Arizona, and hospital cases in california all marking new highs. Plus top advisers to President Trump are set to urge the u. S. To undermine the hong kong dollar peg to punish china for its crackdown in the city. Ons get a quick check up how markets are set up for the open. Here is Sophie Kamaruddin in hong kong. Sophie in asia this wednesday, we are seeing a mixed start to the session with focus on china and if mainland stocks can keep up that rally we have seen for six days. Futuresd 14 so we have in the green for the most part. Hang seng futures settling higher after the rally did stall in hong kong on tuesday. Switching out the board, checking in on the hong kong dollar, which continues to have the 7. 75 mine as they continue to defend the peg, we are seeing little reaction in the curb. Jumping into the terminal for a big picture book, low 200 pips after the spike we saw in may but staying elevated on economic and political uncertainties. Tracking any reaction to a bloomberg report. They are weighing proposals to undermine the hong kong dollar peg. That is the least likely option among possible sanctions. Terminal forthe another big picture view, there are over 5 trillion u. S. Dollars dollars inits deposits around the city. Haidi. Haidi the spread of the coronavirus meanwhile has produced another trough of global headlines. The infections set records across the u. S. With new the countryhs as closes in on 3 million cases per australia in the meantime is putting melbourne back into lockdown. And the brazilian president , gyre bolsonaro, has tested positive. He has long downplayed the effect of the virus on latin americas largest economy. He covers health care as a Bloomberg Opinion columnist. Why are they so dramatically different when it comes to australia and the u. S. . [no audio] haidi just want to check that you can shery we will try to go to mac neeson once we get him max neeson. We are discussing coronavirus cases. Thats get a first check of the first word headlines. U. S. Lked about the dollar peg and advisors in the Trump Administration said to be considering undermining the hong kong dollar peg to its u. S. Equivalent to punish china for tightening its upon the city. We are told the idea could include limiting the ability of to buy u. S. Nks dollars. Sources say it has been raised as part of wider discussions at the state apartment but has not reached the white house and may not progress further. The vice chairman of the Federal Reserve says the bank can do more and will do more if needed to boost the u. S. Economy. Richard clarida says the fed has a lot of accommodations in place but would likely turn to additional Forward Guidance and asset purchases to support the recovery. The fed held rates near zero last month and signaled they are likely to stay there through at least 2022. Malaysia cut its benchmark rate to a record low, warning of threats to an economy reemerging after months of law down. Bank negara dropped the overnight rates by 25 basis 1. 7 5 , its lowest level in records dating back to 2000 four. Stimulus will accelerate the recovery from the virus amid three straight months of deflation and the worst Unemployment Rates in decades. Fell for aports fourth straight month in june as Global Demand struggles with the coronavirus and rising tensions between the u. S. And china. Outbound shipments fell three point 8 , slightly more than forecast, while imports plunged more than 8 , giving a surplus of almost 5 billion u. S. Dollars. Exports to southeast asia, japan, and europe fell out rose to the u. S. And china. Staying with the virus outbreak, max neeson covers health care and is a Bloomberg Opinion columnist. We have seen a pretty dramatic difference in government response when it comes to australia. We had a record of 200 cases in melbourne overnight and we are seeing the Strict Lockdown come into place. The likes of texas seeing 10,000 cases a day and a very different response. Just athink it reflects different amount of what governments or people are willing to tolerate. Theres a lot of Different Things behind that. You know, the u. S. Federal government response has been a little bit lackluster. Mostly the states and the notion of the sort of disconnect between controlling the virus and protecting the economy when the two are largely the same. You are not going to have a successful reopening if the virus is allowed to spread so you have these two very different approaches. One where even a miner outbreak is cause for renewed efforts to bring cases under control and the other where the strategy seems to be or the outlook is that the cat sort of out of the bag and any renewed lockdown just isnt being contemplated in many places. Shery someone that has long downplayed the coronavirus pandemic has been brazils president , jair bolsonaro, and we are now hearing that he has tested positive for the virus. How severe is the outbreak in brazil right now . Max it is quite bad. World the worst in the perhaps outside of the United States and one that consistently is growing with a pretty significant death toll and it is one that is likely to continue in large part because, as you even as heresident, contracts the coronavirus, is continuing to downplay it. Flung the just the narrative, when quite clearly, the data has revealed otherwise in countries around the world, continuing to push hydroxychloroquine, even though there is consistent evidence that it is not effective. Thehopes that perhaps experience of having contracted the virus will turn that around and lead to more robust policy in brazil Going Forward. Haidi on the vaccine front, we learned the new funding given to new types of therapeutics as well. In this race for a treatment, are we getting any closer . They think they can get 100 million doses out by early next year. Those timelines are always to be treated with caution. That one in particular. That novavax vaccine, they will not be able to start a phase three Clinical Trial until later in the autumn, so its going to be a little bit longer. At on top of the fact that add on top of the fact that we have yet to see first stage Clinical Data from that company, one that has not successfully develop a vaccine. Not that other vaccine makers arent very much in the same boat, especially in making pandemic in a pandemic context. It is worth reading these announcements, even though they are what you want to see in this environment, given a lot of different vaccine approaches the best possible chance to succeed as rapidly as possible, you know, still a great deal of uncertainty about timing on the potential success and on top of that, the definition of success, whether any vaccine is going to be durably protective, whether play a broader epidemic control role of containing transmission or whether it just protects against symptoms. Think about flu vaccine versus the measles vaccine is the type of comparison here. All things that are very much in the air and we will only know more once we start to get more robust data over time. Shery max neeson with the latest on the pandemic. Still ahead, how the virus headlines are feeding into market sentiment. The Investment Management has more than 3 billion of assets under management. The cio joins us next. David chow,ak with who is eyeing start ups in china with a near 900 million fund. This is bloomberg. U. S. Futures trading higher slightly at the moment following a down day, this amid signs that the World Economy still has a long way to go to get back on track. Despite this, our next guest is we have likely already seen the bottoms for the year. Joining us now is the chief investment officer, terri spath. Great to have you with us. You actually disagree with the idea that there is really no alternatives to stocks because we have low rates. What do you like in the markets right now when everything seems pretty frothy . Terri a lot seems frothy but that is particularly i am speaking of the u. S. Stock market, and Even International stocks to some extent. Volatility is going to be high. The risks are still quite large. Drawdowns are a big risk and that can do a lot of damage to your portfolio. Everything falls a lot faster than it goes up so we are being a little bit more prudent in taking a broader look at the opportunities out there. Not lowinterest bonds and not overvalued stocks, but things like emergingmarket debt, highyield corporate bonds, preferred stocks, even Municipal Bonds. Shery this gtv chart on the bloomberg showing how if you talk about volatility, you are not going to find it. Of course, we saw the huge spike back in march, but right now, the Municipal Bond index showing volatility. Bloomberg barclays index at the lowest level since at least 2001. What are the opportunities you find here and how do you factor in the potential of more stimulus measures coming from the u. S. Government . Terri theres is so much and theyreing in, already has been so much in the central bank, not just in the u. S. , but around the world. I think this gets back to your original point, which created a stampede into the stock market, but at the same time, as your show has covered so well, the data is not good out there. The Economic Data in fact is quite scary, so things like Municipal Bonds, which did get really hammered like everything not in march, are necessarily overvalued and certainly from a risk perspective, so we look at every in relative to each other and highyield bonds have been doing almost as well to any stocks, but that drawdown is so much less and the speed with which you could lose money and munis in munis and that is why we like that on a relative basis to u. S. Stocks right now. Haidi that may get your picks when it comes to emergingmarket debt, which is your other preference in the investment area. We have clearly seen demand rebound alongside issuance here in asia. What do you like in this part of the world, because clearly, that demand has not been played out equally when it comes to asian paper for . Terri asian paper . Terri there are a lot of things that can be pulled back. We look at things on a relative basis and certainly, relative to emergingmarket equities, our favor is to emergingmarket debt right now and that is, for the obvious reason, which is the less volatility, you have that coupon that can cushion things, but also, it is just a more Diverse Group of countries that are represented in emergingmarket debt versus equities, and its also, you know, possible that the yield on those can sort of carry investors through the deteriorating fundamentals until things are back on the upswing again. , we a risk perspective definitely favor emd over the emergingmarket equities and theres two reasons had a little bit better return, certainly recently, and certainly a lot less risk in a market where we think there is a lot of risk that we want to avoid. Haidi what are your parameters . Would you be looking at investment grade, looking at china, looking more across the philippines, where theres been increased demand for some of those Southeast Asian ems as well . Asia or central and eastern europe, they could underperform versus some of the more closed economies that are out there. Such as parts of china, colombia, and so at the country level, we are more constructive towards mexico, towards indonesia, towards russia, and obviously more negative as many are to chile and brazil. The risk we think is not Getting Incorporated is there could be upside if china has more of a vshaped recovery. Youre not putting that as a high probability but that is a possibility that has not really been priced in so that is where we would like to put out there that theres some upside potential, but again, more constructive towards a certain countries such as mexico, such as south africa and russia, to capture that yield in emergingmarket debt. Shery how much are you factoring in potential u. S. Election risk . We continue to see the substantial lead by joe biden over President Trump. We have seen in the past when President Trump was elected in 2016, how em currencies took a beating against the u. S. Dollar given the harsh rhetoric coming from the president. Terri that is a great question. I think that that is typically a very big issue here in the u. S. That is not getting the kind of attention that it would because everything in the immediacy of the coronavirus. The elections in november could go in a bunch of different directions, including a possibility of a total democratic sweep. I dont think the markets would be amenable to that because of the Biggest Issue that a democratic ticket would bring to the table is a shift in the tax picture here. That is something that is going to garner more attention Going Forward because we could have some changes or not and how that plays out, the market might react differently depending on the impact because they are different sides of the aisle at this point. Shery always great to have you with us. , Investment Management cio joining us. Coming up, we will take a look at why some top advisors to President Trump undermined the hong kong dollar peg. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Tictok video sharing at is playing up its ties to userca and denying its data to beijing. It says it has an american ceo, employs a staff in the u. S. , and would never divulge information to authorities in china. President trump says his administration is looking at a range of measures, including banning tiktok from the u. S. New guidelines that would Block International students from remaining in the u. S. For Online Learning are throwing plans for tuition into chaos. The harvard president says around 40 of its students will return to campus next semester while all courses will be taught remotely. Others may have to leave or transfer schools. There are more than one million foreign students in the u. S. United airlines is warning the surge in virus infections in the south and west of the u. S. Threatens the nation recovery. Shares slumped and made a fall in bookings, particularly at its new york hub as the metro area imposes new quarantine rules for travelers. Was just 16 of 2019 levels at the start of this month, half what it was earlier as travel demand began to rise. Bloomberg learned that top advisors want the administration to undermine the hong kong dollar peg to the u. S. Dollar. It would punish beijing for its recent crackdown on hong kong. Lets get over to our National Security editor who joins us on the line. It would be pretty extraordinary. This takes it to a level of not just sanctions but currency sabotage, if you will, not to mention we do not know quite how it would work. Is this idea something that would find support in capitol hill . Terri on capitol hill, for sure. Theres always kind of a wide spectrum of views on how the u. S. Should be dealing with china and i think we have seen since the start of the Trump Administration, even within his own white house, a wide range of views when you go back to the early days and people who were pushing for very strong tariffs and other officials who were a little more nervous about taking that kind of approach. What we have seen here from our reporting is that there are some senior officials on mike pompeos secretary of state staff who are putting forward a range of options that would be pretty disruptive and pretty extreme by historical accounts. A question about whether this will get to the president s desk and whether pompeo will accept them and end up in a debate with other cabinet members, not whether to go through with them. Of relationste between washington and beijing that these kind of measures which never would have been considered in the past are being discussed at a fairly senior level. Shery we are seeing a series of measures to push back on beijing. Even today, we heard from secretary pompeo talk about potentially banning tiktok in the u. S. Bill there is a whole range of actions being taken now or being debated now and the white house, the state department, the treasury department. There is a lot more debate going on about tiktok. It is vacuuming up personal information being provided to china. The company says that is not true. It is among those measures the u. S. Has praised indias recent efforts to try to ban some apps from their market. The u. S. Announced that they will be placing sanctions on chinese officials who restrict access. On a whole range of fronts, we see the u. S. Trying to take a much harder line. Still, the situation with hong kong is kind of on a different level. It is such an important Global Trading center, as we all know, and the repercussions of any big market moving activity would reverberate around the world. Haidi we are also seeing some concern when it comes to the reaction from big tech, talking about facebook or twitter or google or apple, in terms of how they deal on the privacy side with the hong kong government. Is there a real concern about heading towards, i guess, one country, one tech system when it comes to hong kong now . Bill sure. Wheres administration, there is this range of views, secretary of state pompeo said that from his point of view, hong kong has just become another chinese city. There is a whole range of thought about what china is doing and how seriously its making a move on hong kong. There is certainly that group who argues that, you know, essentially, it is becoming very country, one system situation. You should not distinguish between hong kong and shanghai or beijing or any other chinese city because essentially, china is treating it all as one, you know, geographical unit. Shery we also had heard that chinese firms received some of was u. S. Relief fund that dispersed through the ppp program. Quickly, how much are we seeing in terms