no one has a sense of what ornings will be in 2020 2021. that says, wefed are just printing the money. >> i think you settle at levels where you do not know where things are going. >> this is bloomberg surveillance with john keenan, jonathan ferro, and lisa abramowicz. >> this is bloomberg surveillance. where live on bloomberg radio and on bloomberg tv alongside. what a way to start. in 90 minutes, we catch up with ambassador bolton right here on bloomberg surveillance. krugman later.

but john bolton. and this is a morphed interview.. john, i have not read the book cover to cover. we will go to the epilogue of the book, which is this russia paying bounties to kill marines in afghanistan story. we will dive into that with investor bolton at 8:30. 8:30.assador bolton at the interviewee will have with mr. alpert is just as important. we get the abp report this morning. 8:15 eastern. the range of estimates ahead of payrolls is wide, wide, wide. >> that is exactly where i was going to go. messy and not necessarily

accounting for the fact that goldman sachs is estimating more inn 40% of businesses america every closed or are considering doing so. -- thebe watching those abp number in particular for the tea leaves. also getting q2 auto sales from gm, chrysler, toyota, nissan, and height -- and honda. 2:00 p.m., we get the fomc meeting minutes from last month. policyits of monetary expressed by fed members as they look to fiscal support to drive the next leg of the recovery. >> it will ramp up. on the equity market, down 18. session lows, -.6%. tomorrow is payrolls thursday.

the range of estimates cannot be wider, from positive 500,000 all the way to positive one million. why is it so difficult to get a read on this labor market and could we be in store for a shock? i want to bring you dan alpert. -- in dan alpert. walk me through what you are seeing and why you think there is potential for severe shock. daniel: there is huge distortion pouring through the data as a result of the two major programs that were part of the care act, the payroll protection program and the additional federal supplement unemployment benefits. the problem with payroll protection program is it resulted during the course of may in a significant amount of re-payolling -- of rolling.

we will likely see a continuation of those levels in june. although we have been seeing it stubbornly high, the number of in the employment claims -- the number of unemployment claims, which indicates people are still being laid off. the construct of the paycheck protection program eventually runs out. it runs out a lot sooner than the money for the federal unemployment benefit supplement, which runs out at the end of july. i think july will be a pivotal month when it comes to job count. june it, it is anyone's guess. alpert, the age of oversupply, one of the great contributions to the financial crisis. put your money where your mouth is.

know, every single email i get from real people agrees with dan alpert. frame this on the unemployment rate. we are at 22%. the street believes we are going down to 9% somewhere. translate into that into your mathematics. where do we go to? daniel: in the short-term, you are talking about people who are reporting themselves as having been employed. to the extent that you are getting benefits, a paycheck, theer from your employer, statistic would not indicate you are not not going to work. six -- u6 is more of a window, but not complete.

unemployment going down to 9% in the short term or even to the end of the year needs to weigh a little bit of time before we see how this data moves through the system. i am very concerned about july and august. one thing i went to add is that to the extent that the july data starts to show a reversal of recent patterns, a lot of noise will be made about the re-breakout of the virus. i do not think that will be the leading edge of this. the leading edge will be the unique construct of the cares act programs and the money actually running out. out, the money does run what is your expectation for how high the unemployment rate could bounce back up to in july and august? -- i ami'm not terribly

not necessarily saying it will bounce up. year-end, peak to trough in terms of the period of time running from before the 31st, started until the between eight to 12 million jobs. that will remain stubborn. if you take eight to 12 million jobs out of the picture, you can pretty much figure out the unemployment rate will be in the high single digits at best by your in. -- by ear and. end. year >> is this aa service sector job recession? >> that's funny. when we created the job quality index, which is

jobqualityindex.com, one thing u.s.scovered is that the jobs picture depends heavily on low-wage, low our service jobs. those are the jobs got eradicated during this crisis. it was a unique aspect of this crisis. you saw the elimination of hospitality and leisure jobs, retail jobs, a lot of health-care jobs not in hospitals were also wiped out. and of course your temporary services jobs. you're talking about sectors with some 40 million jobs in them. that is an enormous number. some of those jobs were lost quickly. recently, we have seen the calling --ession culling of higher paid positions. the sort of jack welch argument that you can always fire 10% of your employees.

comparison to the rout amongst low-wage, low our employees in service sectors. >> do you expect that second wave of layoffs to pick up? we heard airbus announcing layoffs. into 2020, isgo that something you anticipate? point, that is a fair but that goes to the culling concept. at some point, we do need to right side this business. fundamentally, the recession is being caused by the elimination of a vast number of jobs, at least in this country. mostly in the lower paying services sector. -- that, given

the volume of jobs we are talking about, that has an enormous impact on aggregate demand in the economy. >> appreciate your time. very timely ahead of the payroll tomorrow. lisa, this came up in the last 24 hours. airbus cutting 15,000 jobs, saying the industry may not itly recover until 2023 and may 2025. those cuts are not even the worst case scenario. hard to map this out when so much depends on the trajectory of the virus. when people talk about the fiscal support how much we will be supporting zombie jobs and a zombie companies. pressure to offset the income shock is going to be massive.

the polls out not encouraging for the president, staring down november. it is unthinkable that this administration is not prepared to do more. foldat only that, but you it into senate dynamics as well. kevin cirilli is the expert on that. i will tell you, this is not just about mr. trump. it is about senators of the gop persuasion and they are scared stiff as we enter july. >> he was in the room. we catch up with ambassador onton at 8:30 eastern time the scary reports coming out from afghanistan around russia and the taliban. we will catch up with him on china too. we will talk with kevin cirilli and get the latest on hong kong as they face confusion and despair.

points,utures are -22 down .7%. tom new york, alongside keene and lisa abramowicz, i am jonathan ferro. this is bloomberg surveillance. ♪ >> i am ritika gupta. anthony fauci warns that the u.s. is going in the wrong direction. dr. fauci told a senate committee the country could see 100,000 new coronavirus cases a day. that is up from the current level of about 40,000. several southern and western states have been increasing in put reopening plans on hold. china announced its new hong kong security law. allowsislation punishment for crimes including subversion and collusion with foreign forces. more than 180 people during

demonstrations were taken into custody. says a swift recovery to the economy may be sinking. sectors -- demand in some sectors is at a low. weinstein -- a federal judge has been asked to approve an $18.9 million deal. weinstein is serving a 20 year sentence in upstate new york. airbus have launched an extensive restructuring. the airplane maker plans to cut becauseobs, downsizing demand for jets and planes during the coronavirus pandemic. 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. i am ritika gupta. this is bloomberg.

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>> we will have to reorient our trade with hong kong to the extent that hong kong no longer

enjoys the it on ami that -- enjoysthat special the autonomy that justified that in the first place. enforcing aina sweeping security law that has the city, the state of hong kong on edge. your equity market. equity futures down 18 points on the s&p 500, .6%. outside the equity market, a look at the bond market. the 10 year. on your yield, .68%. elsewhere, a snapshot in g10. the yen outperforms. the dollar coming in. i am jonathan ferro on this wednesday morning with a focus, a big focus, on washington, d.c.

we could do a one-hour hour brief right now with our chief washington correspondent. there is much going on. the news out of hong kong is shocking. right now, too short of a conversation on washington with mr. surreally -- mr. kevin cirilli. we will speak with john bolton. of russianic story bounties to the taliban. i was struck by the viciousness of the essays by leon panetta and susan rice overnight. their vehemence was stunning to me. and,ill ambassador bolton frankly, the republican intelligence community, respond? >> let's cut through the noise. what is fascinating about ambassador bolton right now is

where does his ideology go? does it go to joe biden? who has become the heir apparent to his hawkish views as it relates to russia, china? that is what i'm looking forward to hearing from the interview you will do. this will be my first question to ambassador bolton. is there any evidence president biden can bring democratic foreign policyy back to the time of scoop jackson, john kennedy, and, dare i say, barry goldwater? >> that is an obstacle for vice president biden, especially if he wants to attract more centrists and republicans. he is the leader of a democratic they that, frankly,

progressive flank thought that hillary clinton was to hawkish. biden wants to move beyond clinton in terms of the is staringbut biden down a progressive flank that is skeptical of hawkish worldviews. indeed, ambassador bolton has had he does not necessarily want joe biden to become president. republican pushback against some of trump's policies. how much is there for a harder stance, toward russia in thiscular, on the heels of news about bounties put on american fighters in afghanistan? >> it will be interesting to see whether you hear from people like senator lindsey graham, marco rubio, to add additional

sanctions. this is a big however. this story have been republicans saying this was a leak the intelligence community, as it relates to this report. and they were leaked by lower level staffers. lowerould argue that level staffers, regardless of the occupant in the white house, have been leaking for political game and it never made its way to in official briefing coming from vice president pence or trump. the bottom line is most americans are unaware of how the and how system works the bureaucracy works at many of these agencies. that is why these leaks have come to fruition. isathan: it is clear there conflict in the intelligence community. the nsa and the cia did not

agree on this. the lack of consensus we are still trying to work through. we are still trying to figure out who knew what and when? a little, but beyond that, based on conversations i have, i think it is the vetting process of the intel as it makes its way up the chain. you have hundreds if not thousands of government employees just in washington working at these agencies all of whom have different ideological leanings and all of whom, frankly, could be talking to reporters, and that leaks, but people at the top are not leaking information. i would be hard-pressed to find a senior official leaking this type of information, especially if it would put american military folks at risk. jonathan: where to find consensus in washington, but i

am sure people would agree the last couple weeks has not been good for the president. this,l see more days like where the equity market is lower and people start to look towards the polls for november. the president is still doing well on the economy. don't you find that surprising? >> we were talking about this off air. it gets to the point of november the uptick in cases continue onward, will that -- the timing of it. the psychology of the american swing voter will be crucial ahead of november 3 as it relates to their confidence in where the economy is headed. beyond that, i bolded this, highlighted it. was at thewhen he podium, said you cannot have an

economic recovery unless you defeat the virus. he is trying to put this idea in voters' minds that it is not an either/or selection. you talk to jonathan ferro off air? you never talk to me off air. >> you have my number. tom: great. kevin cirilli, our chief washington correspondent. john. jonathan: i think kevin nailed it. i think he pulls well on the economy, not the pandemic. you have to think eventually you have to conflate the issues. what is important is the conversation we had with mr. alpert on the job economy. this could be a shock tomorrow. jonathan: 60 minutes from now,

we will be catching up with ambassador john bolton on the administration, russia, china. that is coming up this morning. this is bloomberg. ♪

anathan: leaving behind q2, warm welcome to q3. from new york city, good morning, alongside a time is keene andongside tom lisa abramowicz. after the best quarter since 1998 in the s&p 500, we roll over. .6% down. yield curve steeper through much of this morning. up three.year, in foreign exchange, a snapshot of g10. tom: after the close yesterday

was quite something. call it windowdressing if you would like. we get reset here and we will see how we do in that critical jobs report. there is no question that if we were not speaking to ambassador bolton, this would be front and center today. this is the history being made in hong kong. it is a history of minutes and hours now as hong kong tries to get to wednesday evening and into the weekend. is on thearuddin streets. sophie, how has hong kong changed in the last five hours? energy in parts of the city as people have congregated to the basically expressed there to pleasure about the passing of the bill ,ast night by chinese lawmakers

basically bypassing the hong kong legislature. we have had people come out together. police very much on the streets. you can see police have been lining the main streets around the city. they have been using cordons touch -- to try to control the -- control the crowd. the anthem of hong kong being sung as well. --en the concern this teller that still remains around the security bill. tom: are the police the same police you and steve engle have seen or is it a different police force? under the security bill, within it, the police are to establish specific units to allow for enforcement of the provisions.

apparently, there has been some of those particular officers on the streets today. we have not seen them firsthand, but there have been reports they have been bearing specific badges that would note they are part of the unit. we have seen raptors, the riot police cured up with helmets and with the tools of the trade, as bullets, tearber gas, pepper spray, all of which , and the used today moment, commotion between police and individuals. again, a movable story. i have to give you major points, jon. you are out on this 10 months ago. this story has evolved to a new point of tension.

jonathan: unfortunately, foreign governments have found it difficult to change the chinese communist party's behavior. you could see how visibly uncomfortable the person from about hong kong was. 20 years ago, i think these governments would have had far more leverage. because of the commercial leverage that the chinese coming this party has over economies in the west, they are finding it difficult to influence behavior. the idea that the administration and the united states is talking about rescinding the special status of hong kong. years ago, that felt like a huge threat to china. it does not anymore. it is not shape the behavior of this party in any way. what we have to understand is what is the best approach?

the approach of the last several administrations has not made a difference. tom: no question about that. we welcome all of you. good morning. a particular good morning to those of you listening on radio at your homes. millions of people still working from home as well. morning,mportant this and, lisa, i would look at this with ambassador bolton and 50 minutes. we will be heavily focused on her osha. -- we will be heavily focused on russia. we may have time to speak to him about what this means for taiwan. lisa: this will be a key issue as trump and joe biden take equally harsh stances against china. there is a question of how far they are willing to go, especially with trump trying to

keep his phase one trade deal intact. people are starting to price in election risk. wondering how different trump and former vice president joe biden are there stances when it comes to china, to international trade. it seems like the gap, the air between their views, is not so great. jonathan: when it comes to the market, it is clear on all fronts. two things this market is concerned about ahead of the election -- regulation and taxes. it comes down to those things for market participants. alwaysways -- and it comes down to a handful of things. as the weeks and months progress and the year grows older, it is seen as a risk that the senate could flip and the tax reform of the last couple years could be reversed. people are talking that maybe we

could get a secretary warren as the treasury secretary. you can imagine how wall street would feel about that over the coming years. large point here is that president biden, what does that mean and how does he play to his democratic party? we will continue this discussion . a person from banque lombard is with us. will the resilient dollars today? ingredients for a downside are finally falling into place. the way we see it is that basically the significant decoupling of the dollar

relative to fundamentals, whether long-term or things like interest rate differentials, and the dollar is quite overvalued. initially, the trade war and the virus. the thing is, we are moving in this environment where things are improving on a trend basis. europe, improving virus numbers. it seems europe is getting attacked together -- is getting its act together. of the dollar is being priced out and will lead to depreciation in the second half of this year. i wonder how many conversations with clients you have right now and up with talk about gold. where are you with gold?

>> that is interesting. au have to look at gold from structural and secular perspective. we are living in a world of general interest rates. --n you turn to safe havens silver, gold, and the u.s. -- silver, gold in the u.s. he would like to have in your portfolio, from a structural perspective, it something that can benefit you materially. that is actually gold. a hedge proven to be resurgence in risk aversion. we think there is definitely an element of structural allocation in gold.

right now, we are approaching 1800, a big stretch. potentially it could close at 1700. , u.s. real time .ates lisa: we are done with half the year. half,g into the second how much conviction do you have behind your convictions? all, the virus. that is something going can predict. -- something no one can predict. now, at least most of the have the tools and knowledge to contain pockets or clusters.

i would put it this way. relative to a month ago, our conviction of the dollar downside has increased. of course, if we get a , anificant virus resurgence second wave. jonathan: enjoyed catching up with you. looking at the u.s. dollar. slightly firmer, stronger. the index up .2%. we stick with our 97 handle. tomorrow, payrolls thursday ahead of a long weekend. the response, reaction from the white house after the jobs report. we will catch up with national economic council director larry kudlow, an interview you do not want to miss on bloomberg tv

and radio. with tom keene and lisa abramowicz, i am jonathan ferro. this is bloomberg. york, new jersey, and connecticut have doubled their quarantine list to 16 states. visitors from those states, which include florida, texas, and arizona must self-isolate for 14 days. of positive coronavirus tests in new york continues to remain low. a new poll shows joe biden with a 10 percentage point lead over trump. the survey by pew research also found that almost 90% of americans are dissatisfied with the state of the country. the president's approval rating fell 39% -- 239%. firm in hisng

defense in the names of confederate leaders. ifwill veto a spending bill u.s. military base is named after confederate leaders are renamed. president vladimir putin is on track for a big win. voters support a revised constitution that would let him 2036, anffice until exit poll says. his approval has slumped. a company is pushing backup plan to reopen its u.s. offices. all google offices will remain closed until september 7 in the u.s. the company had planned to bring back some workers back next

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>> hypothetically, a second governmentsld force and people to withdraw from economic activity. the worst part of it would

undermine public confidence, which we need to get back to the economic activity that involve crowds. jonathan: chairman powell in front of the house financial services committee alongside secretary mnuchin, echoing the worry we all share. from new york, welcome to you all. we are live on bloomberg radio and tv. one hour and 42 minutes away from your opening bell as we kick off q3. lows, futures, session down about .8% of the s&p. after the best quarter since 1998, 20% loss in q1, a 20% gain in q2. martin is the only time adams will appear with us. best quarterthe

since biblical times. gina martin adams has been spectacular about the courage to stay in the market. for those that have missed this, for the institutions behind on june 30, how did they catch up? >> i think investors have been really hesitant to put money to work in equities, mostly because of the fundamental underpinnings. they look at the economy and think it is weak, equities cannot possibly continue to go up, forgetting the fact that the other side of the story is that bond yields are so very low and policy is so committed to thatng risk assets afloat you cannot avoid stocks. that is part of the reason why we saw gains come in. we have seen institutional investors get dragged into the market.

they could not avoid, after the rally. we saw some real risk on activity emerge in may. june was really flat. in the end, it was a sideways month. that will be a lot of what you have over the summer, a lot of sideways trade as investors started back -- start to edge back on the market. there is certainly no mass explosion in activity likely. tom: we had a gina afternoon yesterday. you said earnings will surprise. about? what july will be >> i think so. i mean, the consists is expecting a 45% drop in earnings. of march the activity and april and extrapolated that through the second quarter. -- the facthat the

that the economy started to open in late may and we at least got the month of june will be a shock to the second quarter numbers. i think it will be a lot of chop, some misses, but in the end, a 45% drop is too conservative on the part of the analyst community. i think you will have a lot of mess, a lot of companies that take advantage of extremely low expectations. nonetheless, we did have economic activity in june that was not anticipated in the numbers and analysts have been slow to mark their numbers up, so we will be expectations -- beat expectations. well that matter? probably not. thatreally matters is companies disclose what they think the outlook will look like , what their cash flows will look like in the second half and

2021, and address the fears of a second wave. and they address the fear that there has been permanent damage to the economy and how they are addressing that in their operation, how they are anticipating with the future will look like. are: within this, there people clinging to the idea of a cyclical rotation. we saw this with the rug old 2000 -- with the ruffle 2000 -- with the russell 2000. we saw the biggest one quarter gain since 1991. aw coherent is this with bankruptcy rate rising at the fastest pace since 2009? >> yeah. that is a great point. the other side of that is that you have the fed purchasing corporate debt directly. as much as the bankruptcy rate is accelerating, especially for nonpublic entities, the public entities that have access to the

capital markets and can access those via the corporate debt market, are getting a direct infusion of capital from the federal reserve. i think you want to balance those two points. points of, there are extraordinary weakness in the small-cap index. i would argue that most of the weakness is actually in the broader economy that you are seeing in the bankruptcy statistics. they are outside of the public markets. smallime, you cannot save caps when high yields start contracting. it is a bad trade. are you going to continue to see a high-yield spreads contract, given the fed has said, not only are we going to purchase debt funds but directly purchase corporate debt in the capital markets? that is a tough call. as long as spreads are not rising, you have to have some

exposure to small caps. you want to pick those carefully because there will be weak players. they are not going to get the support. that are not going to survive this given cash flow damage. lisa: how long can we see the everything rally? stocks posted their best quarter since 1998. you also saw a historic rally in treasuries and investment-grade bonds. >> i think the everything rally ended in the first week of june. if you look at the data, you see, especially in the equity market, the rotation into junk, high-volume, high-value. all of the ended. the federalause reserve balance sheets stopped expanding. you have seen chop in the bond market and stock market. you have seen spreads move more sideways as opposed to continue to go lower. i think the everything rally,

and by that i mean that two month period where everything in the equity market and bond market rallied, is over. longer-term, the everything rally, stocks go up, bond yields go down. i do not know if that is over. the federal reserve will keep bond yields as low as possible for as long as possible. that is pretty much baked in the cake. reaction to that will be some degree of risk-taking starting to emerge, but not a ton of risk-taking. that has been the story of investor risk tolerance since 2009. do i see that changing in the next six months? no. longer-term, if you get an inflationary dynamic shift, a problem that creates in inflation shift, then that dynamic changes. jonathan: enjoyed catching up with you.

appreciate your time, gina martin adams of bloomberg. so many people attempted to say that easy money has been made. there was nothing easy about committing to the rally through q2. welcome to q2. from new york, this is bloomberg. ♪

>> no one at this point, analysts, companies, strategists , have a great sense of what 20 orngs will be in 20 2021. >> you have a fed that literally looked at a television camera and said "we are just printing the money." confuse a balance with recovery. announcer: this is bloomberg "surveillance." tom: good morning. the second half of a wonderful