going to be a lot more unemployment coming, a shift from what was temporary climate to permanent to some degree -- temporary unemployment to permanent to some degree. >> they have to right size their businesses. >> not everything is going to turn on right away. some things that were turned on will be turned back off for a while. it is going to be bumpy. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: good morning, good morning. this is "bloomberg surveillance ." we are live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. times havehow many we woken up in 2020 to say rising u.s.-china tensions? this morning we are doing it again. tom: this is developing as the entire world waits to see how china will respond to the closing of the houston consulate

by the united states of america. you go out and look at all the speculation. i would suggest right now it is speculation about what china will do, but there is no speculation that they will do something. jonathan: there is a broader story to acknowledge, whether it is the economy and trade, whether it is foreign in the , the commonsea denominator is trust and the lack thereof. you see it playing out more in the last couple of months. tom: it is worldwide. syrian duncan smith was on -- .ir ian duncan smith was on there is a global messaging here about china and what to do with their economic and military assertiveness. jonathan: for the equity market, we are down just eight points on the s&p 500. market participants don't know what to do with that story. this has been the take away for the last several weeks, every

time we see a headline like this. we come back pretty quickly. lisa: trade tensions were a tear bleed through into the economy. result, an unclear less fuzzy result that we are is the crude oil inventory report at 8:30 a.m. i am very interested in that, given yesterday we saw the biggest jump in oil inventories in the u.s. may, leading to a decline in demand. sellp.m., u.s. poised to $17 billion of 20 year bonds. why doesn't the u.s. sell more long-term debt? a debate. after that, microsoft and tesla reporting earnings. if you say anything bad about the stock, you get a ton of hate mail in about two minutes. tom keene's lived it. i've lived it. i'm sure you have lived it as well. you can't question this move.

let's get amy wu silverman to talk about this, rbc capital markets equity derivatives strategist. fantastic to catch up with you. big earnings day with the like of microsoft and tesla in the mess. -- with the likes of microsoft and tesla in the next. amy: i guess i am interested in that hate mail. [laughter] jonathan: you don't want to. amy: i almost forgot that microsoft was reporting as well. tesla has been a name that has completely upended the historical relationships that we have typically seen for years and years and the options market. what i refer to specifically is the call option pricing at tesla has been inverted for a long time, meaning the call implied

volatility is greater than the put in paul's -- the put implied volatility. it hase times for tesla, inverted going into earnings. obviously s&p inclusion is key to watch, but there's also a lot of technical dynamics, non-with the name. it is pricing in about a 16% thattonight, and i think is probably fair, even though that looks historically high, just given how important this particular earnings is to showing potentially the past towards s&p inclusion. tom: i am sure you set in princeton statistics and derivatives, and there was a point where your eyes glazed over over the square root of n, which is a sample size. the simple structure of the equity market is not normal, where we are all weighted towards six or seven glorious stocks. can you do actual derivatives analysis given how different the

market is? amy: it is really interesting. we look at these performance numbers. a lot of people say the market has done this and that, and you are right, sample size of n has essentially become amazon, netflix, faang, what have you. it is a handful of names. it is still obviously the ability to look better businesses that are still there. you just kind of have to adjust a few things. one of the things you have to adjust for is when we talk about the different factors, so momentum versus value, which people have watched closely for a long time. i think it is important to acknowledge that when we say momentum, we basically mean tech. when we say tech, we basically mean these five to seven stocks. , when wep six months talk about whether or not these factors will change, we are essentially just saying, look,

are these faang stocks going to go up or down? i think people trying to make these more factor or index -bsdrf comments -- index based comments really comes down to what you thing is happening with these names. lisa: you look at the fundamental analysis, as well as the technical analysis, based on positioning right now. would you recommend hedging a bid against these big seven names that are basically dominating the index? amy: yeah, and to be quite honest, in the options world we often just think about things in terms of risk-reward. hade are names that have unbelievable rallies to the ,oint where, similar to tesla their options landscape has inverted. essentially, one step i thought was interesting was out one year, you can sell 60% to 70% upside in something like netflix and own 30% downside, meaning

you are retaining substantial upside because the call options are so expensive to own a hedge. portfolio -- if you are a portfolio manager who owns these names, that risk/reward makes a lot of sense. even if you believe that we will to safetyo get flight in these names, it is about that of opposite -- that proposition being at historically high levels. lisa: where is it historically high when it comes to taking risk right now? amy: one thing i thought was interesting was this weekend, howof the posts i wrote is i was surprised at how complacent the market is. i was just thinking anytime the republicans and the democrats are supposed to agree to anything, it seems like a little of the should be a little higher. obviously there's china/u.s. tension in the headlines today,

but the next few weeks we are .lso going to have an agreement coming into this week, options prices were coming down, in particular the short end. i would hit that would probably need to rise. you say the market remains complacent. what do you mean by that? amy: option price to own a hedge to buy downside protection was relatively attractive for august. given the headlines today, everything is probably going to start to pick up, but , it probably makes sense to own put protection, selling upside to own a put, given that prices were below average over the last pandemic period. jonathan: are you satisfied that

we have seen capitulation to the upside? i just got a headline that says is in a packedes ctth pfizer for -- in a pa with pfizer for 100 million covid-19 vaccine doses. are enough people allocated for a move to the upside that you the other way -- that you should move the other way? amy: just to put a wrinkle in it, it comes down to that sample size and because the minute we get a vaccine, i think we are going to see an extremely violent rotation out of momentum and into the cyclical and value names. what that means is all these names that were covid flight to safety names, your large text plus momentum names, i think .hey begin to underperform there's not going to be as much need for they work from home

names, so you will see .nteresting divergence you go extremely heavy to those , whichum based names means owning that downside which is remarkably risk/reward attractive makes sense. jonathan: love catching up with you. amy wu silverman there of rbc as we count you down to the opening bell in new york city. equity futures recovering, down just 0.2% on the s&p 500. the story from yesterday that follows through into wednesday is a weaker dollar. as this session grows older, that delegates weaker once again. me at least, that has been the story as the renewed dollar weakness. tom: you've got the blended dxy index through 95. see as a big deal, to

handle of 94 on the dxy. you see it in sterling as well. but we didn't get to me on that i think is so important is usually what gets people into trouble is leverage. i really agree with her point on the sample size here is so odd. but the huge mystery going into august is the leverage, the use of leverage within the system. jonathan: the use of leverage, and whether people have really allocated to this rally. that has been the story for me over the last couple of months. we have seen it in the fund managers survey from of america, that slowly it has -- from bank of america, that slowly it has come down. have we gotten capitulation yet in this market. lisa: it doesn't seem to be the case yet. on this headline from pfizer, you see the nasdaq turn positive. it seems like there is still more there. the leverage has been moved to the corporate debt sector, where you still see a record amount of debt issued. jonathan: coming up on this program, adena friedman, nasdaq president and ceo.

this is bloomberg. with the first word news, i'm ritika gupta. china calls it unprecedented escalation. the u.s. has ordered the chinese consulate in houston to be closed, according to the state department. it is to protect american intellectual property and american private information. beijing has warned it will retaliate. last night, houston firefighters went to the consulate after reports that documents were being stored in outside containers. president trump has rebooted the tone.virus he says the virus will be defeated, but says it will probably be worse before it gets better. republicans putting together a coronavirus relief plan that broadly supports the idea of more relief checks to individuals, but there are

doubts about president trump's payroll tax cut. the differences threaten threatened to push any action on the stimulus into next month. the democratic party platform is sticking close to joe biden's line on major policies. according to a draft, the policy will call for universal health care and remaking the justice system, but stays away from goals pushed by progressive democrats such as medicare for all. it has been called elon musk's has -- thend the ceo second chunk of it. rose overrket value $150 billion yesterday. that means musk can exercise stock options that would give him profit he sold. one catch, he can't sell the shares for five years. 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. ♪

>> on behalf of the american people, i want to extend my condolences to the

british people from the hurt you have experienced from this pandemic. secretary mike pompeo on china. he is not shy to tell us what he think that all of the chinese communist party. alongside tom keene and lisa abramowicz, i'm jonathan ferro. for theyou prepared opening bell this wednesday morning, here's the price action. equity futures down just seven. we are down 0.2% on the s&p 500. the bond market with the smallest of bids, down a single basis points on tends to break at 0.59%. there it is in the market once again, renewed dollar week. , $1.1567.r breaks up tom: i think that is a great data check. 4, 5, six days in

a row of an additive nuance to move, it really means something. 0.58% 10 year. a high, $1800 an ounce. highern: the breakdown in the yield market, the move higher in the gold market, and the move in the dollar people have been waiting for. the likes of hsbc are pushing back on this. if you are expecting a broad-based, durable push in the dollar, we will have something more nuanced. but you have seen people line up behind that view. we are starting to see just a little bit of it. i have no idea where it goes next. tom: this is the debate that keeps "bloomberg surveillance" going. david bloom at hsbc saying maybe not. jonathan: i think he called the u.s. dollar a bad host. you might not like the food, you might not like the manager, but you have nowhere else to stay.

tom: kevin cirilli doesn't give a damn about the foreign exchange market. he's our chief washington correspondent. he goes, could you guys get to me and stop yapping about the dollar? the news flow is extraordinary. i've got to start with china as well. how does tit for tat and -- tit for tat end? kevin: you've got secretary as theyraising the u.k. are closing the consulate in texas. you and i have talked about this before, whether it is the secretary of state traveling and orising higher education telecommunications in the private sector, trying to rally support across the seas to form an international coalition and a network to combat china's aggressive stance on 5g networks, or yesterday john

demers, previously of boeing, announcing the indictment of two alleged chinese hackers who try to access covid-19 research in the united states and around the world. this is without question an escalation of u.s. foreign policy against china. i got to be candid, i think eli lake, that wrote a column about this on the bloomberg a couple of weeks ago, was spot on about how the change in u.s. policy, not just the trump administration, but democrats and republicans alike, really re-crafting how they deal with beijing. tom: what is the distinction between democrat and republican responses to tit for tat on consulate closings? kevin: alliances. when i talk to democrats, they say the united states is going to need to restore its footing in the world, especially with europe, in order to pressure the chinese to back off on some of their aggressive stance's. republicans would say it is with

the aggressive, unpredictable uncertainty that has allowed the united states to continue to be a bit more unpredictable in dealing with xi jinping. two their point, if you look at the development of the united kingdom and huawei, for example, they will point to that as an example of their foreign policy working. jonathan: let's turn to the fiscal debate and the uncertainty around that. the last 24 hours have been encouraged, that the republicans agree on brought concepts like checks to americans, like extending enhanced unemployment benefits. it is all about size. as long as you are negotiating size and not concepts, i can see a path forward. do you? kevin: yes. from the standpoint of a timetable, secretary mnuchin saying after that meeting with speaker pelosi yesterday that the timetable they are working on is to get to some type of agreement by next friday, that, quite frankly, could run into political hurdles, especially

given how far apart not just the trump administration is with democrats, but frankly, there is some daylight between the senate majority leader, as well as the white house, on the issue of payroll tax cuts. there's also this incredible debate about $1 trillion versus $3 trillion. democrats pushing for a much, much bigger type of economic stimulus that is needed. but from the issue of politics, here is where i would pay attention as relates to 2020. if the payroll tax is not included, as it might not be, in the next round of stimulus, expect that debate to come back as we get closer to the election because there are 50 million americans who desperately need some type of financial assistance. the trump administration is pushing this payroll tax cut because they are looking at the middle-class workers who have been able to fortunately keep their jobs, do not go through furlough, and who are wanting some type of economic relief as well. the administration and republicans that support this

are saying that could be a smart political calculus that could get done in the calendar year. lisa: is there enough momentum, enough agreement to get something done by the end of next week when the enhanced unemployment benefits run out? maria: i will keep this quick -- kevin: i will keep this quick. i am not sure that i could guarantee the economic stimulus would come by next friday. if you look at senate minority leader chuck schumer's comments yesterday, and which he said the democratic caucus will hold together, i think you could see some political theater really start to develop from washington over the next couple of days. ultimately, based on my reporting, i think they will reach a deal. jonathan: great to catch up with you. this is the tragedy of all of this right now. i imagine they are going to make a deal. it might take a couple of weeks. the fact of the matter is, for the people that have depended on the extra on benefit at the end of the week, the end of the month, and expires.

for a lot of people facing that uncertainty, that is a terrible position to be in. tom: there's a working number of 20 million people. i think it is one of the greatest miscalculations in modern america. it is extraordinary. where will we be in seven days? jonathan: i think we should say this. a couple of weeks ago, the republican party was talking about just letting them expire. now there's a conversation. i do think we can make an agreement with democrats and republicans. it is just the timeliness of it that is really upsetting. tom: i think they know the urgency. you just have to push the process aside. the criticalness of this into next week, i can't give you the exact date, but the immediacy of this is way before august. jonathan: couldn't agree more. just down five on the s&p 500, off by not even 0.2% now. coming up on this program, adena friedman, nasdaq president and ceo. from new york city, alongside

tom keene and lisa abramowicz, i'm jonathan ferro. this is bloomberg. ♪ 49... 50!

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♪ jonathan: from new york city, this is "bloomberg surveillance ." we are live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. two hours away from the opening bell, here's your price action. good morning to you all. equity futures down just 0.1% on the s&p 500, down a little more than four points. earlier on the session, much lower on the back of rising tensions between the u.s. and china. it feels like a throwaway line. it's not. we will talk about that a little bit later. in the bond market, yields come down a single basis point. 0.59% is your yield on the 10 year. in foreign exchange, the euro starting to break out, the dollar starting to break down. $1.1568.ar at we said the same thing,

underwhelmed by the response to what was agreed on the continent in brussels through the weekend. i think a massive moment, and very little reaction to it over the last couple of days. bondthe partition is your market, complete non-movement. in foreign exchange, it is tangible. as kit juckes mentioned this morning, we got quickly to a $1.15 double. i see people reframing out to a llar, euro $1.20. i would suggest it takes a lot of inertial force in the market to go out to $1.20. that is a huge mass of movement. jonathan: to see italian yields on the 10 year still hanging out north of 1%, compared to the 35 basis points on the 10 year maturity in spain, is still a big spread. what we have engineered in europe is a massive pull of

fiscal firepower. they might not use it anytime soon after their initial disbursement of grants, but in the future, we got another backstop. i think has to go some way to eroding redenomination risk and reevaluating what euro is worth. ft" did a nice treatment of that come on the market to come. it was really quite constructive about the future of actual bond transactions with a united europe, and that is something new. i think we have been great about the moment that that is. joining us now, i do know freedom and, nasdaq press ash ,oining us now, adena friedman the nasdaq president and ceo. this primal scream i hear right now across global wall street is that everything is free. as you well know in retail, things have run amok. we've got free trades, free

trades, and all of this is trading. there's a new mistrust about business is done for retail in america. are you concerned that retail is getting a fair deal in this new, high-speed, online economy? adena: i definitely think the environment for retail investing has really been pretty great over the last 10 years. think the fees that retail has had to pay to be able to enter the market, the democratization of markets by allowing them to have direct access to the markets over the last 10 to 20 years has really been a key trend that has driven the u.s. markets. i do think that is a longer term trend. the fact that commissions have gone to free has certainly driven more demand within the retail environment, and retail investors coming in. tom: but is it a free lunch? this is a key thing. i go back to our relationship with arthur levin and his respect for the individual investor 30 years ago. is it a free lunch?

schwab says it is free. te deum era shade says -- td ameritrade says it is free. is it a free lunch? adena: first of all, it really is free for retail. i was at nasdaq with arthur levin during his tenure, and i think he was on a mission to make democratized access to capital markets. i think he went a long way in that regard. online brokers have done an enormous amount, and i think at the end of the day, they are getting a good experience. the spreads in our markets are extremely narrow, which means they are getting good execution, and they are not having to pay commissions into this market. for them, it really is free access. lisa: the spreads might be narrow. are there sufficient protections against losses in companies, say, in china that are filing for ipo's here, trading without necessarily the same oversight that u.s. companies face? adena: that is something we have

been active dialogue with the sec about. to have age them roundtable. all of the exchanges, we play a big road together in trying to make sure we create the right kind disclosure regime for companies coming to the u.s., including companies from china. there are some differences in terms of the disclosure obligation that companies have coming from china, as well as some reduced oversight that the that supportrms these companies. that is an area that we are focused on in trying to create positive change. i think the ftc is also focused on it. those that require some diplomacy between the united states and china, it is something we have really been a rigid -- really been encouraging them to focus on. jonathan: you've been incredibly proactive about all of this. can you walk us through what you have done specifically? adena: we have definitely had some concern, that we want to

make sure we play our role in addressing. we've increased oversight of the accounting firms that are being used by chinese companies. theormally will he rely on ftc for that, but we want to make sure we have some oversight on the firms. is we havehing actually increased requirements for companies listing from china. all of those things are things we can achieve, but it is really a broader ecosystem issue that we want to make sure the government is working with the chinese government to address. tom: the backdrop for this is the alibabatant, and grand cayman's positioning of years ago, but then you have the wire -- the wire drama -- the wire card drama in germany

for musica. do you think they are doing their duty? adena: they take it extremely seriously, in terms of disclosure obligations for companies that choose to list in the united states. i think they do an excellent job of managing these, reviewing the companies, being very proactive and writing back questions and comments to companies with their filing. it is a huge part of their role. they are doing shanghai and hong kong. great. is that a loss for you? do you care that you didn't get the ipo? adena: i think we should look at the u.s. markets at the place where any company from around the world would want to go public area i think we would like to see every company from around the world choose to list in the united states. tom: then what are you going to do about it? the president is out there with

the politics of the moment. maybe the president next term will be the same way. what can you do proactively to maintain america as a place to do capitalism? adena: first of all, we are the engine of capitalism here in the united aides, and we are really out of that role area we want to create a fiction with -- really proud of federal. we want to create a frictionless -- really proud of that role. we really want to create a frictionless environment. i think that is something we have to make sure we create that balance, making sure we have the right kind of quality coming into the united states, but also making the capital markets and maintaining them is open markets for the world. it is a fine balance to strike right now. have you rejected certain ipo's based on the disclosures? adena: we definitely have.

we go through second-level review and reject companies we don't meet our standards, even if they have gone through the disclosure process at the ftc. jonathan: thank you very much for joining us. i dean of friedman there ash adena friedman -- i dean of friedman therena , nasdaq president and ceo. fact that this was ever allowed, and for such an extended time, is just remarkable to me. you can see how proactively the exchanges themselves are working on the issue area. tom: this is one of those great surprises when you wander through the curricula. there's like 14 sets of rules out there, and it really varies from the united states to how

they do business in england, how they do business in germany, and indeed, how they do business in auditing, and measuring the audit across the statements and asia. jonathan: i do wonder the questions it raises for the exchange to ramp up its own qualitative assessment of auditing firms. adena wasught brilliant on what they are trying to do. she is being diplomatic area i get that. but you are dead on about the austin of, ok, they decided not to -- about the question of, ok, they decided not to come here. what are the ramifications of this in the future? jonathan: are chinese companies going to change the way they approach listing in the united states, or will they just stop listing in the united states? lisa: there's a question of the consistency of the policy, of the diplomacy. she is hoping that they can get something together to be able to give some sort of consistent

message to businesses, and without that, how much does that uncertainty affect his plans going forward? jonathan: let's get to the price action of the morning. we are negative six on the s&p 500, down 0.2%. in the fx market, we start to see a move in the dollar again. $1.15.llar the $1.16 approaching handle on euro-dollar. tom: the world coming to an end. finally a weak dollar. actually, it is a very elegant chart. the dxy chart has a thrust to the weaker dollar. jonathan: i'm with you. i think this is the point that david bloom at hsbc is trying to make. you can get that rotation back away from the dollar to the euro to the aussie, but to have a sustained, durable move in the u.s. dollar over several years, which is the trade to push, that

is a separate argument. tom: no question about it, but we've got to admit a weak dollar comes off huge positive news out of europe. that is going to last for only a while. jonathan: maybe. coming up a little while later, microsoft after the close, as well as tesla. up next on the program, joseph denardi, stifel nicolaus analyst. this is bloomberg. ritika: with the first word news, i'm ritika gupta. another sign of worsening relations between the u.s. and china. the u.s. has ordered the chinese consulate in houston to be closed, according to the state department, to protect intellectual property and private information. china calls the move unprecedented escalation and is threatening to retaliate. firefighters went to the consulate after reports that occupants were being burned in outside containers. president is warning that coronavirus endemic will probably get -- that the

coronavirus pandemic will probably get worse before it gets better. the president resumed daily briefings three months after he upended them. polls show that the public blames him for failing to control the outbreak. president trump speaks today on what he calls combating violent ryman american cities. his put -- violent crime in american cities. his policy appeals to his base. mayors around the country warned they will resist if the president sends agents to their cities as he has to portland, oregon. u.s. health officials have agreed on an order for 300 million doses of a coronavirus vaccine being developed by pfizer and bio intech. it will not be paid until there is approval or authorization for the taxing. president trump reportedly asked the u.s. investor to britain -- the u.s. ambassador to britain to help get a golf tournament played at his golf course.

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. ♪

>> it will probably unfortunately get worse before it gets better, something i don't like saying about things, but that is the way it is.

we are imploring young americans to avoid packed bars and other crowded indoor gatherings. be safe and be smart. jonathan: there's a shift from the president of the united states. from new york city, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. we got ascent of this in the last couple of days. republicans are starting to panic about november. we saw it was senator ted cruz in texas, worried about texas getting flipped in going blue. we see it in the administration as well, clearly urging the president to make a change in approach. seeing him stand there alone, trying to control the message, the story of the last 24 hours. tom: 103 date is -- 103 days to the election, and day 99 is beforeonally a shift they regroup and move forward. acrossn the dash october. all of that is blown up this year. jonathan: in a big way. isn't that the story going into

november? these polls matter. the president over the weekend said these were fake polls. the way they have responded coming into this week tells me that these polls are loud and clear for this administration. lisa: the question is how it will be received by republicans that have largely largely esch ewed mask wearing the present. will they change course? jonathan: will the polls start to turn in response to a president taking center stage again? tom: i would note that it was a short press conference last night. maybe that will continue. right now on the wearing of masks, it is nowhere more sensitive then the compressed cabins other airlines. joseph denardi is at st ifel. what he has done different is that he actually has buys on the airlines.

are you bottom picking there? on do you construct day buy a company and an industry -- how do you construct a buy on an industry in the company fighting for its life? joseph: you have to believe that the demand for travel will return at some point, and consolidation in the industry will increase earnings power for the survivors and the airlines in a position to play off of them at some point. therlying all of that are work we have done related to how much money airlines make selling miles to credit card companies. that portion of the business is substantially more durable than the core airline business. there's real value their longer-term. obviously we need people to travel, but there is tremendous

value there. united validated that with the debt raise they did a little while ago, where the credit market essentially valued their loyalty program at $20 billion to $25 billion. there's an asset there that is still under appreciated the market. united use that word, survive. that was in the release after the bell yesterday. to survive, who needs a dance partner and who can fly solo. i think this is an industry that has wanted to consolidate further. it is very capital-intensive. ishink the public perception that it is not particularly competitive because there are fewer airlines now than there were, but the remaining airlines are larger, so the number operating per route is the same now roughly as it was 15 years ago area i think that the industry wants to consolidate.

the doj has been the limiting factor there. would lovesouthwest to strengthen their presence on , andest coast with alaska there would be a number of , thates, delta, united would be interested in jetblue. happens, theat earnings power that would would help offset the structural impact from businesses and corporate traffic being lower for a time. lisa: does anyone go bankrupt? i am thinking of american airlines in particular, which is had a more difficult time raising any. depends on thel pace at which demand recovers does not recover. then it comes down to how deep of a hole american is willing to dig to avoid bankruptcy. american has access to significant capital, probably

another $10 billion, more than $10 million via financing their loyalty program. it depends how much of that they want to do, and at what point the board would say we could raise additional capital, but it would put us at such a competitive disadvantage on the others out of this that it is not worth it area i think that is the decision i had of running out of access to capital area -- to capital. lisa: at what point are these debt raise is not worth it? they've raised billions of dollars into an environment of slowing growth area at what point does this become a huge liability for their business and after the pandemic? joseph: it is a very good question. i think we are nearing that point because at this point, the cost of that capital has been relatively reasonable. obviously, american had a pretty expensive debt raise, but again,

if demand comes back, they can pay that back relatively quickly. the question becomes, for american, financing the loyalty program can get very expensive. they would go to citi and offer citi a very significant discount . price at which citi would buy the miles it needs to buy over the next few years to front american cash. that is what they have done historically. it is a very expensive, punitive way to finance the airline. i think if demand doesn't come back in the fourth quarter or goes away like it did in the second quarter as the virus comes back or does not, i think that is really going to be the inflection point. jonathan: joseph, thank you. , stifelenardi there nicolaus analyst. before the bell tomorrow, we

will get numbers from american airlines. the mission to survive was the mission in q2, and arguably into q3 and q4. that is the objective for many of these companies. tom: the money question here is a vector of the airlines as really a non-industry until about 10 years ago. frankly, the vectors have been very good over the last 10 years of responsible industry. to get off the map now, what do they go back to, that responsible industry, or once again and did three of chaos -- one to second -- or once again an industry of chaos? jonathan: they have been subsidizing the airplanes, especially transatlantic. they've got to start to make changes. tom: bring back the 747. jonathan: you want to start flying? that is going to be an extensive flight, tom.

up next on the program, scott wren, wells fargo investment industry who -- investment institute global equity strategist. this is "bloomberg surveillance ." ♪

>> fiscal stimulus gives us that shot in the arm. it buys us time to get there, but we thick markets are going to be increasingly focused on identifying a solution in the months to come. >> there's going to be a lot more unemployment coming, a shift from what was temporary unemployment into permanent. >> confidence is the elusive issue here. for those that are in work, there will be that fear of the specter of unemployment. >> this is "bloomberg surveillance," with tom keene, jonathan