ahen you support the markets, turning point in world history. >> good morning, everyone. bloomberg surveillance. thrilled you are with us.

and across this nation, particularly those of home, alling at different home, all different shades. my major message today is the crosscurrents that we -- the of where welysis are this middle of june. of where we are this middle of june.

the bar for the good news gets higher. >> >> that has been the big debate -- the big debate --

>> we can't choose one or the other. we know a lot more than we did when this first hit. i think the spikes we are going to deal with down the road here, we are going to be better prepared for them. we've got the population operating in a much more safe fashion than when this first hit. i believe we've got a lot of companies putting a lot of energy into how to operate a business with a pandemic, and i wouldn't underestimate capitalists figuring that out. we've got scientists working for treatments that can reduce the death rate before a vaccine is discovered. theall, we kind of nowhere primary death rate is among older and compromised individuals that we can put a big ring around. we've got greater hospital and medical supply capacity. i think we are better equipped to handle additional spikes, which tells me that the restart

going toic activity is continue, and i think it's going to continue to provide comforting information when we see unemployment continue to come down, when we see job creation come back, when we see i think if it is headed in that direction, we are in a new expansion and a new bull market. question to john's point earlier, how much have this has already been baked in, and now we are just waiting for confirmation to come in. point to the filing this morning that said they are looking to raise $500 million in new equity, even of a file for bankruptcy, based on the enthusiasm of what we are hearing. there does seem to be in optimism that already is priced

in. how much more upside can there possibly be? >> that is what this correction is a little bit about, too. not checking sentiment the , we are giving them a taste of the other side of the market. i think that builds buying power again, and it rebuilds some valuation. on the s&p 500 right now, the price to the average earnings, the future expected earnings, that's probably under 22 times earnings. that is high, but what is interesting to me is it is not much different than it was after the recession of in the early 90's, or after the recession in the early 2000's, like 2002, or in late 2009 after the recession

in 2008. when we've had recessions and we start a new expansion, it has popped up every time to about where we are today and even though it is very high, each of those high points in the past have been excellent buying opportunities. i think this one will become a too. i think a year from now, the market will be higher and earnings will also come back in probably go up faster than the stock market. i don't think we are going to keep going up at the same pace we have been, i think it's going to be more choppy and not as fast, but i still think we started a new expansion and if we have, i think we are early yet in this bull market. >> you've got to believe, as you pointed out, that we get positive earnings revisions in the months and quarters to come. were you expecting to see them broad based on a particular sector versus another? >> i think it's going to be

broad-based. part of the positive earning a business is just how low we taken them overall. you combine how low we've taken them with the amount of policy push we now have behind things, i think the next big item coming up for the stock market will be, you are going to see the wall street starting to revise upwards the one-year forward earnings estimates. there is a lot of good signals of that. if you look at the economic surprise index which has gone from almost record lows to record highs, that's a pretty good indicator of better earning estimates coming. you look at the industrial commodity prices which have finally picked up, that has typically been a good indicator. you look at junk credit spreads tighten, that has been a good indicator of better profit growth coming in overall. ad then you just imagine what 20% plus money supply growth , what a mortgage rates this

low is going to do. i think we are going forward the rest of this year wall street revising up what earnings might do. they will start going higher and i think that will help the stock market. >> forgive me because we are pushed for time, but some people struggle with the idea that you can still use high-yield spreads as an indicator of anything. the federal reserve has got involved in the market. why is that still useful for anything? why is that a decent measure of the fundamentals in any way at all in the united dates? think every recession we've had, there has been involvement of government officials into the economy and into the markets. we've had greater deficit spending, faster money supply, a drop in the fed funds rate in

every recession we've had. as we progress forward since the 80's on, those interventions have become greater and greater. i agree, today is greater than ever. but the action of intervening is no different in past recessions. we might not have bought junk bonds directly, but we were buying other bonds that affected junk credits. i'm not sure the signals are all that different from the past. on the other side is that big debate that is raging right now. then tactic to catch up with you. i can sell you that she would have been sitting there going yes, yes, and raring to get in on that high-yield question. the value of the traditional signals that you get from some of these asset classes and the degree to which they have eroded because of the fed's involvement now. thespecially because

federal reserve is propping up prices but not necessarily preventing bankruptcies. another bankruptcy from a gym chain, another from a u.s. shale producer. there is a question about what point that affects the cost of borrowing when the fed is not willing to step in. >> we will talk fixed income next. that is coming up next on this program. from new york this morning, this is "bloomberg surveillance." a moscow court found former u.s. marine corps guilty of spying and sentenced him to 16 years in prison. he says he is innocent and was set up by a russian security officer who owed him money. moscow says he was caught red-handed with a computer flash drive complaining -- containing classified information. top economicse's

adviser is rejecting a more cautious outlook for the economy. they kudlow says unemployment rate will fall in 2021 will be another solid year. he also says $600 per week business payments will end as scheduled on july 31. he said that was the incentive for the unemployed to return to work. british prime minister boris johnson is encouraging consumers to shop with confidence. stores reopened in england today and johnson says that coronavirus restrictions requiring people to stay six feet can be relaxed. be a cut, there could in sales taxes. singapore will is coronavirus restrictions this week. most activities will be allowed to resume subject to safe distance and protocols and more social gatherings can take place. global news 24 hours per day on air and on quick take by bloomberg powered by more than 2500 journalists in more than

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♪ unemployment, the numbers aren't particularly reliable because they don't include migrant workers who basically

are approximately about a fit of migrant workers still have not come back to work yet, which means that even though the unemployment rate drops from 6% to 5.9% in may, the actual rate of unemployment is probably closer to 15% to 20%. thehe challenge against economic data and the bigger challenge, reading the data in china. with that unemployment rate which he says could be close to 15 to 20%. good morning to all. getting you in shape for the market open this monday morning. one hour away with equity futures still heading lower, down by 63 points. that diminished risk appetite are flatter.ies your 10 year yield down four basis points, to 0.66%.

yields copping out and rolling over ever since. >> rolling over, and you got to watch every takedown as well. played george magnus there. things to the team forgetting that up and running quickly because it leads perfectly into her conversation from hong kong, mixing the economy with the culture of china as well. , theeijing news this week virus, it is one story. the economic data in china, let's go roughly halfway between beijing and hong kong, and that can be -- what does the economy of nanjing look like right now? >> the economy looks still quite and the concern for the global economy is that china was

meant to be the one to lead us out of this but even though the has advanced, the consumer is still pretty wary, consumer spending is recovering but it is not back to where it was or where some think it should be. positives, andme the dow is all pointing in the right direction, but the big takeaway from china whether it is -- there is a recovery happening, but it is not necessarily a v-shaped recovery. widely held at the moment that the barbara boxer downs is much higher than it was and the ability to deal with increased infections is much better than several months ago. how is that belief playing out in china right now? >> we are going to find out over the coming days, because we've had a big scare in beijing. last i checked they were talking about 100 new cases originating

in wholesale food markets, a lot of the press are saying it seems important seven, they will have to see how that plays out. system, china has already enforced the lockdown the run beijing city, and it will be critical to see now whether these numbers do continue to increase at a fairly hefty rate or if the authorities turn it down and say they have a grip on it. author of the past few months, the big concern with china and globally was that china was first in, first out, but will it have a second wave? that's why global investors and everybody else will be watching beijing like hawks over the coming days. >> and there is a question of what the political appetite is for a full lockdown, and then there is the question of consumer behavior and how much consumers will just avoid going out to eat or public spaces as a result of getting worried about getting sick or possibly being hospitalized and nine.

i'm just wondering what we're seeing in terms of people going out and existing in a similar manner as they have in the past in china right now. >> again, very fair question. we are seeing an improvement across the board on the retail section. restaurants and hotels have seen a big uptick in business, we are seeing consumer staples rebound. the munication equipment had a good month of growth in may. we also saw car sales pick up the first year on year increase since last july, and that was mostly housed by government subsidies and cosmetic sales was another standard that jumped 13%. curvek it cost the retail , they are starting to spend more, but companies are still fragile in the big takeaway is, when you get news like that out of beijing with another scare on the virus, that's only going to give consumers more wary, keep them at home more, and push shopping to online.

i think the retail part of the story still needs a few more months of a better story before it can fully recover. >> and while we have you on the line, i think what is so important is the protest agenda for hong kong. could there be a protest agenda or a protest schedule forward? >> things remain quite tense here in hong kong, on the political front we are waiting for this national law to see what specific details of that are. of course, we have to see how the u.s. will respond and if they retaliate. building toward a couple of key anniversaries, and as we head into the local elections in september, all the indications are that protesters are still there, it is just being disrupted by a mixture of the virus, the big hole in the economy at the moment, and of

course, the police have become much more proactive and aggressive in terms of their arrest of those gatherings. we the tension remains, don't know how it's going to play out but it is probably much too soon to say it has completely dissipated. and the to hong kong mainland and china, fantastic to catch up with you as always. thanks for staying on. futures down at 62, up by a little more than 2%. that increase in infections in beijing. more importantly, how the authorities handled it. if we get an increase in infections, it will lead to another shutdown, they will handle it differently and it will hurt economic growth in quite the same way. that is the reader across that will be tested in the weeks to come. >> is no question about it. with china, it is an observable thing. morning, as the

latin america and the caribbean at 47% of global death. it's not just in china, on a global basis, there is some tangible stresses this morning with pandemic. guy: couldn't agree more. not as full as where things were just a couple of weeks ago. >> and i'm wondering how this is going to affect consumer sentiment, especially in places like arizona or florida or texas that are seeing these resurgences now and might not have had until now the political will to take a more serious crackdown. ay: the market open around few minutes away. down around about 60 points. downork city, counting it for the opening bell with equities lower, the bond market bid ahead of chairman powell

tomorrow in front of the senate and wednesday in front of the house. a stacked week ahead with the fed in focus, several central bank decisions in the mix, too. this is bloomberg. you doing okay?

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jonathan: jonathan: from new york city for audience worldwide, this is "bloomberg surveillance." , i'mside tom keene jonathan ferro together with lisa abramowicz. one hour away from the opening bell in new york. u.s. retail sales coming up tomorrow. empire manufacturing numbers -- the previous read -- outside of 500, in equity markets, s&p futures -60 points and down 1.9%. treasury yields lower. certainly u.s. retail sales update focus 24 hours out. tom: i agree totally.

this is a huge report. >> it is great talking with you. you always have great insights. now -- are finding right

if you look at the mastercard spending data in the recovery retail online has doubled during the pandemic. it has gone from 11% of sales to 21% of sales. amazon is one of eight beneficiaries. look at target. look at walmart. the consumer has gravitated towards almost all of the major players that have invested in the technology to be able to provide a great experience online, with not just online delivered to the home, it is also the by online, pick up curbside, and things like that. tom: ok. steve, this is so important. let me take one example. let me take one example. if lisa abramowicz is working

the ootd from saks fifth avenue and looking in address usually 1500, now $1800. why did she go back to dropping on fifth avenue? why didshe get it 24 -- she go back to shopping on fifth avenue. probably go back to the relationship. if you buy a louis vuitton handbag, it will probably be the same price online or in store. the price will not be the issue on that item. on the discounted end of season merchandise, you'll be able to figure out where you want to buy it. some people, even with the mastercard data saying 21% is data saying 21% is online, that mean 70% is still in the store. people still like to experience products. they still like that interaction with the associate. clearly they have to feel safe. right now we are in an environment where the consumer be to feel safe enough to

able to go into the store. that is evolving as stores open. as you open up, there is a pent-up demand to get out into the store and you are seeing improvement in the trends. the outdoor malls are picking up faster. people are more comfortable in an outdoor environment than they are inside a big shopping mall. like a coalsstores like a coalsr or a target or walmart, -- like a kohl's or a target or walmart, people feel more comfortable. lisa: if i were going to try on address, i would want to go to a at a physical location. there is a question of how much of the existing store space would have to close to meet the fact that i will probably buy online at some point, but i may go to the store.

store. how much more do you expect in terms of store closures? stephen: it is a lot. we are in a reset period. there 1200 malls in the united states, i think a third of the mako way. -- may go away. in so a lotll kick of these malls will go away. if you look at madison avenue soho in new york, you have huge vacancies, you will see a reset system. jonathan: we have been saying that for years. sorry to jump in. we have been saying that forever. avenue avenue, lexington , all of these storefronts that have been shut down forever waiting for the rents to come down, why hasn't it happened and why will it happen now? have notthe landlords

lowered the rents because they have obligations to their lenders relative to the valuations. i think that what is going to happen is a lot of these guys will go under. you will see restaurants going under, you will see new players coming in. there will be restaurants, but there may be a new ownership structure. in some of these stores, if you have 20% of the business or 30% of the business going online, you do not have the volume per not have the volume per square foot that will support the kind of rent for the store, and the rents will have to come down or there'll be empty storefronts. of -- steveaito sadove with us. across from louis vuitton where

jonathan ferro will buy sneakers as a small shop called tiffany's. give us an update on tiffany's lvmh. what would you do if you were lvmh on this busted transaction? stephen: i think lvmh wanted to buy tiffany. 100 $35 a price, share before the pandemic. share before the pandemic. share before the pandemic. do not have the tourism from china. you have a reset. it is a great brand, it has great expansion opportunities overseas. my guess is there time to play game relative to getting a better valuation. .his is no different than simon the price is probably too high. . the price is probably too high. i do not know whether these things will happen or not happen. i cannot imagine they do not want the brand. it is a great brand. parent.ld be a terrific

it all comes down to price. brands cannot pay the rent, lenders,ords to the and lenders need to be bailed out by the government. tom: steve sadove with mastercard. he has worked with saks. when you hear the word exclusive , steve sadove is the one who invented that. jonathan, i thought you were dead on when went to the rents come down. it has to happen. jonathan: it has to happen but it has not happened for several years. i am asking myself will this be the moment where these guys catch up to the reality of the moment? there'll be no one to fill those storefronts with the rents they are charging. lisa: and one conundrum has been , youu have an empty store

can write down the entire expense of the rent has lost revenues. this has not been as detrimental to balance sheets as some people expected. now we are seeing the rubber meet the road and commercial real estate prices come down significantly. i am wondering whether this will be the tipping point to lower the rent to try to get some people into those storefronts. to get some people into those storefronts. jonathan: can i set the record straight. i cannot think of a conversation this morning more out of touch with the moment than the conversation we had moments ago. carlisle, iup at was often a hoodie, i ordered a pint, and you are dressed very differently than me. at a moment like this, i do not be -- i do not want to be connected to your approach going out having a drink to my approach going out and having a drink. tom: this is unfortunately a true story.

this is unfortunately a true story. we had to explain to the legendary bartender would appoint was. he had -- what a pint was. he never heard that phrase. it is important to observe with what we are seeing in minneapolis and the horror in the last 40 hours, the resignation of the police chief murder, whatd that is so important is i do not murder, what is so important is i do not understand where conspicuous consumption and luxury fits in to the new america. i am not predicting which way that goes, but i think it is a germane debate right now. jonathan: there has been an uncomfortable contrast between what is happening in the markets and the social unrest elsewhere. we have touched on these issues several times over the last few weeks. just getting a feeling the market has finally caught up with the idea things are more fragile than some people which lead to -- some people which would neede people you to believe coming into june. i thought at the time it was a just getting a feeling the marketmistake, things were goinn more than the markets going higher, and perhaps the markets catching up the way they should

be. there is a question about whether this is healthy, especially given the level of stimulus from the fed, that you are still able to see volatility is a positive sign. that said, i am wondering about that rotation that was there for a minute and went away, if that is going to be the sign of a true recovery. right now we are seeing a major reversal and we have for the past training sessions. jonathan: we have. we take some weight off the s&p. retail sales tomorrow. we have had a series of upside surprise and we had another one this morning. lisa: i want to talk about that manufacturing, the empire manufacturing data. the biggest jump in june and records going back to 2001. this is definitely optimistic and we see a dissidents between data that has been much better than expected on the manufacturing front, yet on the consumer spending side still

side stillind where lagging behind where we are on the jobs picture versus the shutdown still ongoing. tom: the data -- jonathan: the data a lot better than expected if you're looking at the data point from 11 minutes ago. the data over last couple of weeks in the pandemic site and the economic side of things failing to validate the exuberance of last several weeks , concluding with the selloff late last week and this morning with equity futures down one .9% on the s&p 500. from new york, this is bloomberg ritika: with the first word news, i am ritika gupta. jerome powell will deliver a cautionary message about the economy to congress this week. the economy to congress this week. he will be unhappy -- he will be on capitol hill tomorrow and wednesday, expected to echo the downbeat assessment he gave last week after policymakers held interest rates near zero. the white house criticized jay being overlying

negative. carlos ghosn always said he was set up, now there's some email evidence to support the claim. bloomberg has learned there was a campaign by top nissan executives to dethrone carlos ghosn and it began before his arrest in japan. motivated in part by carlos ghosn's push for integration between nissan and renault. nissan and renault. prosecutors will decide whether to bring charges against a police officer who shot and killed a black man outside a wendy's. it led to a new wave of protests against police brutality. diedutopsy said brooks from two gunshot wounds to his back. the police officer involved has been fired. the atlanta police chief has resigned. thewall street owners of philadelphia 76ers and new jersey devils now have a toehold in the nfl. they have acquired a state of less than 5% in the pittsburgh steelers. 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 bloomberg. ♪ bloomberg. ♪ ♪

view that there really aren't any other markets to invest in equities, for the

-- low acrossthat large parts of the industrialized world. jonathan: peered dixon of commerzbank, there is no alternative. -- peter dixon of commerzbank. alongside tom keene, i'm jonathan ferro together with lisa abramowicz. .e are -1.9% on the lack of yield will be catching up with greg peters of pgim just a little later this morning, about 20 minutes as we about 20 minutes as weng count down to the opening ballot on bloomberg tv -- the opening bell on bloomberg tv. tom: we look forward to that. we look forward to the fixed income market. market. right now joining us is anne mathias. years she was at the

years she was at the washington research group and owned the analysis of years shee washington research group and owned the analysis of the economics and politics of washington. she now brings up a lot of the fixed income strategy at vanguard. lovely to have you on bloomberg surveillance this morning. zeitgeistn nails the of you have to be in equities because there is no place to be, yet the reality is whether it is a high cost asset manager for an indexed fund, fixed income is still predominant investment vehicle. youhat is the case, how do do fixed income right now? you do fixed income right now? anne: absolutely. it is an interesting time. i understand there is no alternative argument, but i think there is an alternative. we like fixed income.

if you think about historical analogies, we are in the middle analogies, we are in the middle of a huge storm. the wind is blowing hard. you can be on a small boat and go fast, which may be equities, and your bouncing all over the place, or you can be in fixed income which is more like a will goine, which slowly but more steadily and smoothly to your ultimate destination. within fixed incomes, we like lower than anything

we have seen for a two-year period over the last 100 years. we like those strategy tips for inflation exposures and mortgage backed securities and rates. we can talk about credit later. i want to pick up -- lisa:i wani want to pick up on this idea of inflation. people often conflate inflation with long-term yield. there is a tension right now in the u.s. deficit, poised to reach 131% of gdp by year end according to imf, which put it at a higher level than in the aftermath of world war ii. basically we cannot pay that back in less interest rates remain low. how much pressure will that be on growth as well as file high long-term yields will go forward. anne: there are counter bearing forces on long-term yields. from a big picture perspective, a lot of the pressure is for

textbook inflationary. the government is printing a town of money. the fed has said it will keep , unlikely tos low raise until 2022 or later. central banks around the world are pumping money into the economy. we have a lot of potentially pent up consumer spending from people sitting on the sidelines, employees who are receiving unemployment benefits at an expanded level but not interacting with the economy in the regular way. in the u.s. you have a dollar that, if it is not weakening, it is not strengthening as it was before. all of those things are inflationary pressures on the economy. the question is will consumer spending and consumer activity rebound to a level where those inflationary forces can have an effect, or will we have a second wave of the virus and things will stagnate so much longer? all of that pent up spending

will get used to satisfy day-to-day necessities. it is a challenge, but the pricing is attractive. lisa: i am wondering, we just have about 45 seconds, whether this appetite for risk in an environment where yields remain low and consumers have money based on the benefits they received so far, are you bullish on riskier credit? within our credit strategies, we are trying to find great credit. we are focusing much more on security selection than we are on on brought allocations to different ratings buckets. we are looking more closely at credits that can survive along downturn in terms of income, that are well-capitalized. we are looking at higher-quality credit within our high-yield strategies it is more differentiated, but with credit we arede

looking at credits that can last for the long term. we like things that are not so exposed to these ups and downs, things like telecom media, health care, and industrials. tom: anne mathias, thank you so much. with fixed income and foreign-exchange thinking as well. much more to come. when i look at the markets, if ifwas not last week's it was not last week's carnage it would be like we are down, but what is so important is last week's effort followed by another monday with no bid. bide, the flakiness of the is extraordinary in the equity market. yes, although you are not seeing a massive downturn in equities. you're looking equity futures down 57 points on the s&p, just below the 3000 mark. i am wondering how much of this

is a reset, the idea that all of the optimism is baked into the market. we will not necessarily get the rotation into the move to value stocks as people got a get a trance -- get a sense of what the path is. i wonder how much we are also seeing a reality check from the robin hooders, that perhaps the rallies do not make a lot of that mean int does terms of who is driving the enthusiasm with equities. tom: i know you have to get off the show to get your 50,000 shares of hertz, i guess that is what the robin hooders are doing. gold absolutely hammered, down 28 points. 1709 an ounce on gold. a lot of other dynamics. what we are all doing, jonathan ferro, lisa abramowicz, and myself, is following the nuance of the full faith and yield curve that bears close watching through the day. please stay with us through the

day on bloomberg television and bloomberg radio. more conversations on these markets. this is bloomberg. ♪

♪ from new york city for

our audience worldwide, good morning, good morning. "the countdown to the open" starts right now. 30 minutes away from the opening bell. the economic data out of china failing to impress. another outdate in beijing weighing on investor sentiment. >> the probability of a second wave. >> the beginning of a second wave. >> now we are talking about a second wave. >> reopening is a very delicate situation. china is a useful model. >> china is about eight weeks ahead of us in terms of the evolving coronavirus phenomenon. >> there is evidence that economies will recover, that it will be relatively slow, it is a u-shaped. jonathan: some of the latest data failing to