>> there is>> a certain logic in the market is doing better than the economy. . >> very concerned that the fiscal policy right now. >> this dollar weakness is a growing concern were foreign investors are not doing as well on their dollar investments. fear of instability does not seem to be in the cards. >> this is bloomberg surveillance with tom keene jonathan ferro, and lisa abramowicz. simulcast on bloomberg radio and bloomberg television. into going to be eventful

september. what is interesting, with the this on the screen, unconventional transaction of tesla. additional $5an billion of shares geared toward perhaps the nonmainstream, the non-wall street crowd. tesla is interesting because people using bubble with stocks .2 tesla. tom: a recent secondary, even with moonshot on the markets. this will not be publicly offered. it will be equity distribution and distributed by banks as tesla chooses. somewhat akin to what we saw with lesser successes. here,l be widely studied

the why of this transaction as well as the need for $5 million they are looking for. here andarkably up big still elevated from where they were. what else are you looking at? ina: the story today markets, aside from tesla, is the dollar and the question of whether people are going to say this is the end of dollar supremacy or if this is just an indication of the low yield, the negative real yield and this idea of global trade. it is the two sides of the story. tom: not only yields down in the last 20 minutes. i'm not going to editorialize. on the bloomberg terminal, negative 1.10. lisa: you think real yield could be affected by tesla stock?

tom: no. what i'm looking at is a negative 1.10%. for that to go down would be something economists and strategists will look at. gabriela santos joins us, strategist at jp morgan. i want you to do your foreign exchange act now. has disassociated itself or major currencies. what does it signal that we have seen persistent e.m. weakness over the last number of weeks? gabriela: you are right to point out that the dollar weakness we have been seeing for the past few months has been more concentrated. i think that is a reflection

about optimism about growth in europe, e.u. recovery funds lowering. and less worries about the u.s.. in emerging markets, you do have ofkets of concern in terms economic and fiscal situations, namely in countries that have had a harder time with covid, like latin america. you are truly expert at this. the solution for latin america and this pandemic, the distribution of the 45% or whatever is frightening. how does latin america solve this conundrum? beenela: it has heartbreaking to see it has been one of the major epicenters of

new cases and fatalities. part of it is not a surprise in countries like brazil or mexico, but part is a surprise in certain countries that reacted quickly, with strict lockdowns. did. did -- peru that is a reflection of issues like lessica has, hospital beds. it is not an easy solution for latin america. solution is to provide as much support as possible while being able to prioritize health at the same time. less tightca has fiscal space but it is about trying to have that balance

between providing support and focusing on the health issue. it is not an easy solution. lisa: not an easy solution for the u.s. either, even though they have the benefit of being the biggest economy in the world. a stock market that keeps hitting new highs. do you see this as a disconnect or a logical extension? gabriela: there is much more rationality happening in the equity market when we look beneath the surface. epicenter oft the travel, leisure. they are huge employers. they make up 20% of employment. that is why we have such a high unemployment rate. up 6% of the s&p

500. makes sense you have that dissonance between economic pain and improvement in earnings expectations. another way to see that is the sectors leading are the ones that see positive earnings growth, whereas the sectors lagging are those typically exposed sectors. there is rationality. lisa: zoom to the moon after reporting earnings yesterday showing strength. it continues to rally. then tesla. tom has been harping on this, this idea that shares gained 1000% in the past five months. they are going to do it in a different way, geared toward private sales that are reminiscent of what hurts did. don't valuations seem heady at this point given the economy? gabriela: i would say two

interesting things. seeing a tremendous amount of equity, not just by tesla but over the past few months. we have seen an amount of credit , and that has been well exorbitant. absorbed. the fed were able to open capital markets again. that is a sign things are functioning peering it is a sign we have a lot on the sidelines, had $1 trillion then we pre-pandemic. there is a lot of money that needs to be put to work. absolute and on a relative everybodytember 1, has to dress up for q3 and justify their existence.

what is the sweat for the high flyers? gabriela: there is not a concern about a bubble in most high flyers because they are justified by strong cash flow. there is a concern about position after they have increased so much. positioning -- your positioning has gotten too high, so you want to bring that down a bit, may be rebalance with certain companies or sectors that have not shot to the moon as much. it is more about right sizing versus a concern about a bubble altogether. tom: i have to ask about brazil, the opportunity in latin america. when does it go? for latin america, especially big countries like muchl, there has not been

growth over the past decade and we keep waiting for economic reform. brazil is a prime candidate over the past year that has fizzled out a bit. look at it less as a growth equity opportunity. more onto latin america the fixed income side. you still have a country like mexico offering one of the only positives in the world. appreciate it today, a nice reset for september 1. still the tech space is positive. loveesla transaction, i with the team over at zero had to say. with the secondary, you have to answer questions. it is a public perspective and you have to go out not only to institutions but also through retail.

you do not have to do that with equity distribution. this goes to the idea of a faith-based stock, of why people are buying tesla if it is not on any news. or the prospect perhaps of the death of fossil fuels, which has not happened. tom: fascinating. it will be interesting to see others weigh in. simulcast. on our two real experts to chat this up. we will look at the american economy here and a mystery not q4down q2, up q3 but beyond and q1. a little bit of volatility today . the vix 25.70%

that is a remarkable statistic. stay with us. good morning. president trump suggests a man arrested for killing two protesters in kenosha, wisconsin was acting in self-defense. at the same time, he criticized the killing of one of his supporters in portland, oregon. the president travels to kenosha today. flipped the american slogan that no one is safe in joe biden's america. he says the president cannot stop the violence because he has fomented it. jp morgan said markets should prepare for the chance that president trump gets reelected. there could be a shift of up to 10 points from democrat to perception ofthe

protests turns from peaceful to violent. tons of red ink for chicago. of $2 billionicit through 2021 includes $800 million from this year. has impactedus chicago's revenue. mayor lori lightfoot call for more federal aid. for the first time since 2016, consumer prices fell and the euro area. the inflation rate in august came in at minus .2%. economists had expected a slight increase. a recent rebound in economic activity has not upset the pandemic impact on demand. product is being held up. learned that apple anticipates shipment of the next-generation devices could hit 80 million in 2020.

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

>> the u.s. government abusing the role of the dollar,

overusing sanctions to make it unattractive. that is where we start getting alternatives put forward. tom: good morning. we are following the tesla story. we will have two good guests. atwill have those guests 8:30. to inform you about this original transaction. really getting a firestorm of interest across twitter and the internet space as well. posen didwhat adam yesterday, his conversation with the vice chairman. that set of headlines was illuminating. talking about the yield curver control. the aviation industry may caught -- cut half a million jobs. and a structural shift where companies have fewer employees relative to their asset value

are getting rewarded and equity markets. as we come up on labor day, as i always read a -- read a like chapter, it is not 1948. it is not 2008. there has been a change here. the whole battle over labor share is something that has been folded into fed policy more than purists would want. amazon got approval to start testing drones. lead to more jobs for engineers, for people who can create the trajectories of where these drones go. the actual driver goes from

house to house, delivering that parcel, is not going to be as needed. it is a different type of labor force. what does the drone do at broadway and secondly second -- 72nd on the upper eastside? lisa: i was having images of drone wars, of drones crashing into each other. there clearly are issues, but this is the future as amazon sees it. has been forthcoming about that, clear that they have a lot of work to do. we are going to spend a moment and get to tesla in a bit. us.as costerg joins let me cut to the chase. what you see for q4? q4 is going to be

difficult. we are seeing signs of recovery starting to plateau. businesses, consumer facing businesses could struggle. we expect the gdp to be down since last year and unemployment be around 9%. q3 --ith the tom: even with the q3 rebound, you are assuming we are not going to get back to the level or trajectory of february. shaped this is not a v recovery and it will take until 2022 for gdp to recover the level of december 2019 before the coronavirus. , cuts that mayat not come back, talking a how the global aviation industry may cut

nearly half a million jobs by year end. about these people losing their jobs who may not have jobs to come back to because the economy has changed, the world has moved on? the coronavirus has amplified trends that were pre-existing. are in this economy with less contact, less travel, less people going to restaurants and so on. there is a problem here. right now, the good news in the u.s. is you have fiscal stimulus. people are getting generous unemployment benefits. incomes have been sustained. the problem is many people will feel what they felt was a temporary job loss is not becoming a permanent job loss and you could have income go down and consumer spending go down as well. is the risk of a second

round of job losses. we were speaking last week with moody's. if we do not get fiscal support from d.c., we could see double-digit unemployment through the end of next year. do you agree? thomas: consequences could be severe. the saving rate in the u.s. is high. consumers are still growing savings. more physical support is needed soon. pullingbet on congress itself together and voting something before the end of september. tom: housing is remarkable. percent in this nation who cannot pay their rent at another percent of the nation trying to move up or move out or moved to the suburbs. how do you measure the real estate economy right now?

the housing market is the bright spot in the u.s. recovery. of have a definite trend moving to the suburbs. that is going to be durable. --contrast,

twice and now three times off the 505 level. it would be fascinating to see what has let is in an hour and five minutes. lisa: the idea that this is the most valuable carmaker when it has yet to prove itself in the likes of ford and gm. this is the conundrum. will it be the future people are pricing in. tom: i do not have it in front of me right now, but rbc was off the split. numbers are confusing. i do not want to confuse anybody. nixedtreet heatedly tesla. teslaind you again,

looking for $5 billion. they will not do a secondary offering. they will offer it on their terms direct through the major banks to shareholders in an equity distribution. we will cover that next. this is bloomberg. ♪

tom: it is an eventful first day of september. lisa abramowicz and tom keene. jonathan ferro is leaving tuscany. rumored to be somewhere on the continent. i am not sure where. he is out there somewhere. lisa: sing it. tom: i miss john so much. i go home and we talk soccer. good morning. this is what the show is about. where there is interesting news, we are able to call upon any number of legit experts. joel livingston will join us in and the on the debt credit market ramped up against all of these tech stocks. cameron crise joins us with bloomberg live. read forlog is a must

wall street. we are thrilled cameron can join us. cameron, in the secondary offering, you and i tried out the hilton hotel. we have rubber chicken, moved some vegetables around a plate, of institutional guys asked questions about the management. must wants to mr. ask questions about that process? asklon musk wants to questions about that process? cameron: he does enjoy the sound of his own voice. i tend to view this as a wind fall. in theve split the stock robinhood crowd do not seem to understand each share is worth less than it was two days ago. found golden has

eggs in his backyard and decided to monetize them. look at the .nconventional approach dan ives publishing at what bush has been a big bull. he solidifies his his price pre-sprintt is $3500 -- pre-split. they will move shares from time to time. under an equity distribution, how they pull that trigger? cameron: i believe what they will do is they have this panel, and when they deem it an opportune time, they can go to move shares in a trade. they will be like a regular customer of a brokerage firm

with stop to sell. they'ret here we are, not putting out a shopfront for sales time, which is what you typically get at an equity offering. it is very much more opportunistic and more like a trader or investment manager. gold ifis is monetizing i am sitting on your lawn. it is smart for tesla to do. it improves their credit profile. from a broader macro perspective , is it a sign of a top? cameron: i would be leery of streetthat because the is littered with bulls who tried whoall the -- with fools tried to call the top of a parabolic price flow. it is probably necessary if not sufficient conditions for a top. they sell stocks to the market, more traditional offerings over the last few years, and that has

not stopped the stock from continuing tort rally. i would say if we move on a more general basis, if we move to a world where u.s. companies are net sellers of stock rather than net buyers, as they have been over the last decade, that would certainly be a significant change of circumstances that would make a longer-term market top more likely. sure if we, i am not are there yet. , inre left with that stock particular, it is the old rule you do not talk about politics or religion at the dinner table. tesla is more like a religion. tom: cameron crise, thank you for an equity view of this moment, not only for this crazy summer in the land of the stock split we are in, but the view forward. joinsnow joel lovington

us with bloomberg intelligence. he is quietly expert on credit default swaps and credit dynamics within the market. i loved your research note out an hour ago on this announcement by tesla. give us your single and immediate observation. joel: certainly the deal enhances the company's liquidity and continues to put pressure on its views of risk. iquidity is off the table and think the market gets it. they view tesla as a quasi-investment grade company at this point, which is in stark contrast to the raiders, which have a three or four notches , whose bonds traded 100 basis points wider than tesla. tom: dan ives makes it clear this is time elon musk is "out of the red ink." can you actually look at this

transaction and tesla and say they will see rating upgrades from the different rating agencies? joel: that is a great question and the answer is they will not despite the $5 million of additional financial flexibility. the raiders just upgraded the company two notches for s&p in july and one for motors -- one for moody's. be quites tend to slow, but they will still lag the market. lisa: tesla has about $11 billion of debt. people are expecting them to be paying down that debt. they could take some of the money from this $5 billion stock offering and significantly cut their debt. are we going to see more of this , the idea of a company selling stopped to pay down debt in a reversal of what we have seen over the previous year, where they have sold debt to buy

shares? joel: i think that is a possibility, but not at tesla. i do not think tesla will be paying deck. any i talked to management they are focused on growth and paying down debt as it matures. a lot of the debt we have our convertibles that are well on the money. ability to call in their 5.3% note offerings last month, and they passed on it, which is true to the commitment and the work they have described before. i think this is more for growth and to build out the infrastructure network faster were to work on a finance company. this is more of a growth tool than a reduction catalyst. based on your

conversations with management, based on what they have proven about production, do you view this stock sale, as well as what they are likely to do with the money, to be a positive story from a credit fundamentals perspective? joel: 100%. definitely a positive for credit. it is a company that is not looking to repurchase shares, but to build out its business. --that business strengthens i think this is a good credit story. tom: one of the proxies i used is five your paper. 80,ne point it went 100 to with a yield enormous, now it is priced better than jp morgan. how does that happen? how does a bond go from 80 to 100 with a 2% current yield? joel: i think it is called the fed. the fed took risk off the table

for a lot of companies. then you have this phenomenon in the marketplace. i cannot recall a stock going up .000% in a year it happens the other way quite often -- quite rapidly, but not going up. that includes toyota. it has been a tremendous rally for tesla risk. tom: we could go for an hour. jonathan ferro just emailed and said you have joel, great. lovington, an expert on this odd business of industrial america and debt. tesla with a bombshell announcement. the news just keeps coming. this is a huge deal for germany. it speaks to the new europe as well. , not continental airlines of another time and enormousis is a

withnental ag of germany, 200,000 employees listed on the bloomberg, you know them for the better than good tires, they are doing a restructuring. the comprehensiveness of this restructuring is stunning. ist really gets my attention continental sees no return to 2025.esult before that is an extraordinary challenges ofe the global industrial economy. lisa: it highlights the tale of two economies, of the haves and have-nots. the theme of 2020. you can see the intangible asset have companies that are people light doing quite well, the companies that make stuff and have to pay people and pay for the commodities, they are

struggling and putting jobs at a rapid pace. tens of thousands of job cuts announced every day. this raises the question, how long will this continue before something breaks? there is the statistic i was looking for. 30,000 jobs. 13,000 of those jobs in germany. this follows what we saw from the coca-cola company and what we saw from selected airlines. frankly, this goes to the heart of what peter hooper told us from deutsche bank last week. if the stimulus does not show up, q4 will have many more of these announcements. lisa: it goes to a deeper conundrum that the nation will be faced with for a long time, which is how you train people, how do you get them back to work. gdp backning is to get and going off of the presumed q3 bounce. this has been an extraordinary simulcast. we will continue forward.

we are thrilled you're joining us on bloomberg radio and bloomberg television. news flow extraordinary. futures up nine. ritika: with the first word news, i am ritika gupta. president trump heads to kenosha, wisconsin today a day after he suggested that a man arrested for killing two protesters in kenosha may have acted in self-defense. at the same time, he criticized the killing of one of his own supporters in portland, oregon over the weekend. meanwhile joe biden accuse the president of fomenting virus and he rebutted the president's convention speech that portrayed him as a socialist soft on crime. mark zuckerberg and priscilla chan are investing $300 million in election infrastructure according to the political website axios. the money is going to two centers that promote safe and reliable voting. the cofounder of facebook told axios it is important for

counties and states to have the resources they need to handle what he calls unprecedented conditions. the latest border clash between india and china points to a longer-term conflict. india says its troops were able to stop a push by chinese forces to claim more ground over the weekend along the disputed himalayan border. both countries have sent thousands of troops to the region. shares of zoom are soaring. the video service reported the second largest sales surge among nasdaq 100 companies last quarter. 355%, well above estimates. it is a sign businesses and consumers keep flocking to zoom in larger numbers than expected. elon musk continued his climb up the ritualist. the founder of tesla past mark zuckerberg and is now the third richest person in the world according to the bloomberg billionaires index. elon musk is now worth $115.4

billion. shares of tesla cap there rally going. they are up 496%. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> i do think this new daytrading crowd, whether it is the robinhood crowd, all of these day traders who want to

trade weekly options on top of it have had a huge impact on the market. tom: good morning. bloomberg surveillance on bloomberg radio and bloomberg television. lisa abramowicz and tom keene. jon ferro out and about on a sabbatical. we have been advantaged on this interesting tesla story to have cameron crise with us and then joel lovington with his excellent on autos and debt. then we get even more likely. knowrevious scheduled, you him from his podcast masters in business for bloomberg opinion, and writing real money. barry, there are 70 different ways to go. i want to go to a zero pitch tweet out an hour ago that was really involved. in a secondary you have to talk after the big boys. ofelity, pimco, all the rest them you have to do a road show and answer tough questions. that is not going to happen with his equity distribution, right?

barry: that is probably right. i missed the zero hedge tweet because he blocked me on twitter. tom: that is why brought it up your i want to run it'd. -- i want to rub it in. talking about the partition of this to a nontraditional transaction. who will buy those shares from time to time? barry: that is an interesting question. you have index providers that are not participants because it is not in the s&p 500. funds,companies, growth anybody looking to be part of a momentum trade, obviously the stock has been working for quite a while. ago fundinge a year secured was a controversial tweet. now he is the third wealthiest person in the world. tom: lisa and i know this.

ferro has been daytrading off of his couch the last two weeks. goldman sachs and morgan stanley, from time to time, will they give these trades to a robinhood trader? barry: i do not think so. i cannot imagine why. remember, when you are doing big block trades, you are doing them at a discount to the market price. people forget secondary's are priced with an incentive built in, especially for a stock that has run up so far. why would anybody pay market price if they could just go to the market. you have to provide some form of an incentive, and that typically goes to brokerage firms. they would not hand that out to robinhood traders, who let me point out, if you been daytrading tesla, how do you think you are doing versus the guy who bought it one month, three months, six months ago.

these are not independent stories. let's be clear. the idea that the best client of these brokerages get the best look at the shares of tesla, they will bite not necessarily because they look at the fundamentals. they are buying it because they know they can flip up the robinhood traders for more who are making less money than they are. tchir's, to peter point, how much of the robinhood traders have a material effect on market dynamics year to date? barry: that is a fascinating question, one my colleague, our data scientist in the firm, answered in a post this week and essentially said not very much at all. you look at the total dollar amount that robinhood traders swing around, and you look at how little they actually hold overnight. if you buy something in the morning and sell it in the afternoon, essentially that does

not have a giant impact. you are flat. what drive stocks higher our people buying them and then holding them. or buyers than sellers at each price level. -- more buyers than sellers at each price level is what takes stocks higher. if you are buying and selling an hour later, that is not driving the stock price. lisa: fair enough. that said, are you saying that what we are seeing in tesla is not the result of day traders and people who have faith in the stop who want to get in through robinhood accounts, and this is a global wall street acceptance of the stock that was previously hated? barry: somewhere in between. there are people who are true who have in the stock been buyers for much lower prices and keep adding to their positions. there is been a bit of a short squeeze in the stock and a number of other stocks, although

there seems to be a rumor going around -- i am unaware of a two for one or five for one or 10 for one split that leads to stocks being caught away from people who were shorted. this is just a fantastic momentum story that is populated by fan boys who love the product, love elon musk, love the narrative, that is what drives tesla. not people buying 1000 shares and selling 1000 shares. that is noise. to many trillions of dollars robinhood clients have? it is a fraction of that. tom: really well said. what barry ritholtz said at each level is important. there is fancy mathematics in there. barry ritholtz, how does it end for the "fan boys?" barry: i don't know. tesla and then

rest of the auto industry was forecast to have been closed around now, maybe now, maybe next year. not only has that cap not closed in technology, in the network of the charging stations across the country, in wireless over the on software updates, that the one hand i have a hard time saying they are worth more than all of the automakers put together. the flipside of that is automakers make cars that are filled with semiconductors. tesla makes a computer on wheels, and the rest of the industry has not really caught up to that. until that changes, until the rest of the industry is as forward-looking as tesla has been, there will be a premium for tesla. i still suspect that giant gap between mercedes or bmw or ford and tesla will narrow, but it

seems to be taking much longer than most people believe even five or 10 years ago. tom: thank you so much. a real clinic on market dynamics and the idea of belief in stock, buying and holding it for whatever timeframe that is. tesla with the big pop of this $5 billion offering, and moving from the 530 level 2501 right now. that is a change. there is a chart that nails it. well done and looking at the premarket chart. 501 .21. 500 to jobs day. lisa: it is important we move from the winners and high flyers to what is happening on the ground. we are expecting less than a million new jobless filings on thursday. the second in 25 weeks. still, 950,000 jobs. tom: very good. stay with us.

huge news on the september 1. on bloomberg radio, george pyne, we will look for that. this is bloomberg. good morning. ♪

♪ taylor: from new york city for

our viewers worldwide, i am taylor riggs in for jonathan ferro. the countdown to the open starts right now. 30 minutes until the opening bell this morning, trying to extend the gains we saw yesterday. tech continues to lead everyone else. for the record highs within the nasdaq. massive dollar weakness relative to euro strength. 10 year yields mostly unchanged. we are in the higher end. fruit also catching a bid as risk on sentiment continues. -- crude catching a big. the nasdaq 100 on the brink of doubling in less than two years. investors starting to raise concerns about one thing. >> the euphoria. >> exuberance. >> irrational exuberance. >> there is still the irrationality. >> the dichotomy between the nasdaq and the rest of the market. >> all of the things we talked about in the dot com