Jonathan of course, by all means, go on. Dir. Kudlow you had a sermon jonathan with all respect, that was not a sermon. Dir. Kudlow there are other ways to do with these problems. Throwing money at them is not the only answer. You have to create Economic Growth and incentive. We are willing to spend money. Thats not the point. The president has endorsed another round of direct mail checks. He has endorsed that. He has also endorsed continued unemployment assistance. The question is, what is the overall policy to make sure that it makes sense that there are incentives to go back to work . We have a very fullfledged plan to do exactly that. We want to reward people and the businesses they work for to go back to work. We will extend the tpt. That is part of our package. Im not going to negotiate, but that is in the mix. We have retention credit for new jobs, we have benefits for reemployment. We should give existing workers a tremendous boost to income. Even in five months it will be 1200 a year or more. People not working can go back to work and realize their aftertax wage is higher than the unemployment. That is a good thing. So weve got to be smart. It is not just a question im not going to see the ground of compassion. Know people. Families, cousins, kids, neighbors who have been damaged by this terrible pandemic correction. We know that. And we have been working on this now for five months at work speed. We are even at the point now where six or seven companies, aided by federal money, large phase threeare in of vaccination testing, which is a huge part of the story. As far as getting the kids back to school, in addition to the masking and the distancing and the hygiene and so forth, we are willing. We have in our negotiated position a good deal of money, well over 100 billion, to get kids back to school. But we are not going to allow a transformation of the economy, whereby the government and its planners run everything. Health care, energy, you name it. We are not going to go down that road. We have tried that in the past and it does not work. You have to be smart, you have to focus on the incentive model of growth, and then we will see the successes. We have had plenty of economic comebacks in this country. Throwing money at every problem is not the best course of action. Lets be smart, lets be efficient, lets provide incentives. Again, if we cannot get compromise the way we did last march, then the president will act with his own executive powers. Let me tell you, it is not a bluff. Jonathan final question because i know i will get in trouble with the white house for keeping you too long. What will happen first sanctions on carrie lam . Dir. Kudlow those are completely disconnected. My not going to respond to that. Jonathan can we get that a little bit later . Dir. Kudlow im not here to talk about those. We have already done an executive order with respect to sanctions on hong kong and china, for their many misdeeds. Not always taking away the freedom of hong kong and breaking a 50your deal. But the chinese have to be held accountable on their bad behavior during the pandemic, their bad human rights records, what they are doing militarily in the south china sea, and we are putting outcome as you probably know, we are going to protect american investors with a much tougher approach with respect to the auditing of chinese Public Companies and the Public Accounting board and the sec. A financial working group. We just published the stuff. We are going to give one year to shape up on the audits and on the working papers behind the adits to see if they deserve listing on american exchanges. We have to protect our own investors, protect our national security. Those are tough, gritty issues, and we are making progress. Those are separate issues from these fiscal negotiations. Jonathan larry, i know you are a man with a good heart, and i appreciate time every first friday when we get the jobs report. I hope for the best a little later as well. Larry kudlow. From new york city this morning, good morning. This was the countdown to the open. This is bloomberg tv. Guy im guy johnson with my t in london, taylor riggs with my host, taylor riggs. The real implication, the payroll report, is what is it going to mean for stimulus talking d. C. And then you have to throw in this raise level of tension between china and the united states. Equity markets are just going sideways. They are trying to digest this and figure out what it all means. Taylor what is also moving sideways is the bond market. There is almost no movement on the full faith and credit. A few things that kudlow said that struck that stuck out to me the payroll, tax cuts, between stimulus and those to mill. And state aid come austerity measures that might be coming are not included in this to millis package. We are joined now with more from kevin cirilli, who is our bloomberg chief washington correspondent, to bring us more reaction on what we just heard from larry kudlow, the house economic advisor, who was just speaking with us. What are your some of your what are some of your Key Takeaways, particularly if we are going to get a deal or not. Kevin larry kudlow suggesting that an executive order is very onn the taelor short the table shortterm. Particularly on Student Loans and unappointed benefits. It will go through middecember. The white house is telling democrats if you are not going to budge in terms of the negotiations, we are going to go around you. The second point, he is saying debate of ideological epic proportions. I thought a key line from larry kudlow moments ago was when he said that he is not willing the white house is not willing passion, as it relates to speaker pelosi. He invoked jack kemp. Thell long history inside beltway with conservative economist and thought leaders in terms of how economic incentives would help to grow the economy. The final point that he made, and the third take away, is that essentially they are prepared to go along. They are prepared to roll up their sleeves, to continue pressing on word onward for these negotiations. Larry kudlow really signaling that they are going to be able to do this for the long term. Thank you very much indeed. We are continuing to monitor what happens in d. C. With kevin and the rest of the team giving us great reporting. It is critical that we get some sort of a deal done at this point. Michelle meyer, bank of america securities, economics, joining us now to give us her take. Lets break it down a little bit and start with what we learned in terms of the payroll report. Everybody has their favorite way of breaking down the payroll report. What did you see in these numbers about what is happening in the u. S. Economy . Unless the labor market continues to heal but it is at a moderating piece. The jobs numbers were stronger than this than last month. About 42 of jobs lost have been recovered thus far. In some of the most sensitive sectors to covid like leisure and hospitality, retail trade, one would think at this point a beenf hiring has exhausted and now it does become difficult. Ofbecomes more a function broad spending, and that is why i think there is so much focus on the fiscal stimulus bill right now because that has been a big source of purchasing power for consumers. If that feeds, what does that mean for the ability to continue to bring workers back . Theor does this take pressure off congress on some of those tougher stimulus measures you were just talking about . Michelle i dont think so. Given the jobs numbers today, there are still 12. 9 Million People out of work, so it is still really high numbers, and if you are digging even deeper into the data and you look into the household survey, people who are answering questions could reporting how they are seeing themselves in the labor market, about 63 percent of those unemployed say they are temporarily unemployed, which means they are still attached to their job, still looking to get back on, which means there is potential labor out there looking to work, looking to be employed, and looking for help in the interim. I think there is quite a lot of pressure in terms of getting additional stimulus to the economy because we have not fully healed yet. Covering theer European Crisis 10 years ago, and austerity was one of the issues that really came to the long timeit took us a to recover from that because of the austerity that was put in place. Require balanced budgets. Local finances have to change and switch on a dime if we do not get a stingless bill that will satisfy them. One impact will that have on the u. S. Economy . What does it do to your models . Exactly right. Re there are different prongs. What do you do for Small Businesses . What do you do for the governments that have to balance their budgets and without additional funding, reportedly they will have to cut back. Bigink that is a really difference views between republicans and democrats right now. If you dont have additional funding, the rainy day funds will continue to be drug down drawn down. They will have to cut back and that will be a source of pain for the economy. We are carefully looking at what happens there. It seems like all the headlines are on Unemployment Insurance, but there is this underreported component which is what happens with government finances. Is withmichael mckee us. Mike, this probably your 10,000 jobs report today. What were some of your Key Takeaways . Mike the general feeling in washington is it was a pretty good report. I would say it is a not bad report. We saw job gains, but they were less than half of what we saw in june. The unappointed rate came down largely because the labor force shrank. So it looks at this point like we were sort of in status quo from june to july, and this only measured to the middle of july, so since then the anecdotal reports we have gotten in the highfrequency data, things have gotten worse, that hiring has stalled out we will not know that until september when we get the september jobs figures. Between now and then, if there is no additional aid to people from washington, you are going to have a real problem with the economy. Maybe michelle has a multiplier she could put on that, but all these people losing that 600 and it is not being replaced by anything, that is a significant amount of money keeping the economy afloat. Some of the people who are still working may lose their jobs and there is not this additional spending on the consumer side. Guy michelle, what happens if that money disappears . In some ways it has already disappeared and we will learn the effect of this pretty quickly because for most people that money has already run out. Michelle thats exactly right. We will see the month we will see what happens in the coming days as we monitor these highfrequency indicators. As we turn to monitoring other data sources, looking at mobility and movement in the economy and help people and how people are deploying cash, we will know in time how things are the how things are progressing. It is likely we will see pullback connectivity with the expiration of expanded benefits. Expanded benefits went to a large cohort of individuals who have what is called a high tendency to spend because they are there are more budget constraints. Unappointed insurance tends to filter into the economy quickly, so without that you will not see that additional spending, means it could create some challenges for the retail sector. These industries are so sensitive to incoming demand. Absolutelye carefully monitoring that to see what it means in the coming days and weeks. Taylor im curious what your analysis has shown you about the extra 600 a month in Unemployment Benefits versus 400 versus 200, and the trickledown events that you said, back to the consumer. Michelle you can do the math. You have about 30 Million People who are still on Unemployment Insurance, and moving that 600 is, call it about 10 billion a week on aggregate. So you can kind of pass that forward and say for that income, how much goes into savings, how much goes into spending, how does that multiply broadly through the economy . It is fairly straightforward math when you think about how to cut the different numbers. The complicating factor, and this is where there is a debate in washington, what does it due to to the incentive for people in the labor force or out of the labor force . What is the right replacement for Unemployment Insurance . Currently it is running about 100 or so. Precovid it was running 40 . It seems they are candy setting may be around 70 replacement income. That could be the right level where you create incentive for people to enter the labor force but you provide enough to keep spending ongoing. That is the delicate balance they are trying to work out. We are getting to breaking news. The u. S. Is sanctioning hong kongs carrie lam. This was talked about earlier, clearly following news that we had overnight regarding the president s decision on the chinese tech company, and we are still feeling and understanding the reverberations of that. The u. S. Is sanctioning 11 people under the Hong Kong Related designations. That includes carrie lam, u. S. Treasury sanctions on its website, and clearly this is going to be another factor that comes in, the thinking of everybody trying to work out whether to invest their money right now. At the moment you have only got to look at what is happening with the nasdaq and its incredible run to maybe make a conclusion that at the moment, further global tech investors, silicon valley, looking relatively relaxed. Spent a lot of time in california covering this. What are you hearing from people about what is going on here . It strikes me as incredible that everybody seems so completely hugeabout what could be storm for the technology sector. You hit it taylor you hit it right on the head there. Silicon valley and big tech was continuing to think it was business as usual. When you think about the antitrust things that were underway, defining a lot of the antitrust, interesting that we saw microsoft, the one coming in for tiktok, given that we heard some rumors about apple, but most of the big tech guys under that antitrust have stayed out of that. You saw microsoft with its own antitrust issues 20 years ago as some of the ones coming in. It is a busy jobs day, so always grateful for the time with michelle meyer, bank of america security scum and of course bloombergs michael mckee. Both of them have been so patient with us. Much more next. This is bloomberg. Guy before the break we were talking about the fact that carrie lam, the hong kong executive, is going to be sanctioned by the united states. U. S. Actions also hitting the hong kong commissioner of police. Lets bring in from washington nick to bring you context on this. Give us your perspective. We had the news on tiktok, now we have carrie lam and the latest round of sanctions on hong kong. Can you join the dots and give some context . Nick it feels like a day does not go by now where we dont have 1, 2, sometimes three actions by this administration seeking to stick it to china. We had the houston closure, a litany of sanctions, and the hong kong element. We had action on the south china sea. It is safe to say that this administration seize this moment as an opportunity to push every button it cam it can to put china in a corner. There are things it has not done. It feels like they are doing a lot, but at the same time if they really wanted to hit china hard, they could sanctioned the big chinese banks, severing the trade relationship. It is a combination of a ton of action right now, but at the same time we get the sense they are holding off and not going for the jugular. Taylor what you said that stuck out to me is that the administration sees this as the right time. Is this sticky, or if things change in november, two a lot of things become unwound . Nick i think that question is at the heart of this administrations strategy right now. You are seeing at attempt by the Trump Administration to lock in these punitive measures against china now, under the expectation het joe biden, while he says recognizes a lot of the concerns about china would not take nearly so hard a line, it serves the dual purpose of locking in tough actions. But at the same time, if joe biden seeks to unwind them, the response could be joe biden is weak on china, so it is a perfect storm of elements where you have the president looking to exploit this moment with the election coming up, dropping all his restraints because of the coronavirus and blaming china for that, and then also this real hardline group of advisers at the state department, trade advisor navarro, pushing these policies. Taylor thank you to bloombergs nick wadhams. Focus stocks that are winning on this news, you take a look at the russell 1000, smallcap stocks away from multinational is where youre seeing a lot of strength. Yours you are seeing 10 year yield come up just a little bit. And im looking here for bloomberg Dollar Strength to see if that is continuing on this news as chinese tech continues to sell off much more than the u. S. Tech stocks. Coming up, papa johns delivers growth among the lockdown. We will speak to joe lynch on the earnings and hiring. All of that next. This is bloomberg. Guy im guy johnson. Taylor riggs in new york. Alix steel has the day off. This is bloomberg markets. Lets talk about one of my favorite subjects. Papa johns shares up this morning, the company posting a in americanump sales second quarter. Is this sustainable, particularly if we see the stimulus checks this appearing . , thedent and ceo rob lynch Growth Numbers are strong, you are growing really well, you are doing the best you have been doing in years. You have change a lot of things with the company, and you have the big macro factors working in your favor. Ive got a simple question. Thatuch of the 600 a week people have been getting from the government do you think has been spent on pizza, and if that number were 400, do you think the profitability numbers would be lower . Has been always resilient in terms of economic distress. Some customers trade up, some trade down. Stimulus checks are helping the economy as consumers have not felt the full effect of the economic challenges that we face, and if those go away, we think we will persevere pretty strongly. We think customers that are currently able to afford to spend more on feeding their families at home are doing so, and as those pockets get tighter, we will be there. Value. S a great inherent you can feed a family of four for 15 and we think we will sustain through these changes. Taylor what is the background of this pandemic doing to the unappointed picture . What are you telling employees about layoffs, furloughs, bringing people back, b