>> 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

conversation. you just heard steven major of hsbc with his terrific call, persistent call for lower interest rates. , we wills in moments speak about the research notes of last summer, ages ago when things were calm on a vector of lower interest rates. we will get an update and look to the market, to hong kong, and to our conversation with john bolton in 30 minutes. with the news breaking this morning, really must watch and must listen. you nailed this. cacophony has never been seen before. i think it will be really difficult as the quarter grows older and you get the handoff from the balance of reopening the economy and the

realization that the recovery will take a long time. then we get bumped up against the election in november. thee the president exits in senate flips as well. the market has a lot more in the last couple of weeks. tom: no question. based on the emails i've gotten of the supporters of the president really pushing back against the new belief in president biden. part of this is how you price this into the market. they are reading the news today was the swedish central bank suggesting negative rates would be a possibility. lisa, that indicates the persistency of a low rate regime into this new quarter. lisa: which has been accepted by a growing number of investors and strategists. you've already gotten a bazooka from central banks around the world. the bazooka has been unleashed.

we are entering the model territory, the idea you have to have a physical policy takeover in a real way and we will look at the changing composition of the labor market. how extensive the cuts are going up the pay scale, and how pervasive and sustained are the job losses? tom: this is fascinating. across to our simulcast bloomberg radio and television. huge anticipation over the conversations bloomberg will have today. ambassador bolton will join us at the bottom of this hour. a widely anticipated conversation on this horrific story of russians paying bounties to kill marines in afghanistan. morgannty is out on a jp -- as i said he wrote without question my research paper last

question. it was brilliant on modeling towards low interest rates. he has been dead on on that. speak ofw work to as well. do you still believe in a persistency towards a shockingly low 10 year yield? >> we are almost there. the forces we have seen in japan and europe basically said the moment you get there, it is very hard to get out of. it is basically because as you lower interest rates, the saver needs to save more. ratesition lower interest have a positive impact rate by having people to borrow more. then comes the aftermath, the hangover. you have too much debt. that is what is holding you there for years.

that is why europe and japan are still there and what the future of the u.s. is looking like as well. jonathan: a lot of people believed that it would drift higher as recovery grows older. do pushback on that view? jan: at the moment we have to think more downside. the federal reserve is targeting bond yields. we will basically say more is better than last. i will be thinking about staying around these levels to lower. there is volatility around, obviously. jonathan: let's talk about the economic assumptions that underpin the view of 0%. jan: caution.

-levering. afterwards you slowly, not constantly, as we see with irfan japan, you tend to save more and cut your debt load. corporates are cautious in this environment. they won't be doing a lot of borrowing. governments -- they will do a lot now, but in the future. these are your drivers. not economic growth, but saving and borrowing behavior. lisa: this is the paradox of the moment. the zero rate environment implies a very slow growth economy. yet investment strategists are increasingly pushing investors into riskier assets. i think about your latest call on the 60-40 investment call. compare the idea of going further into risk, out of

government bonds at a time of slowing growth. governmentrpose of bonds is to help you when you need them, when you're down in the equity market. your governments can rally and give you support when you're losing on equities. the moment you are at low rates governments can't really do that much anymore. low volatility, they can rally 10 to 30 basis points, but not much more. you know from here on you are not getting much return. your mortgagors and high-grade are pretty much guaranteed the next decade getting 1% return, give or take 30 to 40 basis points. it doesn't do the job anymore. where do you go? you stay there and save a lot more because you aren't getting any return, or you go into risky assets. two options.

equities will give you a better return than bonds. most of us would agree about 5% over the next decade. volatile. very it can go down 20 to 30 as we have seen a few months ago. the asset class i'm recommending is one that is volatile short-term year-to-year, but it goes up and down like a sine wave. your utilities, your real estate, your mortgages, all the stuff around that goes up and down. volatile short-term, but half as volatile the moment you hold on five to 10 years out. you need a little patience and can't fuss too much about the short term. think about where you will end up five to 10 years. you need to be sitting between

bonds and equities. i call it the hybrid world. lisa: a lot of people may scoff at the idea of taking more risk at a time of slowing growth, but tom has raised the idea of the pensions and retirees who need to earn income. the 60-40 split has given returns for 50 years. you expect them to deliver 3% in future decades based on where current bond yields are. how do bankruptcies factor in and how much does your recommendation bank on the idea that the federal reserve and fiscal policies will support riskier companies and assets going forward? much on the rely longer run. i know what asset prices are at today. steadilyepression moving down earnings growth, in which case you won't have a positive return on equities.

can d-link from the overall economy. than theer return overall economy. you have to think about corporate earnings and valuation. the economy is something separate. pension plans have already been moving away from her government. they don't have much left. they are sitting in high-grade, but not doing a lot more. they have private debt, yes. i think they've moved a little bit of the risk spectrum. they reduced risk by being a private asset because they don't get market to market on a daily basis. i'm trying to get them to think more in between, long-term growth stocks look like the most attractive assets. they are extremely volatile even over a 10 year basis will stop it is best to notch down a little bit. you get much better returns to risk if you pile between the

bonds and equity markets. jonathan: really appreciate your time. loeys of jp morgan. tom keene reiterating 12 months ago rocking the research world 0%. with thehat big call research paper. deleveraging is a powerful force. when we make it to the other side, there will be a lot of debt on a lot of balance sheets to pare down. lo: what is so great is dr. eys comes off of a great european tradition that is balance sheet centric rather or statementlow centric. he brings a twist to this like mr. major that is just remarkable. jonathan: the brilliant lineup

of guests continues. good morning. live on bloomberg tv and on bloomberg radio, eight: 30 eastern, 20 minutes from now, ambassador john bolton is live. equity futures are paring some of the losses bouncing off the lows ahead of the adp report. michael keane is breaking this down on the others. this is bloomberg. ♪ chance onll take a raising tensions with china more. prime minister boris johnson's government will allow three million yo hong kong citizens to move to the u.k.. johnson says the law violates the 1984 agreement on the city between the u.k. and china will stop infectious diseases chief anthony fauci warns the u.s. is going in the wrong direction. he told the senate committee the country could see 100,000 new coronavirus cases a day up from

the current level of 40,000. several southern and western states are seeing increases in infections prompting some to put reopening on hold. the imprisoned former movie producer harvey weinstein has reached a settlement with women who say that he has mistreated them. yeartein is serving a 20 sentence for sex crimes in prison in upstate new york. citibank paints a grim picture for the oil industry. analysts predict oil demand growth will fall significantly after the coronavirus outbreak and will never reach pre-pandemic levels. citibank estimates jet fuel demand won't return to pre-pandemic levels until 2023. than 2700 more journalists and analysts in more than 120 countries, this is bloomberg. ♪

jonathan: from new york city this is bloomberg "surveillance." we are live on bloomberg radio and bloomberg tv alongside tom

keene i am jonathan ferro with lisa abramowicz ahead of payroll thursday. the appetizer from atp, let's go to michael mckee. good morning. it is not far from analysts' estimates. two point 4 million jobs created during june. 2,369,000 total. 559,000 were in medium-sized businesses. large businesses, 873,000. that takes us back to somewhere around 20 million without jobs, which is the important thing to keep in mind looking at the overall employment numbers. 450s producing jobs up thousand, service producing 1.9 alien jobs added. leisure and hospitality, including restaurants, up 961,000. the question will be how many of

those people still have jobs today as restaurants and bars close and all of the states seeing covid spikes. jonathan: that is a huge revision. what is with that? mmichae: adp revises their numbers when they get additional information. -2,360,000 to positive 3 million and it looks like a big revision correcting back to where we actually were. not sure how we get there, but no one looks at the adp revision numbers. they're probably not going to get called on it. this will maybe give a little hope to people the overall economic economists forecast for tomorrow will be roughly correct. tom: it will be fascinating. thank you. we will have important coverage tomorrow. mr. farrow in conversation with

mr. kudlow of the white house. we will do it on thursday, jobs day, tomorrow. this is a wonderful interview. we could spend an hour. really interesting, starting out as a buyer in department stores and going to torture as a legit security analyst on the street, and running a really wonderful consultancy on retail trends. stacy, let me ask an open question to get started. where will we be in six months, going into the holiday season? stacy: in six months i think we will be floating in discounts still. that is the big issue going into the second half of the year. everyone is trying to clear and get clean for the second half of the year. i don't think it can happen fast enough. the other thing you will see --

pardon? tom: go ahead, finish. have ars can only certain amount of traffic in their stores for the second half of the year. wille have black friday or all of the promotions move online and push the consumer more online? what does digital online demand due to bricks and mortar? , i think of robert burke running bergdorf. ,or you as a retail industry what does brick-and-mortar actually do? what is their action in the next six months? stacey: it's interesting. because so many brands have seen their online penetration struggle overnight, nike said there expectation -- they did in three months what they were

going to do in two years. stores dohe curbside pickup. stores are becoming almost pickup points are warehouses. for the amount you pay for that real estate, it's a huge amount of money.we . will b parsing appointment only. it will be the 8020 rule. 80% is making or business happen. online. lows it increases return when you move online. the stores get flooded with boxes to the ceilings that the stores have to process. lisa: the overhead costs are not justified by some of these brick-and-mortar locations becoming pickup spots. surged a record number in the first half of this year. are we done with the bulk of the

reckoning, or do you see this wave of bankruptcies accelerating into your end? stacey: i think we are getting started on that end. now that everything is fully open again, we can actually look at the inventory, the real estate, the brands and say what is forward? we could not do that in the last few months because everything was closed and the stock was on a boat or in the store. now things are starting to open at an interesting time because we are going into a holiday. it is unprecedented what is happening right now. into next year, we are just getting warmed up here. lisa: what do you expect in terms of which might be the next safety going forward? what is the next big retailer that is the issue to drop that could mark -- that is the shoe to drop that could mark the next wave of bankruptcies.

stacey: you will hear the drip, drip, drip of store closings. macy's looks more like half the size it is today in a couple of years. i think that is the first thing. you look at malls.we may see 30% to 40% fewer malls. the real estate prices, the rent, the battle between landlords and retailers is crazy. rents must come down if you are doing fewer sales by nature in store. the nature of retail changes over the next year. jonathan: we're lucky to get you on the show this morning. thank you for joining us. stacey widlitz. we just got a stack from michael mckee on the jobs market. basicallyport suggesting we have lost

14,277,500 jobs since the high point of hiring in february. that coming to us from michael mckee. it is still a devastating number. tom: i calculated 40 million people on jobless claims. there are funny numbers in there. to earlier this morning and we need to get prepared for the next 60 to 90 days of data on the american labor economy to reset what is the job economy of this nation? jonathan: payroll thursday tomorrow with a huge range of estimates. an aircraft carrier through the range of estimates going ahead tomorrow. payroll thursday around the corner. around the corner on this program, a conversation you don't want to miss on bloomberg tv and radio as bloomberg "surveillance" catches up with ambassador bolton, the man who

is very much in the room. that is here on bloomberg. ♪ you doing okay?

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♪ jonathan: from new york city this is bloomberg surveillance. tv andlive on bloomberg radio alongside tom keene, together with lisa abramowicz. one hour away from the opening bell, with futures bouncing off the lows, still negative. off the back of the biggest quarterly gain going back to 1998. we say good morning to q3. tom: absolutely. good morning. leading up to the election in q4, it will be extraordinary to get to the first tuesday of november. . interview, a book of his days at the white house. it was going to be a normal

interview. it is not. ambassador bolton joins us this morning and the uproar of current events. i look at the room where it happened, and i have got to get to a room on the first tuesday of november and the wednesday following where we may confront a president you make clear human tissue may clear you do not support from -- but as you look at barring -- at biden, how does biden pull them back toward the center, to the time of scoop jackson and john kennedy? mr. bolton: i do not know. i am very worried about it. it is one reason i am not going to vote for joe biden, unlike some of my conservative friends who have made that decision. i philosophically cannot do it. it is a very unhappy election prospect for real conservative

republicans who understand, and i try to lay out in the book, who has no real philosophy. he is nothing. he does not think in philosophical or policy terms. the day after the election, if biden wins, i think for the country it is going to be a real test of whether a lot of this campaign rhetoric turns into action. let's take the russia case as an example. decades, the democratic party pursued policies vis-a-vis the soviet union and russia that were inadequate for the protection of american national security. i have always favored the barry goldwater, ronald reagan approach. now the democrats are tough on russia. well, better late than never i suppose is the answer. will they be tough on russia if biden wins? we don't know.

agree that trump is not barry goldwater or ronald reagan. myt we need to focus on, and first of two questions on russia before i go to jonathan ferro, is the simple idea of the back pages of your book. the heated debate this morning is where you involved in briefing the president or discussing with other intelligence community members, or the pentagon, about the russians paying bounty hunters in afghanistan to kill marines? you stated to the associated press that that is not the case. i need you to recapitulate that right now. did you come late in your term at the white house, speak to the president about these matters? mr. bolton: what i said was no comment. that is the same thing i am going to say today. we are embroiled in litigation

with theer i complied requirements of the prepublication review process, which i did. i did not write this book with the intention of writing -- of putting classified information and it. donald trump does not want the american people to read it. with respect to russia and what they are up to in afghanistan, honestly, this current controversy i could have written about if i did not face these the difficulties. susan rice, the second obama national security advisor, writes today in the new york times that if she had information like what is being reported in the papers, whether it was totally verified or not, she would have gone to the oval to tell president obama. without getting into what i knew, i want to say i agree with susan rice.

that is what the national security advisor should do. one more point. there are not two categories of intelligence -- verified over here and not verified over there. intelligence invariably is placed along a spectrum. the intelligence community understands this. they say they have high confidence, medium, low. people will have to judge and different agencies will disagree. there is not some block of granite you carry around to show the president called verified intelligence. you deal with uncertainty. that is part of the job. looked at the susan rice essay and also the essay by leon panetta. i found them extraordinary in their heat. how would you recommend that trump extricate himself from particularly how he addresses the military at the pentagon? offerlton: i cannot

advice on how to get out of the mess he has created. in the last four or five days, he has told three different stories on whether he was briefed, whether he was told it was fake, whether it is fake news by the new york times. his advisers are now contradicting themselves as well. how do i view that in terms of the presidency? it is just another day at the office. every day is a new day, every story a new story. what he said yesterday is interesting but does not dictate what you say today. it tells the russians we are in disarray and ripe for this kind of provocation not just in afghanistan but in other places around the world. on this particular intelligence, is there any reason why intelligence like this would be put in the president's daily briefing and not followed up directly with the president himself? mr. bolton: i do not want to

comment on this specific story and it's intelligence applications -- and its intelligence implications. donald trump does not consume intelligence the way you expect presidents to do so. everybody is entitled to gather information in their own personal style. ronald reagan has his style, george bush had his. i think the presentation of intelligence to the president has to take that into account. what i am talking about here is not, does the president read lengthy briefing papers, does he get it via movies and that sort of thing. the question is whether he gets it at all. i think he is uninterested in learning. i think the facts that are inconvenient for him often do not stick despite repeated tellings. can he say that he was never

briefed on its or he thinks it is fake and get away with it? we will see, maybe he will, but this is a serious problem for the united states. you can say what you want about joe biden in policy terms. i think he receives, processes, and retains information. i think with trump it is much more questionable. jonathan: something that is questionable for a lot of people listening and watching is what you chose to put in the book and what you choose not to talk about. on russia, no comment. but when it comes to leading on leaderaning on a foreign for help in an election, you seem to have no problem. i have a continuing obligation not to reveal so i'mied information' not going to talk about it. i did not intend to start that.

lengthy,rough a very page by page, line by line prepublication review, at the end of which the official conducting the review concluded that the government -- concluded that there is no classified information in the document. that is what guides me in terms of classified versus unclassified information. in terms of substance, simon & schuster basically said you can have 500 pages. if they said you could have 1000, i could have filled that. some of the book reviews complain there are too many details. that is the study of history. jonathan: a pleasure to have ambassador bolton with us. this was in the wall street journal. it came from you. "trump turned the conversation to the coming presidential

election, alluding to china's economic capability and pleading win."i to ensure he would is this firsthand knowledge? was that you in the room that overheard the president do that, or was that also through an interpreter? mr. bolton: that was donald trump speaking in english. he did not speak in chinese and it was not interpreted back to us. the sentence he read was what i agreed, in the prepublication review, to describe the exact words the president used. do in thewhat did you days and weeks after that? how did you follow-up up after you heard the president say that? mr. bolton: there are a lot of things that are done in an effort to keep policy on track. there weree,

extensive negotiations underway for what turned out to be a partial trade deal. there was not any way to take any of those words back. i believe, in the records of the chinese government, 50 years from now when they are probably released, you will see their notes as to what the president said in that meeting. there was no doubt in my mind they understood what was going on. it was not the only indication about --ly occasion where this comment about buying agricultural products was made. you have to go on doing the job you are assigned to do on a variety of fronts, not just how many soybeans china buys in the next year to keep policy on track. jonathan: ambassador, this is the big issue that undermines pre-much everything in this book. you are an advisor to this president.

au overheard him lean on foreign leader to help him win an election. you have served several administrations, served your country again and again. yet you chose to wait to put this information in a book instead of doing something about it at the time. i still do not understand why. why? mr. bolton: it is straightforward. i have done something about it. i have given it to the american people, who are the ultimate judges of donald trump's performance. theuse of the way democratic advocates of impeachment in the house structure their effort, they made it impossible for republicans to participate in and impeachment process that might have led to a different outcome. we have a model for that. this is not some hypothesis. in the watergate crisis of the nixon administration, democrats

and republicans did work together. while nixon did not go through a trial in the senate, he had no choice but to resign. i do not march to nancy pelosi's drum. i did what i thought was ultimately in the best interest of the country. i was not going to participate in -- jonathan: i have to jump in. why was it in the best interest of the united states of america to wait to put this information in a book? the fact was the democratic leadership, the advocates of impeachment, had built a cliff and they and a lot of other lemmings were heading toward it. that,k it is very clear had i participated in that because of the malpractice they were committing, my testimony would have made no difference. it is not just my belief. i think this is something, as

you saw in the debate in the senate, many republicans bought the white house argument that even if you believe in the quid pro quo, the famous phrase that reverberated through the hearings, even if you believed the testimony given that it quid pro quo had taken place, that that conduct did not rise to the level of and impeachable offense. that is to say, even if he did it, that is not a grant to impeach. the way that came up was entirely based on the democratic ,trategy, go on a narrow basis just ukraine. it turns out that was not just the strategy of the advocates of the impeachment, that was donald trump's strategy to. what is the result of the ferd -- of the failed strategy? donald trump is not deterred because he was impeached. do more ofed to

this conduct because he was acquitted by the senate. we are left with what i think the framers of the constitution intended as the judge of presidential conduct, the american voter. have beenssador, you very critical of trump, of the democrats and how they conducted the impeachment proceedings. what about republican leadership? have they done a good job of offering up a check on the president? mr. bolton: it is very difficult. the way these past three and a half, four years have evolved, for them to be as independent as i think many of them want. a lot of people who are never trumpeters say the republican house and senate leadership are complicit. i do not agree. the fact is nobody wants to be the subject of a donald trump two minutes hate, to use george orwell's idea, on twitter.

i think we will have to have, within the republican party, a significant conversation after november 3, especially if trump loses, which is at least a 50-50 possibility at this point, about the future of the party. that is one of the subsidiary purposes of my book in my mind. i don't -- i want to make clear trump does not represent the republican party. i will not vote for there are -- for the republican nominee because he is not true to our party. i think a lot of people -- lisa: the polls contradict that. the polls show that the republican party, by and large, has overwhelming support for trump and that is the reason why the republican leadership has, d to often than not, hewe

trump's goals. what makes you think the party is different than what the polls are saying? mr. bolton: public opinion polls take a limited picture based on a limited question by the poster. do you support donald trump over the democrats? what i am talking about is the larger issue of what the party actually believes in. in my conversations across the that thei do not doubt trump view will be rejected. thatnk it is unfortunate our political dialogue is torqued around donald trump. there's really nothing else to discuss. that is bad for the country as a whole. it is one of the things we need to correct. we will have to correct it ittain -- student -- correct

sooner or later. we will have to correct it. tom: two more questions about the room, about your book. i love what someone said about it. the details were damning. would any of this have happened, the russian bounty, if trump had his generals in the same room. was the great tipping point for the administration when those three generals walked out the door? mr. bolton: i do not think so at all. i was in the room with him a lot of times as well. he does not listen. he does not absorb things. former secretary of state george schulz once said the importance of listening is always underestimated. donald trumpnts

does not understand. we all made our mistakes. i certainly made my share. i try to lay out some of them in the book. i think some of them could -- i think things could have been done better, but ultimately trump is trump. that is the problem. this is not somebody who thinks in policy terms. we have not had a strategy in afghanistan or, by the way, with respect to russia, china, north korea. the list is long. tom: one final question if i may. your commentsand to susan rice earlier in this interview. if we have a democratic --sidency, so much of this we have a small matter, vietnam, and the democratic party has had a different foreign policy.

can joe biden, within the ark of drag the democrats back to some form of centrist tendency? mr. bolton: my comments about susan rice will probably get both of us in trouble. i will apologize in advance. i do not know what the fate of the democratic party will be. i do not think there is a scoop jackson wing of the party anymore, or even a joe lieberman wing. that is one reason i worry about donald trump. if republicans do not remain the party of a strong, peace through strength policy, i do not know who will. i think that will leave the country in jeopardy. tom: ambassador bolton, thank you for joining bloomberg surveillance this morning. just a really, extraordinary, extraordinary conversation. thisve been following russia story along with all the new york times with their

repeated stories. mentioned, thero angle --times, and craig, there has been so much happening this morning, including the present national security advisor on foxbusiness. give me an update of where we are now. the gang of 80 briefed later today. -- eight are briefed later today. >> that remains -- that means the top leaders of the house and senate will be briefed. -- the white house has done two briefings already. most of those people walked out unsatisfied. the white house story is that trump was never briefed. we have heard from reports that it was put into his daily brief, which is a long document

presented to the president every day. we also know that donald trump does not read that. john bolton just told us that. he does not process information. does not think in policy terms. --you are a stock republican if you are hearing a staunch republican hearing things like that. our listeners and viewers removed from the beltway, for them, give us a more national tenor. >> i know what you mean. a lot of people out there, even listeners and viewers, are probably not all that familiar with john bolton. he has served george bush, donald trump. it is less about who john bolton is and more about what he is saying. it is another brick on the pile. thatow for a long time donald trump does not think in policy terms, does not deal with

detailed information, does not have a geopolitical perspective. the most damming thing in bolton's book was how he said trump views this thing through a personal lens. xiis about the anecdote with that trump was not really only talking about himself getting reelected. i think whether you know who john bolton's were not, this breaks through. -- what is particularly damaging about the bounty story is, what is the number one job of the commander in chief? protect the nation, protect the troops. donald trump has not said a word about what he would do to retaliate against russia if these reports turn out to be true. that is why i think john bolton was trying to hint at. the president is supposed to protect the troops. he has not said a word about it.

even for some republicans, that is very troubling. donald trump scenes -- seems much more worried about denying -- story and lisa: the republican leadership has taken a backseat when it comes to putting trump in check or contradicting what he said. is that changing this time around? >> we are seeing some changes. houserson who runs the armed services committee says we need to get to the bottom of this. staunch republicans who generally marched in line with trump are troubled and want answers. when you see jim inhofe come out, but down the line republican who has been with trump every step of the way, and now he says, not good enough. we also have to remember all the people in congress also run for

reelection. a third of the senate is on the ballot. people are putting their finger in the wind and deciding and saying, will this hurt me if i do not challenge trump? we are starting to see slippage and we will see more. tom: thank you for briefing on this. an eventful day in washington. our full us for coverage on a very movable story on russia and the president. it is simple. 1, the first day of the third quarter, has been extraordinary -- it has been annexed ordinary first two quarters of 2020 -- it has been an extraordinary first two quarters of 2020. paul krugman will join bloomberg late in the afternoon. extraordinary, 2020.

please stay with us through the day. this is bloomberg. good morning.

jonathan: good morning.

the countdown to the open starts now. equity futures bouncing back. we begin with the big issue. leaving behind q2 and with low visibility and little conviction, looking ahead to the second half. >> a structural shock. >> a clash of titans -- the virus versus stimulus. >> you see more dispersion. >> even more dispersion. >> more differentiation between winners and losers. >> we have a long way to go before we are on solid footing. the fed is pretty much at full tilt. >> the question is how long will the government intervention go on. >> a distinction between the u.s. economy and the u.s. market. people got used to having huge returns in the equity market. it is just u