Potentially coming close to price later tonight. This could be the biggest ipo of the year but we are getting word that that also could be coming in at the lower range. It will be interesting to see what Risk Appetite is like or if it can be measured through what has been going on with these ipos. Taylor we are awaiting some earnings and starting to see Western Digital and a few others start to trickle out. I wanted to pose a question to dennis. You were talking about real rates being low and what that just your equity markets. Do you believe rates should be the slow and if so, what is that doing to an inflated discount rate and how does that translate into what should be effectively higher valuations or can you not use 50 basis points as a discount rate because it is not feel appropriate . How are you thinking about that . Points i think 50 basis is a fair discount rate if you have a global savings. There seems to be a desire for Institutional Investors around hold risk. O that is because of the potential for deflation if things go wrong. We can determine that with china and the u. S. , with covid, etc. Since Monetary Policy is a relatively weak rule in offsetting deflation or encouraging inflation, the policy rate makes sense. It is more of a hedge. The relationship between bonds and stocks changed over the last 15 years. You are going to see Earnings Growth above that rates. My answer is to say it is appropriate. It is appropriate and a world where deflation is something that could happen, which leads equities looking attractive outside of shocks. If you earnings crossing the wire. Western digital and roku. Metrics, on the main coming in at 356 million. The street was looking for 314 million. Average revenue per user was up. Active customer accounts rose 41 . Streaminghours hours on the roku platform, yearoveryear, that is up 55 . Those hours where watching Bloomberg Markets the close. Digital, it isrn significantly underperforming. At one point. Nt falling 8 at one point. Quarter adjusted did match but it seems to be the forwardlooking guidance that many are not liking. They are seeing First Quarter cents safety five . 65. Taylor shares are down 8 . I was looking at their supply chain, one of the biggest customers is apple. Numberay coming in three. Uawei coming in number three. Roku up 1000 . We are seeing a dispersion within these markets. Romaine i want to go back to dennis. I want to get your thoughts. I am going to pick. I want to get your thoughts on what we have seen in the housing market. ,e look at the main indexes housing names, i tv closing at a record high. There has been enthusiasm for the homebuilders. There has been resiliency in the number of people buying homes as well as prices threaded is this countercyclical to what is going on in the economy or does it fit into the narrative . Dennis i think it fit into the narrative and what we are , historyto witness vines, it is not necessarily repeat, a replay of 2002 through 2006. The rate anchored for outside forces. Inflation abnormally low. We sell though real rate and one benefited during that period was housing. I think it fits into the narrative we have been talking about. A 40 b levels are attractive. Saving rates are high. If we pencil in a drop in the Unemployment Rate from 11 to something lower than that, housing is going to benefit meaningfully. Especially if rates are not going anywhere. Of therobably one biggest beneficiaries of a personally persistently low backdrop. Caroline love having their opinion, being able to go across assets with you. A quick look at the other numbers coming out. Sea, all things focused on buying online, beats the highest possible estimates, up 5. 6 . Estimates are three who to 30 million. Beatty secondquarter earnings. Beating secondquarter earnings. Taylor we are all at home watching netflix and roku are playing video games. Im taking a look, if you will bear with me, zynga. Shares rising after hours. Better thanuch expected, secondquarter adjusted revenue, better than expected. Third quarter revenue and adjusted on the Third Quarter and the full year, also coming in better than expected. They are going by their casual games maker, to have this role. I will have to look into that. Romaine real quickly, i want to jump in, fitbit giving an update on that transaction with google, saying it expects to close the transaction this year. It expect to approval. It did report earnings but that is secondary. Just to show you the agony of covid19 for live events, live nation, secondquarter revenues, 74 million. The estimate was 300 million. Theyting loss of talk about selling tickets, but it is brutal for live nation. Whatd you miss . Is up next, we will look at the latest for the hunt for a coronavirus magazine. Vaccine. This is bloomberg. Caroline im caroline hyde. Romaine this is Bloomberg Markets the close this is whatd you miss . Caroline we hope for a vaccine and hope for further stimulus. Nasdaq the outperformer. Another hope from the latest immunization trials shows promise. There is still a virus drag. Jobs data misses estimates. Frys monthly payroll reports in the future of the economy coming up next. All that and more, including earnings. Im looking at etsy. We are seeing a big beach for the desire for purchasing things online. We are seeing revenue coming in a threemillion versus to 30 million. Revenue year on year growth of up to 115 . Seemingly this is our winner even though they do not give us 2020 guidance. Romaine roku, active customer accounts, 43 million, up 41 . The company did report a loss for the quarter, but that is smaller than what the street was expecting. Abovee as miss in expectations. Fullyear half in revenue will grow substantially on a yearoveryear basis but has not provided a specific number, saying it is too hard to forecast given everything going on. It does give interesting commentary on ad spend saying tv ad spend what recover until 2021 but a lot of folks watching roku, using that platform. People everyone except who have fitbits, they are running around central park because secondquarter revenue came in at 206 the 1 million, better than expected. 260 1 million, better than expected. 1 million, better than expected. The deal with google may extend beyond 2021. Beyond 2020. They are hoping the google transaction will close in 2020 but the timeframe may extend beyond 2020 as we try to figure out that antitrust data. Im going to switch gears because in the midst of these earnings, we have to talk about the massive weakening and the dollar that we continue to see. We are at the weakest level since september of 2018. I am curious if this is the fed injection, a risk of trade, if people are moving currencies to basis, the dollar breaking below that key support we have seen. Bring in our next guest because she knows a lot about this. What is going on with not only the dollar but the economy in general. Financialhief economist at jefferies. Thank you for joining us. We want to start off on what we have been seeing with the dollar and i want to get your thoughts and how it ties into economic prospects at the moment for the u. S. I think the weak dollar is a positive for the economic outlook, it makes u. S. Products morten more competitive. The driver of that weakness are positive as well. This is a risk on environment and it is more driven by strength in other currencies than the weakness of the dollar itself. I think that is going to be supportive for the cyclical parts of the economy, in particular manufacturing. I see it as a positive rather than a weakness. Caroline looking at the balance of positive and negative, talk to us about the fiscal hope that is underpinning the equity market. What it needs to be supplied by the u. S. Government to stabilize u. S. Economy . We see covid continue to run rampant. That we need more fiscal. But even if we get the bare minimum, what was in the gop initial proposal, about 1. 1 trillion, i think that is enough to give us another leg up in the reopening process and i think that will start around september. We are in the midst of weaker data, i think that will continue into early august, but by late august, early september, even with a clip in unemployment benefits, if we get a second round of stimulus checks, i think that is supportive for consumption in the near term. The first round of stimulus checks, the second they hit bank inflectionou had an point and Economic Activity and consumption patterns. I would expect a replay of that type of pattern. Hit banks these checks accounts, late august, early september. Taylor is there anything else the fed can do or is this on the fiscal side of the equation . I think this is very much a fiscal policy game. The fed can help the Financial Markets sustain their game, but as part of the real economy, Monetary Policy, they take over a year to really impact Economic Activity and longer to impact inflation. The next fewnting months, it is going to be all about fiscal policy. , think where the fed will help whether it is more qe or more guidance, is to really give this recovery every chance of building on that positive momentum and they can do that by keeping a lid on the yield and preventing premature selloffs and i think that is what they are going to do. Romaine lets talk about that momentum because this is a big week for jobs data. It seemsp numbers that momentum mightve installed. On friday, we get the monthly number. Higher frequency data which is shown a slowdown in the job recovery, Global Workplace mobility data, also data out of cornell. It does not seem like the momentum is there. What are you seeing . I agree. I am on the low end of consensus for friday. I am looking for virtually no growth in payables for july. I think there is further Downside Risks to that. Study wasl interesting, it suggests we are in the midst of the second wave of layoffs, a third of those people rehired post lockdown have been laid off for the second time and i think we are going to see that in fridays implement numbers in some of that will spill over into august. There is a significant Downside Risk and most people will blame it on the covid resurgence but i think that is a contributing factor, that is not the primary driver. The primary driver is fiscal policy and in the case of jobs, the ppp loan program, most of the loans were made late april and we have essentially lost that. I think a lot of those recipients have run out of money and are laying people off for the second time. That is a nearterm Downside Risk for employment. Having said that, we could go through two months of weakness and a loss of momentum and then accelerate quickly september. In particular, in the case of employment, an extension of the ppp loan program will allow existing borrowers to cap second loans. Romaine there will be a lot on friday when the data comes out. A busy day today. Glad would you get you on here. We will be back in a moment. This is bloomberg. There should be a default position of what is your fundamental principles . The fundamental principle is you should try as best as you can to get the children back to school for rates is that when they are not in school, it is deleterious to the child. Then there are secondary ripple effects for families that might have to stop work to take care of the children. The goal should be to get them back, but then you have to have a however and a however is, the however is, fundamental to everything, is the safety and welfare of the children, the teachers, and the parents who may be interacting with their children. If you look at our country, is a big country. You have to have flexibility because nothing is unidimensional. You have some parts of the country where there is little infection and without any impunity, you can open up schools no problem. We called them the green states. Then there are those that have some degree of activity in which you want to do Something Like you are suggesting, maybe a hybrid, physical spacing, masks, outdoor classes, whatever you want to do to mitigate any spread. There are other areas where at any given time, and it may be temporary, there is so much activity that you want to think twice before you start putting kids back to school and if you are in that zone, you probably are going to have parents who do not want to bring their children back, or teachers who do not want to show up. When you talk about schools, you cant say the United States is one place, it is multiple regions. How do we create a sense of confidence in teachers, parents, and students themselves that you need to do these things, dont cut them short, but if you do, you are reasonably safe . It is two messages. You cant forgo them, but if you do, it is probably going to be ok. That is a tough message. Often, when you try look at some examples, there have been examples of schools that have opened where on day one, you wind up having children infected. We are going to have to have a first,ich is still we did mention one thing that is important. The cdc has put a lot of work into giving guidelines about how one can mitigate the spread of infection and transmission of infection in schools. People should look at those guidelines. Larry summers, former treasury secretary, has said on bloomberg that what we are doing is launching thousands of cruise ships with a bunch of 19yearold and he is referring to the dorms. Does he have a point . Correctly, when you congregate people together, but if you look at one if you look at what some of the universities are doing, a lot of them are doing something similar to what some of the Major League Sports are doing. Onceare testing everybody to get there and then intermittently surveilling and determining, if you get an infection, get that person in a sequestered way. Some colleges are going online completely. For are doing online certain degrees and in person in others. Some are doing it completely open but with a live testing. It is not onesizefitsall. There, dr. Fauci director of the National Institute of allergy and Infectious Diseases. This topicstick on because today, we did see signs for hope on this search for a vaccine. Novavax rose today to its highest level since 2015 on the back of positive data released last night on its experiment with drug and Johnson Johnson was saying it would supply 100 million doses of its vaccine to the u. S. For more than 1 billion. A health reported joining us now. The vaccine that Johnson Johnson has is not out yet, it has to go into late stage trials at some point this year. Went to be expected to see that in how much progress has been made overall . Well Johnson Johnson is expected to go into late stage trials come september. It kick started some earlier studies in humans this past month in july. The u. S. Is seeking to reach a string of deals for a supplier vaccine so they can quickly deploy should they prove successful in the clinics. In july, a 2 billiondollar deal for vaccine candidates. Trump Administration Officials expect more of these deals to come. It is important to note that these vaccines are still being studied and data from late stage trials is critical. There are more than 160 vaccines in various stages of development and a handful, like those from moderna, pfizer, have launched into final stage studies. These deals tell us about where the u. S. Is putting capital behind both new and old technologies. That is important as we continue to understand the pathology. Caroline i wish we had more time. By the griffin there for us. Discuss theover s p 500 next. This is bloomberg. Experience the ultimate sports hub. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Caroline we just heard from secretary of state mike pompeo signaling the u. S. Will ban Chinese Technology from computers, name a national security. Let bring an lets bring in our reporter. Todayything surprise you about the pretty harsh tone against Chinese Technology . Nick i think what youre seeing is an expansion of u. S. Priorities. There signaling they basically dont want any chinese apps they perceived as a threat to be featured in app stores in the United States. The big issue here is this appears to be just sort of guidance. The secretary urged u. S. Companies to drop the chinese apps, but did not say if the administration would seek to ban them outright. But you are really just seen the administration expand its attacks on these chinese companies. They really want to choke off huawei in particular, but we chat and tictoc. He also mentioned they are going after chinese cloud services, alibaba and tencent. Really a fullcourt press from secretary pompeo. Caroline how global does this get . With huawei, there was a policy pushed forward to europe that followed suit. Are we likely to see that tactic to again . Nick it is a great question. He did indicate in one of his initiatives, he said he doesnt want u. S. Data traveling along with an trusted cables. So you know, there is a potential there for him to pressure other countries. We have not seen the Concerted Campaign that they used it to get other countries to cut huawei out of their 5g network will dow. That hasnt happened yet, but as we have seen from this administrations, anything is possible. It is certainly possible that he can turn around and call on other countries to enforce what calling a clean pad. Stripping 5g technology. Romaine what about the other nation . This started with huawei way back when. You saw other foreign nations drag their feet, going along with the u. S. Some now say they will pick a side. For some, that site is huawei. Nick thats right. The most successful thing this administration has done in this fear is the huawei 5g issue. They have coalesced a pretty large group of countries, promising to exclude huawei from their 5g networks. We have seen more division on some of the smaller stuff, like tiktok, for example, where australia, for example, said it would not likely ban tiktok. There was an earlier reversal in a decision to ban tiktok. Is hoping the sale of tiktok to microsoft. There is a degree of rumbling from other countries, including gone alonghich has with their huawei decision. Saying they are getting a little too tough for us. They agree china is a concern, but this blanket ban on so much Chinese Technology, we are not willing to follow you there. We will have to see what the responses to these latest announcements today. Hasor im curious if there been any conversations among your sources that any of this could change in november if there is a new administration. What are you hearing about the relatively harsh tone on china . What would that mean come november if things look different . Nick it is a great question because there is a theory. Essentially, what the administration is trying to do is make permanent these, this hard right shift against china, this much more hardline attitude towards china mooted then you put all of these restrictions in place against china and of joe biden wins, it is essentially impossible for him to undo them because the attack line can be opened up and he risks looking weak on china. You can point to the rights and in hong kong. There is a very strong belief in me the Biden Campaign has said, we will take a look at all of this stuff. We do believe there are areas we can cooperate with china, but they also see chen as a big competitor. Romaine bloombergs nick wadhams, thank you for that. Taylor . Taylor domain, the longest conversation inditex, im was taking a look at the upper relative the s p 500. 1. 5 . Went up this goes back into the conversation we were having. A lot of the holdings within that ipo etf or some of those tech companies. Some are newer. You think tencent. I think i hear china and that one. And then zoom technologies. Then it is uber, lift out, some companies that havent done so well. Moderna you hear about with the vaccine. There is a lot of china tech in this and the newer companies. Romaine lets start with the newer companies. ipo was thees were showing for any largecap ipo in the u. S. This year. Quite significant, and we are expected to get another ipo where there were High Expectations for the quicken loans rocket company, but we are getting word that the pricing is at the lower end of the range. Caroline [inaudible] what was your one yesterday . [inaudible] romaine we will. Le. Weeb caroline new ipos coming to the market. We have to be watching out for the ipo tomorrow. Should be raising 1. 8 billion. It is getting a tough entry. It was going so well at the beginning of the week. [inaudible] caroline you cannot sell a business that makes money. [inaudible] [laughter] caroline lets go to mark crumpton. Mark thank you. Of chemical suspected causing the deadly blast in beirut yesterday had been in storage for six years, despite warnings from customs officials. Workers started a fire that ignited the chemicals, according to a broadcaster. Explosion killed at least 100 people and wounded 4000 others. The atlantic Hurricane Season probably will go from bad to worse, according to researchers from Colorado State university. They boosted their storm forecast from 20 to 24 on the eve of the seasons most active 2005 that, which will only. One of them was katrina, which devastated new orleans. The ncaa is telling colleges student athletes must be allowed to opt out due to coronavirus fears. If the athlete chooses to do so, the scholarship must still be honored by the school. Says ahony fauci Coronavirus Vaccine doesnt have to be 100 effective to be worthwhile. The government pot top Infectious Disease expert spoke with bloombergs david westin today. Dr. Fauci i hope it is going to be more than 70, but even if it 60 effectiveo vaccine is totally value added if you complement it with Public Health measures. Measles. Dr. Fauci the legacy ms. 90 effective. Late last month, patients in the u. S. Began receiving shots and later stage clinical trials. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. We had a Strong Quarter and a very Strong Quarter, an exceptional quarter in trading. It was one of the few highlights of the business and the second quarter. To have an fortunate incredible Trading Organization that is global. I dont think that level of performance is readable. Second quarter was the most challenging quarters in our industrys history. It played well and a market where there was a it played to people who had deep capabilities like we do and infrastructure positions like we do. A very Strong Quarter, but not one that we expect to be repeated. Taylor what i was struck with yesterday when you guys were talking about returns and this brings into commodity prices. Do you basically say Power Projects make a lower return for oil and gas investments, but do you see higher returns of 12 to 14 . How much is 100 predicated on 60 oil . What state what happens if you stay at 45 . Good question. Yesterday, we laid out the distribution policy and commitment to shareholders have three elements to it. Number one, a recent dividend and a commitment to do share buybacks the second is profitable growth, which is the returns growth you mentioned. The third is around sustainable valuable, where we are saying here is an opportunity to invest in a bid that is decarbonized. On returns, i think in the early part of this decade, it is driven very much by our existing hydrocarbon business there you will see those new businesses come to the floor. We are optimistic about what we can do in this space. We have said we expect to go from about 2. 5 gigawatts of power to 50 gigawatts. We talked about it is not just about renewables, but the consumer and the mobility in the business, which we said is in the region of 15 to 20 returns. Our transition story is not just a Renewable Energy story. It is a consumer story, a mobility story. People may not know, bp spells coffee sells coffee. Is a very strong business. As a growth business. Milliongo from 10 customer touch points today day to 20 million. We are as excited about that as a low carbon part. Alix but dont you need the oil and gas assets to make that work . Iswhat we did with the reset what we wanted to do is consistent with strategy. This decision was rooted in strategy. Absolutely rooted in strategy. We want to become an integrated energy, b. We need to invest into the transition. To do that, we need to do the outer range of prices. What we set out yesterday is a framework, a financial framework, that has a balance point a 40 oil. We can do these things at 40 oil. By the way, if oil is less then 40, we will take actions to preserve that. Verywe have laid out is a resilient distribution policy that enables us to invest into the transition, giving shareholders a fixed dividend and the potential for at least 60 of buybacks, if there is excess cash flow. Is the ceo of bp. A quick check on the business headlines. Revenuefirst time, the has exceeded brought in from the print edition of the new york times. Digital millions of subscribers. Total revenues fell more than 7 . Bankers were the breakout stars in the otherwise gloomy first half. They may not get rewarded. Itsbritish bank shrank profits compared to a year ago. India, amazon will kick up its first prime day since the coronavirus outbreak, modifying almost everything. It will still be plenty of deep cap deep discounts. There will be a stringent hygiene protocol. Romaine we go from business flash to the smart with Abigail Doolittle where we look at the timely topics. Were looking at the only two things that matter, stocks and digital goals. Abigail we are looking at stocks and goals. We are talking with stott todd. It is been a while you and your family are safe and well. And relative the markets, all about these bank stocks. You say that is likely to continue, but you are worried about the s p 500 index. Talk to us about your Broader Market thoughts. Apple, microsoft, they are the best in the market. Right . We dont want to fight that. But importantly, for durability in the market to continue to the back half of the year and next year, we want to gauge what participation is and you want to watch the smallcap stocks, the equally waited s p, and so far, we give it a passing grade. They are not keeping pace on a relative basis, but they have not broken down yet either. You dont want to get too bearish while they are hanging in there. Today was a good day for them. As long as that is the case, we are in good shape, police heading into the next six to 10 months. Abigail something that has been helping stocks overall has been the deeply oversold dollar. We will look at your chart in the moment. But first, lets look at a chart that makes your point around this divergence in cap size for the s p 500 because it is stunning what is happening there. Long as is and he does not break the june lows, we are ok. What we believe is happening is the dollar is deeply oversold and is going through a major transition from the bull market to a bear market. And not boosting the more average sectors, like industrials and materials. They are not participating in this rally because they are dollar sensitive sectors. They may not there may not be durable leadership in the next two years, but the transition from dollar to a bear trying here is a great google for those sectors is a great boom for those sectors. Abigail perhaps looking at that chart right there, maybe the equal wade will follow the top 50 higher out of what appears to be some sort of massive triangle pattern. Another record high, above 2000. People just taking it in stride, but it does look pretty overextended. What do you think is ahead . Todd gold is a bull market. Whether it is in the dollar or the yen or the year, very stretched in the nearterm. Extreme. Torically when you look at it, it is a very tepid signal. You do get some reversal reversion. 18. 50 inrade down to the nearterm. We do that as a pullback you want to buy. Just be careful on gold and keep a tight leash. Goldil it seems as though and silver can do the unexpected when there is lots of Market Participants excited. Todd, thank you so much for joining us for smart charts. Romaine great stuff. I know everyone wanting turns out there tbs and as we go off the air. Dont do that today because coming up, 5 00 p. M. Eastern time, emily chang will have more of her interview with bill gates, the microsoft cofounder he reviewed dont want to miss that. We will be back in a moment. Romaine time now to check in with joe from his aboveground pool anymore. Joe, a pretty interesting thing. The nasdaq closing at a record. The s p within trekking distance of her record and in 48 hours or so, we will get a jobs report nobody things is going to be good. [inaudible] we have some pretty poor connection. Joe, can you hear us . Joe fine. Can you hear me . Caroline much better. Romaine waited go, joe. [laughter] number, bigthe adp miss and rebounded like nothing mattered. [inaudible] on, he was getting to the good part. Caroline we have to give up on this. Romaine lets stick on payroll. We are talking about again in payroll. That is the estimate they were giving based on the bloomberg survey. We have that adp number this morning that came in well below her folks were expecting. It has a lot of people reassessing whether the gains that people were looking for on friday, whether that is on nonmaterial. Taylor let me run you through some of the individual statistics where we got from the adp numbers. Well sort of the expectation short of the expectation. In march and april, we lost 20 million jobs in only have gone back 7. 5 million. But small and Large Businesses that added jobs in july, but mediumsized businesses, between 50 and 500 employees, they lost 25,000 jobs. You are seeing more about dispersion between small and larger gains, but small and mediumsized businesses were struggling this time around. Caroline all of this movie get something really striking data coming out, like from cornell, four going back to work saying they will be relayed off because the ppp loans are expiring. But the market is showing the is running 1. 8 of its record high. It feels like the market is baking in so much hope when it comes to stimulus, when the rest of the economy is not seeing it. Romaine i think the consensus is we will get that stimulus. Whether it arrives in time to saved a lot of folks. Lets not forget when taylor brought this up and you talk about the people who have lost their jobs, a lot of people are still employed, but kind of hanging on. It is not clear if you have more shutdowns coming in the fall, particularly with some of those service industries, you can see that hurt some of the labor numbers. The highfrequency data is not encouraging. It will be interesting to see whether it will pick up as we get deeper into august and september. Caroline going through some of these numbers with the winners and losers, some are phenomenal, like 14 . Sheerve to look at the ability of Certain Companies to pivot into the moment and roque who sings strengths they have not seen for several years seeing strengths they not seen for years. Romaine some of their gains, they know expect that trend to sustain itself at the current level. They are saying and the second half and full year, they still expect to substantially grow, but they wont grow as fast as predicted precovid. They are not putting a hard number on a bloated this has been the concern that a lot of the stocks have benefited from the covid environment the some of the gains are not sustainable. Caroline some breaking news, amazon Ceos Jeff Bezos is selling some shares. Romaine that is a lot of aboveground pool. Technologyomberg up next. Romaine have a great evening, everyone he you are watching bloomberg. Emily welcome to Bloomberg Technology im emily chang in san francisco. Rise on speculation congress is making progress on a new relief bill. Shares jumping from novak on early reports that its candidate also blocks transmission of covid19. I sat down with microsoft cofounder and