>> i have never heard officials begged for fiscal policy the way they are now. >> i think we are starting a new economic recovery. >> are we headed towards a cliff? >> we are in the midst of a policy mistake. >> undoubtedly, this is a resilient economy but resilience works both ways. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. lisa is off today. an extraordinary monday in the since 1998.gusts

today, without question, on washington. jonathan: absolutely, and the response from washington both inefficient and insufficient with the president and a series of executive orders painting the democrats into a corner. they don't want to be seen challenging this legally. they need to find a way to get back to the negotiating table fast. tom: the executive order and the news out of hong kong as well. he didn't have time to get to it with kevin cirilli, but we may have a vice presidential candidate today? jonathan: it has to happen at some point this week and the readthrough for this market will be interesting. many people think this will be the next candidate for the presidency because the former vice president will be a one-term president if he even wins in november. everybody will start reading into the vp pick. itching to sayre

this man is a trojan horse for the radical left. the cbs poll shows things tightening up a little bit off of democratic enthusiasm. paper, theitmus system of foreign exchange. i want to go to bonds. look for the real yield this friday on bloomberg television with jon ferro. but on bloomberg tv right now, i the to frame the yield, dynamic of the inflation expectations, and to your real yield as well. i am focused on inflation expectations with the lack thereof. jonathan: 10 year yields haven't really done much at all. they are still around 0.55%. inflation expectations have started to pick up just a little bit. we can debate why and if they should, but they have. it has squeezed the real yield which has come all the way down to negative territory further and further.

for many people, it underpins pretty much every thing in this market whether it is gold, foreign exchange, credit, equity, or otherwise. how would that unwind if we kept better data? and what it means for the economy and for this market. tom: and for those of you joining us on television and radio, this number one thing we have seen is mark zandi suggesting a 14% on employment rate is the feeling in america away from the published 10%. one more idea. fxt was your observation on in your reading this weekend? was it developing countries are more em-like? jonathan: start with g10. people are questioning the euro-dollar move. it went a little quickly and we started to question may be the european recovery and underestimating the resilience of the u.s. economy because of

that data last friday. in em, it's all about turkey. but we will feel that maybe what's happening in turkey can bleed out and spill over into other areas. tom: a couple good notes on that. a trifecta of confidence on wall street with j.p. morgan asset management leader joining us. and also with great work on portfolio management and fx. formerly a trader with ubs and there is nothing like losing money as a traitor to give you -- as a trader to give you clarity is a portfolio manager. let us turn to the linkage of the dollar to your world of emerging markets. is it about dollar dynamics or is it em by itself? tom.: it's a bit of both, most of the markets in fx, we see verification playing out in

a big way. for em currencies, we are those markets doing better. the currencies have done reasonably well year to date. but it is a broad dollar. for the high yield, it is more on a case-by-case basis. the fundamental point really does make a big trend. -- turkey asookie a good example. it struggled to do well because the fundamental point doesn't change by a weaker dollar. jonathan: we typically talk about a country in em getting in trouble and contagion risk to the rest of the complex. how much exposure is there to turkey given what has happened over the last several years? it seems like every 12 months, we have the same conversation. how money people be risk and reduce exposure to turkey?

it is irrelevant for the rest of the complex. that is an interesting question. there are two ways to look at it. one, economic exposure of countries to turkey has become incensed in recent years. the vulnerabilities of turkey are not new to markets. terms of the broader financial assets, this is the contagion of weakness in turkey spilling over to other markets. two points. we say that playing out in weaker credit. south africa would be a good case. in this is august, right? we know august is quite a liquid month. that could potentially spill over. the bias would be looking at the

contagion to at risk. jonathan: where would that be if you started to see it? ms. amoa: i will give you an example. if we see the move in turkey impacting something like mexico because it is considered another high-yield country, i think that would present interesting opportunities for us to buy. reason you should see mexico selling off because turkey is coming under pressure. if you look at yield rates, they have some of the highest in the world. inflation,rkey and that is a totally different story. will see, the markets turkey-related weakness as a good opportunity. tom: what is so important to me is a slowdown in gdp. when i look at the world trade charts, they are exceptionally distressing. to notse are we

financial crisis, but liquidity in em because of the lack of world trade. ms. amoa: we are closer to that in q1 and q2 then we are today, tom. trade,a small rebound in actually. we have seen a pickup in activity coming through their -- there. exports are starting to pick up again in aggregate. which is promising. expect to see close downs to the extent that we had in q1. concernally, the bigger is solvency. the big concern in the midst of the shutdown was whether em economies would be able to access markets. we have seen sovereigns come and issue debt. and others are willing to finance that.

i think those concerns are much less than they were three months ago. tom: how do you play that? i think you were suggesting a risk-on feel in em. where would you place that risk on? ms. amoa: we look for select em's that have exposure to the u.s. recovery story. asia thatr pockets of continue to do well. when you look at how china is doing with the virus, they are well ahead of the curve. economic activity is rebounding. look for economies that have economic linkages to china and for fx exposure. and the high-yield market is very much on a case-by-case basis. we look at where you have strong fundamentals, credit policy. mexico is one that i mentioned.

russia potentially, but we want to see what happens in the u.s. election first. jonathan: great to catch up with you, as always, on a very important topic this morning. from j.p. morgan asset management. trade diana is talking about. hungary, check, poland, romania, bulgaria. they may be the top five performing em currencies. and it is all a leverage euro play. we have delivered gains of about 6.5% out of hungary, the czech republic, 6% from poland and 5.6% as well. they have big foreign-exchange moves. tom: when i go there, i go to the euro versus the hungarian form. it is really linked to real estate in europe. i don't pretend to understand it fully. but you have hunger strikes in

europe going through july. jonathan: and the weakness you're talking about reflects concerns going to turkey, south africa. south africa down about 5.3% as a courtesy. the turkish lira down six percentage points. betweenthe difference story leverage to europe and leverage to the deficit countries like turkey and south africa. tom: on a day like today, i look at the chart this morning. i look at the turkish stock exchange which in turkish lira is actually pretty good. then you converted to u.s. dollars which is easy to do on the bloomberg terminal. -70% from the recent peaks. jonathan: a slow day on wall street and a fast day in washington, d.c. we will catch up with a managing director next. financial markets this morning, good morning. the s&p up .1%. if we get to the bond market, treasury yields are doing nothing.

the basis points are at 0.5%. and a big gain after the last month. the euro-dollar 1.1762. i'm jonathan ferro and lisa is back with us tomorrow. this is bloomberg. with first word news, in hong kong, it is the highest profile case against democracy activists under the new security law. we have aggressive media tycoons with a flagship newspaper. withoreign country national security and china retaliating over the crackdown in hong kong. aging says it will sanction 11 americans, but none are members of the trump administration. another move is the u.s. likely to stoke tensions with china. health and human services

secretary praised the taiwanese president's response to the president -- to the pandemic. they called taiwan an inspiration to the region and the world. pushing pushing up -- back against president trump's executive action, in order to offer $400 a week in pay, but they catch is that states have to kick in 25%. new york governor andrew cuomo says it is based on shaky ground legally. billionaire philanthropist bill gates says it is mind blowing that the u.s. has not approved coronavirus testing. the process is slow and lacks fair access. we will be outs of the pandemic by the end of next year. beenillion dollars has donated to coronavirus research. warren buffett's gambling on

better days for berkshire hathaway. a record $1 billion buyback of stock in the second quarter. will blues 24 hours a day on air and on bloombergquint take -- bloomberg quicktake. this is bloomberg. ♪

>> we said let's have legislation on the things we agree on and knock these off one at a time.

they refused to do that until they get their trillion dollars for the states. treasury secretary steven mnuchin on fox news on sunday. i'm jonathan ferro. looking to put the pressure on democrats in washington. the equity markets doing absolutely nothing. it is a snooze of an august monday morning. equity futures up 3%. they are down to one .17 66. -- 1.1766. we said this repeatedly, tom. the markets might be boring this morning, but the politics absolutely is not. tom: absolutely not. news breaking this morning of the sanctions. 11 americans sanctioned in china. fromlabor is with us eurasia group. john and the rest of the team. i want to go to the stunning

azarry of mr. a's are -- with the taiwanese flag behind him. radio,f you on bloomberg it is extraordinary to see any of that on the flags and the symbolism. but just the symbolism after 1979 of the flag that goes well back to the early 20th century. not early 19th-century. the imagery was extraordinary. the administration has been taking pretty aggressive action toward china and i'm sure that hasn't been lost on your viewers and listeners. it is the highest rate in decades for taiwan. the danger here is that it approaches one of china's redline, this issue of sovereignty. is important to the chinese and the economic issues. it is not the highest-ranking

official that they could've sent. they could've sent pompeo or the secretary of defense. but sending your secretary of health and human services to learn more about how to handle coronavirus is an escalatory act on the chinese. bipartisanme it is a washington on taiwan. but what are the nuances between the republicans and democrats? the most important nuances is the republicans led by secretary of state pompeo is enormous on national security, economic espionage, and to a lesser degree, hauling out of the -- [indiscernible] democrats are more focused on job losses. i think the national security issues are important, but in a biden administration, you will see a more focus on hume and. and can you speak to the sanctions this morning?

how happy are you that you made the list? john: i would be shocked if you didn't see press releases starting to come out right away, the republican leaders sanctioned. if you are not on the list, you're wasting your time in congress right now. i don't think this is a gift for senators that were sanctioned, but it will be treated as such and they will be bragging about it all the way through 2024 to the presidential primary. tom: what are the consequences -- jonathan: what are the consequences of it? they are the china hawks that made the list. what are the consequences of this tit-for-tat? john: very little. the chinese are trying to respond proportionally. i assume it is more about a domestic chinese audience than it is about punishing americans. shown not taking provocations lying down. by sanctioning high-profile

members that people in china may have heard of, they can look like they are responding without escalating advance of the u.s. election. the china -- what china doesn't need is anything destabilizing between now and january when they will be potentially dealing with a new president of the united states. tom: the formosa straight at its narrowest is 81 miles. are we showing the flag? do we have a military presence to assist taiwan? john: i think there is -- this is an area where you will see escalation between now and election day. mike pompeo and the department of defense wants to be much more aggressive. and while we see operations in the south china sea, you might see more explicit efforts at suggesting to the chinese that any provocation related to taiwan will elicit a very strong response. it is suggested in u.s. policy, but the u.s. has stayed away

from that redline issue for now. but between now and the election, it seems we are in an area where anything goes. tom: quickly, please tell us how fragile hong kong is today. thes shocked at the tone of em marleau of bloomberg news two hours ago. john: hong kong is part of mainland china. [indiscernible] you are seeing changes over time of more pulling of hong kong into china. the redline here is financial stability. if they force banks to leave and maybe changing the way that the mainland chinese do banking transactions, then i think maybe they step back. up until that point, it feels like hong kong is a lost cause. tom: we greatly appreciate it, john. some small audio difficulties there.

that is a loaded statement. i was thunderstruck about how ian waited the importance of this media tycoon. he did not mince words. it is a changed hong kong. jonathan: let's take the words and just set on them for a moment. hong kong is now just part of mainland china? tom: i'm not there yet. jonathan: that is the view from the eurasia group this morning. not my view, but that is where this is heading. let's be clear about this, this was always the direction of travel. we thought it would take seven more decades to get there and it happened a lot more quickly. the ramifications on a thecorporate day, ramifications to american banking and global banking will be profound. i don't really know what to make of that. i just don't buy the idea that everybody waltzes down to singapore for what will be the new banking and a new china. jonathan: we talked about what

this would mean for the senators to make a list. line ofbio, the first the bio, banned in and sanctioned by china. the first line. this will be seen as a badge of honor for these senators that have been sanctioned by china. will push eveny harder in the months to come. tom: diplomatic sanctions that are very different from economic sanctions. i'm not sure what the sanctions mean but it is a calling card for a select group of people, isn't it? .1%,han: equity futures up we climb higher for the s&p 500. in america coming out on wednesday. friday, it is retail sales data out of states this coming friday morning. this morning, outside of equities into the bond market. the yields gone absolutely nowhere.

the euro a little bit weaker. on foreign exchange up next, terry wiseman. from new york, this is bloomberg. ♪

♪ jonathan: from new york city this is bloomberg surveillance. our audience worldwide. alongside tom. i'm jonathan ferro. lisa will be back tomorrow. here's the monday morning price action. cross assets world wade. 60 minutes away from the opening bell. equity futures up two points. call it three. not even .1%. the euroa little weaker. muted price action in g-10. little spicer in e.m. turkish lira. last tuesday record low close on a 10-year yield. just north of 50 basis points. this morning, tom, 0.55%. down a single basis point. tom: yields come in a little bit. we are struggling to find data movement this morning. that's a good thing. sometimes that gives awe chance

to pause and look at the larger picture. of an do that theory wizman mcguire. what's so wonderful about dr. wizman, is the wonderful work they have built at bear stearns years ago on latin america. we begin this morning with dr. wizman on latin american t thierry, what a joy to go back to the time there. bear stearns. the idea of the linkages of south america and the distinctions that we in the media and our listeners on radio and tv miss. what's the distinction right now of south america that you note? dr. wizman: i think it fascinating, tom. i'm glad we bring this up. we tend to separate the emerging markets from the domestic markets -- from the developed markets all the time with regard to the capabilities of fiscal policy and monetarypolicy. we think the emerging markets

are much more strained in their ability to reduce their economies through more spending and lower interest rates because we know that these are not structurally economies to understand the lisk to exposure or the inflation that might come about through more monetary easing. hat's not the case these days. latin america is responding to the current crisis the same way in regard to policy. in the same way that the developed markets are responding to policy. much more fiscal spending and much easier monetary policy. we seen in the case of latin america, a pretty radical expansion of their domestic central bank balance sheets. at the fed in the last few months. it's fascinating things have not blown up yet completely in the emerging markets. as a result of higher debt levels and very low interest

rates. negative real interest rates, we are starting to see some stresses in the currency market. these latin economies. tom: the south american stresses of this virus. the statistics are frightening. i looked at the trend of mexico over the weekend and not improving as well. how does the pandemic overlay on the presumed fragility of e.m. and particularly of south america? even though the data is quite bad in countries like zalando mexico, it is worse than official statistics would suggest. people have said the number of cases is twice as much. there was an issue of transparency that i think is hurting market sentiment with regard to those countries.

is how thesee emerging markets are coping with the coronavirus pandemic. it is a hospital bed, and a lot less reach for health care in the population. the problems of governance, how does the government deal with crises? ad i think this will be long-lasting issue. i think when the coronavirus crisis fades, markets will continue to doubt the efficacy of governance and a lot of these countries including one in latin america. -- tom: i think the switch away from latin america, there is so much to talk about here. you for din the distinctions of

the us trillion dollar as an indicator of economic recovery. aussie and strong can you say economic recovery over the next two years? we can certainly say economic recovery. in terms of the sharpness of the declining global growth. it's hard to believe things will get worse. in everyone'sion mind is how sharp it will be. are there structural impediments that will make recoveries slower that otherwise it would be taking place throughout the crisis and with financial stresses? higher, trajectories the aussie will continue to recover.

in view of the uncertainty that will be coming out of the u.s. in regard to the election, tax policy surrounding the u.s., very positive the dollar will stay week. has the successful control been in australia? guest: it is a bit too early to tell. has it been successful in spurring economic recovery, the jury is out. thats to do with the fact the transmission mechanism for monetary policy is just about everywhere. it is broken right now because it is not a global recession that comes as a result of simply consumers and businesses choosing to spend less. it is because they have been unable to spend because of the lockdown and social distancing

requirements. it is not clear any monetary policy would have a very big effect on the economy. australia, there is a role here for fiscal policy to play. jon: the reason i ask is we have these interesting case studies going on at the moment. one is in australia and the other is in japan. is there something unique about those bond markets that the u.s. treasury market doesn't have in common with it? something we can't do in the united states? guest: there are certain things the federal reserve cannot do. by virtue of the difference of the u.s. economy, negative rates is one of them. but as far as what it means, the federal reserve will target a five year yield or 10 year yield. i don't think that is something we're the u.s. is different.

the fed has not done it. traction in enough the u.s. economy to make those yields go up. and we don't feel that they will be any benefit from the five year or 10 year yield. as the u.s. economy gets more traction and that is met with higher five-year yields or higher 10 year yields, at that point i think you will see the yieldsp in and consider for control. we thrilled terry can be with us today. i love the thing that john brought up. it we all know we are different, but so much of why we are different is the fluidity of monetary instruments in the very short-term space. generate a negative yield policy given the dominance

of money market funds. in the u.s., you cannot. they have to cover expenses. and the money market would disrupt the payment system. i think the regulators in the u.s. have a reason to worry about breaking the bond market. whether or not that happened as the result of a default, money market account, or money market fund, they will not be able to cover their management. tom: we go to four digits here on bloomberg surveillance. .5493. if we grind lower on a 10 year yield due to lack of aggregate demand or whatever the reason is, there needs to be an urgency to act because of the money market instruments.

what is the grinding down in yield? funds holdy market three months, six months, maybe 12 months paper. it is the u.s. government bond funds. they don't take a prominent role. i'm not really concerned about where the five year and 10 year is. it is about the ability of the u.s. payment system to perform

its function. we start to get defaults and prime instruments. this is after the lehman bankruptcy. jon: thank you, and come back soon. assume the position in washington, d.c. this is the story coming from chuck schumer. he hopes republicans will return to talks. the white house press secretary saying the president most certainly intends to implement orders. no scheduled talks today so far. we will look to see what happens or not. of them woulde initiate some form of centrist compromise across the many different topics and go from there. from the secretary

is they want a narrow set of bills where the democrats want a much more comprehensive set of bills. they are miles apart. jon: speaker pelosi thinks that they have compromised by going from north of $3 trillion to $2 trillion. everybody keeps using the $1.5 trillion, don't they? it started with jason a few weeks back. that is what most people think they will settle on. tom: and a key point this , the president's package models to a number of $400 billion. would you mind if i tease my tv show? would that be ok? tom: yes. jon: in the next hour on policy and demand that thinks we might get a $1.5 trillion package,

isaac from compass point will be coming up later this morning on bloomberg tv. tom: do you want to see the real yield. jon: maybe thursday. you will be off. tom: i'm off? and wednesday, thursday, friday. maybe i will tease real yield on tuesday just for you. this is bloomberg. with first word news, new polls show biden leading president trump in key battleground states. according to the cbs news poll. president won both of them in 2016 by a wide margin. president's handling of the coronavirus was a major issue. another coronavirus milestone to added a million new cases in a little more than two weeks. the positive test rate will hit

another record. news 24 hours a day on air and on bloomberg rick take powered by more than 2700 journalists in more than 120 countries. this is bloomberg. ♪

>> the problem with qe is that it can only go so far. and there is only a certain amount that you can buy that you

can bump into the system. bondthe hsbc on this market a little bit later this morning at around 20 minutes time, but we catch up with matt hoback from morgan stanley, the head of global macro strategy. tom, on the shape of the yield curve, with the extra supply means for the yield curve and the u.s. dollar. tom: and people trying to make money and trying to not lose money as well going into the q3 and q4 of this year. that will be most interesting. right now, this is a joy to speak to brooke sutherland of bloomberg opinion about her latest essay. this goes back to all my years of bloomberg worry did a chart also bloomberg a million years america.nufacturing in what you need to know is a number of jobs in manufacturing is calculated to be somewhere just before pearl harbor. on a population adjusted basis, we are down 60%.

the death of on manufacturing of the flatlining of manufacturing over the last number of years. done thetherland has new math. how grim is it? guest: it is not looking great. the numbers we saw, manufacturers did add back 26,000 jobs. it was about 1/10 of what was forecast. peoplere 740,000 fewer working in u.s. factories then there were in february. that is kind of astonishing to me. when you think of how many of these factories were able to stay open, it is not restaurants or retail. a lot of factories got classified as essential. so what you are seeing here is demand related cuts. toot of this is pertained the hardest hit industries. companies that cater to aerospace or oil and gas.

but a lot of these companies that have relatively robust balance sheets, thinking about honeywell and united technologies, the tone from those companies in april was to try to avoid job cuts. come the second quarter, they are not avoiding them anymore. raytheon was being pretty clear that they are going to be permanent even when demand does come back for aerospace. tom: all of our behaviors are changing. there are things i'm doing that i didn't do the second week of march. we are paper driven here. it tons of notes and tons of paper. paper went out the window and i'm not using paper like i used to. our manufacturing companies the same where they have been forced into shock changes where they are going for new efficiencies based on technology which eliminates jobs? brooke: that is really true. this has been a long moving trend. manufacturing has been talking about more automation for years.

[indiscernible] these are all topics that have been there for years. when you talk to the ceos and experts in the industries, they are seeing a rapid acceleration of adoption of these trends. one of the ones that has been really popular lately is this idea of localizing supply chains. it is interesting because the companies that talk about this the most of the ones that sell automation. rockwell automation talks about this a lot. movings one company across the u.s. and using automation to do it. they are looking to hire a bunch of american workers and a lot of that is going to be done through robots. it sells automation equipment. when you see this happening, it comes to fruition and companies are not willing to give up these margin gains that they have been able to obtain during this moment of crisis.

it is just robotics, doing more with less on the workforce. i think that trend will continue. tom: within the conference calls, how does a dearth of revenues play into this? folks, all these industrial companies when they break. i look at organic revenue growth. to the memory of jack welch who codified this, brooke sutherland, if organic revenue growth is lesser or invisible, that is a new pressure, isn't it? brooke: it is, but you have to distinguish between different industries. for oil and gas, you talked about organic revenue being depressed well into 2021. if you look outside of that, the other basic general industrial companies, none of them are talking about an upturn in a much shorter time. or they are starting to see

green shoots already. you saw that from 3m. low single-digit sales are up in july. they can end up with flat revenue in the back half of the year by the tools segment. so many people are trying to do it themselves. there is a lot of variation between these companies. i think what was concerning to me is that even the companies that we consider doing well now, we're talking about the permanent job cuts. tom: are we going to see m&a? quickly, are we going to see m&a? brooke: i think that you might. there are a lot of companies with a good buffer on the balance sheet. that is what we have been looking to do a deal for a while now. brooke sullivan, thank you

so much. i can't say enough about this essay. i will get it out on twitter. she carries forward the manufacturing challenges that we have. we want to set up this week for you. it's very important. kevin cirilli on the vice presidential watch. widely anticipated that vice president biden will make a choice this week. and somehow, you've got to believe that we will see a lot more gamesmanship to the morning and games woman ship. office throughs the debate. it is a market with one subtle movement. we see a modest grind lower in yields. struggling to make some news, but a .55%, we are three basis points away from the caution we saw last week. the headline statistic without question is the vix 22.62.

i can't say enough, the dow close, i should say. a 22.61 vix is really quite something. that is something to begin the week with. throughas that, we go the week with important analysis. i talked to guy johnson earlier this morning who had a great observation. the 10:00in guy in hour. on commodities, copper rolling over suddenly over the last few days. it copper is not gold, but copper is one of those great indicators. coming up in the 10:00 hour, mark bristow. this will be an interesting conversation not only on gold and the moon, but the challenges of commodities.

announce. $16, 2044 -- an ounce. stay with us through the day on bloomberg radio and bloomberg television. good morning. ♪ what happens when a wireless carrier

puts its customers in charge? well, the good news gets shared. and it gets rated #1 for customer satisfaction. but don't just take our word for it.

take theirs. it's your wireless. your rules. only with xfinity mobile. call, click or visit a store today. where you can find games, news and highlights. all in one place, right on your tv. the xfinity sports zone. use your voice to search every stat and score. follow the teams you love. and, even get notifications with breaking news alerts and more. with the xfinity sports zone everybody wins. now that's simple, easy, awesome. say xfinity sports zone into your voice remote today. ♪ jonathan: from new york city for

our viewers worldwide, good morning, good morning. "the countdown to the open" starts right now. equity futures just about positive. we begin with the big issue. chaos on capitol hill. the president flying solo. president trump: democrats are obstructing all of it, therefore i'm taking executive action. we have had it and we will save american jobs and provide relief to the american workers. jonathan: reaching for the power of the pen, signing a series of executive orders including redirecting disaster relief fund to provide $300 a week in federal aid to the unemployment and differing payroll taxes. corner,s painted into a leaving it unclear whether they will challenge the legality of latest moves. >> i associate my remarks with senator ben sasse who says they're unconstitutional.