that the phase one trade agreement with china is still intact. peter navarro says the comments were taken out of context after saying to adjudge the deal is over. will announce that the two meter rule could become the one meter rule today. and new global coronavirus cases reaches a record in latin and the texas governor says contagion is accelerating at an unacceptable rate. good morning. this is bloomberg: surveillance. the markets have really moved on the back of these china comments from peter navarro. and there's confusion about whether the trade deal is and a lot of the data points in france and europe points to better than recovery. tom: there a turn right now, there's no question of stasis in

the market, it's the same as yesterday, the markets churning with gold moving higher. but you are right, we have seen a bounceback to green on the screen after the navarro flap. it's clear, it's a market in search of a story in the line, maybe we can find a story from philip. francine: we will talk about runaway inflation with him shortly. let's get to first word news. >> president trump calmed that the phaseng one agreement is fully intact. peter navarro said that aspect of the trade deals were over on fox news, and he said his comments were taken wildly out of context. mike pence is warning that more young people around the country are testing positive for the

coronavirus. making their mark in a conference call with governors. concerned byed texas governor greg abbott. the infectionat rate is rising. boris latest stage in johns -- boris johnson announcing the latest age in lifting the coronavirus locked down. movie theaters and museums may open the door after next month and he may also cut the minimum social distance in half, to one meter. seeking antate -- indefinite arms embargo on iran. the proposal has been shared with members of the security council. this expires in october, and is part of the agreement that the you po -- that the u.s. has abandoned. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. tom: equities bonds have

currencies coming out, following the volatility measure. of a newt sure calmness in the market but it's a much better statistic than some of the caution over the last couple of days gold at 17.71. francine, what i find more interesting is not so much what is in the data check, but was not, that's an exceptionally quiet bond market. francine: the bond market is actually good way of looking at it. if you look at the euro and strengthening yields sticking higher. one thing we need to spend some time on is what happened with peter navarro. crude oil is sliding with other moves reversing, navarro said his remark was taken wildly out of context and had earlier said that the china trade agreement was over.

we have data points that address that there is a sign of recovery from the virus, and joining us to talk about market moves, but also to talk about runaway inflation is philipp hildebrand. he's with blackrock and they are holding their sustainability summit today. thank you for coming on to have this extended conversation. what kind of economic recovery are we expecting to see? the more it falls the quicker it recovers? philipp: we will have a big contraction. by year-end we will look at -6% to a, if you compare that normal batter session you can see that this is a historically unique contraction. the market has priced this in, it's almost mechanical, once you shut down 20% to 40% of the

economy, that's what you get. we will see some strong data coming through as the economy reopens, particularly in europe. we need to keep in mind that in along with a contraction. is this under the assumption because of a lockdown -- partial lockdown because of a resurgence or that the economy is recovering and cases are kept at bay? philipp: i would say it's premised on the notion that the reopening continues. the market knows that there's wave, secondnew wave, perhaps third wave of the virus which is that some extent priced in. i think what is not priced in would be if things were to

deviate so badly that we would the reopening process. i think it's a forward path, where economies can continue to reopen, perhaps under constrained conditions. but not a scenario where you would have to go back and do a lockdown, that's what's priced in. given a decline in aggregate demand, you know the textbook function of disinflation and in some economies deflation. forget about the textbook, what lastyou observed in the number of weeks about slowing economies, and what it does to price change? philipp: good morning tom, that's a good question. i think in the short term, perhaps medium-term, this contraction is very likely to be disinflationary. we will see some of the same price dynamics that we have seen for so long, where we have the

structural long-term persistent disinflationary effects. in the short term this might be accentuated or accelerated by the sheer force of the contraction. also by the uncertainty that people will have about losing their jobs, by limited pricing power, all of these things will be disinflation in the short term. in the long term it's a different question. the market is probably underestimating the long-term inflation rate, simply because we have such an and norma's buildup of public debt. eliminated, we have the distinctions between monetary and fiscal policy, so for the long term, i do think we should be concerned about the inflationary effects post-corona, but that's a

long-term story. much will depend on how globalization re-calibrates itself. it won't disappear but it's going to be different, we might and thereragmentation could be long-term inflationary effects. long-term inflation will have an issue. tom: it's inappropriate to ask you dress -- directly about swiss national bank affairs. but i wanted to ask about the outsiders, the people removed from the european central bank. you have a confidence that they have a toolkit available to withstand the flows of capital if we get to that? do they have a set of tools that can help them ameliorate shocks to their system because of the slowness of europe? philipp: tom, you can always ask, please don't hesitate. the most important thing for switzerland is that

europe finds a path back to stability. the last few weeks have been good, i think we have seen germany step up significantly with an impressive fiscal past edge -- package, and francis followed on the health side. europe has handled this crisis well, particularly northern europe. i think what you can also see is the swiss national bank and the swiss government has proven once again that they have proven innovative in using the policy tools they have. in using been quick them, very pragmatic. i think there are tools left, it's a challenging environment and it has been at the swiss national bank for many years. weeks,ave seen in recent the government has been prepared and willing to use the tools

that they have available to them. given the swiss national bank's past two negative rates, what kind of advice would you give the bank of england and andrew devi? go tofficult would be to negative territory, into an icon -- like an economy like the u.k. which is different. atlipp: they don't need it this stage, i think it's a discussion you should have in theory as long as you have an economy where people do have access to banking and bank accounts. it is a tool that you have available. it is something the central bank has in a toolkit. it's limited, mostly because of concerns about cash funds and if you go too far into negative territory. a tool that is

available. i don't think that the u.k. needs to worry about it right now, because he does have some room in terms of other instruments he can deploy. we will see where it goes. as long as you have your citizens that have access to accounts, it is certainly a tool that is available to all central banks. francine: thank you very much. later, a a little conversation with larry fink, that conversation is that 10:30 in the u.s.. this is bloomberg. ♪ ♪

i'm tom keene in new york, we have francine lacqua in london. we are starting with philipp hildebrand, he's here describing this synthesis we see in central banking and the public service he had to switzerland years ago as well as what he's doing with back rock area i want -- blackrock. i want to take yield curves and folded into what blackrock has to deal with and what every other fixed income shop has to deal with. do you assume, like mr. prince in bridgewater, that we will have a dampening of spirits as and central banks are faking yield curve control? or will it actually bring on a new volatility? i would expect, for the time being, that this policy

regime, where the frontiers between the central banking and limitedolicy is largely to an environment where we have limited volatility around bond , simply because, as you have suggested, we have governments putting out central banks buying for debt instruments. whether it's an implicit or an implicit form, the reality is that it's this compilation of bonds coming out, issued by the government and being purchased by central banks. which leads to stability for the time being. if we get this, and we have a not pernicious dampening, but a quiet lassitude across the markets. to increasing

leverage? or people who have the confidence to leverage up because things are so calm? philipp: it could be. leverages a courageous thing to pursue in an environment where there is so much uncertainty. you can imagine a scenario where things get better. you can continue to have this bond yield regime in place which could lead to that kind of behavior. i think governor bailey, and others, our right to worry about of long-term effect eliminating the division between central banking and fiscal policy. we have called this a policy revolution, which i think was inevitable given where we were in terms of rates going into the corona crisis. it was also probably the appropriate thing to do, how do

we get out of it? how do we put guard whales -- guardrails around it? yet, how do we find a way back to a traditional of central banking independence? that debate has not taken place. reflectioncome any or debate by fiscal authorities or central banks on how they will lead us back to a world of an independent central bank conducting monetary policy and the government conducting fiscal policy? francine: how far away is that? if you look at the crisis, and the legacy of the crisis, do we start having that conversation in a year but nothing happens in the next four to five years? how do we address that balance sheet? philipp: if you look at that from a political perspective, in the short term this is

convenient to have in place. i think the concern would have to be do we see politicians that are wising up, to see this as a useful and appropriate short-term way of doing things, but not the right way of long-term stable economic macro policy frameworks? somely, we would have had rules in place to get out of this. we did not have that, i have sympathy for not having time to do it. but it's an urgent need of discussion now, to think about how we think about getting back to central-bank independence from a world where, in many cases we now have a full monetization [indiscernible] that is not what you want to have long-term, and i look forward to having these

discussions and these discussions emerging in the not-too-distant future. that does not mean that you exit out of the current policy because there's a lot of uncertainty that will persist for some time. but the discussion as to how you should get out should begin. francine: when you look at some of the concerns, you mention yourself deglobalization, how much further will this crisis push a country to be inward looking instead of outward looking? philipp: to some extent i would not overdo this. globalization would not disappear, i'm convinced about that. human nature wants to expand in to expand and move -- and trade and travel and move. i think we need to assume that globalization will be different. the best way to frame it is to think about a system where we have fully gone for optimal efficiency, and everything we

have done in terms of the system itself, but also corporate strategies, they have all been focused towards maximum efficient the -- efficiency. i think we will see a recalibration, and that's where sustainability comes in. a recalibration to a system not just focused on efficiency, but on resilience. the resilience properties of an economy, of the system, a corporation, are going to be very much and focus and valued by investors going forward. philipp hildebrand, thank you for joining us, particularly for your comments on central banking on the continent of europe. we have more to talk about, shifting later to a discussion on central banking and the united dates of america -- united states of america. with james bullard,

the president of the federal reserve bank of st. louis. futures are up today. stay with us. this is bloomberg. ♪

this is bloomberg: surveillance, let's get the business flash. a former ceo has been arrested. this is part of an investigation

into a company's accounting practices. they have acknowledged the $2.5 billion in missing funds probably don't exist. softbank is unloading part of its stake in t-mobile. and the company is planning to sell 5% of its share in a japanese one business. to paye using assets down debt and buy stock buybacks. boeing is signaling that it will lower output of its jetline, this is part of a big effort to slash production. working to regulate the ending of a worldwide grounding of the plane after two crashes. since then demand has fallen further because of the pandemic. thank you. this is what the markets are doing, they are moving up in

europe on signs of a recovery that we saw today, the euro is gaining on the back of the yields, also taking higher bonds with crude oil sliding. this has to do with china and that statement where peter navarro said that the china trade agreement was over, then he walked it back saying the remarks were out of context. we will look at shares when they open in the u.s. and we will have an idea on what the u.s. and china will look like. theill talk more about markets shortly. this is bloomberg. ♪

francine: do you think -- >> do you think of the president -- he obviously wanted to hang

onto the trade deal, because there had been progress made on the trade deal. given everything that has happened and what you listed, is that over? >> it's over. yes. maccallum on fox with the dreaded question that goes on forever and did she get an answer that move markets as dr. navarro stunned the markets and we walked away from a trade deal. look for stephen mnuchin to drive forward the walked back this afternoon. david rubenstein, in conversation with the treasury secretary, this has been a successful conference for us and maybe there is an advantage to having a virtual conference versus all of the hugs and kisses of an in cow's -- in-house conference. to brief us now, leslie joins us on all that's going on in north

america. this has been an extraordinary moment, and there's no question that this is a president that has to regroup. in the washington post today, isre's a spectacular article in a cold, hard facts about hillary clinton losing the election in 2016. can joe biden lose the election of 2020? leslie: this is an election, so yes, of course he could lose. it does not look like that will happen if the election were held today, tomorrow, or next week. but two things, november is a long time away and the big question on the table for this sitting president is where is the economy when we get to november?

and all of the indicators are bad for the president, they are bad and states that should matter, florida, texas, getting worse in texas, the economy is not getting better. there's a lot of uncertainty and he's under tremendous pressure. the polling is not good. that this iso know going to be a phenomenally complicated election to run, operationally and practically. the result that we could have a result quickly is very low. important,is is very we have an international audience and the debate over election hasil in been huge. research, can you get a fair election by using the mail and not having people queue up in line? dr. vinjamuri: of course you can. but the time to prepare is now,

and we are seeing that it's highly politicized, its operations that have to be decided on or taken at the state level. the president is tweeting, saying that it's not going to go well. but whether itl, will, it doesn't good. has notprimary instilled any confidence that people will receive mailed in votes with ballots not delivered on time, alongside people queuing in the mill of a pandemic. and that pandemic is not receiving in the united states. endif president trump is tough on china, tougher given what we have heard from the bolt , does- the bolton books that gain him votes? does it make you more popular? is vinjamuri: the china card

so strong in the united states. campaign is pushing hard, that this is a president that has not been tough on china. that he has not been strong, and he's willing to give away the , and now it does not look like the stage one deal is not going to be met by china. is going todent adopt the line that makes it look like he is harder on china, but it's difficult, coordinating with china is essential for getting the economy resolved. forward with some sort of negotiation to get beyond this conversation. moving forward is a good

critical -- moving forward is critical. but he will need to drill down on the rhetoric to look like he can respond to the allegations which are visible from the book, which is due out today. francine: and what does joe biden need to do in the next couple of weeks? dr. vinjamuri: the biden is really becoming more visible. they are taking a clear and measured line when it comes to pandemic response and global response, coordinating a vaccine, they are trying to stand up and stand proud with a measured response, elevating expertise, and taking a tough line on china. difficult position to be

in. sense thatpervasive the biden numbers are up because the president is losing than bidenather gaining traction. at the moment it feels like winning by default. so what could give biden we getm ahead is that as towards july we could have a vice presidential candidate, and i'm sure the campaign is looking to see where the momentum goes in the united states on the question of race and the protests that continue to be important. they are carrying on across the country and becoming more complicated because science is demonstrating that some of the protesters are spreading infection. all of these factors are coming together. and that announcement about who

will be the running mate for vice president biden is important, because it will send a signal to african-americans, people, as tomany which direction the administration would go? thank you for joining us. let's get to first word news, here's reddick a group debt -- ritika gupta. a congress is preparing for flu season that will be complicated by the coronavirus pandemic. they don't expect this to be mitigated by a vaccine anytime soon. testdc has developed a that can check for both viruses at the same time. and steve schwarzman predicts that there is a big hike in the next few months, but getting back to 2019 levels will take quite a while. he spoke in an interview during the global a virtual event.

administration may reimpose tariffs on canada. the u.s. is trying to pressure canada to put a quota on aluminum exports. there are concerns about american aluminum producers because sales and prices have dropped in the midst of the pandemic. and europe has left $2 trillion on the table in the fight to counter the economic collapse. banks, businesses, and governments are all pointing the finger at each other. francine: -- global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. , this isck gupta bloomberg. tom: thank you. coming up, we have a tour of duty at the bank of england, and our guest is always interesting

and controversial, perfect timing giving the essay on bloomberg that we saw from the governor at the bank of england in the last four hours. this is bloomberg. ♪

is bloomberg: surveillance, tom and francine, let's talk about the june services pmi, pointing to an improved economic outlook. this follows an expected outlook from boris johnson, to give the green light to the reopening in

a speech later today. now is andrew. always a pleasure. thank you for joining us. are there any pros to going into negative territories for interest rates? andrew: i can't see any positives for negative interest rates. don't have negative real interest rates if we talk about real interest rates adjusted for inflation. many economists have pointed to this negative real interest rate as a reason for the fact that we have low productivity growth. problems,reates other problems for the financial system. we penalize systems for holding money. and we don't want to penalize systems, we should be supporting

the financial system. does the bank of england have enough tools to deal with a sharper downturn without going into negative territory? andrew: my view is that the bank of england does as much, possibly more than has been necessary. where the action lies now with the u.k.'s with fiscal policy. this is how quickly they choose the lockdown. the policy would sit on the sidelines, it should be there to be supported, but it's not the main driver of how we respond to this prices. this is also seeing the private sector as the main driver.

in the government has the fiscal policy in the regulation imposed are the main things we need to watch. francine: -- tom: that's interesting to say the least, are you advocating an mmt strategy while the government leads the way while monetary authority sit on their hands? what's an mmt strategy in your view? francine: the modern monetary -- tom: the modern monetary policy? i room my ideas in the monetary policy and fiscal policies that i learned, and the that the i learned is monetary policy has maxed out. we have the commitment of the 700 billion in qe. that is the monetary policy

next, the fiscal policy, particularly the selective fiscal interventions, making sure that the regulatory environment helps the private sector come back after the lockdown, which has been very severe. what is -- tom: what is so important is that crucial distinction as we extend the timeline. we see that in the united states . the major question our viewers and listeners have is what is the price of this extended time at the zero balance? how do we clear this market? interesting,is because they are critical of the bank of england but they did not make more steps. the fed was much better in terms of trying to lift interest rates after the financial crisis.

is the new broom of the bank of england and i think the challenge, whether he does it by withdrawing qe or increasing interest rates to be much more active, on the off side of withdrawing monetary stimulus as the bank has been on the there has been asymmetry in u.k., we have been more keen to inject monetary stimulus and with lot -- reluctant to withdraw it. francine: when do you see interest rates, but in general all of the stimulus, how far away are we from an economic recovery? andrew: those are two separate questions. we should be in some form of economic recovery this year. i think the debate is how strong

this will be. , the economic prospects are better than this year. has been --big hit and we should see some gradual recovery. and how the authorities respond to that, and the question and after the financial crisis they were very slow to respond. be quicker toll respond after the crisis. tom: thank you so much for joining us, a most interesting time. steve schwarzman was really making some news yesterday, trumpeting what you would call -- what you would hear from president trump. that's the enthusiasm of a v-shaped recovery. coming up, stephen schwarzman,

not at blackstone. this is bloomberg area -- this is bloomberg. ♪

francine: this is bloomberg:

surveillance. steve schwarzman is showing increasing confidence in economic rebound after the pandemic, saying he expects a v-shaped recovery in the next few months. he spoke -- he spoke at our global summit. v in are also seeing a big terms of the economy going up for the next few months. as people are allowed to go back, the economy will really respond, but there's only so much the economy -- its highly complex, can respond. just because not all things go up equally. and it will take quite a while before we sink up and get back to 2019 levels. when i think about

your experience, i know blackstone is a place where you are always looking opportunities and new opportunities in many ways. i think back to the turn of this andury, and the big bad investment into real estate and the last financial crisis and how heavily you invested into credit. what is something you are doing now, take us inside of blackstone, that might help us understand the opportunities that exist in this crisis? >> this one is different, they are always different. to do, if you hit the bottom, even if you did not know what was the bottom, was to make significant investments. we reported at the end of the first quarter that we invested

$11 billion into securities. this has had a very happy outcome. and we did more in addition to that. that was the first stage, and i think each of our businesses are seeing an interesting opportunity. as technology is changing things and people are staying home, the areas where you would want to invest, whether it's technology or health care, are being modified. economies that are bound to be disrupted, those companies are places where, unless you have a remarkable management, you would want to stay away from. we can see different parts of the economy opening faster.

some things were closed completely, interestingly in the hotel business. we have one hotel in las vegas that's completely closed and the first weekend it opened it was 45% billed -- failed. that's an astonishing thing because las vegas is barely open. there will be some surprises, not all hotels. but as you look at the degrade a radiation -- but as you look at the trends, places where you can drive will be growing, and going over oceans will have the slowest types of recovery investment. each of our businesses is starting to put out money. ,nd there is a much better tone

with a lot of private investing. there has to be confidence on both sides. to believe that they are giving fair value and the people who are buying have to think they are getting fair value. typically what happened, as you know, jason, if you are doing private investing, sellers don't like to sell at bottoms. you can purchase liquid ofurities, debt securities cm bs and other things that are stacks, you can find the security where you think it has the most upside. even if it's going halfway from where it started, some of these will continue to go up. others have already returned to par. it's an issue of figuring out which of the underlying businesses are going to return to health. steve schwarzman of

blackstone with guarded comments on states of the economy and the state of investment in private markets. there's much more to come. to a veryfting vigorous public markets -- wesion, the temple of see some bright lights in the public markets and we get a good update. it's an interesting day today, a little bit of an up to the markets. stay with us. this is bloomberg. ♪ save hundreds on your wireless bill

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get a $50 prepaid card when you switch. it's the most reliable wireless network. and it could save you hundreds. xfinity mobile. tom: this morning, stasis and the markets, the goals nudge

ever higher. for now, modest business stocks indicate next to nothing. new york city reopens. empty offices near empty streets and restaurants and bars, it's really quiet. nightmare, the third week of august has the au pair not expecting to get the visa and tim apple needs to program the widget and ios 14 can't get through customs because president trump says no. good morning, it's bloomberg surveillance. london with an important interview coming up later today. francine, the juxtaposition of the united kingdom trying to open and the tentativeness