Negative territory down by. 2 . The dollar gaining strength and crude is all over the place. You wind up having opec leaders meeting and talking about maybe extending a deal through 2022. That comes from the Saudi Oil Minister. So the oil market is trying to digest that. The big news has been what is happened with apple. A 2 trillion market cap. We knew it was coming and now it is official. Isning me more is the but you are global on fx, apple, what do you do with that . Anne from a fundamental equity standpoint i cannot have any comments on all, that i would stay that say that this level of market cap is a success and that there Monetary Policy policy easing, the giant firehose of liquidity as well as actions by the European European Central Bank and bank of japan has bouyed the equity market and we are seeing a little bit of a rally and everything. We talked about that before the virus and it is interesting to see that we are back at that point and it reflects a tremendous amount of liquidity in the Financial System and a huge change from march. As active investors we are challenged with light liquidity and find the true alpha in there. Alix i have to wonder if this rhetoric is we get a vaccine and things normalize and inflation picks up and we will have a backup in yield, and Central Banks will act. Will that happen . Anne that is fascinating because the fed is gearing up for what will be a significant change in their posture for inflation. Maybe they change a rule, maybe they let bygones be bygones no more. It gets complex and wonky. What they are talking about is that they are no longer trying to stop inflation before it starts, but they are going to let inflation come and an act later to create an average level of Inflation Higher than it is now and raise peoples expectations about inflation. This is way more complex than it sounds in terms of implementation and we will hear about it a little bit more next week when all of the speeches and new starts to come out around the virtual jackson hall meeting this year, and more in september. Alix is the same said for europe . I mentioned the record bund sale. What is happening over there where the yields have been different . Anne it is interesting because there are two narratives. One is tremendous liquidity generated by Central Banks, also benefiting from fed liquidity. The second piece was the nose under the canvas tent of a debt mutualization, and that was a european recover early fund. For the very very first time, europe is issuing a debt obligation at the euro level, not at the country level. So, for us, i am sure not other active investors, it feels like it cut off a significant risk that the virus and all of the differential impact wouldve caused euro to break up europe to break up and the u. K. Was the first of the dominoes. The creation of the french and german plant resulted in a small but important mutual lies debt issuance. It is that plus the liquidity and investors seeking return anywhere which is driving the boom. Alix we have seen the btp bund spread come in and narrow on the back of that. How much more can that narrow at this point . As in, how much is it priced in . Anne we talk about it more broadly, not just italy to germany, but the overall periphery to the core, and it is that it is our view that that could narrow under taught ash over time. Just because of their tourism explosion exposure or Service Oriented exposure, they were exposed to the virus overall early on. Overall, those countries tried to get a handle and they have european recovery funds. Plus, you have the loss of the risk of europe breaking up. We think the spread can narrow further overall and we are exposed to that sort of movement in the market. Alix does it change if we see these little pop up in virus spreads, the virus creep. German cases at a four month high. Does that change the narrative . Anne not really. We are seeing it across the board, germany, finland, a place close to my heart. I think the narrative around the virus has changed, also here in the United States that there is more confidence that we can manage it through intermittent closures instead of a complete spanner style lockdown, and that is a positive. The u. K. You feel like is in the same place and confidence you might have with europe . Whileit is complicated, where europe has two positive things for it, the u. K. Has a negative, the uncertainty with brexit. Theme, but i think we have a little bit less confidence in terms of Going Forward for the u. K. , and we are not very exposed in that market overall. Alix finish up. Sorry. Anne i think you can kind of see a little bit of that dynamic as well. But that was all. Alix it is interesting, but when you look at the boe, the ecb and the fed echo what investors feel and the uncertainty. Economist sees a very halffull kind of thing. And, you see pressure from economists u. K. To change that narrative. Why is that, is there any green shoot that we are missing . Anne i cannot see it. It is a different way of looking at the world, i guess. I am a glass halffull person too. But, the pressures are very similar across most of europe and the u. K. Is no different. There, and isee it do think that some of the brexit pressure is a little bit underplayed at the moment. U. K. Is facing more than uncertain future than the rest of europe, which seems to have gotten its policy apparatus more organized than it has ever been. Alix it is so good to catch up with you and we love your bloomberg terminal background. We will get you back soon. Thank you so much. There is a story that caught my eye when one group ruins it for everyone, ireland tightening restrictions to prevent the spread of the coronavirus because of this video on twitter. It shows a bartender standing on a counter to poor shots into a customers mouth. The Prime Minister called the scene appalling. As a result only six people will be allowed to gather at homes and sporting events move behind closed doors and police will have the power to enforce rules in bars. This is bloomberg. York, i amfrom new alix steel. One big event, the release of the feds july minutes and investors looking for signs of inflation overshooting. Joining me is alexandra wilsonelizondo, mackay shield senior portfolio manager. Another big hallmark has been what has happened to corporate credit, ray cute hot record high issuance. And we see apple hitting a 2 trillion market cap. Does all of that continue . Alexandra good morning and thank you for having me. , thefrom our perspective 2 trillion market cap reflects the value that people are putting on growth in that firm. In addition, you have seen a strong management team, they have even capped the debt market to very low coupons in some cases. We do see that these Tech Companies in particular in a dollar environment that is inclining with foreign revenues coming in they will continue to do well. Alix are we noticing different from the apple to raise money because they can or because they really need the money . Alexandra it depends. You are looking at a market that does have federal support behind it, so that has put the cap on a spread. There is dispersion across the credits insect errors and they are able to finance themselves. That being said, you have one third of the index, less than 1 . Broadly speaking people are able to achieve extraordinarily low levels of debt. Alix are investors still really open. I mentioned Investment Grade one point three 5 trillion and that is huge. Sees discerning to triple triple cccs . Alexandra you are seeing this diversion in the market, you have seen the crossover of the market year to date. People are willing to go down in quality to achieve in particular because what you are seeing is the credit that has rated them leverage has some Balance Sheets to lower rated credit qualities. It is a matter of looking bond by bond to identify where the opportunity is. With that being said, there is still material concerned with segments in the junkbond market where you can see default rates pick up whether you are looking at the retail or the energy sector. Alix when we saw the back up and yields, time has no meaning anymore, does that trickle down into the highgrade market orono . Alexandra you saw some pressure are trying toyou reset to a higher yield level. That is not a material back up and we do think that over the longerterm yields will not be rising materially, but it puts pressure on the tighter spread and lower combined that have come to the market. Extraordinaryhe inflow in Investment Grade and high yields and seeing the demand in the marketplace. Alix we saw High Yield Fund losing 1. 45 billion, that is not huge. Do you view this as taking money on and off the table . Alexandra yes. In particular, when you look at a world awash in trillions of dollars of negative yielding debt. You look at u. S. Companies that have solid Balance Sheets, the ability to take that additional yield, five plus percent is an attractive place to be in particular with the Federal Reserve backstop. Alix what do you like . Are very right now we focused on two sectors in terms of what they will be telling us Going Forward and those are energy and banks. We are focused on what banks are saying because it is the lifeblood of the financial economy. Are we going to see loans in deferral status nonperforming, and therefore we see credit, out of the economy overall . And then, from the energy perspective, we are very much focused on the high demands dynamic improving but structurally you have issues going into the election are you have Clean Energy Policy coming to the forefront. Those are two sectors we are paying a lot of attention to, but broadly speaking what we are in more favor of is the House Communications where you have issuers generating tremendous Free Cash Flow and reducing debt. They have been doing what they lovingly call the tender extender trades when they are taking out high coupon debt. It is good for the longterm Balance Sheet, and an you are actually seeing some of the mna they have done really come to prove come to fruition as people work and watch from home. Those are the some those are some of the things we are paying attention to weird paying attention to. Alix how do you look at it with the u. S. Versus europe or asia . Alexandra most of them are domestically focused and we are seeing a lot of inflow as a result of fx having come down. In terms of diversification there are issuers in europe that are benefiting as economies pick up. And there are issuers within the u. S. That are outperforming. It is really about picking and choosing your spot. Alix would you touch travel with a 10 foot pole . Alexandra absolutely. We are seeing a lot of retail earnings that have come in through the week and we use them to look at the Overall Health of the consumer because we are longterm investors and focused on what the consumer is saying about the health of the economy, and you are seeing that either through retail sales or earnings that the consumer is doing well and in part we are cognizant of what is happening with stimulus. On top of that, you are seeing some of the marginal wallet share from millennials go to homeimprovement, but we do think that is something that is happening currently when it is not being able to travel. But you are seeing Companies Come out and say that demand is ticking up in the Airline Space and you are seeing tsa numbers pick up. There are very Good Management that, Balance Sheet assets we are actively looking at investing. Alix thank you very much. Lauren goodman says you are awesome. Alexandra thank you for having me. Alix i appreciate it. Alexandra wilsonelizondo from makay. This is bloomberg. From new york, i am alix steel, this is the european close. 3 res of goodyear went down before recovering. President trump urging people not to buy goodyear tires because the company has banned the wearing of his hats at work. Todyear has asked employees avoid any expression of support. Suits target targets adjusted earnings today hall time an alltime high. The ceo says. He started slower than usual. Is showing that shoppers still spend on retail. Soared 34 ins the second quarter. Online sales more than doubled during lockdown. That is your Bloomberg Business flash. The leaders of the European Union held an emergency summit to discuss the situation in belarus. Angela merkel said that the election was neither free nor fair. Joining us is richard. Richard, do we get sanctions . Richard we will get sanctions soon. Mainly wantedrs to send a symbolic message to the people of belarus that they support them and they want to the violence to end. Andtions are in the works, they repeated that they want the sanctions to be imposed as soon as possible, and directed specifically at members who were involved in election fraud, and members involved in postelection violence. So, there is a lot in the works step now, and the next should be more details on those sanctions. Alix is an aggressive, or is it sort of a measured step . What was your initial take away . I am wondering how hard putin goes and how hard the western leaders go . Richard that is a good point. The e. U. Wants to take a forceful stance because belarus porters three member states, that they do not want to incite aggressive behavior from the kremlin, and before the meeting started, Sergei Lavrov demanded that the e. U. Not get involved in the situation. Todays meeting was mostly symbolic. The sanctions are in the works but they are not broad. The e. U. Stopped short of calling for a new election, and that is an important fact. They did say that they do not recognize the results from the august 9 election, but they are not, like some countries, calling for new elections. Alix where does this leave Vladimir Putin in his defense of belarus, but also not wanting to ignite further hostility . Richard that is what everyone really wants to find out at this point. I think the e. U. Is treading carefully so they do not give putin an excuse to get more involved. We are not going to see any really strong measures from brussels just yet, just to make sure that they do not give the kremlin an excuse to do anything rash. Alix what should investors be looking for. These are staggering headlines, the video is staggering, and it could erupt into something dramatic. What do we need to focus on . Richard sanctions are always a big deal so we will have to see how widespread they are, who they hit, will they impose the president himself, and how do things develop in terms of whether or not elections will happen . President on go the seems he is willing to escalate matters and draw putin and closer to him those are the things that are mostly keeping our eyes on. Alix thank you very much. Richard bravo, thank you. Head tohad to break break, let us check in on the equity markets. 8 and stocks up volume gets worse. Volume is down 40 versus the 10 year average. You had a solid rally in eurodollar but we reverse that as the dollar gains on strength. Eurodollar down by point we percent. Ist i want to be watching delta coming out and saying that they are adding two more flights a weekly basis. This is bloomberg. Alix live from new york, i am alix steel. Guy johnson. Stocks finishing up the day on the front foot. Up. 8 . Trading is well off the highs. You have the ftse and the dax all in positive territory. Ing out againek despite choppy headlines from the opecplus meeting. A nice drop in inventories in the u. S. The Saudi Oil Minister saying all oil cuts could be extended beyond april of 2022. A delegate talking more about july Oil Inventory builds reversing. Trying to talk up demand a little bit, even though there are signs we are still in a weaker spot for the market. Bund sale in europe, record demand. That beat continuing on the 30 year. Interesting action in the euro, at one point it was higher and then moved lower, now down. 3 . It feels like the first day in weeks we have had a down day for eurodollar. Cable rate ending the 132 run we saw earlier, and also lower. 4 . That seems like the dollar move. Movesas the dollar higher, down 2 despite the fact real yields are also moving lower. I want to take a deep look and some of the big movers at the company level. Here is abigail doolittle. Abigail you do have the solid push to european indexes, but beneath the surface is much bigger movers. Galapagos absolutely plunging, the worst day since 2011 after the fda ejected their arthritis drug, investors clearly not liking it. Rwe, the german utility stock, also lower after they sold shares to fund their renewables. Investors not liking that. Love toms that has settled with the pout lufthansa has settled with the powerful pilots union. Delta saying they will add flights to china. There is a bitly of an airline rally. Maersk the stop being rewarded for that. One of the top one of the top performer sector wise, food and beverages. A piece of this might be a u. K. Government Program Helping out diners and particularly food service workers. This is the open table reservations booth in the u. S. And the u. K. In white we are looking at global and in blue we are looking at the u. K. The program and u. K. Government to help dining started in the beginning of august. They went from 99 territory all the way up to 50 and now back down. Lots of uncertainty but at least a little bit of hope. Alcohol is not part of the program. We do have news out of the alcohol sector with royal unit brew raising their outlook above the highest estimate. That stop is popping sharply higher, the best day since 2009. A bit of a party atmosphere. Alix no kidding. That is covid for you. Bloombergs anna edwards spoke to the ceo on the impact of global trade on his business earlier. Our basic scenario has been we negotiate recovery, meaning we would get back to 2019 volumes sometime in the early part of 2021.