August and a different first of september that has transfixed the nation. In the markets, there is no question i am looking at a weaker dollar today, a profoundly weaker dollar. Text still lifting. Francine the weaker dollar also giving a lift to commodities. A full roundup of the asset classes. To the bloomberg first word news. Ritika President TrumpPresident Trump claims a man arrested for killing two people in wisconsin was acting in selfdefense while simultaneously criticizing the killing of one of his supporters over the weekend. Joe biden flipped to the republican slogan that nobody is safe in joe bidens america, he said the president cant stop the violence because for years he has fomented it. J. P. Morgan chase says investors should prepare for the chance President Trump gets reelected. The bank took a look at polls and estimates there could be a shift of up to 10 points from democrats to republicans if the protests turn from peaceful to violent. The pandemic has created tons of red ink for chicago. The City Projects a budget deficit of 2 billion through 2021 including 800 lien from this year. The coronavirus has decimated chicagos revenue. The mayor warns there could be layoffs of government workers. She has called for more federal aid. A sign that apples most important product is holding up in the midst of a recession and pandemic. The company has asked suppliers to build 75 million 5g iphones for later this year. Apple anticipates shipments of the devices could hit 80 million in 2020. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 2700 journalists and analysts in over 120 countries. I am ritika gupta, this is bloomberg. Bonds, currencies, commodities, its an ever lessening of the real yield. A record low, but a huge negative real yield. Higher,d space is yields are remarkable with what we saw through august. 1. 50 on the 30 year bond. The vix is magical. The vix, 25. 88 shows the dislocation that we see on this first day of september. Francine i cant believe it is september already. Low,ollar at a twoyear moving commodities. Fuelingr dollar commodities. Below in london just 6000. I wanted to show you the yuan. Since 2019. Highest we had some good chinese manufacturing data indicating exports are underpinning our recovery. We will start strong talking about dollar and some of the currencies. Lets get straight to jean freda. Thank you so much for joining us. Weaknesslook at dollar , is this in part because of what we heard from inflation targeting from the fred yesterday or is there debt from the fed or is there something i dont think it was something new yesterday, it was how the change in the fed mandate percolates into the market psyche. A lot of this is really about not so much i think a lot of people focused on the mandate and say not much has changed, but basically the fed is committing to achieving its in ained core pce of 2. 5 way that would probably lead to more pressure on asset markets in the upside and more dollar depreciation. Without dollar depreciation its hard to see how you get that. The way you do that is by pushing down real bond yields. Of the fed focus speakers this week will be on giving signals as to whether or not we get the first down payment on this strategy, which is a strategy that lasts over the cycle. We will get that down payment in september. Francine how low do you expect the dollar to go . The it depends on timeframe. The discussion we have had about the speed of the decline. My assumption is that over the another will see 15 move lower in the dollar. I think that is reasonable. Given the commitment that the fed is making to keep real bond yields low and likely following as the economy recovers. The one big question with that is whether or not other Central Banks respond in kind. We saw a negative print on european inflation. Fine from a is dollar perspective to the that tends to be positive for risk appetite. Typically we would be dollar negative as well. Its more a question about the breath of the dollar declined and whether or not it continues to be concentrated in g10 currencies or broadens out to emerging markets. Tom well said. Squawk . S europes i have heard they will not complain until 130 euro. When does europe start complaining about weak dollar . I think it is some ofbination of the pace acceleration and the context. The context in my mind is more about a european recovery that is continuing to the extent that we see european recovery faltering is the function of a strong currency, partly the function of a week export environment and we may start to see complaints. I dont think we are there yet. Agree 125 or 130 we start to see those concerns in the market. Tom tell me about e. M. I have been watching e. M. And even turkish lira backing up today, relatively contained. Why is that . Why hasnt e. M. Adapted and adjusted to the powell landmark speech . Gene part of it reflects the fact that there is a huge amount of uncertainties within emerging markets right now. Going from some of the most basic lessons of the pandemic, the speed with which you contain the virus probably has some relation emerging markets went into this troubled with difficult growth backdrops and less policy space, they did not contain the virus as well. I should be more specific rather than branding all emerging markets with the same brush, because it relates more to latin america and parts of africa. These economies are suffering. Central banks are using easier u. S. Conditions to ease Monetary Policy which is unprecedented in response to a global recession. Its good for emergingmarket credit quality. The you need to see is u. S. Over from easier financial conditions becoming so broadbased that it lifts all boats regardless of domestic fundamentals. I dont think we are there yet. We need to see more water flow under the bridge of Global Recovery until we get to that point. Francine whats the chance of another lockdown this winter . Where would that change, what would be scarred the most in the World Economy . Concern i would have is if we have another global, synchronized lockdown i think the probability of that is quite well. I think the probability that we have localized lockdowns is reasonably high. The central question in my mind is how broad those lockdowns are. Are they lockdowns and countries, cities, or states. To the extent that we can narrow the scope of the lockdowns and isolated i think that coupled with the Fiscal Branch allows the market to work through it. It would be crazy not to expect some lockdowns. In terms of the scarring i think that really comes back to the question of fiscal policy support. I would expect more scarring in places with less physical space and you can imagine emerging markets fit into that quite centrally whereas in the most developed economies that is not the case. It may be the case in the european periphery but that is why they have been so intent on avoiding secondary outbreaks. Some theoretical things i want to dive into. Coming up at the top of the 7 00 hour, futures korean, s p and doubt dow futures red, s p futures green. Juckes ofo mr. Society general. This is bloomberg. I believe and a number of members of the committee believe there is a place for yield curve control, but the yield curve control most robustly is a complement to the Forward Guidance and a traditional largescale asset purchase there could be circumstances where it would be considered and we were very clear in the minutes of our july meeting. I tried to be clear in my speech that it is certainly something thats in the toolkit. Pozen of the peterson institute, and let me say we need more frontline monetary theorists interviewing other frontline monetary. Other frontline monetary theorists. We will get to that in a moment. Love what he says here about the essence of the German Economy. They have maintained that. Francine tom, we heard this morning that the German Economy may do better than expected area some important better than expected. Saying we can control the virus numbers without a shutdown. This is the trillion dollar question for any politician, how ofyou avoid the number infections rising significantly while avoiding a full lockdown which puts the economy on its knees . You can do local shutdowns, we will see how it goes. We heard from france and germany they dont want to go back into full shutdown. Tom it will be extraordinary to see. Frieda of pimco. Clarida talks about yield curve control but i believe we have a powell speech and a new framework looking for higher inflation. How do you do both . How do you do a compression of the yields while looking for higher inflation . That is not in my coursework. Gene [laughter] to yieldhe aversion curve control within the fed has largely been about having up optionality. No one is testing the fed at this stage of the cycle in its commitment to low yield, there is no need to give up that optionality for something it may need in the future. Its a question of whether or not you get to a point where the market is testing the fed, trying to push shields up as the economy recovers. It push yields up as the economy recovers. Theinteresting thing about outcome of the mandate was and how you translate that into , everyone believes that inflation will be above 2 before the fed hikes but there is a wide range of expectations around the growth rates and unemployment rates necessary to get to that height and that is where the surprise comes. That is the way of the future. The question is, is the fed going to step it up here . Are they saying we are going to get there faster. That is why september is such an interesting meeting. The pimco housecall of two or three years ago in hindsight has been absolutely brilliant about a sustained lower gdp growth. Do you stick with that in your end of summer countdowns and what you will do this summer at pimco . Are you expecting q4 or q1 to be soggy and they have a definite to week gdp . Gene that is still our base case. Recovery toe continue, we dont expect it to be over robust. We are at a point where you start to see a flattening of the curve as the recovery curve and that curve reflects the fact that the easy part is ending lockdown and the initial stimulus starting to rolloff. From that perspective the challenge people have is they an asset Market Reaction should be associated with similar growth reaction. The fed is pushing on asset gdpes to lift a reluctant off of very weak levels. Francine when do we start worrying about debt . Is talk aboutere significant tax rises to make up for some of the debt that was generated by the lockdown. Are we going to see that across the world . What does that mean for fixed income . Fixed income . Debt we worry more about in 2021 presuming there is a be ableand we start to to differentiate between countries that have suffered material scarring and material degradation of Growth Prospects and those who can continue to lift off even as fiscal support and income support and labor market support is curtailed. Is doingment, everyone it so nobody is punished for doing it. I think 2021 will be a trying time and a differentiating time across countries. Francine where do you see the most value now . In any asset . Francine any, do you buy gold . Gene i do currencies, we see a lot of value in being short the dollar. Central banks are committing to keep a bond yields very low, bond prices very high. We dont see value there. Insee some value in credit terms of what can move and what can adjust very good its really the dollar. Much. Ne thank you so coming up on Bloomberg Markets the zoom video chief communications officer. We will have a couple of questions on working from home and the significant increase in zoom calls that we do daily at 10 30 am in new york, 3 30 p. M. In london. This is bloomberg. Ritika this is bloomberg surveillance. Shares of zoom are soaring. The Video Meeting Service reported the second largest sales surge among nasdaq 100 Companies Last quarter. Revenue was up 355 . Its a sign that businesses and consumers keep flocking to zoom in larger numbers than expected. s answer to amazon prime has a launch date. It will be available in midseptember. It costs 98 a year and discounts are included. It will include unlimited free delivery including on groceries and there will be discounts on gasoline. More than 50 black former mcdonalds franchisees are suing the fast food giant claiming they were pushed by the company to set up shop in crimeridden areas. Companyo claim the denied the help for white owned mcdonalds businesses. Uponalds said it would step efforts to fight systemic racism. That is your Bloomberg Business flash. Francine the dollar dropping to a twoyear low, european stocks are also climbing. We had some pretty good data out of china, this is manufacturing data. Theoes seem to point to fact that exports are underpinning a recovery. If you look at the gains we are higher about an hour ago but seeing travel shares under a bit of pressure. Europe leading the charge against the dollar which is also moving commodities. Past 6,800. Treasuries pretty much unchanged. Trading sideways today. Nimby touching the highest since 2050 go to the next hour as well real yield at 1. 0 eight, the deeper more negative real yield over the last couple of days bounces off the dynamics of the headline 10 year yield and also inflation expectations. I have not looked at the chart. Market the equity carefully. The dow not participating in the new mathematics of the dow. Certainly tech continuing to lift and tech futures lifting big this morning. This is important. Iss is where francine looking at rollsroyce in that glorious red color that they have. Francine will do a drive through in her next rollsroyce in the 10 00 hour. This is bloomberg. Hike coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions. Touchdown only mahomes. Expect anything different . The big events are back and xfinity is your home for the return of live sports. This horriblestop ideology that seems to be permeating our country and basically it is weakness on behalf of politicians. Do i look like a radical socialist with a soft spot for rioters . Really . I want to save america. Actions ofondemn the vigilantes like Kyle Rittenhouse . That was an interesting situation. He was trying to get away from them and he fell. Then they very violently attacked him. It was something we are looking at. You may believe mouthing the words law order make some strong, but his failure to call on his own supporters to stop acting as an armed militia in this country shows how weak he is. Our president ial candidates, the president of the United States traveling to wisconsin today. It will be interesting to see how he is greeted in wisconsin. The mayor in kenosha saying he should not come, but he is coming. There. Trump will be we get perspective from asia with washington experience. Jodi schneider joins us this morning. Tell us how asia is viewing this election. Tell us how the media in singapore, hong kong, tokyo are framing out this election postconventiona. Jodi i think there is a bit of confusion. On the one hand there was so much talk during the conventions about the pandemic and other issues. Now it seems to be all about these protests, some of which have turned violent. Watching it has become more complicated. As you look at issues like the president trying to make this law order pitch at the same time that he is president and joe bidens argument that he is the president and if he wants there to be law order this is on his watch. That is something people are interested in. China u. S. Y with the tensions what they are really interested in is what is going to happen with trade, with Economic Issues particularly regarding the u. S. And china and will those tensions continue even if President Trump not reelected. Is theat is so important distinction between biden and trump. As we do that on a race in america, protests. Have asia and, to china formed an extension between biden and trump . Jodi with President Trump clearly there is an issue and people have the question about dealing with the virus. That is something that because they dealt with the virus so much more effectively in terms of containing it in asia i think that has been a real question on peoples mind, why is it not being contained more, why is there not more federal policy . On other issues i think they want to see a lot of people dont really understand what policy issues joe bidens presidency would drive and that is something that would be useful for him on the world bege to be addressing, to underscoring in the few months he has before the election. Would a Biden Administration actually deal with china . Would they be more friendly with china . Jodi that is the perception. In previous administrations, president obama and Vice President biden had a large role in the foreign policy. Expectation,of an but maybe not. A lot of people think things have changed. A lot of these tea couplings and issues that have the u. S. Standing up more and standing against china on a number of issues including technology. They are now here to stay and even with a joe biden presidency there would likely be a tougher line on china certainly then there was during president obama administration. We had jp morgan saying that the market needs to look at President Trump having a second term, what are people saying in your region . I dont know if people are talking about, given that biden becomes the next president or whether they think it could be President Trump for four more years. Jodi people are watching this closely, and asia a lot of this revolves around china and what is going to happen with whatever administration this is, are these tensions going to continue . There is a lot of thinking that they are watching closely, they were surprised as the world was in asia when President Trump four years ago and i think they view this as a race that could tighten quite a bit and that a couple months left to go. Francine thank you so much. Jodi schneider, bloomberg