ray dalio says recent central bank actions, he spoke with us. take a listen. y: today the economy and the markets are driven by the theral banks, and coordination with the central government. what i mean by that is the purchases right now of financial assets by the federal reserve or the purchases by the purchases by the federal reserve of government securities are the drivers of that market. so of the production of the money, if you look at money, and you look at who is in the market -- so the federal reserve, for example, set an interest rate that, for different types of creditors, based on its economic objective, in the old days, let's say when we had the 2008 financial crisis, we needed to protect banks because they were systemically important. and then money market funds and commercial paper and the like. now it is much broader than that. the world economy is systemically important. if they did not go out and make lending to companies, including what we call fallen angels, those that were just above investment grade and fell into investment-grade, we would

course,u also add, of the support of central banks.pect that to be reduced, supriya, but we don't necessarily expect that to be increased either. has that been priced in? -- so whether you look at the amounts coming from central banks from fiscal authorities, you look ahead at where it's likely to be at the end of the year, it's going to be twice the level of gdp that we saw in the gse. so there's no doubt this is helping markets. the low level underpinned market valuation. but that's justified to risk assets. if you have low yields, low bond yields, you're bound to see andations climbing higher those yields and risk assets coming down, and of the risk assets in the search for yields. justifiedf that is and we don't see any pause in -- we don't think central banks are going to pair down services anytime soon. week got indications this that would likely be the case. i think further lower guidance, none of that is likely to change. valuations are justified in being hired then they would be otherwise, based on the quality. what we have se

you are going to see central banks balance sheets explode.hoiceve to because the is the sinking ship. matt: that was bridgewater co-cio and founder ray dalio speaking with our own erik schatzker. thu lan nguyen from commerzbank is still with us. what do you think about the reflation efforts by the ecb, especially. are they going to be able to bring about any kind of inflation? at lan: well, if you look the credit creations that easing has called, their certainty is hope that this time around, exceptionally expansionary measures will lift inflation. obviously, it is unclear to what kind of level. obviously, the central banks have acted aggressively because of the large risk of a deflationary scenario that the corona crisis would put us in. the measures -- as i said, if you look at the money supply in the systems, which is increasing the significance. people are putting the money to use. there will be some inflation creation. still skeptical whether the central banks will be able to reach the targets they have set before. matt: what do you thin

today, the economy and the markets are driven by central banks, and the coordination with the central that is that the purchases right now of financial assets by the federal reserve or the purchases by the federal reserve of government securities are the drivers of but market -- of that market. so the production of market, if you look at money and if you look at who is in the market, the federal reserve, for example, will set an interest rate that -- for different types of creditors based on its economic objectives. in the old days, say when we had the 2000 eight financial crisis, we needed to protect banks because they were systemically important. now, it is much broader than that. the whole economy is systemically important. if they did not go out and make companies, including what we call "fallen angels," those that were just above investment-grade and fell into investment grade, we would lose large parts of our economy. so we are in a situation right now where they are the market makers. take the market out and take the central banks out and you have a different story, including t

40000000000 dinars which the only government indeed borrowed from commercial banks and which the central bank in tripoli will have to actually meet one day and bay because these banks are got emptied by the central bank what about the 12000000000 libyan do you not that have been printed in russia and have been used only in the east what about money stolen by half their sons and hundreds of millions in the in the east and has been taken to venezuela and used to buy gold and gold was taken to africa to exchange for another gold so that it cannot be traced and that gold is probably placed in switzerland or in order to buy or somewhere else these are these are not my words these are the gold from venezuela is an international investigation which some somebodies in the u.s. u.s. are already pursuing the other things i talked about they are well documented in the in the you and the reports of the the actually sanctions committee reports which is part of the u. and it's not my say it's the international community saying that so what about all these corruptions corruption is is endemic and it's libya

there was a proposal by the united nations actually of the montana international office of the central bank of the and there is their proposal point escrow account in a foreign bank and this could help to build up trust g.n.a.t. in the c.b. and are against this understandably from their point of view because probably the a more if the outcome of it all and if they don't have direct in full access to their revenues this would actually undermine their position nationally and internationally and of course all the militias criminal coupes and islamists who benefit from the revenues also firmly against but that may highlight the split be also a great of a humidity to shed light on how much money was a really transfer to the east and we are it ended up you know about allegations of corruption in haifa semele and if everyone worked correct there is no need to be scared of such an order. well let's bring in jonathan winer in washington d.c. you have the special on voice to libya what's the current u.s. thinking on libya. the u.s. does not want libya to be overrun by war by war instability economic

the battle of central banks will continue. are the events. -- the governor of the bank of england will be speaking 5-5." ebinar entitled " he will be joined by john williams. the panel will be moderated by our very own francine lacqua. the uk's office of budget responsibility well published three economic scenarios on the impact of the pandemic. as a monthly gdp and industrial released.ing data is when you get to wednesday, it is going to be the bank of japan publishing their monetary policy decision. thursday is the ecb and francine lagarde will hold a virtual press conference. and on friday, the 27 nations will meet in brussels to hash out the details of the massive economic stimulus package. what will be the compromises? and another item on the agenda, the u.s. bank earnings are expected to be the worst this quarter since the financial crisis. they will give indications of how these three methods -- these three months of covid-19 measures are impacting the economy. take me through what you are focused on in terms of the ret

in europe, the central bank will lend to banks at a -1%.means you don't have interest payments. in fact, you have interest credits. the central bank will take that debt off, they will own it, and they have a clinical agenda, not an economic agenda, where they will determine how they will be paid back or when they want to be paid back based on what the economy is doing. in that case, like in europe and similar situations in the united states and japan to various degrees, they will make loans that will have interest credits, , and you may not have to pay principal back. it depends on what the conditions are at the time. those are markets which are driven by central banks, not only their actions, but their desire to be an owner of the assets, and their priorities about that ownership when they buy and when they sell are not the same as the classic free-market allocations. marketsult, the capital are not free markets allocating resources in the traditional ways. >> one of the questions investors are wrestling with is how far central banks are w

and the markets are driven by the central banks and the coordination with the central government.by that is purchases right now of financial or the purchases by the federal reserve of government security are the drivers of that market so the production of the money if you look at money and look at who is in the market, the federal reserve will set an interest rate for different types of creditors based on its objective. in the old days, in the 2008 financial crisis, we needed to protect banks because they were systemically important. now, it's much broader than that. the whole economy is systemically important. if they didn't go out and make companies, including what we call fallen angels, those that were just above investment grade and fell into investment grade, we would lose large parts of our economy. whereare in a situation they are the market makers. take the market out, take the central banks out and you have a different story. including the value of money. what is the value of money? think about it in europe. the central bank will lend to banks at a -1%. havemeans you don'

those are markets which are driven by central banks. not only their actions, but their desire to be an owner of those assets, and their priorities about that ownership when they buy and when they sell are not the same as the classic free market allocations. as a result, the capital markets are not free markets allocating resources in the traditional ways. erik: one of the questions investors are wrestling with is how far central banks are willing to go in their effort to reflate financial assets to begin with, and then of course, they hope, transmit something through the real economy that will result in growth and jobs. how far are central banks willing to go with this power they have discovered they have? ray: central banks are willing to go, and need to go as far as it takes in order to keep the system afloat. because we are in these late stages where we have a lot of debt, you are going to see central banks balance sheets explode. they have to, because the choice is the sinking ship. guy: ray dalio of bridgewater associates, speaking

i think traditional banks suffer massive head went from no interest-rate margin, central banks are makingestment banks very low on the baden trading side of things. but i think it is worth paying up for quality and for growth where you can find it. francine: patrick, thank you so much for joining us. patrick armstrong. stocks are definitely falling in europe, but u.s. futures are feeling a bit of pressure. this is over escalating chinese-american tensions. we saw the tit for tat in terms of consulate closures. there is also a bit of worry out there on the market that the u.s. economy has stalled. five-year treasury yields touching an all-time low. 1900 anding at near ounce. the offshore yuan actually dipping. coming up, we will talk a lot more about tech valuations, and they later, the intel chief executive, bob swan. you don't want to miss that interview to talk about what is coming next for the tech sector as a whole and for intel specifically. that is 11:30 am in new york, 4:30 p.m. in london, and this is bloomberg. ♪ hike! simon pagenaud takes the lead at the indy 500! coming to the g

for now, with central banks in play and willing to do more if things get worse, that is where the focushould be. we appreciate your insights. that is iain t. stealey, international cio, jpmorgan chase bank. come, stocks in hong kong gain on the first trading day since the new national security laws were imposed. hong kong stocks moving up. the latest on the security situation live from the city. this is bloomberg. ♪ yousef: you are watching "bloomberg surveillance." i am yousef gamal el-din in dubai. amid signs the mainline chinese faces thee city reality of the new security law, the u.k. has extended an offer of sedition almost 3 million residents. let's get more context on this. joining us is our senior asia government reporter from hong kong. i want to get a sense what the security situation is like on the ground today. >> today we have not seen the same sort of protests we saw yesterday, which was a public holiday, the anniversary of the handover. also the first full day were the new national security law was in effect. we saw hundreds arrested. tear gas was fired off. were policed

if we have increased in productivity, on a natural increase in interest rates. >> the european central banknd other banks launched ,nconventional instruments massive -- of securities so these were temporary instruments that they had lasted so the nonconventional instruments have become conventional instruments and there is a second change you have to consider. policies.al budget recovery will be european or will not be. our response must deal with the emergency but be designed for the future. take should allow us to revive our economy's and at the same time, take a leap forward. we need to accelerate the transition, strengthen sovereignty while being open to the world and faithful to our values. francine: still with us, alberto gallo from algerbris investments . we were talking about deflationary pressure across the world. europe, canat europe and the european economy reinvent themselves along the lines christine lagarde was saying? billion, it is a game changer. it is an opportunity for europe under aforward to unite common fiscal policy. we see that as a game changer and many ministers ar

erik: how far are central banks willing to go with this power they have discovered they have? es in order to keep the system afloat. because we are in this late stage where they have a lot of debt, you are going to see central banks balance sheets explode. they have to because the choice is a sinking ship. the founder and co-cio a bridgewater associates speaking yesterday. still ahead, the french president rolling the dice on a cabinet reshuffle. he has a new prime minister and what else will the cabinet look like? we will find out over the next few hours. this is bloomberg. ♪ guy: i am guy johnson and this is bloomberg markets. let's turn our attention to france with emmanuel macron shaking things up. he is reshuffling his cabinet today starting with an unexpected choice. x as hisming jean caste new prime minister who will appoint the rest of the cabinet. let's go to paris for more. talk me through what we know about jean castex. i had not heard this name much before for the officer prime minister. what do we know about him? what will he do? many people who have heard of him e

this is not central bank policy. it is necessary.ing they are doing is great, but eventually when we get out of this, you know, whenever that is, i think we will still have very slow growth, many problems, just like we did after the financial crisis. they will want to do something to stimulate the economy and they will be doing fiscal policy for blast. i -- full blast. i don't think it will be enough. we will almost surely see it around the world, unless something happens that makes global interest rates spike. we don't anticipate that. for better, for worse, it would not be something that we are thinking about. rogoff of harvard university on the group of 30, thank you for your time today. let's figure out what is happening around the world. here with our bloomberg first word news. >> the trump administration and congressional democrats are no closer to a compromise on a virus relief plan. the pressure to act is building. insurance for millions of americans is running out this week. mark meadows sees little chance of a stopgap deal.

spoke expectations for protracted support from central banks. joined by the street -- chief strategist at the investment bank. i wouldn't normally ask about but iys market action, wonder if you can reflect on the strength we are seeing through the asian session and european futures. little has happened since thursday when we last saw the u.s. in full play other than some ongoing bad news around infections. i wonder what it is that you think is driving an improved sentiment in the u.s. data. what is it that points onward and upward for you? i don't -- it is clear this is not about -- what this is retail environment to many of these markets. i do think liquidity is still driving these markets, the main driver of these markets. q2 market is thinking the will be bad enough, but at this point -- improvement in the month. in june, we are seeing -- the u.s. labor market continuing to get weaker and the initial bout of spending slowing down. from the middle of june, patents marketsun to change and a raleigh nonaccredited, particularly retail liquidity i

these notes are counterfeit that recognize central bank of tripoli has refused them so business people in misrata refuse to accept it. have to use this money to destroy al capital refusing to deal with it is how we as businessman a protest spiting in the fight against them. russian support is being seen as further escalating the libyan crisis creating parallel institutions to the central bank in the national oil corporation russian mercenaries from the kremlin backed. have been seen in. libya's largest oil field leaders in tripoli say the house of representatives in the east has taken out loans of $21000000000.00 to fund have to bid to take control of libya economic experts say there are over $8000000000.00 worth of these russian notes in circulation the impact on the economy is likely to be felt for years to come now a trainer al-jazeera misrata. human services have reportedly agreed to allow the u.n. to access the stranded oil tanker which could be on the verge of triggering a natural disaster tanka has been stranded off the coast of home for more than 5 use it's carrying more than a

the central bank is asking banks to not pay dividends of buy back shares until next year.months longer than initially indicated. trump'st donald national security advisor has tested positive for coronavirus. he is the closest person to the president known to have contracted the disease, but the white house says robert o'brien's infection poses no risk to the president or indeed the vice president. is out tell bloomberg he of the office since last week. putn's prime minister has out quarantine measures for his country. the decision is said to be unbalanced, adding that the canary islands have the fewest virus cases in the u.k.. reliant on tourism, spain is desperate for the u.k. to reconsider the move. germany is warning rising infection rates could reignite the virus. it is calling on people to stick to containment methods. germany is planning to make testing rather than self-isolation mandatory for travelers returning to the area. the chief of staff of angela itkel says it makes heightened during the fall more likely. global news 24 hours a day, on air and at bloomberg qu

they are being given helped by central banks in terms of adding liquidity and they trade well so we thinkking sector offers some good value. another sector which could do well as real estate. i think you have to be careful looking at various parts of the real estate market but i think real estate does trade cheaply. andad widened out a lot since we are bullish the next six months, between now and the end of the year, we think real estate will tend to do well. some industrial sectors, surprise on the upside if liquidity is decent, we see the figures being fairly strong. people have been negative on the industrial sector because of high sick -- cyclicality. in terms of industries, these are things i like but factors will be more important in the long haul. matt: when i read through your research, it seems the common thread is markets just got two barris -- too bearish into march and still the outlook is to bearish. you think it is better than markets are pricing? guy: that is correct. we started the year fairly gloomy because we got the market was expensive and we expected the u.s. economy

a massive, massive week coming up for central banks. we are waiting to see what happens this week from the ecb and the boj. to a certain extent, i think it is a bit of a nonevent, but the bank of england's andrew bailey speaking at a webinar entitled "libor: entering the endgame also fed president john williams on that panel as well. francine lacqua is going to moderate that. tomorrow we get the ecb publishing, bank lending survey, the ob are on the budget responsibility. three different responsibilities r on the pandemic. keep an eye on the data this week. wednesday, boj publishing its monthly policy decision, monetary policy decision. thursday the ecb is out, so we get the lagarde point of view. marking time this week, and i think friday, the main event of the week, 47 e.u. nations gathering with their leaders in brussels to hash out the details of the 750 billion euro economic package. it is absolutely critical that this gets done at some point. it might not get done this week, but it needs to get done at some point. morning, valentin

a big week for central banks. let's look at the agenda. througho watch out for this week. today, the governor of the bank of england will be speaking on a webinar. he will be joined by the new york fed president john williams. the panel will be moderated by bloomberg's francine lacqua. interesting to get their take. tomorrow, the ecb publishes its bank lending survey and the u.k. 's office for budget responsibility will publish three economic scenarios on the impact of the pandemic. could be some interesting guidance in terms of sustainability of debt as monthly gdp, industrial, and manufacturing data is released for the u.k.. wednesday, the bank of japan publishes its monetary policy decision at thursday, the ecb rate decision. christine lagarde will hold a virtual press conference afterwards. we will look for thoughts on yield curve control, even if they had been ruled out as a strategy at the ecb. the 27 eue leaders of nations will meet in brussels to hash out details of a massive economic stimulus package, the recovery fund the focus of our attention on friday. next on

erik: yeah, so this is a bit of a dangerous thing, to go again central banks. they control the market, right? let's be very clear and honest have how central banks taken the private sector away from market-making these days. but i still find that the outlook in america, on the economy, compared to, say, europe, is not so favorable, and the reason sits fundamentally with this issue of how they are dealing with the pandemic, and then within the time when they come hopefully soon, get hold of this, we will go into a mode where a lot of it will be taken to the election, and the -- and what the outcome of that could be, and how they could shift policies again, and i think markets will start to be a bit more uncertain, where we have now, for the first time in many, many years, and europe, the policymakers have handled the pandemic quite well, which is really important. nejra: what you said about reallocating u.s. assets elsewhere, if so, will they reallocate more asset the dollar? -- more asset equities or the dollar? certainly i am starting to understand relative va

. >> well, you have extremely strong support from central banks.is not just that we're in places the central banks are buying. that has an impact in terms of momentum. the debt levels are going to rise. there is a determination that the central bank government to really ensure that the economy recovers and that we don't have widespread disstress. and so for that reason, if we think about the rates and recovery rates, we think the reward from the spread is fair. it is not super generous but it is fair in relation to those risks. we really want to avoid the safe havens. yousef: you're right. a closing thought on the u.s. dollar. i was reading a piece entitled decade of the dollar. that is an imminent risk as the uptrend break looms. i can't stop counting the number of times i have heard the imminent turn in the dollar bull market. you don't subscribe do that do you just yet? >> short-term we're bullish on the dollar. i think one has to recognize a little bit with the evaluation and a fair amount of political uncertainties ahead of us. a safe haven at

and the central banks will take that debt on.itical agenda, not an economic agenda, in which they will determine whether they will be paid back or when they want to be paid back based on how the economy is doing and what will happen. in that case, like the example in europe and similar situations in the united states and japan in varying degrees, they will make loans that have interest credits almost, or let's say zero. you don't have to pay interest back. and you may not have to pay principal back .it depends on what the conditions are at the time. those are markets which are driven by central banks, not only their actions, but their desire to be an owner of those assets and their priorities about that ownership, when they buy and when they sell, are not the same as a classic free market allocations. as a result, the capital markets are not free markets allocating resources in the traditional ways. one of the questions investors are wrestling with is how far central banks are willing to go in their effort to reflate financial as

it is a big week for central banks. wednesday, central bank rate decisions from japan.day, we get the ecb decision. joining us now is michael mckee. are we anticipating any surprises this week, anymore forecast cuts, given the uncertainty in the global economy? there is aan see general sense of the ease about the central banks reporting this weekend. canada leading off, then you have the bank of japan and ecb. pat.re expected to stand we are in a consolidation and examination phase, where central bankers are looking at what's happening in their economies, trying to figure out what the next steps will be. accommodation,re can they do that, how would they do that? we are also looking for forecasts in what they see ahead for the economy, even if it is a murky vision. vonnie: labor markets around the world are in canada -- in trouble. canada in particular. debt to gdp is higher than it was. what can the bank of canada do, like what we saw the federal reserve do to fix the u.s. economy? the bank has made it clear, the new governor has made it clear, that is about as low as t

in terms of digital currency, from the central bank's point of view, it looks like pboc, china's centralssue digital currency. this should be adopted by every government, to be honest. u.s. during covid when people were supposed to receive $1200, they were still sending out a check. was to currency, it would make the process better. the currency issued by the pboc this function as one of the key capabilities and it will bypass swift, and if it bypasses swift, it will become international impact. digital currency, , you partlyayments answer the question already but i want to get to it fully, because we have things like wiichatnd we chat -- pay. is there any need for this? jennifer: absolutely. this is one of the under discussed areas. there are a few reasons why this will become different compared to what we have with alipay and others. private companies, and for every merchant, they decide to use the payment as more or less a commercial decision. they are still part of the not used byy are the consumer. this,he pboc issues everybody has to accept it. perhapsfunction is anyone traveling i

, developed countries and emerging market central banks and if you look at the size of the expansion of the balance sheet, we estimate that it is about 20 percent of gdp. if you compare that to what happened during theglobal financial crisis , that was about six percent of gdp so you expanded the bank balance sheet by more than three times what we saw in the financial crisis. at the same time ifyou look at how low interest rates are right now , we estimate that 70 percent of global government debt has a yield of 50 basis points or less. so you've got negative yielding that, then you have basically zero yielding that for 70 percent of the market and that's pushed money into the equity markets. at the same time market liquidity is moving forward here so you've got to be careful going to have this result return in volatility. we estimate liquidity is still about 60 percent weaker than it was below in the market that what it was pre-pandemic. so that's the first thing i'd say about the disconnect between main street and wall street is we see that balance sheet that has expanded by $3 tri

ray: today the markets are driven by the central banks. with theination central government.that is the purchases right now of financial assets by the federal reserve, or purchases by the federal reserve of government securities, are the drivers of that market. whof you look at money and is in the market -- the federal reserve for example will set an interest rate for different types of creditors based on its economic objective. in the old days, when we had the 2008 financial crisis, we needed to protect banks, because they ine systemically important paper money and the like. now it is much broader. the whole economy is systemically important. if they didn't go out and make lending to companies, including what we call fallen angels, those that were just above investment grade and fell into investment grade, we would lose large parts of our economy. where in a situation now they are the market makers. take the central banks out and you have a different story. including the value of money. what is the value of money? think about it in europe, for example. the central bank will

how far our central banks willing to go with this power they had discovered they have?re willing tos go, and need to go, as far as it takes in order to keep the system afloat. because we are in the late stages where we have a lot of debt, you are going to see sheets banks' balance explode because they have to. vonnie: that was erik schatzker speaking earlier with ray dalio. still ahead, we will speak with the founder of operation hope on the widening on employment gap and racial inequality in the united states. this is bloomberg. ♪ vonnie: this is bloomberg markets. i'm vonnie quinn. i think the most important thing we can do today is continued to encourage the to physically distance masks.r a lot of research is coming out showing that that is working. we all want to move toward reopening, but looking at the growing case count, the cases across the u.s., it's critical to maintain those basic public health interventions. it is july 1, back to school shopping begins in 42 days. are we going to go back to school? tot does the pandemic due the classroom of elementary school

, emerging market central banks. if you look at the size of the expansion of the balance sheet, we estimate it's about 20% of gdp. if you compare that to the global financial crisis, that's about 6% of gdp. expanding by more than three times what we call the global financial crisis. at the same time, look at how low interest rates are right now, we estimate nearly 70% of global government debt has a yield of 50 basis points or less. so you've got negative yielding and basically close to zero and 70% of the market and that's the equity market is at the same time, market liquidity is poor here so you have to be careful you will have this. we estimate the liquidity is about 60% weaker than it was in the market and it was before. that's the first thing to say about the disconnect between main street and wall street, the balance sheet is expanded by $3 trillion, they are on a buying spree of epic proportions here but let me turn to the growth outlook and forecast and we agree and rely on a large supply in the third margin

and emerging market central banks.you look at the size of the expansion of the balance sheet we i estimate it is about 20% of gdp. if you compare that to what happened during the global financial crisis that's about 6% of gdp. youso extend the balance sheet y more than three times the global financial crisis predicted same time if you look at how low interest rates are right now we have to make that nearly 70% of global government debt at 50 basis points or less. you have basically zero debt for 70% of the market and that's money in the equity markets. the same time the market is court hears so you have to be careful you will have to return in volatility. we estimate 60% weaker than it was in the market that when it was pre-pandemic. that's the first thing i'd say about the disconnect between street and wall street bbc balance sheet who is expanded by $3 trillion a buying spree of epic portions here. let me just turn to the growth outlook in the growth forecast and we didn't agree with ayhan that this is the largest de

more broadly which supported the markets. 15 emerging markets and central banks are now purchasing assets as well. so whereas in the global financial crisis it was about the policy easing we've exhausted a lot of that. we've gone to credit using, and that's kind of the lasting consequences that we need to monitor going forward. >> let me just push a little bit on the market thing. so, you've said that the stock market has been strong despite the rather scary headlines about the economy. in part because there are few alternatives for money and the central banks have made it attractive. but if the market basically assuming there won't be a second wave or a decline in lasting decline in globalization or longlasting decline in productivity. if is the market fully factored in for some of the risk that you elaborate? >> i think that the market is factoring in that the fed is requesting nowhere soon that the central banks are in for a long haul and it's been a paradigm shift and assuming there won't be a lockdown like in march and april, even if you have a second wave, it's not going to b

from experiencing inflation in their portfolios so it's also really hedge against inflation if central banks continue to print money to pour money into the economy we could see inflation rise higher so that does sort of indicate a longer term rise for the poles and. there's a real paradox though isn't there as central banks prove more money pumped into the economy pandemic lockdowns like receding in spain still mean the jobs can't be created so where is the trouble sector going to head on this kind of pressure we're seeing today ryanair catastrophic numbers there. it's a really difficult situation for the travel sector over the past couple of weeks there's been a lot of talk about the reopening of borders the restart of travel people airlines getting their fleet back in the air but we're just seeing a lot more a lot more. restrictions being put in place so spain. travelers to spain from the u.k. are not going to have to be quarantined again we're seeing more and more restrictions more testing more quarantine rules so that really creates a lot of questions about what what the long term recove

most of the central banks around the world are having to take extraordinary measures because it's now concentrated in the bond market jay powell other central bankers warren buffett are effectively playing financial russian roulette right so they have the gun and in there is one bullet of risk they spin the chamber they point it at america's head and they pull the trigger hoping that they won't blow off the america's head and that they get to keep all the free money this day and they do that every single day and then eventually like in 2008 they blow off america's hype and it will happen again and they'll say well you know we were acting in the greater good basically they're blowing up the financial system the financial sector the credit markets and the credit markets are the foundation of capitalism thus they destroyed capitalism perhaps unintentionally by trying to save capitalism so that has gone wrong and we'll see the result might take a year might take 2 years might take 10 years but this is what you're starting to see this is what you're starting to see from the biggest credit

there's no potential growth to be measured at the moment, so the fed, like all central banks come areasically stuck at zero for the foreseeable future. which means even with the ecb and bank of japan meeting this week, don't expect any monetary policy moves. they are all about interest rates. interest rates are at zero. not much they can do. it is the fiscal authorities who matter right now. tom: what is so important is the idea of what will be the price for this. with all of your years of experience, what is the price out for the foreseeable future that we are all going to pay? michael: that is the hard thing to know. there was always a theory that people would change their spending habits because they would expect texas to go up if there is a big budget deficit -- expect taxes to go up if there was a big budget deficit. so far it is because of the pandemic. we don't know how much crowding we get because of love the deficit spending, so it is a real-time experiment. a lot of people like to say it is mmt. it is not really, and the sense that we are not prepared to raise taxes to step

are not well get this it is now testing a new digital currency so here is what we know china's central bank is confirming today that it's going to be testing a mobile app for storing and exchanging the war on not a big court. the world learned about this when this screenshot appeared on social media take a look at that right there see it you can see there from the image that this appears to be sort of a marketing tool to get citizens chinese citizens comfortable with the idea of using and trusting digital currency now it's important to mention that china is stressing that this really is quote only a test but is it and if it isn't why are they so ahead of the game at this point force right forbes one of the world's leading business periodicals is warning the white house right now the trepan ministration not to continue its present course of banning and attacking cryptocurrency in fact let me show you this recent headline from forbes it says quote why trump should unveil a u.s. answer to big coin to rival china's digital one should the white house he that advice so what are we going to do we'

bob: the primary driver are the central bank balance sheets. there is no way we and the bond market could absorb the trillions of dollars of issuance that would come out of federal governments globally. i always have been saying we are co-investing with the central banks at this point in the cycle. i think that continues. there is some appetite to de-risk. cash and some equity holdings by sponsorsdings that have long-term liabilities. they are doing some of that. it is mostly just coinvesting with the central banks is absorbing a lot of the supply. david: thank you so very much for being with us. that is bob michele, jp morgan asset management. coming up next, we will talk with shelley more capital, the senator from west virginia, about what the government needs to do to help the economy. ons is "balance of power" bloomberg television and radio. ♪ david: this is "balance of power" on bloomberg television and radio. financial markets are waiting with baited breath as to what comes out of congress with more fiscal stimulus. something we should kn

but not all central banks have the luxury of being able to move both sides. if you think about right now, creating a tenure really interesting opportunity. it is true that the consumption piece of the recovery is lagging behind of the industrial production and manufacturing, but that is not surprising in that there is a bit of a psychological effect at play here. this corroborates the big data from china, as well. weekday traffic is back to pre-covid levels. weekend traffic is still very muted. it goes to show that even one people can, they choose not to because they are rather conservative in the face of the reopening, which is what makes it more sustainable. we favor china assets, china bonds, because the country is further ahead in containing the virus in the pandemic curve and at the same time, the authorities, central banks and governments alike, seem to have more bullets in their pockets. nejra: makes sense. at blackrock, you favor chinese bonds and equities. the csi 300 weaker today. it is heading for its first three-day loss since may. we could say th

sophie: the dutch central bank governor speaking at bloomberg's webinar.ook at the latest headlines. on of america's biggest utilities is turning its back on natural gas. dominion energy is selling most of its pipeline and storage to berkshire hathaway for $4 billion. the warren buffett investment outfit sma another 5 million -- 5 billion in debt. citing cost uncertainty. --na's state-controlled our denying health talks about a possible merger. it comes after reports china's two biggest investment banks were trying to create powerhouse oak ridge to rival wall street. the statements released to the shanghai stock exchange say no discussions have taken place. semi conductor manufacturing is looking to raise $6.5 billion in shanghai share sale. the u.s. tightens restrictions on the sale of technology to the mainland. almostres have soared 180% on bets beijing will focus on homegrown tech. one of china's biggest drink makers is said to be weighing an ipo that could raise more than a billion dollars. the company is considering hong kong for the listing. no fina

the central bank will need to keep its monetary policy exceptionally loose. dynamics will be impacted with disinflation to inflation and then that will occur that we will have to anticipate and measure, but it will most likely be based, if we have an increase in productivity, on a natural increase in interest rates. >> the european central bank and other banks launched instruments to elaborate on negative rates for securities. massive purchase of securities. were temporary instruments, but in fact, they mastered so the nonconventional instruments have become conventional instruments. there is a second change to consider. policies.al budget in short, germany has turned out to be comedian. ynesian.easy and -- ke >> our response must be designed for the future. it should allow us to revive our economies and at the same time make a leap forward. we need to accelerate the transition, strengthen our sovereignty while remaining faithful to our values. nejra: edward smith is still with us. you are approaching europe with quite a bit more caution than a lot of people