market just collapsing. money went to the big tech sector. [closing bell ringing] and you have that fear about u.s. growth. i am notere and say, worried about the valuations. you mentioned energy, take a look at energy in 1980. look at their role in the markets, well eat point.rad 500 logging a game the week. >> what dragons higher? drag us -- dragged us

higher? apple, facebook. pinterest is up 36% today. >> take a moment to digest. romaine: they were so quiet on that. >> i purchase all my thoughts there. vital farms, the ceo on earlier. .> pinterest surging advertisers and users. one of the smaller tech companies. the advertising market is interesting to me. are of the businesses advertising, some are not. if there is another downturn, do they advertise? do they not? the chiefet's get to

market strategist at prudential. i want to get into the discussion with what we saw .oing on with the dollar there are pockets that do better with the weaker dollar. just taking a pullback, a breather. it helps financial conditions. you always hear it has not been networking well, but perhaps it will. the weaker dollar is good for emerging markets, commodity producers, those with heavy dollar-denominated debt, the weaker dollar helps them, but the emerging markets if you look at the indexes, it is about china, 40% of any index.

anetheless, it should provide tailwind for emerging markets within the u.s. and good for the materials names, the companies, should be good for exporters. exporters need demand. global we don't have demand picking up dramatically. when it does come a weaker dollar should help them. .ou have a stronger euro if you look at germany, the germans want a weaker euro because they are major exporters. on ae weaker trade-weighted basis. you have a federal reserve that is intent on lower for much longer, and you also have at the same time concerns over growth in the u.s. get will continue until we

to the other side of this pandemic and see whether or not the government is repaired to cushion the downside for the u.s. consumer. that helps to push the u.s. dollar down. nonetheless, any volatility in the market, geopolitical affairs, the dollar prices. it will still be the currency, along with gold, you want to be in. >> gold up 0.9% today. factoecoming the new de hedge over bonds, they get you nothing. >> it has been. you are seeing the cryptocurrencies joining the move higher, and poor man's gold, known as silver, also moving higher. gold has so many narratives, but seeingrative is perhaps

all this fiscal and monetary stimulus inciting inflation at some point. hedge -- serves as a gold also serves as a hedge of we see tensions rise, and also questions over the election. election, the last election, where everyone thought hillary clinton was going to win and trump turned out to be ,resident trump, gold got a bid the treasuries, thinking this is armageddon, and gold has that role when there is concern, but concerned about inflation. we have seen central bank buying of gold, and also chatter , the honghong kong

kong dollar. whether or not mainland china changes that, and we have a gold situation there, so gold has many narratives. the one that is not helping is the retail buying of gold and jewelry, china or india. that will come back when the global economy moves, and there will be a pullback in gold. the weekend's will sell the could be margin calls in gold and silver, but the trajectory is up. >> great to get your analysis across the markets. meanwhile, now that does it for the closing bell. "what'd you miss?" is next. ♪

♪ >> i am caroline hyde. >> i am taylor riggs. >> i am romaine bostick. hopes, up,isk on, the most since the month, the best since april. let's look at the deepest recession on record. -area falling.

the u.k. putting easing on hold. ti osoft in talks to buy ktok. this hour.igh in all that and more. taylor, take it away. area gdpntioned euro off 12%. come inside my terminal. number,hat u.s. gdp showing a 35% drop. we got some china data. all this putting into question the global recovery. estimates looking at at 2020 dropped, then hoping for again in 2021. for more, we are joined by our guest.

bill, thinking about the gdp data, how are you looking at the u.s. recovery relative to europe and china? bill: all this talk has created complacency. they seem to be better in terms of treatments and containing the spread, but european economies have been structurally slow to grow, and now there is a new globalization, where supply chains are much less globalize. they are dependent on china. we saw china's industrial production has gone up, but domestic demand is faltering, so there is a lot of question about whether the demand sign will be there to support it. there are doubts about that. in the u.s., we need to worry about how it domestic demand

will be bolstered by the fiscal package. romaine: with regards to the fiscal policy, when you fold monetary policy to stabilize economy's overall, overall, isies there the thought that tools for policymakers have run their course and you have to come up with something new, something different? bill: the fed put out new approaches to policy, not just low interest rates and flooding markets with liquidity. c worried about making sure debt markets can function and channel the funds to the right places. packages and policies in place, the balance sheet looks like it has stalled

and starting to contract, so we have to worry whether the fed is transmissionright channels in this post-covid environment. i don't think they are. people don't want to borrow unless there is demand because people are afraid of spending the way they used to, so the tool we need to put in place is doing a lot of, what others have done, by equities to support markets, because it is through ownership that we can have the innovations to transform our economy. we need innovations, not lenders who say i don't want to innovate because i want to make sure i get my money back. caroline: we have seen the fed by corporate debt. , one pointang apple $7 trillion market cap, does not

need it. cap,.7 trillion market does not need it. bill: i think it will be for smaller businesses. we need special purpose vehicles smallstart up and businesses like restaurants and retailers who want to innovate and say i'm not going to have a lot of people-racing activities in the next several years, so let's transform ourselves and be a restaurant where i can deliver good food to people without having him come to my restaurant , but how will i pay for that? it takes equity ownership. if we have a lot of equity securitizewhy not that so it spreads the risk around and allows the fed to support the markets. of this analysis on

prices with the weaker dollar, , the germaneurope economy is a big export economy, do we import higher inflation, or do we start to see increasing exports if this weaker dollar does persist? weaker you folding in dollar analysis with inflation scenarios? bill: the fed would love to see some pressure through imported prices or whatever. i don't think that will happen. no one has pricing power right now. to of the things we need worry about is when the weaker dollar will be a persistent trend. the u.s. is still the place of innovation in the global economy , and people look at the united states as a source of strength and safety, so as much as we have weakness in the dollar, i don't think it will be a long enough persistent trend to influence the global financial

flows in a meaningful way. we will get a lot of speculative flows that try to take advantage of the quick jump in the exchange rate, but the real stuff that creates jobs in the long run will not be affected. romaine: we have some critical aroundtings in the fall the election in the u.s. what is the main metric policymakers will look at to assess whether the steps they have taken have been effective in whether they need to do something more or let it run its course? bill: there is talk about how long this indulgent monetary policy will persist. inflatione outcome is or some combination that combines output and inflation, what our viewers need to worry theseit it is

micro-financial policies of supporting debt markets. how do they measure that and know they are doing well? that is something we have no metric for an something they will have to ask themselves, are we succeeding at the microlevel getting funds with a need to go, or are these loan programs of failure and it do we need to look elsewhere, and how do we judge success and failure at the microlevel? the toolkit of the fed, and that has to be worked upon. theine: yes, and raise alarm with congressional policymakers there. bill, great to have you on. bill lee, chief economist at the milken institute. a quick programming note. david westin's conversation with ibmy summers and the former ceo is coming up on wall street week tonight at 6:00 p.m.

they will talk about economic events and antitrust issues. you don't want to miss that. we will be back in a moment. this is bloomberg. ♪

the numbers would be far worse if policymakers had not fired a bazooka, injecting trillions of dollars of support into the global economy. these measures have propped up markets and in bold investors to plow into riskier securities, but all that has not been enough to offset the consequences of recession. companies are struggling to survive with little income and ballooning debt after borrowing cash to stay alive during the pandemic. investment-grade companies in the u.s. sold a staggering 1.3 trillion dollars of bonds in just the first half of the year, exceeding all of last year's issuance by more than $65 billion.

caroline: don't miss this special report tonight, the bankruptcy breakdown. now to a developing story. president trump is potentially anouncing a decision to order company to the vest itself that tiktok. buymicrosoft is in talks to the u.s. operations of tiktok. -- admits indst the middle of the glory, microsoft, i was also your tweets, thoughts, about how on earth you separate tiktok u.s. part of the story that doesn't make sense is tiktok operates everywhere in the world except for china, so

it is unclear why the white house would care about the tiktok operations outside of china. tiktok, tiktok operates all but in china, so it is not clear why were talking about tiktok u.s. versus everything being separated from ownership in china, so that is the confusing element. i don't know how you separate tiktok from everything else, when all of the technology leverages the global business of tiktok would seem very challenging to do that. that are lots of companies have tried to replicate the functionality that predate predecessor,he

none of those have caught on. that is the magic behind tiktok. i don't know how you separate that. romaine: this is a play for that technology. thread the trump administration and folks in congress seem to be pointing to is on the back end of this, you have the chinese government and their ability to access the data. create aa way you can separate company where that thread to the chinese government is assured to not exist? are a lot of apps that have connections to china that you use every day, games owned by chinese companies. it is unclear what makes this

one singled out over all, but the larger question is no matter what president trump or the white house once, we don't know if they will be in the white house in 90 days. it is unclear joe biden shares the same view of china and tiktok that president trump does , so we may be putting the cart before the horse. lot ine have learned a this country in terms of applications and their power. we saw the big tech hearings earlier this week. the reality is everything you do is being tracked and understood. it is not clear what the behavior or data that they are capturing that is so problematic or worrisome. i think it will be challenging to get rid of tiktok and shutting it down. making it a u.s. company as possible, not easy, but

possible. taylor: microsoft went through antitrust issues two decades ago. in front oft congressional hearings this week. they have $136 billion in cash. what is a potential microsoft acquisition of tiktok mean for microsoft? welldon't know microsoft enough from a stock standpoint, but from a consumer facing, if you leave off xbox, a lot of what microsoft has done has not worked out very well. using skype. everyone is using zoom. gotou look at mixer, which sold off, their competitor to twitch. you look at minecraft, which is amazing, but i don't think microsoft has meaningfully innovated. linkedin looks like nothing has happened to it since they bought

it. microsoft has not been exactly awesome with consumer-facing tech. i can see why microsoft wants to buy it. it may not be so exciting. what it means for tiktok may not be great given microsoft's history with consumer-facing internet apps. caroline: does this help anyone? ifthere is a big difference, you were to tell me that tiktok is being shut down or severely hobbled in the u.s., that would be very good just competitively for snap, facebook, and twitter. it is a war for consumer time, and it is an app taking a lot of people's time. in thed help everybody consumer mobile internet sphere exist, butt did not being sold to a u.s. company may

not matter very much. it is different ownership. caroline: this is bloomberg. ♪ thank you.

romaine: breaking news on the u.s. government debt rating, the outlook lowered to negative, saying the not look -- outlook has gone from stable to negative. fitch going negative. taylor: that was 2011 during the fiscal cliff crisis, then .oody's maintaining the aaa the reasoning for the outlook shifting to negative, fitch

saying the structural strength, the size of the economy, per capita income, dynamic environment, however this reflects deterioration in u.s. public finances in the absence of a credible, fiscal consolidation plan. , think of high fiscal deficits in war time, you don't worry about deficits, but later down the line, you have to address that, raising taxes, the high debt to gdp ratio. that is something goldman sachs mentioned as a reason for andaps for dollar weakness why the dollar may no longer be the currency of reserve. somethingng out with on the deficit and debt. caroline: 130% of gdp. by 2021,hat they see 130% of gdp, so clearly the

sounding of the alarm by fitch, one to watch in terms of the reaction of the u.s. treasury, whether yields get pushed a little higher. it tends not to occur when you see a country such as the u.s. get its aaa question. let's move and return to the story in a moment, but now let's cross the world of cargo, airlines may be lower on passengers, but cargo has become a major revenue stream during the major shift in the industry. now were joined by our guest, cofounder and managing director of cargo one, start up booking airfreight. you are receiving funds from big backers. i'm interested, first and foremost, about where you see the market for cargo going. how much is the sudden desire to ship cargo at the moment and how much more difficult it has become in the slowdown in taking passengers around the world? >> yeah, thank you for having me.

it has grown in importance massively. 35% is being flown on planes. that's roughly 100 billion annually. roughly 50% of that is flown on passenger planes. you can imagine that would have a huge impact over the past couple of months with covid hitting passenger airlines and a ,ot of flights being canceled with 5% of capacity remaining. have airlines that traditionally focused on passenger traffic are now seeing a major shift in strategy. they start to invest into the cargo business, as demand for increasing with trade, but more importantly, the ,redictability of supply chains

thus the demand growing. while it was a byproduct for airlines for most of the past few decades, it has changed massively. that in q2, 70% of revenues now comes from cargo operations, which is crazy, compared to what it used to be. romaine: over the last few pushes, there was a huge to international trade, this on-demand inventory system that a lot of corporations moved to, which would have benefited air cargo. we are in a recession and the political environment where we don't seem to want to play nice with each other. what do you see as the longer-term outlook against that backdrop? airfreight is the

fastest and the most reliable mode of transport. it always thrives when there is uncertainty in the economic and political climate, so we predict it will grow over the next few years. it was predicted to grow at 4.2%. d instability we have seen in countries around the globe, major economies like the u.s., china, it will add to the demand for airfreight as other modes of transport and predict ability of supply chains go down. predict thinke change?a structural so often we are wondering how long these trends will last. what are some of those structural changes in the way you really see lasting? >> airlines will have to reinvent themselves. passenger traffic will not return to the same level, and will only gradually come back to

levels that are somewhat sustainable. airlines have to think about how and can increase revenue sustain their business. there cargo is important, bitterly the only revenue stream a lot of them have right now. airlines have converted their passenger planes into cargo planes, taking out their seats to facilitate that increase in demand, but also to facilitate some kind of revenue into the balance sheets. fantastic to have some time with you. thank you for staying up late. we appreciate it. now let's return to that breaking news from fitch. romaine: that aaa rating on u.s. government debt on watch at fitch ratings, one of the three major credit rating companies out there, basically moving its outlook from stable to negative, still maintaining the aaa rating, but as you know, this

became a big deal a few years ago during the fiscal cliff here in the united states, where s&p made at the time what was the almost unthinkable move of downgrading the u.s., which led to a huge rebuke from a lot of folks, but the u.s. did manage to get through that. taylor: it is so interesting to hear in this press release that they are tying in the federal reserve as well, saying borrowing costs are able to stay low as we engage in deficit therefore rates remain low. if it goes up, how do you maintain those borrowing costs and what happens to the interest on the debt? they are highlighting we can borrow $3 trillion in three to six months, but borrowing costs are cheap. how does that happen if you raise rates, and what happens to the cost of that debt? romaine: this absence of a credible fiscal consolidation plan was interesting. it seems like congress in

washington have agreed they really didn't need that now, that it was more important to deal with the crisis and worry about that later. caroline: you heard it from the federal reserve as well saying don't worry about the deficit, just go for stabilization of the economy. into the be playing republicans hands when they are negotiating the fiscal debate in washington at the moment, how will provide further support and stimulus to the economy and whether that will be a worry and concern for some of the more conservative members of the republican party who don't want to see more than $1 trillion spent. taylor: we have to worry, and i heard this from economist, you don't worry about deficits in wartime, but eventually, you have to address it. there is no unlimited deficit or debt. i think that is what you alluded to, talking about a consolidation plan. you offended ak

lot of people out there with that statement, taylor. we do have that there is a meeting this weekend between democratic leaders as well as therepublican leaders, white house, mark meadows, steven mnuchin, so whether they can bridge that gap, it will be interesting to see if that happens. caroline: we will be waiting for the market reaction. we will see whether this moves u.s. treasury yields. romaine: let's go to mark crumpton. first word news. mark: florida authorities say a british man, florida man, and forwarded team hacked the twitter accounts of multiple individuals to scam people around the globe of more than $100,000 in bitcoin. the 17 year old boy was arrested today in tampa. the hacks lead to bogus tweets being sent out from the accounts on july 15. the charges against the

individuals include communications, organize fraud, fraudulent use of personal information, and access to computer without authority. federal authorities also announced charges today. house speaker nancy pelosi is asking republicans in the white house to come quickly to know proceeding table with democrats over the next coronavirus really i could prevent unemployment assistance and an eviction more train from expiring for millions of americans. they have taken us down with their delay, denial, and distortions that cause unnecessarily. let's say that we should all of us can see that scientists should be making the decisions about how we stop the spread of t thosesease, and not the president seems to tweet about.

mark: the white house chief of , speakerk meadows pelosi, steven mnuchin, and the senate minority leader chuck schumer will be holding a meeting at 9:00 saturday morning to continue talks on the next virus release package. a federal appeals court today overturned the death sentence of the man convicted in the boston marathon bombing. three-judge panel of the first circuit court of appeals in boston issued the decision today, more than six months after arguments were heard in the case. attackril 15, 2013 killed three people and injured more than 260 others. -- a tropical storm battering the bahamas is aiming for the u.s. east coast by saturday. the national hurricane center has posted a watch along florida's east coast. meteorologists expect it will largely, likely rather, skirt be

eastern coast, staying offshore until the hurricane probably comes a short near north carolina next week. global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in over than 120 countries. i am mark crumpton. this is bloomberg. ♪

says she ordered the election postpone for one year in order to ensure public safety amid a third wave of coronavirus outbreak. cases, on top of

a record search thursday. the pro-democracy candidates for those elections are not buying the reasoning. they say the delay is intended to rob pro-democracy candidates of momentum, after the implementation of that national security vault a month ago. the postponement follows the disqualification of 12 pro-democracy candidates in the arrest of four people accused by hong kong authorities of promoting self-determination for hong kong on the internet. it cap say week of new redline set out by the hong -- caps a week of new redline set up by the hong kong government. taylor: for more coverage, tune in tonight for our special. that at 7 hosting p.m. eastern. it is time for smart charts, looking at topics through

charts. this week, gold. >> thanks. joining us for smart charts is the founder. thank you for taking the time. >> thank you. day, month,ek, year, all this volatility. you were telling me that there is a bullish signal coming through the s&p 500 chart. talk to us about what you are thinking more broadly. >> it was interesting today. we saw a reversal higher at the end of the day, and that strong finish for the month of july, tends to both positive for seasonal influences, and with that, we received a momentum buy signal that is long-term in nature. the same indicator flashed back in february, so it does mark a significant shift. it doesn't really have

implications near-term, but implies we will see new highs in the coming months. near term, we have seen consolidation. that is healthy. we will see that consolidation modeaway to another up from an intermediate-term perspective, so that consolidation with more value rotation, i think that may be short-lived after today where we saw the rotation back into tech stocks. those stocks, they were a big driver today. apple surging into the close. let's take a look at your faang chart of microsoft. seen long-termve outperformance, but also outperformance that was significant as of last march. we recently saw some

consolidation that had folks on. people are very heavily exposed to these stocks, including apple makes us pullback nervous. we saw at the start of this week a collective oversold reading, the first of its nature based on the chart since march, so that was significant, especially for the fact that none of these stocks had broken down below significant support levels , so that suggest the consolidation was healthy. >> that was incredible data showing that oversold signal. a five-day basis, 2%, 3%, so certainly healthy consolidation. another big theme, gold and silver surging. gold today at a record high. let's have you share your thoughts on gold. highs.all-time

that is usually a good thing that reflects positive momentum and means gold has exceeded what was final resistance on its chart. the breakout, assuming it is confirmed with another week or so of trading above this 1920 level, we can arrive at a measured projection using a iart to get to that 2285, so nice move, as you can imagine. near-term, there is short-term exhaustion that supports a pullback or consolidation phase, and that would be healthy for gold, and of course, other related commodities. leadershipexhibited within precious metals. outperformances is something we become accustomed to in coming years. >> that consolidation for mecca cap seeming healthy.

thank you so much for joining us. this is bloomberg. ♪ special onfor our the tensions and turmoil in hong kong, a city on edge. ♪

romaine: the u.s. government is a top-tier, aaa credit rating with fitch. fitch putting that rating under review, saying the outlook has gone from stable to negative still affirming the aaa rating, but this could affect borrowing costs going forward. joe weisenthal joining us now to talk us through his impression of what is going on. before, have been here most recently 2011, where the u.s. credit rating was downgraded. the immediate effect was severe.

longer-term, it did not change the dynamics too much. joe: no, it didn't change much of anything. people have learned to tune these out, realizing sovereign credit ratings on the u.s. are essentially meaningless from any perspective. it was an interesting read, but i essentially think this is just a outlook, but if they were to point the rating, at this , it would have no bearing on anything. taylor hasomething been bringing up, worrying about the dominance of the dollar as a reserve currency. is it true the u.s. government cannot run out of money to service its debt, however there is the potential, albi remote, the result of physical dominance

as the result of jetta dvd spirals that the reserve currency status. eventuallyt another the straw that breaks the camels back? flowll have this ebb and of news that makes the u.s. a less dominant economy? political angle to the u.s. dollar. there is nothing close to being able to replace it in terms of liquidity. inple have debt denominated dollars so they have to require dollars. if the u.s. economy work peoplefully to shrink in lose faith in u.s. politics, that could have an impact, but even the dominance of the u.s. dollar as a driver of anything is overstated. other countries with high jetta ddp ratios, japan comes to mind, u.k. comes to mind. i don't think anyone considers

the yen or british pound to be a world reserve currency, and yet it doesn't impact anything in terms of their ability to fund spending or anything like that, but even that is questionable as an important factor. some argue the dominant dollar hurts the u.s. and the overvaluation hurts u.s. workers so it is an issue potentially, but whether it is an issue for a sovereign currency is still up for debate. everyone says don't care about it during a pandemic. deficits don't matter. does it matter? joe: i don't think so. concerned the recovery won't be real bust enough.

there are concerns that interest relates are so low that they can't raise interest rates, so most of the concerns are we will cut off physical support to soon , not that it is to expensive. one of your comments on the dollar -- romaine: one of your comments on the dollar, the net short positions we have seen, the latest data coming out an hour and a half ago, 10 straight weeks, and the market short the dollar the entire year, and i'm wondering whether that becomes more of a concern. are two reasons historic be for the dollar to rally. one, u.s. growth is better than the world. the other is you have some major panic and a flight to safety,

like we saw in march and april, then people acquire dollars for that. now people are looking at the u.s. saying the growth prospects don't look that great. caroline: that is all. taylor: bloomberg technology is next. romaine: this is bloomberg. ♪

♪ >> welcome to bloomberg technology. stocks extending a rally. a volatile session. apple, amazon, facebook spiking on earnings. alphabet ending the day in the red.