on. caroline:caroline: and it felt like today they did indeed focus on other places, out for performance -- outperformance in small caps and blue chips. we can hear the bell ringing. the s&p 500, seven straight days of gains. there have not been big -- but we have seen the longest winning streak since october 17. sort of ticking upward. i guess it does not matter. when you look at the big tech names, apple did close higher by about 1.5%. anant to point out we saw interesting move lower in some of the names in gaming, including draft kings. a lot about college football canceling the season or some

conferences canceling the season, and what that could mean for the betting world. i know you are a big ambler. -- gambler. ann: if i'm gambling, i'm gambling on robinhood. i'm not going to give away any of my freebies. i was just looking, as you were talking about the market -- you mentioned small caps were one of the big up performers. 5% ord small caps are off 6% year-to-date. the s&p is up 3%, 4%, 5%. value is down 12%. it is up 18% year-to-date. these are yesterday's numbers. i have not calculated the numbers today. you are starting to see some of that divergence again, not only in the companies, but in the value and growth rotation we continue to talk about. romaine: let's bring back ann over at wells fargo asset management.

when we talk about the market, a lot of people look to the fed's support, not only in terms of some of these special policies it hasn't amended because of the pandemic, but also the rate cuts , which has kept the nominal rate low. and that real yield well below zero. about 100 basis points on that 10 year real yield. enough forupportive the economy, for the market right now? ann: i think they are right now. certainly, though, when all the money that has been poured into the market, over $40 trillion, $45 trillion -- that has been a real stimulus. when there is that much buying in the market by the government, that is real dollars, and that has helped a lot. there certainly has been interest by retail investors as "don'tut the old adage,

fight the fed," holds water in this case. >> on that note, if you are looking at active equities, who to buy, who to not buy, how are you thinking about levels of debt and the health of the balance sheet, with yields of zero? you have tons of issuers selling debt because it is free and cheap. how does that affect how you are looking at a lot of companies you are investing in with shaky, or not, balance sheets? ann: it is a really good question. our managers are highly focused on building resilient portfolios. they are not traders. their focus is on high quality companies with really strong balance sheets. i think despite all of the capital, spite low rates, we are going to see an increased focus on bankruptcies, and there will be quite a few of them that we will see over the next 12 to 18 months. investors need to be cautious

about those things. and so although it is great to names the market a lot of rally and have big, big rallies, and investors can get tempted to go to those places, it could switch quickly. and we are all seeing it, when you have shutdowns occur or pauses occur, because the virus controls a lot of activity. and so although schools may start, the nfl season may start, college football may start, we don't know how quickly those things will get paused. i think we all have to be a little cautious about those things, and certainly our managers expect bankruptcies will be more prominent in the future. bankruptcies, more nervousness, and probably more volatility.

how do you do that? ann: they stay focused on quality companies. they stay focused on making sure they have their portfolios very diversified, in a lot of different sectors. on their they focus investment processes and staying true to those investment processes, which can lead to outperformance over a long cycle. >> great to get your focus. that does it for the closing bell. we will look at potential investors for tiktok. and also, breaking news. ♪

♪ ♪ caroline: from bloomberg world headquarters in new york, i'm caroline hyde. romaine: this is what you missed. ,aroline: i rally in blue chips but not in tech stocks. the nasdaq down. .he s&p 500 edging ever higher stimulus at a standstill. roundations for another of virus relief breaking down. president trump chooses to go it alone, but does he have the authority? and buying tiktok. app ine lucrative question, more companies than microsoft see potential, but is it better to invest or to buy

outright? all that and more coming up. taylor: we have to talk about a stimulus or a lack of a stimulus deal and what that is doing to business conditions in terms of the uncertainty it is providing. take a look at this chart. you see the indexes for all of this stuff. the blue is the monetary policy uncertainty index. that is relatively low as we get guidance from the federal reserve. lack oftration over the compromise on the physical side of things means that in the white line, well, it still remains pretty high. i will bring in our harvard kennedy school center for fitness and government senior fellow, megan green. when we talk about the lack of compromise on a stimulus bill, what you need to see to make sure state and local governments have enough money to whether the pandemic? -- weather the pandemic?

megan: we need money from the rogue government. this seems to be the biggest block to finding a deal between the democrats and the republicans. but beyond that, we also need to see a few other things, like reversing the cash cliff that many people went over at the end of the month, with the end of unemployment benefits and enhancements, eviction protections, things like that. and also, i think we should see more support for small and medium-sized physicist. the ppp loan program was slow getting off the ground. they extended the time that firms had to use the money, but they did not increase the amount they first had. firms that already allocated their budgets, brought people back on the payroll, they have used up that money. i think we are going to start seeing more people laid off. the august jobs report might look pretty bad. and all this happening at a time when unemployment insurance

benefit enhancements have also stopped. i need to see a lot here, but think a big piece is federal money for state and local governments, which the democrats have been pushing for and the republicans have really vetoed. interestedegan, i'm in your global perspective on how the u.s. is tackling supporting the continuation of small to medium-sized enterprises, wanting businesses to keep on employees. europe has done it. the u.k. has done it. is this the right way of trying to support the economy at the moment, ensuring the unemployed get the money necessary, $400, however it might fall? the u.k. has basically kept people in positions of work. megan: it depends on a lot. and minuses tos each approach. as you say, the u.s. has not really tried to keep unemployment low. the focus has been on supporting those who are unemployed. in europe, there has been an attempt to keep a connection

between workers and employers. i think given the jobs that were lost initially, these kind of hourly service jobs that are high turnover jobs anyhow, the u.s. approach was not a bad one. but given how flexible the u.s. labor market was, i think the u.s. approach of supporting those who were unemployed is ok as well. for europe, i think it does make more sense for them to try to connect workers and employers, because they have much more rigid labor markets, so once you lose your job, you tend to be out of a job for much longer in europe than in the u.s. the european approach gets much more expensive. europeans have come together on a fiscal package in a pretty big way. it is a politically significant deal, the e.u. recovery fund. economically, it is probably not big enough. it is not a hamiltonian moment. it has been a big show of

solidarity, and so it is really rare for me to be bullish on europe ever, but the europeans have gotten their act together in a way the u.s. is clearly showing it cannot. romaine: in the u.s., the trend line -- this has been going on for a while. where we stand today with the labor market, a lot of the conditions, the underlying factor has been unfolding for a few decades. i'm wondering if you see in your research, in your observations, any sense that that could change in any meaningful way, meaning that trendline could be broken and that u.s. policy toward labor would somehow move in a slightly different direction. megan: i think there is an opportunity here. you rightly point out that income inequality has been in the u.s. for decades now. a big part is the decrease in worker power. part of that is people no longer being members of unions. the union membership has fallen significantly, and those who are unionized tend to earn a lot

more than those who are not. so that is one way to try to address this. another way is to kind of inerse a decade-long trend increased market concentration. a few star firms emerge. it means if you are a worker in the industry, you do not have that many possible employers, so you cannot negotiate higher wages. you sort of have to take what you can get. that has held wages down as well. trying to encourage unionization, penalizing companies for all of the tactics they have for trying to undermine unions, having increased anticompetition authority, that could help with market concentration. these are all things that could help workers, and this is an opportunity. in crises, you often have bold moves. this is an opportunity to do that. i think a lot will come down to the elections. the biden campaign does have a lot of this kind of stuff in their memos.

it is possible that it could happen. and i think it is absolutely necessary. income inequality was a huge problem already in the u.s., before this crisis, but it has been exacerbated massively by this crisis. taylor: on that theme, you were talking about lack of unionization. we are getting headlines at the top of the hour than it is a preliminary injunction. california has gone against uber reporting independent contractors as full-time employees. -- talking about your knowledge of what it means to be an independent contractor, the lack of benefits, the lack of wage pressure we have continued to see, how do you see some of the gig economy, the gig workers, moving forward, if this were to become a bigger issue, a lack of independent contractors, and a push for full-time employees with guaranteed and? -- guaranteed benefits? megan: that could help, and

something that underlies worker power is misclassification of people who should really be full-time employees, that are hired and brought in as independent contractors. we know there is an amazing benefitsoking at the that someone in kodak have gotten decades ago, versus someone working at apple or google now. the difference is huge. if we could try to trap -- crackdown on that misclassification and try to bring the gig economy into the regular workforce, that would improve worker power in many ways. hopefully, we can make steps toward that, but it is not clear that we will. there is some of this in biden's documents, so those are on the table. hopefully, we can take the opportunity of a massive crisis to make some of these really bold steps, because they have been necessary for decades. romaine: great advice as always. that is megan greene, senior fellow at the harvard kennedy's will center for business and

government. ♪

>> the initial pockets of activity are probably going to be in those industries which are relatively unaffected, as compared to some of the ones that have been affected terribly. i think you look at things like financial services, you look at technology, things like health care, and i think that's the place where you would expect to see the first pockets of activity, because they are a little bit less worried that we have not hit bottom and are in a recovery. >> you mentioned in the last crisis you had this universal aspect of all sectors going down together, all sectors, as

relates to m&a, emerging together. is it difficult this time? the mechanism for commerce, the credit markets have not broken down. companies have seen that is still functioning. >> when you look back at 2008, 2009, it was stable and across all industries it took a return of the liquidity. it took a return of the debt market. and that was a slow and steady return. if you look at the numbers coming out of there, there was a steady return. we went back to 50%, back to 70%, back to 90%. because you do not have those, i think what it is going to be focused on is the impact on the industry of this particular crisis. you are going to see industries that are probably going to be back at the same levels of activity fairly quickly. you look at the travel industry, the hospitality industry, the

energy industry, where i think it is going to take a lot longer because it is not a question of is that available. what is the rationale for transacting in those industries? what you were going to see probably when you look at the numbers, recovery might be the same, but the recovery is going to be more industry pocketed as opposed to smooth across the whole m&a market. >> policy is going to be a huge aspect of any decision any company makes going into the last owner of the year, particularly around m&a, and i suppose particularly a cross-border deal. how are your clients thinking about the risks of -- whether it is the election, different outcomes there, or the ongoing situation between the u.s. and china, and the tensions that is creating? >> clearly, with cross-border is being dampened by the unpredictability of the foreign policy of the united states right now.

i think that it is going to take a while before people feel confident that jumping back into some of the geographic markets -- the china-u.s. steel -- deals , until there is a sea change in the attitudes between the countries, it is hard to see that coming back. i think you are right. it is always dangerous to try to predict the impact of an election on m&a, and the impact on policy, that there are certain things people are talking about that are probably inescapable. one is, it is clear the progressive wing of the democratic party is anti-merger and anti-big. it has been stated publicly. when you look at what is going on at the ftc, a number of deals cleared the ftc recently on 3-2 votes with pretty scathing dissents from the democrat commissioners. oaks are thinking in a biden

administration, if you have democratic control of the ftc and the doj, there might be scrutiny attached to deals as a result of that attitude toward mergers. that might impact the ability to do some of the strategic deals that have cleared today. i think the other big piece is tax policy. biden has been very clear that he is looking at raising the corporate tax rate. and it's clear that looking to raise the individual tax rate, including the long-term capital gains -- somewhat counterintuitively, i think that might be a catalyst for m&a activity in the near term, because folks are looking at might trypossibility, to get deals done before the tax policy changes. so the threat of tax changes has people doing deals sooner rather than later. long-term, it is probably a negative, but in the near term, it could have people jumping in and trying to get things done. wolf,: that was daniel

speaking with our own ed earlier. a developing story and what looks to be a big loss for the gig economy. uber and lyft were ordered to convert their california drivers from independent contractors to employees with benefits. for more now, we are joined by bloomberg reporter eric newcomer. preliminary a injunction, but what do we know about this ruling? eric: this is a big move against uber in its homes. -- home state. california legislators passed assembly bill five, which clearly has a goal of making and lyft drivers employees. that went to the courts and hoover has been fighting it out. now we have san francisco superior court saying they look like employees. like everything in this world, that could be appealed, and certainly uber will do so.

they have i think 10 days to try to push that out, and see if they can get an appeal going. uber a big strike against drivers being independent contractors in california. romaine: eric, assuming the companies lose their appeal and this effectively becomes the law or the rule in that state, is there a business model here financially where they can operate and be profitable while keeping these drivers on as employees rather than contractors? that's ah, multibillion-dollar question, i think. it is complicated. one, i think technically there will be a question of whether uber wants to show that it can make it work, because it would open the door to a lot of other places. california is so important to the company, you would have to sort of imagine they would try. uberr has long argued --

has long argued that the stack -- the status of his workers allows drivers to jump on and off the platform. it will be a pretty drastic change. i think part of the problem is that uber has full-time drivers who work with bonuses and certain incentives, but really do seem a lot like employees, with people who are more likely to bounce on and off the platform and supplement other income. i think a big question would be whether uber could really still maintain those two different pools of labor, or whether they would need to really focus on waste morerivers and money when there is idle downtime, or make it harder to get a ride in nonpeak periods. caroline: how far-reaching is this? i think of the gig economy back in the u.k. the argument is that workers want this

flexibility, want to be able to come in and out and work when they want to, and don't want the benefits. that's the argument. but this hit deliveroo, hit instacart. many gig economies companies are based on these modes of working. how far-reaching could this be? eric: this is going to -- when uber went public, this was a major risk factor for them. the independent contractor fight is a global challenge. the legal and regulatory system has moved slowly. thean, some of president-setting cases for this issue are from sort of old guard companies. the government has just been figuring it out. if california moves against uber, makes them employees, and the world does not collapse, i think a lot of nations, cities, states, everybody will say, ok, we should do that. definitely, there is a domino effect here.

i think people will be very interested to see with california, which has been watching this longer than everybody else. caroline: we have to leave it there. be safe. we are expecting to see moves coming through at the start of trade. how long will it last, is the perennial russian. -- question. ♪

romaine: growing tensions between u.s. and china, plus the lack of stimulus deal from congress is adding to market risks. apple about to hit a market valuation of $2 trillion. our next guest believes this is just the beginning and the market can push even higher. joining us, foia investment management ceo. when you look at the way this market has performed, a lot of it seems to be tied to expectations for recovery in the economy. but everything is going to look

like a v when you are coming off such low levels. i am wondering how you look at the economy in a way that gives you a pure view of where we stand right now with current conditions and where those conditions might be a year down the road. >> certainly. to your point, we still have a the u.s. togo in get back to where we were. the underlying fundamentals and momentum are actually quite good. you are seeing this in some of the areas, whether it is retail spending rebounding. opentable, kind of a high-frequency thing that we watch. as well as improvements in the united states and the number of covid cases. it can really look like a v when you are laying on the floor and

you try to jump. you are jumping high. we do have confidence that this recovery has some legs and will continue for a while. caroline: therefore, an opportunity to go further into the market. highs,s led us to these will it be the same type of theanies to take us through -- through that? christine: one of the things we are looking at is just even some of the parts of the market such as the cruise industry. back in may, they tried to get a bit of a recovery, then it just completely faded. now you are seeing a broad raised recovery. clients do not just look at the overall level of the s&p. with stock at an all-time high

low,ields at an all-time what do i do with my next dollar? taylor: one thing i love about getting ceos on this program, we can really take a birds eye view, get your thoughts on an emerging market, the rise of this retail investor. you have seen what looks to be a race to zero. then you have this new class of investors, that they want to make their own decisions and do their own trading. from a business development perspective, how do you think about a retail investor in this moment? as you point out, there has been quite a bit of pressure and really not much

more to go. investor.r the retail if you look over history, the retail investor tends to make not good decisions. when they went through all the market volatility in the first they stayed the course and stayed invested. i do think things like more institutional money and knowledge is really important. longer run, what we need to think about is how we give them access to private markets. it is a challenge given daily liquidity. but if you think about what is growing and where is the alpha being created, it is really in market sector

sector. romaine: there is a belief, rightly or wrongly, that there is a floor being put under risk assets here. i wonder if that obscures some of the risk out there. christine: i would say, for the most part, no. let me explain. the coversel back the market,per into whether you look at the levered loan the market, real estate, we still are seeing a tale of two cities. commercial real estate company costs of it, has really lagged. haver as the markets that been supported, investment grade credit and other parts. the low yields while companies are taking on more debt is much

less risky for them. if you believe that we will see real revenue growth, then really overall macro risks and credits are not something keeping us up at night on behalf of our clients. a tale of two cities. wouldn't it be great if dickens was still alive to write about our current times. let's go to mark crumpton with the bloomberg first word news. mark: president trump's lawyers made a final pitch today to block a new york prosecutor from getting his tax record. the lawyers made a written submission to a federal judge who last year refused to throw out the subpoena issued to mr. trump's account in a criminal probe. president trump says the effort is politically motivated. , cleanup continues

after a night of looting in the city and shopping district known as the miracle mile. police shot a man after he opened fire on officers, an incident that apparently prompted a social media post urging people to converge on the district. arrests were made and officers were injured. >> what occurred in our downtown and surrounding communities was abject criminal behavior, pure and simple. there cannot be any excuse. legitimate first amendment protected speech. these are not poor people engaged in petty theft to feed themselves and their families. this is straight up felony criminal conduct. mayor lightfoot

said police had collected video and other evidence that will be used to arrest and prosecute as many as possible. , violentnd, oregon protests continued for another night. demonstrators used a mortar to launch commercial grade fireworks at belize. managed tors also get inside the police union building and light a fire. protests have been going on since police killed george floyd in minneapolis. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm a mark crumpton. this is bloomberg. ♪

mcdonald's has followed a lawsuit against its ousted ceo steve easterbrook, accusing him of relationships with multiple employees and even even a stock award to one of them. it is pretty salacious. it is quite breathtaking, really. all to us about how this unfolded. >> i would say this is more salacious than bloomberg news usually gets. steve easterbrook was fired after he had an affair with one employee. they let him have severance pay, stock awards at about $37 million of value. an anonymous tip in july resulted in another investigation. turns out he had affairs with at

least three other employees. not only that, it looks like he lied about it and tried to delete evidence from his phone. change company wants to from firing him without cause to firing him with cause. romaine: if they do get that change in designation, does that automatically give mcdonald's the ability or i guess the right to get that money back? >> that is what it looks like. companies and former executives often settle clawback matters. but they usually do it privately. i think the fact that they are doing this openly shows that the company is trying to distance from him. they thought, maybe one consensual relationship, we can deal with that. now that it is four and deleting evidence.

taylor: we saw the quote from the mcdonald president and ceo, saying, "we recently became aware of this new information and the new information makes it clear that he lied and destroyed evidence. 2/10 ofet was only off 1% for shares of mcdonald's. what is the market now thinking of this? easterbrookind that has been out since november. shares pretty much unchanged today. back in november, shares fell quite a bit. wall street really liked easterbrook. on themade some changes tech side, like a company that reads your license plate when you come into the drive through. chris kceo, called

within the company, to the world. caroline: the law firm representing easterbrook has not yet responded to emails. thank you, bloomberg consumer team leader. latestquick check on the business flash headlines. shares of apple are within striking distance of $2 trillion valuation. 3.5% ofd to gain just the market cap to go over the threshold. ceo tim cook has now reached billionaire status according to the bloomberg dinners index. the federal reserve is out with a new capital requirement. the toughest demands will be made of firms such as goldman sachs and morgan stanley. romaine: the hospitality industry, of course it has been hardest hit in the past few months. earlier today, marriott

international boarding -- reported a draw. royal caribbean posting a second quarter net loss of $1.6 billion. we spoke with the ceo of real estate management company, jll hospitality company america. >> we saw a little bit of a green sprout in the summer with the pent-up demand on the leisure side. obviously, we have had a little more of a virus spike. expectation is that we are going to see a modified version of corporate business coming our way, september. leisure continuing to tag along. the big question mark really is the group business. it will be depending on whether the team is hardly available.

>> let's focus on how important that piece of the business. some hotels are managing to capitalize on the staycation trend. people will check into a hotel in their own city to have that experience. before we get planes back in the air fully, how do you get that corporate traveler or group revenue back in the system? >> corporate, it is a little bit easier to attack. we are all eagerly awaiting to see what will happen from a governmental perspective in september. travel, i mean ease of any restrictions. what we are seeing ourselves, we are starting to travel for client meetings. i think technology has been really interesting in terms of how that has provided a little bit of a bridge in such a

disruptive environment. people do need to travel. continue to run a business with technology but to be able to grow, when to get people out on planes. on the corporate and group side, there is quite a bit of pent-up demand. cateringall the social business that has been put on hold. all the weddings that haven't happened. there is that eagerness to get back and book hotels once we are able. to benest, we are waiting widely available for some of the bigger groups. the conventions. the thousand people meetings and greater. will the way people book things change in the sense of lead time? i am not going to book a

year-round in case the virus comes back in a certain country, but i might book for next week. >> you are right. the booking window has gotten shorter over the years. gottene crisis, it has that much shorter. the window could go from a day, a week, maybe a month. i know some corporations are looking at what to do with the group commitments for 2021. pushed a little bit to the second quarter or second half of 2021. but the name of the game is very short booking windows. a lot of the hotels are being very flexible in terms of what kind of penalties as a consumer you would have to pay. costat kind of additional is the industry still facing in terms of the safety and

cleanliness? >> the big focus right now, yes, cleanliness. but it is really all around the labor costs. we are paying a lot of attention on hotels located in markets that are highly unionized. the labor structure is dictated by the labor unions. muchere may not be as flexibility. i think the cleanliness standard, that is an added cost, but not by much. also, some of our biggest corporate clients. theine: the outlook for travel industry. perez-alvarado. this is bloomberg. ♪

romaine: twitter shares rising as much as 6% after the wall street journal reported that the ktok.ny is in talks with ti joining us, jitendra waral. tiktok is kind of the hottest person in the room right now. have atwitter already video service at one point with vine which they ditched? thatdoes tiktok bring them they didn't necessarily have with vine? is executionre

risk. vine was one example. tiktok, however buys them as to be able to sustain that margin pressure for a couple of years while they build their business and scale it. be a very high strategy fork twitter. obviously, if you the opportunity to reconfigure the entire ecosystem. realistically, i thought the risk in the face of competition might be too high. strain the balance sheet. caroline: talk about that balance sheet. could they afford to just buy it outright or would it have to be done with others?

jitendra: yes, it has to be done like that. the market cap is less than $30 billion today for twitter. even if you look beyond that, more from the execution risk standpoint more so strategically. at least for now, twitter standalone has some good things going for itself. going after small businesses, improving self-serve advertising. launches, events start returning, they will have a tailwind as well. business, thelone balance sheet is pretty strong. mix you bring this into the , the equation changes. said don't culpan brush this off because of the size and balance sheet. you're right that it would be a

hurdle but if you get other investors involved, it could be more feasible. he ends the article saying, for twitter investors, any management change alone would be worth it. is there a concern that there isn't really a ceo at twitter, that he is off in africa or helping run square? does that hurt any potential for an acquisition ordeal as well? jitendra: it has been a sticking point for a while now. the pressure they had in the beginning of the year, you saw that was a to sort of resolve that issue. i am not sure if there is going to be resolution anytime soon. at least you have more options. financial, the engineering aspects are ok.

but the question you have to ask, the patient's to give them the opportunity to deal with these compliance costs while they figure out the business together. caroline: jitendra waral, fantastic analysis as always. you can hear more on that continuing developing story in just a few minutes on bloomberg technology with emily chang. now makelyft must drivers employees, so says the judge in california. this is able to be repealed. ofaine: this really sort challenges their business model at the moment. keeping labor costs low is a big part of that model. taylor: it gets tough on the consumer. my costs rose a ton this year

when ab-5 went into effect. romaine: do you pay for your own rides? i take the bloomberg issued rolls-royce phantom. caroline: we have a team helicopter as well.

♪ welcome to "bloomberg technology." i'm emily chang in san francisco. stocks ended the day mixed today. a daily escalation in tension between the united states and china. tiktok says it now plans to sue the trump administration,, the effort unconstitutional.