIN THE AIRLINES. I DO WONDER WHAT THE WORLD LOOK LIKE ON THE OTHERS OUT OF THIS. JONATHAN: SMART FISCAL POLICY IS GOING TO BE CRITICAL, AND WE GOT A LITTLE FLAVOR OF THAT THIS MORNING FROM THE UNITED KINGDOM AND THE BRITISH CHANCELLOR. AROUND ONE HOUR 19 MINUTES AWAY FROM THE OPENING BELL, EQUITY FUTURES ARE SLIGHTLY ELEVATED. WE ADVANCED 0.2%. ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. HEARD ON BLOOMBERG RADIO, SEEN ON BLOOMBERG TV, THIS IS "BLOOMBERG SURVEILLANCE." RITIKA: WITH THE FIRST WORD NEWS, I'M RITIKA GUPTA. THE U.K. HAS ANNOUNCED A NEW $11.3 BILLION JOB RETENTION BONUS. COMPANIES WILL GET A BONUS FOR EACH EMPLOYEE THEY BRING BACK TO WORK. CHANCELLOR OF THE EXCHEQUER RISHI SUNAK IS SELLING HIS PLAN TO GET THE ECONOMY GOING AGAIN. THE U.K. IS ALSO CUTTING THE TAX ON SOME HOME PURCHASES. U.S. IS PLANNING A CORONAVIRUS TESTING SURGE IN THREE STATES HIT HARD BY THE PANDEMIC. TEMPORARY TESTING SITES ARE BEING SET UP IN LOUISIANA, TEXAS, AND FLORIDA. THAT COULD HELP HEALTH EXPERTS GET A CLEARER PICTURE OF HOW THE VIRUS IS MOVING PRETTY POPULATION. MEANWHILE, OFFICIALS ARE WEIGHING HOW FAR TO GO IN REOPENING THE ECONOMY OR ROLLING BACK STEPS ALREADY TAKEN. IN BRAZIL, PRESIDENT BOLSONARO DEFENDING HIS APPROACH TO THE CORONAVIRUS DESPITE THE FACT IT HAS KILLED TENS OF THOUSANDS OF BRAZILIANS AND LEFT HIM WITH THE DISEASE AS WELL. BOLSONARO HAD CALLED THE VIRUS "A LITTLE FLU," AND BATTLED OFFICIALS WHO WANTED STRICTER QUARANTINE MEASURES. THE PRESIDENT OF MEXICO IS TAKING THE BIGGEST GAMBLE OF HIS 19 MONTHS IN OFFICE. HE IS IN WASHINGTON TO MEET WITH PRESIDENT TRUMP, DESPITE THE ADVICE OF SOME OF HIS TOP COUNSELORS NOT TO GO. HE WANTS TO SAFEGUARD THE COMMERCIAL CONNECTION BETWEEN THE ENTRIES. TRUMP IS REVILED SOUTH OF THE BORDER RAVEN CALLED MEXICAN CRIMINALS AND RAPISTS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > THE RESCUE PACKAGE THAT THE PRESIDENT LED WITH BIPARTISAN SUPPORT IN CONGRESS AND THE PPP THAT SECRETARY MNUCHIN FOSTERED AND IMPLEMENTED, IT IS THE FURLOUGHS THAT ARE COMING DOWN. WE KEPT PEOPLE CONNECTED TO THEIR EMPLOYERS. A LOT OF TEMPORARY LAYOFFS WILL GO BACK TO WORK. JONATHAN: THERE A KUDLOW, THE NATIONAL ECONOMIC -- LARRY KUDLOW, THE NATIONAL ECONOMIC COUNCIL DIRECTOR IN THE UNITED STATES, AS POLICIES COME INTO SHARPER FOCUS IN JULY. IN YOUR EQUITY MARKET, WE ADVANCED FIVE POINTS ON THE S & P 500, UP A LITTLE MORE THAN 0.1%. TOM: IT HAS BEEN A NICE MOVE IN THE MARKET TODAY, CERTAINLY A NICE REBOUND OFF OF HER WE WERE TWO HOURS AGO. RIGHT NOW, TO DRIVE FORWARD THE DISCUSSION ON STIMULUS, WE HAVE WITH IS A GENTLEMAN FROM THE 10TH DISTRICT OF NORTH CAROLINA, PATRICK MCHENRY. HE HAS BEEN STEEPED IN POLITICS, GOING BACK TO GEORGE BUSH THE YOUNGER. HE WAS INVOLVED IN THAT SUCCESSFUL RUN FOR PRESIDENT IN 2000. THANK YOU FOR JOINING US TODAY. WHAT IS THE BEST OUTCOME FOR CONSERVATIVE REPUBLICANS IN THIS FISCAL TRAJECTORY OF THE NEXT 6, 7, AND EIGHT WEEKS? FOR THOSE THAT ARE FRUGAL AND HAVE FRUGAL CONSTITUENTS, WHAT IS THE BEST OUTCOME? REP. MCHENRY: IDEOLOGICAL CONCERNS ARE DIFFERENT WHEN YOU HAVE A HOUSE FIRE. WHAT WE HAVE IS A MAJOR HOUSE FIRE HERE, SO WE'VE GOT TO GET THAT RIGHT. THEN GET BACK ON SOLID FOOTING. FOR ME, I THINK THAT APPROACH IS HOW DO YOU GET PEOPLE BACK IN EMPLOYMENT IN SAFE AND EFFECTIVE WAYS. THE FIRST PART IS HEALTH SAFETY. WITHOUT HEALTH SAFETY, NOTHING OF MATTERS. WE HAVE TO HAVE SUBSTANTIAL FUNDS SO WE HAVE A PIPELINE OF TREATMENTS THAT HAVE BEEN BORNE OUT BY SCIENTIFIC PROOF, AS WELL AS POTENTIALLY A VACCINE. YOU GET THAT RIGHT, WHICH REQUIRES A SUBSTANTIAL AMOUNT OF GOVERNMENT MONEY WITH PRIVATE SECTOR INNOVATION, AND THEN YOU GET TO THE QUESTION OF A REHIRING BONUS AND TAX POLICY THAT INCENTIVIZES BUSINESSES TO GET BACK IN THE RISK BUSINESS. TO SAFELY REOPEN, TO TAKE THE PROPER RISKS, AND TO KNOW THEY HAVE A FOUNDATION UPON WHICH TO TAKE THAT RISK. I THINK THAT IS REALLY IMPORTANT, SO REHIRING BONUSES WOULD BE SUBSTANTIAL AND HELPFUL CON THAT -- WOULD BE SUBSTANTIAL AND HELPFUL. AND IN MAJOR PARTS OF THE COUNTRY, FEDERAL BENEFITS FOR UNAPPOINTED. I THINK TAPERING DOWN THAT UNEMPLOYMENT BENEFIT WOULD BE SMART POLICY. JONATHAN: ARE YOU GETTING FRUSTRATED BY THE LACK OF CLARITY AND DETAIL YOU'RE GETTING FROM THIS ADMINISTRATION IN THE MONTH OF JULY KAILEY: REP. MCHENRY: -- IN THE MONTH OF JULY? REP. MCHENRY: YES. WE SAW THE HOUSE DEMOCRATS PRODUCE A PARTISAN BILL THAT GOT NO WERE PUBLICAN BOATS. THEY EVEN LOST DEMOCRAT VOTES. SO THAT IS NOT A SERIOUS POINT OF DISCUSSION. WHAT WE WANT TO HEAR IS THAT AGENDA SO THAT WE CAN HAVE TRUMP ECONOMY 2. WE JUST CAME OUT OF THE BEST ECONOMY AND MOST OF OUR LIFETIMES. THE POLICY SET WE IMPLEMENTED THERE GAVE SUPPORT TO WHAT WAS HAPPENING IN THE PRIVATE SECTOR AND LIFTED US TO NEW HEIGHTS. LET'S PUT THAT AGENDA OUT. LET'S BE BOLD ABOUT IT. LET'S HEAR FROM THE WHITE HOUSE ON THE DETAILS SO THAT WE CAN IRON OUT THE POLICY ON THE HILL. THAT IS REALLY WHAT I WANT TO HEAR, AND IT HAS BEEN FRUSTRATING THAT WE HAVEN'T HAD THAT DETAILED SITE YET. JONATHAN: WHY ARE THEY DRAGGING THEIR FEET? IS IT MAKING IT DIFFICULT IN YOUR CONSTITUENCY TO TALK TO YOUR CONSTITUENTS ABOUT WHY THERE ISN'T A PLAN B ON THE MONTH OF JULY? -- A PLANNED BEYOND THE MONTH OF JULY? REP. MCHENRY: WE WERE SAYING THAT SUMMER WAS GOING TO TAKE THIS THING DOWN WITH THE FLU SEASON, AND THAT WAS JUST A COUPLE OF MONTHS AGO. WE HAD HEALTH EXPERTS TELL US NOT TO WEAR MASKS IN THE BEGINNING OF THE YEAR. SO THE IDEA THAT YOU ARE GOING TO SEE TWO MONTHS OR THREE MONTHS IN THE FUTURE IN THIS ENVIRONMENT IS REALLY HARD. I THINK THERE'S SOME UNDERSTANDING THAT WE WANTED TO BE HESITANT TO LAY OUT A BROAD POLICY PATH BEFORE WE ACTUALLY UNDERSTAND THE CONFINES OF THIS. NOW WE ARE IN JULY. WE NEED TO SEE THAT CLEARLY FROM THE ADMINISTRATION, AND FROM STATES AND LOCALITIES ABOUT SCHOOL REOPENING, BECAUSE THAT IS A VITAL ASPECT AS WELL. IF YOU DON'T HAVE CHILDCARE, IT IS VERY DIFFICULT TO GET BACK TO SOME SEMBLANCE OF NORMAL LIFE. LISA: YOU TALK ABOUT A LACK OF COHESION AND CERTAIN THE ABOUT WHAT HE TOLD POLICIES ARE GOING TO BE GOING FORWARD, AND YET YOU HAVE ALSO ADMONISHED FED CHAIR JAY POWELL FOR PERHAPS BLURRING THE LINES BETWEEN MONETARY AND FISCAL POLICY. SOME ARGUE THAT BECAUSE THERE HASN'T ANY FASTER FISCAL POLICY -- THERE HASN'T BEEN A FASTER FISCAL POLICY, THERE HAS BEEN A NEED FOR MONETARY POLICY TO BRIDGE THAT GAP. DO YOU THINK YOU HAVE BEEN TO SLOW, AND HAVE FORCED THE FED TO ACT? REP. MCHENRY: NOT YET. IF WE SCREW THIS UP IN LATE JULY AND AUGUST, I THINK THAT WOULD BE THE CASE, BUT I DON'T SEE THAT WE HAVE THE SECRETARY OF THE TREASURY BEFORE MY COMMITTEE AND THE CHAIR OF THE FEDERAL RESERVE, I ALWAYS REMIND THEM THAT THERE IS THIS WALL BETWEEN MONETARY FOLLOW -- MONETARY POLICY AND FISCAL POLICY, AND THE HILL SHOULD NOT GET INTO THE WEEDS OF MONETARY POLICY, NOR SHOULD THE FED CHAIR DIRECT FISCAL POLICY. I'VE GOT TO TELL YOU, JAY POWELL GETS HI MARK FOR HIS FAST ACTION AND BEING VERY FORESIGHTED. HIS FORESIGHT IS ABSOLUTELY AMAZING IN THIS ENVIRONMENT. WHEN THEY LAID OUT MAIN STREET LENDING, IT TOOK A LONG TIME TO GET THAT RAMPED UP, BUT IT WAS A VERY CLEAR SIGN OF POLICYMAKERS ON THE HILL THAT WE'VE GOT THE LENDING PIECE. YOU GUYS GET THE STIMULUS PIECE. YOU GET PEOPLE CONNECTED WITH THEIR EMPLOYMENT AND GET PEOPLE OFF THE END EMPLOYMENT ROLES, OR GIVE THEM SUPPORT SO THEY CAN GET BACK INTO THE ECONOMY. THAT IS SOMETHING WE HEAR CLEARLY. I THINK THEY PICKED THEIR LANE SMARTLY. I THINK THEY HAVE STAYED IN THEIR LANES SMARTLY, HOWEVER, REALLY AGGRESSIVELY. WE WILL HAVE TO HAVE THESE PROGRAMS PULL BACK FROM THE ECONOMY, BUT AT THIS STAGE, WE ARE STILL TRYING TO PUT THIS HOUSE FIRE OUT. TOM: WE NEED TO GET DOWN TO ASHEVILLE AND DO A REMOTE DOWN THERE. TEAM "SURVEILLANCE," ASHEVILLE, NORTH CAROLINA. I CAN SEE IT NOW. PATRICK MCHENRY, THANK YOU SO MUCH. THIS IS SO IMPORTANT, BUT HE IS IN A DISTRICT FROM ASHEVILLE OVER TO THE EAST OF RURAL NORTH CAROLINA. HOW IS THE PRESIDENT HOW ARE VICE PRESIDENT BIDEN GOING TO DO IN THAT DISTRICT COME NOVEMBER? JONATHAN: AND WHAT YOU GOT THERE WAS JUST A LITTLE BIT OF A HINT, JUST A LITTLE FLAVOR OF THE DIVISION SLOWLY EMERGING, THE FRUSTRATION BETWEEN REPUBLICAN CONGRESSMEN AND WOMEN AT THE MOMENT DOWN IN WASHINGTON, D.C. LOOKING FOR LEADERSHIP ON THE NEXT FISCAL STEPS, AND A REAL LACK OF CLARITY ON WHAT THEY MIGHT. I THINK WHAT HE SAID WAS SMART. LOOK AT TAPERING ENHANCED UNEMPLOYMENT BENEFITS, NOT JUST LETTING THEM EXPIRE. THESE ARE THE PLANS WE NEED TO SEE QUICKLY. TOM: THERE'S NO QUESTION ABOUT THAT. THAT TAPERING IDEA YOU WERE DEAD ON ABOUT, BUT IT IS GOING TO BE INTERESTING TO SEE THE OVERLAY OF THE ELECTION INTO THIS FRACTURED CONTENTION SEASON. JONATHAN: FROM NEW YORK CITY THIS MORNING, GOOD MORNING TO YOU ALL. ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. THIS IS "BLOOMBERG SURVEILLANCE ." JONATHAN: FROM NEW YORK CITY, THIS IS "BLOOMBERG SURVEILLANCE." ALONGSIDE TOM KEENE TOGETHER WITH LISA ABRAMOWICZ, I AM JONATHAN FERRO. CHECKING IN YOUR EQUITY MARKETS. EQUITY FUTURES UP FOUR POINTS, UP A LITTLE MORE THAN .1%. NO DRAMA IN THE EQUITY MARKET. QUITE CHOPPY OVERNIGHT. IN THE BOND MARKET, STICKY OVER THE LAST SEVERAL WEEKS. YIELDS LOWER. HIGHER THIS MORNING NOT EVEN TWO BASIS POINTS 2.60 6% ON U.S. 10 YEAR. THE POUND A LITTLE BIT FIRMER, UP AGAINST THE U.S. DOLLAR AS THE CHANCELLOR UNVEILS THE NEXT STEPS FOR FISCAL POLICY AND UNITED KINGDOM AND BABY ELSEWHERE AS WELL, INCLUDING THE UNITED STATES -- AND MAYBE ELSEWHERE AS WELL. WE ARE ALSO ON BANKRUPTCY WATCH. NOW WE HAVE ANOTHER ONE. TOM: YOU SEE IT NATIONWIDE. I DO NOT HAVE THE STATISTICS IN FRONT OF ME BUT THE BANKRUPTCIES HAVE EXPLODED. THIS IS BROOKS BROTHERS. THEY TAKE GREAT PRIZE IN MAKING THEIR TIES ON LONG ISLAND. ON SEPTEMBER 11, 2001, BROOKS BROTHERS IN BOSTON, THIS SUIT IS NOT BROOKS BROTHERS. IT IS OXFORD, CHICAGO. BROOKS BROTHERS NOW IN BANKRUPTCY. NEIMAN MARCUS AS WELL. SOMEONE WHO HAS BEEN A GREAT STUDENT OF THIS HAS BEEN JEREMY SIEGEL. HE IS SOMETHING. HE IS AT WHARTON WORKING WITH LARRY KUDLOW FOR YEARS AT CNBC. THIS IS JEREMY SIEGEL, WHO WORKED WITH ROBERT SHILLER YEARS AGO AT M.I.T.. HE HAS BEEN A GREAT SUPPLY-SIDER , SOMEONE LOOKING AT THE FREE MARKETS. HIS FRIEND ROBERT SHILLER HAS GONE A DIFFERENT WAY. WE ARE THRILLED THE GENTLEMAN FROM MORTON COULD JOIN US. THANK YOU FOR JOINING US. ROBERT SHILLER TALKED ABOUT FINANCE AND A GOOD SOCIETY. IS THIS MODERN CAPITALISM IN PANDEMIC PROVIDING FOR A GOOD SOCIETY? JEREMY: WOW. DID NOT EXPECT TO BE HIT BY THAT QUESTION NUMBER ONE. [LAUGHTER] LET'S PUT IT THIS WAY. FORTUNATELY OR UNFORTUNATELY, I THINK IN SOME WAYS UNFORTUNATELY, THE PANDEMIC, THE SHUTDOWNS HAVE SHIFTED ADVANTAGE TO LARGE CORPORATIONS. THE TARGETS, THE WALMART, THOSE ABLE TO STAY OPEN, TO HAVE THE INVENTORY, TO PROVIDE THE NECESSARY PROTECTIONS AGAINST THE MOM-AND-POP STORES. THEY ARE THE ONES THAT ARE SUFFERING. WE SEE THE MARKET VALUE OF -- HOLDING UP EXTREMELY WELL, WHILE WITH WE HAD A STOCK MARKET FOR MOM-AND-POP STORES IT WOULD BE IN THE SUBBASEMENT. TOM: THIS IS SUCH AN IMPORTANT CONVERSATION. I GIVE GREAT CREDIT TO CATHERINE MANN AT CITIGROUP FOR DRIVING FORWARD THIS TO MAKE. -- DRIVING FORWARD THIS DEBATE. ARE WE ARE BECOMING TOO MONOPOLISTIC WHERE WE WILL SEE A CONSOLIDATION OF COMPANIES TO BIGGER AND BIGGER ENTITIES? JEREMY: THERE HAS BEEN A SHIFT, AND OBVIOUSLY YOU'RE GOING TO SEE SOME OF THE BIG COMPANIES THAT HAVE RESOURCES BUY THE SMALLER COMPANIES. I THINK THAT IS ALSO TRUE. WE ALSO KNOW WE CAN LOOK BEYOND THIS CRISIS TO NEXT YEAR, WHERE I THINK BY VERY EARLY NEXT YEAR, MAYBE EVEN THE END OF THIS YEAR, EFFECTIVE VACCINES. IT WILL COME BACK, BUT IT WILL COME BACK WITH A SHIFT TOWARDS THE BIGGER COMPANIES HAVING ADVANTAGE, AND PERHAPS WE IN PUBLIC POLICY SHOULD THINK ABOUT MAKING SURE SMALL BUSINESSES GET CREDIT TO REOPEN AND NOT CEDE ALL GROUND TO THOSE LARGE RETAILERS. LISA: YOU RAISE A GREAT QUESTION, WHICH IS HOW DO WE PRESERVE DYNAMISM IN AN ECONOMY HIT BY A PANDEMIC WHICH DOES SEEM TO BE ACCELERATING. NEW JERSEY'S GOVERNOR JUST ORDERED ALL NEW JERSEY TO WEAR MASKS OUTDOORS TO PREVENT THE OUTBREAK THAT DOES SEEM TO BE PICKING UP IN THAT STATE. WHAT IS THE CONSEQUENCE ON PRODUCTIVITY, ON GROWTH, ON THE DYNAMISM OF THE U.S. ECONOMY IF THERE IS NOT AN INCENTIVE TO SWAY THE POWER BACK TO SMALLER BUSINESSES A BIT MORE? JEREMY: THE QUESTION OF PRODUCTIVITY IS AN INTERESTING ONE. I BELIEVE THAT WE ARE GOING TO SEE A SURGE OF MEASURED PRODUCTIVITY BECAUSE I BELIEVE, AND THERE ARE TWO SIDES TO THE COIN. I THINK A LOT OF THESE PEOPLE WHO HAVE BEEN LAID OFF WILL NOT BE HIRED BACK BECAUSE CORPORATIONS WILL SAY I DID NOT NEED THEM. I DID NOT NEED TO INCUR THESE EXPENSES. WE ARE TALKING ABOUT BUSINESS TRAVEL AND BUSINESS MEETINGS. I CAN DO THEM FREE ON ZOOM AND STILL PRODUCE THE OUTPUT I DID BEFORE. THAT IS ONE MEASURE THAT PRODUCTIVITY. OUTPUT PER UNIT INPUT. YOU ARE TALKING ALSO ABOUT DYNAMISM AND DISCOVERY AND INVENTION. LET'S HOPE THAT DOES NOT GET IMPEDED. SOME OF MY CONTACTS IN THE VENTURE-CAPITAL WORLD SAY IT IS PROCEEDING AND MONEY IS STILL AVAILABLE FOR INNOVATION, IT IS INNOVATIVE COMPANIES THAT ARE STILL GETTING PLAYS. LET'S HOPE THAT STAYS THERE, AND THAT CONNECTS WITH IMMIGRATION. AS A PROFESSOR, WE ARE VERY WORRIED ABOUT SOME OF THE RECENT ICE RULINGS, IT IS ALL DOOM, STUDENTS CANNOT STAY HERE. THERE ARE A LOT OF VERY GOOD ISSUES. MEASURED PRODUCTIVITY AS STANDARD MAY INCREASE OVER THE NEXT SEVERAL YEARS BECAUSE OF THIS PANDEMIC. LISA: LET'S BRING IT DOWN FROM THE 30,000 FOOT VIEW OF OUR ECONOMY TO THE HERE AND NOW, WHICH IS THAT PEOPLE ARE SCARED FOR THEIR FUTURES AND THEIR JOBS AND THEY ARE STOCKPILING CASH AT A RECORD PACE. YOU BELIEVE AND YOU'VE BEEN REPORTED AS SAYING THERE IS A BOOMING CONSUMER SPENDING. CAN YOU SQUARE THAT WITH THIS IDEA WE WILL SEE RESUMPTION IN CORPORATE SPENDING? WE ARE SEEING AN INCREASE IN SLOWDOWN OF THE U.S. ECONOMY? JEREMY: I WAS SCHOOLED, MY FIRST JOB WAS AT AS A PROFESSOR AT THE UNIVERSITY OF CHICAGO. I WAS HONORED TO BE A COLLEAGUE OF PROFESSOR MILTON FREEMAN. I REMEMBER HIM TELLING ME FED EXPANSION IS VERY IMPORTANT, BUT LOOK AT THE MONEY SUPPLY, WHICH IS THE SUPPLY OF BANK ACCOUNTS, OF TRANSACTIONS ACCOUNTS, DEMAND DEPOSITS, CHECKING ACCOUNTS, PAYROLL DEPOSITS, AND ALL THE REST. I HAVE SEEN AN EXPLOSION LIKE WE HAVE NOT SEEN IN THE POSTWAR PERIOD. THE M1 MONEY SUPPLY IS UP 34% FROM THE FIRST WEEK OF MARCH. JUST TO GIVE YOU A PERSPECTIVE, IN THE ENTIRE GEAR -- IN THE ENTIRE YEAR THAT FOLLOWED THE LEHMAN CRISIS, UNTIL SEPTEMBER OF 2010, THE MONEY SUPPLY WAS ONLY UP 17%. THIS 34% IS JUST THE BEGINNING. WE'LL BE PUTTING MORE STIMULUS BACK IN. I THINK IT IS REPRESSED NOT BECAUSE TRAVEL IS NOT TAKING PLACE, RESTAURANTS ARE CRIPPLED, AND ALL OF THE REST, BUT I'M THINKING TOWARDS 2021. THIS MONEY AND PEOPLE'S ACCOUNTS IS GOING TO BE SPENT. NOT ALL THE PEOPLE WILL BE HIRED BACK BECAUSE AS I SAY A LOT OF COMPANIES CAN SAY I CAN STILL PROVIDE THE OUTPUT WITHOUT THEM. NONETHELESS, I THINK WE ARE GOING TO HAVE INFLATION NEXT YEAR AND I KNOW THAT IS NOT AT ALL CONSENSUS FORECAST, BUT IN 2021, 2022, WITH A STRONG CONSUMER SPENDING. TOM: THANK YOU SO MUCH. JEREMY SIEGEL WITH US. TOO SHORT A VISIT WITH MORTON SCHOOL AT THE UNIVERSITY OF PENNSYLVANIA. I LOOK AT ALL WE ARE TALKING ABOUT, AND PROFESSOR SIEGEL TOLD US TO WATCH THIS OVER THE YEARS. ALL OF THIS PANDEMIC AND ALL OF THIS CRISIS, THE TRILLIONS OF DOLLARS OF DEBT WE HAVE WILL TEST THE UNDERLYING THEORIES THAT HINGE EVERYBODY TOGETHER IN ECONOMICS, FINANCE, AND INVESTMENT. YOU SAW THAT IN THE HOUSE OF COMMONS, WHERE THERE IS A THEORY AND ACTION. I AM UNSURE IF YOU WILL SEE SOMETHING AS COHESIVE OUT OF WASHINGTON. JONATHAN: SOMETHING I SAID EARLIER AND I WILL REPEAT, THIS IS AN OBSERVATION ABOUT THE PRESENT, NOT A JUDGMENT ABOUT THE FUTURE. THE BOND MARKET IS STILL WIDE OPEN FOR FISCAL AUTHORITIES TO DO MORE. AT SOME POINT YOU TEST THE ABILITY OF A BOND MARKET TO ABSORB THAT. WHEN IT COMES TO THE DEBT, YOU HAVE TO DRAW A DISTINCTION BETWEEN THE DEBT BUILT UP ON THE CENTRAL BANK BALANCE SHEET, AND THE DEBT BUILT UP IN THE PRIVATE SECTOR. COMPANIES ARE TAKING ON A LOT OF DEBT NEXT -- A LOT OF DEBT TO GET THROUGH THE NEXT SEVERAL MONTHS AND THEY'LL HAVE TO PAY THAT DOWN. THAT WILL BE A FOCAL POINT FOR THE YEARS TO COME. THE DEBT BUILT UP IN THEIR ABILITY TO PARE IT DOWN. TOM: YOU READ ABOUT COMPANIES ON PROJECTS TO DO THAT. DOMINION RESOURCES, THAT IS WHAT THEY WILL DO WITH A LARGE PART OF THE PROCEEDS FROM WARREN BUFFETT AND BERKSHIRE HATHAWAY. JONATHAN: LOOKING AT THE EQUITY MARKET, FUTURES TURNING A LITTLE BIT LOWER. BASICALLY UNCHANGED ON THE S & P 500, GOING NOWHERE INTO THE OPENING BELL AROUND 50 MINUTES AWAY. FROM NEW YORK CITY, ALONGSIDE TOM TOGETHER WITH LISA ABRAMOWICZ I'M JONATHAN FERRO. ON BLOOMBERG RADIO AND BLOOMBERG TV, THIS IS "BLOOMBERG SURVEILLANCE." RITIKA: WITH THE FIRST WORD NEWS, I AM RITIKA GUPTA. THE CLOCK IS TICKING ON THE U.S. DECISION TO LEAVE THE WORLD HEALTH ORGANIZATION. PRESIDENT TRUMP HAS GIVEN THE ORGANIZATION ONE YEAR NOTICE IT PLANS TO QUIT. CRITICS SAY THE MOVE IS AIMED AT DISTRACTING FROM THE ADMINISTRATION'S FAILURE TO CONTROL THE DISEASE. MANY AMERICANS PLAN TO SPEND LESS THAN BEFORE ON THE CORONAVIRUS PANDEMIC. MORE THAN 40% OF ADULTS SAY THEY WILL CUT BACK ON SOME OF THE DISCRETIONARY SPENDING THAT STRUGGLING RETAILERS NEED ACCORDING TO A NEW SURVEY FROM CREDIT CARDS.COM. IT IS THE BOOK THE TRUMP FAMILY TRIED TO STOP BEING PUBLISHED. BLOOMBERG HAS OBTAINED A COPY OF A TELL-ALL BOOK WRITTEN BY PRESIDENT TRUMP'S ESTRANGED KNEES. -- ESTRANGED NIECE. AMONG OTHER THINGS, SHE CLAIMS PRESIDENT TRUMP PAID SOMEONE TO TAKE THE COLLEGE ENTRANCE EXAM FOR HIM. FACEBOOK IS OUT WITH ITS THIRD CIVIL-RIGHTS AUDIT REPORT. AUDITORS SAY THE SOCIAL NETWORK HAS A LONG WAY TO GO. ON THE PLUS SIDE, THE AUDITORS SAY FACEBOOK HAS DEEPENED ITS RELATIONSHIP WITH CIVIL-RIGHTS GROUP AND LEADERS. THE REPORT DISAGREES WITH THE COMPANY WHEN IT COMES TO FAT CHECKING POLITICIANS. A NUMBER OF CIVIL RIGHTS LEADERS MET WITH MARK ZUCKERBERG AND CALL THE MEETING DISAPPOINTING. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > I DO NOT THINK ANYONE EXPECTS THE U.S. TO TRY TO ENGINEER A BREAK TO THAT PAGE ANYTIME SOON. I THINK IT WOULD HAVE SIGNIFICANT BLOWBACK THROUGH THE FINANCIAL SYSTEM TO THE U.S. ECONOMY. IT IS SENDING A SIGNAL TO THE GLOBAL FINANCIAL SYSTEM THAT THE U.S. IS SERIOUS ABOUT RAMPING UP PRESSURE ON CHINA. JONATHAN: THOSE COMMENTS FROM RUPERT HARRISON AT BLACKROCK FOLLOWING A REPORT THAT OFFICIALS OF THE TRUMP ADMINISTRATION ARE WEIGHING OPTIONS TO UNDERMINE THE HONG KONG DOLLAR PEG. FROM NEW YORK CITY, ALONGSIDE TOM KEENE, TOGETHER WITH LISA ABRAMOWICZ, I'M JONATHAN FERRO. ABOUT TO STEP AWAY TO GET YOU UP TO SPEED ON THE OPENING BELL AS WE COUNT YOU DOWN TO THE OPENING. LOOKING TO CATCH UP WITH TONY RODRIGUEZ. SIGNS OF FRAGILITY START TO COME TO THE SURFACE AND THE RALLY OF THE LAST SEVERAL MONTHS. TOM: NO QUESTION ABOUT THAT. IT WILL BE INTERESTING TO FOLLOW INTO THE OPEN AT 9:00 ON BLOOMBERG TELEVISION. WE WILL BE WITH PAUL SWEENEY ON BLOOMBERG RADIO. EXTRAORDINARY WHAT WE ARE SEEING IN TECHNOLOGY. RIGHT NOW, WITHOUT QUESTION, OUR INTERVIEW OF THE DAY, IF NOT OF THE WEEK ON THE SOCIAL FABRIC OF THIS NATION. IT WOULD NORMALLY BE AN INTERVIEW ON TRADE WITH A FORMER AMBASSADOR ON TRADE WITH PRESIDENT OBAMA, MR. KIRK OF TEXAS, BUT THAT IS NOT THE CASE. WE NEED TO TALK TO RON KIRK ABOUT THE REAGAN HIGH SCHOOL IN AUSTIN, TEXAS, ABOUT THE MAYOR OF DALLAS, TEXAS, AND WE NEED TO TALK ABOUT THE PATH FORWARD. WE ARE HONORED TO HAVE YOU WITH US TODAY. WE ARE SEEING IMAGES OF STATUES TORN DOWN. THEY WILL NOT DO THAT IN FRONT OF THE ALAMO, BUT WE ARE SEEING IMAGES COAST-TO-COAST OF STATUES BEING PULLED DOWN. HOW DO WE RESURRECT THE NEW STATUES, HOW DO WE REBUILT THIS NATURE IS WITH STATUES OUR KIDS CAN BE PROUD OF? RONALD: FIRST OF ALL, THANKS FOR HAVING ME. WE ARE TAKING A TURN I DID NOT EXPECT, BUT NOT ONE I HAVE NOT SPOKEN TO QUITE A BIT OVER THE LAST SEVERAL MONTHS. FIRST OF ALL, THE MORE IMPORTANT JOURNEY IS NOT ABOUT WHICH STATUES WE REPLACE WHAT WITH. THE BAKER JOURNEY IS WHAT IS IN OUR HEARTS AND WILL WE GET TO THE SYSTEMIC MATTERS THAT HAVE ALLOWED, FOR THE MOST PART, THE OVERWHELMING MAJORITY OF BLACKS AND LATINOS AND POOR PEOPLE IN THIS COUNTRY'S TO BE LOCKED OUT OF THE ECONOMIC SYSTEM? WHILE YOU MENTIONED THAT I GRADUATED FROM JOHN REAGAN HIGH SCHOOLS, A SCHOOL NAMED FOR A CONFEDERATE GENERAL, MY CONCERN IS IF WE SPEND MORE ATTENTION ON TAKING DOWN THE NAMES OF THE STATUES, WE DO NOT ADDRESS THE SYSTEMIC PROBLEM WE HAVE IN SOME OF OUR POLICE COMMUNITIES OVER THE FAIR TREATMENT OF BLACKS AND POOR PEOPLE, IF WE DO NOT ADDRESS THOSE UNDERLYING FACTORS THAT HOLD PEOPLE OF COLOR BACK ECONOMICALLY, WE WILL HAVE ONLY PUT UP NEW DRAPES AND DECLARED VICTORY AND MOVE FORWARD. I AM MUCH MORE INTERESTED IN ATTACKING THE CORE ISSUES THAT HAVE PLAGUED THIS COUNTRY, WHETHER THE LAST 70 YEARS OR 200 YEARS, BUT FAR TOO LONG. TOM: I WILL BE BLUNT. YOU GREW UP IN THE TOUGH AS NAILS POLITICS OF TEXAS AS IN RICHARDS GAVE YOU GUIDANCE. THERE IS ALWAYS BEEN A GRACE UNDERNEATH THE TOUGHNESS OF TEXAS POLITICS. HOW DO WE GET THAT PRAISE BACK TO WASHINGTON AFTER A ONE TERM PRESIDENT TRUMP OR AFTER A TWO TERM PRESIDENT TRUMP? HOW DO WE GET THE GRACE BACK AT THE FEDERAL LEVEL? RONALD: THIS IS A BUSINESS SHOW, NOT A POLITICAL SHOW, BUT IF NOTHING ELSE, PRESIDENT TRUMP HAS TAUGHT US ALL THAT THE TONE AT THE TOP MATTERS. WHAT PEOPLE ARE REALLY CARING ABOUT IS THE RESTORATION OF GRACE AND CIVILITY, AND THAT WILL BE A LONG PATH IN AND OF ITSELF. THEN YOU HAVE TO START WITH THE BELIEF THIS HAS TO BE A ONE TERM PRESIDENT. HE DOES NOT HAVE IT WITHIN HIS DNA TO EVER DEMONSTRATE EVEN A MODICUM AMOUNT OF GRACE OR FORGIVENESS. OR RECOGNITION OF WHEN HE IS WRONG. VOTERS, THE AMERICAN PEOPLE HAVE TO RECOGNIZE DONALD TRUMP DID NOT START THIS DEGRADATION OF OUR CIVILITY. HE DID BRING TO THE SURFACE AND GIVE COVER TO A LOT OF AMERICANS WHO ARE AFRAID OF OUR CHANGING DEMOGRAPHICS, AND WE ARE SEEING THAT ACROSS THE COUNTRY. ALL YOU HAVE TO DO IS LOOK AT ANY OF YOUR NEWSFEEDS AND SEE ONE MORE INCIDENT OF A BLACK FAMILY, AND ASIAN FAMILY, A HISPANIC FAMILY BEING ATTACKED. THERE IS A BOLDNESS I DO NOT THINK PEOPLE WOULD HAVE DEMONSTRATED IF THEY WERE NOT GETTING OVER DIRECTION FROM THE WHITE HOUSE. THE OTHER THING I'VE TOLD PEOPLE IS WE ARE RESPONSIBLE FOR THAT. IF YOU WANT MORE CIVILITY, IF YOU WANT POLITICAL LEADERS TO FIND THE COMMON GROUND, STOP VOTING FOR THESE JERKS WHO GO TO WASHINGTON, REFUSED TO COMPROMISE, SEE ONE ANOTHER AS ENEMY COMBATANTS, VERSUS ALL OF US WHO CARE ABOUT AND LOVE THIS COUNTRY AND WANT IT TO LIVE UP TO OUR IDEALS AND ARE WILLING TO FIGHT FOR THAT. IT STARTS WITH THE POWER OF THAT VOTE. I CHALLENGE THE AMERICAN PEOPLE TO VOTE FOR THE KIND OF POLITICIANS YOU SAY IN YOUR HEART YOU WANT TO SEE REPRESENTING US. DO NOT STOP THERE. EXAMINE YOUR OWN BEHAVIOR IN THE WORKPLACE AND IN CORPORATE AMERICA AND SEE WHETHER OR NOT WE ARE LIVING UP TO THOSE IDEALS. LISA: AMBASSADOR, SINCE THIS IS A BUSINESS SHOW I WANT TO GET A QUICK QUESTION IN. GIVEN THE FACT WE HAVE SO MUCH EMPHASIS ON SUPPLY CHAINS IN THE WAKE OF THE PANDEMIC, DO YOU THINK WE NEED A DIFFERENT TRADE POLICY WITH THIS IN MIND IN ORDER TO BRING MEDICAL SUPPLY PRODUCTIONS AND OTHER ESSENTIAL SERVICES THAT UNITED STATES? RONALD: SURE. WE WILL TALK ABOUT PRESIDENT LOPEZ IN MEXICO TO THE U.S.. THIS IS WHERE TRADE POLICY DOES MATTER. WHILE THE NEW NAFTA IS AN IMPROVEMENT, IT HAS TAKEN THE OLD CAR IN THE GARAGE THAT YOUR PARENTS GAVE YOU AND PUTTING A NEW ENGINE, PUTTING NEW BELLS AND WHISTLES VERSUS A NEW ARCHITECTURE LIKE THE TRUMP ADMINISTRATION THREW AWAY WITH THE TPP THAT WOULD ALLOW US TO HAVE ACCESS, WHETHER IT IS MEDICAL SUPPLIES OR TECHNOLOGY OR RAW MATERIALS WE NEED TO DRIVE OUR ECONOMY, AND MORE IMPORTANTLY, GIVE US FREE ACCESS TO THESE NEW EMERGING MARKETS THAT DESPERATELY WANT TO GROW USING THE BEST OF WHAT WE MAKE IN AMERICA. THIS PANDEMIC HAS DEMONSTRATED THE FOLLY OF HAVING A TARIFF POLICY THAT ENDS UP COMPROMISING OUR ABILITY TO ACCESS THE TOOLS WE NEED TO FIGHT THIS DISEASE. TOM: THESE ARE MANY CONVERSATIONS THAT WE NEED LONGER CONVERSATIONS. RON KIRK, WE HAVE TO GET YOU BACK ON AGAIN SOON. THANK YOU SO MUCH FOR JOINING US. HE HAS A FORMER MAYOR OF DALLAS. LOTS COMING UP. JONATHAN FERRO WILL DRIVE FORWARD ON TELEVISION, WE WILL DRIVE FORWARD ON RADIO WITH THE MARKETS REFUSING TO GO DOWN. I WILL ALSO POINT OUT THE SEARCH WE SEE IN GOLD. STAY WITH US. THIS IS BLOOMBERG. ♪

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