>> no one at this point, analysts, companies, strategists , has a great sense for what earnings will be in 2020 or 21 021. >> though separation part of the labor market is still bad, but claims only tell us half the story. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. >> good morning. we are live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this has been building. treasury yields breaking lower. tom: that is exactly the description of the mathematics on the bloomberg terminal this morning. it has been a persistent grind, and it is mathematically elegant

to see a two year yield come in and a 10 year bond coming in with a vengeance. coming in is that signal slowdown, massive curve flattening. jonathan: 10-year yield breaking down. we are down eight points on the s&p 500. lisa, phase one was about access to capital and drawing down credit lines. phase two is about the permanent decisions, cuts and layoffs. that is what has been building this week. lisa: we have seen those cuts and layoffs likely to be ongoing with a number of cfo's studies pointing at bigger companies looking to shrink their workforce further through the end of the year. the thing i'm watching is how much can we plug the gap, the deficit of production with regards to fiscal stimulus? as we wait for that, we will be waiting for the data coming out

today. we get the u.s. june producer price index, measure of inflation. 1:00 p.m., this will be interesting in light of the fact that you seek shale producers bringing rigs back online due to higher oil prices. later today, president trump heading to florida for a fundraiser and an anti-drug trafficking event. what this will do is bring the focus on the virus. we have more than 4000 deaths in florida. the focus will be on what kind of corrugated effort does the u.s. have to combat the pandemic? jonathan: looking on catching up with kevin cirilli. we begin the program looking at risk assets. would you believe the s&p 500 is still positive on the week? you can think big tech for that.

over the last month, tension has been building. it has been recovery slowing down in the u.s. let's start the conversation with david kelly from jpmorgan asset management. which one is it, recovery derailed or slowing down? david: for the moment slowing down. people have the wrong impression from the data from may and june. the economy fell off a cliff. the important part of it is falling off a cliff. we have seen certain industries that could operate in a pandemic, shut down in april, opened in may and june. that brought back a third of the jobs we lost. we are still down 30 million jobs. is -- u can see life, that stuff in

is very much impacted by the pandemic. of corporations are trying to figure out what do we spend money on? how should we behave in a recession that is likely to linger into 2021? it is a wake up to reality. v.s is not a it started as a v. economics fordone years. you have melded it with political strategy. this morning, we see a stunningly low yield regime. what does that do to create urgency for politicians to pass the stimulus faster? david: it enables them to do that. the federal reserve is monetizing the debt. federal government

has run a deficit of $2.72 trillion. the federal reserve lent the government $2 trillion. the federal reserve is writing a check for whatever solution the government wants to do in coronation with congress. it enables the government to do more to support the economy. with the government needs to do is control the pandemic. arestries being shutdown not being shut down by a lack of consumer income. it is because consumers don't want to get onto an airplane or pile into a restaurant. it is difficult to reopen schools. we need to control the pandemic if we are going to see the next leg of recovery. markedncertainty has 2020. we have seen that consistently whether it comes to the pandemic or the next round of fiscal stimulus. as an investor, how do you operate in this uncertainty when the safe assets are so expect

said -- so expensive? cease to bethey safe. you have to try to cast your mind beyond the pandemic. 2020 is the year of the virus. i think those countries that are controlling the virus right now and can bring those numbers down, they can leverage the vaccine to get back to normal. that is what will happen throughout 2021. some regions will do better than others. when we get back, you want to look at those companies that are priced well today. david, we are going to have to leave it there. tensiona little bit of on the line, which is breaking down just a little bit. my apologies to our audience around the world.

looking around the world right now, the different tolerance governmentsdividual is absolutely amazing. look at what is happening in the sun belt in america and how the governors are responding to it. you look at a surge of infections in melbourne, australia. what happens? lockdown. the tolerance levels are so different. we all talk about the science, is beinghe science interpreted differently from country to country. tom: i will give you a distraction this morning pushing against this. intoroup advances amazon .022 with a price target of 355 it shows the digital revolution and the stock market focus you and i have talked about against all this cacophony of news on a friday morning. jonathan: it is more than that.

it is the performance of defensive assets in 2020. what we have considered defensive has shifted somewhat. long treasuries up around 23% year-to-date. real yields lower. the opportunity cost of holding gold shifts, gold up 19% year to date. the start of 2020 we perceive nasdaq and the big tech asset.es as a defensive gold performs. treasury performs. you expect to see that. to see the nasdaq up 21% year to date has been phenomenal. lisa: the question is are these companies worth it? is amazon worth being a global superpower that exceeds the entire size of the global retailing sector? are the valuations justified? a lot of people are saying yes.

they are only going to get bigger. there is not any push for antitrust movement given the fact that the emphasis is on jobs and american businesses. at what point do these stocks get too expensive? at what point will the recovery trickle out into small cap? i think it is unclear. this is the interesting tension. the surprise could be to the upside when we look at smaller stocks. yields,: low rates, low 10-year treasury breaking 60 basis points. that is part of the story. this pandemic has accelerated existing drains. we know that. the big are getting bigger. the week are getting weaker. this pandemic has made the strong stronger. balancead a strong

sheet, your borrowing costs are lower. if you are struggling, your borrowing costs are a lot higher. the airlines are a perfect example of that. tom: there is no question about that. something to watch for today into the weekend will be layoff announcements. we have seen many of those this week and bankruptcies as well. i justwould underscore, took a path north from miami and looked at the virus news at the great state of florida, which the president will visit. he is a resident of florida now. the news out of florida is flat , and yet disney world is going to open on monday. the magic kingdom is going to be there. you can go to disney world and get a socially distanced hog from mickey mouse. jonathan: and then i have to

quarantine for two weeks. that is the problem. this is what would happen. if the consumers don't self regulate, the businesses will self regulate regardless of what the governors do. around the world, lockdown in millburn, closure of schools in hong kong. u.s., theee in the reopening starts to slow down. we are looking at the same high-frequency data. it shows up for all to see. restaurant bookings, mobility data starting to flatten out. the improvement has started to flatten out over the last couple of weeks. the family, if they were on speaking terms, is going to go out to lunch on a sidewalk. that is what we are doing in manhattan. even here how tenuous it is as

we look at these real tragedies in the south. jonathan: i feel for the restaurants most of the time. this weather in new york is going to be brutal through the day. for new york city this friday morning, good morning. equities futures are recovering. we are off around 0.2% on the s&p 500. a conversation you do not want to miss in the next hour. mohamed el-erian joining us right here on "bloomberg surveillance." ♪ the coronavirus new cases have climbed over 60,000 in one day for the first time in texas, california, and florida reporting large numbers of deaths. coronavirus is likely to overshadow president trump when

he heads to florida today. on the schedule is a fundraiser and anti-drug trafficking event. the president will not be able to escape the pandemic surging in the state. it has already killed more than 4000 floridians. florida was one of the most aggressive states when it came to easing restrictions. bloomberg has learned the u.s. will impose tariffs on up to wine, cheese,n and handbags from france. the international energy agency is boosting its outlook for global oil demand. report, it said they collapse in fuel production during the second quarter was not as bad as originally thought. it projects demand should bounce back strongly in the next three months.

global news 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪

>> would test so many people. sorybody says we have

many cases. that's because we test so many people. we are up to 40 million cases. we showcases. other countries don't show cases. jonathan: at the moment worldwide, when you see those increasing cases, you see a very different response in places like australia, hong kong, and beijing. in new york city, good morning. i'm jonathan ferro. two hours and 12 minutes away from the opening bell. 0.25% on the s&p 500. by 0.7%.00 advancing get?do you a market that is down on the week. that is the real story, the

tension away from mega cap tech. tom: i cannot say enough how non-correlated the move in tech is. it is not there in bonds. really -- that we deal with right now. i'm not sure there will be a local risks for president trump today. risks for president trump today. it is absolutely extraordinary. seen cirilli has never anything like this. he joins us, our chief washington correspondent. i have no clear how the president addresses what i am reading about from medical professionals in florida. kevin: yesterday was another dizzying day for the president's

reelection efforts. they are trying to look at the supreme court cases as a way to unite the party and to continue plowing ahead. yesterday, i spoke to a senior advisor on the reelection campaign. he was the campaign manager at one point in 2016. i asked how he is going to turn around the poll numbers in battleground states. he said the message is we want to open the schools and close the borders. tom: even the governor of florida looking for a more open society has to address the schools. hong kong closing down schools. what is your reading of what republicans in florida are telling their president? kevin: buckle up for the economic stimulus. this is where the economic stimulus comes to the forefront. should this past ahead of the

august recess, that is enough time for cash to be injected into schools nationwide, not just public schools, private schools and charter schools. that is where the lobbying arm of the education system, higher charter,c, private, this is where there is an opening bid to come to the table to try to get financial assistance to make sure classrooms are better prepared should local officials on the ground feel it is time for students to go back to school. president trump be weighing in on his fiscal plan after joe biden laid out in more detail what his plan was for the road ahead. aside from the actual fiscal spending he proposed, he talked about raising the corporate tax 28%, going back to

obama era tax policies. how is that being received? kevin: among the left, it is been received as ok, good proposal. there were many progressives who were very curious to see precisely where joe biden would come down on this. this is largely seen as the more centrist plan. i'm going to speak with one of the people that helped craft this plan. force in termsng of workforce development and making sure all different haveons of individuals access to reopening the economy. i want to note something about for joen, which is biden to come out and say he wants to end the era of shareholder capitalism is assigned of exactly where he feels the democratic party should be heading towards.

after robustnation discussions with the democratic-socialist wing of the party that played out publicly and privately and a foreshadowing of where he would take the party should he win november 3. let's talk about the direction this administration is going to take fiscal policy in the next several months. administration not going all out on fiscal stimulus ahead of a november election? why are we taking this so slowly? what is the holdup? kevin: the holdup is no one knows what is going to happen in the states where there has been an uptick. we had the unrest of the past six weeks. no one knows how that will factor in, the fourth of july celebrations, vacation plans. should they just throw money at this all the time, that makes a lot of people very

uncomfortable. president has laid down a marker in terms of another potential stimulus happening ahead of the election with infrastructure potentially coming in the fall. potential next rounds of stimulus, one ahead of august and the next ahead of the election for infrastructure. who is it making uncomfortable when the trajectory of the debt pile in this country is only heading in one direction in the last three or four years? kevin: it is the conservatives that are very uneasy about spending more money. we all see the headlines. data trackert the for coronavirus. there are parts of the country that have not had to deal with some of the negative health effects the rest of the u.s. has had to deal with. jonathan: kevin cirilli, down in

washington, d.c. so many people don't get it. i will ask the question. is now really the time to start worrying about the deficit and the debt given where unemployment is and where this economy is headed at the moment? jpmorgan, hsbc, what they would say is look at what the market is saying. these lowbed by yields. part of that is the disappearance of the great tv show the real yield. you can do all the debt you want at this level. jonathan: i'm desensitized at the amount of digs you have taken at me for the lack of that program. give me a break. tom: i did not realize it was off the air. jonathan: i'm sure you did not.

coming up on this program, fiscal affairs department director at the imf on the fiscal next steps worldwide. this is bloomberg. ♪ ♪

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jonathan: from new york city, this is "bloomberg surveillance." for our audience worldwide, we are live on bloomberg tv and radio. i'm jonathan ferro on this friday morning. improved over the last hour, negative about nine points on the s&p 500. and heading towards a second straight week of gains on a week where so many people have discussed pivoting away from the u.s., it is the strength of big tex america that is driving us into the green. sub 60 on a 10 year. the price action shaping up as

follows, dollar just a little weaker against sterling and the euro. the euro advancing several tents of 1%. percent. of one tom: this is without question the most important interview bloomberg will do on the state of global fiscal policy. fiscal monitor is a critical document in these times. dr. gaspar joins us now. give me an update on your confidence that we can expand by trillions our debt over the justification that interest rates are so low. do you buy that concept? >> yes, i do, tom. blogwe emphasize in this that i just put out is that

global debt is at this point in time at record levels. never in history has global public debt been so high. it is now above 100% of world gdp. it is so high because we are facing a crisis like no other. in that context, the fiscal response has been very quick and unprecedented. months, thefew response of fiscal policy is bigger than during the global financial crisis. you take together 2008, 2009, months0, in the last few , we are above the response of three years of financial crisis. that was absolutely appropriate lifelines totended

households made vulnerable by the crisis. this enormous level of debt in a sense, compensated impact on the budget by these very low interest rates you are talking about. interrupt,t mean to sir, but because of time, i want to cut to the chase. el-erian on with us in the next hour. what is the t decision we are and threeto make two and five years out after we count up the trillions of dollars of debt? decision down the road for political authorities as they look at endless debt? >> i would not put the issue

that way. so thatinterest rates, service costs are relatively low becausecent of gdp inflation and inflation expectations are very low. at this point in time as my colleague and i said yesterday, we are more concerned about too low inflation than too high inflation. the epidemic has boosted precautionary savings. for a while, we are going to have a situation where savings exceeds investments. our balance of risks points to the fact that premature withdrawal of fiscal support is a more pressing danger than the high levels of debt. lisa: there is a question of how

companies, foundations are spending the money they are pumping into their economies to try to support everything as it gets up and running. how good of a job our nation doing as supporting companies that are viable in the longer term versus the zombies that are just going to die out even if they are supported in the short term? >> the short-term priority is public health. support toes fiscal vulnerable households. that should be regarded as lifelines . as the situation normalizes as lockdown and as economies open gradually, you that facilitate the reallocation of resources.

ot froms necessary to piv support of jobs to support of et lending toknk firms to a much more discriminating approach. it is important that the intervention by the government instruments,tal equity participation, even partial nationalization so that the issues of solvency can be tackled appropriately and the natural restructuring of the economy takes place. lisa: we hear a lot of big ideas. ans is then a -- has been era of big ideas. there is a question of how good

a job in the here and now governments are doing. how optimistic are you that they will implement the policies you are talking about? are you optimistic about that or are you doubling down on this message because you do not think it is getting through? >> we are actually quite the ssed by how effective-- by how the interventions put out by the world governments have been. thatve an online document 50iews policies by more than countries. we have seen more than $11 trillion of measures. many of those measures have above the line impact on budget.

this has been crucial to support firms and households. the situation is very difficult. we face radical uncertainty, and the first priority is public health. the first priority is to control the epidemic. why? only by controlling the epidemic are we going to be able to create conditions for the economy to pick up in a sustainable way, for investment to pick up and for a transition to a new model of sustainable and inclusive growth. we are not out of the woods yet. a lot remains to be done. up until now, the ability of governments to deliver timely, targeted, and temporary measures has been threatened. jonathan: appreciate your time.

always valuable to us. tom, this is about fiscal authorities acting counter cyclically when we need them to. many governments have that luxury, including the u.s. and elsewhere. europe is a different story. ask italy if they can continue to act counter cyclically if they share the debt load. in europe. that is why it is such a crucial month ahead. gaspar has advised investors in more than 120 countries. on a game theory basis, you cannot look at it as a homogenous fiscal structure. there are these individual stories that lead to unique and great challenges. italy being one of the real challenges forward.

what i find important from the are authoritative on the dynamics between markets and economics. those dynamics are now shockingly fragile. jonathan: those dynamics will be loud and clear for politicians in a couple of weeks time over in europe as they try to construct the next moves. this market has been increasingly optimistic about allocating capital to europe. we could have some real trouble. plan the 750 million euro that we put out there, this idea that it will get passed and create a new closer-tied europe. this is something i'm struggling with. people talk about the more you spend, the better. the composition of those plans in focus in washington, d.c.,

and elsewhere, it depends on how quickly the economy is going to grow. are they going to go to companies? individuals? the composition matters in terms of inflation and consumer spending and potential growth. jonathan: the struggle to normalize seems to be the big issue worldwide. 0.3% on the s&p 500. let me get elsewhere across assets. in europe, huge story about allocating capital to the european equity market. if you do that, you are turning your back on big tech america. has performedca in a big way. compareg can trust -- and contrast the nasdaq to the s&p 500. yields have been so sticky over the last couple of weeks.

we break lower in the last week or so. down eight basis points on the week. in foreign exchange, to round things out, snapshot of g10. the dollar weaker against stronger euro. euro-dollar advancing. we will continue to explore crosscurrents. this is bloomberg. ♪ this is bloomberg. ♪ >> the coronavirus is on a rampage through the u.s. sunbelt. reportedtexas, florida record numbers of deaths yesterday. the number of new cases in the day went over 60,000 in one for the first time. president trump's former lawyer is back in prison. cohen is serving a

three-year sentence for campaign-finance finally shines. he was released -- campaign finance violations. to homeeleased in may confinement. the chairman of the joint chiefs told congress it should take a hard look at renaming bases named for confederate generals. tosident trump is expected veto legislation that would mandate name changes. investors have that $20 billion against a stock. the value of tesla shares is short is approaching that milestone. they are bidding to buy the new york mets. they have offered $1.7 billion

for the team. 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪

>> we will have to borrow money. we will probably have to put

some revenue raisers on the table as we develop our next budget. the first place we will go is the federal reserve special program they have set up. we will go from there. this is going to be and both. borrowing in the billions and meeting federal cash assistance. we are not alone. jonathan: governor murphy on the need for revenue raisers. that is a new term for increasing taxes. do you like that? revenue raisers. whatever you think about the politics, governor murphy is a smart guy. tom: that is a smooth guy. revenue raisers. that was alluded to by vice president biden in scranton. carnagee pandemic and

economically across the nation, it is good to talk to someone authoritative from a firm that owns a franchise. that would be collins and company. the legendary airline analysts. owns the high ground on airline analysis. i want to cut to the chase. wouldate how many people become unemployed across the american aviation business. year,the start of the there were 750,000 people employed in aviation. at the end of the year, we estimate between 550000 and 600,000 people employed. jonathan: we caught up several months oago.

can you walk me through what the industry looks like? what does booking look like? >> we are better than we thought we would be. the first time, we thought by august 1 we would have 400,000 people traveling. 87,000s based at the people at the nadir. you see the 95% decline. about,are screening tuesdays, wednesdays, saturdays, between 600,000 and 650,000 people. peaks, we are screening 700000 and 750,000 people. that is without business travel

and international travel. we don'those two, think traffic can exceed one million by the end of the year. lisa: without business and international, where are people going? >> domestic. [laughter] that is actually a really good question. the people that are traveling, visiting friends and relatives, leisure, and those that absolutely have to travel. that 87,000 people we saw were traveling were doing work related to the pandemic. now you have people where states .ave opened up universal orlando and seaworld opened in june. people are now starting to take vacations to those locations. whether that continues given the

ramp up in coronavirus in those states remains to be open. -- to be seen. disney orlando is supposed to open tomorrow. it is western states with national parks, we are seeing a lot of outdoor activities. lisa: given the fact that we are not expecting to see demand for international or business travel picking up until potentially 2025, how many airlines have to go out of business in order to correct the oversupply of seats and flights that we currently have in the market? >> that is a great question. the way the government set it up in the short-term is none of the airlines will go out of business. the amount of capacity that will come out of the network, between

800 and 1000 aircraft will not come back by this time next year. when you think about the level of capacity, that is to the size of one full airline. caroline: -- tom: give me the single best idea three years, five years out. which management is going to be most opportunistic and add shareholder value when we get through this tragedy? >> southwest is our best idea in the short term because they have net cash, and they are well positioned. they did a huge cash grab earlier this year. loan.aid down their we think they are well-positioned. i haveecession since covered this group, they have grown share.

the one we get a lot of pushback on is american because we don't think they are going out of business. they have raised a ton of cash. they still have some assets they can raise. 64-dayaid down their 3 term loan. they are not in bad shape. that is one very contrarian and the other more of a safety idea. contrarian given the borrowing costs. i always enjoy catching up with you. you are always so compassionate about the workers that make up this industry. we talked yesterday about the two shocks to the global economy. the first is the shutdown to the economy. the second is the persistent nature of being below capacity for an extended time.

countries have gone through two phaeses. phase one was to raise capital. phase two is the big long-term cuts. tom: we are seeing the job cuts. far more importantly, i would suggest the struggle of so many industries up against technology and up against demographics was before the pandemic. i'm certain we cannot just blame this on the pandemic. these were challenges that were embedded years ago. people would line up to tell you that what the pandemic has done is accelerate existing trends. many people would agree with you and that sentiment. little lower. don 14 points on the s&p 500, down 0.4%. up next on this program, jim holster. a conversation on this equity

market you don't want to miss. on the week, mega cap tech stocks ripping. this is bloomberg. ♪ is bloomberg. ♪

point,ne at this analysts, companies, strategist, portfolio managers has a great -- for 20202021. >> the separation side of the labor market is still bad. the claims only tell us about half the story. >> this is "bloomberg keene,lance" with tom jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz, and tom keene.