higher. up about 4% for the nasdaq. the average over the past 20 days, suppressed trading volumes. as we close, record highs across the board. saw someeresting, you sort of rotation today. it was apple, it was facebook, it was amazon. romaine: we talk about apple rallying into a stock split. this of course was the last day for traders to get in on that. we saw tesla get bid down a little bit. those splits will take effect towards the end of the month. we did see a lot of individual names of buyer. airlines, energy names. about: it is really all that energy trade. i would not discount a little

bit of the rising yield. 65 basis points on the 10-year. throughout the day, i think my theme has been trained to gauge investor sentiment. maintains, stocks can these high levels. if you go up to 1% or one and a quarter, he has to massively rethink his price target. then you get to the relative trade. of course, earnings yield lower than the 10 year treasury at the moment. but if it starts to climb a little bit, how does that affect the relative value? caroline: we have had that sort of worry. mike wilkins at morgan stanley also saying, we are worried about rates going higher and what that would mean for stocks. whiting is still

with us. this week, we get a little bit of messaging out of the fed. are you expecting to hear anything out of powell or any of the other members that would give you a better assessment of where monetary policy might go? steven: it is possible. chairman powell has been relatively quiet about healthy federal reserve might adjust its framework for achieving its inflation goals. pastdea of making up for disinflation. the 10 years after the financial crisis, the inflation measure rose 1.6 cumulative. fedargument is that the needs some overshoot's and inflation. index,e the pce price

which is almost like saying it things you can't afford. i only bring this up because inflation is high or going to be high, but how central banks may target in the future. the most important thing about the fed here is they have not done to do what japan has and target specific treasuries. what is really important is that we have private credit expand and allow the economic expansion to occur outside of u.s. government borrowing. of course, the government will be able to borrow as needed by the fed. depends on private credit. that is what we want to hear about. hasline: the fed of course

time and time again tried to shift the focus away from what monetary policy can do. you have any sense for if further stimulus will, -- will come? steven: i think what is important here is that our government has time and time again provided help where it is needed. cases where there has been some need to expand insurance benefits. the administration found a way to do that. i don't think this is absolutely critical to the path of the economy. importantrus is still to the path of the economy. ultimately, if is going to hold back recovery, we will see the government to more. i think people assume there has to be some massive program. the economy is finding ways to

adapt. we have important parts of the economy that just can't fully improve until there is some way to pass this virus. taylor: does the fed need to cap yields on the long and to get rid of these 20 and 30 year bond options and help us fund our bond -- our budget deficit? atven: we started this year a 1.9% yield. if you had an economy that was able to operate normally, you would not have to cap interest rates in the treasury market. if it was the only problem we have government policy failed, we could have lower interest rates. what really matters is private credit markets.

ultimately, borrowers have been impacted here. those borrowers and get things that that get done in credit markets a much more important than treasury yields. caroline: steven whiting, global chief investment strategist at chief economist at citi private bank. more, next. we will be looking at the global inflation story as we move into that virtual jackson hole meeting. the symposium held virtually this year. this is bloomberg. ♪

caroline: i'm caroline hyde. this is bloomberg markets of the

close. it was inks unless the percentage point movement we ended up seeing. for once, we had some breadth. financials, energy stocks pushing up as well. taylor: we have to push that story forward and we do that when we go to jackson hole later this week. inflation, it is back in vogue. the question, is there actually real inflation. i am hearing a lot of talk from people who nail this every time when they say, yes, inflation expectations are rising but that is mostly due to the liquidity premium. you take out that liquidity premium and there is really no inflation. that is part of why we heard from jay powell, saying he does not see demand-side offsetting

some of the supply-side pressure. bring in rich miller, covering the economy for quite some time. this is the first time in a while we have betty jackson hole meeting that was not actually in jackson hole. is there a message that you think he is going to give with regards to the trajectory of economic policy, with regards to the inflation targeting, or are we may be putting too much stock in this? >> i think we will get some broad outlines of what they are doing. for the past year and a half, they have been doing kontaveit route branch review of their policies and practices.

i would suspect we would get some broad outline of where they are headed. a subtlel probably be yet pretty important change of how they are focused on inflation. rather targeting it at 2%, saying it doesn't matter if we have been below 2%, they will probably switch to something like average inflation targeting, which will mean that we are willing to take some inflation above two percent if we have had for a long time below. that means lower rates for even longer. getor: except we can't even 1%. why in this moment would we change to quote averaging above if we can't even get there? >> it is a good question. it is one thing to talk the talk, another thing to walk the walk. keeping open that by

,ates very low for a long time by shoveling out a lot of qe, it will overcome some of these strong disinflationary forces that we have seen over the years, everything from globalization to technology. as you point out, there's a lot of people in the markets. despite the rise in breakevens. even if you take them at face value, they are still well below the levels the fed is targeting for inflation. there is a lot of reason to be skeptical like you are. caroline: many worrying that perhaps the thursday speech coming from powell might be underwhelming to the markets. the jackson hole symposium has

brought blue sky thinking as well at times. last year, the boe's leader as well as the canadian superstar was himself, mark carney, talking about in theory a move toward virtual currencies. do you think anything like that might come out of a virtual meeting or will we be more focused on the virus? >> the virus is so all-encompassing. you hit an unusual situation with carney on the way out so we could basically do a lot of blue sky thinking. the economies around the world were doing very well back then for the most part. kind ofafford to be that the sky thinking. i think that will be focused on covid and in the u.s. and europe, how can we avoid

becoming japan? how can we avoid becoming a country kind of settled with lower interest rates for years, but also has inflation that is very low and seemingly always a lurking threat of deflation. romaine: all eyes going to be on the virtual summit, jackson hole , being held by video. let's get over to mark crumpton with the bloomberg first word news. mark: -- romaine: we are having trouble with mark right now. taylor, you hit on this a little bit earlier about the general sense, the market wants some sense of what that inflation targeting will look like, whether they are willing to let inflation really run hot as most people seem to be pricing in. taylor: i would urge you to

check out a bloomberg opinion column by brian chappatta, where he breaks down that inflation has gone nowhere. i kept thinking we were in this higher inflationary environment. on some of the dynamics going into some of these gauges in which we measure inflation. romaine: i believe mark has got his tie on now. scientists believe is the first documented case of reinfection, a hong kong man as contracted the coronavirus for a second time about 4.5 months after the initial bout of the virus. they determined that the 33-year-old had been infected by two different strains. he did not develop symptoms the second time which could indicate subsequent infections may be

milder. thee are new signs that pandemic may be easing in tokyo. last week, the government advisory panel said japan's covid-19 wave has more or less reached its nationwide peak. the japanese prime minister shinzo abe visited a tokyo hospital today for the second time in about a week amid concerns that he could be suffering from a flareup for any ailment that once led to his resignation. he tried to dilute worries about his health, saying he was there to get test results from his last visit and wants to continue to work hard. japan's longest-serving prime minister. in belarus, the prime minister is vowing new steps to crack down on opponents. demonstrations brought tens of

thousands of people into the streets over the weekend, demanding his resignation. he was seen on state tv flying into his residence in a helicopter carrying an automatic rifle and wearing a bulletproof vest. thelaims a landslide in election which triggered the protests. 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 mark crumpton. this is bloomberg. ♪

the national conversation around race and inequality is front and center the the past few months focus has been front and center

also on the very few black venture capitalists in silicon valley, highlighting the obstacles they face in trying to create opportunity for others. bloomberg's nico grant joins us with a fantastic story really talking about how some of those successful venture capitalists who are people of color are looking at what they have managed to achieve or perhaps what they have not managed to achieve and they would like to. can you talk about some of the key players and how they feel in this current scenario and environment? absolutely. i spoke with tyson clark, a general partner at alphabet think, formerly google ventures. of base the cofounder 10, and he actually has the distinction of being the black person who has assembly largest

warchest ever for a black vc with his second fund. garvey. to be inkes, who used the industry and left, is said to me that when she was at nea, a prominent firm here in the valley, she had introduced black entrepreneurs who were very talented and has great companies to her white colleagues and she would feel the chemistry in the room sour. she said that they would always use the same excuse that they would not meet that person again for another meeting, which is that they could just not get excited. the same is true about job candidates who come in. there are many vcs thinking that just about their colleagues but also their own role in the tech industry not being as inclusive for representative as it perhaps

could or should be. romaine: i'm going to play devils advocate here for a second. there are people in silicon valley who have pushed back on this idea that there is any systemic racial discrimination out there. aey to the fact that you have relatively decent percentage of asian american and asian immigrant entrepreneurs who have managed to get funding and grow relatively profitable or relatively good companies. i wonder, what is the argument that blunts that criticism? >> this is absolutely an argument that some people say in silicon valley. venture capitalists at mainstream firms, some of them themselves are asian immigrants or asian americans. and there is one person i spoke

named asked not to be because of the sensitivity of these private conversations, we approachedhis -- who his white and asian partners at a firm and said, this firm has not been investing very much in black started companies. this firm really should be investing earlier in the process to make up for some systemic issues, the fact that black entrepreneurs may not have a friends and family around. asianaid, no, i am an immigrant and i was able to make it. this person had to explain that there are very different experiences between african-americans and blue immigrant to the u.s. either already quite educated or for their education, for college or graduate school, with in

different economic circumstances. taylor: what has really changed in the last four months? nico: i think what really has changed his a sense of awareness and a level of comfort about having these conversations. which is not to say that they are easy conversations to have. say we haveow ok to a problem at this firm. it is ok for some people including tyson clark and google ventures to say to his colleagues that he is not ok right now, and he needs to take time off. there are many vc firms who have that ok, we acknowledge

there is a problem now and we are going to set up these funds. in the case of anderson horowitz and softbank, they said they would have these funds specifically for black and brown people. the problem with that is some black vc's say that this is a can to have any separate water fountain and they are trying to fundissues in their own that keeps them from being diverse in the first place. romaine: i really encourage our viewers to check out that story. that is nico grant. taylor: your favorite gaming company, nintendo among other $3 billion in market value in tokyo today. they are citing the popularity of retail investors on the sites like robin hood. the animal crossing game helped popular switchdy console.

will temporarily shut a factory in michigan next month to install machinery for the redesigned f-150 pickup. bloomberg has learned the automaker is also building a new facility adjacent to its dearborn, michigan, truck plant. they think that it will increase output of the f-150 by 150,000 vehicles this fall. the coronavirus pandemic has cut into the vacation plans of millions of americans. unused vacation days are piling up as a result. some companies are allowing more days to carry over into 2021. others are requiring employees to take their vacation days as soon as possible. we are not taking vacation days. we are too committed to our job. so we are all still here. but while we're here, we can go

see the movies after work. there have been some encouraging signs about people returning to movie theaters. romaine: you have theaters open this weekend, at least on a larger scale. the box office take was not big. "unhinged,"e called which is not a biography. it is a fictional movie about a road rage incident. the expectations were pretty low, so $4 million is pretty good considering how few screens were actually open. atedline: also, an r-r story. don't think it is going to go on my family oriented need to watch list. 50% of critics say to avoid it on rotten tomatoes. i am still going long holiday.

taylor: joe is standing by, he can't wait. this is bloomberg. ♪ ♪

♪ caroline: from bloomberg world headquarters in new york, i am caroline hyde. romaine: let's take a look at how market started the day. faang stocks, energy stocks joining the tech rally. joe: the question is, "what'd you miss?" caroline: while many in the u.s. focus on the rnc, the big news from markets this week may be of fed policymakers as they gather

virtually for their annual symposium at the artist formerly known as jackson hole. but not this year. elected officials unable to deliver another fiscal deal here in the u.s.. the question becomes, can the fed do enough alone to hold off this economic recovery? joe: it is the key question in the absence of a deal. let's show some charts for some perspective of how well the market has done relative to expectation. how well measure of the data is coming in around the world versus expectations. at the highest level in history. haveis how much economists underestimated the pace of the recovery. romaine: it is not just what is going on in the world. the u.s. has outperformed. the u.s. a index hit a record last month.

since.been elevated ever he talk about the rebound, you were talking about after a more past rebound -- this is not going to stay there. but right now, it is giving investors a little bit of hope that maybe we were a little bit too pessimistic heading into the current recession we are in. joe: i want to bring the renaissance macro research head of economics. the charts do not lie. we have seen the economic data, whether it is globally, but we are talking in the u.s. here, has come in significant better than economists anticipated and that explains a lot of the market rebound. in the absence of a fiscal deal, does this economy in your view have the momentum to sustain growth? i don't know that it has been a double-dip.

clearly, that is a risk. i think there are a lot of factors. for example, if all you are focused on is the fiscal cliff, you will be downbeat about the outlook. at the same time, the coronavirus is coming under control in the u.s. we are seeing cases moderate in's -- in hotspot states like arizona, florida, texas. the state of the virus is improving so the economy is getting better. in the background we have this ongoing job market. in the background, going over the fiscal cliff is bad, but we are seeing employment growth probably in august. it is important to recognize that the fiscal cliff is probably a one-time shock and the growth is likely to be more sustainable. i think there are a lot of moving parts.

if you are just focused on the fiscal cliff, you may get sort of your view of the economy i think is going to be much more negative to the markets than mine. that is sort of how i am thinking about it. economist, what do you and the rest of the economists out there -- and why has the surprise index been shining a light on what is getting so wrong? and do you think you are starting to readjust and understand what perhaps was being minimized in your perspective? i am of the view that these indicators can keep on keeping on for a while. if anything, there is still a face of sense of caution. as an example, you have

articles. look at the wall street journal talking about the disconnect between the markets and the economy. recently, i think i saw the new york times looking at a handful of indicators to say that there is a positive recovery. so you are seeing this among economists as well. there are a few people who are upbeat but generally speaking i think there is still a pervasive sense of caution. i get it. we're coming off a very deep shock. lots of sectors are quite depressed. at the same time, there are other industries within the economy that are having a relatively normal recovery. manufacturing is one. there are others that are having recoveries that are more pronounced. the entire recovery -- the entire economy is not what is happening in the restaurants,

leisure, and hospitality industries. -- you: there is still obviously have pockets here, but there are some concerns as to whether we get an economic rebound that takes us back to the pre-covid-19 employment levels, gdp levels of etc. one area that seems to be on fire is the housing sector. eemand for homes really surg forward with no abandon. we have seen certain metrics reflect we saw during the 2005, 2006, 2007 era. what does that tell you about the state of the economy? ofl: there is probably a lot pent up for homebuying even before the pandemic it. the housing data does not actually look that far off from what you probably would have

expected. i think there was a lot of demand. i think what is important is that existing home prices are growing well above income. the fact that we have this pandemic is probably keeping folks sheltered in their own longer than they would have been. that is going to create momentum for new housing construction. they were seated sentiment cap, lumber prices higher, recovery and construction activity that will probably continue for the foreseeable future. joe: let's talk fed, because it is jackson hole how much has the fed so far contributed to this recovery and is the fed start to more -- start more meat on the bone, their approach of what the next phase of forward guidance would look like in order to foster this recovery and market rallied?

neil: i don't know if they have to. i think they want to. lowously, rates are quite they are likely to remain that way for the foreseeable future. that is one of the reasons why committee members have been leaning against the idea of control and things like that what i will say is that it is probably prudent for them to introduce some kind of forward guidance. i think tying interest rates to a macroeconomic variables like inflation makes a lot of sense. things like average inflation targeting. what the fed is trying to do is build opportunities on the front end of the yield curve. you don't want the situation where markets are pricing in a full tightening cycle at the first whiff of inflation. ,omaine: that is neil dutta

head of u.s. economic sent renaissance micro -- renaissance macro research. ae the fed's tools working at local level? this is bloomberg. ♪

romaine: welcome back to "what'd you miss?" last segment, we went big picture talking about the fed. domainwant to get closer in new york city. last week, there were reports the new york city might eliminate hundreds of emerging new responder positions amidst the budget crisis. joe: we know that the fed has established municipal facility. we have seen this powerful tax hit. two big cities. new york expected to see a 14%

decline in budget in 2021. it raises the question, is the programf the fed's really filling the whole? joining us with more, the director of research and analysis with employee america. analyst at the federal reserve bank of new york. thank you very much for joining us. ay can't new york city and bunch of other cities just borrow money from the fed and not have to do any budget cuts? >> thank you for having me. i think the case of new york city is very instructive with the complaints faced generally and the limits of what the missable facility and do right now. new york city is considering laying off emt workers.

that bill de blasio has proposed both layoffs and has asked governor cuomo for forority to borrow operating expenditures. normally, they borrow for capital expenditures. in this case, for operating expenses. bill de blasio wants to be able to borrow funds. this is a political problem. this is a challenge of municipalities. it is not so much that they can't borrow through the market. but there is a sort of political and to some extent legal set of constraints that exist to variate degrees for different municipalities. will be farility from the optimal solution to this problem. the federal government should be

filling in the void with direct aid to state and local governments. jay powell has reminded us that they can't do spending itself. there are ways that the look facility could do a better job. so there are certainly actions that can help at the margin. but if we are looking for a solution to this problem, i don't think the federal reserve has the tools to get that done. caroline: sadly, at the moment, it feels like politics will not play much to the aid of the states and localities. as it stands, we have a roadblock going on. if we are going to get anything out of jackson hole, what is it do? they could they have already cut the interest rate. ?s there anything else

skanda: they have recently lowered the interest rate at which they are willing to purchase missable debt. do moresay they could within the rules, the way the execute emergency lending power. going back to how they decided to use their emergency lending power, right now, the fed has a rule in place that says we will lend only at a empty rate. aey have really made that principle by which they decide how to land in emergencies and probably constraining their ability to influence markets to some degree because they have to always keep interest rates sufficiently high. so that is going to constrain sort of the appetite to make use of the facility. do we think about how it could be improved? more straightforwardly, they

could extend the maturity of debt that the fed would be willing to buy. market the municipal depends on much higher duration borrowing. maturity, a the zationo station -- amorti can work more in your favor. fed is soaking up additional issuance, it is also -- those are all helpful actions. again, we are talking about marginal changes that will still be helpful but it is also in the position where i don't think you can expect that this alone will fix the underlying budget gaps that exist across state and local governments, some of which are in a better position to borrow and some of which have tighter legal and political

straitjackets that make it more challenging for states aps abilities to be able to tap the municipal bond market. fed did revise that rate and that seemed to help a little bit. i'm wondering how much some of the statutory issues with regards to the local laws in those states or cities budget constraints that effectively limited their ability to even take advantage of what the fed is offering. i think it definitely factors in. it is -- new jersey is a good example of where you have the democratic governor phil murphy, pretty keen to exercise borrowing authority because of the pandemic, and be classified as an act of god, which is one of the exceptions within the new jersey constitution.

you have the republican gubernatorial candidate suing thatersey in court, saying new jersey does not have this borrowing capacity. a lot of this is about how you choose to interpret these requirements, how you choose to navigate them. some of it is a little bit i of the beholder. weis the kind of thing where need to see the political will to actually make use of the fact that financial conditions are actually pretty supportive. the fact that we have municipal bond yields that are generally pretty low, about the lowest we have historically seen. skanda amarnath, thank you very much. congratulations on your nuptials coming up. director of analysis for employee america.

coming up, apple's domination of the stock market has some worried about the current rally. this is bloomberg. ♪

caroline: a new day, a new set of record highs. the s&p 500, the nasdaq. apple was front and center, also dominating its position. there was some decent breadth on this market. i want to speak to what is going on in terms of the worry that has been there. today, at least we had a few slightly different names leading us higher. joe: last week was crazy. everyone was marveling at this incredible run from apple, gaining an extraordinary amount day after day. you see this here, apple's premium really just completely

off the charts here. seene anything people have from a company this big. , i want to this bring in bloomberg's cross asset reporter sarah ponczek. littlet today was a different. it was not just tech. sarah: today did buck the trend. if you look at the percentage of stocks on the s&p that gained today, it is between 80% and 90%. stocks on athe best percentage basis, your airlines, cruise lines, hotels. a very different tone from what we have experienced for the last couple of weeks. this is kind of to be expected. we have seen this narrative, this episode before. really any time you have a day when you have positive news about a covid treatment, covid

vaccine. over the weekend, convalescent plasma, the fda. still yet to be seen if this is really the start of a broadening out of the rally. but today really did buck that trend from the last couple of weeks. romaine: when we talk about the potential broadening of this rally on a sustained basis, we have to talk about all this cash ostensibly on the sidelines. it seems that some people are dipping their toe back in the water. the latest data, we saw short positions actually drop pretty substantially. sarah? sarah: i lost you for a second but i think i have you back now as long as you hear me. goldman sachs pronounce of data showing that medium stock short interest is now at the lowest in

at least 15 years. there is an argument that some of what we have seen could be attributed. we have seen money coming out of money market mutual funds. thatdoes go to the idea there is some cash on the sidelines. i will say there is a debate about that phrase, "cash on the sidelines. we have seen inflows into equity etf's, for example. we have clearly seen money going into the stock market. too, if people are going come into the stock market, where are they going to go? are they going to believe in a typical rally or go to these bank stocks like apple that have proven they can rally time and again? caroline: on balance, where do you feel people are sitting in terms of the direction of travel? will it be higher or are they in morgan stanley's camp where they

are worried about rates pushing higher? sarah: morgan stanley has actually been more optimistic for a time now. it seems the strategists over there are starting to change more to the pessimistic side. other strategists across wall street have been upping their price targets, kind of playing a catch-up trade. stocks in general, higher. people largely do seem more optimistic. you can look at the latest bank of america fund managers survey, for example. people said they believed this was actually the beginning of a bull market, not a bear market rally. more people are starting to believe in this rally. however, the contrarians would look at that and say, if more people are starting to, what's that mean for how much further it can run?

in a while, we get a day like today where transports or cruises or value companies outperform tech. if we were to get like a true medical breakthrough or vaccine, good value stocks outperform tech for maybe two weeks?? taylor: the idea i hear over and over for managers and investors is that they believe investors should be moving at least a little of their portfolio if not a majority of it toward cyclicals. you at least have to be edged for this possibility. human ingenuity to take over, the idea that you could see a vaccine come to market faster than expected and all of a sudden you see value really take off. these trades happened really quickly.

if you are not positioned for them, you can miss out on a large part of the trade. caroline: that is all from "what'd you miss?" romaine: have a great evening. this is bloomberg. ♪

♪ emily: welcome to "bloomberg technology." i am emily chang in san francisco. u.s. stocks rising to record highs. investors optimistic about signs the trump ministration may fast-track vaccines and treatments for covid-19. this on the first day of the national convention in nor