slimmed-down stimulus bill, but democratic support looks unlikely. competition for microsoft. larry ellison's oracle is said to be interested in buying tiktok's business in the u.s. will others join the contest? and the world's top miner, bhp, reports steady underlying earnings on a surge in iron ore. the chief executive, mike henry, speeds up plans to exit coal. good morning, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. a lot of the focus is on aggravated tensions will -- tensions between the u.s. and china. august.is the artist -- it is the oddest august. if you follow francine, you will know it is a surveillance veterinary clinic and they have a bird in the backyard and they have been taken care of the bird, so francine had to

stay-at-home to save the birds of london. that is a good thing to say. it is the strangest august, and the only litmus paper you've got right now is the weaker dollar, the preponderant trend this morning. francine: yeah, weaker dollar. i'm also looking at a couple things. when it looks at iron ore, it is significantly up, and we are looking at gold. first let's get straight to the bloomberg first word news in new york city with ritika gupta. ritika: michelle obama describes president trump as unfit for office on the opening night of the democratic convention. the former first lady blasted him from his handling the pandemic. worthen 150,000 people have died, and our -- more than 150,000 people have died, and our economy is in shambles because of a virus that this president downplayed for too long. trump isbama said that

clearly in over his head. president trump added a trip to iowa to his schedule today. support has been slipping in a state that he won in nine percentage points in 2016. polls show iowa is up for grabs in a race with joe biden. trade talks with china were indefinitely delayed. president trump told fox news that he is having a hard time with china, and the country is trying to make up for it with purchases of american made products. peter navarro says the trade deal is still on track. in canada, bill morneau has resigned after a rift with justin trudeau proving impossible to repair. that leaves trudell with a major hole in his cabinet in the midst of a recession. ah that leaves trudell with major hole in his cabinet in the midst of a recession. mark carney has been inviting peter tchir to -- justin trudeau

global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, -- i'm ritika gupta. this is bloomberg. tom: thanks so much. equities, bonds, currencies, commodities. weak dollar is a major theme today. kit juckes of socgen with a smart morning note looking at where inflation rate-evens are, the dynamics that brings to the dollar market. what we've got all in all is just a up fractionally, turn there. yields have come in lower, three, even four days in a row. more than anything, i'm looking at that. 10-year tips negative. 0.99. that is a greater negative number, a much lower more negative real yield over the last -- i'm only courting that because i miss jon ferro. turkish lira not part of the story, at least yet today. francine? not planning are to come visit me in london anytime soon, tom?

i thought that is why you were looking at sterling. u.s. equity futures are struggling for traction. there is a sense that the trump administration definitely had -- we areith the seeing a lift to gold climbing back to $2000 an ounce. treasury is advancing. iron ore, i'm adding that to data check. iron ore rallying. to talk about the economy and markets is bhanu baweja. as always, thank you so much for coming in. what is priced in the markets right now. are they optimistic about a second wave of covid, or are they also ignoring the possibility of the biden administration in the white house? bhanu: the markets have been optimistic for some time, so we could back this to medically, that the markets are pricing this in in terms of global

growth policy. longer, somewhere close to 3.5. that is where the markets are pricing in right now. driven by the amount of help that the fed has been giving. the market driven by lower real interest rates. the key question for the market is, can really interest rates continue to drop? i think that is where we are coming to the limits of expectations. francine: i was going to ask you, if there is one thing you need to get right, if inflation rises, and there is a single or chance of that, do you buy gold? bhanu: i think you buy gold for different reasons. rises, gold if inflation but the probability of inflation rising is very low. you cannot get significant inflation if the labor market is

down. the end of this year, perhaps to the beginning of next year, the on employment rate in the u.s. is going to remain quite high, perhaps in the teens. in three to six months' time. that is a situation where there will be tremendous pressure on regions. hade the 1970's, you inflation without wages going up. it took 10 years of running monetary policy really taught to wages to moveale up in the market. with the kind of money that we saw in the u.s. market, they are responsible for nearly 100% of the move in the real interest rate. we have to be quite careful as to how much we extrapolate that. so i think that move is coming to maturity. tom: i'm so glad you brought

that up. tom keene in new york, and it morning to you. i was looking across the drake evens in the major parties, and it is extraordinary -- the breakevens in the major parties, and it is a strawberry. we have not seen higher expectations -- i think from a strategic standpoint, and into the autumn, beginning into 2021, there are these glimmers of hope, but against it is a wall of tough data. the things like the boeing layoffs, the marks & spencer news this morning. as the market priced in non-v-shaped recovery? no, the market has priced in normalization. the market is treating this as a complete income statement chart. they don't think this will have solvency. they don't think they are going to have balance sheet imbalance. from here, what i think is important, last week, it was quite remarkable, you said it

was a strange august. last week the markets held up reasonably well despite the fact that you didn't have any agreement between the -- democrats and republicans. why did the markets hold up? because of the vaccine hope. the vaccine hope is important in keeping the market going right now. but that is one month to three months. growth and liquidities have to be reassessed. tom: this is so important, folks. stephen roach from yale university is going to be here, and he is always talking about balance sheet dynamics versus the income she dynamics. how will the central banks react to this? what is the next step for central banks looking at a non-v-shaped recovery? what more can they do he echo -- what more can they do? bhanu: this is the key point, not much. in the last three months rake evens have done the job of

taking interest rates lower -- last three months, breakevens have done the job of taking interest rates lower. if they are going to do it in three to five years with the control balance, they have oaken about, and considering the rba at the moment for that, which is 023 years, it completely priced in. they cannot surprise on the upside. the only question is, if they are going to target average inflation, is that going to be credible? to hit really struggle core pcm for any length of time in the last 15 years -- and i personally think it is going to be difficult for them to push inflation expectations much higher. this is not just the u.s. look at japan, look at europe. these folks have not been up to pay down the interest rates, unlike the u.s., because their inflation expectations have not picked up.

francine: thank you so much. bhanu baweja stays with us. coming up, on balance of power, ralph schlosstein kumutha evercore chief executive. schlosstein, the evercore chief executive. that is coming up at 2:00 p.m. in new york, 5:00 p.m. in london. and this is bloomberg. ♪

tom: good morning, everyone.

"bloomberg surveillance." a good conversation with bhanu baweja of ubs. we have been talking about some really important, delicate themes, and one of them is the idea of re-fleeting our way through this pandemic. the phrase that seems to be in the zeitgeist is to get to the other side of the bridge. where does the bridge end? of the biggest problem for me is it seems to be time determinant on discovering a vaccine. that becomes more apparent every day. do you just assume that the goal here is to get to 2020 and somehow get to 2021 and a vaccine? much bigger are questions than that. first come on the vaccine itself, i suspect that -- first, on the vaccine itself, it is not going to be a digital event eventually because the market is going to think normalization, is going to buy the laggards as soon as we get the vaccine, but itcourse the vaccine -- will

be mass-produced? how many people will it be available to in the u.s., how many people will take the vaccine? answer, most epidemiologists say it is no. so the economic data recovery is still going to be quite slow for europe. by the end of 2021, we will still be below the high watermark. that is just the vexing question. the bigger question is policy. inevitably there will be an air pocket in the coming quarters, and how much can policy help? real interest rates are already at -95 basis points. how much can policy help in the future? how much can china help if debt to gdp is already 200%, 300%? they have much less left on fiscal and monetary into the future, as if the market believes that fiscal expenditures can continue

unabated. inflation expectations go higher, and i really think the reality is quite different from that. is a major theme for valuations of markets in the coming years. tom: what is the strategic opportunity? as the chief strategist for a major swiss bank, the idea is that you have to have somewhere on page 13 the opportunistic plan. what is it? bhanu: i think the key question is how we get income at how we get diversification from our client. it is going to mean that past valuations are not going to move forward for the future. speaking about gold earlier, i don't think it is a major inflation head, -- hedge, but it is one asset class that has breaking models and able continue to break models. gold, for instance, it will be completely different. gold is going to do much better. the question is, on the equity ,ide, whether we see a shift

emerging market, is that a strategic opportunity echo the answer in both cases is no. these are tactical opportunities ahead of the u.s. election, head of the possible vaccine for the virus. you rotate away from the u.s., you rotate away from growth to grow value, but this is a one to three month trade with strategic opportunities in the united states. it still exists in quality, it still exists in minimum -- that is where clients go for liquidity, for capital appreciation. you will get these in terms of credit, and in terms of fixed income, but i'm afraid not so much in equities. so gold in emerging-market credit, quality, these will be a part of our strategic asset allocation portfolio. when you talk about some of the value, and some of

the emerging markets, is there anything in emerging markets that could be an opportunity right now? bhanu: emerging markets equities, francine, are very different from emerging markets gdp. 5% of that index is basically three countries -- china, korea, taiwan. the most value driven is korea, which i think gets you -- and i'm speaking from a tactical perspective, not from a strategic perspective -- it gives you optionality both in equities and the currency in the near term. the big risk of that is that the trade war with china absolutely explodes in the u.s., and that could -- i think the possibility of that as we get closer to the election, there is the probability of it getting lower, not higher, and the administration does not want to engage in terms of a trade war. the geopolitical relationship with china is worsening, but in thes of the trade war --

opportunity in the coming weeks and months in terms of currencies and equity, i would single out korea. korea that is out the disproportionate beneficiary. we have a biden administration in the white house in the next couple of months, he will start in january. if he does become president, what impact does that have on markets and what is being modeled at the moment? does the market currently believe that biden is the next president? bhanu: yes come on the margin the market certainly believes that. the reaction to some of trump's actions on china and how the market has disregarded that, i think that is evident, how the markets are looking through the administration. again, this is a question of probability, but the big question is going to be whether the democratic sweep or not.

already we are seeing this move through the u.s. market, and moving from text toward capital, i toward think this would also be reflected, francine, in terms of a move away from the u.s. to the rest of the world. i think the biden trade and the equities market for the next a, asia, b, will be europe. biden will be much more lax in terms of the trading relationship, but the volatility, the risk premium around that trade relation, is going to go down. certainly the volatility with the volatility with the trading relationship with europe is going to go down. this is a tactical opportunities rotate away from the u.s. in the very near term. that does not hold, i don't think, longer term because the u.s. economy has a much higher stimulus. in 2021 you are going to see a

significant decline, we hope, in the u.s. unemployment rate. at that point we want to be coming back. here and now, head of the vaccine, ahead of the u.s. election, we think there is room for rotation. tom: thanks for the brief. baweja, ubs chief strategist. i love the idea of the analysis of income statement versus balance sheet. i totally agree that the balance sheet dynamic is very important. a reason to speak with stephen roach, and we will do that later on surveillance. it has been way too long on commodities. and yes, with oil at $45 a barrel. mr. harry tchillinguirian. this is bloomberg. ♪

ritika: this is "bloomberg surveillance." let's get the bloomberg business flash. convention, night one has wrapped. michelle obama, senator bernie sanders, and republicans who cross the aisle to support joe biden spoke. >> i am sure there are republicans and independents who could not imagine crossing over to support democrats. they fear joe will turn sharp left and leave them behind. i don't believe that because i know the measure of the man. it is reasonable, measurable,

respectful. and you know, no one pushes joe around. ritika: boeing will make deeper job cuts than the 10% originally planned. the plane maker is planning buyouts to employees for a second time this year. most of the offers will go to staffers in boeing's commercial airplane unit. the jetline market has plummeted since the start of the pandemic. oracle is considering a bid for part of -- the company has approached other parties to partner with the streaming app, including venture capital firm sequoia capital. it is in talks with tic top owner -- oracle is in talks with the tiktok owner. this is what the markets are seemingly focusing on, certainly when it comes to europe. trading tensions between the u.s. and china actually taking a step higher, having an impact on some of these european stocks.

european stocks are fluctuating. they were down, they seem to be moving sideways at the moment. gold is on the rise and did a bit of a movement with the dollar. tom: the fix comes in. the dow not working as well yesterday. the vix, 21.27, really has my attention. market, 1.1907. euro really buttressed up against resistance at 1.1907. coming up, on retail, oliver chen. this is bloomberg. good morning. ♪

>> this is bloomberg surveillance. let's get to bloomberg first word news. bernie sanders all but begged

his progressive followers to vote for joe biden last night before the presidential candidate spoke on the opening night of the democratic convention. us be clear. if donald trump is reelected, all the progress we have made will be in jeopardy. at its most basic, this election is about preserving our democracy. >> biden -- sanders admitted that biden's health care plan fell short of his. and funding for the beleaguered postal service. it will be part of legislation that will prohibit cutbacks before the election. a vote is set for saturday. democrats want the post office strengthened before millions of election ballots are mailed. and in california, more than 10 million people avoided a blackout when temperatures fell. it looked to be 108 degrees in

parts of the state. it is the first time california has resorted to the blackout since 2001. and in hong kong, chief executive carrie lam says she is having trouble using her credit card after u.s. sanctions were imposed. the trump administration sanctioned chinese officials in response to sweeping new security measures that beijing imposed. lamb called the measures against her unjustified. howard by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine and tom? tom: we are committed at bloomberg surveillance to having medical professionals speak to us about the virus. every once in a while and this pandemic, you have to listen to the politicians speak about the virus. >> to everyone that supported other candidates in the primary and to those that may have voted

for donald trump in the last election -- watching new york get ambushed by their negligence and watch new york suffer. today, six months after it began, the nation is still unprepared. we had a national strategy. everyone who needs a test gets one for free. everyone has access to a safe vaccine. >> more than 150 thousand people have died and our economy is in shambles because of a virus that this president downplayed for too long. >> the truth is, even before trumps negligent response, too many hard-working families have been caught on an economic treadmill. tom: we go to the experts. one of them we spoke to a few at theas pamela

university of manchester in the united kingdom. esteemed and respiratory virology and has done important work on medicine as well. morning isgeist this a great fear and you are certainly qualified to address the fear. in new zealand, the virus returned on a measured basis, but at chapel hill, the university of north carolina has made an abrupt shift because the virus just simply won't go away. i don't want to talk about a second or third wave, but is it delusional to believe that you can get social again once you get control of cases and deaths? guest: good morning. that weit is vital

don't let ourselves be controlled by the fear of this virus. certainly, the virus is still with us. there is no doubt about that. we see spikes of cases were ever locked down been relaxed. i think what we have to do is learn to live with the virus. we have to learn out of take measures for ourselves, keep ourselves in each other safe. can live int we lockdown forever just can't happen. >> -- tom: are we asking too much? are we trying to find a medical perfection that doesn't exist? is vallely: i think there something in that, yeah. we are definitely going to see some spikes. and the idea that young people don't get the virus is just not true. young people certainly get the

virus and they pass it on. and some of them get sick with it. going to anytime soon get to the point where we can go back to what we all considered normal, previously. we have to learn to live with it. what do we know and not know about the virus? do we know that people that have had it are protected? if this thing is mutating or not? ms. vallely: people that get the virus develop antibodies. and there is work suggesting that those antibodies are neutralizing. we do not know if they protect you from the infection. long. don't know how

antibody response doesn't last very long. maybe a year and most people. cells are important for many of the vaccine strategies. they are making sure the t cell virus,e work the certainly tracking mutations is a lot of good work. and we have seen mutations originating in china and in southeast asia and into europe. the virus has mutated in that time. we don't know what that mutation particularly means. in europe, it got more verlander.

it becomes think more transmissible or if it becomes a more severe infection. it isn't proven at all. pamela.: ms. vallely: and as they mutate, they become less severe. they sort of attenuate. we need to track it and monitor it very carefully. the antibodies, if it is unclear whether you are protected, does it mean that we can never potentially have a vaccine? i think the elements of the t cell part of the vaccine as well, potentially it could mean that if there is no immunity to this virus, the vaccine wouldn't work. but i think that is unlikely to happen. i think worst case scenario, it

will make for a less severe disease. it's not an ideal thing, but it's better than the situation we have at the moment. think the likelihood is that there will be some protection and not very long-lived. need to vaccinate people on an annual basis with this virus. francine: thank you so much for joining us from the university of manchester, a medical virologist. i do ron, we have more with a conversation -- later on, we have more conversations as we continue to track the pandemic. coming up, anthony patchy -- athony found she -- fauci 1:00 p.m. in new york, that is 6:00 p.m. in london. this is bloomberg. ♪

>> there is going to be more oil supply that is needed. we think there is great value generated in oil in the foreseeable future. certainly the next decade and likely beyond that. the hp chieft was executive mike and re-speaking with bloomberg as the company reports earnings today. that will be dominated by profits. staying on the subject of commodities is terry chan from bnp paribas commodity research and senior oil analyst. great to speak to you because you make us smarter about the commodity world. how do we look at commodities? has it been hell in a basket because of covid-19 lockdown? do we look at demand from commodities in china to give us a sense of how some of these commodities will gradually recover?

guest: commodities is a vast world. some are more leveraged in the economic cycle than others. .ou mentioned china as china goes in front of other countries, it is a covid lockdown situation. relatively favorable. in the u.s. and japan, there is an increase in pricing taking place. in other markets like oil, there is clearly an issue of oversupply. opec is addressing voluntary cut. -- cuts. and in precious metals, uncertainty about the economic recovery and the balance sheet expansion by the fed has gold prices going to new records. depending on what you're looking at, the focus changes a little bit from supply to demand to the

broader macro financial considerations. harry, iron ore is used to make steel. we had record steel production in china, which means iron ore has surged to the highest level since 2014. can it continue? mr. tchilinguirian: i think in terms of china's plans in general, there is a lot of it that will be related to infrastructure. and clearly there will be a lot of rebuilding. china had some flood episodes that will require a lot of work. i guess from original respective perspective,ional naturally, iron ore will respond. china is having quite a bit of influence recently in terms of oil prices in terms of the influx of oil.

crude reaching all-time highs. very recently, they supported the structure in dubai pricing and, by extension, -- [indiscernible] playing a lead role in terms of contributions with industrial commodity growth in general. tom: harry, i went through six or seven commodity charts and they are all different. none of them look the same. lumber is exploding higher and there's the discussion of iron ore. what i'm finding interesting here is the rebound in commodities, if it establishes a new commodity trend out one year, two years, five years. can you call that? or is this just a balance of whatever the progression is to a long-term bear market in commodities? mr. tchilinguirian: i think we need to be a little bit cautious. again, you have to differentiate which commodity sector.

but we had a v-shaped recovery with a lot of soft economic data, the pmi. people are trying to figure out what letter the recovery will have. will it be l? the square root type view of things. tom: we don't do square roots on tuesday. mr. tchilinguirian: [laughter] of course not. endink the commodity in the is the real asset. the more manufacturing that we showings economic data that you will get a bounceback in the industrial complex. the other issue is precious metals. it is tied to what the fed is doing. tom: i'm looking for an entry point on gold and i missed it. i can't find the front door. i look at commodities and all that is going on there. ok, great, i need to make an opportunity. the australian dollar is gone on

me. iron ore has popped. where is the opportunity in commodities? or is it to go the other way on something extended? mr. tchilinguirian: i think that there are two cases in terms of the longer-term view of commodities. one pertains to oil and the other pertains to gold. in the case of oil, the decline in prices that we were experiencing at the beginning of the year is compounded by the outbreak of covid and has led to drastically tap -- drastic reductions. there are final investment positions. and you see the likes of bp and others lowering oil price expectations. that will only exacerbate the reduction capital. that sets you up for the possibility of a higher oil price in the medium-term. in effect, despite the drive for energy transition and the fact wet over the next 20 years, look at some displacement with

oil demand. we still have to incentivize deflection of oil. -- production of oil. case fora cyclical higher oil prices. people are considering the fed balance sheet expansion. we see key inflation measures that are rapidly higher in response to that. and people are still thinking if the fed were to adopt some sort yield curvem -- control, as the economy picks up again, the breakeven will be for another rally. tom: in the gold chart is something with a bounceback. always interesting and informative. up on the dnc, i guess it is the vice chair. or maybe the virtual chair. he's the lieutenant governor of the most important state of

michigan. this will be an interesting conversation in the 6:00 hour. this is bloomberg, good morning. ♪

>> this is bloomberg surveillance. let's get your bloomberg business flash. a million dollar mistake is facing scrutiny on two fronts. bloomberg has learned regulators want to know how citi paid money to revlon lenders on accident. the bank is suing one of the recipients for trying to get the money back. the world's largest sovereign wealth fund lost $21 billion in the first half of the year. it represents a 3.4 percent decline for norway's wealth fund. a rebound in stock markets wasn't enough for record drops. softbank is at $3.9 billion on 25 tech giants. they have invested more than a billion dollars on amazon. his son is expanding the company's investment activities to publicly traded equities. the race to acquire

tiktok is ramping up. oracle is said to be considering a bid for the video sharing app. its entry could challenge microsoft's bargaining position. joining us for the latest on these tech companies is bloomberg opinion tech columnist alex webb. thank you for joining us. oracle is after tiktok. anyone else? it is beingerstand reported by our colleagues that oracle has reached out to some other parties including sequoia, the bp firm on the west coast about making joint bids. it had also been reported that twitter was involved at one stage. it is a far bigger ask for twitter to get involved. for have a lot less capital a bid that estimators -- analysts estimate could be worth $50 billion which is about the

same as twitters market cap. who makes sense to acquire tiktok? how much does tiktok have to transform compared to what it is now and who benefits the most from it? of thetrategically, three names, microsoft seems the most larger call -- logical acquirer. they areand google, the ads duopoly. two thirds of all new dollars spent on digital ads go to google and facebook. increasingly, amazon is getting a piece of that. microsoft has a platform in the form of linkedin. but this would help it significantly boost presence in digital advertising, adding a major new pillar to its business and constantly trying to compete more forcefully with the facebook duopoly. tom: the question for me, is the

ownership and you lose a network ability of any given system -- if it is partitioned to american ownership and other ownership and chinese ownership, do they lose the networking advantage of 800 million people together? huge challenge here, to understand quite how technically it would be divvied up. if you think about tiktok and the u.k., for instance, it wouldn't be part of this carveout. and the u.k. would remain in the business. and there is a huge amount of content coming out of the u.s. we don't know how that would work. a be there is a technical workaround which would alter that. but it is a huge question which

remains unanswered and might sort of unpick some of the logical deals. microsoft, oracle, they have to be asking that question. i simply don't know. surprised ifry they have a technical solution to that. that it is less of a concern, frankly, for microsoft. of it that has .een concerned in the u.s. to resumeability content, will people consume in the u.k.? not just french creators.

and then the ability to create in france or germany, going on to the platform and find a u.s. audience, that gets diminished. tom: it is fascinating. alex, that is brilliant. alex is always smart on technology in the network effect of separating out any given platform, including tiktok. coming up, this is really timely to talk to stephen roach about china. and dr. stephen roach, talking about the dynamics of the economy we are in on the income statement and on the balance sheet of the world. for anotherwith us hour of bloomberg surveillance. ♪ you doing okay?

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weaker against the euro and bonds are falling. "voluntaryxecute a layoff" to eliminate one in 10 employees. so much for the v-shaped recovery. yet housing booms. employed, look for that at 8:30 a.m. and ideology be dammed. democrats and select republicans ask the nation to make president trump a one term president and vice president tweets of a record close for the nasdaq. this is bloomberg surveillance from new york and london. tom keene and francine lacqua. what an interesting dilemma we have across this world. a virus that won't go away. is he their elections -- new zealand delaying their elections. here, the university of north carolina has aggressively switched their plans as well.