Very, very, varied longtime. What does that mean for u. K. Asset . Strategistnvestment is joining us now. David, the u. K. Economic outlook is really bad right now. We have had a bounceback a little bit in the month data, but it makes grim readings. U. K. Asset pricing enough in terms of the downside . Dont think they are pricing enough bearing it was a truly terrible q2 gdp number. That was expected. At the moment, investors are taking some comfort with a decent pmi number for the u. K. Some of these monthly gdp data from the statistics have been revised up for june. After such a big decline, we are going to get a bounce in q3. We may get doubledigit growth in q3. For the headwinds are really significant. It is being massively underreported in the u. K. It has been a sticker shock for investors and for households and consumers from the furlough scheme. This brexit is still hanging out and never seems to go away. Alix what is the down lot what is the Downside Risk to the furlough . Is that being priced anywhere . David i dont think it is priced in. There are expectations that we are going to see a decrease in u. K. Unemployment as the scheme is down, but also, i think investors are dissipating further fiscal stimulus i think investors are anticipating further fiscal stimulus. To be frank, i think with the u. K. Assets when we think about equity and credit as well, it is broadly tracking what is going on in terms of the rest of the world. , think it is really, you know not that much u. K. , idiosyncratic risk. Probably the u. K. Will do well if we do get this favorable rotation to growth. Where you get potential weakness Going Forward would be in sterling, and that will likely be more against the euro than the dollar. Guy lets talk about the dollar. Am i correct to think that you closed your dollar short, and if that is correct, why . David well, you know we did not meaningful dollar short position. We have been treated mutually in terms of xacts in terms of fx positions. That is because [inaudible] they have not really participated in any kind of rally, even as the dollar has come off. We did have some short positions on sterling, which we have reduced more recently as well. Alix is there a point you want to go in buy the dollar . What about the bond market . Do you want to buy bonds with yields backing up . Think i still i view this outlook for the dollar and the parts of the broader narrative dollar in part of the broader narrative. What we are seeing at the moment bythis dollar driven lower law real yields in a higher gold price. And i think that is reflecting we had some pickup and Inflation Expectations and nominal yields have stayed pretty flat. But i think that reason dollar story is part global reflation rotations into value. And yeah, i think that could wey for a little while, but have enough conviction that we are in a breakout for Global Growth for the upside, and for significant outperformance for the rest of the world. Where imc and the dollar coming under further pressure is that where i am seeing the dollar coming under where im seeing the dollar, under further pressure is guy how far down the capital structure are you prepared to go for yields . [inaudible] where we see investmentgreater companies, financial institutions, banks we happy moving into [inaudible] , particularly for european banks. There is value there. Now, a lot of your guests that it is very strong. There is a search for you. You have Central Banks with backstops. Capital markets are open. You are not getting this sudden liquidity squeeze that would lead into defaults. Defaults in europe are running less into percent on an annual basis. Looking at as percent or 9 . That looks right right now. Investors will be moving down the capital structure carried structure. Alix where does that leave duration . David that is a good question. Duration andt of investors portfolio in investors portfolio. Creditw, the duration of has been extending the duration in the equity market. I think there are multiples of Growth Companies moving higher, at least in part because real rates have been moving lower and turning negative. The dollar ratio would be painful, but you know, i dont the selloffs we are seeing in treasuries is not getting that much pace. We need to see a shift either in sort of emerging policy and Central Banks but i dont think we will get that anytime soon. I think the fed will become more dovish, but we have to recalibrate to the upside on growth. Again, i dont really see that in terms of the bases we are talking about at the moment. Guy one final quick question from me. I want to take you back to that call on what is happening in terms of corporate defaults. Im hearing a number of people talking about the fact that we really dont have a handle on what corporate defaults are going to look like until we get to the auto. That is when some government stimulus will roll off and we will see that in the u. K. And elsewhere around the world. That is when things will start to get a little sticky. Trade . All in on that what are you looking for in the autumn to get a better handle on that . , wed not only on the trade have been rotating out of [inaudible] wee been rude toting have been rotating out of double bs into single b. Effected most cyclicals it companies as well. Trying to find the best that we space. Hin the single b agree thatw, i dont we that the market doesnt have a handle to force it where it is going to be. The market has been pretty [inaudible] is leadingeld market at 5 . You have 5 or less yielding about 10 . We know who they are. There is some uncertainty in how many oft of those will go into chapter 11 or capitaluring, but markets are open. With i think that leads to a big unexpected spike. [inaudible] the junkbond market, 2. 9 . David riley of bluebay asset management, thank you very much. We will get more insight on the markets and politics from byron wean byron wien. This is bloomberg. Steel, guylix johnson and london. This is the european joe biden naming Kamala Harris as his vp pick. Investors are focusing on issues. Byron wien is joining us from blackstone. Byren, good to chat with you. You are a wall street veteran. How do you look at the election in november now that we know who is going to be on the democratic ticket . Biden we knew that joe will moderate i was going to be the lead of the democratic ticket. Now, hes picked Kamala Harris who is more progressive than he is. And the Democratic Party is shifting to the left with Kamala Harris pick, he is definitively moving to the left. That means higher taxes, more , and ordinarily, that would be negative for the market food on the other hand, we will probably have more international tradeents, better practices, or more agreeable trade practices. So it is not clear that a Biden Administration would be negative for the markets. And the markets generally do better under democratic administrations then they do during republican. You think a Biden Administration will be better at dealing with a virus . That is a significant factor in terms of the way which way the markets are going to go as well. Byron yeah, i think the democrats believe that we arent going to make the kind of economic progress all of us want until we have a vaccine, until we get the economy going again, and in order to do that, most of us are going to need a vaccine, or at least need access to a vaccine. There will be a certain number of people who wont take the vaccine, even if it is available. What i think we have to have it available in order to get back to normal. I dont think that is going to happen next year. I think it will take a while to get there. Alix byron, the election is still months away, and we are dealing with a subdued stimulus. What are your expectations for economic shocks over the next on months given your early to a more subdued economic recovery than most of the banks expecting a v shape . Toon most of the references fiscal and monetary stimulus that i referred to is just that, stimulus. I think it is really survival money. I think the economy wouldve melded down if the Federal Reserve had an increased Balance Sheet providing liquidity from the system. If a government in not provided the 600 a week supplement to those who are out of work. So, the federal government has played a key role in keeping the economy aloft, keeping the economy growing, or at least preventing it from suffering a deeper recession then it already did. I dont think the work of the federal government is over. I think the economy continues to need help. We definitely need more monetary expansion for the financial system. We definitely need more fiscal aid to provide for those workers who are out of jobs. 20 Million People were put out of work, 10 million of them wont find jobs because their companies have gone bankrupt, or their owners have decided not to reopen. So, we are still in pretty tough shape. I think we are growing gradually. We are about a quarter of the way back to where we were in 2019, but we have a long way to go. Speaking of a long way to go, you were talking about bankruptcies. Thatis a big fear mounting we will see a second way. How is that baking into your expectations for the economy and Investor Expectations for how they will put money to work with these bankruptcies rising like this . Byron you know, i dont think the bankruptcies are over. We have already seen it in the Retail Industry with lord taylor and neiman marcus, brooks brothers, names that were household names to us growing up. Economyiew is that the is clearly recovering. I mean, you can see that in where lowd autos, Interest Rates are providing a push, and a number of Manufacturing Industries are coming back. If you look at the purchasing manager index across the world, it is above 50, indicating expansion globally. But we are still a long way from where we were in february. Guy byron, are you worried about inflation . Would you advise people to buy gold . Then im worried about dollar. I think that one of the ramifications of heavy, fiscal spending, large budget deficits, gdph could amount to 20 of , the expansion of the Federal ReserveBalance Sheet from 4 trillion to 7 trillion, on its way to 9 trillion, and the better performance of asia and europe with respect to the hasnavirus and recovery u. S. People doubt the exceptionalism. And as a result of that, i think the dollar has weakened. One of the ways to protect yourself against that is to own gold, which has been a good asset to have in your portfolio this year. I have some in my portfolio, and i think it makes sense for individual investors to have a position in gold. Mentioned u. S. U exceptionalism here. The trade tensions of china had been very significant forces in the market. How do expect that to play out the remainder of the year . Byron i dont think it is a healthy thing for the two largest economies in the world to be in conflict. I think that the phase one negotiations are still moving forward. We still are trading with china. There is a lot of talk about the end of globalization and on shoring chinese manufacturing. Not are a major producer, of just every household good you can name but also medical devices and to near drugs. So medical devices and generic drugs. Youre continuing to import from china, and we are continuing to import from china. Phase two is off the table. If there is a biden victory, we are able to restore more normal relations with china and the hostile relations that exist now will diminish, but biden has not been friendly toward china. Outcome of the relationship between the u. S. And china is not clear. Likeat signal do you look look at to advise your client to invest in china or to not invest in china . Think, i think china is going to be a major as the but as long avernment is taking nationalistic stance, as long as the government is seems to be opposed to mobilization, i think seems to be opposed to globalization, i think it will be hard to make a minister china, but i think there are Growth Opportunities there. And i think we need to have more harmonious relationships with im comfortable making new commitments there. Guy do you think u. S. Tech companies have fully appreciated the impacts of a conflict between the United States and china . Actually a better question is, do you think investors in u. S. Tech companies have fully appreciated the impact of u. S. Tech companies being mostly out of china . Byron to some extent, but not to the full extent, but i still think u. S. Tech companies are attractive. Their earnings are growing. The degree of innovation is taking place here. It is still very impressive. I did not like to see intel considering transferring its manufacturing operations to taiwan. I thought they were benefiting from having manufacturing and research and Development Taking place both in the United States. So, i think that the United States should be a manufacturer, as well as an innovator. And i dont want to see that sidelined. Thattheless, i think creativity in technology in the United States is still ahead of where it is everywhere else in the world, but china is making major advances. They are putting more money into r d and technology than we are. And it is making major strides. Byron, i want to revisit your s p expectation given so much has changed. You said it would have 3500. Where do you think it will end the year now . Youwell, i think bear i think when the market is over and the recession is over, i can see the s p 500 being higher than it is today, but basically, i think it is fully priced at this point. It is been driven to where it is by the large capitalization growth stocks, by the bank , microsoft. I think their multiples are pretty full right now, 2022,pating earnings in so i dont think i think there are a number of attractive they of the market, but are not in the stock that benefited from the recovery so far. I think you have to be patient with some broader industrials, and even some travel and hospitalityrelated stocks. I think it is being priced above where it is right now, but i dont think it will make major strides upward from this point. Guy byron, thank you very much indeed for joining us. Byron wien. We appreciate your time. European equity markets are approaching the end of the day. Insurance sector trading well. The food sector trading well. This is bloomberg. Guy 30 seconds until the end of regular trading in europe. We have faded a little. Off on the stoxx 600. In terms of how we break it down , looking differently at the different markets, clearly we are seeing a little bit of a selloff a little bit of again coming through when it comes to equities. Yang is we aree seeing a bond market selloff. Yields are rising. We are seeing a turnaround in the cable rate. Earlier on that was positive. It is more driven by what is happening with the dollar than what is happening in the u. K. Economic dataered earlier on. Brent is trading up 2 . In terms of the individual markets, the ftse 100 is outperforming. We are seeing the insurance sector trading strongly. There seeing the takeaway, food Delivery Business is doing well. Just eads doing reasonably well just eats doing reasonably well. Lets take a look at what is happening from a sector point of view, just to break it down there as well. We can do that by taking a look at the terminal. As you can see, every single sector in positive territory and the individual stocks, lets run through them. Liberty swooping into sunrise, which is a swiss company. The nice piece on the terminal written by Bloomberg Opinion columnist alex webb talking about this. But sunrise out of switzerland with its german shareholders has been taken out by liberty. The share price reacting to that. Up 26. 8 . Tour operatorean securing additional financing from the german government. Initially the stock went up but it has faded since then, down 4 . We are seeing the food delivery sector doing well. The outlook is good and the profitability numbers coming through better than the market was anticipating. That stock up 3. 32 . Lets continue the conversation. Time for our stock of the hour. Here with that is scarlet fu. Scarlet we will talk about big tech out of china. The social media giant tencent reported record profit in the First Quarter when covid hit china hard. It continue to build on the gains in the Second Quarter. The stock popped at the open and as it and is at session highs. Other results giving chinese tech shares a lift. , which is often called china google be reporting up with a close. The amazon of china will be reporting next monday and alibaba reporting next thursday. What the results show is just like big tech, tencent has been a beneficiary of the covid lockdown. Second quarter revenue rose of the fastest pace in two years, but also like its u. S. Peers, tencent has a target on its back. Ever since President Trump announced his plan to ban we chat, the company has lost 42 billion. In the Earnings Conference Call this morning, tencent executives address the band. Addressed the ban. They downplayed the impact, saying it would probably only applied to its overseas operations and not affect its internal services. Throughout the call, Company Executives stressed over and over again they are still trying to figure out how this executive order would be applied. The expectation is apple and google we need to pull we chat from their app stores. They would probably suspend updates and perhaps blackout services. It is not clear if apple would be able to offer the app within china. Tencentis critical for because the app is the conduit to distribute all of tencents comp tent content. Beijing will be doing some of the bidding because chinese and u. S. Negotiators will be meeting to make sure they bring up the we check the we chat ban. Alix fintech there is huge. That would be banking, the whole thing. S