It did not shy away from staying there. The dollar continues to be weaker at 93. 20. A strong british sterling. 1. 3082. In euro also a little stronger. Crude oil at 42. 20. A rare glimpse into the Research Division at bridgewater. Our next guest overseas a team of over 150 at one of the largest hedge funds. We are in a new era of policy. Kareng us now is karnioltambour of bridgewater has 100 60which billion in institutional investments. World . Isn np3 karen as the world changes, investment need to change with it. Interest rates were the primary driver of fed cycles. The fed lowered and raised Interest Rates, and that was the most important thing to drive the economic cycle. Then we got to the financial crisis, and quantitative easing became the most important lever. But at the end of the day, you can print all you want but the Federal Reserve doesnt have the mandate to figure out who will get the money. A lot of money went to Financial Assets and not the real economy. Andworld is changing again the new era of policy it will take to drive economic cycles is coordinating fiscal and Monetary Policy, printing money on one hand, and on the other hand, running large fiscal stimulation. That combination means printed money can make it into the hands of those who need it through the fiscal package. We call this Monetary PolicyMonetary Policy one being Interest Rates, the second being quantitative easing. Both the money printing and fiscal stimulation. Central bankers been advocating this approach for a long time now and getting nowhere, both here in the u. S. And in europe . The ecb andinly europe have said it dont leave us on our own, we need the fiscal side to play its role. But that has not started ,appening around the world until the covid crisis, where it became more obvious that without fiscal stimulation, we would not get out of the current downturn. You are seeing the biggest differences across the world, governments able to pull that lever and do fiscal stimulation, and the ones that have not, and what a difference it has made, in what their recoveries have been like. Vonnie how does this macro idea into the approach that bridgewater takes into its strategies . How thenderstanding world works is the single most important input to figure out how to invest. ,his is how cycles will work and then try to understand it, quantify it, and then understand what we should invest in. Maybe the most obvious thing is that nominal bonds are a lot less useful than they used to be werese when Interest Rates what moved, that was a large driver of the cycle and an important tool for investors in deciding what to hold. Now, rates are basically zero everywhere, there is almost no carry left in the bond, and policymakers are managing that closely. At the same time, equities are extremely important in any Strategic Asset allocation, but policymakers are doing everything they can through these facets of policies to put real money into the economy. A lot can be left over to go into the stock market. Most portfolios are already too concentrated in equities. Our research has been, what are the most important assets to diversify equities in this environment of fiscal and monetary coordination, stimulation. Assets like gold, inflation like bonds, are important to investors right now. If policymakers do not succeed in getting the economy going, they could succeed in creating inflation, devaluing currencies. Reflected thatnt inflation is recovering much faster than in prior recessions because of this era of new policies we are in, how important it is for investors to balance their equities with something that will help them in the case of inflation. Vonnie some of the components were very pandemic related. It was still overall below prepandemic inflation. How concerned are you at bridgewater that inflation is coming within the next two years, lets say . Less so concerned that we are about to have hyperinflation as much as investors will not be ready for the balance of outcomes that could happen. Because these policies have been especially focused on getting money to the hands of people and printing money, the possibility of devaluing currencies, having gold go up, the possibility that people who have saved at home will eventually spend them, or that they will be supply constrained through the crisis, is greater than in a typical downturn that is deflationary. Given what policymakers have said, that they are prepared to handle more inflation, important for investors to be prepared and hold assets that will pay you help you inat will the cases of currency and values. Vonnie somewhere to hedge in your portfolio, even though we are not getting regular inflation. Lar also talk about a tripo world. A lot of concern expressed about a cold war 2. Does bridgewater buy into that theory . Karen the advice we have for investors, if you believe it is a tripolar world and i believe it is unquestionable that we are in a tripolar world. The u. S. , china, and europe. Each contribute similar amounts to global output and demand, each run their own monetary and fiscal policies, kind of set on their own needs, and if anything happens in either of those countries, there is a lot of ripple affect two countries around them. As an investor, why would you only want your money in one of the three . Most investors are highly concentrated in the United States. Especially when you are going to where you are saying, having a lot of pressure around fragmentation, pressure on companies to have their production be more localized, pressure to think through whether you will be allowed to move things across borders, and something that could turn into outright conflict, it is not a sensible time to say let me have my investments in just one of the three poles. Most investors in the world have little in china, much less than you would expect, given its actual weight in the Global Economic system. Vonnie very briefly, would you in the through adrs u. S. , or invest differently to take advantage of a china play . Karen a lot of investors have only realized how much the chinese have opened up access to their capital markets, onshore, in china. The more you have the ability to get the companies that reflect with the chinese economy is, i would recommend build the best portfolio you can of china bonds , because the rates are higher, and whatever collection of chinese stocks you can put together to best reflect what that economy is like, including some international, local brands, and the possibilities to do that are opening up quickly. Thank you for that. We will talk to you soon. News go over to first word with Mark Crumpton. Mark President Trump says he opposes additional funding for the postal service. The president acknowledges his position would starve the agency of money that democrats say they during the coronavirus pandemic. The president maintains that mailin voting the lead to voter fraud in the president ial election. Democrats are showing enthusiasm for joe bidens running mate. Only 6aign raised million in the first 24 hours after he picked, harris to run with him. The pair made their first appearance in wilmington, delaware. Puerto ricans will have a Second Chance to vote in primary elections. Authorities have been told to reopen centers where botched ballot supplies are vented people from voting in the first round. Lawsuits were filed after only about 60 of precincts were able to accept votes. French authorities are demanding tougher enforcement of rules to stem the spread of coronavirus, including the use of masks. The country is battling a rising number of cases and some regions are nearing alert levels. Paris and marseille have already made masks obligatory in some streets, and the government is pushing for labor unions push for tougher rules within companies. 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. Vonnie this is bloomberg markets. Im vonnie quinn. Green Thumb Industries is getting a thumbsup from analysts. The Cannabis Company bidding Second Quarter street estimates. Demand for cannabis remaining resilient through the lockdown. Kovler joinsceo ben us now. What is next for green Thumb Industries, what kind of growth to expect . Ben thanks for having me today. The early stages of the u. S. Canada market unfolding before our eyes. We think this will eventually be an 80 billion space, and it is really a consumer packaged goods industry. We in the early innings. Up next for green thumb is continued at solution execution, continued growth. We are setup with a portfolio across the u. S. To execute. Vonnie are you going to roll in more Smaller Companies, where exactly is this growth that you speak of going to show up in the bottom line . Are you going to buy more grow plans, make acquisitions . Ben we have monstrous organic Growth Opportunities within the states that we operate. Ratedis is currently run at a billion dollars in sales, an alltime high. Illinois alone could be a 3 billion plus industry. Our portfolio is positioned for that. We are looking at the m a environment, we are out there to do Accretive Acquisitions for shareholders, but right now, our portfolio is set up vonnie what do you mean that your portfolio is positioned for that . Hiring more farmers, what exactly doesnt mean that you are position for the growth that is coming . Ben these are limited licensed markets. We have one of the coveted production processes and licensing productions in the state to expand the production and make the products grown in state in order to deliver to the consumers in states like illinois, ohio, pennsylvania, maryland, new york, connecticut, massachusetts. That portfolio is set up to grow. We will put capital by expanding those spaces and making more cannabis products for the u. S. Consumer that is demanding a ton of it. Vonnie so you are going to put capital to work. Is that going to be from the equity market, is that were the capital is coming from . How do you plan to finance otherwise this growth . Ben great question. We continue to invest capital. Last year, we put over 100 million capex into the business. We currently have access to andtal through lease backs other means, nondiluted to shareholders, to continue to aggressively spend into the business. Our business is profitable and producing Free Cash Flow. We can use that to expand the retail fleet, for example. You today, we have opened nine stores, we can fund that expansion with Free Cash Flow operations. Vonnie how concerned are you that private equity is turning now . D this industry when will we see the more consolidation of these independent growers, farmers, production facilities . U. S. The unique thing about cannabis is it is federally illegal. Most capital pools, Public Markets have a hard time accessing u. S. Capitol. We have a big edge with a big whereround our business Institutional Capital cannot invest. That is beginning to change. People are seeing this and they are coming in, and we welcome them into our space. That will make it more attractive for shareholders as we continue to allocate and grow. Vonnie i am sure that you are please with how things went this quarter. Shares are definitely rewarding you. Ben kovler, ceo of green Thumb Industries. Still ahead, a big day for beike chinese, as the property prices its u. S. Ipo at 20 a share. We will speak with the cfo on its trading debut. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Soaring as ite has become the largest u. S. Ipo by a chinese firm since 2018. It raised 2. 1 billion from sub tank and tencent, just had an ipo priced at 20 a share. Asning us now is cfo xu tao, well as sonali basak. Sonali thank you for joining us today. One thing that i find interesting about your listing, it is one of the biggest chinese listings on an American Stock Exchange in years, but it also comes at a point of great tension, and the threat of delisting. Why are you comfortable listing in the u. S. Right now . Xu i cannot speculate on the market relations but i can say is a Service Transaction platform. Vonnie how concerned are you about u. S. China relations right now . Think this is a point that i can speculate, but i would like to say china and the u. S. Are the biggest economies in the world. China and the u. S. Have big markets. We have learned so many experiences here. We are providing services to millions of families in china. You have three of the biggest investment banks in the u. S. On this stock listing, goldman sachs, morgan stanley, jpmorgan. All three of those banks want a bigger presence in china. How long have you built a relationship with them . We have a longterm relationship with our company. Vonnie what do you plan to do with the money raised . Clearlyally, this is documented. [indiscernible] vonnie maybe you and me can take over because i think we may be losing the connection. For as a fascinating time chinese property company. Give us some details about what exactly it does online. It is an online property brokerage. More than 60 ping in the listing, so you see american investors shrugging off any of the threat of delisting. In my conversations with Investment Bankers, they dont see it as an immediate threat. It would be very difficult to do. More thann by beikes 2 billion listing that is surging, there is a ton of interest from american investors to be investing in chinese digital companies. With thee just spoke codirector of research at bridgewater who said it is not wise to just be invested in the United States. In a tripolar world, you need to be invested in china. Did she mean adrs or Chinese Companies, she said bonds and companies in china. Perhaps lined his company was so popular on the ipo. You have to wonder about china real estate. If we are going to into a global recession and people are exiting urban areas, wont they be doing that in china, too . Sonali that is certainly a concern. One interesting thing about this company, people are buying into the digital platform. One week ago, we had rocket, who tried to sell itself as an online company, but investors were pushing back on the idea, making sure it had more of a financial valuation than it did a technology valuation. Beike is having a different experience here. We spoke to blackstone yesterday, and something he mentioned, the Technology Spending in china is significant and cannot be ignored. Vonnie certainly a variety of ipos and Investment Bankers are having no todays alike in 2020. Thank you for that, sonali basak. Lets take a quick check on the markets. Technology stocks are higher once again. The nasdaq above 11,000. Tech shares pushing it up 0. 6 , even as the s p 500 rests on its laurels, it is on a record. The dollar index down. 2 . Us 10year yield providing with perhaps the Biggest Surprise of the day, right above 70 basis points. 20 basis point move in the last couple of weeks. Optimism about the u. S. Labor market, but how should investors read the numbers . We will be speaking with bill strazzullo bell curve trading. Mark im Mark Crumpton with bloomberg first word news. Israel and the United Arab Emirates have agreed to fully normalize relations. A joint announcement from the countries and the United States called in an historic diplomatic breakthrough. The decision by the uae will also be seen as a proxy for its larger neighbors saudi arabia. The saudis have close ties with uae and have been viewed as having some informal contacts with israel. Secretary of state mike pompeo is in slovenia making the case for a highspeed Wireless Networks that bars Chinese Companies like huawei. He met with officials and signed a joint declaration on 5g security, to keep entrusted telecommunications vendors out of slovenia. He says while he is a security risk. Police in portland, oregon once again declared a ride last night outside the federal courthouse. They used tear gas to disperse the crowd after they say some of them are setting fires and shooting off fireworks. There have been let me demonstrations since george floyd died in Police Custody in may in minneapolis. The former police chief in milwaukee who was demoted to captain in part for using tear gas against protesters demonstrating George Floyds death has decided to retire. The city police and Fire Commission voted last week to demote all caps on so morales. He told a Radio Station that if he came back as captain, it would cut his salary and pension benefits. His jobsaid that he did transparently and honestly and is considering legal action. 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. Amanda live from toronto, im amanda lang. Welcome to bloomberg markets. Vonnie im vonnie quinn in new york. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. The road to recovery, initial jobless claims fall below one million for the First Time Since the pandemic began, underscoring the depth of the economic damage in the long road to recovery. Apple readying some scripture bumbles. Seductiony prepares bundles to boost its services. Ig markets for the second time this year. We will discuss the lack of credit available for small and mediumsized firms. Amanda some positive enthusiasm thanks to the jobless claims data today. We still have earnings out there playing a role in market sentiment. Overall for the broad s p 500, a mixed session. Half of the groups are higher, half are lower. We are into negative territory, we had been positive today. Tech, consumer staples, discretionary, and communications leading us higher. The energy and financials are the weak spots. Gold up a little bit again today, still above that 2000 level. Gold close to but slightly off of alltime highs. There are those who are wondering about whether those levels are justified, based on the fundamentals and the uncertainty that is out there. Taking a look at the s p 500, i want to bring in bill strazzullo bell curve trading. You called a high in the s p 500. I want to check in with you on where you think the market goes from here, whether it can breakthrough that level of 3400. Bill this is an interesting time to do this interview. What i did a segment back in january, february, in some circumstances, it is eerily similar. Coming into the year, we had a blockbuster 2019. The nasdaq was up 35 . The dow was up 22 . The sentiment was the market can do no wrong, sky is the limit. Guys, ipoke with you said, pump the brakes on an equity market rally, bring your exposure down. It is not that i had any inside information on covid, but we had hit 3400, our final objective off of 2009 lows. We thought there was a lot more to the upside,ed regardless of the barest catalyst. We sold off 36 in the s p 500. Fast forward six months, and we are coming back to that same level. People think the market is bulletproof. We have rallied through covid, economic collapse, domestic and International Political strife. I will say the same thing to the viewers as i did in january and february. Once you approach that 3400 level in the s p, the riskreward, in our opinion, doesnt make sense. It is not about trying to top pick the market and get out at the very high. Risk reward is understanding that when you are in a trend, when you start to see a lot more room below you that above you. Vonnie what will the next catalyst be . Bill good question. I made the same call in january and february and covid was not on any wars radar screen. The market at this point is really priced to perfection. This anticipated second wave of not be that destructive. It is priced that the economy continues to recover, albeit , we get more stimulus, etc. There are a lot of things that have to go right, only one or two things that will go wrong. That we will go back to those march 23 lows, but you can get a pullback that hurts. You could easily see five, 10 . A point now, like we were in january, february, where it makes sense to play some defense. Amanda what about gold . We have seen it hit a fresh high of about 2000, settling back a little bit. Do you think the fundamentals will support a move higher . Bill i think gold is one of those places i have talked about it on this network a number of times. We have been very bullish. Let me distinguish, i am not one ls that isermabul always touting gold. I really didnt care about it t until the middle of 2019. To 3000 ate could go that time. We got about 1500, our trigger. To 2100. Treated close it doesnt seem to crazy anymore. We did have a big selloff on tuesday. That shook a lot of people, myself included. For therlying thesis bullish case is still intact. Negative Interest Rates around the world which makes the opportunity cost of holding gold negligible. Central banks are printing money 24 7. It makes gold very attractive. I think it is a great diversification tool, and that is one of the reasons i want to talk about it here. We getly, when overextended in equity markets, they go into bonds. But when bond yields so low, get . Are you going to if you are in the longer end of any of these markets, and you get it wrong, at these levels, a small increase in yield leads to a big capital loss. Here,k the last catalyst which has been fairly recent, is the weakness in the dollar. One of the trends we are looking at for the rest of the year, into 2021, is a much weaker u. S. Dollar. You can see euro versus the dollar at 1. 30 and potentially higher. All of those things make the case for gold very compelling. A numbere have heard of times today that we should be invested outside the u. S. Your specialty is within the u. S. , but would you be looking at areas where you could get exposure . Bill sure. We cover a lot of the major global stock market. Has outperformed for a really long period of time. Of trying to diversify, going into major stock markets around the world, emerging stock markets has not worked to this point. I am not sure we are ready to do that. My thought here is more, do something defensive, raise some cash. Things to different different people. Some are more aggressive, they will sell call, buy puts. They will go into more defensive sectors. I am not so sure that if we do youll do any better in the foreign markets than you will in the u. S. Context of 3500 in the snp, the risk reward start to change. What do you think about semiconductors . Do you believe they go higher . Bill i talked about this on your show in june. Certain areas may outperform the snp as we get back to alltime highs. I talked about semis. Atthe time, smh was trading 1. 50. Over 1. 70 now. I still think there is upside here. Think smh goes higher and maybe prince 100 at some time. That is an area where you could outperform the s p. Technology in general has driven this rally. A lot of attractive areas to be. That is where we have had a lot of success. Thank you so much for your time today, bill strazzullo, of bell curve trading. Gradehits the investment market again. Their second Debt Offering of the year as they reveal new plans for subscription bundles. That is our stock of the hour, next. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Time now for todays stock of the hour. Apple in the headlines again. It has a new Subscription Service on the way, and its second bond issue as well. Abigail doolittle is combing through the issues. Apple is popping higher on this news, and because of that we have a neutral to risk on tone for the markets. This is the biggest waiting in the dow, s p, nasdaq. That is important to keep in mind as apple hits a new high. As for why, mainly the reason you were talking about, the bundle inscription. They will be offering subsection option bundles to boost their Digital Services including video, music, news, and fitness. The price will be cheaper than if you would buy those services separately. It is being called apple one. It will be launched along with a new class of iphones. As for the bond offering, this is interesting, the second one this year. If we go into the bloomberg terminal, they have so much cash, nearly 194 billion worth of cash. But that is down from the peak of almost 300 billion in 2017. With borrowing rates so cheap, so many other Companies Going to the market to take advantage of that, we have that. Cash in blue, in white, the total debt. They are close to having a level cashbt close to their pile, but folks really love apple. Over the last 14 days, up 11 days. They put up that big june quarter. Another piece of the story, stock split, which means you can take a 406 into dollar stock, and it will become a 115 stock at the end of the month, making it far more attractive to retail investors. As you note, the stock has been on a tear, up almost 60 this year. The price to earnings ratio could be considered rich but it is on par with other banks. What is overvalued these days . Relative to amazon, which is trading at what i would call a crazy multiple of 123 apple is atd p e, 35, does not look so high. At last time apple traded such a lofty valuation, it was 2007. This stock relative to its own trading history is very rich, especially given that the stock is up 118 since the march lows. What makes that mind blowing, this is not even a small army cap stock, this is the worlds biggest company, and it has more than doubled in five months. They need to do is continue going forward. Apple will continue to put a Great Results to support this stock price. Frankly, the broader indexes, because of that bid weighting. Amanda thank you for that, abigail doolittle. Is causing9 pandemic a lot of change in the way that we think about the value, including many decades of u. S. Dominance. Erik schatzker spoke exclusively with a founder and ceo of light sky macro. In general, people are optimistic about the virus. Q4,ill get a vaccine in lets move on. Then when you look at the consequences, people have not made the linkage between the policymaking response is not necessarily linked to the actual outcome of the virus. Catalyst thata allowed an extreme change in a short period of time, but it has now taken a life of its own. So even if the medical experts are correct, and even if the virus is not a major part of our lives over the following years, i still think these changes will be borne out and we are not going from a policy or social perspective or from a political perspective, back to where we were. For this to bear out, we dont need the virus to stay with us for an elongated amount of time. Bolted and horse has it will be very hard to put in the box. It will be hard because we have already let the political cat out of the bag. You have seen these big social conflictsburst out, that were already simmering. Nder the surface the environment of quarantine has allowed them to bubble up. I also think from a policy perspective, it is hard to put it back. What matters with fiscal policy is rate of change. If you have blown a 20 deficit in your reaction, how do you put that back in the bubble . You cannot say, virus is gone, next year we go to zero. It doesnt work like that. Have anal policy to even trajectory on growth, it needs to stay the same. Fiscalre to be a zero impulse, 20 deficit next year that is a 5 ear, fiscal impulse contraction. If i trade down to a 10 deficit, that is a massive contraction. In this political environment, im not sure you can Tell Congress that they need to be writing trillions of dollars in checks to fund the interest on reserves. You are going to take money out of social security, pension, education to pay banks . Good luck with that. Three of the great trades over the past decade have been long equities, long rates well, actually four. Credit spreads compressing. You could have certainly been short commodities. What are the next great traits for the coming decade going to be . If i look out over the coming , i think we are going to be in a very different world. I think the risk parity world that you have essentially described is not going to happen. We have already brought forward all of that asset price appreciation. It remains your ability for the equity market to keep having these gains is going to be very hard because you have already brought forward in that big, dramatic move lower in the long run discount factor. Expected return on equity over the next decade is zero or negative, depending on were that longterm Interest Rate goes. Amanda that was Erik Schatzker in an exclusive conversation with ben melkman. This is bloomberg. Amanda this is bloomberg markets. Im amanda lang in toronto. Levels ofted government stimulus has led to a rise in borrowing, but that may be shutting out some Smaller Companies that are the engine of the economy. Our corporate reporter joins us now. Why are smaller firms being shut out of this boom . Everette side, to financial disaster, the fed came in with a huge bond buying program. That provided a backstop to the markets. Today getting some of the lowest borrowing costs ever, and then we have some of the more pandemic stricken Companies Hitting the market. Stimulus works well for them. But on the other side, it hasnt worked well for Smaller Companies. It is much more challenging to try to fill 20,000 different holes with liquidity. Easier when you have a Financial System problem. This is much harder and they are finding it difficult to get cheap money. Vonnie what option to smaller firms have . Ye spoke to marc lasr yesterday, but how many of them are out there . Thany charge a little more half they would want. The fed has designed other tools, the main Street Lending program, where it is essentially buying 95 of the loans from the bank, so banks should feel more comfortable with the risk, but that is complex, difficult to roll out. And there is the Paycheck Protection Program where loans are doled out, they can become grants, if they are used to cover payroll. These have worked to a degree, but there is a lot of criticism that they are just moving too slowly. That brings me back to the challenge point. This is something the fed has not had to do before. With the financial crisis, they just funneled the money down. This is a different situation. Vonnie thank you so much, sally. York, amanda lang in toronto, this is bloomberg. What happens when a wireless carrier puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. 2 00 p. M. In new york, 7 00 p. M. In london, i am caroline hyde. Lets check in on those headlines. Gains andween small losses. Tech leading the day with apple shares pushing to an alltime high at one point. Flirtingnd s p 500 with that record. It surpassed the prepandemic record yesterday. U. S. Jobless falling below one million or the first times the start of the pandemic. Americansmillion still collecting on ointment, it is a long collecting unemployment, it is a long road ahead. Sales of the online auto in the red after reporting its first earnings as a public company