Before we get to your morning brief, would you explain to our american audience on radio and this great ruler in britain . Great uproar in britain. Just in 20 seconds, what happened . So a levels are the exams you do that get you into the school or university of your choice if you do well. Nobody took exams this year of course, which meant the government had to put in place a system. People didnt like being downgraded by an algorithm and the process is in chaos. It has caused a huge political storm here. It shows the competitive column of the u. S. Education system as we stagger back to school. Its a jumble. You know where you were on friday, where you were on thursday. I am watching turkish lira with further depreciation. You have a look at the things to come here. My mind skips to nightclubs and air travel this morning. Those are things that are really driving European Equity markets now. Brief,s of the morning there manufacturing data, estimate is supposed to be around 15. How will that play into the swathes of poverty data out of the u. S. President trump speaks in Oshkosh Wisconsin and then the Democratic NationalConvention Starts at 9 00 p. M. Im guessing there will be a lot of talk about the Postal Service. Tom weve got special programming. Look for david westin, balance of power and of course Kevin Cirilli. We are going to focus on conversations around what you are going to be at unique virtual conventions. Saw is you will be shocked over how short the speeches are this year. This is a really interesting experiment. Idea how its going to turn out. I remember governor clintons speech of arkansas decades ago. Mario cuomos speech of decades ago which stomped this nation in its tracks. Youre going to be seeing one minute, two minute, maybe five minute speeches. Vice President Biden speaks later in the week. The markets yield Asset Management, thank you so much for looking at this recovery from march in the equity markets as compared to 1998 that august. And also even back to december of 1987. Was it a correction . Was it a bear market . What was it we just lived through . I believe it was a correction in the bull market which started in 2009. You could make an argument that that bull market died on its 11th anniversary. Extremelyt of that quickly with very similar leadership. Certainly parts of the u. S. Intoy market i think went a secular bear market at that point in time. Its really covid related equity that went from bull to bear. Some of the cyclical stuff which has really been an interesting for several years has started to look very interesting again. Tom we are seeing that in the railroads and of course smallcap doing better. We hear conversation after conversation is its really not an enthusiastic market. Theres too many walls of worry out there. Do you agree with that assessment . Certainly. Sentiment measures are very poor. Sentiments, but i dont think weve seen sentiment this level with the market this high. Committedople are even if they are reluctantly committed. If we look back at l tcm and the like, do we learn anything from these previous crises . Think Central Banks react and you have a sort of generally dacian what you come out the other side of. Andainly in the late 80s 90s you had a narrowing of leadership. End a sort of excessive commitment of capital to what people thought work. In the late 80s it was all about japan and markets like taiwan. Of course in the late 1990s im sure Everybody Knows technology came out and completely dominated. Tech had market 398, done well. See aling is that you do narrowing of leadership and excessive commitment of capital to portions of technology and perhaps a couple of other sectors managed to jump on the bandwagon. Im quite polish about Precious Metals. I actually think we are going to see a broadening. I think the physical local economy is going to be much better than the Global Services economy. Here are starting to see that play out in the markets. That supportive to Precious Metals . You are talking about Precious Metals that are useful in industrial processes . I think Precious Metals are very sensitive to global liquidity and Central Banks are going to be in full emergency mode for the foreseeable future. Get pickups in things like inflation and good data coming out of it, the physical economy i think is going to look ok. Theres going to be so much covid related weakness in the Service Economy and prevailing unemployment rates are going to be so much higher that i think Central Banks are going to be doing more of what they are doing today and thats really quite positive. Where i probably am more contentious is i think the industrial side of the Commodity Markets look like they can get going here. Any kind of acceleration in the physical portion of Global Economy whether thats the u. S. Housing market, youre going to see some of the Industrial Metals really hitch a ride on this very narrow Precious Metals rally weve had so far. You suggesting its a recovery of consecration concentration because people are desperate to find Revenue Growth . You might see some of it. Activityink physical is going to be ok partly because of disruptions of covid. Related isusing starting to accelerate even if buying new homes. They are renovating their existing homes. This is going to be broader than just a u. S. Story. The very easy to see destructive impact of covid its very obvious, its very. There has been a constructive impact of covid as well. It has forced people to go out and spend on things they hadnt necessarily expected to spend on. Tom thats very true. Michael shaoul, thank you for joining us. This is extraordinary. All of our behaviors have changed. We are consuming things that we didnt consume before. Im curious what you see in the United Kingdom. Good, butooks pretty so much in the newspapers is grim. How is the United Kingdom doing in this august pandemic . There was a period of huge retrenchment and the rebound. T doesnt severally necessarily mean you were covert precovid levels. The focus is on the end of the furlough scheme. Rates is winding down. There is a concern as to what happens and some lobby groups and think tactics tanks have been warning the chancellor about how high they will spike towards the end of this year. Similar are the dynamics of this postal crisis as well. Nancy pelosi sent a Dear Colleague letter which is get back to washington now. Discussed in that letter is the idea of jumpstarting stimulus talks tied into salvation for the postal system. Want to make clear, that is speculation right now but certainly something to watch as well. Futures up 11. Now futures up 68. The yield. 69 as well. A little curve flattening this morning. A jumble. The data we are in london and new york for this simulcast today. Anna edwards. Osinska. S sinc we will do that next. This is bloomberg. Nancy has called the house back to deal with the Postal Service crisis. The Postal Service has warned 46 states that it may not be able to deliver ballots on times. Accused the trump appointee of enacting sweeping new changes that degrade. Strategist david carson now sees the benchmark taking 3600. The rally has caught many strategists and investors by surprise. Was the biggest antigovernment protest yet. Tens of thousands of demonstrators gathered in minsk protestst a plane attainted president ial election. In japan, the economy shrank in the Second Quarter by the most on record read gdp declined at an annual rate of 27. 8 . The worlds thirdlargest economy was already hurting. Japan had already slipped into a recession when the third outbreak hit. Deal is valued at 2. 4 billion. Principia focuses on treatments for multiple sclerosis and a range of autoimmune disorders. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. This is a deliberate effort to defund and destroy the u. S. Postal service so that people cannot engage in mailin ballots. This is a crisis for american democracy. Weve got to act and act now. Sanders of vermont talking on the uproar over the Postal Service. Acting pelosi asked congress to get back to washington. London, wes in welcome you to our simulcast. I want to get right to Kevin Cirilli. You crushed oshkosh. You nailed that. Nailed oshkosh but gosh. Us, ourrilli joins chief washington correspondent. Off dave wiggles wonderful work in the washington post. That is dane county. A lot of the democrats are going to be talking like Madison Wisconsin and liberality of that island of growth in wisconsin and outside it is a massive reality as some people have said. Going to speakts to madison, wisconsin or at the margin removed from dane county . That is such a great point because whether you are in appleton or Madison Wisconsin, it is really going to be about those towns that have the swing voters. Theyve already got the cities. So they have to play to these swing districts. Thats why its so interesting to watch. Have the former republican governor of ohio john kasich speaking before senator Bernie Sanders and you hear that juxtaposition, that is more of the kasich crowd the democrats are going to have to win if they want to defeat President Trump. Ofas looking at the poles 2016 compared to this time last cycle. The president was trailing Hillary Clinton by many points over the summer before the 2016 election by double digits. Thats why when i speak to democrats they are incredibly nervous to suggest they have this thing in the bag. Tom misses obama will speak as well. Amounts given shorter of time this year. What will we expect to hear from the former first lady to speak to those people outside of zones of liberal politics . Has really obama become a prominent voice within the Democratic Party apparatus. Whether its her book deal, her netflix shows or her speaking engagements, she really has become in many ways a prominent voice within the Democratic Party. She of course is most known for that phrase in the 2016 elections when they go alone, week ohio. Look for her to have much more of the ethos appeal tonight and look for kasich to also have an ethos appeal. Watchl be fascinating to how senator Bernie Sanders will talk about what type of administration they will join. I was speaking with Carly Fiorina last week. She of course has endorsed joe biden. Ofsked her what do you think republicans who are backing aocn but very nervous about or Bernie Sanders having President Bidens year. She says shes optimistic there will be a coalition government. Given the state of politics right now, im not sure thats a reality. As we work our way towards convention, the story around the postal system in the United States and how good and ready it will be for postal voting is going to get some airplay. The fbi should probe the Postal Service delays. How dominant theme is this going to be . House Speaker Nancy Pelosi lawmakers in the house of representatives back into session could happen as early as this weekend. Republicans over the sunday shows saying that the 10 billion but democrats are seeking for there to be funding in the usps, that that could be done. That could be finished. But the process and this is where it gets incredibly interesting if you are tracking iscal stimulus, the process where the headache lies because democrats would like there to be just a standalone bill with regards to usps, but republicans want to lump this funding as part of rotter economic stimulus. Ins a bargaining chip stimulus talks. It will be interesting to see of this fight over usps can be juxtaposed to the fiscal impasse have been covering for weeks. Interesting to move on to that fiscal question. Themed elerian talks about point of this debate should be regret minimization. Im sure that pauls unfriendly ears when it comes to the Democratic Party. What is the zeitgeist around the fiscal story going to be . They are going to say this ought to be passed yesterday and they are going to take this directly to the state and local workers and they are going to say that this funding is going to prevent layoffs. You know this across the pond that you are having a similar fight in the sense that there could be massive layoffs should there not more funding past. Similar fight thats happening here in the United States. Republicans, to they are adopting much more of a jack camp approach. Tom and i were talking about how you have Bernie Sanders and aoc speaking on the need to be more funding and next week youre going to have senator tim scott who really inherits the jack camp economic philosophy of conservatism for a generation. To be onte is going full display over the next two weeks. Tom Kevin Cirilli, he starts way too early. Wonderful conversation on that show. ,ur special coverage this week the Democratic National convention on Bloomberg Television and radio. David westin leading that coverage. Its going to be a very political week across all of our platforms. Futures up 11. The vix really shows that to 22 point 44. Nasdaq showing some strength this morning. We didnt see that friday and thursday. That was much more of a Broader Market move. Tech up nicely today. Nasdaq up 176 points. Yields come in a little bit now. 69 on the 10 year yield. We will turn to the yield market , where to find yield. Wells fargo Asset Management will join us on our simulcast. We welcome you. This is bloomberg. Good morning. Tom bloomberg surveillance i will cast. We welcome you in boston, new york, san francisco. Good morning. Bloomberg television worldwide. It is remarkable in the worldwide broadcast we have this morning. So much going on in china and as well in europe. George bory will be joining us. Dow futures up 53. I really want to show yields coming in as well. 69 on the 10year yield. Improvesyield actually , a lesser negative number than what we saw a week ago. Up 14. Related to that, 1963 an ounce. I want to focus on the turkish lira. To remindds, i had myself of world war ii and the road to warsaw, and then you make that turn northeast on the way to moscow. In the middle of all of that is belarus. How, it is stunning suddenly belarus is front and center. Anna suddenly it is on the map, isnt it . It shares a border with the eu, which is why they got the areension paving protesters not just the young but also employees of state owned businesses on the streets protesting. They are upset at the violence that has been met with their family members. Its important with the eu does here but is important with the eu does not do. Talk about sanctions, but avoid too many red lines. Putin is already getting involved in the situation. If you put into many red lines, that may influence the direction. Tom our bureau chief out of moscow was brilliant this morning, saying this is not ukraine, you dont have the polarization of Eastern Ukraine toward russia, western ukraine toward the west. You perceive belarus, isnt one nation or a partitioned nation . I will take her point. I am sure her assessment is very good on this. Different to ukraine, thank goodness for that, i suppose. The ukraine events certainly drove a wed between europe, made the response complicated. Perhaps europe can be more united this time, but anything against russia should be watched closely from a geopolitical perspective. Tom the key element is the nato the socalled cushion with russia. Fargo hasy with wells an important job of not only figuring out fixed income strategy but within the financial repression that we are all living in right now. Thisyou ever seen it like with the real yield so negative, that the return to retirees from saving has been so extraordinarily deficient . George good morning, thank you for having me on. Great to be on. From an historical perspective, i have not seen anything like this, but i dont think any of us have. As bond yields have come crashing lower, and most recently, inflation starting to tick higher, it continues to push real yields you mentioned the difference between nominal yield and inflation lower and lower. It emphasizes two things. If you are a borrower, it is a great time to borrow money. That is true for corporations, individuals, and the government as well, who gets the greatest benefit of these negative yields. But if you are a sabr or longterm investor that has a considerable amount of money in bonds, it gets increasingly more difficult to find real yield. That is what we spend a lot of time looking for, where can you get we yield . The reality is, used to be able curve, sothe yield where do you go . Maybe you go overseas. Know theourse, you french banks have been clobbered in the derivative businesses. I will suggest retail and conservative institutions dont want to test the derivative space of structured credit. What they want to do is desperately find yield. Specifically where do they find that right now if they are not leveraging up with the derivative instruments . George the real yields can be found in the Corporate Bond market. Investment grade yield in real terms are about 60 to 70 basis points depending on where you position yourself. That would be for an Investment Grade portfolio. You would have to have a duration of around seven or so. Maturity around 10 years to get a positive real yield. That is a considerable amount of duration risk. The other alternative is to go down the world of highyield which we know has its own pitfalls, challenges and struggles. When we remind investors is that highyield by definition is a relatively segmented market. There are sectors that are under a lot of pressure. But if you go into shorter duration highyield, trying to contain the risk of duration but you are willing to accept some credit risk, now you can start 2 , two. 5 real yield. That is relatively attractive in todays market. If you can compound over the 2. 5 several years at 2 , real, that is attractive for a longterm saver. You mentioned it was a good time to borrow. With that in mind, what do you expect from the fed . They will want to see yield curves going higher. What do we expect to hear from the fed on that . A revised strategy, inflation targeting is something that has been talked about for a while. George the fed are arguably in and an enviable position. They were able to contain volatility earlier this year. Now the question is what to do next. Toy are fixated on trying create inflation within the economy. As they pivot toward a more flexible, or what we expect them to pivot to a more flexible inflation regime, there are likely allowed to move higher to the extent they can and let it run above their target. Their target is to percent. The messaging likely to come from the fed next month is that they are willing to let inflation move above that 2 and then stay above that 2 while keeping yields low. They want to look at an average inflation target over a long period of time. That all presupposes inflation actually move sawyer. That is a debatable point. Recent data suggests we have seen core inflation not try your. That could just be a flash in the pan, a result of some feedback during the covid crisis. It remains to be seen whether those inflationary trends will remain persistent. Low,d is still relatively sorry, unemployment is still relatively high. To see sustained inflation moving up, you would have to see a materially increase in growth. To real improvement on the medical front with respect to covid. Said about fed strategy and inflation, how high do yields go in the u. S. , much further, or do they pause after they recoup the dip and they made in march . George 10year yields are up 15 basis points from the low. We got down to roughly 50 basis points, just under 55. Now we are closer to 70. If you look at the trend a little bit of technical analysis. 70 basis points was a support level in price terms. We have bounced off of that. The data that came out over the last couple of weeks we had the nonfarm payroll part followed by the inflation numbers. That allowed inflation to move higher. On top of that, the government is in the midst of doing its auction and they have considerable borrowing do between now in years end. All of that put a little bit of upward drift on bond yields. 10 year bond yields above 80 see apoints would need to material increase in growth and a signal, sign that you will see sustained inflationary uptrend. While we are optimistic about growth, we think the trajectory will be relatively contained. There is some concerns about nearterm inflationary pressures. But we think it will be difficult to see that move materially higher on a sustained basis. That would have to carry us through years end. 80 thek a range of 65 to 10year is sort of the new range over the next one to three months, at least until the election. Tom george bory, thank you so much. One of the things i noticed is not so much the depth of the duck line but the struggle of airline business. Provide air again cutting storage. Airw the article of british trying to figure out what to do with their a380s. The world of heathrow is in total disarray. Anna the world of air travel. My thoughts were on nightclubs and aviation. We are constantly being reminded , further limits being put on limit and travel plans, the ability to go to one country in europe to another. We are seeing those freedoms dial the back as coronavirus cases spike up. That is bad for aviation stocks. Wenair negative even before got the news, and now we hear them talking about cutting capacity in september and october. Tom we welcome all of you on Bloomberg Radio and Bloomberg Television. Dow futures up 69. Coming up, moderna will since go from the dukemargolis center for health policy, talking about the pandemic. This is bloomberg. Good morning. Ritika members of the house are cutting short their vacation. Nancy pelosi called him back to work to deal with the growing crisis of the Postal Service. Postal service warrant 46 states it may not be able to deliver their balance on time for the november election. Thesi has accused postmaster general, a trump appointee, of hurting the service. The white house downplayed a report that President Trump wants to meet with Vladimir Putin in the u. S. Before the election. Robert obrien says there will not be any summit before the vote by the administration would like him to come to the u. S. Once there is an agreement on a nuclear arms deal. 1000 people died in the u. S. From the coronavirus. Wasl the death toll of 1046 300 fewer than the previous day. The number of infections rose by the smallest amount since tuesday. Another week of chaos. Lockdown in britain meant people were unable to take their usual exams. The government said instead grade would be best on an algorithm that took into account predictions and previous scores. When the scores came out, students said many of them were below expectations. A heat wave is threatening to take down californias power grid. Estate instituted the first the 2001lackout since energy crisis. Officials are trying to protect the system being used too cool so money with air conditioning. 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 ritika gupta. This is bloomberg. The opening of the economy is not the december 2019 economy. It doesnt mean that people will be flying on planes and going back to the office. This is a tentative environment. Tom another view on the American Economy and there are many views out there. Twoen to surveillance for hours, and youll get 12 views. We welcome you on a monday, much to talk about. Anna edwards, the china discussion is driven forward. Secretary of commerce ross talking about huawei. We bringdlines, as them up, really get your attention after going after about going after more affiliates. Is it a story in london . Anna absolutely. If you find a strategy that works in terms of taking on individual chinese businesses, what is to stop you from moving on to another . Are in the u. K. , there is perception that either because huawei,hanging ideas of or by persuasion, they changed their position on the ability to work in this country. Also another headline crossing the bloomberg saying that u. K. Says the eu trade deal can be reached by september. The deadline is not until december. As we know with the eu, sometimes there is a temptation to run them up to the deadline. That could be where i spent new years eve, i guess. Tom i like the idea of getting to new years eve. It seems so distant in this crazy 2020. One thing that is important is this a bipartisan view on china, and that will certainly be a nuance in the convention covered this week. Westin and Kevin Cirilli leading our coverage there. Virology androm epidemiology over to policy. She is at the dukemargolis vantiv for health policy, the Deputy Director of policy, moderna will since god joins us. Nska joins us. What has changed in our knowledge . What is new about where we are going in this pandemic . For one, we have had a rapid increase in cases. Earlier in the summer, i dont think anyone anticipated the amount of spread that may occur between now and when schools would reopen. When we were thinking back in the summer, we did think we could reopen schools because we did think there would be some control over this epidemic. We have had ae, rapid spread in this country. Britain, a at great greatys ago britain, europe, a couple days ago, 13 cases per million. Right now the u. S. Has about 160 cases per million. That is across the country. Some states have much more. We have really started to lose control over the situation, which is disconcerting. Here, and inoticed guess it is part of the generation, i measure the vietnams. We are coming up on three vietnams of death. That is an extraordinary scope and scale. I say this with immense respect for the sacrifices of vietnam and what professionals are doing now. Are we going to have four vietnams of death . Marta it is difficult to measure out. Have many more, excess deaths are significantly higher. And we are still not done with this. We have a long way to go, and. Inter is coming up we are going to lose a lot of american life, unfortunately, in this pandemic. Meantime, we hope for a vaccine, we watch closely all of the headlines from various parts of the world. Is there anyway to know how long protection from a vaccine will last, other than allowing a vaccine to run its course . Is there any other way to answer the question until we test and wait . Marta test and wait. That is how you answer the question. When we see a vaccine available, we will know how much of an immune response it will have initially, but we wont know how long it will last. That will have to be studied. If we want a vaccine soon, we will have partial answers into how protective it can be. It will protect you in the shortterm but we dont know how long. Anna what would the role that strategy be . When we get a vaccine i know that we are not there yet. Should it focus on Health Care Workers to start with . What is the best way to provide the most protection, cut the transmission . You need to identify the highest risk populations. That might include Health Care Workers especially with the underlying conditions, pregnant Health Care Workers who are also at high risk, other populations that are at high risk. They are the priority. It is necessary. To produce the number of doses of the vaccine that we will need is tremendous. You and i will likely not be vaccinated until the spring or perhaps summer. We are hoping the vaccine will be available this winter and we can start to vaccinate highpriority individuals. Greatlynk you so much, appreciate it. With the dukemargolis center for health policy. Much more to talk about this morning. We have not gotten to it on the em basis, but global wall street, whether you are involved or not, the political economics are fascinating. To see the currency unraveled to is reallythe kospi distressing. Russiay thoughts go to coming off of that conversation with vaccines. Different governments are making different assessments on when they have seen enough testing, when they are confident they can give it to their daughters, professionals in their country, the wider community. You may get a virus vaccine sooner if you go to moscow. Tom i know the philippines is also talking to russia about the testing of a so untested vaccine. At least that is what we hear from american authorities. Gold rebounding off of a difficult friday paving Jonathan Mackay joins us from schroder investment. It is a simulcast on Bloomberg Television and radio. Thank you for being with us. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Dividedarket is totally from the real economy. Yes, we are printing money in the u. S. But we have not seen that velocity of money enter the system. Every minute that goes by is compounding the losses. There was only so far the market can go without the stimulus a deal. The only thing voters care about right now is the coronavirus and the economy. This is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. Tom