dividedarket is totally from the real economy. >> yes, we are printing money in the u.s. but we have not seen that velocity of money enter the system. >> every minute that goes by is compounding the losses. >> there was only so far the market can go without the stimulus a deal. >> the only thing voters care about right now is the coronavirus and the economy. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. tom: tom keene here.

jonathan ferro and lisa abramovitz are off today. joining us today is anna edwards from a simulcast. dow futures up 62. all the politics in america. milwaukee in a virtual convention. david westin leading our coverage on that. what i find absolutely interesting -- and i think london has done a better job of this -- is the shutting down of our economies. our coverage of the tourism in , all the beaches in the summer, how shutdown is london? anymore, all that much it has opened up, in theory. this is a services economy, and plenty of people, including myself, are working from home. in terms of the shut down, we have lifted a lot of the

lockdown measures that had been in place. what is on my mind from a market nightclubs and aviation. those are really driving sentiment across the european continent when it comes to our freedom of movement. it is being eroded, perhaps rightly, because of the virus. that is not good for nightlife or the aviation stocks we see under pressure. tom: we have been watching the huawei story. before we get to jonathan mackay, i want to mention secretary of state pompeo -- the u.s. will keep restricting most exports to huawei. this story is bouncing back and forth. we have belarus as well. we will get to that with riddick a group do.

dow futures up 59. yield futures, two basis points the 10-year yield, 10 point 69%. watching the turkish lira as well. that is really a pretty grim morning. asset allocation, what to do next. he has really understood this idea of thematic, where you go if you have not enjoyed a rebound. jonathan mackay is a schroder investment senior market strategist. we are thrilled he could join us this morning. i want you to speak to our radio and tv audience. simply not on board this market. to a 22from and 80 vix vix. how do i come back into the market?

we have some technical difficulties there as well. i was away for three days and i didn't pay the bill. we will try to hook up in a moment. this is such an important idea, and it goes well back into investment history. it is so easy to get out of a market, so hard to get back into the market and participate, once you have made the decision to go to cash. anna: i was talking to a guest earlier today who said he was grumpy about the prospects in front of him, grumpy about the strategy choices he had. he says he is sitting on a load of cash but he is too grumpy to find any way and at the moment. headline abouta the city ofions, london, and the actuarial

assumptions. return?the expected it is not amazon or apple returns, it is a shockingly low number. in the united kingdom, the idea of a more structured pension around 4% or falling under that. how is that doable for retirees in the united kingdom? anna: it is a tricky position for anyone trying to save money. as we heard from our guest in the first hour of the program, perhaps now is a good time to be borrowing money. just looking at interest rates and where central banks globally are keeping them. not a great time to be looking for yield, looking for income, paying that retirement. when do we get to retirement again? withwe have hooked back up jonathan mackay of schroder investment. i'm trying to figure out in the

chaos of the pandemic, ofatility, people have walls worry. what is a theme that works? jonathan: great question. high equities have done extremely well over the past six months, and the question now is where we go from here. the easy money has been made. i caught the tail end of that conversation you were having about yield, what kind of returns you can get from fixed income. i think you have to get creative. the secular bull market has reached lows, could get lower, but the amount that you can get from risky assets has been considerable. clients,lling our broaden your spectrum, you have to look at riskier parts of the market. orther that is high yield

other bits and pieces, think about incorporating that as part of your fixed income portfolio. tom: that is fine. if i migrate there with inflation expectations rising, i'll see some price depreciation as well. are you managing for total return? you could not tell me that you are going to equip the coupon as well. how do you generate a total return given a move to how your yield structure paper? jonathan: if inflation is rising because growth is rising, risk assets, 10 year treasury yields will not be doing much for you. you'll be losing money on and after inflation return. high quality bonds will not do much for you either. way we think about it is, if you can build a portfolio that

has shorter than market duration today, high quality, use moments of stress in the market to trade in and out of bonds, you should be able to generate return in a portfolio that is above the rate of rising inflation. it will not be like anything in the past but it will serve as a ballast for your overall portfolio. anna: so what do you expect to see? expect to see on the inflation front? do you really see it on the horizon? big internalhave a debate going on about whether or not inflation will rise. a lot of structural reasons for it not to rise. we have been bitten by this in the past 30 years. of theon the side argument that inflation will

rise, not in the next quarter or maybe even next year, but over the next three or five years, we will see higher inflation because of the makeup of the bailout. fiscal policy and monetary policy working to put money into the hands of consumers, i think we will move higher. banking system is different from 2009. the last thing is onshore and. de-globalization may help as well. we will have to see what the fed meeting,the september whether they go to an average rate. for a year or two, you could have higher inflation then what we have been used to over the past 15 years. anna: that is interesting, you talk about de-globalization, does that lead companies to find two different sources of their materials but in two different

markets? does it really bring back jobs to developed markets and push-up inflation? jonathan: that is a good point. to clarify what i mean by on charm is a combination of on shoring and near-shoring. , i don't think they will completely change their cost structure, suddenly break those setups of a come back to the u.s., u.k., or germany. will leadnal change of thoseroduction supply chains within the u.s., the developed world, away from single sources in the emerging markets, which we think will lead to higher inflation. that would be good for certain parts of the market, bad for other parts. tom: greatly appreciate it,

jonathan mackay. some economic data just came out, and it shows the confounding nature of this split economy. us a weekk zandi tell ago that the unemployment rate is not 10% about a completely unacceptable 14%. all of us know anecdotally, all of us are touched by people with hardship. the national association of homebuilders index just came out, and it is a record high going back at least to the 1980's. extraordinary bounceback of the grim statistics of the early pandemic. amazing to see that rebound in the housing. of course, the optimists have been talking about that as well. virtualelations with a milwaukee. leslie vinjamiri will join us from chatham house.

we do that next. this is bloomberg. good morning. house speaker nancy pelosi has called the house back from vacation to deal with the postal service crisis this week. states itwarned 46 may not be able to deliver their ballots on time for the november election. appointeesed trump's of enacting sweeping new changes that degrade operations. goldman sachs is raising its year end price target for the s&p by 20%. strategists say they see the benchmark hitting ready 600. the s&p's rally has cut many by surprise. in belarus, it was the biggest antigovernment protest yet. tens of thousands gathered to oppose a fraudulent, tainted presidential election.

the president denounced the bandits.s as trash and in japan, the economy shrank in the second quarter by the most on record. the world's third-largest economy was already hurting when the coronavirus outbreak hit. japan had already slipped into recession. buy a san agreed to francisco-based company. overpresents a 10% premium the closing price on friday. cipia focus is on a number of autoimmune disorders. 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 ritika gupta. this is bloomberg. ♪

>> the whole u.s. approach to china has failed because it has been entirely unilateral, ignored the wto, has not worked

with our allies, has focused on illegitimate objectives, these purchasing goals, and we need to change all of that. of harvard isman talking multilateral. we welcome all of you on bloomberg radio, bloomberg television. jonathanrds is in for ferro and lisa abramowicz. no problem for her. what is so interesting about just saidssor furman there, we had announcements from secretary ross about further restrictions on huawei, and just now the president speaking on fox, praising china's purchases of beef, corn, and soybeans. that really encapsulates all of this. anna: a lot of moving parts, a lot of signals in terms of relationship. i was surprised we didn't go more risk off in terms of the

market reaction to the postponement of those talks that were set to take place this weekend. it was supposed to be a six-month check in on the trade relations. i have to have a word with somebody. i am standing in for two people and i still don't have one of those surveillance microphones. s andthis is mr. heil' maybe we can get one over to you. leslie vinjamiri joins. she is from chatham house. we are thrilled that she could join us right now. what a strange convention. convention is a non- but it is not. chicago 1968, or harry truman, 1948, what is

biden 2020 going to look like? leslie: i have to say it is actually an exciting convention, specifically because we don't know what to expect. we have always known who would be the candidate coming out of any convention. but this will look very different. the lineup is interesting. i think the goal is to get voters excited about this ticket,the biden-harris rather than just being driven by voting against the sitting president. shell obama,p from bernie sanders, bernie kasich, andrew cuomo, the idea is to unite the party, bring in the young, progressive voters, create an opening from those from the republican party who may want to vote democrat. it will be a very interesting

few days. tom: this came up this weekend. my amateur take, it is simple. they have to get out the vote. how do they get the youth of america -- many are so upset with president trump -- how do they get them to actually show up and vote? drive, thise is a is obviously a real concern. as we know from the data, the young have been hardest hit by unemployment, school closures, online education, the uncertainty facing them in september. there is a lot of energy there, and it's about inspiring them to turn out and put that boat forward. president trump is trying with his play to defer student loan interest rates. but the democrats have this challenge, and that will really be what the next four nights are

about. that is why we see bernie sanders having an important role at this convention. tohas been very much like buy a lot of young voters, and he is not the only one. i think that is a genuine concern. but young voters do not face the health constrained, they are not as worried as being hit by the actual virus. if there are concerns, they don't feel than to the same degree. they are more likely in that sense to be inspired and take the risk of voting. minority groups may feel more vulnerable and that may be an issue for democrats. just crossing the bloomberg, mixed signals from the president in terms of his mood were china. praising what he is doing on agricultural products, and then spies on the united states. over the weekend, he said the

democrats have not said much about china. are they trying to stay away from that subject? leslie: right now, so much of the focus is what is going on at home in america. it is about the concerns over trying to obstruct the actual voting, the postal service, about the pandemic, unemployment. ongoingf course, is the foreign policy concern for the united states. the democrats will not want to be seen as looking weak or soft on china. focus will be primarily on the domestic agenda. leslie, again, china seems to be the only bipartisan issue out there as well. will a biden policy be that different from a trump policy? not in discourse but in final outcome with china?

leslie: one of the key difference is is a blighted administration, as we know, will turn up in europe and ask the europeans to lineup, to ask the u.k. -- which is an easier position right now -- but to look across europe and say let's take a unified approach toward playing a tough card with china on its economic agenda. i think it will dial down some andhe attention on tariffs, look at a broader set of questions that are concerns on both sides of the aisle but have not been the focus of the trump administration's focus on china. tom: leslie vinjamiri, thank you so much. it is a jumble of statistics today. anna, extraordinary to see the

president's headline about huawei spying on america. is there a sense in the united kingdom that huawei is spying on the united kingdom and the continent of europe? anna: i don't think that language would be used specifically, but certainly the u.s. has been successful in influencing policy. certainly, we have seen the u.k. pivot, change course and its response to huawei, following the u.s. lead. tom: watching the turkish lira. you have to wonder if there will be support from the government. the turkish lira clearly weak this morning as well. and theican economy global economy, dana peterson of citigroup will join us. and rumor has it, michael mckee

will be with us as well with interesting economic data. thanks for watching. this is bloomberg. ♪

♪ tom: good morning, everyone. we welcome all of you. we are going to have some good conversation here on economics. right now, we've got the politics of the moment. futures up 12, dow futures up 61. economic data, which, in this pandemic, there's no such thing as tertiary or even secondary data. the manufacturing statistic out of buffalo gets everyone attention. ,ichael mckee is with us now economics and policy correspondent. what are you see in, and why is it important now? michael: we've got a negative surprise here after a big jump in july. the empire index falls back down theoints to 3.7, telling

story that even though covid cases have dropped significantly in new york state, the overall rise in cases seems to have stalled the economy. 34% of the businesses in new york surveyed by the new york fed say business was better than in july. 30% say it is worse. orders fell 16 points to 1.7, and shipments fell to 6.7. employment edged up, but at 2.4, it is still very low. this has a bearing on the rest of the week. most of the week is housing. housing numbers have been good because we have seen low mortgage rates, but the philadelphia fed index is going to get a lot of attention on thursday. tom: i totally agree, and you are truly expert on this. the haves are in housing, taking advantage of low rates and all of that. maybe they are employed as well. what do you glean from a wishy-washy or volatile

manufacturing index about the state of the american economy for those that have been so affected in this pandemic? michael: we are stalling out. that seems to be the story that the high-frequency data are telling us. i should mention that the national association of homebuilders housing market index did rise. it hit 78, which is a record, but not what you would expect when you see the fed lower interest rates to zero and mortgage rates come down to record lows. it's the standard way of getting out of a recession. the incident -- the rate sensitive sectors respond quickly. however, the rest of the economy doesn't seem to be picking up. it is growing, but i do very slow pace. we may get some good numbers for the third quarter, but does the fourth quarter hold up? that is going to be the question if we keep getting numbers like empire this morning.

to you.od morning let me ask you about that housing data. what i find interesting, if you look at the picture that data creates, it is a really obvious v shape. it just make me wonder whether it is the sentiment data rather than the underlying data. michael: we have seen strong growth in new home and existing home sales. we will get existing home sales in the united states on friday, and they are expected to rise. we have an interesting dynamic going on here. i don't know if you have the sending happening in the london --a, but with sony people with so many people concerned about covid, people are moving out of the big cities i'm looking for real estate in the suburbs. getill be watching when we housing starts tomorrow to see if single-family home starts pickup significantly as builders try to match supply with demand. tom: one final question here.

i want to go forward, housing starts this week, initial jobless claims coming out august 20 as well. iss phrase you've just said the great fear of every conversation i have, and that is stalling out. prose what that means to like you. michael: you go back to what anna which is saying about -- and i was just saying about v shape. but the general view is we will get a tick shape. thenrt, short rebound, and it flattens out. whether or not that a trading is going to be an interesting question because our old friend bob schiller says the markets like narratives. they like stories. and the story we are going to get a flattening out has been told in the market, and now the data seems to be ratifying it. tom: michael mckee with us. we'll get to dana peterson right

now of city global markets -- of citi global markets. , lower yields off of the data as people look at what michael mckee is looking at. dana peterson is the global economy stalling out as michael alludes to? dana: it is really kind of on a rolling basis, depending on when the virus speaks in your region. weake still seeing very data. most economists are downgrading their forecast for regional growth for this year, and also the expectations for next year. they are also pushing back when they believe gdp level will return to pre-covid levels. anna: indeed. make the point that a rebound is not the same as a recovery. what kind of date do you have in

mind? you can take this globally if that is meaningful. what kind of date do you have in mind for us to actually recover to pre-covid levels to the global economy? dana: it looks more like the drivenhalf of next year, mainly by china and the united states. yes, some of the high-frequency data have been a little choppy, but for the most part we are seeing faster than expected recovery in retail sales. given lots of spending on non-store types of things, and we are also seeing housing improving, and manufacturing europe.ack online in it feels like they are having a second wave with new closures. latin america is in the doldrums right now.

it means that certainly, we have a long way to go, and we are very much dependent upon the u.s. and china pulling us through this. about what istalk happening here in europe. there does seem to be a difference between the way germany is sinking about its fiscal support to the german economy than the conversation this should carry on, to the u.k. where do we see unemployment picking to, do you think? this great divergence in the underlying economic realities and the policy response as we seen across europe. dana: that's a great question. it is still in debate. certainly when you have these furlough schemes, it basically to pass on thees cost of having employees to the government's. at what point do the governments

say enough is enough, and businesses start letting people go because they can't continue to pass on those costs? so it is not really clear when we see a peak. , i: i look at all of this listen to what michael mckee said about a stalling economy, and it just it's to a point where it is stimulus exhaustion. are we anywhere near that? dana: i don't think we've exhausted all options just yet. there's still a number of central banks that have yet to hit the zero lower bound. or even go to negative rates, where some economies allow that. even where you look at the u.s., the fed still has a number of arrows in its quiver. certainly the fed is expected to ,ntroduce forward guidance certainly you have a possible phase for stimulus in the u.s..

in europe, you have the stimulus package that has yet to be rolled out that is expected to have a very long tail in terms of the effects because much of it is in infrastructure, which takes a while. there's still many options on the table globally. economyyou look at this , it is about consumption as well, but it is also about the confidence of business investment. what do you and catherine mann see? the yield coming in a full three basis points, getting down to a 0.67% handle. the lower yield regime, what does that say about global trade and business confidence? dana: certainly consumption has been better-than-expected, but we are not very optimistic in capex. the capex and international trade have collapsed, as we saw in the second quarter. we look at june readings for new

orders. they are still pretty tepid. until businesses get over the fear factor and uncertainty, we are probably not going to see a lot of investment, and investment is certainly linked to trade. we look at consumption, a lot of it is kind of specialized, things like goods, building supplies, things that people can do while sitting at home. but services remain challenged throughout the world. tom: dana, thank you so much. this, one of the things we really haven't noted collapsethe absolute of the japanese academic experience. i usually fold back to nominal gdp, and i didn't even go through that exercise today, the numbers were so grim. anna: absolutely. we've got the japanese gdp numbers breaking overnight, the worst in many years. early interesting to see the

finance minister in japan is commenting now on those numbers. g-7 ministers, saying that they spoke via teleconference, and it just makes you wonder what could be achieved if we were in a place where we were seeing more couple russian -- more cooperation between the g7. you don't get the sense that that is really where the spirit lies. this a lot more nationalism these days. tom: and the confusion i always try to mention is the way gdp is calculated. we do it differently in america, where we annualize the 90 day experience. other nations, including japan, take the 90 day statistic, which was a gram-negative 7%, and i a -20% to an annualized basis, which is frankly unimaginable. he has a book out of controversy. john bolton. we spoke to him weeks ago.

we asked to the ambassador to come back on. we must speak of our national security and the importance of nato buttressed up against belarus. stay with us on this simulcast. this is bloomberg. ritika: with the first word news, i'm ritika gupta. members of the house are shutting short -- are cutting short their vacation. they were called back to washington to deal with the growing crisis over the postal service. last week, the postal service warned 46 states it may not be ever to deliver balance on time for the november election. -- the white house downplayed a report that president trump once to meet with russia's vladimir putin in the u.s. before the election. as national security adviser robert o'brien says there will not be any summit for the about, but would like putin

to come to the u.s. once there is an agreement on a new nuclear arms deal. for the fifth day in a row, more than 1000 people died in the u.s. from the coronavirus. was almostdeath toll 300 fewer than the previous day. the number of new infections rose by the smallest amount since tuesday. forher week of chaos british prime minister boris johnson now. the government is facing an exam crisis. the lockdown meant peoples were unable to take -- meant pu pils were unable to take exams. when grades came out, many students said they were well below expectations. heat one of the worst waves in generations, threatening to take down california's power grade area in the past 72 hours, the state has instituted the first rolling blackout since the 2001 energy crisis. authorities are trying to protect the system strained by so many people using their air conditioners.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

esther biden: -- mr. biden: kamala knows how to govern.

she's ready to make the hard calls. she's ready to do the job on day one. tom: joe biden speaking on his vice presidential thick. this is the oddest thing for all of us in this business, and we are fortunate that we have david westin's leadership on a virtual convention. he will be doing a virtual "balance of power" today, led by a virtual kevin cirilli as well. how have you and your team decided to approach this most original convention? david: first of all, it is virtual leadership on my part, i think it is fair to say. we don't know what to expect, so we have to be able to swing in various directions. but what we want to do is really try to do themes. the democratic party themes. we have our own themes, starting off by what what i biden president mean -- what would a

biden presidency mean for markets and for business. tom: you have an intimate knowledge of these datagrams states. acquaintanceodding with pennsylvania, but you know milwaukee. you know michigan up down and sideways. what do we get wrong in the media about our simplistic coverage of those states? david: well, take michigan. we have congresswoman debbie dingell on today. but michigan is not one state. they voted for george wallace in 1968. you have the southeast, the areas around detroit, very urban. the rest of the state is very different. it is a much more nuanced situation. the same thing is true in wisconsin. we tend to overlook that. something donald trump understood the last time around. tom: he understood looking at flint,l results of

where he took huge dominance over secretary clinton as well. looking at the convention, what does joe biden not want to do across this week? david: one of the things he has to really fight against his appearing to be two democratic parties. there's a big debate about kamala harris already. clearly, donald trump wants to paint her radical leftist. you have tonight bernie sanders on the progressive wing. you also have john kasich, a conservative republican. it will be fascinating to see the two of them on one night in the convention. anna: good morning to you. thinking about these events taking place in a very different format, without the normal crowds that participate, it makes me think of debates around the house of commons it has been brought down to operate in a

much more virtual fashion. it doesn't have the normal support you get in that kind of venue. i wonder if that translates to what we will see at these conventions. you're going to be without a lot of the usual noise in the room. sometimes that plays to the strengths of some who like to get that feedback from the crowd. i wonder if that is going to influence the way people go down at these events. david: for sure, it will be a different sort of effect. there are two effects that tom knows so well. he's been on that floor. you have two things you might lose. one is just the enthusiasm from the base, all stoking one another off because it is really quite a cacophony for four days. the other thing is fundraising. this is an opportunity usually to get together with highrollers who can contribute a lot of money. it is going to be curious how they can do that when they can't buttonhole them on the convention floor or take them to fancy parties with the leadership in the evening. anna: yes, so part of the

challenge that they face this time around. in terms of the topics that are really going to be talked about, president has criticized the democrats for not talking enough about china. he is dialing up the pressure in talking about china. will china feature? david: i don't think it will feature prominently. i could be wrong. on tuesday we will hear from former secretary of state john kerry. i'm sure he will address that question. we are also going to hear from barack obama, as well as president clinton. they may address that issue. there is a sort of unanimity right now between democrats and republicans. nobody is really running for china right now. tom: i think you touched on something so important, which is the crowd and the experience we have. you have senator kerry speaking. he joined me at davos for an important climate change panel as well. 2004, there was a kennedy clan lined up just below our

bloomberg box. i remember peter jennings being there before he was so ill. those days seem to be gone. when we are done this pandemic, do we in anyway get back to those kind of conventions? david: i was there in 2004 with peter. we worked together on that convention. it was sadly his last convention. my prediction is that we don't go all the way back. it will come back some of that direction, but i think the conventions will be transformed forever by this experience as so much of american life will be. i don't think we will go all the way back ever again is my prediction. tom: david westin, thank you so much. really looking forward to this. it begins with "balance of power" at 12:00 noon today. david westin, kevin cirilli and our team really focused on some of the distinctions and nuances, and of course, the politics of the nation. our convention coverage tonight

at 10:00 p.m. as well. must get back to the markets on this monday morning. equities improve, and off of that economic data, once again, yields come in. anna: indeed. looking at european stock markets, euro stoxx up 0.2%. seat sitting in this exact at the time the european markets opened this morning, and they were really quite directionless, searching for that direction. you wonder whether that comes in september. anna: let's look at the boards -- tom: let's look at the boards right now. on howy want to focus yields have come in. it is amazing how fixed income comes in all the time, and you two cents spread, 53 basis points. it will be interesting to see if

we get the surge we saw last week off of the empire statistic. part of this is the tech juggernaut, and healthy -- and how the tech juggernaut reaffirms itself or not off of what we saw last week. you saw it on friday, just a fractional day, the dow outperforming the nasdaq as well. it will be interesting to see within the futures. on a percentage basis, nasdaq futures simply do better today as well. i want to tell you about some of the conversations we have coming up later on bloomberg radio. ambassador bolton will join us in about 40 minutes. carnival's chief executive officer. this is bloomberg. stay with us through the day. good morning. ♪

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taylor: from new york city, i'm for jonathan in ferro. u.s. equities trading near all-time highs despite a growing list of economic and political uncertainty. >> the stock market is at an all-time high. >> these markets have been a lot better supported than people think. >> there's still a lot of uncertainty. >> whether or not there is going to be a second wave of infections. >> tensions with china. >> people started to focus on the election. >> the election coming up in the states. >> washington's inability to get a deal. >> there's only so far the market can go without this stimulus. >> we are slowing in terms of the recovery. >> we've had the momentum trade start to slow. >> you want to be constructive on markets. > you have to look at the technicals. >> given the level of economic distress. >> the fundamentals are