that election risk just after the bills. we see them being wrong at the stock exchange. down more0 closing than a percentage point. weak point, the airlines, the hotels, the stocks most exposed, clinging to a story of economic recovery that is now under skepticism at the moment, particularly in europe, the european commission worrying about the extent to the recession in that part. in the united states, we focused yesterday on the ism manufacturing. but now, is it a question of profit-taking or worries about the coronavirus? taylor: i don't know the answer for that. all i know is that we will run offset after this and readjust our math with that ratio.

throughout this conversation, you have been talking a little bit about the housing market. it was interesting that the university of michigan survey actually now says that about 64% of people think it is a good time to buy a home. fannie mae came out with a survey today. they are showing a nine point increase, to now 76.5 of the survey respondents would like to buy a home, that now is a good time. a lot of that in part is due to valuations. then the low mortgage rates, as you assume lower for longer thanks in part to the fed. very curious as we sort of touch on equities and go into real estate. >> before we get onto the election risk. that theot surprised

university of michigan survey would be positive, because rates are low. people are not walking through a home. i don't know anyone who would buy a home virtually. most of the home sales are people who had seen the property ahead of time before we had all the shutdowns. commercial real estate, where we invest, it is impossible to figure out the value of a mall. it is empty and half the tenants are not paying rent. we are having a good discussion about commercial real estate when it comes to office buildings. once this is all resolved, i don't know that all the workers will need to come into the building. huge questions ahead for real estate. i think it will still be a worthwhile area to invest in. we really have got to get through a lot of things and there are no transactions.

it is tough to figure out the price at this point. tolor: with rates so close zero, how are you thinking about your actuarial assumed rate of return and the discount rate? 7%, 8% days of reasonable, or do public pension plans need to be more realistic? theow that the loons liabilities. given that we are lower for longer within this rate scenario? again hit it on the head if i look out over the last three years, 7% is challenged. zero interest rates, the fed is pushing everyone into different assets again. 2011, 2012.in 2010, your fixed income side of the

portfolio, that will push people into credit, high yield, other areas where they think they can find opportunities. if i look out over 10 or 20 sure --hat longer-term longer-term picture, i still think seven is a realistic number. from the near term, it may be tough. but over the long-term, i think it is doable. about 13% int fixed income. people realize that the fed is going to keep interest rates at zero for a long time. focus on risk assets. i think we will see private 2021-2022, back in real estate come back and take advantage of these cheap rates. caroline: let's talk for the

nearer term. the bite and risk is a positive one, negative one, and how much the market will be pricing it in? >> i am not a politician so i am not going to try to call this election. but i think the risk that the market will focus on is the risk of a contested election. i really am fearful that this election will not go smoothly. we still will have a health crisis. questions about mail-in ballots. theay find, just like gore-bush election, that was only florida. we may find this one locked up in the course in november, december, and i hope not, but maybe january. a discussion about whether it is a smooth election or contested

election. caroline: great to have some time with you as always. that does it for the closing bell. "what'd you miss?" is next where we will be looking at the viral video app tictoc. this is bloomberg. ♪

♪ caroline: from bloomberg world headquarters in new york, i am caroline hyde. romaine: this is "what'd you miss?" caroline: the close was lower. the s&p 500 closed more than

eight percentage point down. the nasdaq still the outperform her as technology falls flat. market. real estate through may6.5% 2021. and, an unhealthy dose of reality. brazilian president jair bolsonaro gets covid after downplaying the threat of the virus. all of that and so much more coming up. welor, take us through what should be looking at in terms of the market manthey chinese market. taylor: talking about u.s. outperformance versus the rest of the world. we take a look at the china market cap growth relative to the s&p 500, no showing a big difference given the big rally

and the additional market cap they have added. a lot of this is coming from profit growth earnings, momentum frankly, lower valuations making some of the stocks look a little bit more attractive. for more on this, i want to atng the economic advisor silvercrest asset management. he heard in the set up how we are thinking about a rally in china and frankly valuations that are still very attractive relative to the s&p. are something you have to really be careful about when it comes to china. the average valuation in chinese markets is weighed down by the banks, which have a very large capitalization relative to the market. those tend to be impacted heavily with concerns of bad debt.

banks,u take out the often the valuations are much higher. romaine: when you talk about valuations, do you get a sense that a lot of this rally is based on valuations, or is it more of the general sense in the u.s. that you continue buying as long as you have a sense that there will be monetary support and other forms of government support that will either directly or indirectly keep a floor under asset prices. thehere is a sense that chinese economy is recovering from covid shock both at home and abroad. that has encouraged the kind of gradual recovery. the real magic number here for the chinese market is 3000. you go back to 2015, a big

bubble, the latest bubble. when it first, 3000 was sort of the maginot line. that is where the chinese in theirt dug defenses. up until the end of last month, what we saw as the market gradually recovering back to 3000. consistent with the view that maybe things will get back to where they were. it shot up soek quickly that a lot of people think it is driven by liquidity, the injection of liquidity to

stimulate the economy and that that is translating into a rush into stocks. romaine: we are showing a screenshot of what the shanghai composite has done. a lot of people have talked about the sharp jump up we have seen. caroline: quite phenomenal, it almost looks like tesla. let's talk a little bit more about how the retail influx is playing into this. you said before that really the state in china has been there to support the level of shanghai composite. what about if it becomes an unhealthy desire to get into stocks? >> china has had a history of people piling in and having stockmarket bubbles. in 2007.ace another took place in 2015.

both of them had very sharp conclusions where they went back to nearly where they started. definitely asm is concern, or should be a concern. right now, the level where the market is is nowhere close to where those bubbles hit. so we are just seeing the beginnings of something that people should keep a cautious eye on. in the state media, they are sort of pumping up the market, maybe for political reasons, victory lap and say we got over this crisis. but that is a dangerous game compared to the past. taylor: in the u.s., we are mostly astounded on the equity rally that has defied all of the covid-19 cases. a lot of analysts have said that china has may be done a good job

containing their second wave of an outbreak. covid-19andling of relative to the world of equities? >> it is opaque and it is hard to judge the numbers out of china. and italy, it seemed -- anecdotally, it seems that they are on top of things. then can change. also, china is not an island. very an economy that is trade dependent. a continued pandemic that affect's the rest of the world certainly weighs heavily on the prospects of the chinese economy. it is important to also remember otherhina, like every economy around the world, had issues before we ever heard of

covid-19. , whichpe, it was brexit forgothave kind of about. reliance on credit to drive investment given growth. credit stimulus that they are pushing to get through this. so, the very things that might pushing up the chinese stock market in the short run contribute to the longer term issues that people need to be very wary of as they look at chinese growth prospects. romaine: patrick, great to have you on. coming up next on this program, we will talk about tiktok in hot water. the popular app facing pushback from the chinese government and the u.s. government. this is bloomberg.

♪

caroline: viral video app tiktok is the first internet service to withdraw from hong kong after the chinese government signed into law national security legislation. -- shelley, you very eloquently in your story highlight the cynicism we should perhaps have when looking at the reasons tiktok should be pulling out of hong kong. originally, it seemed it was due to tech end user data, but maybe there is more to it.

>> a full picture of all the different masters that tiktok serves. thehe one hand, they saw clinical wins shifting in china. they were ready. all of the other tech companies like facebook and others and put a stop gap measure in place. say,k, they were ready to we are actually leaving hong kong at the same time, they kind of come out, they appear to be serving what u.s. government officials want to see, that i am not going to count how to the chinese government. the same time, they don't really lose out for me business perspective. from a pleasing beijing perspective, just another avenue of social media discussion that they take away from a city that has been using social media to rise up against china.

romaine: they are now also being squeezed here apparently by the u.s.. there has been concern long before with the relationship edance might have with the chinese government, whether they might be sharing data with the chinese government. >> this has been a long-standing point amongst u.s. officials. senators rubio, schumer. we heard pompeo talk about it. kind of pointing the finger at tiktok saying, we don't know where the data is going. for the past two years, all tiktok has done is try to convince people it is an american company. they hired a ceo away from disney, kevin mayer, to lead tiktok here in the u.s. and around the world.

that is really what they are trying to do. the question is, will it work? do users really care that it is really owned by a chinese company? not so far. but, will politicians actually put some teeth into their threats? romaine: we will see. careere and i's tiktok was just getting started. shelley banjo. let's get a quick check of the headlines. shares of walmart higher. the world's largest retailer will launch a service to compete with amazon prime. according to recode, that service will be called walmart plus and cost about $98 per year. underpaid -- had to pay the new york compliance regulator for compliance lapses.

regulators say deutsche bank thought out jeffrey epstein as a customer after his conviction in florida for soliciting underage girls. a firm will get money from the u.s. government, operation warp speed, to develop its coronavirus vaccine. approved lysol for use against coronavirus, for surface disinfectant. novavax ceo and president discussed the science behind the vaccine. >> we have taken the tactic of having a vaccine that has the competent protein that we make at large scale. that protein itself has the ability to stimulate antibody responses.

but we also mix it with an adjutant. the purpose of that is to boost the immune response to the antigen and boost a t cell response. so our vaccine has both. we think post -- we think both components are important. think a world where we get a one shot and done things like measles is realistic? >> i think the data are looking so far, in trials, we are trying out one dose at day zero and following that up with a dose at day 21. others are taking approaches where they are trying just one dose. there are several different approaches to the vaccine. we are all targeting the same protein, the spike protein.

a protein on the surface tothe virus that has to bind the antibody cells. there are several different ways of making this protein, one where it is inside a viral vector that has been killed so it does not infect you. make rna. to ours is the more proven traditional way, to actually make the protein itself, a particle which is very immunogenic. three different ways of making them protein could result in three different immune responses.

will show us. we are all racing as fast as we can. those phase i trials should turn in august.two trials we should have some evidence stimulatingcine is an immune response. >> dr. fauci also talked about the other day the fact that we are starting to see mutations in the virus. would that affect the spike you are talking about. if that were to mutate, how problematic would it be for your effort? >> we have looked at it and so far we are in the clear. that is why you want to have a vaccine like ours, that has a antibodies protein,

to many parts of the protein, and has an antigen to stimulate immune response. get test it to patients to try the vaccine? >> it is a question that is increasingly asked. it is not hard to do a phase one study. we had 130 people in one day. withu get into trials 30,000 people, we can do that as well. there are a lot of people who would like to have an experimental coronavirus vaccine. that has to be worked out. certainly plenty of trials. no shortage of people who want to try a coronavirus vaccine. so that should be sorted out. up, covidcoming positive. cases sore in brazil. the impact of president

bolsonaro contracting the virus. ♪

romaine: welcome back. we are going to talk about brazil now. it has become a global hotspot for the coronavirus, trailing only the u.s. with six to 5000 confirmed deaths and -- 65,000 confirmed deaths. brazilian president jair bolsonaro, was consistently downplayed the impact, has tested positive for covid-19. we want to bring in the former minister for finance for the country of brazil. henrique meirelles. thank you for joining us today. the big question on everyone's

mind, given some of the comments we have heard from bolsonaro over the past few months. positive forg covid-19 likely to change brazil's approach to fighting pandemic? haveque: in brazil, we .everal levels have certain responsibilities in the process. foremost,, first and --ing measures to protect quarantines, social distancing.

and all the measures aimed at ofreasing the rate of growth the people who get the virus. number one. two, more strict quarantine, particularly in sao paulo now. we develop whatever sector of foreconomy, protocols reopening. work. distancing in the etc. the police customers, how many people can get in the many people, how etc.,uare meter in shops,

etc. with all of that, we are reopening gradually and very, very, very aware of the data. who -- number of people number of people who go to the hospital. who go to of people special treat, etc.. all of that. criteria,ll of those there is gradual reopening. paulo --ities like sao getting thef people

virus is coming down. caroline: will it be helpful, do you think, if there was more of a federal level, more coming from brazilian president? a focus on face masks, a focus on precaution. we know that this is a state-by-state, area by area. but it must help if the brazilian president himself took seriously some of the social distancing aspect's, some of the mask wearing, to ensure that this does start to be a virus that is slowing in its growth, not escalating. do you think that his attitude will change and therefore, economic impact is and health devastation can slow to a certain extent?

i missed most of your question. line, as i talk about the president and the president'she opinions and speech -- he did have the power to face specific measures because this is the priorities of the states and municipalities. social distancing, protective measures, etc.. all of that is at the state level. directed tores more protect the economy. subsidized loans. in order to protect companies

help fort support people who don't have an income, mostly paid during the period of the pandemic. having said that, opinions in the process and somewhat during the process, worked in a negative way, people went to the streets more than probably they should. himself got the -- testedhimself positive. theon't know if he has effects of that. the way people react to that. there is a good chance that people understand. population --e

realizes now probably further the problems. governorsg what the in sao paulo, the seriousness. romaine: i am curious here. you are obviously the finance secretary for sao paulo only but you were formerly the finance minister for all of brazil. i'm curious, when you look at the economic position the 2019,y was in prior to when you had debt levels getting high. how much room is there for some kind of fiscal stimulus to generate economic growth in an economy that just like the u.s.

is heavily dependent on services and consumer spending. definitely, is a problem. there was no way out. in the sense that the federal , at the end ofto the day, generate the resources support forprovide the people for jobs or any kind of income rate also for --panies who have severe yes, the totalt, -- the total public debt will be higher than 90% of gdp.

growth of public spending and all the austerity period whening the i was the finance minister now are suspended. suspended two or three times because the government had authority to protect the people. over, all of the austerity measures, the ceiling on growth of government expenses whichery other measure , to have followed again in order to bring the

level of expenses out. when i took over the finance ministry in 2016, the total was more than 20%, it was going down gradually. now it will go up again during the crisis. all the measures will have to be severely adopted and some other reform like initiative of the state and federal government, etc.. all of that will have now to be approved. -- the airport, between the federal government and the states, all of that. i think it will be possible.

i personally worked on that on the state level, the federal level before. states -- all of them together i think will enable other countries to tackle that. caroline: sao paulo finance secretary henrique meirelles, thank you. now let's get the first word. mark: mexico' is president andres manuel lopez obrador says that he had tested negative for covid-19 in advance of his trip to washington to meet with president trump. he said, "i did the test, i have got my certificate." he added that if the white house asks him to repeat the test upon arrival, he will do so. he will use his first foreign trip as president to celebrate the start of a free-trade agreement with the united states and canada.

of testsa, the number coming back positive is climbing. the first time positivity rate climbed to 16.3% for monday from 15% on sunday. it is now at the highest on record according to data compiled by bloomberg which goes back to early april. florida has over 61,000 new cases over the last seven days, the highest ever. the white house wants congress to pass another stimulus package by the first week in august before lawmakers had home for their annual summer recess. that is according to mark short, who tells bloomberg that they want to keep the cost at $1 trillion or less. house viewshe white liability protections as essential for companies to bring workers back in fully reopened the economy. roger stone is appealing to president trump to issue a

pardon or commute his sentence before he begins a 40 month prison sentence next week. he says his health conditions make him vulnerable to covid-19. the u.s. court of appeals in washington has ordered the government to respond by thursday. 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'm a mark crumpton. this is bloomberg. ♪

caroline: the u.s. housing market surprised economists by rallying in the midst of a pandemic. therding to a forecast,

coronavirus could drive down home prices after all. joining us for more is none other than the man himself, robert shiller, nobel laureate, yale university professor. professor, your take on housing as it stands. are you as concerned about prices throughout the rest of the year? >> i looked at the report that you mentioned. i think it is a reasonable forecast. the kind i think will differ by region, or more by urban versus suburb. i am thinking that home pricing finds will be bigger in downtown areas where apartment buildings have elevators and you worry about social distancing. so, i am worried about home prices. but you look at their forecast,

it is not the end of the world. and i think it may not happen. there are other positive indicators as well. romaine: this is sort of been an interesting market here for a lot of different assets. obviously, we saw a lot of people in equity markets embrace some of those homebuilders. we did see home sales remain resilient insert parts of the country. the equityn overall market shoot high for the nasdaq. curious as to how you put this into context with an economy that is still hobbled. >> in the background is low interest rates. they are so close to zero that this is unusual territory. that affects everything.

bond prices are high, stock prices are high. you cannot get away from that. you've got to put your money somewhere. covid-19,thing is the we are not sure whether it is a toporary thing or will lead lasting scars. i am worried that it will lead to lasting scars. the urban situation will not be quite as strong in years to come. assess howtrying to much of the psychology of social distancing is going to stick with us. i hope it does not stick to long after it is necessary. taylor: we were speaking with chris aleman in the last hour, the chief investment officer at of the largest pension funds in the country. he was desperate to get your

thoughts on the ratio, the seasonably adjusted p/e ratio. valuation -- how do valuations look on that basis? >> it is high. i have not checked it in the last few days but it is in the vicinity of 30. i think all the way back to 1881, the historical average is more in the high teens. so it is high, but it has been i've for a while. ratio got upcape over 45. it could go up from here. i think of it as a kind of risky situation where our models, which were estimated over historical data, may not apply now. your sense ofe psychology and human history to

judge what might happen now. ofoline: indeed, many sort fall on their sword talking about history when we meet such unprecedented times. in terms of also the psychology of the retail investor, the height that we get around ,ertain stocks like hertz basically a bankrupt country -- pickup -- bankrupt company. if you had to be a demand, which i am sure you are not, do you think that this rally can be sustained, and do you think retail will feed into that the same way? >> i have questionnaire survey data on my website. they are more confident at the moment about a possible crash than retail investors, who are more dramatic, i think. so we have been worrying about a

crash because the word depression is in the air. and we have seen the highest unemployment rates since the great depression starting to recover now for the moment. but, the narrative that has developed has been a scary one. there is also the problem of the affect heuristic. if you are scared by one thing, you tend to be scared by everything for a while. we really got a scare from this covid-19. and it is not over yet. timesk this is very risky for all of these markets. caroline: we will leave it on that note. risky times for these markets. our thanks as always to robert shiller. that does it for me. i going to head on over to "lumbar technology." --e in to catch my energy

catch my interview with imran khan. this is bloomberg. ♪

romaine: welcome back to "what'd you miss?" time to check in with joe weisenthal, twitter kingpin in austin, texas. , i get in my inbox, the old days it was just charts and graphs, moving averages. over the last few weeks, few months, it has all been medical charts. aam basically just reading doctor's note. how does this maybe tie into the rally we have been seeing over the past few weeks? to talk a lote about trader macros. at this point, it is more like

trader epidemiology, wanting to look at epidemiological trends on the fly. in is the surge we have seen several states that the virus has not caused a selloff in the markets. i think there are a few things going on. one of the things, at least so big there has not been a pickup in debt. people are thinking, maybe this time it is was younger people or they are getting at her than -- better at treating it. although wehope, just got these headlines coming , evens -- even in some of these states, it is picking up. surgeon in case count is

not necessarily picking up. caroline: they should be perhaps looking for fundamentals, everyone seeking them out. scaryd a tweet about the jobs that people should be looking at. joe: if you just look at total unemployment, you see this extraordinary horrible spike up and fastest bike down. if you look at the category of permanent unemployment, people who say they don't expect to return to their jobs within six months, that started off very small but it is picking up steam and it is at a worse pace than the start of the last crisis. there is a slow-moving economic damage that is happening. look at ual, the airline just came out with numbers. even in august, they only expect to be 65% of capacity.

if you think about how slow this recovery is going. caroline: we will have to wrap. joe in texas. that is all for "what'd you miss?" romaine: bloomberg knology is next. ♪

♪ taylor: this is "bloomberg technology." today, we are taking a look at the stock get slumping a little bit coming off those record highs, particularly airlines and hotels. the world economy has a long way to go to get back on track. the tech heavy nasdaq dropping from a record intraday high in the afternoon. amazon and