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David it has been up and down even though we had the amazing quarter we just ended. As we go into the second half of the year, you say that maybe perhaps some tea leaves that indicate there may be a shoe to drop. Why is that . Abigail i look at a lot of charts each day and there is just nuances in some of these charts that suggest that some investors are preparing for the possibility of some sort of even shock, an event that most are not anticipating. This is very unlikely. One thing to really keep in mind is the dollar index. There is a lot of indication that the dollar is going to continue declining. The dollar is higher by more than 2 and you have the s p 500 down by equal amounts. This is the real driver for stocks. Drop, as the does economy improves. More so on fed liquidity, that puts pressure on the dollar, you are likely to see stocks and other risk assets go higher. If the dollar rises and there are technical reasons to think you can see the dollar index go sharply higher, that could be the reverse. Really some uncertainty out there. Today, it does seem like the bulls are trying to take it. David we will take it where we can get it. Lets talk about the jobs numbers we just mentioned. 4. 8 million jobs created. Want to bring in sick professor Teresa Ghilarducci. Elcome give us your take on these numbers. Are we back faster than economists thought we would . The numbersink probably align with expectations because the economists are who said we should be a lot worse and forgot the surveys taken just in the first two weeks of june. If we had a picture of the entire month, when the governors of certain states, florida, texas and parts of california, had to reshut down the economy, the numbers would have looked differently. What we economists are seeing now is through the unemployment the, to what is causing economy to get a little bit better, especially since april, it is not actually the governors decisions to reopen or not, it is what the government has done from the fed in congress to put money in the pockets of people who lost their jobs. The short answer to that is that the unemployment really doesnt matter as much. It is the loss of income that matters. If we can restore income for people who have lost their jobs and Small Businesses that have lost their business, for a while, we can actually have no tradeoff between keeping people safe and keeping the economy going. I really worried that these numbers are going to be seen as good and that congress doesnt understand the unemployment expand the underemployment insurance. David there are two ways you can restore that, one is through extending some of the benefits by congress. There is this cliff we are coming up to, particularly Unemployment Benefits at the end of july. On the other hand, we could also have the demand up and people go out and spend more money. That really raises questions as estate starts to close down. A lot of it was an increase in things like hospitality and leisure. Teresa im looking at the numbers way down right now in professional and business services. A lot of health care and elected services. Probably the stupidest way to open the economy is to try to get people to spend money. Because the leisure and hospitality jobs are the highest covid19 risk jobs for very little gdp multiplier boost. They are lousy jobs and you just dont get the bang for the risk you are taking in getting sick. You need the income in order for people to go out and spend. I would much rather see people take their income and go to the dentist or go back to their doctor for their wellness checkup. That would have a much bigger effect on the economy. Is there anything we can do to really direct it one place or the other . You said the stupidest way is to go to leisure and hospitality. If you want to go a smarter route, is there anything we can do to put a thumb on that scale . The other cliff coming up is the losses in state and local governments. Governmentscal desperately need more money now to get people back to school. We now have reduced the classes by 75 , meaning k12 kids are going to be juggled about coming back to school. We are actually going to need to hire bartenders and waitresses to work in the schools and help everybody go back to school. If we dont reopen k12, that is where the first dollars should be spent, we are locking a lot of parents out from working. We need to fix these structural issues that have come about because of the peculiarity of this virus. It is so unlike any other recession. To actuallyds target money for state and local governments. David we heard from secretary mnuchin today saying maybe there should be more federal support for schools. You are saying that is a good idea. Never i would have thought i would ever say this, but i stand arm in arm with secretary mnuchin. Focusedhe has been very in a very practical way on how to get through this virus. The hat is one of where the first dollars should be spent. The other one is contact tracing. Economists are really following the overall edges. Testogists say we have to and isolate those who are infectious away from the susceptible until we get a vaccine. That just takes person power. We do it every 10 years with census papers. We now need other numbers. We have a way of getting those extra numbers. Remember econ 101 where the economy is really composed of consumer spending, investment spending, government spending. We really should in the next six or seven months shift away from spending too a little more government spending. We have got to get people back to work and get their kids back in school. We need to keep incomes going. Incomes are going to the bars, for sure a little bit. That is why you will see jobs come back, but they also went to landlords and banks to pay off their loans. Bankis one of the reasons stocks are up because we havent seen the default yet. Congress really focuses their spending on getting k12 back and running. Congress should consider taking over the Medicaid Budget from state and local governments. You could release a lot more funds there and we should extend ui benefits. David really great to have you with us. That is Teresa Ghilarducci from the new school of social earch. Coming up next, we will talk with robert reich about how the pandemic is maybe transforming the labor market. That is coming up next on balance of power. The spectacular number and it helps the overall situation enormously. That is really the key point. We have created a lot of jobs in the last couple of ons and the trends continue. Months in the trends continue. David that was larry kudlow speaking earlier to bloomberg about the encouraging job numbers. We welcome now the former secretary of labor, robert reich. He is also the author of a new book. For joining much us. You heard larry kudlow say this is really good news. How do you interpret these jobs numbers . Sec. Reich the trend is certainly encouraging relative demand april, but we are still 15 million jobs and let me repeat that because sometimes, the numbers just are overwhelming. 15 million jobs below what we were in february. This little increase in jobs is good. It is better than not having it, but i also want to bring to your attention into viewers attention and listeners attention, that a viewer of labor Statistics Survey was done before the current spike, the new spike in viruses in california and texas and arizona and many other places. The real problem here is that the coronavirus is calling the shots. It has to call the shots. People are not going to go into malls and two airplanes and do a lot of other things until they feel safe. Unfortunately, with this new spike, we are heading in exactly the wrong direction. Yesterday, 52,000 new cases. We have not had that many new cases in the united states. The record before had been 50,000 new cases. Cases in one2,000 day, which is more than europe put together, you are heading in the wrong direction. Not only in terms of the economy, but in terms of Public Health and Public Confidence and all of the basic ingredients in what a good life should be. David if you look at these jobs numbers, which you say the trend is a nice trend, two months exceeding expectations. A lot of the gains come in areas most susceptible to the reversal of the reopening. What is the smartest thing to do in terms of job creation in dealing with this pandemic . Sec. Reich if you are an employee, and you are furloughed and you are getting paid and you are furloughed, you are in a pretty good position. If you are in an employee and you can work remotely and you are getting paid to work remotely, you are fine. My concern is that you have these two other very big groups of americans. One who are socalled essential workers and working in inehouses and factories and hospitals, a lot of these people are susceptible and are getting the virus in very large numbers, in hotspots and are infecting other people. We are not doing what we need to do as a nation, not only in terms of contact testing and tracing, but also in terms of providing these people with adequate protection. Occupational Safety Health administration when i used to supervise is not doing their job. They ought to be establishing National Standards right now for maintaining distance at work, for masks, for sanitizers, for all sorts of other ways of preventing these essential workers from getting sick. The second group of workers we have been talking about, people unemployed but also underemployed. We have come across the country, millions of people, about 4 Million People getting paid less than they were paid before because employers know that unemployment is very high and they can squeeze their workers. We have about 6 Million People who are working fewer hours than they were working before even though they are still employed. We have got many millions of americans who are working parttime, who would rather be working full time. They cant find jobs. And then, we have a very large group estimated to be about seven to 8 Million People who are too discouraged to even look dont want toey look for work because they are understandably worried about catching the coronavirus, covid19. These people are not even counted as unemployed. The bureau of labor statistics doesnt recognize this very large group of people who are not wanting to go to work right now as unemployed. Many of them, if they are furloughed, they are called and they dont go back, they are not collecting Unemployment Insurance. Other thingadd one to this, a very disturbing brew. States that had, in effect, moratoriums on evictions, those states are now ending their Eviction Moratoriums. Has hadral government in place and Eviction Moratorium on subsidized housing that ends on the 31st of july. Extra Unemployment Benefits end on the 31st of july, just a few weeks from now. There has been no movement in congress to renew those, particularly in the senate, although the house has renewed them. The senate has not. This is going to cause huge problems for people and a great deal of harm if these are not renewed. David lets talk about the sorts of people that are most vulnerable. The people you just described, whether they have lost their jobs or are in danger or are on the front lines in jobs that make them come into contact with one another a fair amount. This virus looks like it is going to be with us for some time to come. Do we need to be thinking about how to protect these people over the longer term . Ultimately, do we need to think about retooling them so that they are not as exposed . David the first and most important thing is to make sure they survive and their families survive. They have a roof over their heads and they are not going hungry. The direction we are going in right now with the virus increasing again and all of these benefits running out, our first worry should be that these people and their families are going to be in peril. In the end of july, in august, in september, the next big question is what are they going to do if, as we expect, the virus continues through the fall. I think that we do have to enable people to work remotely. More people are going to have to work remotely. Employees employers are going to have to figure out how to enable people to work remotely and if they cannot, we have got to get National Standards with regard to safety and health in the workplace. Got toid before, we have have those be National Standards. We cannot have one city or state with differing Safety Standards than another city or state. Did we exceed what we should have done with the Unemployment Insurance by encouraging people not to go to work . Sec. Reich no. There is no evidence we are encouraging people not to go to work. We have a hugely high rate of unemployment. When you have a high rate of unemployment and jobs are scarce because so many people are afraid to go into malls and shops and so many places are closed because of the the extras, it is not Unemployment Benefits are causing people not to work. Actually, with the extra Unemployment Benefits are doing is preventing families from going hungry and losing their homes. We have got to understand that. The republican fiction that somehow people are being deterred from going back to work is very damaging. It is not only fiction, it undermines our understanding of what is actually happening. Just to put this into perspective, we have not seen this degree of unemployment since the Great Depression of the 1930s. Even with the slight increase, the slight uptick in june, we are still 15 million behind where we were in february. The dimensions here are really extraordinary. About 14 Million People have lost their employer provided insurance. David truly historic and stunning. Always great to have you with us. Hat is the former secretary coming up, we are going to be talking about testing. This is bloomberg. This is balance of power on Bloomberg Television and radio. Our stock of the area hour is tesla. Had aprised because they plant shutdown for part of the time. To explain it all to us is kailey leinz. Kailey a lot of people didnt think it was going to be possible in the second quarter. Analystng well ahead of expectations. That was with its plant in fremont, california being shut for seven weeks. Tesla overcoming the challenge by ramping up production at its new factory in china. Deliveries were still down roughly 5 from a year ago. When we compare that to what we have seen for other automakers, that is a strong showing. Yesterdayo sales data from other automakers who saw declines. Tesla holding up pretty well. Because i just mention toyota, i will remind you that yesterday was when we saw tesla past toyota as the most valued auto company in the world thanks to the rally it had already seen this year. It is close to tripling in market value so far in 2020. The stock trading around 1200 a share, that is about 73 of the average analyst price target. David if you look at equity, it is not quite the same story. It is an interesting story. Are they making any money . Are they making a profit . Kailey that is the very key question. Tesla has turned a profit thanks in part to subsidies because we are talking about electric vehicles. This quarter is going to be really key because if they do become profitable on a cap basis , generally accepted accounting practices, that means they could be eligible for inclusion into the s p 500 index. Profitability is going to be the key criteria that could get it into the index. I would just note that even if they break even, they still have a lot of cash on hand. Its cash pile is nearly four times as large now as it was during the start of 2019, about 8 million. That gives us a nice cushion to whether any kind of headlines because of this pandemic. David thank you so much. Quite a story about tesla. Coming up next, we are going to talk with the ceo of Kansas City Railway being affected by the pandemic and then you the new usnca. That is going to come up on balance of power on Bloomberg Television and radio. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. David this is balance of power on Bloomberg Television and radio. Im david westin. Nate is time for bloomberg first word news with mark crumpton. Here in new york city, kids will be heading back to school in september with social distancing guidelines in place. Mayor bill de blasio today said he believes some schools will have enough space to accommodate all students, and for those that dont, school will operate on a standard staggered schedule. Everyone will be required to wear face masks and facilities will undergo a deep cleaning each day. Florida continues to see coronavirus numbers spike. New cases and hospitalizations jumped by the roast on record and deaths climbed by the most in a month. Florida has had 5500 new cases in the past week, the highest level ever. Talks between the u. K. And European Union over the future relationship broke up today one day earlier than planned. The two sides say they are still far apart. Talks will resume in london next week. The two resume facetoface meetings for the first time this months. Three global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. David thank you so much. The usmca went into effect yesterday, affecting trade with canada but also across our southern border with mexico. Railwayity southern really handles that seven border. We welcome the ceo, patrick ottensmeyer. Of what younse think the usmca will do to your business. Patrick thank you for having me. Longerterm for our business will be a positive. Audience,nefit of the our company is more committed and more invested in mexico than most other u. S. Companies. Company,u look at our 50 of our business, route miles, employees are in mexico. Link,y a very important logistically, and between the supply chains of the two countries, moving products such as grain, Food Products from the upper midwest into mexico, recently, Refined Petroleum and theninto mexico, coming out of mexico, we have a host of industrial products, electronics, automobiles is probably the best example as it relates to usmca and the trade between the countries. Autos, auto parts both ways. Finished vehicles primarily coming north out of mexico. Usmca and the resolution of a trade agreements between the countries and canada is very important. Been a lotbviously investment in mexico the past 20 years. We are certainly a very important piece of that. Usmca, the resolution of nafta is important long term. The most important feature, part is just the resolution of uncertainty, removal of that are a loty, and there of benefits, improvements that have taken place with usmca versus nafta, but the removal of uncertainty is perhaps the most significant elements, particularly for longterm investment, and the strengthening of north american supply chains. David that uncertainty has been there and its certainly President Trump took office. Automobiles, Automotive Equipment being shifted back and forth. One of the issues was rules of origin. Rules, some would say would be more restrictive. Do you see a diminishment in the number of automotive goods from next code into the u. S. Sta usmca . Patrick no, i dont. Obviously, there are some areas where challenges will be, with origin,hiring rules of north american content increasing. Elementssome phasein to that higher content. There is also a labor provision that requires 45 of the labor to be in socalled high wage, higher than 16 an hour. Those are things that will, over time, strengthen wages and jobs in north america. Talking to our customers, particularly detroit customers, these are not going to be highly restrictive, at least not initially. I dont foresee this to be a constraint to the movement of parts and vehicles between the two countries. Auto has been a very strong part portfolio, represents 9 of our business, finished vehicles, and then when you add the other components and parts, double that,er to 17 , 80 of our total business. We see good opportunities for growth. David give us a sense of how the pandemic has affected your business at kansas city southern, and are you seeing a resurgence . Some states are dialing back on their reopening. Else, welike everyone saw a very rapid drop bob in our volumes in revenue beginning in the second half of march, april and may were pretty bad. Then we started to see a recovery in june. Most of the auto plants in north america are running again. 30 volumes fell by roughly from firstquarter levels. Not pretty up to covid levels, still about 10 trends in our recent volumes and revenues have been quite strong across our entire portfolio, led by chemicals, autos, auto parts showing up in our intermodal business, other areas of our portfolio. Grade has continued to be strong, mainly grain has continued to be strong. Weakness in crude oil. Also in our paper business. Generally, a nice recovery. Depending on whether or not we rebound, res closing of the economy in certain areas, expect that strength to continue for the next several weeks. David you wrote a piece recently about the usmca, using it as a plot or for ongoing consultations between the u. S. And mexico. One of the problems with nafta, it was drafted in a different era and did not modernize itself. You say that could address things like trade issues and even with the pandemic. Give us a sense of how that would work. The high level of coordination between the governments of the three countries, the private sector, alignment of priorities on things like health and sanitary guidelines that we have all become very familiar with in the last three months. In order to keep supply chains functioning properly. Going back to the auto sector, we have seen difficulty with misalignment of those priorities, guidelines. As the economy has been reopening, certain plants, vendors, suppliers in mexico has have not been designated a sensual, or a misalignment of these priorities. Expense oft the keeping our citizens safe, it is making sure we have time alignment, so the supply chains can continue to operate without disruption. Forward, that could be a great opportunity for north america. Lets learn from what we have seen in the last 90 days. There is no doubt with the resolution, usmca, removal of that cloud of uncertainty around nafta, coupled with what we are seeing from Global Supply chain disfavoring Global Supply chains, certain markets in asia, that all should be very positive in north america, for all three countries, bringing those jobs in manufacturing facilities back to north america. The other elements of this, which is more that personal, human engagement of the policymakers, connection with the private sector, to make sure we are addressing the right issues and protecting that investment to take full advantage of not only the new that are the trends occurring as a result of the pandemic, and what that could mean north american supply chains going forward. With great to have you us, patrick ottensmeyer, ceo of kansas city southern. Coming up, we are talking with amity shlaes on her new book. Could it tell us something useful as we try to address economic inequality in the here and now . That is coming up on balance of power on Bloomberg Television and radio. On and radio. David this is balance of power on Bloomberg Television and radio. Im david westin. There is really focus on economic inequality in this country and some are saying we have had some of these problems before in the 1960s, and then a response from Lyndon Johnson with the Great Society. We welcome a new book on the Great Society just out, amity shlaes. She will take us through whether or not we can learn from the Great Society. Great to have you with us. Take us through your analysis of what happened in the 1960s, are there parallels to what is happening now, are there differences . Amity there are so many parallels, starting with idealism. They did not call the good society but the Great Society. That is the kind of idealism we see today, they want to get too perfect. This is important for bloomberg viewers, that the economy could pay for anything. Great societye a program to eradicate poverty. The economy can take care of that. We want equality in all corners of america. The economy can take care of that. So the economy is a given. I dont think the protesters have thought a lot about what the economy can and cannot support. To get into the then there was a campaign against the police as well. The police were not defunded but were sidelined. There was a great impulse of community action. Ae federal government spent billion dollars, a large amount,. O empower communities those are three examples, parallels with today. David at the same time, the instinct to have what they called the Great Society was not wrong, was it . Equal opportunity is important in this country. We dont give equal opportunity to everyone, and we could be losing some of the people that contribute most to our society because they are being left behind. Amity the impetus is wonderful. I want there to be more opportunity for more people. The only question in the 1960s was do we get to a Great Society and the Public Sector or private sector . Over and over again we opted for the Public Sector because it sounded kinder. We didnt say companies would do it, we just expected companies to pay to get to greatness. What is interesting about this research i didnt just look at civil rights. I did look seriously at that. I also looked at companies and what they did. There were companies that did a lot to help people out of poverty. A job ort is technology. One of the things that i learned ,s that the forerunner to intel fairchild created a chip factory that became the single biggest employer of native americans in the private sector are. People in new mexico there were very good at making chips because of their experience with needlework. So the question is the same today. Who helps more, the private sector or the government . What is the proper role for government, the private sector, but does it take both . There are some aspects of the Great Society that did work. What about medicare, medicaid, things like that . Amity absolutely. The book goes through all of the civil rights laws. We all feel the Civil Rights Act and the Voting Rights act which followed it were necessary. Was important for Senior Citizens to get health care. That is what became medicare. And for poor people to get health care, medicaid. Laws wasem with those not that they put an incredible burden on our children and grandchildren. The positives of medicare and p front, are positive u but the negatives, the young people may as well be writing checks because we are running out of that money. The general entitlement culture that we should do everything through entitlements was particularly bad for poor people and minorities. Shame in getting food stamps, if you need them. , even peopleme come eve on food stems would agree, is the expectation that your children and grandchildren will forever be on food stamps. What you see in the 1960s, that only learned last time by a wellmeaning government, is that sometimes guaranteed income, payments do not work out for the people who receive them, and make it harder for them to have a career or advance in it. David this may have been outside the scope of your book, goes later than that, but if you go to the late 1970s and 1980s, income inequality has grown substantially in this country in part because of government and action, not because of entitlement programs, but because of how we tax wealth, capital. Is that one of the issues, that the government can have a negative impact on income inequality, as opposed to what you describe in your book, the Great Society . Inequality we are all concerned about poverty. The Great Society said its goal was to eradicate poverty. Lyndon johnson said cure. Poverty was not cured. After a point, its reduction decreased in rate, that is, it settled down around one level and staying there, no matter what. Helped the poor in very expensive ways or not. There seems to be some section of every nation that will always have some poverty. So the goal was too large. Income inequality i am less worried about. Wh is worrisome is the sense of those who are poorer that they can never make it. That should be all of our concern. There should be opportunity for all. It used to be that higher taxes make more income inequality. David we will have to have you back to talk about that. Thank you to amity shlaes, chairman and ceo of the Calvin Coolidge president ial foundation. This is bloomberg. David this is balance of power on Bloomberg Television and radio. Im david westin. This friday night at 9 00 eastern time, bloomberg will air a special called unequal america, talking about the way that income inequality may influence the election. I spoke with a Senior Advisor to the Biden Campaign about how a President Biden may address economic inequality. The crisis we are in right forevers pandemic, will change american life, the way that we think about each other, government, our responsibilities to one another. You are right. This, coupled with the tragic killing of george floyd, have put a magnifying glass on the deep structural inequalities. Not just the income inequalities but the systemic racism and division in our lives. Those are more pronounced today than ever before. Working people are buried the brunt of this crisis in many ways. They are the ones putting their frontlinee line as workers, disproportionately feeling the impact of lost jobs, and donald trump just does not understand that. Think about what is happening today. Donald trump does not appreciate, understand, respect the generations of struggles of american workers. Today, his administration is filing a brief in the Supreme Court to take Health Care Away from 23 million americans. From 23ealth care away million americans in the middle of a global pandemic. It is outrageous. On the other hand, joe biden, from the beginning of this campaign when i started with him a year and half ago, has been talking about this from the start. We have to rebuild the middle class. Biden,at means to joe everyone will come along. Before the pandemic started, we were already feeling the problems, divisions. Working families were hurting. Corporate profits were up, wages were flat. Helping,rump has been eroding labor rights, giving tax breaks to the wealthy. So what would a joe biden do . What we need to do is make sure apped states are getting the resources they need to make sure that helped her workers are on the job, teachers firefighters, we need to extend Unemployment Benefits, get bigger Social Security checks, and then we can talk about how we will address these major issues, the root causes of many of these inequities. Introducent, he would an infrastructure bill to rebuild our country and create millions of jobs, create a greener economy that works for everyone. Course, transform our educational system, the great equalizer in our society. That means student Debt Forgiveness for families making less than 125,000 a year. Free public college. Transform the way that we think about education, which is again, the big equalizer in the country. The problems have gotten so big, we have to think about the big opportunities. As president , he will know how to get things done. Vid our bloomberg special, unequal america on friday night at 9 00 eastern time. In the second hour, we will be speaking to ambassador Thomas Pickering about the big win for Vladimir Putin yesterday. This is bloomberg. Vonnie it is 1 00 p. M. In new york, 6 00 p. M. In london, and 1 00 a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories we are following from around the world. The u. S. Labor market accelerated as the economy began to reopen, but does the pickup in coronavirus cases but these gains in jeopardy . We look at how African Americans being affected more than other groups. We will discuss todays report with the former acting labor secretary seth harris. What he thinks of the current administrations approach. And ill be speaking to the ceo of stew leonards. And hisgrocery business workers have become essential to the u. S. Economy. Lets take a look at u. S. Markets. We started out with a nice bounce and we are still there. The s p 500 at 3144. The 10

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