♪ anchor: sky high, the s&p 500 above its highest-ever level, and a rally today. the u.s. cranks up tariff threats, with a long-running dispute over subsidies to airbus. the boston fed president says over eagerness to reopen the economy will not contain covid-19 and has backfired in the united states. we will hear from him. good morning, everyone, and

welcome to "bloomberg surveillance." i am francine lacqua in london. we are also getting a cut of an oil demand forecast amid the darkening of the travel situation. if we go straight to the markets and have a look at those, the story really is with these stocks, so yesterday, the stocks had quite a big move, and we are trying to figure out exactly what that means for the earnings forecast for the future. what else i am looking at is crude oil, as you see, $42.56, after the iaea report, and the litmus test, in terms of risk appetite, gold at 1930. are signs of faltering after stimulus talks in washington remain at deadlock. now, let's get straight to the bloomberg first word news. reporter: hi, francine. a warning that a failure to control the pandemic is undermining the economic

recovery. the boston fed president says america's over eagerness to reopen has backfired. he is concerned many temporary layoffs may become permanent job losses. rosengren: my thought is some kind of stimulus is going to occur. it would definitely be bad news, both forecasted and for the economy if we do not do any additional stimulus. reporter, the blast in beirut last week is hurting attempts to tackle the coronavirus come the explosion putting three major hospitals out of action and also impacting more than two dozen clinics. the world health organization says foreign medical teams in the country are diverting some of their focus to now containing the virus. and the u.s. is upping the heat over airbus, adding extra tariffs on some goods from germany and france. the move is designed to squeeze

the european union into settling the long-running dispute over subsidies to the aircraft maker. theu.s. won a judgment from wto last october. the eu was waiting for a similar judgment against boeing subsidies. that could come as early as september. global news, 24 hours a day on , air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine: thank you. let's go to u.s. equities and stock futures, slipping as the rally will likely show signs of fatigue get the dollar weekend. joining us -- the dollar weakend. mark cudmore, what are we looking out for? is it about stimulus? mark: i think there are four things to watch, one the stimulus divide, and the other is the u.s.-china trade tensions with the trade deal being

reviewed this weekend, and i isnk something on the radar a big theme of the u.s. china trade tensions. equities,rket, with recovering gains in asia, and the u.s. equities, and the s&p is testing its record high again, and i think the other theme is commodities have been easing down in the last few days. orther you look at gold copper, whether it is the havens or the speculative ones, commodities are easing off their highs, and that, to me, implies there might be some kind of deleveraging wave. the first half of august has been very good, but i think there may be a warning that either the stimulus or the u.s.-trade tensions could be a catalyst in the second half of august. francine: mark, what happens to treasuries in this environment? have hadthe moment, we

this weird dynamic and the last week. we switched from the world talking about how low it could go, and what is ironic is that the yield rise stopped when we saw cpi beat strongly. i think one of the things to take into account is that inflation is not as high. they are breaking with the market drive, distorted by the liquidity premium in people seeking tips, and much higher liquidity premium, and there is also coming to terms with things. the market is very vulnerable to an extreme shift in inflation, so they need inflation hedges, not because they think it will happen, and this is what we saw at the end of last week and the start of this week, and that cost a little bit of nervousness in the market about inflation. -- that caused a little bit of nervousness. this new narrative of is there inflation possible?

i think we have got a little further to go now. we have not seen that much of a rise in yields yet, but again, i think it will be a negative for stock markets and might tie into what is happening in commodity markets. maybe commodity markets are the warning, the warning sign, that this is why the yield is not sustainable for markets more broadly. will it last? no, i think it will come right back down quickly. this a binary moment, mark, for what the market is looking at? mark: look. i kind of highlighted this yesterday in terms of gold and copper both tested their six-month march low from where we got this team this team list packages all over the world, and they behaved nearly perfectly, unbelievable, and then gold, i think it was at nearly four months. the trendline. i think both gold and copper, so one is the haven kind of metal,

and one is the growth, reflation, the world is bothrful metal, and they crashed through their six-month trendline. then i think that is a big warning sign. i think that is a binary moment. yesterday was the first test of that trendline. we survived it really well, so optimists and people with a strong hand at the moment, but we are not far away. i think that is what people are going to be watching. as we close along those trend marks, i think there is a real problem for markets. francine: great, mark, think you so much for all of the inside, mark joining us on the phone from singapore. and coming up, a guest joins us. that is after a company reported a 40% drop in the forest have -- first half profits. he is still sticking with his 2020 outlook, so we will speak with him next, and a little bit later in the program, the u.s. puts pressure on germany and france and the extra tariffs on

goods following the airbus disputes. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." i am francine lacqua. for the bloomberg business flash, let's go to leigh-ann gerrans. h-ann: demand for loans surged during the pandemic, and eight of the top 15th firms increased headcount, only four reducing it. deutsche telekom has raised its forecast and reported profits

that did beat estimates, after bolsteredse of sprint the parent company finances, but the picture is more mixed. mobile service revenue dropped over 1%, largely thanks to lower roaming fees due to the coronavirus pandemic, and a forecast of a slump in earnings this year as the coronavirus affects bureau consumption in bars and restaurants, with a decline of 15% at carlsberg, already changing their guidance .his year, rivaling ab invev that is your bloomberg business flash. francine? francine: and sticking with the estimate for full-year payouts, despite taking a hit in the first half zürich insurance. it is the second largest europe

insurer, bracing for the impact of covid-19. joining us now is the company chief executive, mario greco. joiningo, thank you for us. when you look at the insurance business, 2020 has been rough for people but especially the insurance business. what could you tell us about the beirut blast? what does that mean for insurance? the incident was in precedented -- unprecedented, but beside the losses, beside the claims, it indicates the need for change in serving the customers. we are moving towards a position.led we took this time to accelerate our digital investments. we upgraded our services. we have been able to serve our customers over the last six months from home with the offices practically closed everywhere.

thate are quite confident we will keep improving this over time. francine: what needs to happen for the insurance industry to be able to provide protection to businesses from a pandemic risk, like covid-19, in the future? mr. greco: i think, honestly, the risks of a pandemic, they go beyond any private sector. what we can do is to protect some customers in a limited sense, as we did, but the pandemic as we are seeing now has such profound consequences. that has to be covered by the governments, by the public, and by the private. and so, we need to have a concerted agreement of private and public to take on the losses for the private customers and reimburse them.

but it cannot be left to an insurance, private solution. insurance companies will not be able to do that. francine: what are the lessons from covid-19 that you can take away from it and also maybe use it for climate change? lessons arehe main in behavior of customers and in the change in the society. us toese lessons drive think that the world will be much more based on technology and digital interfaces than ever before. are also, then, we taking lessons from the clarity of our positions. , where thetzerland positions are very clear, so we opted for the best of the , but we willcome

then clarify conditions going forward. but the main lesson is about and is this opening for us, what it does is it is a catalyst for a great shift in the way we live and in the way we demand services. greco, what has the lockdown actually taught you about operating in these kinds of circumstances? are there any lessons to be taken on, digital insurance, for example? mr. greco: sure. sure, there are. we were able to serve customers without problems, so during this month, we paid claims, issued policies, acquire new customers. we even created new products. however, in terms of what we do for the customers, for example, in telemedicine, you know, we

are now considering investing in that sector as a consequence of this, because we understood during covid that there are lots of customers who needed to be cured but couldn't because of the physical proximity was just impossible. i mean, they could not go to the hospital. they needed to be cured, you know, with digital solutions, with remote solutions. we are investing in that. if i could see to rational and lever -- leisure, -- if i could see travel and leisure, this is completely upside down. we believe travel and leisure will start again progressively, but we believe business travels will be completely revolutionized by the situation, and so we have changed services that we offer to travelers, and we have developed a very different approach, considering that leisure will become the

dominant reason for traveling. so there are lots of lessons, sector by sector. share investing in mobility before. frankly, when this started, it share mobility is not going to be the most natural decision of customers over the next months, and we are going to see if that develops again or not. lots of lessons learned. francine: and what about zürich, in general? or, specifically, do you still need all of the office space you have, or has it show you that people can work from home quite well, so that is a cost-cutting exercise? mr. greco: yes, look. i do not think the answer to this change is going to be cost-cutting. cost-cutting is always important.

have obtaineds we remain in the dna in our organization and our culture. however, you do not respond to what is happening just by cutting costs. allerms of office spaces, of the offices that we have been building over the past years, people could work one or two days from home, so we are not providing 100% to all of the employees belong to that office, chairs and tables. that has not changed after this, maybe that is instead of one or two days, it will be three days, but people will have interest to come to offices once the health and the safety conditions are completely restored. , just goingr.greco back to lebanon and beirut, some of your competitors say they may

see a major loss because of that. do you have any exposure to the beirut blast, or something to quantify at the moment? are trying to, we understand ourselves. it is very early days for that. we do not think we have exposure. definitely, we will have some kind of exposure, but that does not look as something significant or relevant for us at all. 2021ine: how do you expect to go? thesego back into lockdowns, potential lockdowns, how devastating would that be for your industry? greateco: it is a question. the real answer is i do not know. you know, what to expect from the virus and from the reaction of the government over the next months, that is beyond my capabilities. you know, i personally do not

think, and as a company, we do not think the lockdown would be repeated. that was our understanding of how to fight the virus. i think we know now how to do it. individually and collectively as societies. and i think we will find ways to contain it, as we are doing right now, without going to the extremes. cannot -- i cannot say more than that, because i really do not know. i cannot forecast that. francine: yes, no one can, so thank you for your honesty and for joining us. he is, of course, the chief executive of zürich insurance, joining us this morning. coming up, did mid-america open too early? harmingto a surgeons,

the recovery? our interview is next. -- leading to a resurgence, harming the recovery? our interview is next. this is bloomberg. ♪

until we get a vaccine or some form of effective treatment, it will be -- >> until there is a vaccine and customers feel safe and confident to resume normal activity. important, but we

cannot wait for the vaccine. i think we need to have a coordination among countries so tracing,sting, contact that will allow travel to resume. >> the hotel is not profitable. so what we really need is that sense of safety. people want to feel it is ok to travel. >> do i believe the peak is behind us? absolutely. but the industry will recover in time because of the inherent need for people to travel. >> it will be a while before mass travel can resume, and that ultimately stems from consumer confidence. it stems from the availability of a vaccine. >> we are going to be on a bit of a roller coaster for quite a while. well, those were some of the top names in the travel and tourism industry giving their view of the impact on the pandemic, with a $1.3 billion loss after the virus shut down trevor, and revel -- revenue

fell 98% for the three months. shares are trading lower this morning. the markets focusing on the fact that the in the u.s., we still do not have stimulus. that is putting pressure on some of the stocks around the world. european stocks are down 0.5 percent, also looking at the pound, 1.3071. and the outlook darkens. coming up, the jobs market is improving, but data of consumer activity shows retail spending is falling again in areas where the virus is spreading quickly. we will have more on that next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get straight to the bloomberg first word news with leigh-ann gerrans.

leigh-ann: in the u.s., stimulus talks remain in limbo with no sign of a stalemate ending. -- an overture from steven mnuchin's a start negotiations. mnuchin pushed back saying it was pelosi who has actually refused to compromise. residential hopeful joe biden and running mate kamala harris made their first joint appearance last night. the event took place in wilmington, delaware, which dramatically stood out from previous elections. it was due to the pandemic. the ongoing restrictions may mean it is only one of their -- it is their only joint appearance before the election. president alexander lukashenko cracks down on opponents in belarus after clamming a landslide -- claiming a landslide election victory.

the nation's a foreign minister tells bloomberg there should be consequences if it doesn't work. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? senior fedwo officials are blaming america's slow economic recovery on the country's failure to contain the coronavirus endemic. president says that over eagerness to reopen the economy without containing covid-19 has backfired. he says additional stimulus is needed from congress. have --think at times i i think at this stage of the recession and the pandemic, the forward guidance probably is only mildly helpful. the reason for that is the

long-term treasury rate is still quite low, interest rates are still quite low, and in that environment i think people are assuming it is going to be quite some time before interest rates rise again. while it might be marginally helpful, i would actually say that our lending facilities and some of the facilities being run by the new york fed are probably providing more support as they are getting out the cost of funds to individuals and businesses that i think are more important than the outlook of the economy. chairman powell emphasizes that the fed could lend, not spent. is that the wrong prescription from the economy right now? lending programs have not seen a lot of take up. eric: the announcement of our willingness to buy corporate security quickly push those interest rates down, and as a result, we didn't need to buy very much because the market reacted to our announcement. i would say credit conditions are much better than they were

in march or april because of the federal reserve's actions. i think that has been an important stimulus to the economy. in terms of spending, that has to come from fiscal policy, so the u.s. economy also benefited from the kind of very quick and very significant stimulus provided by both providing better unemployment benefits, broader unemployment benefits, checks for low income individuals. all of those things have been very helpful in preventing particularly low income individuals from continuing to make spending decisions over the course of the spring and into the summer. but i think many of those programs have ended as of the end of july. the on appointment rate is still above 10%. we need stimulus and fiscal policy to continue. i think that is critically important and congress should come up with some kind of agreement to continue to provide support. mike: have you modeled the end

of that impact of the physical state -- have you modeled the impact of the end of that fiscal stimulus? eric: it would definitely be bad news both for my forecast and for the economy if we don't do any additional stimulus at this time. mike: you supervised the main street program, perhaps the most controversial. according to your figures, $856 million in loans in the system, but it is a program that could do $600 billion in loans. does that suggest modifications need to be made to the mainstream program? eric: we had an initial term sheet, we came out with a revised term sheet, and then it was revised once again to make the program broader and more accessible to a wider range of small businesses, and we have also opened it up to the nonprofit sector. while we are not live on that part, banks are able to start negotiations with the nonprofits. as you know, it takes a long

tame -- a long time to negotiate a bank loan, so it doesn't surprise me that we would start gradual and pick up over time, and that is what we are seeing. one reason we are seeing about of the lending coming primarily from the midsize banks is because they are more flexible. i would expect larger banks over time would be able to start using the facility more. the goal is to make sure the businesses actually need it, that are credit worth the -- that are credit worthy and heather cash flow disrupted and viable will get cash flow financing. we are seeing a pickup in that activity. as banks get more familiar with the program, we will continue to see increases. ericine: that was rosengren, the boston fed president, speaking to michael mckee. joining us now is mark andersen, head of asset allocation at ubs.

thank you for joining us. when you look at the markets, what they are worried about, does anything seem like it is in bubble territory? do you work about -- do you worry about the valuations out there? echoed think certainly -- equity or market valuations have gone beyond what they were. central banks around the world are providing unprecedented stimulus, low degrees of interest rates, and that is suggesting that multiples on equity markets can go beyond where they have been before. if you plot the chart and look at where equity markets have rebounded, back close to the pre-cobit levels, and with interest rates, if you look at the u.s. 10-year now, -- pre-covid levels, and with interest rates, if you look at it will-10 year now, stay lower for longer and that

means multiples can extend beyond where they were before. francine: what do you think the market is pricing and right now? are they looking at progress -- politics in the u.s., are they looking at stimulus, and where will the biggest shock or shift come from? covid-19, the potential outbreak is one of them. trade tensions, and then obviously may be on the short-term around the fiscal stimulus, as your interview with yesterday, republicans and democrats should find a way between the $1 trillion and $2 trillion mark. along with fiscal stimulus that has already been employed -- been put in place, we still think that the fourth quarter will likely be one of the strongest and economic history. francine: what do you do with

gold right now? good question. we have a forecast of $2000 per and we also have gold in the portfolio for our clients. we think gold come as many have observed come has been driven by a negative real rate. chartsk also looking at yieldsay, 1.6% nominal more or less cap from the current levels. we think interest rates could take a slight move lower, and that means gold prices are supported. the second factor that is being debated in the market is, do we have a bit of a risk around inflation, and we could maybe see something like gold prices could do well if that kind of risk starts to increase in probability. itn we look at commodities, is interesting. focus has been around gold

because of the parabolic move we saw in july with prices up around 11%. realisticmore of a view around commodities and add portfolio aso our well, suggesting a pickup in commodity prices including base metals as well. from ubs mark andersen stays with us as well, and we will talk about the u.k. and europe next. also, the u.s. raises tariffs against germany and france. we will discuss the latest development in trade relations next. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

let's get straight to the bloomberg business flash. here is leigh-ann gerrans. leigh-ann: wirecard is losing its place in germany's benchmark dax index after a consultation that favors the immediate removal of bankrupt companies from the index rather than waiting for the quarterly review. wirecard's successor will be announced on august 19. the changes will take effect from the 24th of august. cisco is giving a lackluster tail forecast, saying businesses are spending less in the pandemic in the quarter through october. revenue will fall up to 11%. company plans to reduce expenses by $1 billion through a rebound that will include job cons and early retirement. the plan will cost about $900 million. lyft has reported its worst financial performance as a public company, with sales plummeting 61%. but it is maintaining quarterly

profits by the end of next year. there is a similar story that uber reported last week. both companies face risks from the virus, and the push for gig economy workers to receive employment benefits. that is your bloomberg business flash. francine? thecine: the u.s. is upping ante over airbus, adding extra tariffs over germany and france, designed to squeezing the european union into settling the long-running dispute over subsidies to the aircraft maker. equities have been on a wild ride this year with markets seeing heightened volatility amid the kurumi writer's -- amid the coronavirus pandemic. mark andersen is still with us, head of global asset allocation at ubs. what exactly is the market pricing in in terms of what a biden administration, if you look at the polls a real possibility, looks like in terms of trade tensions with china? mark: that is a great question.

we have tried to speculate and looking at the market, it looks like we might be getting a wave where the markets are telling us that things may shift at this point in time. when we look at the potential impact on markets, it is clear that up until the november election we will see volatility particularly on the sector spot. for broad markets, we don't fear a blue wave as much as you might think because what we might be getting in more in terms of taxes, we will see corporate taxes rise. we will get spending on the others of that equation. think the overall economy is going to be sitting in a solid place to be supporting overall equity markets. so the blue wave is likely to be neutral if not slightly positive for global markets. francine: how do you make a difference between, for example, european stocks or european assets compared to the u.k. and the u.s.? do you break it down i dependlly, or does it

on the action of headquarters? mark: one of the things we have been doing recently come as you might know, we are long equities, commodities, credit, so we have a risk-on positioning in our portfolios. the question recently is where do we see is picking up? if we look broadly at europe, we think u.k. equities look attractive, where we have an overweight position at the moment. u.k. equities are trading at roughly a 30% discount. compared to global equities, they are trading at a discount. there is a pickup potential and we see oil prices moving higher, 35, $45 that could go to $55 over the next year, which will support u.k. equities as well. francine: when you look at asia, how much of a recovery will we see in asia, and what would you do with the chinese assets? mark: good question.

we have daily monitors running, first of all, on observing chinese economic activity, and it is very interesting, with the male that got in this morning, when you look at the traffic around the major cities in china, they are exactly where they were pre-covid from earlier this year. when it comes to investments, we had a longer-term positive view on chinese equities. there are some laggards in the asian region that might be benefiting a little more than china these days, so we have had positions recently on singapore and india where we could see a bit of a pickup to some of the great performances we are seeing in china. francine: what do you do with emerging markets? a lot of them are linked with what happens with dollar and the fed. question.'s a great for the same reason, with think emerging-market equities will continue to move higher.

we have had more overweight decisions around emerging-market credits, so emerging-market government bonds issued in u.s. dollars, in terms of yielding almost 4% in addition to what you would get on u.s. treasuries. away froming a bit these idiosyncratic -- it is taking a more broad perspective. we avoid some of the currency risk. they are being supported by rising commodity prices, broad economic rebound. we think emerging-market credit is a more favorable pick than emerging-market activities. francine: mark, a difficult question but probably the most important. how much do you worry about inflation if we put in extra stimulus. it is something that we should or should weear, make sure that stimulus is in place? one of the reasons we have

tips and are photos -- golden opera photo, commodities in our portfolio -- we have a bit of a sale risk on inflation. when we look at where the excess supply is, we don't think we will see a broad-based pickup in inflation. we have seen inflation expectations creep higher. we think this extraordinary demand in stimulus, that is something we are conscious about in our portfolios, and we try to protect also the wealth of our clients from any potential flareup in inflation expectations. francine: thank you so much for joining us. he is mark andersen, cohead of global asset allocation at ubs. coming up, joe biden and kamala harris make their socially distanced debut. up next, we discussed the race for the white house. this is bloomberg. ♪

>> clearly the natural markets,

we would they, are not necessarily reflecting what is going on in the real economy right now, which is that demand disruption that we saw as a result of the current pandemic that we have. tois making it challenging underwrite new investments in the marketplace, because you're trying to predict, if you want to call it that, when we are going to come out of this pandemic and the impact it is having on a global basis. onneed to look at credits investments that have an underlying endurable, sustainable cash flow that we feel comfortable with. equally so that when we look at those companies, it is way more important today than it was 10 or 11 years ago, that we understand the margin of safety or, if you will, what the equity cushion is that we have in those investments. that makes it much more difficult. jenkins, that was mark carlyle group head of global credit, speaking exclusively to

bloomberg. joe biden and kamala harris made their first joint appearance since becoming running mates. the vice president promised to be -- to bring leadership to the white house and attacked donald trump for his -- device presidential candidate promised to bring leadership to the white house and attacked donald trump for his response to covid-19. >> it is because of trump's failure to take it seriously from the start. his refusal to get testing up and running, his flip-flopping on social distancing and wearing masks. his delusional belief that he knows better than the experts. all of that is reason, and the reason that an american dies of covid-19 avery -- every 80 seconds. francine: joining us now with the latest is annmarie hordern. what was the main take away from the event?

annmarie: the main take away is that both joe biden and kamala harris took aim at president yes, it is duend crisisr handling of the in the united states. joe biden said it would be a key for their administration, creation of jobs. on top of that, the issue of racial justice, and the crisis that america is grappling with. all of these, they took aim at trump for. that is the overarching theme as they both took the stage yesterday. one of the few possible joint appearances that we are seeing, you want to see the chemistry of this brand-new ticket, but due to the pandemic, it was a very different kind of style. we usually have massive enthusiastic, filled halls. we saw kamala harris weave her own story, her own biography, with an attack on trump. she talked about being a

prosecutor, and the case of trump and biden, how she would rescued that. this is something democrats want to see from her. we saw a lot of her interrogation skills during the judiciary hearings in the senate. that is something we want to see her come out with. francine: what have we learned about the ticket? annmarie: what is interesting is the amount of money that poured into the campaign since she was announced as his running mate. $120 million came into the campaign, including first-time contributor's. there is excitement in the democratic party that this was his running pic. an is a black woman, is also asian woman, so it is historic. it goes to show that this is more of a reflection of the democratic party, which is becoming more female and less white. this is something they both talked about yesterday, about how historic and significant it

was, there ticket together. you so much,nk annmarie hordern, on the latest with this new ticket making history. this is what the markets are looking at. the markets are focusing on the fact that there is no stimulus, or at least no opposing economic bets from both president trump, and nancy pelosi, now in the stimulus standoff. at 0.3%.stocks bloomberg surveillance continues in the next hour. jasonl be talking with furman of harvard equity -- harvard kennedy school. this is bloomberg. ♪

francine: skyhigh, the s&p 500

shoots above its highest ever closing level before finishing off a few points shy of the mark. the rally hits pause today. no compromise. democrats and republicans point their finger at each other. the two sides remain trillions apart on the relief package. and boston fed president eric rosengren says overeagerness to reopen the economy without containing covid-19 has backfired for the u.s.. we hear from him this hour. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. lisa abramowicz is stepping in for tom keene in new york. good morning. we look at the markets, the politics, the new ticket in town, which is biden-harris. and the policies they will put in place. lisa: and jobs. the fact that there is still expected to be 1.1 million for joblessling claims this week. the political pressure heading in november.