an op-ed for a bloomberg opinion, the governor says he checked the balance sheet before raising rates to give officials more firepower. rally in the headlines due to weak turnout. what this says about enthusiasm going into the election. in the world against names and finance with peter sanderson. good morning, everyone, this is bloomberg surveillance. markets, andt the a lot of the focus is certainly on what andrew bailey said in his opinion piece, a lot of focus is also on gold and oil. >> is no question, gold really has my attention. up, it is not back to the 2011 peaks but nevertheless, gold really

surging this morning. away from that, a jumble of news as we try to reframe for the second half of 2020. francine: we will look at the second half of 2020 shortly. let's get straight to the bloomberg first word news. >> morning. accountd south america from is two thirds of a new coronavirus cases and the latest reports. the death toll in brazil has now passed 50,000. there were a record 4500 new cases until or near. florida reported more than 4000 cases on saturday, also a record. back in england, andrew bailey has signaled a major shift in the strategy for removing emergency stimulus. tos stressing the need reduce the central bank balance sheet before raising interest rates. he has an op-ed in bloomberg opinion. he says this would give them more firepower in future

crises. the disappointing turnout at was just the latest warning sign for his campaigns. criticismrshadowed by about the pandemic in the protest against police brutality. the president has fallen behind joe biden in national polls and surveys of key battleground states. he will putin says consider running for a fifth term in 2024. -- russians will vote on the most fleeting changes to the constitution since it was adopted three decades ago. one provision would allow putin to stay in office until 2036. global news 24 hours a day on air and @quicktake on twitter. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

tom: equities, currencies, commodities, this goes two different ways. london quotes it a little bit different than chicago futures. in the equity markets, the upmework is higher, the dow 314 points, which will really see the reset off of last week. 33.73. yes it is in, yes it is a more attractive number, but nevertheless that is a shift from 10 days ago, the jumble found a little more angst in the market. at gold: i'm looking approach in highest since 2012, the treasuries and the dow are actually little changed. i guess the focus is on investors betting that the economic recovery keep going even as virus infections rise. the other thing is, of course, everything to do with the u.k.

it signaled a major shift in the strategy of the central banks wanting to shrink the balance sheet before rate hikes which is why i'm looking at the pound. joining us to discuss market moves, the global chief investment officer. as always, thank you so much for giving us a little bit of your busy schedule. that weident are you won't see a continuation of the first wave or a second wave of infections? i think at this point, we feel pretty confident that we've learned a lot about the virus and that policymakers have a lot more options than just going to things like national lockdowns. i think the way that we are framing the story right now is that it is primarily about the fed, but this jumble that tom talked about both with the headlines, daily around the and headlines around

the u.s. election can make investors think that the recovery is going faster or slower depending on the day. francine: where do you see the most value in asset markets right now? >> i think that, certainly, is a place that investors have to look, and they have been looking because the federal therve is tracking financial conditions in the united states and it is trying to loosen them up. investors have been buying the fed has been buying in the credit space. expand now incan global equities can also do better over the next six months as that liquidity spreads out. mark, as you know, the proper way to read a research report is to start at the back

and look at the spreadsheets before you read the propaganda up front. thunderstruck, house to house this weekend, how there is just the least in gdp recovery. do you share that leap of faith? do think that we are going to see a recovery, and we base that on looking at things like the mobility data, which gives you a better sense of something we've never had before, how, if you talk about the united states, how people are actually reacting and moving around again versus what you can read from anybody's spreadsheet for any estimate these days. tom: that's fine, but can you translate that over to something on the income statement that we are misjudging revenue or misjudging earnings recovery? know, what we are

looking at and what we think a lot of investors are focused on is just about how quickly we can get back to the trend earnings for stocks. as that is something of an open question, as long as that trend is moving in the right direction, and we don't get a second wave of the virus, we think that equities could move higher a year from now. the s&p 500 can be trading in part because the confidence will grow about the rebound but also because there is that extra liquidity in the system which means equity get better,s can and also that volatility that you talked about can fall again as well. francine: i was going to talk to you about volatility but in general, do you have to get the

dow right, and are you still expecting a weaker dollar? particularly, if the recovery is better than expected, that the dollar can aaken because there has been fear trade and a flight to the dollar. as you come out of that, i think one of the most important things interest that investors around the world could have earned by moving into dollars has gone now that the fed has cut rates. the dollar does look expensive versus a lot of currencies. francine: what do you do with gold right now, or some of the havens? one of the things about this crisis is that so much of it really does hinge on political decisions about stimulus and about lockdowns and

protecting populations. there are certain downside scenarios where the economic rebound takes a lot longer to take hold. notalso, fears about developing a vaccine. in those scenarios, we certainly think the swiss franc will remain a safe haven currency and it is probably a better one now than the dollar. with gold, i think it has been very popular. have a swiss franc, we many clients that love gold. we see it moving to around 1800. it's probably not our preferred condition here. we have a lot of clients who want to johnson what about all this extra money leading to inflation? i think we would say, one crisis at a time. that will come, but it's not the

immediate focus right now. what is your preferred position? i think the best risk-reward for us remains around u.s. high yields and dollar-denominated , and then start to look also as we see the u.s.ery improve, toward equitiesand also u.k. which play into basic materials and cyclicals and are also a bit of a value play. tom: what do u.k. equities do around sterling? i assume you are not going to hedge sterling, but if we are enthusiastic about u.k. equities, how does sterling play into that for foreign investors? >> you are right that the pound

equities,r for u.k. because so many of them do get their earnings outside of the u.k., but in this case, we think that the u.k. equities, the a strongervercome pound which we also agree is likely even that the pound has been so undervalued. tom: thank you so much. greatly, greatly appreciate that this morning. you, heext hour, i tell has been writing up a storm for bloomberg opinion. william donley will join us and i'm told he's going to go into a discussion of the balance sheet that the federal reserve system of the united states of america. bill dudley in our next hour. this is bloomberg, good morning. ♪

♪ francine: this is bloomberg surveillance. let's get to bloomberg business flash. missing $2.1 billion of cash on the balance sheet probably doesn't exist. the company has now withdrawn its recent financial results. that previous descriptions will not collect different negotiating debt terms in a struggle for survival. weeks the most momentous as a fight between the airline's biggest investor in the german government is threatening to stop a $10 billion bailout and pushed europe's biggest airline toward collapse.

and american airlines has boosted its balance sheet with a $3.5 billion in new financing. previously relied on federal aid for liquidity during the pandemic. they will take out a half billion dollar loan. tom: thanks so much. i really want to bring your attention to this, and this is in light of the pandemic, and this is that bloomberg is really trying to continue the conversation on investment globally. always important, but never more so as we see in june of 2020. in conversation with william ackerman at the 2:00 hour today, let's watch. for global wall street, this is bloomberg. good morning.

>>

♪ this is bloomberg surveillance. the governor of the bank of england has weighed in on how the u.k. central bank should move forward after the crisis. it maybailey says that be better to consider adjusting the level first without waiting to raise interest rates. the government goes on to say that elevated balance sheets could affect future emergencies.

article ond his full bloomberg terminal and website. for more insight, our senior executive editor. stephanie, thank you so much for coming on. what do you make of what governor bailey has put in writing? this is a pretty significant shift from what we've heard so far. the way significant in he phrased it, although this is the governor, he does suggest it might be better to consider it's just introducing a bit of ambiguity. it is not expected to change its reserves, and so interest rates are at at least 1.5%. thattried to send a signal people who think that central banks are now just tools of the financial markets and the government as a result of this crisis should think again.

seen a lot of liquidity go into effectively propping up financial markets. we also have a lot of people pointing out that there is a new debt being issued out the door by all of these countries with enormous stimulus programs is being covered by bond searches and people saying, can the central bank be independent? it's quite striking that you are saying in this piece, don't assume that we are going to be setting out for governments and financial markets without thinking about how it fits into our monetary policy framework. we are independent. francine: does that point to the use of eurocontrol? we had a lot of debate about whether the bank of england would rule out negative rates, whether it would go toward yield control. we obviously had experience in japan about that. ishink the key thing here

economic sequencing when you are thinking about the bank of england or maybe any central bank. don't assume that all of those bonds are going to be staying on the balance sheet for an indefinite period. it's just about extending the room for maneuver. it certainly makes it easier to do all of those things. tom: good morning from new york. whether it is the governor of the bank of england or bill dudley, there seems to be a lot of explanation about sequence. to me, it really comes down to the series. i'm going to assume none of this is in the textbooks of ppe at oxford a million years ago, what is there a difference between mark carney and mr. bailey, or is this simply no theory right now? >> it's interesting you say

that, because when i saw the piece, i was wondering the same thing. there is a different philosophy about how much you promise to market. we were put into a situation where the bank of england really that theeeded to show balance sheet was going to stay at high levels, much higher than all the global financial crisis. one way to signal that was to say we are not going to use it to respond to more short-term macro movement. if that hadurprised changed because people in the bank of england do feel that they have a better sense of interest rates than the quantitative easing. responding to a quick change in the economy, i think they are going to be reluctant to rule that out. but the reality is that with the crisis, the balance sheet has got that much bigger. already, 300 billion probably another 100 on the way over the next you month.

i think it's just a question of the reality, everyone knows the bank of england is going to have a much bigger balance sheet. keeping a bit to maneuver makes sense, but i'm not sure it is due to a philosophical difference. tom: stephanie, what is not being spoken here in all these different conversations including mr. bailey in his essay for bloomberg's currency appreciation or evaluation. that's the traditional path out of any excess at all. the u.n. your team just assume sterling's appreciation if they get this wrong? >> it's so many other things that have driven the change at sterling and we have seen so much appreciation over the last few years. thing continues to be that the bank of england is willing to sustain what seems to be an almost unlimited amount of

appreciation, not literally unlimited, but a very high tolerance. francine: thank you so much for joining us. this is what the markets are doing, and actually that opinion piece by andrew bailey. the focus is on the economic recovery, the focus is also on what we saw despite the rising virus infections. i'm looking at the dollar weakening near a seven-year high. about it, we've seen some real movement in currency over the last number of days, but we are in that remarkably fixed income. there will be some economic data to question the move forward as well.

we've got housing data coming up this week among many others. the most interesting monday, we need you to stay with us. bill dudley with us in the next hour, the former president of the new york fed. coming up, a conversation on the pandemic. we are thrilled to bring you from london. please stay with us with futures elevated. this is bloomberg. good morning. save hundreds on your wireless bill

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the measure is expected to come up for a vote this week. the president says the measure would "destroy our police." have policelicans reform legislation. meanwhile, trump plans to announce new restrictions on various work visas that could affect an estimated 240,000 people seeking to work in the u.s. across industries from technology to hospitality. restriction would include programs for high skilled workers. in new york city, companies are being allowed to reopen after a three-month shutdown more employees seem reluctant to go back and companies are forcing forcing them -- are not forcing them. this week in the u k, boris johnson will talk about more lockdown easing plans. he will underline what parts of the economy are allowed to be open in july. this would be a huge boost to the british leisure industry.

global news 24 hours a day on air and @quicktake on twitter. powered by more than 2700 journalists and analysts in more than 120 countries. tom: thanks so much. one of the things we really tried to do here at bloomberg surveillance is give you straight talk from true experts on this pandemic, on this virus. we've looked at people looking at the bigger, the broader, the epidemiology of what we've seen. the demographics, the social effects. and then there's people in the trenches. very carefully about the minutia of all this microbiology talk. jennifer is an expert on biology who has been extraordinary in the short term.

thrilled to have you with us again. there just seems to be an amateur belief that a vaccine is out there somewhere, and all of us have our templates of what that means. for me, it is the polio vaccine and million years ago. is it that easy to make a vaccine and to know that it will work into next year? it's an overwhelmingly difficult task to make a vaccine work, it usually takes a decade if at all. we've been waiting for an aids vaccine, still don't have it. there's no vaccine we will ever have -- guarantee we will ever have a vaccine. there's no guarantee. tom: what have you learned about the cell biology of this virus? the work of your colleagues, what have you learned about the actual, cellular activity of this virus? >> the virus is very good at

infecting deep in the airways, really inside the lungs. it also has a propensity to set off alarm bells and our immune system which makes our immune system completely overreact, so people are dying not from the virus, but from our own overreaction to the virus. it's very contagious compared with other viruses. in some ways, it is a very well adapted virus. when people don't know they are sick, that is a really good recipe for a virus. you want to sneak around and spread, that's what this virus is very good at. the only good thing i can say is that it is quite stable. unlike influenza or hiv, it is stable. if we do find a vaccine that works, it will probably be easier to keep on top of it. francine: a number of italian coronavirus ist

reducing in potency. is there any truth in that? >> i've seen exactly that, it is anecdotal. it is one opinion. this isre saying that not true. this no evidence from the genomics of the virus. i don't think there's much evidence for that. francine: when do we know whether this is losing potency? is there a worry that the number of infections or the fact that it is dangerous surges with the winter? is october and november the worrying months free o -- months free of? -- months for you? >> a record surge around the world, north and south america. we are seeing countries that have it under control, we see

germany numbers going up, outbreaks in australia. new zealand, even. people coming back in and bringing along. winter, a to get worse, not just because we might get a second wave from the cold temperatures being more amenable to the virus, but also looking at circulating the seasonal flu. coronaviruslu and is going to be a recipe for disaster. francine: do something like the coronavirus just disappear one-day? doing it to look back at the black death or the spanish flu to give us an indication of what can happen? >> you don't need to go that far, you can look back at sars in 2003. advantage without a trace a year later. -- it vanished without a trace a year later. these viruses can get under control. it could peter out, but i'm not confident that is going to happen. economist published

this morning or late last night a list of the things closing in the states of america where the virus is persistent in coming back. around of that centers the believe that this is a virus that kills old people, but not those younger. what is the risk that you perceive in the cell biology of new age and younger people from the virus? >> well, it's true that most of the deaths are amongst elderly people, people with comorbidities, other kinds of illnesses on top of that. but really there is a large cohort of people which are middle-aged or younger people who got coronavirus and it keeps coming back, so they are not in intensive care, but they are very debilitated. they are being very tired. we really don't have a handle on how many people.

i know several people like this myself. they are out there, so younger people can have problems. there's even a study recently showing that if you look at the lungs of completely a-send medications, you can still see evidence that covid has been there. we would be wise not to underestimate it. in venice in the play, the boats would sit offshore until they knew that people were safe to be in society. now we have quarantine. does it work? >> clearly if you stash people away when they arrived, you are going to stop the infection, but at what cost to the economy? i think if we keep some level of social distancing, maybe start wearing more masks, we should be able to open the economy little bit, but not too much. now reporting increases in the infection rate after having had it under

control, we just have to tread very carefully, make changes a little bit at a time, see what happens. we don't know if things work. i think easy does it. francine: do masks work? in the u k, there haven't been much of a campaign to get people to wear a mask but in other countries, there has been. >> i've been on this program saying that masks don't work, and there has been a bit of a change. it's true that your average mask is not going to do much. having said that, it will block some of the larger aerosols. it's not a magic bullet, especially if you don't have the ones which are really hard to get a hold of anyway. i think a little bit at this point in time would not be a bad masks might offset that risk. francine: thank you so much for

joining us. hour, joshua is at johns hopkins bloomberg school of public health. we will talk to him about coronavirus at 6:30 a.m. in new york, 11:30 a.m. in london. this is bloomberg.

♪ >> you are warriors, thank you. we had some very bad people outside. we had some very bad people outside, they were doing bad things. i stand before you today to declare the silent majority is stronger than ever before.

tom: the president of the united a source ofy conversation through the weekend in the united states on a large gathering in also in the ramifications of maybe a smaller turnout than anybody expected. what we are going to do is look forward. we can do that with emily, usually in people it -- people in washington are not up this early, but we are thrilled that emily is up. we are thrilled she could join us this morning. emily, what a sight to see the president come out from marine one, the tie wrapped around his neck, clearly exhausted, clearly downcast. what is the plan forward for the white house on this monday? >> i definitely think the white house needs to start reevaluating a couple things after this last particular rally. he has campaign stops in wisconsin and arizona coming up,

but none of the saw last night. remember, the trump campaign touted that they had more than one million ticket requests. attended, thate wasn't even enough to fill half of the arena. tom: just absolutely fascinating. your work with congress, mr. and the of war about the southern district of new york and such, the heart of the matter is that i guess the attorney,fired the but the mystery this morning, is there any documentation? matter toand does it have formal documentation from the president? >> i think that's definitely a question that is going to be asked and going to be looked for and it is something that we are hearing calls for. there are certainly lawmakers were not happy with his decision to fire's attorney.

however, there are a lot of people in the past who have said they work at the pleasure of the president, and so going forward, hold his feetns and a fire on this one, is this going to be challenged in court? these are things we are going to be looking for for the past week. certainly, democrats will do whatever they can do to try to investigate more into this matter. francine: good morning from london. how is joe biden doing? >> joe biden was actually feeling pretty strong, mostly based off the trump campaign rally over the weekend. they tweeted about the discrepancies in the size of the rally, what was expected and what actually turned out. at this point, we are starting to see some polls indicate that this is going to be a pretty tight race between biden and trump. it remains to be seen what forward momentum biden might get from this. certainly at this point because

of the coronavirus, we have not seen a ton of rallies yet from his campaign. this could be an interesting factor as we watch the rest of the selection play out. francine: how do the revelations trump inon's book put the difficulty to draw differences between him and joe biden on what they would do if given the chance? >> it is a little bit interesting to see, you've heard a lot of republicans who did hear bolton's comments, these other republican senators who voted on trump's impeachment, whether or not he would be leaving office. he saw a lot of these senators really react to bolton's comments with not a great deal of concern or alarm. they seemed to suggest that maybe if his book cannot before, i certainly think that trump's

impeachment is something we are going to hear about from the biden campaign. i think the book is something we're going to hear about. the question is what kind of impact this is going to have on trump supporters who still support him after he has been impeached. tom: emily wilkins, maybe an unfair question, but we are almost to july, and that means we will have convention talk. if we observe tulsa, what does that say about virtual conventions for both parties? >> that's a very good question. virtual conventions haven't really been something that the party has had to grapple with in the modern age. but it is a thing that you've seen the trump campaign seem very confident about. remember, there was supposed to be, in north carolina, now they've moved a number of events down to florida because trump is seeing florida opening up and responding to the coronavirus.

you can tell the president sees things that are important the trump campaign and that is certainly something they are hoping to get again perhaps further along as trump continues his reelection. tom: emily wilkins covering congress for us. we've got much more coming up, how about a former presidential candidate? the technologist, andrew yang will join us. it says 5:30 p.m. in new york. stay with us. this is bloomberg.

♪ this is bloomberg surveillance, let's get the bloomberg business flash. it can dedicate is taking its toll on american homeowners. liquidities climbed to the highest since 2011. the number of borrowers more than 700,000 to 4.3 million.

that's according to an information service. more than 80% of all u.s. mortgages were past-due or in foreclosure. facebook is reportedly in talks to take over a retail space. they filed for chapter 11 bankruptcy protection last month that would allow it to back out of a lease without penalties. in almost one third of u.s. at $35roducers with oil per barrel according to a report that highlights the industry's strain even though crude has rebounded earlier this year. the company will face problems needing debt repayments. that's the bloomberg business flash. exchangeshong kong says 2020 is set to be a big year no matter what a lot of long-term things in the pipeline. we also spoke about the hong

kong security law. i think one thing people sometimes do not fully appreciate is that the market is really mutually reinforcing each other. the more open china is, the more opportunities we actually have. obviously, when they are more open, you have slightly different opportunities when they are more closed. it's not about a binary thing that people are not coming here. we are very differentiated in , complex and functions restraints. we remain resilient and we remain relevant, we will always be able to solve the problems that they can solve at a particular time, and when they are able to solve those problems, we can move on to solve other problems.

as long as china continues to remaind we are able to on a competitive distance and a differentiation, we will always be succeeding together. francine: is this a priority to you to get some of these stocks included, especially if some of these companies might be -- prettyrison, too soon, too? >> there are things we can do in hong kong including some of the and theto the system rules that will allow them to be potentially designated slightly different from the current form, but that may or may not necessarily the sufficient for with reach an agreement our friends in beijing and shanghai. but i'm sure this is something horizon, and i don't want to give you a specific time, but it's coming. security/and,al

the central government has confirmed that they could trump the hong kong legal system what it comes to national security issues. how are you reassuring investors right now that this is not going to be as big of a deal? bewell, there is going to absolutely short-term anxiety discomfort,rm because this is not something that people are used to. all the, in light of ly sensitive times we are living in, it is fully understandable. i think if anybody really understands hong kong, 's overalls china philosophical approach, they should really pretty easily conclude that the long-term

systemsone country, two absolutely works for the best interest of china. i think no matter what happens, no matter what the u.s. government will do in terms of andconflict with china, even with the national security law in production, hong kong will remain to be the most international, the most open, the most free, the most western market of china. us as thed to know most international market, maybe tomorrow, we will still be the most international and most chinese market. >> you can also tune in to bloomberg invest global right now. on the terminal, speaking with

the game chief executive. with listen in. know,the moment, as you we been focusing a lot on cost efficiencies. we are always looking to be prudent in terms of real estate, though i don't know that it's going to make a huge difference in the medium-term. >> now, you did mention something in the press release, isuppose this is the debate, know their numbers are much bigger than yours in terms of potential customers. when are they delivering -- >> that's a great question, i suppose for me, this is about

♪ >> this morning, to simply walk in a store to say, i'll take the

, to swear of the crosstown traffic, new york city will reopen this morning. the rent is due in nine days. this morning, gold higher, tell us the reason the bears do not believe in this market, and once again, it is june. all virtual fan boys, they will assemble. not in tulsa, forget about that, old news. kim apple will dabble once again, shares up 170% plus the last gathering of the true believers. good morning. this is bloomberg surveillance. francine, i will be today, at with aon the sidewalk twice opened then walk -- twice opened then