he insists any sale must include a substantial payment to the u.s. government. bp cuts its dividend for the first time since the gulf oil spill, but the oil giant's loss is narrower than expected. and the 20 minutes that broke the oil market, when the price of crude went negative back in april for one group of traders, a very profitable day. good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. discovering tiktok today, i'm excited to see everything you put online. tom: i almost missed the show opening. we are talking about tiktok, and i would not even be aware this. show opening.the i'm looking at the cat videos and the dog videos, and about 80% of it i could not play on tv because it is not -- surveillance videos.

tom: maybe we should get you out on tiktok to advance the show. this is an extruder's story. it exploded last night with the prep -- this is an extraordinary story. it exploded last night with the president's comments. as you know, bloomberg reporting on the response from the chinese. it has been abrupt. it certainly is, a finders fee, something we have not seen in the past. for microsoft it could mean the deal of the decade. let's get straight to the bloomberg first word news in new york city with ritika gupta. ritika: good morning. president trump may take executive action if congress cannot agree on a new coronavirus stimulus package. a president told reporters he might impose a moratorium on evictions and an act a payroll a payroll taxct holiday. that ant trump insists

pickup in u.s. operations has stalled, the u.s. government -- if tiktok -- it said the money would come from china or from an american buyer such as microsoft. earlier in the day, he said tiktok would have to close in the u.s. by september 15 unless an american complete buys it. i.s. -- hurricane prompting tropical storm warnings all the way into may. pose a threat to oil refineries. and northern ireland faces a brexit. supermarkets,ing some may pull out, according to the northern ireland retail associates. from britain to

northern ireland could require export certificates, adding an additional $2000 to the cost of each shipment. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm ritikauntries, gupta. this is bloomberg. tom: thanks so much. equities, bonds, currencies, commodities. i had to redo the data check because buried in all the bloomberg data that we look at every day, i missed the tips yield. nine,s at negative suggesting doldrums. you do not see it in the bond market. yields are higher in the last couple of days, but the 10-year -1.0405. at that is an extraordinary statistic to see. it really bodes important for this mystery, which is a friday jobs report. francine? francine: i'm looking at stocks, edging down in europe.

u.s. futures also down a touch. investors are waiting for word on whether we are going to see fresh stimulus -- fresh fiscal stimulus in the u.s. and whether they get necessary approval. i want to show you the are peson -- the argentinian because the ministry put some headlines out about 15 minutes ago saying it reached a dead deal with creditor groups at the same time it actually extended deadlines toon august 24. i just wanted to show you crude oil because that is going off, with bp at 40.56. senior democrats and out some progress on the next phase of u.s. stimulus, and agreed to meet again today. here is senator schumer yesterday after meeting with white house officials. getting anr: we are understanding of each position and we are making progress on certain issues moving closer together. there are a lot of issues that

are still outstanding, but i think there is a desire to get something done as soon we can. so we continued the work. was senatorat schumer speaking on capitol hill yesterday. joining us now is amy pope. homelands. deputy advisor for president obama. have we turned a corner? are the two sides or the three or four sides given how the is?t and the republicans finds -- no one really wins if we cannot find agreement. in the end, no one wants to be the reason why they cannot come to a deal, so i suspect it is a matter of time. francine: what needs to be in the final bill?

amy: needs to be support for americans. the most recent economic analysis that has come out has shown real hits to the american economy, translating to people on the ground, which means that they have very serious concerns about whether they can make their bills. so that kind of pocketbook impact is going to make a big difference to americans, and everybody knows that the election is just around the corner, and that is a moment in time where they want to make sure americans are not blaming them for their particular economic circumstances. tom: the mythology here is out of the 1980's, which is less government, the federal government is something inefficient, etc., and it steamrolled over the decades to a point where we have a legislature that cannot legislate, certain parties divided, and a president who clearly does not want to be part of the so-called swamp. are we able to legislate now? amy: that is a great question. the bottom line is that moments

like this, real crisis where the economy is struggling, where the coronavirus is really taking home in the united states in a way no one anticipated, now more than ever, it is time for legislators to get together and come up with a compromise. whether they can do that, ultimately i think in the end they will pull it out, but they are going to keep people biting their nails on the sidelines until then. compromiseea of seems so incredibly simplistic given the emergency. at bloomberg we do not take sides on this debate. what is blocking compromise? amy: no one wants to look like they gave into the other side. the election-year politics here and the dynamic that that is playing at this particular moment in time, it just cannot be underestimated. no one wants to go into an election suggesting that they were soft on some issue or they did not get after president trump.

i had to say this, but i think talking points and politics are dominating over some common sense, and good outcomes. but ultimately, everyone knows that they have to get there in the end, so i really anticipate they will get there after posturing along the way. francine: if they leave it too will how much more soft people be and how will that translate into voting in november? who are they blaming? amy: i think they blame the president ultimately. senate,blicans hold the the democrats have a very small amount of leverage. it is not insignificant. they are and can use it to their advantage, but in the end, people look to the president when it comes to evaluating their own circumstance and whether or not they think the country is going in the right direction. there is a lot at stake here for him, and ultimately the real question is, why isn't he

getting into the middle of trying to navigate or negotiate the deal himself? frankly, some of the rhetoric or the commentary regarding tiktok seems a bit bizarre, about the u.s. administration getting some kind of finder's fee if tiktok is taken out. how will that be taken in the inner circles of the president? amy: it is really unusual, and i'm sure everyone there is sort of scratching their heads. there are legitimate security concerns about chinese technology companies, that one of the reasons why there is a law that evaluates whether or not certain deals can and should go through if there are national security concerns. that is the right place for something like this to be worked out. it is not the president weighing in on whether a deal can happen or whether the united states should get some sort of fee. all of that is highly unusual. is not entirely clear that he can do that legally. arei'm sure his advisors

confused as to what his objective is here. tom: what is the chinese objective? we have had a wonderful response overnight from china, with clarity about theft, etc. do you perceive tiktok as a private company, or in china, amy, is there no such thing as a private company? skeptical that in china any company can fully function independently. we saw this a year ago with the hong kong protests, real pressure from the chinese government to reveal employees who were protesting and take action against them. we should not assume that china will keep its hands off of any company that is operating there. tom: how do you believe that america will extricate itself from this tiktok mess? it is usually unpredictable right now, but does it just collapsed past september 15? collapsed.k it could

i think the president is using this, as he often does, as a way to distract from more serious issues that are happening. he knows that the issue of china really resonates with his space, giving him the opportunity to look tough and to look like he is negotiating some kind of deal. but really what he's doing is distracting from a much more serious issue that the united states is facing at the moment. where he really needs to be using his influence. that, for example, is what we were discussing, negotiating a deal to help americans get through this very significant crisis. francine: amy, thank you so much. amy pope, chatham house , former deputy homeland security adviser to president obama. later today, the former commerce secretary advisor penny pritzker. this is bloomberg. ♪

pres. trump: the united states should get a very large percentage of that price because we are making it possible. i use the expression -- it is like the landlord and the tenant. without the lease, the tenant does not have the value. lease, and way the we make it possible to have this great success. tom: absolutely historic in the history of this nation, to see any president talk about a transactional fee of some form. this is really difficult,

unclear language right now, to the government on eight corporate transaction. it has been bouncing around -- on a corporate transaction. this has been bouncing around for the last several hours. the chinese have responded talking about theft. right now we talked to derek wallbank. i'm sure you come as everybody else, of any political persuasion, were stunned by these comments. where did they come from? derek: i really was. the idea of having a sort of finder's fee that is involved in a required corporate takeover that is a form of sanction is unprecedented. it is not really clear where the u.s. government has some sort of legal justification of what the statute is that they will be looking at, that would underpin something like that. certainly there is some case for

some unrelated things, but not for something like this that anyone has talked about so far. three years into -- into hise years administration, is this something that we would ignore because it will go away? derek: something has to be resolved by september 15, so there is a time limit on this. this is not like mexico paying for the -- it is an open-ended thing that may or may not happen. at some point trump has two fold on this or someone has to figure out some justification, or there is some fig leaf that they get to put forward. that makes this different than other things. elegant wayat is an of finding a resolution to this? goodness. it is hard to say. you talk about job creation, you talk about some other things, you talk about future tax

revenue, something like that, there are a lot of ways to get around this. to say there is a government benefit, in terms of an actual direct payment to the u.s. government from microsoft to the u.s. government, that is a much harder thing to contemplate, to figure out how that necessarily works. maybe there is a creative legal theory that is going to get put out the next couple of days to weeks, but so far we have not quite seen it. i think everyone was really taken aback by that headline yesterday. francine: what does that mean for microsoft, or whoever buys it? the u.s.then tied to administration? is it something that we need to explore further? more to think there is explore here. for microsoft, you look at something like tiktok, it is a potentially transformational technology. it certainly is something where people have a lot of options, and most things do not come around every day, so the chance

of acquisition here is certainly a valuable opportunity. it is also a valuable opportunity in terms of pricing to get something under pressure potentially. we do not know what the deals might look like, but you can imagine there might be some price pressure here because there is -- there is this date certain. there is some risk here in terms of getting involved in this, because this is such a governmental mandate. ifcould potentially change the wind changes inside the white house differently. ,o it is certainly some risk some twitter account risk, let's say it that way, to anything that goes forward in this space. tom: i want to rip up the script here, and we have to go to your attendance in singapore right now. as singapore seen any changes or difference after the uproar in hong kong, the new changes in security and liberties in hong kong? do you detect any change in singapore yet? derek: we are seeing some

explorative change, tom, in terms of people putting money here to maybe invest here. in terms of tax singapore peoples flying here, moving their industry here, we are not seeing that as yet. the singapore government is being careful about how they play this because they are really trying not to look like they are scoring opportunity off of hong kong. that is not the vibe that they want to project here. but in terms of exploration, are we seeing people do this? yes. are we seeing people make a choice that they have an offer between which major financial stimulus they want to take, singapore over hong kong? we are seeing a little bit of that as well. tom: how far is singapore from hong kong? i don't need miles or distance, but how linked is singapore to hong kong mentally? derek: it is a three hour flight

and there are some connections, but this is a place that operates a little bit differently. the analysis that a lot of people land here, they will say it is sort of a switzerland from asia, whereas hong kong is very much an interest point to china, singapore might be between singapore and china and also southeast asia. inle they do think of things terms of business regulation and access to capital, they are positioned differently, and certainly since the national security law has been put forward. they have been positioned very differently, certainly than investors in terms of outside australia,stors near america,. veryhave gone from two

similar things to two very different things. we will see how that manifests over the next year to see if some of those initial nibbles become full on bites and changes in strategy. tom: derek, thank you so much. derek wallbank in singapore today. dowres at negative nine, futures at -38. politics of the moment, a washington frozen on the balance of power. this is bloomberg. ♪

ritika: this is bloomberg surveillance. let's get the bloomberg business flash. bp has cut dividends for the first time in the decade, removing the cornerstone of its investment case as the coronavirus pandemic hammered almost every part of the energy business. of $7.6n adjusted loss billion in the second quarter. the company smashed it dividend in half. the federal trade commission is investigating twitter for alleged privacy violations. the issue, whether twitter used phone numbers it uploaded to security purposes that targeted advertising. -- thate could lead to is your bloomberg business flash. francine? tom? want to point out

the disinflation on the data screen and go to the 10 year tips in america, breaking under 1%, negative one percent, i should say, a few days ago. now it is a -1.04. that is an extraordinary negative real yield in america. all of this heading for the jobs report friday. francine? and negotiations on the stimulus has become increasingly urgent with millions of americans left without additional aid. coming up, we speak with scott thiel, blackrock chief fixed income strategist. this is bloomberg. ♪ hike!

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touchdown! only mahomes. the big events are back and xfinity is your home for the return of live sports. you say the customer's maklet's talk data.s. only xfinity mobile lets you switch up your wireless data whenever. i accept. 5g, everybody is talking about it. how do i get it? everyone gets 5g with our new data options at no extra cost. that's good. next item, corner offices for everyone. we just have to make more corners in this building. chad? -your wireless, your rules. only with xfinity mobile. now that's simple, easy, awesome. switch to xfinity mobile and save up to four hundred dollars a year on your wireless bill. plus, get two hundred dollars off when you buy an eligible phone. tom: good morning, everyone. francine lacqua in london and i'm tom the in new york.

my fixed income interview of the day, he is a blackrock, giving us a long-term perspective on the fixed income world, the fundamentals of the fixed-income world. scott, good morning. i want to go to the 10 year and the disinflation by its. when you see a -1.04% on the tenure tips, what does that indicate? scott: as a couple things. one is that the breakeven, the spread between the nominal rate and inflation bond has risen a lot and retraced 100% of the collapse in inflation expectations we saw, so to price are negative in yield, but the spread or expected inflation protection is around 1.5% up to about 1%. despite the real rate being negative, the breakeven inflation, and expected

inflation, has risen to 1.5 percent, oil prices, economic recovery, activity restart, that is all of the things that brought this to empire. tom: i know it kristin -- princeton, you have to -- do we see the nominal move up or down, or does the real rate adjust? which is the greater mover in the next months? scott: that's a great question. we focus on the tenure treasury, but that has been the -- the volatility has been low. been moreat has volatile was 30 year rates. as we approach 30 year rates, we take a negative yield on interest rate suggesting 150 to 115 and we are closer to the bottom end of that range. yield have the opportunity to move higher, dependent on thevity restart and

presidential election, geopolitics, etc. francine: what happens to inflation 12 months down the line? clearly, the activity restart will be critical. energy prices, which are tied that's, are going to be important. there will be a. -- there will be a period where economy suffered, but recently, some of the high-frequency numbers have come off. there has been a relatively strong rebound in economic activity. with europe apparently leading the way versus the united states. you have to expect, ove time, as the economy retraces the loss as much of the stimulus economyhrough, the u.s. is back to trend growth, kind of the third to fourth quarter in 2021, and if that is the case

there is not a huge impact of virus out extent we get, that inflation moves higher. we have been positive on tips, breakevens because of economic stimulusbecause the itself is inflationary over longer-term. francine: overall, if you look at the composition for the u.s. economy, where do you expect the longest term to happen? scott: i think it is going to be the number of sectors that have been dramatically impacted by the ships in activity -- shifts andactivity -- an activity consumer activity. when we look at the equity markets, we look at things like the quality factor, because we see the companies in that bucket performing well, given their position and their cash flow and the dynamics. some of the other companies more

involved in the sectors that have been beaten down, it is not just about being beaten down in this environment. it is about how consumer preferences evolve over time. in other words, do consumer preferences ship. -- shift. is it safe to travel? whether people want to travel is a different thing. tom: i know it blackrock, it is not the charm to go out and bad banks, but we have a number of things in the divinity -- in the derivative space that blew up. this is where you got the bond like equivalent guarantee almost you -- guarantee on where are and put optionality to do better. randall kroszner, with the pandemic and lack of dividends from corporations, these have blown up. is it a productive business for wall street to do structured

products, or is it just a gimmick? implicit in a structure product return is this idea of selling volatility, so the basically what you are doing with a structure note is effectively taking the view the volatility -- there are different structured products but i think the one you're talking about here is effectively taking a view that volatility is not likely to increase. so. as of economic and policy calm, -- so, in periods of economic , --policy calm so when you get to a period where we have the crisis where we have been, and it is volatility extraordinary, they won't perform well and you will suffer. it is more about the product

itself is a function of bonds and alling structure product is a way to do that. with goldman sachs and blackrock, are the good of structure ductwork that, given youknow when you get vol will blow up. is it good for the years if in one year you blow up? scott: again, i think the premise behind these products is designed -- and i'm not suggesting -- i'm not taking of you are in whether they are a good thing or bad thing because that would depend on the investors themselves, parameters, and risk tolerance, but they are not put together in a way that is designed to only last for a short period of time and suffer. there are views around volatility over the longer-term. obviously they can underperform and outperform, but i'm not in a

position to know the sinister nature of the product. it is specifically designed as a ball fail. they work in periods of low volatility, and then -- and we have had long periods of all until at the -- a volatility in the past. tom: beautifully explained. francine: scott thiel there from black rock. is --sident tom executive might actions. republicans and democrats have made progress in negotiated students on a new stimulus package but are far apart on key issues. china's next target in the growing tensions with the u.s. could be american journalists in hong kong according to the editor-in-chief of china's global times who has been come

known accurately predicting beijing's actions. he says of chinese journalists are forced to leave the u.s., china will retaliate against america in hong kong. has --york, facebook that is the former post out this -- post office being redeveloped . facebook will take over 730,000 square feet at the site located next to penn station. global news -- global news, 24 hours a day, on air and on quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. gupta and this is bloomberg. francine: thank you so much. in the next hour, carla harris morgan staley vice-chairman of global management, that's an interesting conversation on diversity and the way forward at 6:30 a.m. in new york, 11:30 a.m. london and this is bloomberg. ♪

tom: "bloomberg surveillance" from new york, from london, we are focused on thursday jobless claims. without question in my career, the greatest mysterious friday jobs report ever, ever, ever. it will be something to see what the math is given this horrific pandemic that we are in. michael mckee yesterday was a smart conversation with with mr. kaplan from dallas. >> it is still our view we will contract for the year at about 4.5% to 5%. it has been our view with a sharp decline in the second quarter, we have healthy rebound

in the third and fourth quarter. i think that rebound is more muted in the united states now. it has caused me to think the unemployment rate, if we do not do a better job managing the virus, the unemployment rate is likely to be above 9%, between 9% and 10%. we have moved up our unemployment forecast, and so i think we got a rebound but it is much more muted than it was. if we do not do a better job managing the virus, we will have a lower growth and a higher unemployment rate, so i have been spending a lot of my time talking more about the virus than anything else because it is so critical to the recovery. >> the $600 extra unemployment bone of and -- unemployment onus bonus. should we expect a wave of defaults that might it

credit markets? >> we have looked at it. one of the things unusual about this downturn we had is incomes has stayed relatively solid in a big part of the recent unemployment benefits. usually you see a drop in incomes and we have not seen that here. it is still my view, in some form, we will get an extension of unemployment benefits. i'm hopeful that will continue, but if it didn't, you would see a further weakening in the economy. in particular because consumers would not have as much 20 in their pocket to spend. >> any business people telling you that $600 bonus was keeping people from coming back to the labor force. >> a lot of business people were telling me that. they were telling me it was challenging to hire people. we have looked at a number of studies. we have done our own works. we don't see it as much in the

data, but i am hearing it from business people. is,hatever the right answer i think you still will need to see extension of unemployment. it may be restructured to some extent from the $600, but i think it is important we see an extension of it. i think the increased incomes, while it may have made it harder for certain individual businesses to hire, it has helped create jobs because it helped bolster consumer spending. the net effect is still probably positive for the economy and employment. francine: that was the dallas fed president robert kaplan with bloomberg. still with us is scott thiel. scott, i want to ask about gold and where you see gold headed. just one comment on one -- on the piece

before. when we look at the second quarter, it was up 45%, the single largest increase in personal income. if there had not been government support, that number would be down 22%. i think with the fed president said is critical in that government support is a really important part of income and keeping the economy on track, as a sidebar. i thought that was interesting what he said in the numbers will back what he said. francine: so given the stimulus and that we are still in the midst of negotiations, with all parties in the u.s., what are the one or two priorities that you think needs to be in there? carla: the fed -- scott: the fed has pushed active policy cliff by continuing to deliver the measures they have. it's obviously important the government also gets by and continues, to in many respects

this concept of going to policy revolution that is putting money into consumer's pockets, giving them direct benefits, is going to be critical keeping the economy going with the disposable income numbers. it is about going direct in our minds that needs to continue. tom: i want to get back to the ramifications of the tools used, let's assume it is yield curve control. i'm interested in how you feel the efficacy of yield curve control will be not only out the curve but the colored they will have available. be, thewill that color range they could affect the two his?, given market for scott: let's look at the statistics. we are 50 to 60 basis points in the 10 year yields. around 1%, the view is fed would

implement yield control. we were there at the beginning of the summer where 10 year yields cut. that is a big move from where we are now. given the index has a duration of seven years, you could leave -- you could lose 3.5% to 4%. it's an incredibly important tool, that being said, and one to see more information around in september, but it can really dampen volatility at the long end of the market. what happened -- look at what happened to 30 year treasury rates. although not explicit, they are moving toward the control yield framework. not now because rates are lower, but if rates should view higher or their view around rates could change, that is important, because the whole point around you -- yield curve control is keeping monitoring conditions easy as stimulus is delivered.

you don't want higher rates detracting from policy easing and fiscal spending. that is the critical part. if that works out well, you are positive for volatility going down. tom: we gotta do this again. i have about eight more questions. scott thiel there brilliant with blackrock not only on what the fed will do in the fixed income space but important comments on structured products as well. he a blackrock investment institute. on "bloomberg markets," john tuttle is the new york stock exchange vice chairman and chief commercial officer in the 3:00 hour today. stay with us at futures at negative eight. this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get to the bloomberg business flash. -- is planning a sheriff sale. on takinglay plans

.ichard brand into space virgin galactic says the triple occur in the first quarter of 2021. southwest airlines have scaled back its aircraft cleaning operations. it is no longer wiping down armrests and seatbelt after every flight. as well as other areas around seats. this is to keep planes from being on the ground longer than expected. regulators are looking into a small group of investors who got rich when the price of oil dropped. it happened on april 20 when the oil went two -$37. it was the first time crude had ever crossed into negative territory. bloomberg learned that there was a tiny firm that made as much as $500 million that day. the u.k. and u.s. were trying to see if any rules were broken. tom and francine? francine: thank you so much.

saying on that $500 million jackpot, let's speak to the co-author of the story. liam, first of all, who are they and how did they make so much money? it's a couple of traders on top of a pub. [laughter] >> that's pretty much about why. it is a prop firm that is essentially an umbrella for may be a couple dozen traders at most. soy were formed in 2016, nobody has really heard of the firm at all. most of the trade is grizzled veterans of the market trading since the days of the pit, and it looks like after hanging in there, with the arrival of theyation in the markets, hit pay dirt. unfortunately for them, it

attracted the attention of the regulators. markets fell that afternoon to -$37. vega was essentially paid by oil, and it also sold oil that day so it got paid on both sides of the trade. it was completely unprecedented and they ended up walking away with a large amount of money. tom: it is a 4.4 standard deviation on oil that day. i get that. that is off of the bloomberg terminal, fine. that is very much equivalent to august of 2007. somebody has got to make money in the market when you see these big moves. what is wrong with making money? >> it's a good question. goill let the regulators

through this with a comb and come up with their own conclusions. there are specific rules around how you trade in separate periods. specifically in events called banging the close, involving trading in such a way to get paid in another market. that is the kind of thing that previously attracted problems in the past with traders trading in settlement. but you are absolutely right, nobody could predicted the market would go as far as it did. if you time to tried, then you would have made a ton of money. tom: liam, congratulations. we have to leave it there, but really thoughtful article all in all. just extremely well done. this is about that they were we saw -$37, and we had surveillance of this because lisa abramowicz was on top of had two 55 gallon

oil drums in her interior. team, good work there. author of a global manhunt, the most mysterious market crash in history. theng up, if you are in equity market, christopher varona on the trends of the market with strategic -- strategic's. futures is100 negative. this is bloomberg. ♪

tom: this morning, if it is tuesday, it must be washington

without a plan for 30 million unemployed. still, the president goes after as well as the senator from new york that is helping "radical left governors." it is august 4, and do you know where the real yield is? 10-year continues to deflate all the way to mystery of the friday jobs report. let's make a deal. the president of the united states once some form of tictoc and microsoft to write a check for "keep money or they pay something -- key money or they pay something." all this to the treasury of the united states. in beijing there is a discussion of "theft." good morning, everyone. what an odd "bloomberg surveillance." i'm tom keene and francine lacqua is in washington. francine, i can say it is a continuatione