Transcripts For BLOOMBERG Bloomberg Surveillance 20240712 :

Abramowicz and tom keene. The first full week for america. We welcome all of you to our simulcast, Bloomberg Radio and bloomberg television. It is merger monday. Across the headline from verizon, they will buy track phones from america mobile for 6. 25 billion. It is like an afterthought this morning when you look at the frenzy to get out there and by revenue. Announced 60 minutes ago, if you have access to these Capital Markets and many people do, they have the money to go do it. Immediate fixed income picture, William Gross will join us at the bottom of the hour. We will get an update from the retired one. I want to talk to him about the financial repression. Lisa, that is a backdrop to everything we talked about. Anybody with yield after inflation is losing. They are falling behind every day. Lisa it is cheaper to borrow money and invest in anything else because it is so cheap to borrow. That is what is driving a lot of the frenzy. There is a question about how far can the financial repression go. That seems to be the main questions the fed will be faced with this week. What kind of inflation targets will day be looking at . What tools will be be using to get inflation and the jobless rate down . More importantly, how much will we hear about the side effects, the increase in financial prices at the expense of a lack of inflation elsewhere. Tom we welcome you to Bloomberg Radio and bloomberg television. For those of you on Bloomberg Radio, Lisa Abramowicz flashing the red and white. I thought maybe she was going liverpool on us, premier league. But no, there is a team in northern london. Lisa your rival. Jonathan this is amazing. Thank you. Lisa any time. 30. N your spurs, nil. They lost to richmond the week before. They lost to richmond the week before and they got crossed. Egerton was fired up. Richmond theres pretending like they know something about london football. Jonathan this has been torture. Let me confirm this because it is true. Tom knows more about this than i do. Lisa [laughter] jonathan it is shocking. He will call me out on a saturday night and tell me more about these teams than i ever knew. , up in boston,w good morning. When the red sox are last in the american league, you talk english football. 77 37 points i should say. They are up were up over 40 early. Dow futures are up. Rest of the the data. On the business of fixed income and what to do right now, as we dive into the autumn, ian lincoln joins us. He writes really piercing, really dense Research Notes on the state of fixed income. Ian, where is the belief right now, where is the opportunity into september and october . Ian well, i think it is an exciting period between now and the end of the year for the fixed income markets as well as for equity. The point was made earlier about buying revenue. I think that is going to be a story. But, there is a problem with that from the feds perspective. Because the fed does not want to see too much consolidation from industries. That is not good for the jobs growth profile. Right now, between now and the end of the year, it is all going to be about jobs for the fed and are they willing to deliver more by the beginning of 2021 . We are doubtful, frankly because financial conditions are as easy as they are. Probably stuck in arrange for 10 year yields until we are through the election. When that occurs, i think that, if anything, there will be an upward drift rather than a bid into the end of 2020. Tom what is the price ramification of the upward drift . If we go yield, i believe that us price down, how injuro will that be to total return . Ian it could take the edge off some of the upside that treasuries have seen this year. For context, i dont think the equity market can withstand the 10 year yield above 1 . The extent to which rates can increase are capped by the realities of what is going on with the feedback with the equities. That is still going to be a toid year to belong treasuries given everything that has occurred. Jonathan if equities get hit because yields rise too much, who is capping them . Will the Federal Reserve come in and say hold up, thats too much . So, a material decrease in volities increases equity via the fix. We can say with a straight face that if the selloff in equities that appeared to be starting , we will has continued call it 10 to 15 off the peaks, we would have a different conversation about what the fed is going to do on wednesday. There would be a much higher probability that they would need to deliver something in terms of Forward Guidance or a change in the qe program. As it stands now, financial conditions remain easy and the fed has a bit of a pass. Jonathan from 2020 onwards, is there any such thing as a warranted timing in financial conditions for the Federal Reserve . Is there anything like a warranted timing where they sit there and say financial conditions have tightened, that makes sense . I asked then that question to gauge whether they would do something. If they said yes, they would step in and do more. Does that . Anymore . Is it relevant . Will behink it relevant at the point in which the Global Economy has stabilized and we have moved past the pandemic and we start. O see Sustainable Growth the big question about inflation becometo come back even more topical and a warranted tightening in financial conditions at a period where inflation is starting to accelerate might be something the fed is willing to stand by for. We are talking about several years away and a lot of positive developments would need to occur between now and the point where true demandside inflation reinto system. Fed is there anything the could do to increase employment in the u. S. . Ian what they have done is set the stage for trying to allow the time to allow the employment market to heal. It is the passage of time and the direction of the pandemic that will dictate what happens to the employment market. There has been a lot of dislocations associated with the change in consumption patterns. One of the biggest surprises, at least for me personally, has been how willing businesses are to embrace the work from home culture, which has clear when frontliner Service Sector businesses come back, where will they be located and how long will it take employees to find longterm employment again . The buying time, what are consequences of buying this time given you are seeing the widening divide between the haves and the havenots in every sphere of markets . The fedpoint is acting counter to their claim . Point in which the valuations in equities and risk assets should conceptually be problematic to the fed, because the risk is to the overall stability of the system in the event that we see a crash for corruption. But, the fed has come out and actually said that that is not on their radar at this point. They are content to see and frankly be responsible for some of these asset bubbles as long as there is Good Progress being made on the employment front. I think that is the big unknown and that is what makes the balance of this year so pivotal for Monetary Policy. If we continue to see jobs come back into the system, albeit at a much slower pace than they left, i think that will give the fed the confidence to keep Monetary Policy incredibly easy without worrying so much about some of the asset inflation that they are creating. Jonathan what a change for chairman powell. Ian, great to catch up. Tom, you wont forget this one. Iron memory walking through manhattan with you a couple of years back to listen to chairman powell. Howalked about cycles, and the last few cycles have been disrupted by asset prices and not by inflation. Here we are. When he took over that role, any people thought he would be the straight talker and would not allow markets to shape what they did and did not do. A full 180 a couple of years later. Tom that is what a pandemic will do to you. Ian lincoln with great perspective. Gloomyins us with not a but a shift lead or that we will talk about. It is a pandemic overlay. I dont want to get gloomy on a monday morning. Moment isality of the how do you measure depression . How do you measure financial repression . We are in it right now. Jonathan i daresay anyone has and hadbout markets optimism. Lisa, has that happened . Lisa i can occasionally be optimistic. I am optimistic about the gunners. I am optimistic about their chances very i hope the optimism prevails. We need it in 2020. Jonathan that is the happiest i have ever seen you talking about your new football club. I am Jonathan Ferro live on bloomberg tv and rita. Radio. We count you down to a week full of Central Bank Decisions right here on bloomberg. News. Have the first word tiktok has abandoned talks with microsoft to sell its video in the midwest. There is a partnership with oracle. Chineseith tiktoks parent and oracle would look like a Corporate Restructuring than an outright sale. President trump has threatened to ban tiktok if its u. S. Operations are not sold. Amazon is hiring 100,000 employees in the u. S. And canada. Jobs are both full and parttime and they pay at least 15 per hour. U. S. Workers will get sign on bonuses of up to 1000 in certain cities. 35 in westas hit coast wildfires that are burning from california to washington state. Buildings have been destroyed. Tens of thousands of people have fled their homes. Firefighters could have another problem this week, the forecast calls for low moisture and high winds. Set for, the stage is the first new Prime Minister in almost eight years. Theas elected leader of democratic party. He will replace shinzo abe who is stepping down for health reasons. An agreement could happen by early next friday. It would create one of the largest banks in europe. Global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. There is a short term sugar affect when money is free. It is no longer about what is your Interest Rate because we dont have them. We are interested in where is growth. Jonathan we are all interested in that. Where is the growth . Up nine after two weeks of losses on the s p 500. Up a little more than 1 . 118. 76. X, eurodollar range bound over the last seven months going into a fed decision this wednesday. The story this monday morning, the deal flood is immense. Tom we have time for one of eight stories to go. We have to look at the secretary of treasury speaking at the death star right now. He extended the date out on oracle and tiktok . Jonathan september 20 were the words he used in the last couple of moments. Many people assumed september 15. They will have a look at what has been agreed between oracle and tiktok. No idea where this story goes. You can make it up as you go along with the deadline. It could be tomorrow, the 20th or the end of the month. Tom it is important. This is not a deal, it is a partnership or a restructuring, who knows. Lisa i just want to bring up that Steve Mnuchin said they will review the oracletiktok deal this week. I think, tom, it is interesting that oracle shares are lower in premarket trading on this. Thanare at less than 6 9 . The moving target, the uncertainty factor. Tom it was a head scratcher, you heard that here in the recent minutes ago. We look at the head scratcher which has been the u. S. Dollar. We are joined by carrie wiseman. That barely describes his. Xperience, particularl is dollar direction about the major currency or is it about Everything Else Currency Pairs or Everything Else . I think it is about the major Currency Pairs. When the world does not look that great, the dollar tends to do better and not worse. Today, it is doing better against the emerging market currencies. It is doing worse against the developed market currencies. I dont think it is because the market perceives the world as being that great. I just think it is that there are problems in the u. S. The u. S. Y after election, whether it will be a clean election and not a contested or litigated one. Europe is finding some unity. They have gotten there resilience and Recovery Fund going. France proposed a reform and stimulus package based on getting funds from the rescue package. Europe just looks better these days than the u. S. I think this is the main reason why the u. S. Dollar has weakened in the past few months. Jonathan what is the key risk for europe . It is what is happening with the u. K. And it is also covid. To speak to the first point, we know that there are now problems with the path toward a smooth brexit. And if we get a failure of these negotiations to come to terms between the e. U. And u. K. By october or the end of the year and the market starts to price at a hard, europe will suffer as well as the sterling. The other risk is covid. We are now seeing a second wave that seems to be pretty intense and not under the control of the authorities. If that gets worse and all of a sudden you have an Inflection Point where European Growth looks a lot worse in the u. S. Because they have gotten over the hump temporarily, those of the main two ones. Lisa where is the balance of risks in your opinion in terms of dollar versus euro . It depends on whether youre looking at the short or medium term. The short term might be the next few weeks. As euro may get back with the sterling with concerns about brexit. Especiallyoncerns, when you consider this michael to blame of the lane the lane. Ative after the next few weeks and assuming we get some resolution to these brexit concerns, as we approach the u. S. Election, the reverse will happen. Europe will be concerned about what will happen in the u. S. Election and it will strengthen into the years end. The next fewmpy in weeks before we start to get an uptrend again in the euro. Looked at the currency dynamic with fixed income. We have bill gross coming up in a bit. How do we judge currency paired dynamics given that nominal rates are so low and the real rate is negative pretty much everywhere. It is the differences between those International Ranks that matter. Unfortunately we are living in a boring time right now. It looks like the fed will keep rates near the zero balance for potentially the next three years. We will see more on the projection the fed issues this week. That looks like what will happen. As far as the ecb goes, they will keep their rates low as well. Although that has been important in the past, it may not be important anymore. Other things may be much more important. Geopolitics, relative growth as opposed to the yield spreads. Jonathan a final question from me. In your experience, your time in this industry, can you remember a time where g10 was so heavily influenced by politics . That is a tough one. I would say yes. But you would have to go back to , you know, 40 years, 50 years, 75 years. The reason is because we were in a fixed Exchange Market before 1973. It was not translated into movement and foreignexchange trade it is tricky to consider that. I think you could make a case that, in the middle of the 1970s, late 1970s, between the oil crisis, the global recession and the unstable politics in europe at the time, yes, you would have to go back to that point in time and conceivably things were as grinding as they are now. Again, we are talking about 40 years ago. With an and fx market 70 seal to it. Great to catch up. A g10 market with an em feel to it. Politics influencing big major currency in a way that maybe it didnt a while ago. Tom there are some really outlandish strong yen calls. People are looking for a big figure move on yen and yet it just does not happen. Jonathan the dollar and yen have been remarkably stable. We have said that many times on bloomberg surveillance. We have had a breakout, the eurodollar breaking out. Sterling breaking down. Foreign exchanges are a little more interesting, a lot more interesting in the last two weeks alone. Up next, a conversation you do not want to miss. No gross, next on bloomberg. Gross, next on bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Jonathan from new york and london, this is bloomberg surveillance. From our audience worldwide, live on bloomberg tv and radio. I am Jonathan Ferro. 60 minutes away from the opening ballot. Equity feud from the opening bell. The s p 500 with a bit of rebound. Up 1. 1 . In the fx market, the euro breakout. The ecb trying and failing to do anything about it. 1. 1874 on eurodollar. In the bond market, a bit of a snooze. The bottom end of the range 50 basis points, the top end around 90. Right now it is 66. Headlines from airbus. Lisa mentioned in the job cuts angle from the airline industry. Travelsays the summer rebound to not live up to expectations. It is unlikely voluntary departures will cover all shortcuts and their preparing for longer, deeper crisis than previously seen. It is not a return to normal in that industry. Tom this is the debate for the end of the september, and the fed meeting on wednesday, we will have our special coverage led by caroline hyde. I look where we are with these troubled industries and does it roll over to the general economy as well . Jonathan that is the issue. For equities right now, job cuts , cost cuts might be seen as bullish. Mediumterm the labor market is not doing well. It will not look good for demand. That is the push and pull, the tension. What is the tension in highyield . Lisa the tension is nil. The question is when the fundamental start to matter again. Right now it looks like the fundamentals will have free money for a long time. Intothat is a good skew Bloomberg Radio<\/a> and bloomberg television. It is merger monday. Across the headline from verizon, they will buy track phones from america mobile for 6. 25 billion. It is like an afterthought this morning when you look at the frenzy to get out there and by revenue. Announced 60 minutes ago, if you have access to these Capital Markets<\/a> and many people do, they have the money to go do it. Immediate fixed income picture, William Gross<\/a> will join us at the bottom of the hour. We will get an update from the retired one. I want to talk to him about the financial repression. Lisa, that is a backdrop to everything we talked about. Anybody with yield after inflation is losing. They are falling behind every day. Lisa it is cheaper to borrow money and invest in anything else because it is so cheap to borrow. That is what is driving a lot of the frenzy. There is a question about how far can the financial repression go. That seems to be the main questions the fed will be faced with this week. What kind of inflation targets will day be looking at . What tools will be be using to get inflation and the jobless rate down . More importantly, how much will we hear about the side effects, the increase in financial prices at the expense of a lack of inflation elsewhere. Tom we welcome you to Bloomberg Radio<\/a> and bloomberg television. For those of you on Bloomberg Radio<\/a>, Lisa Abramowicz<\/a> flashing the red and white. I thought maybe she was going liverpool on us, premier league. But no, there is a team in northern london. Lisa your rival. Jonathan this is amazing. Thank you. Lisa any time. 30. N your spurs, nil. They lost to richmond the week before. They lost to richmond the week before and they got crossed. Egerton was fired up. Richmond theres pretending like they know something about london football. Jonathan this has been torture. Let me confirm this because it is true. Tom knows more about this than i do. Lisa [laughter] jonathan it is shocking. He will call me out on a saturday night and tell me more about these teams than i ever knew. , up in boston,w good morning. When the red sox are last in the american league, you talk english football. 77 37 points i should say. They are up were up over 40 early. Dow futures are up. Rest of the the data. On the business of fixed income and what to do right now, as we dive into the autumn, ian lincoln joins us. He writes really piercing, really dense Research Notes<\/a> on the state of fixed income. Ian, where is the belief right now, where is the opportunity into september and october . Ian well, i think it is an exciting period between now and the end of the year for the fixed income markets as well as for equity. The point was made earlier about buying revenue. I think that is going to be a story. But, there is a problem with that from the feds perspective. Because the fed does not want to see too much consolidation from industries. That is not good for the jobs growth profile. Right now, between now and the end of the year, it is all going to be about jobs for the fed and are they willing to deliver more by the beginning of 2021 . We are doubtful, frankly because financial conditions are as easy as they are. Probably stuck in arrange for 10 year yields until we are through the election. When that occurs, i think that, if anything, there will be an upward drift rather than a bid into the end of 2020. Tom what is the price ramification of the upward drift . If we go yield, i believe that us price down, how injuro will that be to total return . Ian it could take the edge off some of the upside that treasuries have seen this year. For context, i dont think the equity market can withstand the 10 year yield above 1 . The extent to which rates can increase are capped by the realities of what is going on with the feedback with the equities. That is still going to be a toid year to belong treasuries given everything that has occurred. Jonathan if equities get hit because yields rise too much, who is capping them . Will the Federal Reserve<\/a> come in and say hold up, thats too much . So, a material decrease in volities increases equity via the fix. We can say with a straight face that if the selloff in equities that appeared to be starting , we will has continued call it 10 to 15 off the peaks, we would have a different conversation about what the fed is going to do on wednesday. There would be a much higher probability that they would need to deliver something in terms of Forward Guidance<\/a> or a change in the qe program. As it stands now, financial conditions remain easy and the fed has a bit of a pass. Jonathan from 2020 onwards, is there any such thing as a warranted timing in financial conditions for the Federal Reserve<\/a> . Is there anything like a warranted timing where they sit there and say financial conditions have tightened, that makes sense . I asked then that question to gauge whether they would do something. If they said yes, they would step in and do more. Does that . Anymore . Is it relevant . Will behink it relevant at the point in which the Global Economy<\/a> has stabilized and we have moved past the pandemic and we start. O see Sustainable Growth<\/a> the big question about inflation becometo come back even more topical and a warranted tightening in financial conditions at a period where inflation is starting to accelerate might be something the fed is willing to stand by for. We are talking about several years away and a lot of positive developments would need to occur between now and the point where true demandside inflation reinto system. Fed is there anything the could do to increase employment in the u. S. . Ian what they have done is set the stage for trying to allow the time to allow the employment market to heal. It is the passage of time and the direction of the pandemic that will dictate what happens to the employment market. There has been a lot of dislocations associated with the change in consumption patterns. One of the biggest surprises, at least for me personally, has been how willing businesses are to embrace the work from home culture, which has clear when frontliner Service Sector<\/a> businesses come back, where will they be located and how long will it take employees to find longterm employment again . The buying time, what are consequences of buying this time given you are seeing the widening divide between the haves and the havenots in every sphere of markets . The fedpoint is acting counter to their claim . Point in which the valuations in equities and risk assets should conceptually be problematic to the fed, because the risk is to the overall stability of the system in the event that we see a crash for corruption. But, the fed has come out and actually said that that is not on their radar at this point. They are content to see and frankly be responsible for some of these asset bubbles as long as there is Good Progress<\/a> being made on the employment front. I think that is the big unknown and that is what makes the balance of this year so pivotal for Monetary Policy<\/a>. If we continue to see jobs come back into the system, albeit at a much slower pace than they left, i think that will give the fed the confidence to keep Monetary Policy<\/a> incredibly easy without worrying so much about some of the asset inflation that they are creating. Jonathan what a change for chairman powell. Ian, great to catch up. Tom, you wont forget this one. Iron memory walking through manhattan with you a couple of years back to listen to chairman powell. Howalked about cycles, and the last few cycles have been disrupted by asset prices and not by inflation. Here we are. When he took over that role, any people thought he would be the straight talker and would not allow markets to shape what they did and did not do. A full 180 a couple of years later. Tom that is what a pandemic will do to you. Ian lincoln with great perspective. Gloomyins us with not a but a shift lead or that we will talk about. It is a pandemic overlay. I dont want to get gloomy on a monday morning. Moment isality of the how do you measure depression . How do you measure financial repression . We are in it right now. Jonathan i daresay anyone has and hadbout markets optimism. Lisa, has that happened . Lisa i can occasionally be optimistic. I am optimistic about the gunners. I am optimistic about their chances very i hope the optimism prevails. We need it in 2020. Jonathan that is the happiest i have ever seen you talking about your new football club. I am Jonathan Ferro<\/a> live on bloomberg tv and rita. Radio. We count you down to a week full of Central Bank Decisions<\/a> right here on bloomberg. News. Have the first word tiktok has abandoned talks with microsoft to sell its video in the midwest. There is a partnership with oracle. Chineseith tiktoks parent and oracle would look like a Corporate Restructuring<\/a> than an outright sale. President trump has threatened to ban tiktok if its u. S. Operations are not sold. Amazon is hiring 100,000 employees in the u. S. And canada. Jobs are both full and parttime and they pay at least 15 per hour. U. S. Workers will get sign on bonuses of up to 1000 in certain cities. 35 in westas hit coast wildfires that are burning from california to washington state. Buildings have been destroyed. Tens of thousands of people have fled their homes. Firefighters could have another problem this week, the forecast calls for low moisture and high winds. Set for, the stage is the first new Prime Minister<\/a> in almost eight years. Theas elected leader of democratic party. He will replace shinzo abe who is stepping down for health reasons. An agreement could happen by early next friday. It would create one of the largest banks in europe. Global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. There is a short term sugar affect when money is free. It is no longer about what is your Interest Rate<\/a> because we dont have them. We are interested in where is growth. Jonathan we are all interested in that. Where is the growth . Up nine after two weeks of losses on the s p 500. Up a little more than 1 . 118. 76. X, eurodollar range bound over the last seven months going into a fed decision this wednesday. The story this monday morning, the deal flood is immense. Tom we have time for one of eight stories to go. We have to look at the secretary of treasury speaking at the death star right now. He extended the date out on oracle and tiktok . Jonathan september 20 were the words he used in the last couple of moments. Many people assumed september 15. They will have a look at what has been agreed between oracle and tiktok. No idea where this story goes. You can make it up as you go along with the deadline. It could be tomorrow, the 20th or the end of the month. Tom it is important. This is not a deal, it is a partnership or a restructuring, who knows. Lisa i just want to bring up that Steve Mnuchin<\/a> said they will review the oracletiktok deal this week. I think, tom, it is interesting that oracle shares are lower in premarket trading on this. Thanare at less than 6 9 . The moving target, the uncertainty factor. Tom it was a head scratcher, you heard that here in the recent minutes ago. We look at the head scratcher which has been the u. S. Dollar. We are joined by carrie wiseman. That barely describes his. Xperience, particularl is dollar direction about the major currency or is it about Everything Else<\/a> Currency Pairs<\/a> or Everything Else<\/a> . I think it is about the major Currency Pairs<\/a>. When the world does not look that great, the dollar tends to do better and not worse. Today, it is doing better against the emerging market currencies. It is doing worse against the developed market currencies. I dont think it is because the market perceives the world as being that great. I just think it is that there are problems in the u. S. The u. S. Y after election, whether it will be a clean election and not a contested or litigated one. Europe is finding some unity. They have gotten there resilience and Recovery Fund<\/a> going. France proposed a reform and stimulus package based on getting funds from the rescue package. Europe just looks better these days than the u. S. I think this is the main reason why the u. S. Dollar has weakened in the past few months. Jonathan what is the key risk for europe . It is what is happening with the u. K. And it is also covid. To speak to the first point, we know that there are now problems with the path toward a smooth brexit. And if we get a failure of these negotiations to come to terms between the e. U. And u. K. By october or the end of the year and the market starts to price at a hard, europe will suffer as well as the sterling. The other risk is covid. We are now seeing a second wave that seems to be pretty intense and not under the control of the authorities. If that gets worse and all of a sudden you have an Inflection Point<\/a> where European Growth<\/a> looks a lot worse in the u. S. Because they have gotten over the hump temporarily, those of the main two ones. Lisa where is the balance of risks in your opinion in terms of dollar versus euro . It depends on whether youre looking at the short or medium term. The short term might be the next few weeks. As euro may get back with the sterling with concerns about brexit. Especiallyoncerns, when you consider this michael to blame of the lane the lane. Ative after the next few weeks and assuming we get some resolution to these brexit concerns, as we approach the u. S. Election, the reverse will happen. Europe will be concerned about what will happen in the u. S. Election and it will strengthen into the years end. The next fewmpy in weeks before we start to get an uptrend again in the euro. Looked at the currency dynamic with fixed income. We have bill gross coming up in a bit. How do we judge currency paired dynamics given that nominal rates are so low and the real rate is negative pretty much everywhere. It is the differences between those International Ranks<\/a> that matter. Unfortunately we are living in a boring time right now. It looks like the fed will keep rates near the zero balance for potentially the next three years. We will see more on the projection the fed issues this week. That looks like what will happen. As far as the ecb goes, they will keep their rates low as well. Although that has been important in the past, it may not be important anymore. Other things may be much more important. Geopolitics, relative growth as opposed to the yield spreads. Jonathan a final question from me. In your experience, your time in this industry, can you remember a time where g10 was so heavily influenced by politics . That is a tough one. I would say yes. But you would have to go back to , you know, 40 years, 50 years, 75 years. The reason is because we were in a fixed Exchange Market<\/a> before 1973. It was not translated into movement and foreignexchange trade it is tricky to consider that. I think you could make a case that, in the middle of the 1970s, late 1970s, between the oil crisis, the global recession and the unstable politics in europe at the time, yes, you would have to go back to that point in time and conceivably things were as grinding as they are now. Again, we are talking about 40 years ago. With an and fx market 70 seal to it. Great to catch up. A g10 market with an em feel to it. Politics influencing big major currency in a way that maybe it didnt a while ago. Tom there are some really outlandish strong yen calls. People are looking for a big figure move on yen and yet it just does not happen. Jonathan the dollar and yen have been remarkably stable. We have said that many times on bloomberg surveillance. We have had a breakout, the eurodollar breaking out. Sterling breaking down. Foreign exchanges are a little more interesting, a lot more interesting in the last two weeks alone. Up next, a conversation you do not want to miss. No gross, next on bloomberg. Gross, next on bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network<\/a> in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Jonathan from new york and london, this is bloomberg surveillance. From our audience worldwide, live on bloomberg tv and radio. I am Jonathan Ferro<\/a>. 60 minutes away from the opening ballot. Equity feud from the opening bell. The s p 500 with a bit of rebound. Up 1. 1 . In the fx market, the euro breakout. The ecb trying and failing to do anything about it. 1. 1874 on eurodollar. In the bond market, a bit of a snooze. The bottom end of the range 50 basis points, the top end around 90. Right now it is 66. Headlines from airbus. Lisa mentioned in the job cuts angle from the airline industry. Travelsays the summer rebound to not live up to expectations. It is unlikely voluntary departures will cover all shortcuts and their preparing for longer, deeper crisis than previously seen. It is not a return to normal in that industry. Tom this is the debate for the end of the september, and the fed meeting on wednesday, we will have our special coverage led by caroline hyde. I look where we are with these troubled industries and does it roll over to the general economy as well . Jonathan that is the issue. For equities right now, job cuts , cost cuts might be seen as bullish. Mediumterm the labor market is not doing well. It will not look good for demand. That is the push and pull, the tension. What is the tension in highyield . Lisa the tension is nil. The question is when the fundamental start to matter again. Right now it looks like the fundamentals will have free money for a long time. Intothat is a good skew William Gross<\/a>. The world would stop when he worked at pimco for a monthly newsletter. He is in a kind of retirement where his golf game, reports have it has improved. We are thrilled with bill gross joining us today. Here is why. The new normal is one of the great calls of the decade. Gary should blame with his call of inflation and the inflation. Then there was gross and Mohamed Elerian<\/a> in the new normal. If you look back to the advent of the new normal, now you have a pandemic overlay. Do we escape your new normal at any point . I think we began to escape perhaps we will continue to do so. The new normal was based on a slower economy, lower inflation. It incorporated globalization to some extent. Demographic spirit i think the demographic influence continues demographics to some extent. I think the demographic influence continues. Has not helped globalization, it has accelerated deglobalization. , the virus is changing things. Tom any number of things to talk about. I go to your memo where you talk about a 6 trillion deficit. We have heard this from other sources. The great economist claudia somme has made clear we need more deficit coverage. What does the bond world do if trillion, 4 3 trillion, 5 trillion deficits . Is a the bond world melding of the fed and the treasury. My way of thinking, this sounds rather derogatory, but the fed is the dog, the treasury is wagging it. If the treasury wants mother once money, if the treasury wants money, the fed will provided through purchases. Do i endorse that . No. Is that a constructive thing down the road . Probably not. Is it inflationary . Probably yes. We will see. To the extent we have melted fiscal and monetary rather permanently, deficits can increase but we are at 100 of gdp already and it goes to 120 , if thend at some point fed stays out of it, then inflation is going to come back. In any case we had inflation with Financial Assets<\/a> and commodities that have come back in another form. Michael i remember that tom i remember the day when you recommended Procter Gamble<\/a> dividend and the bond world fell off its collective chair. Now we have permanent repression. I will give you great credit for coming up with that concept. We have an asset bubble because we have your financial repression . Bill i think so. We have an asset bubble because Interest Rate<\/a>s are near zero and negative in many parts of the world. , through dividend discount models and so on, has inflated growth stops and anything withh stocks and anything profits far in the future growing fast. Wantcial repression, if we to speak to that is something that has always been swept under butrug by not only powell by janet and ben bernanke. It is something that can be fixed by a later point. Prior fed chairpersons have focused on inflation or focused on rebig rating the economy to the extent on reinvigorating the economy to the extent retirees and Pension Funds<\/a> and savers are being hurt. That can just wait. At some point it cannot. We are beginning to see that. We do not have to talk about prudential or insurance or banks. We can talk about momandpop on main street in des moines, iowa, where they have no more savings and they are not able to earn money on whatever they have left. The problem here year is getting greater. That becomes the chink in the armor of this entire financial complex. Jonathan always enjoy your writing and you never hide your personality when you do right. Today when people when you do write. When people read the Investment Outlook<\/a>, it is not the thingsent it is the you read about your family. With the deep amount of respect for your career, what is behind that as you put this out . Bill i have always wanted to let people know who i am. To the extent they know who you are and there is a certain amount of honesty and talking about yourself and your life, to my way of thinking it always translated to an equal amount of honesty in terms of the investment world. Always been an autobiographical type of thing. I did not want to write a book about my life, but to a certain extent these outlooks outline my life as i have moved along. The current one, where i talk about my sons tattoos i think is interesting, it is a topical piece of information, not only to my family but for society the extent readers like it, fine, if they do not like it, that is fine, too. Jonathan you know many people are interested in your life. Once again, with the deep amount of respect for the family members that might read this and be terribly upset, you do refer to your son is a disappointment. You look happy as we talk. Hugely successful. When people read this, they might be thinking bill sounds bitter and unhappy. What would your response be if they ask you that . Bill i talked about tattoos. I said he was a disappointment in terms of tattoos. That does not mean he is a disappointment as a son. Did not have enough room in space for that. I talked about my other two kids as well, relatively tattoo free. Just something funny to talk about, especially the tattoo on the inside of my sons lip. Son did issue is his not get a 49ers tattoo. That is the real issue. Lisa and he will go get a tattoo. I want to go back to the investment thesis, you are making the analogy of the tattoo on the Global Economy<\/a> that cannot be removed for a long time and you talk about how you expect the bulk of stimulus to have already occurred and it is time to get more defensive. What does it mean to get defensive with yield so low right now . Bill a number of things. Tattoo is applicable to the Global Economy<\/a>. A tattoo is a discoloring of the skin, and certainly the Global Economy<\/a> has been discolored by the virus and things have changed in many ways as we have spoken in the last half hour. What does it mean in terms of investment and yield type of investment . I am always amazed, and i do not discount the phenomenon of Growth Stocks<\/a> and the fangs and the big five and others because as real Interest Rate<\/a>s have to 130 in the u. S. Basis points, much more than other countries, the dividend discount models would account for that and make Growth Stocks<\/a> do much better than other investments in the u. S. And globally. In terms of dividends, i have always i am always amazed that if others do not recognize you can borrow money at 1 and investors can borrow a 2 , relatively stable 7 to 8 , i gravitated to natural gas pipeline stocks with relatively firm dividends the bread is enormous. If you compound that 6 the spread is enormous. If you compound that 6 or 70 a year, that is almost as good as a growth stock. Not as good as an amazon, but a good stable investor. Lisa are using leverage is good in this kind of environment given how low rates are . Bill for sure. To the extent leverage comes back and snaps you, it does that when Central Banks<\/a> raise rates. I do not think, and most do not think rates will be raised for a long time. If you want to be able to borrow money you can do that with funds that lever, you can do that with margin at your own account. Whenever you lever you want to do it safely, because we know ultimately leverage is destructive in the forerunner of a bear market as opposed to able market. Always appreciate your transparency and you are always generous with your time. Bill gross on his new Investment Outlook<\/a> he released earlier this morning. Lets get to some of the price action. Equity futures bouncing back. On the s p 500 we are positive. Up next, patrick foye of the mta. That is next on bloomberg surveillance. Now leadingle is the race for tiktok. The music video apps chinese parent have abandoned talks with microsoft and now favors a deal with oracle that will look more like a Corporate Restructuring<\/a>. Treasurer terry secretary Steven Mnuchin<\/a> tells cnbc the oracle proposal will be proposed by the Government Panel<\/a> that looks at transactions where foreign control could result in a threat to national security. Tropical storm sally is taking aims at new orleans in louisiana. It could turn into a hurricane and is likely to make landfall tomorrow morning. That would make it the second hurricane to hit louisiana in a month. Led toas already evacuations on some platforms in the gulf of mexico. Gilead is making a big bet that a tumor fighting drug can boost its fortunes. The company has agreed to by immunomedics for 21 billion. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Am ritika gupta this is bloomberg. We are making the preparations everywhere. We are using Smaller Centers<\/a> around the world. We care deeply about the safety of our candidates. While our candidates prepare, the reup rate been extraordinary. Jonathan your equity market this morning shaping up as follows. Good morning. A lift ahead of the opening bell. Looking ahead to your conversation with kate moore of blackrock in just about 10 minutes. Tom and to reset for the audience, the fed meeting on wednesday, kate moore to give a nice synthesis of the different Asset Classes<\/a> and where we are headed into 2021. Right now Lisa Abramowicz<\/a> and i want to get to something very visceral for both of us, the transportation challenges we see across new york. That is the metropolitan transit authority. You can do that with patrick foye come and you can do all of the suit and tie stuff, you can nsd jennifer gunnerma fantastic article in the new yorker magazine about driving the bus across central park north through the pandemic. It is extraordinary journalism. Patrick foye, i know you saw the article about one of your bus drivers. I love, deep in the article, i willey say paraphrase, the policeman see you when they are needed, but the bus driver and the mta see us every day. Employees perform heroically during a pandemic, as they did after 9 11, as they did after superstorm sandy. The coronavirus exacted an incredible toll across new york. 131 of our colleagues passed away from a virus. New york was the epicenter. The hurlock work drove men and women working on subways and buses the heroic work of men and women working on subways and buses and bridges and tunnels is extraordinary. Each of those men and women played a extraordinary role in new york during the pandemic, which i remind your viewers is continuing. Tom what is so important is with the funding shortfall, and if you do not get aid from various larger governments, how many layoffs do you foresee . Pat we are asking the federal government for an additional 12 billion, which is the amount of loss we will have the remainder 2020 and into 2021. Significantlyown greater than during the great depression, which is extraordinary. If we do not get federal aid, and that is incumbent on the Republican Senate<\/a> leadership to move that bill and move that funding, we may have to cut subway and bus service up to 40 and layoffs about 7400 employees and up to 50 serpas reduction on metronorth and Long Island Railroad<\/a>s. Those cuts would be devastating. The mta is the circulatory system of the new york City Regional<\/a> economy. Jobs will not be created, the recovery will be stunted if we do not get that level of funding. I also want to point out the following. ,he Chicago Transit Authority<\/a> important and wellrun agency, prepandemic carried about 2. 5 billion customers 2. 5 million customers on an average day. In the throes of the pandemic we carried 2. 6 million. That is a prepandemic comparison in the case of chicago and during the pandemic in the case of the mta and it demonstrates how important the mta is. If we do not get that funding enough to make those cuts, it will have a drastic effect on the new york economy. Lisa as somebody who grew up in new york city riding the subway system and who has seen it through the 1980s and 1990s, there is a fear we are heading back to another era with the subway system. How realistic is it we will make those cuts . A lot of people hear what youre saying and chop it up as a negotiating tactic. Are we on the brink of heading back to the 1980s and 1990s for the subway system . Pat it is not a negotiating tactic. We have been downgraded again. The rating agencies are not political figures, they are calling it as we see it. Going into 2020, we expect an 80 million surplus, we expect it to take hundreds of millions of dollars out of the expense base of the mta. We have done that. We expect to an additional billion out in 2021. This is not a negotiating measure. Deficit we12 billion have to face. The only level of government that can fund that is the federal government. Every state and every city is broke, including the state of new york and the city of new york. It is only the federal government. It is a National Crisis<\/a> that requires a national solution. Lisa given that financial backdrop, how do you plan on employing the resources to enforce the new mandate to wear a mask on buses and subways or face a fine . Pat it is a great question. The mask find provision into effect this morning. Countingeen serving, mass compliance before today was subways,ses, 91 on well over 90 on metronorth and Long Island Railroad<\/a>. I spent the morning with the mta mask task force. Queens and gotn on the four from Grand Central<\/a> down to bowling green, where the mta offices. I will tell you that of the thousands of people we saw this morning, there was only one without a mask. My colleagues and i handed out a couple hundred masks to people so they would have them for tomorrow. Masks are available from station agents and also distributed by Long Island Railroad<\/a> and metronorth. Our goal is not defined anybody. Isis not to fine anybody, it in the interest of public health. We are not looking to issue a lot of fines. Tom we are out of time but we say congratulations to you and all these special workers of your mta. For those of you globally, it is a snapshot and every Transportation System<\/a> across this nation. The airline news we have seen today as well just as challenging. Of the 47 m a stories this morning, which one has your attention . Lisa absolutely oracle and tiktok. The big question will be the process, what the deal will look like. Steven mnuchin saying phidias will weigh in on this this week. It is a huge question mark. Dan ives is saying what is this . Is it an acquisition, is it a restructuring . Tom i will leave my opinion out. I will also note we did not spend as much time as nvidia. The Prime Minister<\/a> saying this is a global issue. This goes to the theme of bloomberg surveillance on our simulcast over the recent days and weeks about digital dominance. , 45is out of cambridge miles north of london. The Prime Minister<\/a> of the United Kingdom<\/a> warning about arm ying in london with nvidia so many stories this morning. Arthur blank, owner of the atlanta falcons, coming up. This is bloomberg. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile<\/a> lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy<\/a> note20 ultra 5g. Jonathan from new york and london for our audience worldwide, good morning, good morning. The countdown to the open starts right now. Morey futures positive than 1 on the s p 500. We begin with the big issue. Tech rebounding after an ugly two weeks. We could be in correction territory. A healthy correction. The rally has gone too far. I continue to see a green light on tech. Nasdaq will lead the way. U. S. Equity outperformance has been driven largely by tech. Pervak some of that exposure. Unless we get more support. Rotate into areas that have been left behind. The u. S. Will go back into her recession. For moretation cyclical stocks may be overdue. The","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia601907.us.archive.org\/17\/items\/BLOOMBERG_20200914_120000_Bloomberg_Surveillance\/BLOOMBERG_20200914_120000_Bloomberg_Surveillance.thumbs\/BLOOMBERG_20200914_120000_Bloomberg_Surveillance_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}