tom: is fed day. we will talk to our esteemed guest about fed day.kweek i will put out my of the summer. one i will surprise on my linkedin. a wonderful book on international relations. the other one is a book last year that was extraordinarily on community. it is the book of the moment. us from rajan joins chicago. he is the author of the third pillar. we will get to that in a wide-ranging discussion. we have to talk about the federal reserve policy. i understand you have a little bit of reticence about that. of identifiable fault line our central bank policy is somehow, the there debt has to diminish. how will they do that? raghuram: they cannot do anything about it for now. what they have to do is support all markets. the problem is when you support all markets, you're not letting the markets do their work. the question is when do you allow that to happen? take the highly indented which arelike hertz experiencing a revival without any debt restructuring. the question is when do we allow them to restructure their debt so they can emerge earlier fro

what more will the fed do? our cnn fed survey showed support for three principal areas. databased forward guidance pick a stat like unemployment. the fed really hasn't done a qe program, not a classic one, at this point it's done more for market functioning purchases that it's done and bonds yield caps setting a rate for the treasury market and buying and selling bonds to hit that rate. okay, so the outlook comes back. take a look at the yellow bars in this next chart that's the last time we heard from the fed back in december. they were looking for 2% growth this year, 3.5% unemployment and a 1.6% fund fed rate something has decidedly changed them that's the fed survey, a 5% gdp decline, a 1.5% unemployment rate for the end of the year we'll see how close it goes. but kelly, i question as to whether or not the fed surprises on the upside by announcing some new forward guidance or keeps the status quo, saying, look, we've done a lot and there's lot more to do, and it looks like the economy is improving >> steve, what's going on in the stock market, i wonder if that will

the people that worry about the fed.e from jekle island they've been doing the fed induced for a while. do you think there will be a debt bomb going off anytime soon >> caller: not anytime soon. right ow, the desire to own u.s. debt is the safest market we'll watch the currency and interest rates very carefully. something further down the road and after we get through the covid-19 crisis and the recovery begins to take shape it is something to worry about but not in the next year or so >> i completely forgot about the pandemic being tongue in cheek there. >> our year-end price target is 3,000. we don't see a ton of movement in and around it, we see a lot of rotation in the cyclicals is our theme. >> btig laying out the risks still out there. thank you. wow, goes by like this dow futures are up 463 a little brighter than it was this time yesterday. i'll see you thursday. off tomorrow "squawk box" is next between ideas and inspiration, trauma and treatment. gained a couple of more pounds. that's good for the babies. betwee

the fed would like to get back there, and we did not see inflation with employment at fed and i do notthe will see inflation if they get back to that point. if they want to keep pushing the unemployment rate lower, the focus will be on inflation when the fed rolls out there forward guidance. we assume that will be in september. guy: i don't think any economists knows what narrow is right now. mark cabana, thank you very much indeed. we will delve into what is happening in the lng market and the supply chain. the industry ceo is coming up next. this is blue. ♪ -- this is bloomberg. ♪ ♪ welcome back. i am guy johnson in london with alix steel in new york. youme update you on where -- where we are in the markets, a complete flip from the days and weeks. value growth is back, the dollar is big, european stocks underperforming. peripheral and the markets are down nearly 4% and 5%, italy and spain being pounded. alix: inventories, here is a good barometer of the underlying demand in the u.s. storage is coming in at 93 billion cubic feet a day, less than estimated and well down from last week

the fed is deciding what saving the economy equates to and the fed doesn't that have the authority to do that and to decide what it has the authority to buy and to take up so essentially what's happening is the market is being flooded now and the only thing the fed in the past has been allowed to do is buy up these e.t.s and now they're saying we're not going to do that anymore we're going to go directly to the issuers. of these junk bonds and we're going to buy directly from them where is the accountability in that process and there is 0 well about let's turn it over right now to the employment numbers we've talked about this early in the show we've seen the unemployment benefits rise to new levels paul is now saying that those should be extended beyond july while others are saying that they're going to deduct the weekly unemployment check that people are receiving why is that so essentially what's happened is this that with the unemployment insurance and issuance that's been going on since coronavirus came along congress up the amount that simply people received by the additional $6

it is fed day.rkets falter little bit, or at least equity markets certainly pausing to wait and see what exactly the fed says later on. has never disappointed equity investors. there is not any expectations he will do anything different. equity markets pausing and a lot hoodlk about -- robin seems to be part of the narrative. some of the most beaten up stocks, even those who have declared bankruptcy are coming back. tesla is another story we are paying attention to. the s&p is down .7%. the stoxx 600 down .5%. the dollar index at a three-month low and brentde

a quick thought. >> we need to maintain fed independence if you go years and years with the fed building up the balance sheet and supporting massive budget definite at this time, eventually you end up with some financial crisis i'm not talking about the next year or two, but down the road that's where you're headed there is no free lunch, right now the fed is paying for everybody's lunch. >> "power lunch" they're paying for right there. folks. thank you very much. we're glad we were able to resolved the audio problems there. >>> it's a positive reaction, generally, bob >> yes, initially it was not, but the mark still believe whatever -- look at the s&p 500. actually the reaction was the other way. as you can all see, it reverses. within five minutes we started to move to the up side, now about 20 points above where we were prior to 2:00 p.m. eastern time they're liking keeping rates low through 2022, particularly real estate was notably negative. home builders in particular have rallied here late in the day they were down notably earlier banks not so much. you can think about that, rates

the fed knows upsizing will be a given.risis continues, if businesses stay shut, if we see a spike in new cases a cannot open up as fast, the fed will continue to bridge the gap. i think that is why everything they have done has been quite open ended. they are not giving everybody terms as to where they are going to stop. they are not giving deadlines necessarily. everything will be extended. if of our more famous quotes there is nothing more permanent than a temporary government program. the case still stands in the sense as long as the crisis is still in front of us and we are dealing with that, the fed, the treasury, governments, central banks will all be on board to extend any sort of benefits. it moredoes it make difficult for economic projections? some states are already reopened and some are beginning to reopen and some are closed. the pandemic is still very much a reality. challenge.is the it is easy to be critical of the fed and central banks and governments but they are doing their part to try to make things bette

the fed.nce they get approval with the fed they can start making loans. it is a couple step procedure and we are only just of the point where some banks are getting approval, than they have to take in applications. this is much more complicated than the paycheck protection program because these are bigger loans for bigger companies, some of which may be private. a lot of it is based on relationship banking, with individual bankers who will determine credit risks. unlike the ppp, banks have to retain at least 5% of the loan. , andare taking credit risk they want to make sure the people they are lending to will not default. we have to wait and see how long it takes the banks to process loans before they put them to the fed to borrow. one of the issues because it has taken so long is he was out there that still needs money that cannot get it from anywhere else. if you in that category are you more likely to default because no one else would lend you money? there are questions about how well this

the former president of the atlanta fed. we will have a lot more analysis on the fed ahead.lus, we will be speaking with morgan stanley's chief u.s. economist. that is in the next hour. you can get more on the fed in today's edition of debris. available on the mobile on the bloomberg anywhere app. coming up, a second virus wave could be emerging in the u.s. why medical experts say surges cannot be directly related to reopening. this is bloomberg. ♪ shery: signs of a second virus wave emerging in the united states. localized surges are alarming medical experts even though the numbers are massed by the overall case count. the bloomberg health care reporter joins us. where we seen the outbreaks? for having so much me. we are seeing the outbreaks in parts of the country like arizona as well as florida, texas and california. i think it is worth noting this is something we have been looking out for. the u.s. has been relaxing restrictions in different states for several weeks. it was sort of expected case count were going to rise because people are leaving their houses, they are g

>> well, the fed has been relatively agnostic but i think what the fed would like to see is further fiscal stimulus. if they can get it. the issues that plague the economy are well beyond what the fed can control right now. they need more fiscal stimulus to come down the pike in order to try and fill the shortfall in aggregate demand the pandemic has created. what the fed has told us is they will keep rates low and that should allow for any additional fiscal stimulus to come at a rel tif relatively low cost to the taxpayer. ashley: very good. gentlemen, thank you for joining us to talk about fed. we appreciate it. >>> markets making a bit of a comeback after fed chair jerome powell's press conference. let's get to the floor show. teddy weisberg joining us. teddy, what was your biggest take-away from today's fed reserve statement? what little nugget did you get out of that? >> well, the nugget is that they are going to stay the course and they pretty much told us where interest rates are going to be for the next couple of years. i heard nothing that would make me nervous as an equity invest

stocks edge higher ahead of a fed rate decision.hey have a lemon see will release its forecast since december markets will be looking out for any comments on yield curve control. jeffrey gundlach says curve control will happen if the assent of long data yields continues. investors have a good bulk of humble pie amid a stock rally. china's factory deflation deepens in may with producer prices falling the fastest in over four years. a surpriseower in jump of u.s. inventory. manus: it's just gone 6:00 a.m. in london. it is seven in frankfurt. the seat of the latest breaking news story about banking. capital.erberus a five page letter. this is the language that is being used. you got the same story in front of you. an abject failure to take appropriate actions and the refusal of management and the supervisory board to acknowledge the seriousness of the situation. good morning. nejra: good morning. exactly. basically, the letter talks about commerzbank suffering from leadership, lax resolve to slash a bloated cost base. this is according

the fed has made it clear. one of the benefits that this market has had over the past couple of years is in the fall of 2018 you had a 10 year yield at 324. you could be passive and just watch them come down, and that was a big part of your total return. that is now gone. you have to look at things like credit and carry, sector allocation, to really gain total return. the fed chair is speaking. we will listen. on behalf of the federal reserve i want to express our gratitude to these dedicated individuals who put themselves at risk day after day in service. march, economic activity fell at an unprecedented speed in response to the virus. even after the unexpected lovely -- unexpected positive report, nearly 20 million jobs have been lost since february, and the risen.ent rate has the decline in real gdp is likely to be the most severe on record. the burden of the downturn has not fallen equally on all of our americans. june policy in the report, low income households have experienced the sharpest employment. if

that's the message from fed chairman jerome powell. it's a sign to central bank will keep pumping stimulus into the economy until the labor market has healed. >> we're not thinking about raising rates. we're not even thinking about thinking about raising rates. so what we're thinking about is providing support for this economy. we do think this is going to take some time. i think most forecasters believe that. manus: asian stocks and u.s. and european equity futures are slipping this morning. we digest the comments. here's some of our top guests reacting. >> they are prepared to do what it takes and to stay the course with a very, very expansionry accommodative policy stance. >> if miraculously there's a much better outcome in the economy, they will reconsider. so there's no guarantee that the policy rate will be at zero for 2 1/2 years. >> pretty clear they don't see any need to pull back for any of those financial stability concerns. and so that's just reinforcing the zero rate policy. >> basically we're not going to let companies fa

the fed is distorting markets, the fed is doing other bad things and but it is not inflationary. we have to accept we're in a secular deflationary period where they're bidding risk assets up but against deflationary pressures. ultimately the real prescription for this is bigger private sector and smaller government sector. that is what will cure all these problems. in the meantime we're stuck with gary worried about one man controlling everything. charles: listen, we've been in this sort of deflation this, velocity death spiral, folks for over, several decades now. we just can't get money circulating in the economy for many reasons. you guys have been fantastic. please hold on with me. meanwhile, folks you've been watching the screen. you see all three major indices grown positive right now. it all has been led by super growth names in tech and communications. these titans made this market what it is. i said it before, i will say it again. these are the new defacto havens. that's right, they're safe havens! think about it. monster growth. market share growth. constant upgrades. t

perhaps you can't front the fed. re-create trying to this index that the fed has created with the express purpose of trying to get ahead of it? is that in your playbook right now? mike: i would say our playbook in general is around being up the capital structure and being up in quality. those are the things we think have been very good risk-adjusted positions over the entirety of the coronavirus shock. that doesn't have anything to do with the strategy you described, but it does have to do with putting yourself in a position to benefit from these very strong policy stops we have seen from policymakers in a highly uncertain environment. jonathan: i am just getting a load of messages on the bloomberg terminal about the subject. we've all had the messages over the last 24 hours. revolve around a sense -- many of them revolve around a central question. what is the point? was there a real need for the fed to follow through? importantink it is for the credibility of policymakers to follow through on the commitments they've

been as dire, the fed not stepped in. prediction one a default rates, but as you point out, they will be lower than anticipated in march, april. i wouldn't take a bit of a contrarian view in that i think the fed should have been more patient with some of the actions taken.ve i know i am on here partly because we were able to take advantage of late march, early april, dislocations that we saw in the real estate market, which worked out well, and i would love to be wrong about the fact that i think there will be second and third legs down, and this little longer than at least what the equity market is anticipating. but i would reiterate, i think the fed did not allow us to come anywhere near the precipice, and has potentially set of a moral hazard dynamic by essentially putting a put option on asset values. vonnie: you referenced a trade. could you talk about the freddie mac debt trade that paid off handsomely for you in march? we had been anticipating a recession for a while, stayed quite liquid. in late march, early april

allowing the fed to part cash to to purchase.he fed it is expensive to get in as an issuer by one of the public firms like s&p and moody's, but at the moment only companies that can afford that extensive, sometimes cumbersome process can access the primary market facility or indirectly access the second market facility, but there are many companies that issue investment grade debt that purchasedated b, and without sacrificing the quality. may, when we spoke about this issue, you said we were working on this issue. when will the fed allow issued debt to be bought using this credit facilities? mr. powell: we did open up the ratings to three additional firms that had significant business and particular sectors. it is not just the three majors. it is three others that are considered majors for some purposes. we've considered that does leave some companies that don't have a rating. as we have opened these facilities -- they are just in the process of opening -- they are, we are looking for an answer there. sro and has not traditionally been used in this way. we are looking at options for

we'll hold near 0 through 2022 but the real question has been what action will the fed take moving forward. since march we've been purchasing sizable quantities of treasury and agency mortgage backed securities you know to support the smooth functioning of these markets which are vital to the flow of credit in the economy. our ongoing purchases have helped to restore the market conditions and have fostered more accommodative financial conditions as market functioning has improved since the strains experienced in march we have gradually reduced the pace of these purchases to sustain smooth market functioning and thereby foster the effective transmission of monetary policy to broader financial conditions we will can increase our holdings of treasury and agency mortgage backed securities over coming months at least at the current pace paul added the fed will continue to monitor the situation make moves as necessary and went on to talk about the economic impact of the krona virus pandemic. the virus and the forceful measures taken to control its spread have induced a sharp decline in economic

fed. it's important to the fed itself because it opens up criticism, fueled by how long it's taken to get main street lending program there. that's why i was more hesitant than others about the statement made during the press conference. >> i wonder what your take is on the u.s. dollar at this stage. clearly unbelievable low rates and negative rates in europe and japan for many, many years is this sort of changing tune from the fed more of a surprise and more of an impact on its currency if we do now see rates incredibly low for the next two or three years. >> i think two things will play to that. one, people realize the fed is dovish he is not ruling out negative rates, which is interesting. neither is he ruling out control. looks at this year, my get stuck in the low growth equilibrium longer that's happening and will have an impact on it. third, people are looking at the investment all that is coming in. i think that's why you're seeing the dollar under pressure. >> mohamed, thanks so m

and the fed is buying bonds that we would normally -- i mean, maybe the fed buys hertz bonds and takeshem up to the point where maybe hertz is good. i don't know, david. there's a lot of people saying talk pony. the problem is, if you decided to cash out yesterday, you did much better than yesterday take that which has very few side effects i was taking it. >> i'm glad you were until reading about the study itself, 2,000 people who received the drug were compared with nearly 4,000 who didn't to put it in perspective, if you were on a ventilator it cut your death risk from 48% to 28%, that's significant if you needed oxygen, it cut your death risk from 25% to 20%. these were severe, ill patients. >> they obviously were treating the wrong thing. they were treating the lungs this is a drug given for swelling i took it for swelling >> if you were lucky enough to have gotten covid early on you were not possibtentially treate wait you are now, jim. and we hope that the death rate can be far less because the doctors have a better idea of how to treat this. >> well, with hydroxychloroquine, it

that's directed to the fed. the you've been directed during the pandemic, you personally -- the fed has been directed, to make loans in places where the fed has not gone before. and maybe they're not 100% guaranteed to pay back. do you see that as -- i was talking a minute ago about mission creep or mission impossible or something like that. does that kind of thing worry you? >> you know this is a -- this is a emergency of a nature that we haven't really seen before. and at the beginning of this, my colleagues and i really saw that we needed to be using our tools to their fullest extent. that it would be very hard to explain to the public why we would hold back from doing that at a time when we saw the, you know, the 50-year low in unemployment turn into an 80, 90-year high in unemployment in the space of 60 days. we saw the economies around the world shutting down and we, you know, i think we felt called to do what we could. and so we crossed a lot of red lines that had not been crossed before. i'm very comfort

that the fed is expecting for growth to resume 2021 but at the same time to to quote europe how the fed is not even thinking about thinking about raising interest rates which is kind of a goldilocks scenario we're going to have a return to g.d.p. positive g.d.p. over the over the next 12 months or rising or so unemployment is going to come down but the fed's not going to think about raising interest rates which should keep animal spirits that are really propping up the stock market going he's been he's saying in no uncertain terms i am not turning off the printing press so that should definitely have pleased investors which i think we saw with the way the nasdaq closed at the very least. what data points you think the fed is monitoring here at this point to gauge whether or not to continue being accommodating or to start to tighten as we just heard. well this is a really delicate game that the market is actually playing right now like the old narrative that we always spoke about before bad news is good news the worse the data actually looks the better for the market because then it expe

he mentioned the fed.enting this ultra bullish policy wrapped around macro narratives creating a very bearish sentiment and positioning. what we have seen is this bearish positioning falling like dominoes. we saw the peso, the euro, the yen, the riyal rally back strongly. recently the bond market. >> shouldn't yields be lower than they are? we are still above 1.5%. what do the charts tell you? charts arewhat the telling you, yields should not be low here. over theourse of april and may , the 30 year u.s. treasury yield on the very head and shoulders base pattern, we saw the selloff happen right into friday better than expected. , recent target and how it has cooled off again. you often test the breakout level which we are coming into at 1.5%. another opportunity to trade in the direction of the base, in this case, a base in yields, but resumption higher in the yield space. >> we have to talk about the curve. no control from the fed but we did see one person with the fives in the 30's today. -- and the 30's

good but the one business show you can't afford to miss i'm going to bore in washington coming up the fed is decided to keep rates steady in the midst of the coronavirus devastation we bring you inside or inside on the decision and what lies ahead for the u.s. central bank clutched at the federal reserve has propped up markets in the u.s. it is posed an interesting issue for a major debt holder china and later the race is on for the head of the world trade organization and the european union is weighing in we bring you the latest on the run with a packed show today so let's dive right in. and we lead the program with the latest policy update from the federal reserve's federal open market committee as expected fed chair jerome powell and now it's interest rates will hold near 0 through 2022 but the real question has been what action will the fed take moving forward. since march we've been purchasing sizable quantities of treasury and agency mortgage backed securities you know to support the smooth functioning of these markets which are vital to the flow of credit in the economy our ongoing

long as they are able to than the fed.nk that is part of it. yourhe risk rally, to point, has to become a little more differentiated here. i don't think it will simply be the case that all of the early cycle winners will continue winning, so banks, values, cyclicals, you have to pick your winners here. markets, anding the story with europe i think will be reflected in part in the currency as well, where part of will not be able to out much the fed's ability in terms of forward guidance. lisa: let's build on the europe call. i was looking at the oecd productions that came out this morning for the economic downturn, and it looks like the european economies will be the hardest hit. in particular, italy, the united kingdom, and france. but to your point, you have seen european stocks outperform. and is being priced in, what would be necessary in the data, as well as the stimulus front, to keep this rally going? ben: there is an inevitable ashaped in the data, so labor markets and corporate profits globally are still in a state

it is fed day. guy: the markets falter little bit, or at least equity markets certainly pausing to wait and see what exactly the fed says later on. has never disappointed equity investors. there is not any expectations he will do anything different. equity markets pausing and a lot hoodlk about -- robin seems to be part of the narrative. some of the most beaten up stocks, even those who have declared bankruptcy are coming back. tesla is another story we are paying attention to. the s&p is down .7%. the stoxx 600 down .5%. the dollar index at a three-month low and brent crude down nearly 2%. day. you just made my was that a mel brooks movie -- robin hood -- men in tights? with the singing. something like that. every time i think of robin hood that is what i think about. alix: cary elwes. let's get back to markets. any comments on yield curve control when the fed releases its decision in about three hours. joining us is marilyn watson of blackrock. thanks a much for joining us. with the exception of t

and how does the fed get out?eter: chairman powell has been careful in repeating over and over that it's really up to congress now and fiscal policy. i think he's been wise to do that. getting people to borrow more money in the peak of a recession doesn't make sense. that's not our way out of this. stabilizes tried to and put a floor on the asset price s which is driven them higher, but now we need something more profound. i think the fed has done what it can and it may create a problem here, pushing prices up to historic highs and getting corporate debt to gdp even higher in the peak of a recession does not make sense. but i'm not really expecting the fed to get takeout on all $4 trillion but they are offering. that's like 20% of gdp, we and it wouldthat be massive and put -- push corporate debt to gdp even higher. that's a risky gambit. i think it's likely that we see the fed backstopping bank lending and that's a wash and the fed takes income from the banking system. i'm not sure that's a great thing either. ca

the fed has always -- you know, covering it for 20 years, the fed thinks it can alleviate some of the pain of the recession but it can't fix everything. one of the things powell has been doing, he's gone further than he wanted to go before in terms of urging congress to put more policies in place and be ready to do another round of stimulus we have a major fiscal cliff coming in july the second thing the fed has done pretty consistently is speak way out of turn and urge the public health officials to not reopen too fast, to create -- if you look up this concept that the fed speaks of creating consumer confidence to go back, the government can open anything it wants. but people actually going back requires confidence that they are not going to get sick. and the fed has been urging that quite a bit. >> yeah. i think you will see the market believes that even if things get a lot worse they are still going to jump in a point that you bring up that is a valid point the creation of zombie companies. there is too much fed intervention at some point that is a real risk. somebody once told me

i think the fed has done a basically admirable job.passive with respect to the banking system. companies have gotten their banks to stop paying dividends. it is a reverse interest rate. jonathan: pretty much every ceo that would come on our program like this would tell us that the capital position is strong. they suspended their buybacks and they can meet their dividends. what is it about the big banks on wall street that some people are missing? to learnk it is good the lessons from last time around when with think about the financial crisis. over $100 billion. we are raising equity capital into lap of stress test. deteriorate is they are all at once. the market is trying to tell us something. the last time around, the market was looking that way. this is a very big economic shock. it is a very big economic shock. .he measures of capitalization thatnk there is reason there is the baseline expectation. you can be seriously concerned. just to be really clear here, professor, are you saying that the risk of a bank failure is greater than

markets are reacting to the fed.estors are reassessing what powell said, a long road to recovery for the economy. the msci asia-pacific index down for 10th of 1%. take a look at where we are in terms of the dollar. trading at a three-month low, down with the -- g10 currencies affecting no change of rates. --uick check on that ease netease. 8%y start trading up about of the opening, higher by as much as 10%. plenty more to come. this is bloomberg. ♪ haslinda: it's 10:29 a.m. in singapore and hong kong. 10:29 p.m. in new york. budgingral resort this to maintain asset purchases and sees interest rates near futures to at least 2022. the fed chair is using all the banks tools to help the u.s. economy recover from the coronavirus. the fomc said it will increase its holdings of treasuries to sustain new functioning in the market. president's top economic advisor said he does not see systemic racism as a problem in the united states. spoke at the funeral of george floyd, and said the white house is -- behavior. the president

the fed only has 70 tools. how deep to those go -- the fed only has so many tools.eep to those go? it is a fierce debate, especially as we look to washington, d.c. and the policies there. tom: on the i.s. curve and the real economy, it is about the miracle which is the microcosm, the little thoughts we all have within any national experience. you think the people of america will move this forward to better economic growth and all the good outcomes from that, but we are a long way from that right now. you have chairman powell coming up. that will be very important to see at 10:00. the q&a always different between the senate and the house. i need to do a data check, which is really important. futures up 11, dow futures up 64, the bid goes from 34 to 33. at 32.78 on the vix. that gives you a sense. we are not back to where we were before last week, but we are getting there, grinding up towards recent strength. i've been watching the two year yield, cannot get through. there is a foot on the two year yield. maybe does jonathan ferro's foot. we have much more. i am thril

had ever been. -- pushed the fed. even more so than the one you are just speaking about. can you comment on the special difficulties the fed has encountered in standing up these so-called main street lending programs? chair powell: i would be glad to. the main street facility is for small and medium-size companies heard companies that are not way tonough or in some not have the ability to have access to the capital market. so they do not issue public bonds or public equity, meaning that the way they get their financing and their operations is really to the banking system and through nonbanks. so we had -- we have a facility that deals with companies that have access to the bond market. congress has done a lot for smaller companies under 500 employees with the paycheck protection program. so this was for the companies in the middle. it is very challenging because it is an extraordinarily diverse space at the credit needs of different kinds of companies in different industries are extra gnarly diverse. some borrow again

it is fed day. we will look at bonds all through the morning and we are particularly off of our special coverage at 2:00 p.m.. i would note, we can talk about this through the show, but the currency dynamics this morning are extraordinary as the euro 1.14.another run at francine: u.s. equity futures, equity futures are waiting for the fed. the dollar heading for a three-month low. you also mentioned treasury yields edging lower and crude oil retreating. i am looking for tomorrow, for example, euro area finance ministers discussing the recovery package but also the succession of the euro group. the oecd made an assessment in its quarterly outgroup -- outlook. that the pandemic would cause a slump of 6% this year. a second we've there's a second 6%e could mean a seven point contraction. joining us now is and how gurria -- angel gurria. think you for joining us on bloomberg. a seconde know it is wave? could this come in the next 12 months or could it gain attraction with the economy, and then we need t

fed had gonee beyond its remit.hing you expect some people to say every time the fed does something extraordinary. this is something we have talked about a lot on the show. warning about that further waive of white-collar unemployment. then something we saw in the jobs report last friday. even as service workers are coming back, the longer-term higher paid unemployment continuing to creep fire. affectedhat has not this market in obvious ways but it is something we have to pay attention to. caroline: joe, thanks so much. eyecourse, got to keep an on what superman, i.e. the fed, will be bringing us tomorrow. romaine: all eyes on the fed special, you don't want to miss that. i guess really the big question is what more can the fed do now that will encourage investors? caroline: hold onto that thought. we will be with you after the fed special. that is all for "what'd you miss?" technology"omberg is next. romaine: this is bloomberg. ♪ you doing okay? yeah. this moving thing never gets any easier. well, xfinity makes mov

when you look at the fed, what do you expect in the fed? did the jobs report change everything from where we were expecting the fed to be in six months from now? kathleen: good morning. i think when we look at what weeks at -- what we expect from the fed today, it is not in terms of policy changes. we had some fixed income consumer activity, we had some surprise in the jobs report on friday, but we think they will continue a dovish stance without any major policy announcement. we can point to the fact that they are very focused on the potential second wave of the virus. we are also still digesting what the economic impact of the virus is, so i think that is where the fed is mainly focused. we heard from the vice chair recently that it would be a couple months maybe or further down the road before they did announced changes. ar base case is, there is small chance that they could get some guidance or info on for guidance, or the reclassification of qe. we think that will come in time. francine: when you look at what is going on around because

lisa: when the fed starts to raise rates, when the fed starts to open up its balance sheets. things?fed do those william: i'm assuming that a few years from now, we will be back to a more normal economy, and we will also be back to a more normal level of interest rates. showing just got data that june is on pace for the fastest pace of issuance ever for u.s. junk-bond sales. what are the consequences of the debt being incurred by corporations, not just the united states, as a result of fed policies? william: the short run, it means people have the cash and resources to stay in operation. in the long run, there's limits to how much debt people can take on, so there's risks to servicing that debt over the longer term. they are not so worried about what is going to have been years from now. there will be a hangover from what we are experiencing today. look at all that we've gone through, and i would suggest this is not in your textbooks at berkeley years ago. it is unorthodox. do you have a confidence in the belief of all of the smart people like you to get this fixed, even if working o

louis fed.e so messed up right now that we are finally going to shift to the targeting of nominal gdp instead of a real gdp analysis? pres. bullard: i've been an advocate of nominal gdp cousin,g and it's close price level targeting. the committee is still formulating about its framework review. hopefully we will get some statement on that sometime during the rest of this year. it is up to the chairman to drive that process. years ago a landmark paper was written in the greenspan fed about the toolkits available. what does the bullard and the fed toolkit look like now? it seems like you've exhausted and awful lot of useful tools. therebullard: i expect are other things we can still do. we have deployed a lot of good tools. the policy response has been quite good, both on the monetary policy side, the liquidity programs, plus a good response from the political side to get fiscal relief to those disrupted by the pandemic. , given the of this nature of the shop and the ck, it has allsho gone pretty

it is a big step for the fed if you look at history. the fed never did this before. this is too much like the fed playing favorites, deciding who wins and who loses. pandemic times need unprecedented staff. -- steps. they will buy individual corporate bonds tomorrow through the secondary markets. of course, they are buying individual corporate bonds after they bought $5.5 billion of etf's. this is why it is a step forward. if you want to see what the fed is up to, we can get a little more detail. this fed is made up of all the bonds that make up the market. approach will come at the current purchases of exchanged rate of funds. there is an index of u.s. corporate bonds created especially for this facility. white is so important is because investors and probably some cup selling corporate bonds are wondering if they might meet the criteria for the bonds that the fed would buy but now they don't have to worry about that using the fed index. it is another step forward in that regard. this is one of nine emergency lending program set up in march. they have taken their ti

is there anything the fed can do? to address the problems? is stucknk the fed financing the u.s.because of the size of deficits. when you look at credit, however, credit spreads now have been wider 40% of the time relative to u.s. treasuries. they were tighter 60% of the time. that is a pretty normal spread for credit. is not sure that the fed really finished in terms of what it wants to achieve, in terms of tightening credit spreads. i think the jury is out. one of the big reasons for that is we have yet to buy any corporate bonds under the corporate bond purchase program. and in time, i think there is so much demand for credit at this point from the investment standpoint that we probably will end up driving credit spreads in and it will be supported by the fed. that was scott minerd there. coming up next, as protests u.s., majoross the companies are speaking up and positioning their brands but the responses not only -- the response has not always been positive. this is bloomberg. ♪ karina: this is "daybreak: asia." the federal reserve is pledging to maintain its current pace wi

if we want to give the fed different tools, that is a conversation we can have, but the fed is doing what it can do to put a floor under this shock and help the and just provide insurance as we adjust to covid. what else do we want from him? he doesn't have the perfect tools and that is just the reality. guy: history would dictate that inflation and a low of near inflation. do you buy this dip? is there a better entry point coming? understand,ough to financial markets, when they get in front of the real economy it tends not to wind well. -- not to end well. is this a good entry point or do we reset the lows? julia: it depends on your horizon and if you are thinking long term, then you might find value. this is going to be a long process. i fully concur with the fed's forecast that this isn't going to be simple, there is going to be some lasting damage. again, i would expect we will flows in the market through the next year as we process the information of the shock and tried to get clarity on the outlook. whether this is an opportunity really depends on your horizon. what we do know,

that from fed chair jay powell. chair powell: the extent of the downturn and the pace of recovery remain expert merrily uncertain and will depend in large part on the virus. using ourmitted to full range of tools to support the economy in this challenging time. discussedes we include explicit for guidance and asset purchases. we also reviewed the historical and foreign experience with targeting interest rates along the yield curve. whether such an approach would complement our main tools remains an open question. we are not even thinking about thinking about raising rates. after the crisis has passed, we will put these tools back in the toolbox. the report was surprising. we are pleased. we hope we get many more like it. but we have to be honest, it is a long road. the rising joblessness has been worse for lower wage workers and women, african-americans, and hispanics. there is no place at the federal reserve for racism, and there should be no place for it in our society. francine: let's get to our big interview. sc

with several other members of our committee of hr2650, the payment choice act of 2018 -- >> that's fed chair powell testifying in front of congress for the second day we'll continue to follow that, and welcome, by the way, everybody, to "the exchange. we'll dip back into that in just a moment, but we just got breaking news out of the justice department let's bring in ylan mui for that what's going on, ylan? >> reporter: the justice department is trying to revamp platforms for facebook, google and twitter. they want them to remove the liability shield for civil action if they are found to solicit federal activities, such as fraud or scams. they are also calling for carveouts for child exploitation, terrorism or cy r cyberstalking, and they want to make sure the protection won't extend to antitrust claims they want to clarify the law by moving the reference to objectionable content and replacing it with more concrete term such as unlawful or terms that promote terrorism industry groups are against it, and the big caveat here is that the doj can't do this alone, it would need congress to

what can the fed do about inequality?lle: i think we are seeing the limitations of the fed in terms of how it can reach its monetary policy into main street. that is why, when he is in front of members of the senate, tomorrow, the house, he is being so vociferous in saying i need more stimulus measures passed. it is your business to decide what it will be, but we need more stimulus. the fed is happy to monetize again, the stimulus measures have to be on the fiscal end. we have just heard about that letter going to the president saying we need to step back and have more austerity. it will be interesting to see what the pull and push is with this july 31 expiration of that extra $600 per week in unemployment insurance. amanda: that is one of the questions when we see this historic jump in retail sales, how to factor that in, if we were to smooth it out over the year. what are your thoughts about that as we get to that withdrawn fiscal support? danielle: that is the critical word you are using here "smooth." , whichlook at r