It was also what came out of pmis. Taylor we had great pmis data. Really showing a divergence between the pmis that you were looking at out of europe where that recovery now seems installed. Most of the analysts said the pmi in the u. S. , dont take us one piece of data as the endall beall, but coming in higher than expectations and that existing home sales data, huge, not only talking about the move to the suburbs but the prices and demand, really something that shows the Housing Market not only in a recovery, but booming. Caroline we were hearing about the potential in real estate and diversified assets. Talk to us about those bets you are making. Where are you looking in that area . Christopher private equity is slow right now. There are not a lot of transactions. People cant travel and do their due diligence. The estate, we are on commercial side, not the residential. What is the value of a mall right now . The departments remain strong. The Office Market is uncertain because none of us are in offices and we are not sure how it is going to look in the future. Area is on fire. Pmi,rms of manufacturing, we are seeing goods move. Amazon Distribution Centers have been a popular investment. For thearm buildings internet have been popular. It is not a market you are going to run into and rates are not at a bargain price, so it is an area that Institutional Investments can make money. Romaine i am curious about your thoughts on broader economic trends. As an investor, you look at the economic recovery and one thing we have seen is a lot of bigger businesses have managed to hold through this. We see bigbox retailers, big software companys power through this. On the Small Business side, the kind of places that are not going to show up in equity index, are struggling. Some businesses might be going away for good. Can we have a functioning economy similar to what we had prior to covid19 that does not include some of those Small Businesses in the same numbers we had before . Christopher we cant. High, an alltime record bond market was up today, that is unusual, but you are right. Main street is being hurt and when the tide goes back out, and it will, remember 1999 . When the tide goes back out, we will see the damage that has been created by this health crisis. The Small Businesses that are shuttered for good, the number of people unemployed that will not find opportunities, think about the restaurant industry, hospitality industry, so on the American Economy in many ways, it is going to take a long time to recover. We were talking about the airlines and how crippled they are. We will get a vaccine but it is going to be slow. About, when is the next time you are going to get on a plane for Business Travel . Most people, it was almost a year before they will be comfortable doing that. That is a slow recovery. I want to get into a letter fight, but i said for a long time i think this will be a choppy economy and choppy recovery outside of the Great Technology names. Caroline so great to have you on a day like today. Christopher ailman, chief investment officer. More market coverage coming up. We will look at treasury auctions. This is bloomberg. Caroline lets look at how the markets closed because it was a set of record highs. Nasdaq, s p for the 500, and it is thanks to apple, the star performer of the week, 150 million, it helped lift the dow jones today. Taylor what has not been amazing this week, those treasury bonds. You pointed out that 20 and 30 year bond options. A little bit of the weakness we have been seeing on the long end of the yield curve we had a record wednesday, that through higher than expected yields, throwing concern about the growing supply of treasuries and then you had a poor showing of that 30 year option, that pushed yields to the highest we have not seen in july. Joining us is ian lyngen. I am curious, as you are taking a look at the supply that the market is trying to digest, are you getting nervous that the market is noticing rising supply or a rise in yields appropriate given the supply and there is no concern . Away anyuld not take amount of concern from an auction in the 10 or 30 year levels are out light at 70 basis points. Right levels are at 70 basis points. New securities are actually well in the money after their idea, which speaks to the that as long as there is a reasonable amount of concession built into the auction, which is a classic ascension classic concession we saw last week, there will be a market and demand. One thing i would point out was 30 year auction had the largest tail on record and that is counterintuitive in an environment where we would think the markets should be worried about inflation and no one was willing to pay up for inflation protection for the next three decades. Romaine we had those fed minutes which took some people by surprise for some reason. He saw a reaction in the equity markets. We are supposed to get a we areum next week, supposed to hear from jay powell. What are you expecting to hear from him . Ian i think the reaction to the minutes was based on the idea that there were expectations for the fed to couple the framework transition with harder Forward Guidance and what the minutes told us was that the fed is not going to do that, so first we look at the framework shift which will be some version of average yearoveryear inflation targeting, we will get more information from the chair next week, then it wont be until either later in 2020 or some point in 2021 that we will see a change to the Forward Guidance to include objective oriented targets, probably more likely. Caroline it is interesting to juxtapose u. S. Options versus the level of demand for the german option which was a 20 year auction, even though they have negative yields. I am interested in your perspective as to how many people you are hearing from are less intoxicated by going into u. S. Debt because the dollar is lower and they are looking for opportunities abroad. Ian i think the weakness of the dollar, as well as the haseptions that the u. S. Been an underperformer in terms of addressing the coronavirus and the pandemic, has played into the notion that we will see plenty of supply Going Forward, so there will be opportunity to buy treasuries in the future. The situation in europe, as evidenced by this mornings rollover in the pmi data, suggests that they are facing the realities of a second wave of the economic fallout, which in that context, it would make sense to be adding. Taylor on real rates in the u. S. , you are looking at negative one to 1. 3 . What rate is appropriate to you . Ian at this stage, i would expect that the fed is going to be happier the more negative yields gets because that is the impetus for growth and that is the shot in the economy that the fed has been hoping for. It is stimulative. Is there an appropriate level . Cannot make itds beyond 75 basis points and we are able to generate some type of real, consistent demandside inflation, which is perhaps what we saw with last week stayed out, i think it is difficult with last weeks data, it will be difficult, especially given how aggressive the fed has been and will be. Romaine when you look at pipe equities, does it feel to you that they are out of sync or are they where they need to be . Like this was a meaningful divergence in april and may when we continued to see the outperformance of the equity markets with rates contained in a tight range. What we are seeing now is an Investment Community that has become comfortable with the idea that the fed has control of the outright yield bubbles and shape of the curve and they will continue to keep risk premium built into the system and in that context, with the fed as it has been, we should be able to continue to see stocks outperform and it is not only the tech sector, but we are starting to see those moves broaden out, although it died feel like tech this week. Romaine wonderful insights from ian. He is head of u. S. Rates strategys at bmo capital markets. Lets get over to mark crumpton. Mark thank you. The u. S. Postmaster general said today, he was unaware of recent mail operation changes until they caused a public uproar but also said he has no plans to restore mailboxes or highspeed sorting machines that had been removed. Members of the Senate HomelandSecurity Committee questioned him about concerns that the Postal Service would not be able to handle an expected surge of mailin ballots. There will be no post Office Closures or suspensions before november 3. Wasost Office Closures around before i got in. , we i found out about it had the reaction that we did, i suspended that until after the election. Mark he told the committee that his priority between now and election day is that the Postal Service is fully capable and committed to delivering the election mail securely and on time. He called that a sacred duty. Russian doctors have cleared the to for antikremlin activist travel to germany to receive medical treatment for his suspected poisoning. Lifeagreed after his appealed to vladimir putin. He blames putin for his illness. His work documenting corruption in putins inner circle has made him enemies over the years. His illness has raised suspicions following a string of when critics who have been victims of poisoning. Geneva, theks in special envoy for syria today appealed for progress, he said success in next weeks u. N. Lead talks aimed at securing a peaceful future for syria depends on making progress on a series of issues. I told the council and i have said many times that when i meet with syrians from across the board, they all expressed to me the lack of progress on the political front. Mark he urged the International Community to cope to show the people of syria that they have not been forgotten after a decade of war that has claimed hundreds of thousands of lives. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Investors seek to raise hundreds of millions of dollars the promise to use it in 24 months to pursue a takeover. Investors trust the dealmakers to make an acquisition that will make money in the long term. Titans havetens all raised money for spac. Spac issuance toward path 25 billion in mid august. The most ever raised in a single year. A Technology Billionaire said spac helped after the greatest Wealth Creation opportunity in history, that is miles away from where they were a couple decades ago when the person active when the perspective was dim. People did not know the investors, then in the early 2000, citibank became the first and ipowork with spac now it is shut, actually a better path than an ipo. Firms are chasing spacs because it provides fewer regulatory hurdles. Bakes banks like s pacs. Spacs have generated 800 million in fees for goldman, citigroup, and others. Spacs arent without risk. Many pursued deals that failed to return. The s p 500 rallied to hundred percent. 200 . Bill ackman, who launched the in july, summed up the opportunity and challenge. To marry an attractive unicorn under the sun that meets our characteristics and design ourselves to be an attractive partner. Romaine the meeting of the unicorns. By sonaliak down basak. A couple years ago, we were talking about these Like Tech Companies and it was like crypto company, a blockchain but the companies doing it today seem to be more legitimate companies with legitimate revenue and in some cases profitability. What is the impetus behind this . You are not talking about very many of them and todays spacs are tomorrows deals. In a year where there has been few ipos and very few bigticket deals happening, the best thing anut a spac is they have acquisition that comes after them. So everybody involved wins, especially when a spac gets to retain the fees involved in raising the money. Caroline we have had paul ryan announce one. What are you in veiling for next week . Sonali something that i was on a call with our reporter, we were interviewing dealmakers and nextg, is the spac the fourball rate billionaires and now politicians and sports team owners, is it the next way to own something hot and cool . Meaningless without the deals that they do. When you look at the numbers, they have not worked out yet and there is no assurance that these will work out. All you have is a bunch of money raised. That is billions of dollars, that is happening as Interest Rates remain low. There is a hope these will be have onlys, but spacs really returned 10 percent on average while the s p 500 rallied more than 200 . Taylor why the interest if returns arent there . Sonali there are so many Unicorn Companies and companies that are private, there is a hope that they will like this instead. When we spoke to kevin hart earlier this week, he had a spac, he was talking about amazon buying the market and making it a way for companies to find it attractive to go public. We heard a million times, to reformlleys cry the ipo market, find better prices for the people looking to sell, and there is this hope that this can provide that. Romaine we have also heard from sayingves, basically they welcome this, right . Sonali this time around, there is a hope that this will keep wall street activity going, that Real Companies romaine you mean fees . Sonali they keep the wall street machine going. Even if they are the were in fees, there are fewer underwriters involved so underwriters get to keep a bigger share in those underwriters get to work on the deals in the future and for the exchanges, it is another way of finding a company to live. Caroline winwinwin. Sometimes these things seem too good to be true. A quick check on the rest of the business flash headlines. Another sign that Residential Real Estate markets are going very strong. The most on record last month. Transactions were up almost when he 5 . Almost 85 . Wells fargo has started its jobs cuts. Rivals a break with some who have held back from terminations. Wells fargo is under pressure to reduce costs. Termination resumed in early august. It cost tens of thousands of jobs. Warehouses in the u. K. Are soaring. Retail rents are down within 10 for 2016. Warehouses are getting 20 more. Credit given to the boom in internet shopping. As the virus moves consumers online, there is greater demand to store and distribute goods. ,lso what you might have missed i know my coacres can barely contain their excitement, or exit. Remember that . Brexit. Remember that . Miss having to explain they were highlight in 2019, but at the moment, groundhog day, we are at a stalemate. Romaine they have to get something done but you saw the market reaction. I thought it was interesting because there did seem to be optimism a couple months ago that this was a deal that was going to get done and now, who knows . Taylor i have done the math. Since we stares since we first started talking about brexit it was like three boyfriend to go for me. Caroline has had two kids. How many more kids are we going to have until we have it result . Caroline even if this takes another year, we are done on that. Be three moret boyfriends down by the time we finish. That is what taylor is going to be taking us through. Hoping brexit that stung. Stay tuned, what did you miss is coming up next. Joe weisenthal is ready to come in. This is bloomberg. From new york, i am doe caroline hyde. Romaine a record high. The s p walking a tightrope. Caroline quite phenomenal. The question is, whatd you miss . Romaine joe. Joe i am still getting used to this. My apologies. Caroline day five. Can the economy keep up this pace . Records surging in july with mortgage rates. But plus, august data shows u. S. Manufacturing and pmi above expectations. Joe, millions of people unemployed in this country. The virus still front and center. How much of that is going to eventually detract from the u. S. s ability to keep its head above water, particularly when you look at u. S. Versus europe . Joe there is no question the u. S. Has massive challenges. Not a great job in most peoples view of suppressing the virus. Massive unemployment. Mayalso, the u. S. Economy be better on a relative basis than people think. Although the virus situation is still not great, the rebound in many cases is not as bad as people thought. If you were to say, look at pmi u. S. Versus europe, the white line is the u. S. Version. Higher substantially than the european version. The european one slipped a bit today, hitting european stocks. There is no right line is the key point between virus suppression, at least on a relative basis, and manufacturing. Argue we, there is a lot of data out of the u. S. That is not that bad. Romaine not that bad. I will one of you on that. Take a look at what happened with home sales. Just knock it out of the water. These are the types of numbers we saw during the housing bubble in 2006 through 2009. A lot of this obviously is because of those record low mortgage rates. You had a pentup demand in there as well. Now you are running into this question of whether this can continue. Because the inventory has really lightened up here. Now there is only about 1. 5 million homes for sale out there. Ago is down 21 from a year and the 14th Straight Year of your decline so this is the leanest supply for any july we have had on record. If you want to buy your fifth house, now is the time to do it. Joe if you want to sell your house, you are any good position. Joining us now to break all this down is the university of oregon professor and Bloomberg Opinion columnist. Lets just start big picture, which is, is the economy more robust today than a lot of people would have guessed 1, 2, 3 months ago, especially given how elevated our virus levels remain . Yes. I think it was surprisingly strong given our expectations a few months ago. As you mentioned yo earlier, we are seeing fairly strong rebound among the pmi which is showing significant demand building in the background. We have seen inventory sales ratios drop back to where they were around the beginning of the crisis. That suggests t