francine: second wave fears. beijing cancels flights and orders schools to close as coronavirus cases in the chinese capital rise. florida and brazil report record new infections. jay powell says the fed will use all tools to support the economy and defends its foray into corporate bonds. robert kaplan tells bloomberg health care policies are key to the recovery. and geopolitical risks add to headwinds for investors. seoul says north korea must bear all consequences of its actions. india's defense stocks gain on rising tensions with china after a deadly clash in the himalayas. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. a lot of the focus is on stocks. we are seeing european stocks adding to the rally. they seem to be shorting off concerns to the infection rates. the focus today once again is on

government and monetary stimulus. the dollar is slipping. we are looking at a couple of data we are looking for -- we had the surprised rebound yesterday in retail sales. treasuries are mixed, and i wanted to show the korean won because of volatility that we against the dollar because of political tensions. up, peter schaffrik is coming up shortly. and this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance. thank you for being with us today, from london, from new york. i want to do some data and it is a joy to do this data check because it is a quiet data check. right to equities where there is a turn in the market this morning, and you see it across equities, bonds, currencies, and commodities. what is so important here is that for the number of days up in a row, it is nice to take a pause. futures advance up 19, dow futures up 179. that is a higher level of futures in the last 15 minutes

or so. i want to view the vix, the volatility index of the standard & poor's, a lower number is more quite yes and, speaks of a bull market, and that is what we have seen off the carnage of what seems a distant thursday and friday of last week. we got off to a 44 level on the vix, average over the last two or three decades is 20. we are at 44, and we are now down to 33, which is of course an 11 move as well. to get us market perspective here, really to reframe where we june, peterdle of schaffrik joins us from the royal bank of canada, rbc capital markets. thank you for being with us this morning. how is the reset of what we have seen? awent back in and looked at 40% move off the march lows. 4100 dow points

that we gyrated over i think the last two, at most three days. how do you reset given that move? :eter tom: we are having some typical -- technical difficulties this money. we thank you for joining us in your london midday, and of course for those of you early morning in america. we heard from chairman powell yesterday. i was talking with jonathan ferro about the importance of a senate move, and then today we hear from the house and that will be a different set of questions. within all of this, stability and great messaging by the fed yesterday, including our kathleen hays conversation with mr. kaplan of dallas. in that, it was really quite

clear that they are managing the what was ay from grim press conference, and then the word "morose" came up a few days ago. let's listen to the always optimistic gentleman from dallas. robert: i felt strongly that after severe retraction for the first couple of months, the first half of this quarter, that we probably bottomed out sometime in early may, so we to thegrowth to continue end of this quarter and into the third and fourth quarter. in the the surprised jobs number and strong retail sales is part of that narrative. we are going to grow pretty

strongly from here. kathleen: let's dig more into what you just said. is this going to be perhaps a faster recovery than a lot of people have been looking for, including people at the fed? robert: it is possible. there is downside risk the recovery, and there is upside, and a lot of which it is going to be come in my view at this stage, is going to have less to do with monetary and fiscal policy and a lot more to do with how effectively we execute the health care policies. kathleen: couple of other tools i want to get quick comments -- i know you are not a fan of negative rates. the minneapolis fed said this week that you guys are making a mistake, that negative rates would boost businesses and encourage lending to go out from banks or people to invest where they could make money. he said that by not doing this,

you are favoring banks over people. what is wrong with that argument? ofert: my concern is, first all, when i look at the performance of negative rates outside the u.s., for me at least -- and i have studied it as carefully as i can -- the jury is out as to how effective they have been and whether they have actually helped growth. in addition, there are side effects to negative rates. also we have a very large money market industry in this country, and many companies access commercial paper which depends on a healthy money market industry. my concern is negative rates might end up doing more damage and have more side effects, and it is not as clear to me what the benefits are. kathleen: i want to ask you more questions about yield curve control. you are open to it, but earlier this week you said it could

distort signals to the market. curve, it canield send everybody a message. so why would you consider going for a policy that is going to destroy the important -- distort the important market signals that you yourself set are so important? robert: i am skeptical al about yield curve control, and at the moment i need to be convinced of the reasons for it. having said that, what could happen is we have got a substantial amount of government ,ebt that needs to be issued and we had a substantial amount before this crisis that has now gotten exacerbated. as we are in this crisis, while we are still in it, treasury yields were being strained because of the substantial amount of -- that would be one argument to examine yield

control. i don't which is the reason why i am skeptical but i want to be open-minded. tom: robert kaplan of the dallas fed, much to talk about today. one of the good conversations we will have. with mike wilson of morgan stanley, it was exceptionally prescient, not seeing a pandemic ng, but there it was. mike wilson of morgan stanley later. this is bloomberg. ♪

>> this is bloomberg surveillance. let's get to the bloomberg first word news.

there's growing concern some of the biggest u.s. states are facing a new wave of coronavirus after lifting lock down orders. yesterday texas reported a record number of new cases. florida also set a record for new infections. governor desantis says he has no plans to roll back the states reopening. the government claims john bolton's book would compromise national security. bookublisher calls it the donald trump doesn't want you to read. it's due out next week. it was the most serious outbreak of violence between china and india in four decades. itsa has confirmed 20 of troops were killed along the contested himalayan border. a couple of days ago both countries indicated they were pulling troops back while talks continue. the u.s. has spent more than

half of $3 trillion in economic rescue funds passed by congress. there is little of the oversight designed to keep the money going to the right places. president trump removed the official who was going to lead an accountability committee. democrats say some of the money is already flowing to unqualified recipients. global news, 24 hours a day on-air and on tic tok on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. this is bloomberg. tom? tom: thank you so much. this is an interesting interview. of course, the distinguished 10-year we saw from stanley fischer, it can only be the bank of israel. of new governor of the bank

israel has been there one year. he, like others, is having to deal with the coronavirus and pandemic. here in the first interview with bloomberg, the governor of the bank of israel. started this crisis in a very well positioned, high growth rate, low debt to gdp, current surplus, low unemployment. we had the buffer to whether a quick move in terms of lockdown early exited the lockdown and we did see economic activity arising in the economy. we don't have as many buffers as we had before. therefore we need to be able to do not across the board lockdowns. we need to be able to do testing, tracing, isolation,

localized lock downs if needed. what we didn't do very well up front is be very clear about unemployment support, various entities, andness we would do well if we had more plans that were clear to the public, what they would be localizedo in case of lockdowns, or even one more major. active ine been supporting economic recovery. is it an expansion of the qe program? is that expansion on the cards t? gov. yaron: the bank of israel will do what it takes to make sure and support the economy asm the tools we have, which the monetary policy committee

has two tasks. the first one is making sure financial markets work, and financial markets in a difficult situation, the government bond market.nd fx we took swift, strong actions immediately, and they have been functioning well. providingtep is credit and transmitting monetary policy. this we have done through this qe program. to give you perspective, it is three times the size of what was done during the 2008 financial crisis. we have several other creative programs, such as giving special whichto banks, refunds include absorbing corporate bonds as collateral, and we lower the rates, though we didn't have much degree there.

ensure thatinue to we support the economy. i believe that as long as the fiscal side -- we have to remember this is a fiscal crisis. this is a health crisis, an economic crisis. most of the burden is on the fiscal side. as long as the fiscal support is on board supporting the economy, supporting growth and productivity, the rating agencies will see it favorably, and therefore credit conditions should continue to be convenient. terms of other strategies, you have been buying foreign currency for some time. there are questions i'm getting from investors as to what your dynamic window is. it seems to be operating around those parameters. what is the boundary you are

trying to keep the israeli cycle within? gov. yaron: obviously i did not state topically what our boundaries are, but i will say that first of all some of the appreciation since the spike we have seen as part of, as i mentioned, the situation happening in the drying up of the dollar market and the onslaught of the crisis has been a reflection of the fundamentals the israeli economy exited early and relatively well out of the crisis. having said that, most of the brunt of the crisis has happened on the domestic sector, not the sector. the last thing the bank of israel wants to see is the export sector having more difficulty than the reduction in world trade. problems within the israeli economy. and therefore our dynamic window

that,ifted to account for and obviously where we see fit we are not shy of intervening. tom: the governor of the vanke of israel with the challenges we see given this virus. whatt to bring up "bloomberg surveillance" has learned about the virus in the last couple of days. the debate over second wave and first wave. in our conversation yesterday with the baylor university, he made it clear he is not counting waves. he is trying to make a vaccine. he made it clear it is no time soon, as we heard from many thecials, including president and even vice president pence. dr. fauci made it clear he study. buy a second wave

he is more interested in the first wave of the pandemic as we see across much of the continent of europe and challenges in the united kingdom as well. we will focus on that today. it will be a discussion of the different impacts of a first wave across america, and of course the great distinction for our global audience is america of a new york tri-state area healing, even new jersey doing better on a per capita basis, versus other geographies in america having a struggle. they are at a much lower level given what we saw from new york and new jersey, but nevertheless the slopes of their levels are disconcerting. that would include florida, texas, arizona, and other geographies as well. there is much we are watching across bloomberg. nothing more important than the continuing testimony of chairman powell to the house of

representatives. stay with us from london and new york. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." we arerg and new york, having challenges across the bloomberg communication system. we thank you for being with us. we give a midweek summary of where we are a. the real caution was out there with the vix up to 44. we came back with a vengeance on monday with a big turnaround clearly driven by chairman

powell. on a tuesday as well. the markets of economic, finance, and investment, we have seen extraordinary movement this week. those of you globally, in the united states all-america came to a halt earlier in the week with a most interesting and most controversial supreme court decision. we have the great privilege of speaking with the 28th secretary of labor, eugene scalia. we spoke about not only the labor economy, challenges and economics, but also about the supreme court decision on title vii. here is the secretary of labor. scalia: we had too many americans put out of work. hasnow the hardship that been for their families. we got here through a different route and the great depression the jobs report suggests we will

come out of it by different route. we put 2.5 million americans back to work in may. old.data was a month there has been a lot of reopening since then. it is important that happens i think we are making headway on the employment detriment. >> do you see evidence that the unemployment benefits pastor holding back rehiring? mr. scalia: we heard concerns antidotal you buy a number of employers. the point they make is with the enhanced unemployment benefit provided by the federal government, $600 a week on top of the state that if it, people can make between $50,000 and annualized basis,

up significantly more than one typically sees. the concern is they will not return to work. that benefit expires at the end of july. congress set that sunset in the anticipation we would have reopened and we want people going back to work. the secretary of labor, a really interesting conversation will stop we greatly appreciate that today. we will have much more for you on economics, finance, and investment. chairman powell before the house. we will see that later this morning. and also to see what the markets are. apple has the developers conference. a lot of rumors on apple. a $2 trillion company. maybe i will buy a share or two. stay with us worldwide. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." we welcome all of you from london and new york. of parts ofudies

the world, none more in focus then asia. the challenges china has faced with not only the coronavirus, but its associated viruses, including sars. in our economy forum we heard comments from the chief executive officer of prudential. it started with china. covid was an issue last year, and there has been a lot of learning. culturally as well as economically there are differences. if you think about hong kong, last year was 1080 five cases in hong kong and 4 deaths. tragic, but a shockingly low number considering the travel from mainland china and the early exposure they had to people who may have been exposed to the illness. what you did see on the ground was culturally before there was

government policy is a caution around health. people wear masks in asia as a courtesy to others when they are sick. north american friends say i'm wearing a mask, they think it's a shield.it is actually for someone else you where that. -- you wear that. there is muscle memory from sars and the bird flu where cultures understand to take health issue seriously early. in the balance of economies, asia started with growth. europe started probably with flatter negative growth. we have more to work with economically, but it's the same policy decisions for these leaders. they are trading income for health and often financial and health inclusion. singapore has been very dramatic , often referred to as the switzerland of asia, which would imply a serious focus on their economy.

they do, and it is well developed. they are one of the most conservative, health care-centric governments in asia. they are the most cautious with their populace's health.that is why people trust the government. they see the trade-offs to made and there is an alignment with the social policy, people executing, and the populations are smaller. and borders, they are defining inter asia. asia -- if you look in the states, inter-state travel, new yorkers were not welcome in florida. license plates from new york were scarlet letter for a while on the east coast. those policies are addressed on a more national level in asia stop i think there's a cultural thatstanding of illnesses

more developed from having other challenges. mike wells, the chief executive officer of prudential looking at the ramifications of the virus in asia. with our business flash, here is reddick a group to. >> a surge back on the london-based bank to cut 35,000 jobs worldwide over the next three years. it has been put on hold i the coronavirus outbreak. is targeting underperforming units in the u.s. and europe in the plan. at&t is cutting thousands of jobs. it is just the beginning. the telecom giant says there will be a reduction in its workforce involving executive managers and unionized employees.

at&t had 160 billion dollars in debt and has been under pressure to sell assets. hong kong says five gtech knology is making its way into phones much quicker than the rollout of 4g. says it's 5g capable chips will be available in the second half of the year. mark zuckerberg hopes facebook's social network will help register $4 million in the u.s., twice the number they claim to help with before the 2016 and 2018 elections. that is the bloomberg business flash. tom? tom: thank you so much. greatly appreciate this morning. lots of business stories. we are watching hsbc, the challenges they have and the challenges over the years.

that weshowing the idea are moving toward business plans after the virus has made mikey takeaway from what we just heard on hsbc. she is from st. john's university, but not in the health area we have been talk about. it is their international arm, d.c..ularly out of she came out of yale and set up a college industry of looking at third world challenges. on the virus and challenges of the moment, here is an apple lebaum.e app specific nation to nation. even across europe, leaders who have been successful or perceived as being successful

fighting the virus has been reinforced in power. you can look at angela merkel in germany, you can look at the prime minister of greece. they are perceived as having successfully fought it either through technology or early lockdowns. when you look across europe in the world, those who are perceived as failing are in trouble. boris johnson in britain is in trouble. he has been heavily criticized for how he handled it. you can also look at bolsonaro, the president of brazil, and so on. it is hard to generalize. one of the most interesting aspects of how the virus has touched international affairs is at the beginning of the crisis many people were saying, partly because this was a chinese line of argument, that it seemed as if dictatorships would do better fighting the virus. the chinese were pushing the idea that we can control it better because we can force

people to do things. as the crisis has played out, particularly in more recent thes, it has become clear inviting well between who has done well and badly is not dictatorship versus democracy, it is more to do with social trust and lack of trust. countries with high level of trust and affective bureaucracies who have a lot of faith and expertise have done better than those who have not irregardless if countries are dictatorships. you can find democracies who have done well, democracy and greece. you can find dictatorships who have done well and those who have done badly. the impact of the virus will be quite complicated. applebaum of john hopkins university.

the noise of the last two days, the huge bull market we have been in, settles down. let me get you the futures. the futures are up 4. dow futures up 29. the vix settling in at 34. much better than where we were two days ago. he wrote a blistering essay for bloomberg opinion two days ago. or dollar.ng wake im in the nextto h hour. stay with us worldwide. this is bloomberg. ♪ save hundreds on your wireless bill

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tom: 42% off the march bottom. a third talk about wave. combined market havef $2.8 trillion, they illion of cash on hand. future shock is here and now. good morning, this is "bloomberg surveillance."