four more years, jp morgan says investors should ofsition for rising odds the president being reelected. the german government expects the contraction to be less than forecast. the economy minister speaks this hour. apple's production blip. build 75suppliers to million 5g iphones for later this year, assigned demand is holding up. good morning and welcome to bloomberg surveillance. tom keene is in new york. we will have a robust conversation on the economy. we are getting inflation numbers out of europe following to 0.2%, the lowest in years. it's all about school reopening's and some schools may be getting it better than others. and decided to stay-at-home others were more class dependent. tom: certainly a different

august and a different first of september that has transfixed the nation. in the markets, there is no question i am looking at a weaker dollar today, a profoundly weaker dollar. text still lifting. francine: the weaker dollar also giving a lift to commodities. a full roundup of the asset classes. to the bloomberg first word news. ritika: president trump -- president trump claims a man arrested for killing two people in wisconsin was acting in self-defense while simultaneously criticizing the killing of one of his supporters over the weekend. joe biden flipped to the republican slogan that nobody is safe in joe biden's america, he said the president can't stop the violence because for years he has fomented it. j.p. morgan chase says investors should prepare for the chance

president trump gets reelected. the bank took a look at polls and estimates there could be a shift of up to 10 points from democrats to republicans if the protests turn from peaceful to violent. the pandemic has created tons of red ink for chicago. the city projects a budget deficit of $2 billion through 2021 including 800 lien from this year. the coronavirus has decimated chicago's revenue. the mayor warns there could be layoffs of government workers. she has called for more federal aid. a sign that apple's most important product is holding up in the midst of a recession and pandemic. the company has asked suppliers to build 75 million 5g iphones for later this year. apple anticipates shipments of the devices could hit 80 million in 2020. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries.

i am ritika gupta, this is bloomberg. bonds, currencies, commodities, it's an ever lessening of the real yield. a record low, but a huge negative real yield. higher,d space is yields are remarkable with what we saw through august. 1.50 on the 30 year bond. the vix is magical. the vix, 25 .88 shows the dislocation that we see on this first day of september. francine: i can't believe it is september already. low,ollar at a two-year moving commodities. fuelingr dollar commodities. below in london just

6000. i wanted to show you the yuan. since 2019. highest we had some good chinese manufacturing data indicating exports are underpinning our recovery. we will start strong talking about dollar and some of the currencies. let's get straight to jean freda. thank you so much for joining us. weaknesslook at dollar , is this in part because of what we heard from inflation targeting from the fred yesterday or is there debt from the fed or is there something i don't think it was something new yesterday, it was how the change in the fed mandate percolates into the market psyche. a lot of this is really about not so much -- i think a lot of people focused on the mandate and say not much has changed,

but basically the fed is committing to achieving its in ained core pce of 2.5% way that would probably lead to more pressure on asset markets in the upside and more dollar depreciation. without dollar depreciation it's hard to see how you get that. the way you do that is by pushing down real bond yields. of the fed focus speakers this week will be on giving signals as to whether or not we get the first down payment on this strategy, which is a strategy that lasts over the cycle. we will get that down payment in september. francine: how low do you expect the dollar to go? the: it depends on timeframe. the discussion we have had about the speed of the decline.

my assumption is that over the another will see 15% move lower in the dollar. i think that is reasonable. given the commitment that the fed is making to keep real bond yields low and likely following as the economy recovers. the one big question with that is whether or not other central banks respond in kind. we saw a negative print on european inflation. fine from a is dollar perspective to the -- that tends to be positive for risk appetite. typically we would be dollar negative as well. it's more a question about the breath of the dollar declined and whether or not it continues to be concentrated in g10 currencies or broadens out to emerging markets. tom: well said. squawk?s europe's

i have heard they will not complain until 130 euro. when does europe start complaining about weak dollar? i think it is some ofbination of the pace acceleration and the context. the context in my mind is more about a european recovery that is continuing to the extent that we see european recovery faltering is the function of a strong currency, partly the function of a week export environment and we may start to see complaints. i don't think we are there yet. agree 125 or 130 we start to see those concerns in the market. tom: tell me about e.m.. i have been watching e.m. and even turkish lira backing up today, relatively contained. why is that? why hasn't e.m. adapted and adjusted to the powell landmark speech?

gene: part of it reflects the fact that there is a huge amount of uncertainties within emerging markets right now. going from some of the most basic lessons of the pandemic, the speed with which you contain the virus probably has some --relation emerging markets went into this troubled with difficult growth backdrops and less policy space, they did not contain the virus as well. i should be more specific rather than branding all emerging markets with the same brush, because it relates more to latin america and parts of africa. these economies are suffering. central banks are using easier u.s. conditions to ease monetary policy which is unprecedented in response to a global recession. it's good for emerging-market credit quality. the you need to see is

u.s.over from easier financial conditions becoming so broad-based that it lifts all boats regardless of domestic fundamentals. i don't think we are there yet. we need to see more water flow under the bridge of global recovery until we get to that point. francine: what's the chance of another lockdown this winter? where would that change, what would be scarred the most in the world economy? concern i would have is if we have another global, synchronized lockdown i think the probability of that is quite well. i think the probability that we have localized lockdowns is reasonably high. the central question in my mind is how broad those lockdowns are. are they lockdowns and countries, cities, or states. to the extent that we can narrow

the scope of the lockdowns and isolated i think that coupled with the fiscal branch allows the market to work through it. it would be crazy not to expect some lockdowns. in terms of the scarring i think that really comes back to the question of fiscal policy support. i would expect more scarring in places with less physical space and you can imagine emerging markets fit into that quite centrally whereas in the most developed economies that is not the case. it may be the case in the european periphery but that is why they have been so intent on avoiding secondary outbreaks. some theoretical things i want to dive into. coming up at the top of the 7:00 hour, futures korean, s&p and doubt -- dow futures red, s&p futures green.

juckes ofo mr. society general. this is bloomberg. ♪

♪ >> i believe and a number of members of the committee believe there is a place for yield curve control, but the yield curve control most robustly is a complement to the forward guidance and a traditional large-scale asset purchase there could be circumstances where it would be considered and we were very clear in the minutes of our july meeting. i tried to be clear in my speech

that it is certainly something that's in the toolkit. pozen of the peterson institute, and let me say we need more frontline monetary theorists interviewing other frontline monetary. -- other frontline monetary theorists. we will get to that in a moment. love what he says here about the essence of the german economy. they have maintained that. francine: tom, we heard this morning that the german economy may do better than expected area some important -- better than expected. saying we can control the virus numbers without a shutdown. this is the trillion dollar question for any politician, how ofyou avoid the number infections rising significantly while avoiding a full lockdown which puts the economy on its knees? you can do local shutdowns, we

will see how it goes. we heard from france and germany they don't want to go back into full shutdown. tom: it will be extraordinary to see. frieda of pimco. clarida talks about yield curve control but i believe we have a powell speech and a new framework looking for higher inflation. how do you do both? how do you do a compression of the yields while looking for higher inflation? that is not in my coursework. gene: [laughter] to yieldhe aversion curve control within the fed has largely been about having up optionality. no one is testing the fed at this stage of the cycle in its commitment to low yield, there is no need to give up that

optionality for something it may need in the future. it's a question of whether or not you get to a point where the market is testing the fed, trying to push shields up as the economy recovers. it -- push yields up as the economy recovers. theinteresting thing about outcome of the mandate was -- and how you translate that into , everyone believes that inflation will be above 2% before the fed hikes but there is a wide range of expectations around the growth rates and unemployment rates necessary to get to that height and that is where the surprise comes. that is the way of the future. the question is, is the fed going to step it up here? are they saying we are going to get there faster. that is why september is such an interesting meeting. the pimco housecall of two

or three years ago in hindsight has been absolutely brilliant about a sustained lower gdp growth. do you stick with that in your end of summer countdowns and what you will do this summer at pimco? are you expecting q4 or q1 to be soggy and they have a definite to week gdp? gene: that is still our base case. recovery toe continue, we don't expect it to be over robust. we are at a point where you start to see a flattening of the curve as the recovery curve and that curve reflects the fact that the easy part is ending lockdown and the initial stimulus starting to rolloff. from that perspective the challenge people have is they an asset market reaction should be associated with similar growth reaction.

the fed is pushing on asset gdpes to lift a reluctant off of very weak levels. francine: when do we start worrying about debt? is talk aboutere significant tax rises to make up for some of the debt that was generated by the lockdown. are we going to see that across the world? what does that mean for fixed income>? -- fixed income? debt we worry more about in 2021 presuming there is a be ableand we start to to differentiate between countries that have suffered material scarring and material degradation of growth prospects and those who can continue to lift off even as fiscal support and income support and labor market support is curtailed. is doingment, everyone

it so nobody is punished for doing it. i think 2021 will be a trying time and a differentiating time across countries. francine: where do you see the most value now? in any asset? francine: any, do you buy gold? gene: i do currencies, we see a lot of value in being short the dollar. central banks are committing to keep a bond yields very low, bond prices very high. we don't see value there. insee some value in credit terms of what can move and what can adjust very good it's really the dollar. much.ne: thank you so coming up on bloomberg markets the zoom video chief communications officer.

we will have a couple of questions on working from home and the significant increase in zoom calls that we do daily at 10:30 am in new york, 3:30 p.m. in london. this is bloomberg. ♪

♪ ritika: this is bloomberg surveillance. shares of zoom are soaring. the video meeting service

reported the second largest sales surge among nasdaq 100 companies last quarter. revenue was up 355%. it's a sign that businesses and consumers keep flocking to zoom in larger numbers than expected. 's answer to amazon prime has a launch date. it will be available in mid-september. it costs $98 a year and discounts are included. it will include unlimited free delivery including on groceries and there will be discounts on gasoline. more than 50 black former mcdonald's franchisees are suing the fast food giant claiming they were pushed by the company to set up shop in crime-ridden areas. companyo claim the denied the help for white owned mcdonald's businesses. uponald's said it would step efforts to fight systemic racism. that is your bloomberg business flash. francine: the dollar dropping to

a two-year low, european stocks are also climbing. we had some pretty good data out of china, this is manufacturing data. theoes seem to point to fact that exports are underpinning a recovery. if you look at the gains we are higher about an hour ago but seeing travel shares under a bit of pressure. europe leading the charge against the dollar which is also moving commodities. past $6,800. treasuries pretty much unchanged. trading sideways today. nimby touching the highest since 2050 -- go to the next hour as well real yield at -1.0 eight, the deeper more negative real yield over the last couple of days bounces off the dynamics of the headline 10 year yield

and also inflation expectations. i have not looked at the chart. market the equity carefully. the dow not participating in the new mathematics of the dow. certainly tech continuing to lift and tech futures lifting big this morning. this is important. iss is where francine looking at rolls-royce in that glorious red color that they have. francine will do a drive through in her next rolls-royce in the 10:00 hour. this is bloomberg. ♪

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touchdown! only mahomes. expect anything different? the big events are back and xfinity is your home for the return of live sports. this horriblestop ideology that seems to be permeating our country and

basically it is weakness on behalf of politicians. >> do i look like a radical socialist with a soft spot for rioters? really? i want to save america. actions ofondemn the vigilantes like kyle rittenhouse? >> that was an interesting situation. he was trying to get away from them and he fell. then they very violently attacked him. it was something we are looking at. >> you may believe mouthing the words law & order make some strong, but his failure to call on his own supporters to stop acting as an armed militia in this country shows how weak he is. our presidential candidates, the president of the

united states traveling to wisconsin today. it will be interesting to see how he is greeted in wisconsin. the mayor in kenosha saying he should not come, but he is coming. there.trump will be we get perspective from asia with washington experience. jodi schneider joins us this morning. tell us how asia is viewing this election. tell us how the media in singapore, hong kong, tokyo are framing out this election postconventiona. jodi: i think there is a bit of confusion. on the one hand there was so much talk during the conventions about the pandemic and other issues. now it seems to be all about these protests, some of which have turned violent. watching it has become more complicated. as you look at issues like the president trying to make this law & order pitch at the same time that he is president and

joe biden's argument that he is the president and if he wants there to be law & order this is on his watch. that is something people are interested in. china u.s.y with the tensions what they are really interested in is what is going to happen with trade, with economic issues particularly regarding the u.s. and china and will those tensions continue even if president trump not reelected. is theat is so important distinction between biden and trump. as we do that on a race in america, protests. have asia and, to china formed an extension between biden and trump? jodi: with president trump clearly there is an issue and people have the question about dealing with the virus. that is something that because they dealt with the virus so much more effectively in terms of containing it in asia i think

that has been a real question on people's mind, why is it not being contained more, why is there not more federal policy? on other issues i think they want to see -- a lot of people don't really understand what policy issues joe biden's presidency would drive and that is something that would be useful for him on the world bege to be addressing, to underscoring in the few months he has before the election. would a biden administration actually deal with china? would they be more friendly with china? jodi: that is the perception. in previous administrations, president obama and vice president biden had a large role in the foreign policy. expectation,of an but maybe not.

a lot of people think things have changed. a lot of these tea couplings and issues that have the u.s. standing up more and standing against china on a number of issues including technology. they are now here to stay and even with a joe biden presidency there would likely be a tougher line on china certainly then there was during president obama administration. we had jp morgan saying that the market needs to look at president trump having a second term, what are people saying in your region? i don't know if people are talking about, given that biden becomes the next president or whether they think it could be president trump for four more years. jodi: people are watching this closely, and asia a lot of this revolves around china and what is going to happen with whatever

administration this is, are these tensions going to continue? there is a lot of thinking that they are watching closely, they were surprised as the world was in asia when president trump four years ago and i think they view this as a race that could tighten quite a bit and that -- a couple months left to go. francine: thank you so much. jodi schneider, bloomberg senior international editor. let's get to the bloomberg first word news with ritika gupta. ritika: president trump suggests a man who killed two protesters in kenosha was acting in self-defense. at the same time he criticized the killing of one of his supporters. the president travels to kenosha today. joe biden flipped the republican slogan that nobody is safe and joe biden's america. the president can't stop the

violence because he has fomented it. the trump administration canceling contracts on ventilators with three companies. one is a $650 million deal that was signed in april. the company supplied only a fraction of the ventilators the u.s. has asked for in the midst of the pandemic. a government spokesman says there are 120,000 devices in strategic stockpiles. the latest border clash between india and china points to a long-term conflict. india says its troops stopped a push by chinese troops to claim more ground over the weekend. movedountries have thousands of troops to the region along with tanks, artillery, and fighter jets. .lon musk continues to climb he passed mark zuckerberg and is now the third richest person in the world according to the bloomberg billionaires index. he is now worth $115.4 billion. shares of tesla cap the rally

going following a forward stock split. they are up 496% this year. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. tom: this is really something you need to know on september 1. the mathematics of cases and deaths in the empire state is extraordinary, possibly a victory lap for the you -- lieutenant governor. teachers advance up 13. nasdaq -- futures advance up 13. nasdaq futures up 127. this is bloomberg. ♪

♪ germany more optimistic on the economy than it was earlier. the economy minister presented a new forecast showing the hit from the pandemic will be less severe than initially thought. is an investment manager and head of global macro strategy. when you look at europe it seems to be at crossroads. we have this investment plan that was signed off on commission. we are seeing a worrying number of cases rising due to covid-19. what countries will do better than others in europe? >> i think it is really going to be a question of how people can handle the rise in cases and keeping measures limited. goingt think we are

towards massive confinement, some countries are struggling more like spain. germany has more self-discipline to start with so it would not be a surprise for them to come out ahead area overall, europe needed the summer months and needed tourism and july and august to be open. now it is going to pay the price for that. francine: how punitive is the euro rising for european economies? i think that will be the key question and we will see at the next ecb meeting that probably a strong euro is becoming a headwind. europe is a very open economy and externally focused. it depends on its exports. strongerginning the euro is positive and that's point becomes costly. is the shadow into september and october, what is

the thing that we need to try to observe? much thatly not too we don't know about or are not yet looking for. i think we absolutely need to congress to get together and pass the cares act two. that is one of the critical aspects where markets are pretty optimistic about it. we expect the next phase to be delivered. i think that will be critical for the equity market rally. you fold q4 into q1? deutsche bank looking for a slow down if we don't get stimulus. do you just frame out a slow down into 2021? that the momentum is slowing and that in areas where cases are rising more than others the momentum slows even more because you do have a

little bit of self-discipline happening as well. strongot going to be as as q3. if we don't get the stimulus it might be a bit more abrupt. of extra income americans received up until august might carry them through a little longer. congress to get a new package. hopefully we won't have this fiscal cliff we are talking about. >> where do you see inflation heading? is it something we should start worrying about or do we see deflation issues first? eurozone numbers and we are back in two negative territory. we know that central banks are still more worried about a deflation scenario than

inflationary one. i don't think inflation is a risk and won't be a risk for quite some time. underpins trying to inflation expectations, hoping inflation is going to get to 2% or a bit above for a certain period of time. a lot of the fiscal stimulus we have seen his income replacement, not adding to it. liquidity is abundant but has not made its way through the system completely, but i think there is still some time before inflation is a worry. francine: if there is a hard brexit or we go to wto rules in january, how much will europe and which country specifically will suffer more than the u.k. itself? >> the question is what does a hard look like. even if they don't come to some agreement, and we had this conversation earlier in the year with our clients thinking if a

deal does not go through, what happens? for some of these key strategic industries they are going to come up with some safety net policies to make sure you can move forward and you don't have a total stoppage of activity on january 1. we expect something like that to happen, whether that comes out as many deals or it is more emergency later in the year. plenty of countries are at risk but hopefully there is enough will to get those strategic industries in line to avoid the worst case scenario. tom: thank you, greatly appreciated this morning. a nice lift to the market, dow futures up 15. weaker dollar. focusing on yields coming .hrough on a 10 year .72% coming up, the j.p. morgan asset management member.

this is bloomberg. ♪

ritika: this is bloomberg surveillance.

let's get your bloomberg business flash. in south korea, prosecutors have indicted the deaf active leader of samsung electronics on charges including document manipulation that could put the head of the world's largest electronics corporation on trial for years. settles whether he used a legal means to take control of the group founded by his grandfather. at&t has kicked off a debt exchange. the world's most indebted company is continuing its efforts to refinance more expensive obligations. at&t has roughly $170 billion in debt and it is seeking private equity investors to buy the majority of its directv and satellite business. gotten interest from potential buyers. they filed for chapter 11 bankruptcy in maine and are considering a sale of their fleet unit if they can get at least $1 billion. the money will be used to off

debt. that is your bloomberg business flash. has begunastrazeneca large-scale human trials of the coronavirus vaccine. as plans to enroll as many 30,000 adults to test the shot. a final phase of the test is also underway in the u.k. and preliminaryo results. joining us is our bloomberg intelligent senior pharmaceutical analyst. what you are good at is telling us what these trials actually mean. if you test 30,000 people, can you tell if they develop the right antibodies? can you tell if the vaccine is safe? with that sort of number we should be able to tell whether the vaccine has any affect on a whole variety of things including hopefully deaths, hospitalizations, severity of the disease, it set we don't expect it to be completely --

we expect these vaccines to not be able to control people from catching an infection but reducing the severity of the disease. francine: when will we know if of the vaccine is safe enough for general consumption? first quarter of 2021 or longer? in the initial safety kind of thing we are looking for if there are acute side effects you need to worry about, that i think you will know by the end of this year with these large trials. pfizer announced they are at 20,000 patients out of their 30,000 target. that is recruiting rapidly, they will have that as well. tom: where are we on comparative vaccines? robert hill of men, gallo on polio and such, are these vaccines we are developing radically different from the structure and process and distribution of the ones we know and love?

morethe ones you hear about like pfizer and biotech and moderna and astrazeneca are the ones that are using completely new technology. originalk to the methods that are tried and tested are those companies like novavax and a european company that never turns up in the news much. they are developing a very old vaccine like the general vaccine for smallpox. tom: which will win the race? sam: i wish i knew the answer, i hope they all win. i think what we end up seeing is that some are better for some populations than others, some are better at managing new mutations than others. the new version in terms of if you have a new variant of the virus may be quicker to develop. francine: how do we know they are really safe?

we have a couple of polls saying 30 or 40% of people would want to get vaccinated the first time around. is it a bigger exercise making sure people are convinced it is safe so enough have it to reach herd immunity. sam: astrazeneca has put out another press release saying, we what thefollowed science sells us and what the trial tells us, patients first. i am glad to see that. you will only know the long-term safety of any vaccine including those with the older technology base after it has been in a sufficient number of people for a long enough time. there is no way of speeding that part of it up. if there is something you want to know now that would help with understanding the vaccine, we heard last week that people who have been sick can

still get reinfected. does that put into question the viability of a longer-term vaccine or it will be like a flu vaccine that you need every year? >> it could be like the flu vaccine and honestly i would not get too excited with just two or three cases of what may be reinfection's, maybe not. so far they seem to be quite rare situations and only really cause disease in one which is the u.s. one that was reported in nevada. wouldn't get too worried about vaccines being protected or not. new versiond a every year. what about the overlay. a lot of people are talking about the overlay of the vaccine for this present disaster plus the overlay of the regular flu vaccine. is that going to be a normal

process that happens? sam: i don't know the answer to that. i don't know if you will be able to vaccinate people with the flu vaccine and the covid-19 shot at the same time. frankly that will not be a question for this particular season because in the next few weeks the flu vaccine shots will be administered going forward. it's more of a question for next year. it's going to be different in the southern hemisphere. that is something that has to be looked at. we are used to having vaccines on top of each other. francine: thank you so much. of bloomberg intelligence. quite a lot going on when it comes to currencies. the dollar fueling a lot of debate out there. anddollar expending losses if you look at european stocks -- strengthening to just

under 120 on the dollar. underpinningar some of these prices across commodities with oil, copper, and gold posting gains. francine mentioned 11980 on the euro-dollar. the next hour, juliana man u well of btig on the extraordinary oddities of the equity market we are witnessing. this is bloomberg. ♪

♪ this morning, stock split led by stocks floating with

yields higher and the dollar shows true weakness on euro-dollar nears $1.20. it is a conundrum, how can you wish upon a star for inflation and do yield curve control at the same time? and trump insburgh kenosha and the mayor of pittsburgh says it is what it is. good morning, this is bloomberg surveillance from new york and london with francine lacqua back with us. off three or four weeks. propping up the italian economy. tom: what did you observe? they were hit so hard in march and then a real recovery but it's a little dicey in italy right now? francine: it's interesting how italy was scarred because they were very hard hit in march.