tv Bloomberg Surveillance Bloomberg July 10, 2020 6:00am-7:00am EDT
our society to function, so says the governor of florida, he wants schools open. deathas the rate of accelerates in miami. in orlando, the magic kingdom will open. the arm's-length hug from mickey mouse. into the weekend, amazing, yields persistently lower and in hong kong things are "complex in developing," with authorities effectivehools monday. francine, it is extraordinary to see in the u.s., the pandemic story, state to state, city to city, but indeed, worldwide, the difference between melbourne and
miami is extraordinary. francine: it is. what we are seeing in the u.k., ester 10 daysc ago. it seems authorities have a better handling to track and lockdown onng this this city instead of everything. very different in the u.s. where cases and deaths are rising and at record highs. tom: amazing to see the acceleration in the death rate in some of these states. for our international audience, it is in america, riveted by this virus. ritika: morning. coronavirus milestones climbing in the u.s., new cases climbed over 60,000 in one day for the first time. florida,lifornia,
record number of deaths. new york city events requiring permits have been canceled through september. the u.s. is set to take the next step in a battle with france over taxes on technology giants. the u.s. will impose tariffs on $700 million in french goods including wine, cheese and handbags. biden has laid out a plan that will make america's economy better than it was before, he says. to boostdate wants manufacturing and encourage innovation, with a focus on buying american, avoiding big-ticket proposals like the green new deal. agencyernational energy has boosted its outlook for oil demands. sayss monthly report, iea
a collapse in fuel consumption during the second quarter was not as bad as originally thought. global news, 24 hours a day, on air and on @quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thanks. equities, bonds, currencies, commodities, extraordinary. equities, we are depressed, -11, the vix, 29.87. i want to sit on bonds. frenzy,more than a bid as the price elevates. .14%, 10 year, yield has plunged .58%. moving bond, maturity, down.
1.25%. all of this, the curve flattening. fascinating to see this. francine: incredible. a lot of people in the market are expecting record lows will gather momentum in the coming boe rateshe negative grows. barrel,e trading $39 a european stocks fluctuating, treasuries jumping sending the five year yield near a record low. tom: important conversation. the equity market. i particularly want to look at what we observed, core bank stocks, tech stocks. good competitor at citigroup, expanded his two-year
3550, at amazon out to aginormous forecast well into 2022, speaking of the analysis and extrapolation going on right now. career as arling security analyst before he entered the dark side of portfolio management. we are thrilled. andrew, you and i have never seen this before. into 2022 whatng we are seeing into these technology stocks? andrew: great question. expectations in these companies moving into near-term earnings season. i think they are extrapolating out good things, pulling forward
info and expectation into currently embedded stock prices, with earnings seasons around the corner. tom: right. what is so interesting is the theory we learned in school, the basic idea of price, earnings, flip them, and you get the yields lower right now. yields go ever lower. can you live sustained as a portfolio manager? have been in this business a long time. i remember the anxiety of 1999-2000. you are saying, do i just chase a few stocks going to the moon or do i be responsible to my client base and not own them and therefore lag? it is starting to feel that way
again. a few stocks have outrageous valuations and the rest of the market is being left behind. francine: what will accelerate that trend? andrew: we are already in a bubble in the nasdaq but we are levels of the valuation bubble of 2000, when it did burst, but we are getting there. what will accelerate it is the fear of people like me or investors, of missing out. i have to get in. more and more money piles into fewer names which causes the bubble to expand, ultimately, before it pops. the tech sector is more expensive than it has ever been but for 2000.
francine: what would make it pop? i know it is difficult to pinpoint. it is the search for yield going on? is there something that will make equity investors realize it cannot go on this way? andrew: if you think back to 2000, ultimately what burst the internet never went away. ultimately, companies could not deliver on the ever heightened expectations. ultimately what brought it down was companies reported good numbers but they were not good enough. that is one of the ways it could bring it down, ultimately, these companies cannot report the numbers expected. the other way it brings it down, it goes back to the initial okstion is losing money is
if you expect in 2022, 10 years out, whatever, you are going to make money and therefore discounted cash flows justify valuations. if interest rates were to go up, suddenly those cash flows don't look as attractive. that does not seem to be the case today, as we are seeing with interest rates. i think that is because you have this constant bid by the fed. there are signs of inflation percolating. look at gold, the weakness of the dollar. off, the rates, do they move higher? tom: i cannot remember if you took the course, chicago or lemmings 101? every cfo goes off a cliff. did warren buffett change the
dialogue this week? are we going to see the wall of money out there finally going to an mnf frenzy? an m&a frenzy? andrew: i was excited he bought into a sector that was down and out. i thought that might cause the market to say, gosh, maybe we should by more than just these few stocks. you cannot say the market is in a bubble. you can only say the nasdaq is in a bubble. i thought it would cause reevaluation. gee, maybe we should by the sectors because there could be m&a in this area. that has not been the case. same stocks that have moved this week. i cannot answer that. i am baffled. tom: well, thank you so much, greatly appreciate it.
portfolio atr morgan stanley, i am looking at gold and the fifth weekly $1800 perovering near ounce mark. what does that tell us? either it is uncertainty with risk assets leads people to aboutr it is something what is going on in the currency markets, debasing the currencies. there is a combination right now. gold was going up when the equity markets, risk on assets were going up. i don't think it is just a risk off trade. i think it has more to do with the dollar weakening. the dollar has weakened against other currencies. this is why you are starting to see asian equity markets break
upside. to me, it is all the same play. strengthening.ld your started to see signs inflation is picking up. we are not seeing it in the bond market yet. tom: will we see it in the business plans of multinationals? not that they are pricing gold minute by minute but i'm fascinated if we get a renaissance of multinationals. everyone is betting against globalization now. do we actually go the other way where the multinationals prosper? question.od it makes for great headlines about deglobalization. at the end of the day, global growth is coming back. ism numbers around the world are
starting to recover. that will help multinationals. i am dubious of headlines. i think stocks will recover because we are in a recovery phase. never lose sight of the fact that you have extraordinary central bank stimulus going on. that will help economies and companies. francine: andrew, thank you so much. shortly, the eurasia group head of research, we will talk europe and china and u.s. elections, next. this is bloomberg. ♪
francine: this is "bloomberg surveillance," tom and francine from london and new york. the upcoming u.s. election, reopening the economy and controlling the virus, at the forefront of political uncertainty. markets awakening to a different reality of leadership as joe biden lays out his economic recovery plan. the polls are interesting. meredith, great to have you on the program. the policies we are starting to see from joe biden, in terms of foreign affairs, and i don't know whether anyone will care on
november 3 but what does it mean for pivot to asia, the middle east, europe? meredith: good morning and thanks. we are calling the election now for joe biden. how he is thinking about reconstitution of u.s. leadership in the world. he is a longtime foreign policy and. i worked alongside him in china. he knows what he is doing internationally, given his longtime and the senate foreign relations committee. the challenges that the world has moved on from u.s. hegemony alone. this is a different world than six months ago. his approach will be tested by major shifts in u.s. politics and the geopolitical order. he will have to work harder, including with partners and
allies, he will be looking to europe, as well as new partners in emerging market economies to try to hobble together and impacth that will have globally. -- an approach that will have impact globally. francine: what would joe biden as president mean for the people in the middle east? would it be a significant shift? meredith: there would be more attention paid but not as much as in past u.s. administrations. u.s. energy independence and an administration focused on green energy will limit and deepen involvement in the middle east. he has broader ambitions of a u.s.-iran dialogue. his priorities will be working with iran to put the nuclear issue back in a box but also, stabilizing israel and palestine
as a secondary top priority. go ahead. tom: good morning from new york. i have been dying to talk to you about a vice presidency of susan rice. you are saying joe biden will win. i am not willing to go there yet. i am willing to say picking the vice presidential candidate is critical. the mayor of orlando, etc. you work with these people. can susan rice reach out and have a domestic voice as a vice presidential candidate for mr. biden? meredith: susan rice can certainly make that domestic case. given her time, with president obama, she was focused externally. for most americans and abiding campaign, when you hear them talk about rebuilding ties with
europe and what they can do to and u.s.asia traditional allies and partners, you are hearing two things. --, domestic sources [indiscernible] -- they need to make american foreign-policy work for a domestic populist highly uncertain, concerned about future livelihoods and the resiliency of the u.s. domestic economy. with susan rice as vice president or any of the vice presidential picks joe biden might pick, what you're going to see is a focus on rebuilding at home and making a stronger case for why having a strong global presence and global relationships, including in trade and investment will be critical to building a pandemic resilient economy that has a
solid growth trajectory moving forward. that has never really been done very well in recent political memory. this will be a key challenge for that administration. and thisinating to me, is a richard haas kind of question, he has linked our fiscal temperament to our foreign policy. sumteraffect a foreign-policy given trillions of dollars of deficit? meredith: we will have to start somewhere. i think what you will see in the u.s., if you have a joe biden administration, and you are right to not count the president tendency to pull rabbits out of hats, but we place a 60% probability joe biden will win in november given our read of polls.
what you will see domestically, the passage of a stimulus deal by the summer recess, thereafter, wariness to bring on more debt. you cannot drive a healthy recovery by just stimulus alone. conversation -- if you have to spend more moving forward, rather than just monetary stimulus or sending checks, what are you going to do to rebuild infrastructure? that will be critical. francine: thank you so much. interview -- this is bloomberg. ♪ you doing okay?
believe, further in the bloomberg day, ian bremmer may show up. we are more fortunate. we have meredith sumter, eurasia group, knee-deep in research. meredith, i have been dying to have you on to direct our attention to what is not spoken of in china. everyone focused on hong kong, on beijing and then there is taipei. i want you to give us an update on the distance across the sea from taiwan to mainland china. what do you foresee that eurasia group? -- at eurasia group? meredith: a great deal of unease. on theon is focused consolidation of chinese power over hong kong and this is not missed on taiwan but for beijing, with such a move, they have really risked a lessening
of support by those on taiwan for close ties with china. it is quite interesting if you see the way the kmt has been shifting approach domestically, to get space between itself and mainland china. term, there will be space given to the kmt and taiwan as beijing focuses on trying to further consolidate the position it is holding in hong kong. tom: we are far beyond nixon and kissinger, even farther beyond shouldhanghai, how a joe biden administration or second term trump administration support taiwan?
meredith: starting with preparing a relationship with china where you have a communications channel and you are able to provide your views of what would be best for stability across the taiwan strait. that is the way you are able to help partners in taiwan elevate their message in beijing. without that active channel, and to my knowledge now, there is not one at a senior enough level, that will be a challenge for taiwan's leader as well as the u.s. in terms of protecting taiwan's long-term interest. a joe biden administration is going to have difficulties in quickly shifting its relationship with china. should you see that administration. that is just because there was little trust before. there is no trust now. withis coming at a time
the u.s. trying to shift, we see, over the next year, president xi is going to have longer-term challenges that markets are not necessarily baking in just yet. at howe: when you look china has dealt with the pandemic and the fallout internationally, will china recover credibility from this or is that just added to all the concerns and fights between the westin china on security law in hong kong, but they are doing with the uighers as well? meredith: great question. you have to separate different sets of issues for china. one, there are these core interests that china -- [indiscernible]
, south china sea, taiwan as well as the state backed system -- these are core issues xi jinping believes is critical to the longevity of communist party rule in beijing. second, how is china going to be a great power externally? that is quite interesting. there has been a hit to beijing's reputation, in part because of the state backed economy and the economic coercion it employs to try to get countries to allow it to pursue interests the way it wants. you see active thinking in beijing policy circles about what kind of power china needs to be globally. once we get past -- [indiscernible] response, i think you will see active thinking about trying to create space for a model different than the classic
western backed economic model or liberal model. china will argue this model we have might be more appropriate for emerging markets that don't necessarily want to follow the westin path and we need space -- the western path and we need space for our models to coexist. that will be the challenge for diplomats under a joe biden administration and the xi jinping government as well. can they find a way for this to coexist or not? francine: thank you so much, meredith. let's get straight to the first word news in new york city. a rampageronavirus on through the u.s. sunbelt, texas, california, florida, paul reported record deaths yesterday. in houston, all the icu beds are filled up last week.
a day for the first time. refused termshas of home confinement, including constraints on talking to the press. he is serving a three year sentence for campaign finance violations and other crimes. he was released in may and allowed to return home over fears of catching coronavirus. breaking with the president. the chairman of the joint chiefs, general mark milley told congress it should look at renaming basis. he called the confederacy an act of treason. the president has threatened to veto legislation that would mandate name changes. jennifer lopez and alex rodriguez are amongst a group bidding to buy the new york mets. the group has offered $1.7 billion for the team.
stephen cohen has made an offer. prefers ceo is said to the rodriguez group if the offer is close to the best bid. global news, 24 hours a day, on air and on @quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thanks. folks, risk off in the equity markets, yields come in, all of this about the pandemic nationwide. we will speak with the gentleman from little rock, french hill, about how arkansas in the sunbelt, attacks the pandemic. stay with us, worldwide, this is bloomberg. ♪
ritika: this is "bloomberg surveillance," with the bloomberg business flash. for the first time ever, investors have bet $20 billion against a stock. the value of tesla shares sold short is approaching that milestone. it has risen 230% this year. elon musk poking fun at short-sellers. the pilots union has reached an agreement on a lead program, with early retirement. senior pilots, 62 and older. earlier this week, united notified employees they could lose their jobs in october.
air travel is picking up. firms, countries in the asia-pacific region account for the top 20 markets, vietnam, south korea and indonesia showing growth. china and the u.s. dominate in the number of flights operated. that is the bloomberg business flash. tom: thanks. greatly greatly appreciate that. we are hoping to have all of francine,eillance," victoria street in london, we hope to be back. extraordinary extraordinary effort by our team. what it takes to do "bloomberg surveillance," 4 a.m. london with francine starting coverage out to 10:00 a.m., just extraordinary. we are thrilled, not all of us
thrilled, to be back at lexington avenue on monday. [laughter] tom.ine: we will miss you, tom: i will deposit the dog down here right now, francine. a careful segue in introduction. on.ch hill, life goes new york is adapting, as everyone is to this pandemic. as the governor of new jersey told us yesterday, it is difficult in new jersey but it is nothing like what you are seeing in little rock and across the sunbelt. what needs to be done this weekend to assist the sunbelt in this pandemic? rep. hill: tom, francine, good to be with you. arkansas,utchison, of recently signed an executive mask for common requirement. if mayors want to pursue that.
it would be consistent across the state. i think we now know after months, we have to live with this. people with the virus, have to follow cdc guidelines of wearing a mask in public and having social distancing. that would be the number one thing we could do in the sunbelt, to follow cdc guidelines. tom: how are we going to do this? mayor scott of little rock has had a challenge with people flagrantly avoiding what dr. fauci and scientists say. where does the attitude adjustment come from if the governor of florida says open this, open that, open disney world this week? rep. hill: for example, in little rock, where we had a local bar not follow the social distancing guidelines for the masking rules, they were threatened and closed by the
state and i think that sent shockwaves to all operators, bars particularly, to follow and enforce those guidelines through their own personnel. francine: what are the guidelines, good morning from london, that will change in the coming weeks? do you have an effective track and trace program? 12,000ll: we are doing per 100,000 testing here. we put a lot of money in testing, hired a lot of tracers working to keep up with the caseload. we are using the cares act money in arkansas to pay for our tracing program and the testing fund for expanding testing. because of hotspots, which arkansas has been one, northwest arkansas, florida, texas, we are
back to needing more reagents for testing to speed up turnaround time for testing. written theon has vice president on this. the governor has called the president about it. that is something we need to consider, again using, federal government power to increase production of reagents or we will not be able to keep up with testing we need and across the here and- we need across the country. tom: do you have a number of what the senate needs to come up with for the next round of stimulus? of $1.5guests speaking trillion. can french hill outdo that? rep. hill: i've heard numbers smaller than that coming out of senate discussions in the areas of extending and reforming unemployment payment, continuing ppp program for small
businesses, giving more guidance throw governors on how to use state and local money we sent out to all the states and dealing with the liability issue need from a real talking to teachers and superintendents, do we have the right amount of funding to get our schools open safely for both teachers and families? i don't know that it will be that large. members on both sides are working hard at looking at gaps we should try to fill as we continue to fight the virus. francine: congressman, this may be a dumb question, but from europe, i wonder when wearing a mask became so political? the u.s. is so divided in dealing with the health crisis, which is a political. what happened and how do you get on track? rep. hill: great question really. the initial problems were the
mixed messages coming from dr. fauci and others, earlier in the crisis. that has been spread through our community. is a valuable? is it not? if both people have them on, is it really working? the federal government gave mixed messages. here's the bottom line. it reduces the spread. if people wear them, when they cannot socially distance, it reduces the spread. you are doing your part to stop this virus so we can get this economy fully opened. i was thinking, tom, i that people complain like hell during world war ii about gas rationing, coupons. well, they were necessary to fight the war. wearing a mask is a modest thing to do to help fight the virus and get our economy back open. francine: thank you so much for
francine: "bloomberg surveillance,", francine from london and new york, continuing to track the virus. bloomberg has developed a unique partnership, with johns hopkins .t the forefront the johns today, hopkins university bloomberg school of public health professor. thank you for joining us. when you look at cases and the huge amount of deaths that have increased in the u.s., are the states more reluctant to put social distancing in place, to wear masks, now turning a corner and doing it? andrew: you are starting to see the responses to the search.
this starts with the larger public health interventions like closing businesses are wrong. that was to get things to a manageable level. statese seen a number of did not hit low enough levels to loosen restrictions and now you are seeing that surge of cases. masks and social distancing will help of more stringent efforts will be needed to get this to a manageable level again. francine: what is the metric you use to reopen an economy? we talk about the curve. does it need to be almost flat to reopen? on pekosz: it really depends an individual state's contact tracing mechanisms. cdc recommends 5% test positivity rate as being a good place to aim.
if you have a good mechanism in place, you can deal with numbers in that range. if it gets higher than that, you really stress the system and you're not able to trace cases, identify people and instill individual quarantines and stay-at-home orders, which are going to keep us from doing these large-scale citywide, countywide, statewide stay-at-home orders. francine: how close are we to a vaccine that would work for a large number of the population? dr. pekosz: all the initial vaccines, testings of mostly in phase two testing, are good. we are seeing immune responses to these vaccines giving us signals we think are associated with protection. the thing to realize, to be realistic, it is going to take a long time to get the vaccine
distributed widely in the country. signs are good. the entire vaccine rollout is going to be a process and take a long time to get in place before it can make a significant effort. things are looking good but it is not short-term. francine: longer-term, is your advice to live with the virus and get used to social distancing, wash hands, for the foreseeable future? could this take two years to deal with? dr. pekosz: it is difficult to predict a timeline but you hit on the right points. this virus is here. it is not going to go away. we can get it manageable, where things like wearing masks, distancing, taking into account those kind of scenarios where transmission can occur. large gatherings, multiple people over the course of a day. those other kinds of things that will keep this down and carries
with it personal responsibility to follow rules. it is doable. we have seen this work in other states and countries that have controlled the outbreak. it needs to be implemented effectively. francine: case counts have risen in the u.s. when will we see more hospitalization and death? three weeks? longer? dr. pekosz: you see case numbers rise first. because this virus takes sometimes 14 days before the serious cases come through, you will then see a lag in terms of hospitalizations. often, those cases can take another two weeks before you start to see the effects on mortality or death. when you see case numbers dropping, you have to be careful and realize the surge in hospitalizations and deaths may come three weeks after that.
any interventions that go in now, we expect to see those effects, three weeks down the line. these effects won't be seen immediately in terms of case numbers, hospitalizations and deaths. francine: thank you so much for joining us. bloomberg for the latest information and tune in every day for our exclusive conversations with johns hopkins experts, battling covid-19. ♪
>> no one at this point, analysts, companies, strategists , has a great sense for what earnings will be in 2020 or 21 021. >> though separation part of the labor market is still bad, but claims only tell us half the story. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. >> good morning. we are live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this has been building. treasury yields breaking lower. tom: that is exactly the description of the mathematics on the bloomberg terminal this morning. it has been a persistent grind, and it is