likely -- the fact is we are likely facing a sluggish economy, and that is a good environment for secular growth. >> the specter of unemployment is coming down the track. >> a lot of businesses are not buying into the v. they see a different destination on the journey. >> this is "bloomberg surveillance," with tom keene, jonathan ferro, and lisa abramowicz. jonathan: for our audience worldwide, good morning. we are live on bloomberg tv and radio. alongside tom keene, together with lisa abramowicz, i'm jonathan ferro. rotationning reinvigorated in the last 24 hours. tom: there's no question it is reinvigorated. i am seeing it in the equity markets, where it is tranche after tranche. some of it may be off the apple ruling in europe. what i would note now versus the

last 400 days is we are finally on dollar support. we will talk about this through the show. on dxy, the blended dollar index , with strong euro contribution, we are really on the support of a signal to a weaker dollar. jonathan: it is the trait everyone would hope would develop -- it is the trade everyone was hoping would develop. we see that on the screen this morning. it is a tug-of-war between pretty negative corporate guidance and the vaccine hopes that started yesterday evening. lisa: i would argue that the vaccine hopes are very much in the front of people's mind this morning. the question of whether moderna can jack up production, as well as the regulatory approval they need to get this out and distributed. meanwhile, more guidance from the big banks. goldman reporting in about a half hours time. at 2:00 p.m., the fed releases

their july beige book. some indication of how businesses are changing their expectations based on the resurgence in virus cases. also today, opec-plus meeting to decide whether to extend production cuts. a question of how many of these nations might increase output as planned or perhaps push that back. jonathan: i appreciate the onhusiasm of trying to sound the fed beige book. i am still trying to give my words out -- to get my words out. give me a break. tom: i feel so bad. [laughter] jonathan: this is a serious matter. let's get to it, shall we? simple sally of bloomberg -- sam porcelli of berg intelligence joins us. sam -- of bloomberg intelligence joins us.

dharna have data from a -- from moderna. they have given us the most out of that any company has given us from human trials area it looks like, as i've said several times, a step forward. it seems to be as effective as the data we got from pfizer. there is possibility for comparison. one thing i wanted to highlight , let me give you an analogy, if i may. you are hungry. i give you a biscuit or a steak dinner. they are both food, but one is more substantial than the other. when we talk about vaccines, something will be available by the end of the year, but will it be the full-blown, well studied, supersafe axing? i doubt it -- supersafe vaccine?

i doubt it. jonathan: can you talk about side effects? there seem to be a difference of opinion from medical professionals in this trial. sam: it looks similar to what we have seen from pfizer. has signals what doesn't seem to be mentioned here in white blood cell counts, but i don't see anything here that is crazy. you clearly are getting a product that is quite active and makes the body react to it, but comparing it to the data we got from the chinese biotech company and the safety profile appears similar. it is only 45 patients. jonathan: a small case study, but some progress. fazeli ofllie -- sam bloomberg intelligence there. we will get medical professionals on the program to talk about this, but pretty much

everyone says the same thing. it is still early days area. tom: i thought guy johnson was wonderful talking about the --ferent i/o chemistry, the different biochemistry, the physiology of the vaccines. all the rest of the pro talk. you are right. we've got to listen to the pros. i would suggest there is more going on here than just the vaccine. the apple news out of ireland, the eu, and the bank earnings yesterday were a sigh of relief. jonathan: let's be clear about the bank earnings, the guidance that came from the c-suite was not optimistic at all. it was very conservative. this market really shook it off. i've been describing this market is a glass half-full market for the last month or so now. it seems to ignore and shake off the negative news and seems to embrace any signs of hope and optimism. mary there is -- maybe there is a message there. lisa: 28 billion dollars was set aside for potential loan losses at the three big banks that

reported yesterday, a record. the reason why? they just don't know. this is an era of uncertainty but we've never seen. jonathan: let's bring in mona mahajan, allianz global investors u.s. investment strategist. we had a bit of a reality check from the c-suite in america. how are you reacting to it? mona: thanks for having me. generally, we are seeing in earnings, and it is early days yet, that estimates have come down dramatically. we thinksus of -44% reflects a little bit more reality for the year. , just at the end of march, the expectation was for -4%. downward revisions have come down quite a bit. we feel relatively comfortable with where we are for q2. what we are watching more closely is what companies will say for q3 and q4. over the last few weeks, we have experienced a bit of a p, a

bit of a rollback in the reopening. we don't think that is yet of the economic metrics, but also from what we are hearing from companies as well. got a little taste of that yesterday with jp morgan. they did rollback their gdp growth estimates and unemployment estimates for the end of the year as well. so look for a little bit more of that. tom: how unloved is this market? retail, all of the immediate heat that we are seeing. but how unloved is this market, or is everyone on board? mona: i would say over the last few weeks, we have certainly seen a shift to more defensive market. although we have seen technology clearly move upward, to us that is a bit of a defensive trade. not only did we get the covid stay-at-home winners rally, we also saw gold rally, treasury

bonds rally, and of course, even the dollar stabilized somewhat as a flight to safety. it has really been a more flight to safety trade in our view over the last few weeks as people are giving a little bit of pause, seeing what direction the health metrics go in the u.s. in particular. lisa: it is clear that this market is really high and crowded trades, low in conviction. is this a time to go with consensus given the uncertainty, or time to go against it, be contrary and, and a little more aggressive rotating into cyclicals? mona: generally, we think the cyclical story will have another run. and the one we saw since mid-may to about mid june, it lasted about three and a half to four week. that is not the typical length of a true value cyclical rally. six, 12you see for,

months of outperformance. we don't think that comes until we get not only a vaccine approved, but also a plan for manufacturing and distribution, a true, all-encompassing solution, or we get better health results overall. some of the trends we are seeing in the surging in cases and some of these states in the south really start to stabilize and reverse. until one of those happen, probably you're going to get periods of outperformance. may even see it today with the modern and news, but generally, a sustained rally may not happen until something like that truly changes. jonathan: one area of debate is whether you want to position yourself geographically to capture the cyclical move to the upside. is it the united states, europe, asia, em? where is it? mona: great point. --arly, i feel this room

clearly, i think there is room for more distribution of regional exposure in your portfolio. we are seeing that over the last few weeks, and really since this quarter has started at the end of june. we have seen europe and asia outperform quite nicely. the health trends have been much better across the globe, in both .urope and areas like china for those who want the cyclical exposure, europe tends to be a little more value cyclical oriented. it has exposure to areas like finance, energies, and betterials at valuations. china is probably the most comparable to the u.s. in terms of the breakdown. obviously they are going through their own retail rally over the last few weeks, but that is an get we really think, to

into this crisis, the first to reemerge possibly, asia has some attractive opportunities. we do think expanding your exposure beyond the u.s. is important over the next couple of quarters. jonathan: mona, great to catch up with you, as always. this is an important subject for china right now, developing yesterday evening with the president of the united states. hong kong very much and focus. not a surprise for many people that the special trading status has gone. several years ago, this would have been a humongous story. yesterday it was just widely expected. tom: there's some emotion to it. for those who know the history of it, it was a huge event. what i find fascinating in the total mystery of getting to august is, as bloomberg news writes today out of our hong ighg bureau led by karen le about the hong kong brain drain. to me, it is a mystery how that

brain drain will occur. jonathan: we will discuss it later on the program. with your equity market elevated by 40 points on the s&p 500, we advanced by 1.26%. later on the program, patrick harker, philadelphia fed president. from new york city, this is bloomberg. ritika: with the first word news, i'm ritika gupta. it is a big victory for apple at the european court general court. apple won its battle over an eu battle to pay ireland in texas, chief.ing blow to the eu tosident trump has moved order an end to hong kong's special trading status with the u.s.. he also signed legislation that

would sanction chinese officials responsible for cracking down on political dissent in the city. beijing told the u.s. to quit interfering in chinese affairs. the bank of japan is out with a gloomier picture of the economy. -- central banks forecast the superbike forecasts japan's 4.3% -- theink central bank forecasts depends bank- the central forecasts japan's gdp will shrink 4.3%. former auburn coach tommy tuberville beat jeff sessions in an alabama primary. after the president named him attorney general, he turned on sessions' back because he recused himself from the russia investigation. 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'm ritika gupta. this is bloomberg. ♪

pres. trump: we all watched what happened. not a good situation. their freedoms have been taken

away, and with it goes hong kong because it will no longer be able to compete with free markets. a lot of people will be leaving i suspect, and we will do a lot more business because of it because we just lost one more competitor. jonathan: from new york city this morning, good morning. alongside tom keene, together with lisa abramowicz, i'm jonathan ferro. your equity market advancing 40 points on the s&p 500, up by 125%. for me -- 1.25%. for me, the direction of travel has not changed regarding hong kong come but the speed has sped up. tom: i used at some point this morning, suddenly we are here on china. we had great interviews from lord patton on down. then there is the what of it. daniel tennenbaum is an expert at what financial companies do given sanctions, rules, and law changes. he is with oliver wyman after is distinguished career.

mostly, what he does is go into rooms and say, ok, here are your options. tannennenbaum -- dan baum, what are the options and hong kong? dan: it is going to be a tough day for u.s. banks operating in hong kong as they really think about what this could mean. i think it is really important to note that sanctions weren't actually levied yesterday, but a framework was essentially established. but if these sanctions are put forth like many think they could be, and these were very much a blunt instrument in a sensitive market, it would be nearly impossible for a u.s. bank to be able to comply with u.s. sanctions and chinese law simultaneously. jonathan: i am trying to understand the magnitude of the issue before us right now.

don't want to get you in trouble with any clients. let's say there is a bank that starts with an h and ends with a c. tom: i'm thinking -- jonathan: don't name anything. say youay -- let's service a particular client the comes under these sanctions. what do they do? daniel: realistically, they have to pick which regulatory regime could end up hurting them the most. i do think there is some cause for caution on all of this because we are potentially a year away from actually seeing any real designations under this program, if you get into the nuts and bolts of what was signed yesterday. days,ministration has 90 and they have a year, so you're talking potentially tober of

2021 before you may begin to see any banking-related restrictions or more serious sanctions that it rolled out potentially. lisa: the sanctions haven't been levied yet, and clearly this is just camping up the arsenal that president trump essentially could have. initially, president trump didn't have that strong of a reaction publicly to the incursions on hong kong's autonomy, and this came, according to some people, sort of suddenly. daniel: let's remember what he signed yesterday. it was a very bipartisan piece of legislation passed in both the house and senate that forced to the president's hand. he was essentially given no choice in a vetoproof majority. congress is the one that acted .nd forced the administration for thethe next step

administration to identify targets, that is the real sensitive piece here. it definitely was delayed for a few weeks, and the timing of the u.k. announcement yesterday of excluding a certain tech company from involvement in their 5g weekt, this has been a bad in terms of western china relations. tom: to the delicate questioning on what a given bank would do, to the margin this stops marginal hong kong growth for the financial system of the west. where do they go when they move from stopping the marginal growth of headcount over to we've got to adjust at the margin or completely exit hong kong ? where would you suggest they go to? daniel: this is still somewhat fresh, so i don't think there is a clear answer of where you would go. i know there's a lot of people in singapore concerned for the potential growth of singapore as a financial services hub, which

is a logical move from a regulatory standpoint and otherwise. i don't think anyone is evacuating the hong kong market yet, and i think any move would be premature depending on the business. similar to those looking at bracket negotiations, we may have to spin up plans on if this escalates, do we stay in hong kong or potentially move? tom: i would point out the trip from hong kong to singapore is almost four hours. you are on the plane, and you ?re like, really tom: give an update on what your counsel would be to banks right now. daniel: i think it is keeping aware of what is happening. the u.s., when it set forth a unilateral sanctions package, that there weren't other countries latching on as you

have these more significant business decisions that have to be made. whatnk trying to establish this could potentially mean looking at the china response, which thus far has been similar to what it was last week with the designation of marco rubio and ted cruz in response to sanctions, the response has been relatively measured given the sense that nothing has really happened yet. but countries need to prepare on how they can operate without completely running afoul of the other side, and there aren't any clear answers yet given that everyone is still decomposing this executive order and the autonomy act, and what it could potentially mean. jonathan: i think the era of sitting on the fence for many of these companies who want their hand in both regions without really coming out and saying what they think about the situation, that is over, isn't it? daniel: it does seem like that

is over. i think the relations between the u.s. and china have only continued to worsen over the last few months, and for banks that have grown their business in the region, those that have significant business in the u.s. , i don't know if they necessarily need to make any choices in the near-term, but obviously this does pose a threat to the growth of the business going forward. jonathan: great to catch up with partner, oliver wyman joining us on the latest out of hong kong. want to bring you the latest from goldman sachs. second quarter trading revenue coming down to $4.24 billion. let me get you equity sales and trading revenue, coming in at $2.94 billion. we got a decent steer on this in the last 24 hours in the capital markets out of these big banks that has done really well. that meant for goldman sachs, they were going to do really

well. expectations were already there. topremarket, up by around 2% 218.50. the outlook uncertain. the ceo of goldman sachs saying the economic outlook remains uncertain. how many times did we hear that yesterday from citi, wells fargo, jp morgan? lisa: the story is pretty clear, banks are in a good spot, with the exception perhaps of wells fargo, who's had a bit of a disappointment. with the investment bank revenue coming out at $2.7 billion, basically capital markets are screaming red hot, benefiting from the fed's largess, as well as the federal programs to support the consumer, and yet this is all in preparation for a much bleaker future to come. goldman sachs doubled down on the trading unit. even morgan stanley pulled back.

this quarter, they crushed it. the question is how long can this go on in such an uncertain environment? jonathan: looks like a beat across the board here. tom: there's no question about it. i look at 11% shareholder equity is really a stunning, non-big bank number. i don't know why they would want to give that up and be like jp morgan. the other thing i look at is the growth of this consumer banking experiment. in fiveer where that is .ears i would emphasize the difference of goldman sachs versus major banks. jonathan: clearly this is much more focused on the capital markets business. in a moment like this, it is the bank trying to build out a consumer business as well. that is a difficult task given what the consumer business looks like elsewhere. tom: mr. solomon will face institutional investors. they've got lots of doubts and

questions. now.ng us our sonali basak david solomon has got to justify they want to be a big bank, they geelyo be different then -- they were to be different than the goldman sachs of 10 years ago. how do they do that today? sonali: he's going to tell you that by starting digital, he has an advantage by starting from the ground up. goldman sachs is not going to become a jp morgan overnight. a lot of this is to lower the cost of funding. return on equity is pretty good, given all things considered. do they keep that up in a volatile environment? the fixed income trading number was up 83%, compared to jp morgan. it is poignant today, with roger altman becoming senior evercore.t

that magical goldman sachs name, john weinberg elevated at evercore. the family at goldman sachs that spans our lifetimes. is this the same morgan stanley -- is this the same goldman sachs? sonali: it is definitely a different goldman sachs. what remains the same as that business. it is hard for goldman sachs because investment banking is still very much at the heart of it. evercore did say at the beginning of this year that hard times are ahead. it's stock is taking a hit as well. lisa: as we parse through these results, how reliable are other aspects of the business and supporting profit ability going forward as there is this historic fickleness at a time

when people are expecting issuance to cool off a little bit in the following five months? what have you seen initially in terms of the strength of the other businesses? weali: one of the ones haven't talked about yet is the investment and lending business. goldman is trying to build up the merchant bank again, to tom's point earlier. how much is goldman the goldman of the past? goldman should be the main beneficiary of that. the equity investment did still take a hit here. it is not like in the prior quarter, where that was the headline of the day. 19 think some stability in that business will be important as they go out to raise billions of dollars to put to work. jonathan: stock up in premarket by 2.5% right now. just going through the release right now, investment banking generating record quarterly net revenues. the word record coming up repeatedly here, and both equity

and debt underwriting. the quarter after that is going to be really difficult. to summarize, listening to the c-suite from citi, from wells, from jp morgan, from goldman, the next few quarters are still going to be difficult. there was a sense that maybe the second quarter the worst of this, everything was behind us. i think we come out of this earnings season already getting our hands around the idea that it is going to be complex for the fairfield future. tom: but remit -- for the foreseeable future. tom: but remember when we had six ceos line up with their right hands in front of congress. this performance is great, but it was all due to the fiscal and federal reserve a lout during the spent ash federal reserve bailout during this pandemic -- federal reserve bailout during this pandemic. i wonder what the messages to washington given what we seem to see coming in economic slowdown and contraction. jonathan: you can already hear it from the banks, saying we are

part of the solution, not part of the problem this time around. but you would be hard-pressed to say it wasn't down to the fed and fiscal authorities. it definitely was. the last couple of quarters, these banks benefited hugely from the unprecedented booths from fiscal authorities -- unprecedented moves from fiscal authorities and the federal reserve. sonali: the first part of the year was propped up by government stimulus, and debt underwriting had to slow because of that. you and i are talking to james gorman tomorrow. how is he going to answer that question in terms of what they need the government to do next? at the beginning of this crisis, wall street and washington had a very symbiotic relationship. all of the bank ceos and ken griffin down in washington with donald trump -- well, facetiming i guess -- but that relationship has started to sever as things get rougher. so keeping the peace between

wall street and washington will be some thing to watch. jonathan: sonali, thank you. the stock up by a little more than 3% in the premarket. for equity futures, we drift a little bit higher, heading north on the s&p 500 by 42 points. we advanced by 1.3%. tom: i am looking for an entry point and i can't find a great one. the dow up 450 points. atwill get a dow print 27,000 in about two cups of coffee. we welcome all of you on bloomberg radio and bloomberg television. ." is "bloomberg surveillance what we do is conversation from the emotion and the character of wall street with sonali basak. now we look at the financials with the wonderful alison williams of bloomberg intelligence. why in god's name does goldman sachs want to be a big bank when they seem so successful with their heritage and what they are doing right now?

alison: you say that this quarter, but a year ago, a lot of critics would be out there saying this model doesn't work, etc. business, but i think they want to add some diversity to their business. .hey've had some opportunities we think the banking business mix a lot of sense for them. i'm also going to cut to the line number.ttom at 13.6%.l ratio they have a new hurdle. last quarter, they were well .elow that hurdle

even though we talk about trading being unsustainable with . huge blowout quarter that should take away some of the dividend fear. lisa: when you talk about building up capital and a little -- and almost a $30 billion set aside by big banks when forward, amount a conservative likely to be more than they need, or is this a sign of just how bad they think things will get? alison: i think time will tell, but this is a conservative it does reflect the very bad economy. but i think it is a common nation of both. they are making all of this money in trading. they have the money to set aside and still turn a profit at some

of the bigger banks. wells fargo is a little bit of a different story. but they are in the capital position to be conservative, and that is what you would one from the banks. , theere talking earlier ceos pointing out the uncertainty. we think that is prudent. point? iknow at this think the fact that they are preparing for a bad scenario -- preparing for a bad scenario, but if anything, we are about half the .ate risk that they want to get behind them, and they show some progress there. tom: alison williams, you and i remember in the way you measured your success on wall street was taking off all of august.

here?does banking go from do you expect a massive roll up, including efficiencies involving thousands of jobs? where do things look in january given expense control? alison: on the digital side, it has been a sort of lengthy progress. what we have heard from some management is really just not necessarily a step change, but you're obviously getting a lot more activity. i think you are going to continue to see the kind of things like we see at bank of america, where they are not necessarily closing their branches, but they are transitioning their branches. they are moving their workforce to more sales, more front facing

come over they can hopefully bring in more revenue. jonathan: live on bloomberg television and bloomberg radio with alison williams. we had bank of america put out the fund managers survey in the last 24 hours, and it delivered saying longndents u.s. stocks are the most crowded trade. we foot setback to the more cyclical parts of this market. how underground are some of these names? -- how under owned are some of these names? alison: the financials have not kept pace with the market recovery. it is tough to say if the financials are more bearish and seeing a lot more negative in those trends, or if it is something else. we have sort of moved to a world where we are focusing more on income. for goldman it was more of a capital issue. they've come to where they need

to be, but to the extent that we are still in an incredibly uncertain economy, look at j.p. morgan's comments yesterday. mathematically, they have tons of capital. they have very strong earnings. there's no problem with their dividends. however, if we start to go down ,nto a much worse environment is that the catalyst for banks to just go into capital conservation mode just to be prudent? will there be increasing pressure from regulators? i think to the instant -- to the extent that the uncertainty continues and we have that worry, it is a little more difficult for the stoxx, but i would point out, very different this time. it is not a capital concern that they need to capital to survive and be solvent. they may just want to conserve that capital. jonathan: great to catch up with you. goldman sachs delivering some record numbers and that balance

sheet. across the board, a big beat with goldman. mentioned some of the words of jamie dimon. this is not a normal recession. the recessionary part of this you are going to see down the road. you are just not going to see it right away because of all of the stimulus. that is exactly what you were talking about. tom: the stimulus we see within the relative success of these earnings as well, and he banks to come all benefiting from it. what i would focus on here is everything gets sped up in a recession. the five-year business plan becomes three years, and to get out bonuses in february is going to be a real task for these executives. you can do efficiencies, but allison alluded to it, there is a new technology overlay on this which is a great unknown. the digital side of this.

you know this better than i do because of your britishness. other parts of the world our way out front of us on taking in digital banking. jonathan: i removed -- i remember moving here for five years ago, walking into a duane reade with a contactless payment card, using it, and the person looking at me like i was a magician. incredible how far behind the u.s. is on digital banking. the forces of this pandemic have turned the accelerator up on some of these forces. everything has sped up. tom: absolutely. we are seeing the vix come in. it is really interesting to see, as we go through this trading day, do we have the tech lag we have seen the last couple of days? with the banks, we may get a broader lift to the market. jonathan: equity futures up 40 on the s&p 500. we advanced by 1.26%. goldman sachs up by 4%.

this market is doing better. is the rotation back on? we will ask that question to jared watered -- to jared woodard. this is "bloomberg surveillance ." ritika: with the first word news, i'm ritika gupta. china is warning the u.s. to stay out of hong kong affairs after president trump ordered an end to hong kong's special status. he also signaled sanctions on officials cracking down on political dissent in the city. a vaccine produced anybody's for the coronavirus for the first time in its current test -- produced anti-bodies for the coronavirus for the first time in its current test. the trump administration has reversed itself on student visas after a high-profile fight with harvard, m.i.t., and hundreds of other schools.

the administration had required that all international students take at least one class on campus. many are preparing online instruction only. google has agreed to buy a $4 billion stake in india's jio platform. that makes a large u.s. investment into the online venture. google will receive a 7% stake in jio. earlier this year, facebook took 10% stake. supreme court justice ruth bader ginsburg is in the hospital for the next few days, being treated for a possible infection. the 87-year-old is a four-time cancer survivor. she was appointed to the court in 1993. 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'm ritika gupta. this is bloomberg. ♪

>> this tension between the u.s. and china israel. it is not coming away -- and china is real. it is not going away. co there: david bian

on the situation between the united states and china. a real lift on the s&p 500, driven by decent gains off the back of goldman, up 4% in the premarket. your equity market up 42 on the s&p 500. one key question heard worldwide in financial markets is the to 0.64%. there's year euro-dollar. this is the story. dollar weaker, curve steeper. underperformance for u.s. tech. will that continue? dxy, sittinghing on support. right now, a really important conversation because i feel every day to pay attention to the buy side. ceos ando talk about

all of that. tonever give enough credit the boring institutional money out there doing our retirements, doing our institutional charitable foundations. bank of america has a franchise in research of trying to figure out pulse of the buy side. is an important conversation, and i would say in the history of bank of america's research, there's never been a more important time than the pandemic and to figure out what the people scared stiff about the equity -- about the actuarial assumption are thinking. watered, bank of america securities head of research and esme committee -- bank ofodard, of the securities head research investment committee.

good to have you with us. jared: everyone essentially crowded into one trade, which is tech. on one hand, it is not quite as dangerous at this moment to own tech as it might seem. for one thing, a lot of these stocks turn out to be more defensive than history would suggest. but at the same time, we see one big risk to the very crowded positioning that everyone has in place, and that is the risk of a genuine economic rebound. of thet a return to form secular stagnation, low growth, low inflation, but in the instance of a genuine economic uplift causing a huge surge in research and develop, corporate. if you get that kind of macroenvironment, that would be a big risk to the crowded trade everyone has in place. tom: you've got a wonderful double degree, philosophy and theology. i want you to explain to me the

panic in the institutional buy side over where the actuarial assumption is going. the mass doesn't work. jared: it isn't. it is an essential risk. but if the mask doesn't work in the long-term, that is why people are increasingly pushing out of treasuries come out of duration into more equity like investments and part of the credit market that have a little more risk because they have to get some yield somewhere. that is a big theme, where you can go when yields are low. it is important that the fed support fiscal authorities. some asset classes are a little safer than they were. we can talk about moral hazard. we talked about long-term solvency issues on the horizon. at the moment, what we are seeing from a lot of investors, both in terms of households, institutions, everyone really come are looking increasingly at

these alternative asset classes and riskier parts of the credit market because they have to get yield pickup somewhere. lisa: you can look at philosophy , but the bottom line is, as you point out in your research, 77% of s&p 500 stocks are paying dividends that are higher than treasury yields. how long can this subsist? how long can these companies keep such high dividends relative to borrowing costs without that compressing one way or another? jared: historically, that gap has fallen when economic conditions recover. that is more a function of treasury yields rising then functions falling. that has happened in the last three or four economic cycles. wrinkle in thene story today is it does seem really difficult to imagine how treasury yields could rise sharply, if for no other reason

then everyone expect the fed to join other central banks in yield curve control. if it is not yields rising, it is the other thing. it is the prospect of increasing theral-bank issuance, issuance of expensive new investments, which would be really bullish for growth, but also painful for treasury owners. for that reason, that is why we say it is all essentially one big trade. or are long defensives, you are starting to look for avenues to bet on a meaningful economic rebound. lisa: there's also companies cutting their dividends. how concerned are you about the fact that we have seen companies cut their dividend to the fastest pace on record this year, with the likelihood that is going to continue in some shape or form going forward? jared: we are not overly concerned about that at this

moment, if for no other reason then the amount to policy support that has come online has made some of those cuts unnecessary. there's certainly political pressure, may be pressure from shareholders to shore up balance sheets. a lot of institutional investors continue to say increasing buybacks, increasing dividends was at the very bottom of their list of priorities, which was very understandable at this moment in the business cycle. but medium-term and longer, we don't expect cuts. one of the reasons we are suggesting this is take a peek at european banks, for example. may be to your watchlist because there is the prospect of dividends -- jonathan: the letter conviction here, take a peek. [laughter] you call me up and say take a look. what does that mean? jared: i am being cagey because they are some of the least owned

assets in the world. my contention is that there is a really great value opportunity there. if things continue to go when you're with the fiscal policy, and maybe they get permission to pay dividends again, that is a really profound opportunity. jonathan: we are going to leave it there. always great to catch up with you. you know what this is about. jared can come back in a couple of weeks and say, i told you. take a peek. just have a look. on isn the buy side, dead a carefully balanced portfolio. that is what the general counsel at every firm tells these guys to say. they are hedging every way towards diversification. they are doing that in a market that is the most non-diversified i've ever seen. just publishing moment's ago, says watch equal weighted spx. jonathan: it has really outperformed over the last few months. we will get cyclical rotation away from big tex.

s&p 500 futures advancing on the essence -- rotation away from big tech. s&p futures advancing. good morning to you all. this is bloomberg. ♪ it's pretty inspiring the way families

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>> the fact is we are likely facing a slower growth, sluggish economy as we recover out of this, and that is a great backdrop for secular growth. >> in an environment where unemployment is going up, and for those in work, there will be that fear of the specter of unemployment coming down the tracks. >> a lot of businesses are not buying into the v. they see a different destination regardless of the journey. >> this is "bloomberg keene,lance" with tom jonathan ferro, and lisa abramowicz. tm: you listen to