be taken off the ventilator. >> history is littered with examples of countries that have tried to print money to finance the government, and that works until it did not. >> it has to be the real economy+, otherwise none of these companies can make it through. announcer: this is "bloomberg surveillance," with tom keene, jonathan ferro and lisa abramowicz. jonathan: good morning. we are live on bloomberg and radio. morning, give back tuesday in the equity market and a reminder of the bumpy stop and start world we live in right now with melbourne back in lockdown for six weeks. script at that in the 6:00 a.m. maybe that is the path to come. i don't know the details on the

others of the planet. serious. new lockdown in melbourne. difficult news around the world on cases of the virus, john, even though the death statistics are good. lisahan: on this recovery, . [no audio] lisa: -- garage of fed speak. we will hear from raquel bostic and tom barkan. 10:00 a.m., another read on the u.s. labor market with the job

openings data. this is key. president trump participating in a forum on reopening schools. until schools we open, we cannot get the economy fully up to speed because working parents cannot get lives back to normal, a key debate when you want kids cap safe -- kept safe. jonathan: equity futures down. hours, all about global equity market rally. u.s., nasdaq back to all-time highs, up 60% year-to-date. the question. how do you tilt away from the u.s. when it is the home of mega cap growth stocks? i want to begin by asking the question to james. help me understand. it is the home to mega cap tech, apple, amazon.

why would you tilt away from that story for the rest of the world? james: good morning. if you had done so you would have underperformed significantly because globally, equities have nowhere near performance we have seen from mega cap tech names. that is not just in the immediate pre-and post covid period. it has been going on sometime. euro stocks index not far from the level of the late 1990's when you compare that to the performance of the u.s. indices, the divergence is stark. if you are a value investor and look at things like price to earnings on price to fail, tech names, i cannot justify owning these without multiples, you have missed out.

it is a leap of faith. there is no way you can justification of valuation a big tech names, you are investing in a belief they are able to turn what are either dominant market positions currently or emerging-market positions currently, in the case of tesla, you believe they can convert that into winner takes all and become a true global monopoly. you cannot prove that. agree, there are different companies involved in these growth stocks. fascinating, what will be the action of the value laggers? do you assume we get one big combination of all these companies generating low single-digit revenue growth and not good cash flows? james: the way the market has years, in time, recent

lends itself to that idea. a movement away from truly active bottom-up stockpicking investment toward factor investing/sector investing/ passive investing in all forms, toward price dominated strategies like momentum's and such like. that has the tendency to lump similar companies through various dimensions into one analogous group and that really look attractive to people who are doing fundamental research and looking at bottom-up. you are wrong until the masses start to see the same thing you are and that can take longer than most investors, patients can last. it is tricky to be a value investor. you have to be long-term and

except you may look wrong for a time and that markets are not being moved around on a daily basis by people doing the same type of analysis you are. lisa: you sound skeptical. you're not alone. heelscontinues on the of cheap money as governments are pumping cash into their economies to keep things afloat. is your negativity translated into a bearish view on u.s. equities/risk assets? or is it displeasure at the uncomfortable moment we are in? james: probably both, to be honest. i am skeptical. without a broadbrush, tech, tech, tech and you say the word a lot and that counts as an investment thesis, i would look within the group and say, there is a big difference between what amazon is doing and how they are able to manage the business

through an economic cycle versus facebook. there is probably a big difference between amazon's ability to survive and thrive post covid versus an auto manufacturer like tesla. the challenges of the businesses are dramatically different. that does not seem to be reflected in stock prices which is part of this psychological driver of equity returns, dominating at the moment. i don't think it is necessary. not analysis. psychology. does that make me bearish? yes. i believe my role as an investor is to invest based on fundamental research we do. when things are expensive relative to our understanding of what is going on in reality, it behooves us to reflect that in our portfolio positioning.i am

looking at names, the change in price of tesla, i will pick on them, just in five days, i cannot possibly think the outlook for that company selling autos of questionable quality in recent use have changed so dramatically in such a short time and that would make me want to lean in the opposite direction. jonathan: i would love to think the committee meeting is more sophisticated then screaming tech multiple times around the table for several hours. a tilt away from the u.s. narrative, not because of style, composition of indices but because people believe economic recovery is engineered in places like europe, china, is more dependable/the liable than what we are seeing play out in the u.s., which is becoming increasingly more uncertain over the last several weeks. what do you make of the argument? james: interesting.

before i have started to look into this, i was skeptical immediately, the main reason sneezes,en the u.s. the world catches a cold. large,. is the only major economy which permanently runs a current account deficit, therefore places demand globally. china has been a source also. that demand a secondary to demand elsewhere, predominantly through history, the chinese are not yet there. consumption is 50% in china. 80% in u.s. it is difficult for the global economy to fire on all cylinders without the u.s. that makes me skeptical. the other issue is what we are seeing at the moment is the sugar high. it does not tell us anything about what the medium-term trajectory for economies are. with europe, you run into the

same issues which have dogged the region since the late 1990's, when they decided to form the union. it is incomplete. structural rigidities. divergences across economies. that makes it difficult to generate sufficient demand to get economies up to capacity and start to generate pressures, which would suggest an economy motoring forward. the other sector, currencies are a problem. it is more sensitive to the currencies than the u.s. is. far,tors run too fast, too that can get in the way of recovery. jonathan: james, appreciate your time. one of the debates at the moment, the rest of the world versus the u.s. a different debate now. a belief held by many, not by me, because the u.s. may be the

source of instability for the global economy, given what we are seeing in many states in america, that your money, your capital is better elsewhere in regions like europe and china. tom: i thought yesterday was dazzling. charles cantor made clear he is american centric and is buying growth in managers that are managing to do growthy things. you know the word. personified with charles cantor and that is in america, his belief. jonathan: i heard the interview. the other side of the trade, a lot of people elsewhere also had some faith in a low growth, low yield world, you will pay up for growth. the big companies in america driving topline growth are big tech, listed here, not elsewhere. lisa: the key point. they tech names are in the u.s.

james was talking about this. interesting to see billion nation between successful ones -- delia nation between successful ones, amazon versus facebook, amazon versus tesla, amazon versus everyone, perhaps that is the rotation coming next. jonathan: the congregation will continue on "bloomberg surveillance," the s&p 500, -9/10 of 1%. next, down to washington to catch up with kevin. this is bloomberg. ♪ beijing has reported zero new coronavirus cases for the first time in 26 days, a sign that a resurgence of a second wave is now under control. across-the-board lockdown, beijing employed targeted measures, testing more than 11 million people. any vaccinei says would be limited in providing

protection. officials assume it would offer a degree of protection but it is likely to be finite. whether any ofto the vaccines being developed will be safe and effective. u.s. government paychecks protection program, religious organizations and companies, president trump and other politicians, according to data, 4.9 million, steve mnuchin recently released names of the companies. millions of americans have moved due to the coronavirus. moved temporarily or permanently. 6% say someone moved into their home because of the virus. young adults are most likely to have relocated. one in 10 have moved. global news, 24 hours a day, on air and on quicktake from bloomberg, powered by more than 2700 journalists and analysts in

more than 120 countries. this is bloomberg. ♪

>> the usual course of events data andcession, uninterrupted fashion, the markets track if you're going to

call for some sort of breakdown in momentum. [indiscernible] jonathan: john norman of jp morgan addressing the trillion dollar question. what will it take to break the momentum in this market? good morning. we are live. in your equity market, rollover. 500, downints, s&p three quarters of 1%, context and the massive run-up in the equity market in the last couple months. about to take some weight off the s&p after adding weight to the benchmarks in the u.s. bond markets, treasuries, i think you are focused on this, yields have been so sticky, regardless of risk on-risk off environment of the last couple weeks. it still stands at 70 basis points on a 10 year maturity. excellents garvey,

gold analyst, making clear there is no other story for gold away from supply dynamics in your next marginals. no other dynamic for gold than the low real interest rates. the real yield. will we see it anytime soon? will let the first one go and address the second one. digs. i have no idea when real yield is coming back. i hope we can get something together by the end of the month. lisa: oh my god. jonathan: people still want the program back. i don't have an answer. [laughter] tom: well they do. that is what it is about, folks. real yield numbers. all this devolves into washington. waseme for this simulcast the idea where we are with the next fiscal stimulus. kevin cirilli, chief washington

correspondent, following this carefully, kevin, cut to the chase. headline maker yesterday, the senator from kentucky. what did mcconnell say yesterday to change the republican debate on the next marginal trillion dollars? kevin: before august. be another round of economic stimulus. this is incredibly important. leader mcconnell doesn't get out ahead of himself. for him to make this public comment, he must know something that we inside the beltway reporter crowd do not know, that he is able to get republicans on to some type of the same page in order to get something done before august. tom: this is what you are so good at. characterized the difference in the hallways of the white house, if mr. meadows is now a rising -- is now advising the president

versus the various fiscal approvals before? kevin: fascinating. the president's chief of staff, one of the founding members of the freedom caucus, very conservative wing of the republican party in the house is now having to play political referee to get support in congress to get republicans on the same page for another round of economic stimulus. he really is a bridge between the freedom caucus and the white house. the president has been out front in saying he wants to have another round of economic stimulus. he is bolstered by the support of a mark meadows who has the ear of those conservative members. for leader mcconnell to suggest the forecast yesterday, showing cohesion with stimulus, quite frankly, many conservative states seeing upticks, arizona for example, are in need of this

stimulus in a way that perhaps they were not a couple weeks ago. politically the incentive now all around is toward more stimulus, bailout funding, yet, this comes with details from the existing program in particular, the paycheck protection program and who received the loans, including companies from china, some associated with the president and congress members, including billionaires and wealthy public companies. how does this color the debate? swin: it feels very ampy. democrats and republicans linked to this. large businesses and corporations. the frustration is palpable it was only the well-connected and wealthy benefiting from this, when you have less overt money for main street and small businesses. of thatult

transparency, it will only further the desire for there to be more main street economic relief. it really feels like a no-brainer at this point. it likely would be wrapped up in the next round of stimulus, especially, again i cannot stress enough, when there was leftover money for main street that was not allocated, for whatever reason, because of democrats and republicans. jonathan: increasingly, the last week, the november election is becoming a bigger part of the market conversation. last couple days, notes suggesting a democratic sweep would not be market negative. the president is trying to make the argument it would be. don't risk your retirement, this market, with the democrats. another argument elsewhere? kevin: yes. democrats are trying to reframe this in terms of in order to get economy reopened, you have to defeat the virus.

i was struck reading the tea leaves by the former fed chair, janet yellen, last week said she thinks another round of dodd-frank might be needed. for her to say that, that could be the type of messaging democrats are going to embrace ahead of the 2020 cycle and could call for new reforms for big businesses. that could be an opportunity for the former vice president to unify the progressive flank, the elizabeth warren weighing of the party with his centrist remy. -- wing. the biting campaign has suggested we are not that far out from the vice president unveiling a plan, and that could come within the short-term. they did not want to put a timeline on it but maybe before the next round of stimulus. jonathan: we would see it sooner

rather than later. [laughter] kevin: thank you. jonathan: terrific. the argument. quite simplistic for people. two things. more democrats in congress means more regulation/taxes. another argument, in an economic downturn, you would want a government committed to a long-standing approach on fiscal stimulus, something more sustainable beyond 2020 to '21 and beyond. that is something democrats are likely to push. tom: i will go anecdotal and welcome you worldwide to a corner of a fancy part of new york city, the number two value meal i usually have, i was having a lovely dinner last night that one of the best italian restaurants in new york and the owner said, we are desperate that they move fast. to me, the fiscal thing is, let's go, let's go. and i heard that from the majority leader yesterday.

jonathan: i hope we hear more. at the moment it has not been let's go. it has been drag your feet into july and see what happens. good morning. this is bloomberg. ♪

jonathan: the longest daily winning streak of the year so far in the equity market. from new york, good morning. this is "bloomberg surveillance." we are live on bloomberg tv and radio. i am jonathan ferro. in your equity market, after five straight days of gains, you have to go all the way back to december 2019 to see a winning streak that long. down 24ning, we are points on the s&p, negative at around .73% in the bond market. treasuries really sticky, yields not doing a lot at all. year, 0.6 8%. yields going nowhere this morning. against almost everything with the exception of sterling. pound sterling just a little stronger, cable a little higher.

the story of the last 24 hours has been this phenomenal rally in tech stocks. just absolutely unreal, the gains these names have generated. let's go mathematical here. you can do that right now. , charles kantor, news -- neuberger berman and others, i want to go to you on the convexity in the market. convexity is a fancy name for acceleration. you're in a car, you put your got on the pedal, and you faster. that is what we see on these mega stocks right now. how many people are on board? how do you describe the convexity? who is participating in that? it is a little of institutional investors

capitulating to an underlying trend that is higher. it is also retail investors playing short-term trends, certainly momentum investors are gathering -- reverting back to momentum from what was more of a value trade in late april, early may. i think you're seeing a pile into winners as a result of conditions in the market that changed in late may, early june. what change in late may, early june, we got to a point where the fed balance sheet stopped expanding. that took the wind out of the sale of value trade and created a reversion to growth pile stocks again. that is what you are seeing. what do the other stocks do? jonon to the moon, as mentions, but for the other 45 stocks away from these glory stocks that are doing nothing,

what do their corporations do if there stocks are laggards? this they have to come out earnings season and get some visibility into their long-term growth prospects. one of the reasons these stocks are working is because we have some visibility. we have no visibility on two thirds of the s&p 500. companies have completely slice guidance. -- sliced guidance. the results of that uncertainty is investors are reticent to put capital to work in stocks that presumably could have a decent recovery into 2021. i think that is what this upcoming earnings season is going to be about. the companies that provide visibility, even if it is not great in the short-term, if they can provide confidence that they will survive through, that they have the funding, liquidity, capital necessary to survive continual fits and starts with respect to the economic outlook asthe short-term into 2021

we work our way through this economic situation, those are the company's investors are going to get interested in. we have not heard a lot of that. we have heard nothing outside. i think that vacuum of information used to get resolved over the next four to six weeks for investors to get more interested in stocks and mass -- en masse. you could have another policy move. there are people concerned about what happens at the end of july when unemployment benefits expire. the balance sheet as reverting back to normal. can the fed do something more? we could have in other policy that could propel stocks in some of the beaten down value, high volatility groups again. that is an outside chance. those are your two options. way that youthe

give some reality into what often is pretrade as an exuberant market that is going full force into equities, bearing no potential risk. talking about that, the upside surprise on the policy step, on moves from the federal reserve, which areas in particular do you expect to benefit most if we do get a re-upping of enhanced unemployment benefits, if we do get additional buying by the federal reserve or expansion to their balance sheet? in that situation, where we do have another policy implemented, i would say you see ,tocks revert back to the april may winners. those are the higher value stocks. energy,ocks like consumer discretionary, financials, some industrials. it is what you would call the stocks. junk

those benefit from policy specifically. they are also where all the deep value is. it is where all the potential strong growth and bounceback is. i would say the least likely candidates for strong performance in a short-term bump of policy are the current winners, the momentum stocks, andlarge tech companies diversified coronavirus winners of the world, where people are hiding capital. you see it again, the rotation like what we saw in april, may, reemerging in july, august if you get another package. lisa: this is so important. and if you have big tech names acting as haven plays, do they lose value in that scenario where you see upside surprise on some of the deep value names? or do they just not gain as much?

gina: most of the time, it is a story of not getting as much. we started talking about this in march and april. when you start to see rotation out of major loans, you see rotation into value. more than likely, that propels another leg higher in the market because you are seeing rotation as well as new capital coming into the market in that risk on environment. it is not usually that money comes out of the winners and goes into the former losers. it is more and more capital starts to come into the market as a result of some sort of change, like a policy change or change in economic perspective. more than likely, it is a story of the laggards playing catch-up again, which is consistent with what we had in the spring months. tech stocks did not do poorly. they just did not do as well as other high-value names. jonathan: what does this conversation mean for your

geographic buyers at the moment? scorecard still has asia at the top. pac's,apan, china, asia followed by the u.s.. if you get an environment in which you have another big policy or you start to really see risk tolerance come back, some emerging markets probably start to do better. u.s. and china like have been behaving as defensive safe havens to some degree. if you think about leadership in particular over the last month, that has been the case largely in most of asia as well. it is a consistent story globally. those defensive safe havens start to lag to some degree and riskier areas of the world, in particular emerging markets where investors are still hesitant to put capital to , where volatility is higher

but value is also there, probably start to come back a little on some of these more defensive trades that have dominated for the last several weeks. jonathan: everyone is grappling with the same question. what should shape your geography at the moment? should it beat fiscal policy, monetary policy? is theit be how reopening process going on the ground in china versus europe versus the united states? what do you think we should focus on? scorecard our global is pretty methodical. no matter what environment you are in, focus on price momentum. focus on earnings and revision momentum. focus on relative value. trends andrectional macro data. are favorites

representations. and also currency trends. andency is important effectively a derivative of policy. when you see the dollar weaken, you see emerging marketplace perform better. the dollar should weaken in an environment in which policy is taking place and risk tolerance is reemerging. that is a huge trigger. you want to combine a bunch of factors in every situation. coronavirus is no different than any other. those factors have always framed our outlook for global equity, relative performance. want to watch for a trigger shift in all of those factors. jonathan: the gains continue, especially in china. gina martin adams a bloomberg intelligence. ofs is one of the debates the moment. regional, geographic exposure, what should underpin it. thehe center of it, what

dollar looks like amidst all of that. tom: this is good and i will go to where we were 90 days ago and talking about the international shift. right now, the equity strategy is do i by amazon in the morning or afternoon? that is as sophisticated as it gets, but these are important underlying questions with a hugely impatient equity audience that is saying, how do i have the courage to get on board the 12 names going to the moon? some people are on board, and many people are missing this rally. the conversation is massively divided. still little consensus over those important questions. lisa: ultimately, there is a question, how much the fed policies are underpinning this push into the higher-quality names. somehow, valuations have changed. on this: coming up program, we talk about the

politics. increasingly on a november election and what it means for this market. from new york city this morning, with equity futures lower, i am jonathan ferro. this is "bloomberg surveillance." ♪ >> the president sees fines or leveling off. some of the things he sees suggest recovery might be bumpier than it might be otherwise. inre has been a pick up coronavirus cases in the u.s. recently. the atlanta fed covers a region that includes the worst hit areas. in brazil, the president has undergone another test for coronavirus after showing symptoms of the disease. bolsonaro has been seen mingling with supporters while not wearing a face mask. china has installed a hard-line

team to enforce security in hong kong. the chief executive is normally the top decision maker, but she will become more closely supervised by officials who come up through the communist party ranks on the mainland. the u.k. trade deal with the european union is the only one where negotiators have to worry about. there are agreements following -- covering british trade that all expire when the u.k. leaves the e.u. at the end of the year. among the countries in that group, canada, japan, and turkey. the u.k. is seeking new deals with the u.s., australia, and new zealand. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

of unemployment benefits, i think there will be discussion. it is clear to me the $600 benefits was a good thing to do when the economy was being shut

down. anhink it looks different in opening economy, particularly one that is doing so much better than people were expecting in march. we are ahead of where we thought we would be and the $600 benefit , i think it is right it expires at the end of the month. jonathan: secretary scalia on one of the most divisive issues in washington, d.c. from new york city, good morning. i am jonathan ferro. with equity markets down 19 on the s&p 500, we are -0.6%. the unemployment benefits that expire at the end of the month are going to be at the center of a vicious conversation in washington in the weeks to come. tom: what is important is not only the center of the conversation but the center of a complex conversation. is expert att going through the minutia of all of this.

he has a beautiful midwest feel for the policy of all of these congress people, all these senate people as well. us from compass research. i love your detailed note, how you gross up to $1.5 trillion. we are talking $1 trillion. isaac is talking $1.5 trillion. does that tell me the eventual bill is going to be $2 trillion? isaac: it is going to be higher and thisrillion congress is willing to spend money. is anality is deficit indent -- deficit hawks are an endangered species on capitol hill. there will be a phase four vehicle. it will become law before the convention. investors should expect it to become law by early august.

that vehicle is moving, and everyone is going to try to hang their ornament on the christmas tree. , the price tagns gets bigger. $1.5telling my folks trillion is a fair assumption at this point. lisa: nobody is worried about a deepening deficit in the united whetherother mac -- they be republicans or democrats. will notden wins, it mark much of a change to policy. we might not get that increase in taxes and you will get a doubling down on infrastructure spending, leading to a market neutral or market positive event. can you parse through your thinking? isaac: when i talk to my clients about what a blue wave scenario looks like, i think it is easiest to focus the issues into legislative and administrative. on the legislative front, we will have a torrent of

proposals, everything from the green new deal to medicare for all. you have to look at the votes. the reality is, if democrats win the senate, they will have a slim majority. within that majority are red democrats like joe mention. n. joe manchi that will make it much more difficult, if not impossible to get these part -- priorities through. ultimately, you would see a tax bill by the end of next year, but it would not be as onerous as the biting campaign has proposed -- biden campaign has proposed. it would not be nearly as expensive as the campaign has outlined. lisa: a lot people would agree with you. we are seeing an increasing number of notes the say something similar, that if we do get a biden win and democratic sweep, it would not be that negative for markets.

i am wondering how much people are factoring a potential antitrust push to break up companies, particularly big tech. this is the most important point. while we do not need to fear the legislative agenda nearly as much, we must be cognizant of the administrative agenda, especially as the administrative state has grown materially in our recent decade. the easiest way to think about this is to say, where has the proverbial pendulum swung the most under the trump administration? we should expect it to swing back the other direction with similar force. here we are talking about energy, the environment, and health care. the second tier is financial services. go ahead. i am worried about the cleveland indians getting

renamed and washington redskins. there are all these other diversions away from policy. you're from ohio. you know it is an election year, and all that matters is the election. now on the election next six weeks of fiscal stimulus. how does that election ballet filter into getting to your $1.5 trillion? isaac: politicians are not good at taking things away in any year, but especially not an election year when they are running for something. with that motivation, lawmakers are going to return to town and stroke a big check and -- aimed at unemployment insurance, another ground of recovery rebates, and anywhere from 500 billionbillion to $750 to states and municipalities. there is an election in

november, and lawmakers are notizing that reopening is synonymous with recovery. there is going to be another slug of fiscal. jonathan: fantastic work and appreciate your time this morning. this has to be the issue of the moment. thatan make the argument enhanced unemployment benefits may disincentivize a return to work. evidence.e i have been told they only have anecdotal evidence to provide me with. i think they run a real risk. if you go down that path and remove the unhand -- enhanced unemployment benefits, you face an air pocket this summer where you still have elevated unemployment, shocks to income no longer being offset. do you want to risk that ahead of november? tom: i take issue with all of this discussion. we are talking about $600, which

was spent differently on the island of manhattan from the way it is spent in a given state in the south. i think it is a distraction from the reality, which is the pandemic is here. there is a recovery, but what we are hearing in our conversations is there is a massive mystery q3 into q4. sachs naileddman that over the weekend with a pullback of enthusiasm for q4, even though they look at 2021 as being pretty good. jonathan: it is pretty clear that things have to evolve. the optimal composition has to be offsetting a shock to income and incentivizing rehiring. i do not see how you can choose one over the other, especially if you are trying to get elected on an economy on a better track recovering by the time we get to november. from new york city this morning, the focus increasingly on

washington, d.c. ahead of that november election and a big debate in washington on the next fiscal steps. we are down .7%. this is "bloomberg surveillance." ♪

>> the economy is not ready to be taken off the ventilator here. >> littered with examples of countries that have tried to print money to finance their government. >> it has to be the economy to perform. otherwise, none of these companies are going to be able to make it through to 2021. >> this is "bloomberg surveillance." tom: good morning. our simulcast bloomberg surveillance across this nation on bloomberg radio, bloomberg television.