See the jobs report, francine. I see all sorts of numbers modeled. 6 rate be looking at the u. I do not see any forecast of where that statistic is going, but it harkens back to an american job economy of 1933. Francine we will have a big look on whether we will go back to those depression years. Lets get to first word news in london with leighann gerrans. Francine, andd, tom, as you were saying, todays jobs report expects to see the u. S. Unemployment rate surge to almost 20 last month after reaching the highest level since the Great Depression in april. The may report is likely to show the jobs slump has extended into whitecollar positions. By 7. 5s publicly shrank million positions. The jobs report comes out at 8 30 new york time. In buffalo, new york, two Police Officers have been suspended after a video of them pushing an elderly protester to the ground went viral. The video shows the 75yearold lying motionless with blood pooling around his head. Been hospitalized in serious condition. Is set to opecplus is set to extend production cuts. Saudi arabian pressure were able to reach a tentative deal with holdout member iraq. They were pushing the iraqis to stop shirking their share of cutbacks. Brexit talks between the u. K. And European Union are set to finish today without a trade agreement. Negotiators are still far apart on crucial issues ahead a key deadline ahead of the key deadline at the end of the month. That will add pressure for Boris Johnson and ursula von der leyen to intervene directly. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, leighann gerrans. This is bloomberg. Francine . Tom . Tom thank you so much. We welcome all of you to bloomberg surveillance. You would think we were talking jobs, etc. The data matters. Markets are on the move in subtle ways that need to be made clear. Futures elevate, no question about that, with the vix coming in well under 25. That is a huge deal in a huge week of equity performance. The real story is that the yield market in some of this off what we saw from Christine Lagarde yesterday i will go right to it the vanilla spread, the difference between the twoyear yield and the 10year yield has. Oved three standard deviations here is a sophisticated word for that. It is a join or must steepening it is a ginormous steepening in the yield curve. Francine stocks rallying and the treasuries falling as investors are focusing on the stimulus, off the u. S. Jobs report is expected to show the highest unemployment since the 1930s. With a good conversation an employee from blackrock. How consumers behave will give us a glimpse on what post lockdown economy looks like. Keep an eye on that. Sixthoking set for its weekly gain after opecplus reached a tentative agreement to extend production cuts. Sombermber and a memorial for george floyd gave way to intense protests on thursday. Response hasmps created unease, particularly among republican lawmakers. All of this ahead of the elections in november. Joining us now is amy pope. For deputy homeland advisor president obama. Thank you for joining us. Is President Trump going to be much more unpopular because of what is going on and his handling of the situation, or in the suburbs will he gain in popularity because of his law order message . Hard for himit is to really become any more popular as a result of what is happening. I think you see him pivoting toward shoring up his base. He is trying to paint the protesters as people to be afraid of that he is going to dominate, but at the same time americans are feeling less secure. They are less welloff, they are worried about their health, worried about their safety. It is hard to see that translating into greater support for the president at this moment in time. Francine what does joe biden need to do now to capture an audience . Amy joe biden is an interesting candidate for this moment in time. A strategy might just be to let the president spin out and let him provide his own rope at this point. At every turn he is pushing all sorts of buttons, alienating folks, with extreme reactions. On the other hand, joe biden will not provide the face of the new Democratic Movement or a very progressive movement, which suggests he is sort of a safe pair of hands, some one who has been around a long time, who will not come up with extreme new policies. If he can demonstrate that he can guide the United States through a very uncertain time, he has a very good shot at this election. Tom keene in new york. Thrilled that you are with us, and particularly with your experience, your tangible day to day experience. The Homeland Security part of this nation that started out of of out of nine 11 out 911. From the ellipse up to the adams 16th, anding up 15th, 17th street with all of your experience, is it appropriate that we have fenced in our president to such dimensions . A couple of from levels. It sends the wrong message. While of course there is losing happening, there is some violence, a lot of the protesting that is happening is peaceful. It is actually the president firing tear gas into the crowd around the white house that really exacerbated the situation and created tensions that were there before. Likewise, i think will ding a fence, effectively i think building a fence, effectively his wall around the white house, has not found any ways to resolve this. That is the issue, that there is not a clear way forward, and it does not look he is trying to a waya way for forward. Francine i will give tom i will give you another angle here. Cant thervice secret service be justified in worrying about the protection of a president within that perimeter . Absolutely, they can and they should. But the real question is, what is the real threat here . Is he really that the president cannot be protected through the usual mechanisms . It is wellknown that there is a bunker available to the president should he need it. He has used it, and apparently he has inspected it, if you believe his framing of the events. What is he afraid of . If he is so afraid of, if he is so afraid of it, what should the American People be afraid of . This is sending the wrong message and not getting us to a place where we can resolve the very real issues and find a way forward. It is particular problematic that you see the military started to speak out against the president as well. Theral mattis comments other day suggest that President Trumps tactics are not actually going to be effective in managing the unrest. Also pointoes that to a u. S. Military in turmoil, not sure what to make of what is going on . Amy the president is effectively putting them into a position where they are having to choose, which is ultimately not good for the country as a whole. It is not good for the relationship between the president and the military, any president , not just President Trump. It is creating a precedent that will be difficult to walk back. None of the behavior is particularly president ial, and that goes back to the original question. If he is not behaving president ially, not demonstrating that he can manage the situation effectively, i think most people understand intuitively, suggesting that you can dominate your way out of this album is not consistent with american values, so the president really needs to change his tactics if he wants to get through this successfully and avoid alienating much of the American People. Question, and i differ to Chatham House here. We willthis morning, see a statistic on unemployment. It is truly 1933like. Will that be enough to establish a new fiscal stimulus in washington . In the would be president s interest to do so. As we all know, the state of the economy is one of the primary drivers of his reelection possibility. You have that now coupled with the social unrest, coupled with the pandemic, which is not over. The number of cases in various American Cities still are continuing to rise. So the president needs to pivot toward some good news here. He needs to demonstrate that he can deliver. Prospectsi think his for reelection, which in ordinary circumstances would be quite high he is the incumbent, but all of the different factors are turning against him. While i will never underestimate donald trump, he has pulled it out and no one thought he could do it before. It does suggest he needs to take this very seriously. Francine amy pope, thank you so much for all of the inside. Deputy Homeland Security advisor to president obama. Coming up today, lawrence kudlow, National Economic council director, have a conversation with Jonathan Ferro on jobs at 9 30 am in new york, 2 30 p. M. In london, and this is bloomberg. Tom good morning, everyone. Bloomberg surveillance from new york and from london. We will have the labor report coming up. It will be truly depression like. All sorts of nuances there. Someone just emailed and said what are you looking at . I am looking at the you six all in unemployment rate. With what contrast difficult statistics of 1933. Right now on what we are witnessing, which is a near three standard deviation move in the yield market, the yield structure, plus, christine powell, whaterome they wrought. All over the we media all over the media, we have reached a junk condition where we are resetting the yield structure to shorter panic shortterm yields but longer maturities giving way to higher yields. For ahink we will be in structure that remains fairly flat for quite a while. Hope for economic reverie building. There is the possibility of a steeper yield curve over time, but Central Banks are buying so much, i dont think the yield curve will move so much from where they are now. They probably just wont be permitted to move a lot. I still hope to see the german bund 10 year getting close to zero, but it probably will be sometime next year rather than this year already. In my view, the yield curve will largely remain flattish. Athere is a text berke textbook outcome for a steeple yield curve in a greater economy. That is ambiguous. Does a steeper yield curve with these low rates give us diminished aggregate demand, or could it be a signal of a better Global Economy . Holger the steeper yield curve is usually a signal of a better Global Economy. The unusual thing at the moment, however, is that one way we are getting toward the economic recovery is a Monetary Policy onch for one is not focusing the short end but has a significant focus on the long end as well. And i would say the Predictive Power of the yield curve is probably less than it used to be in the past because the way Central Banks impact the yield curve, in a period of quantitative easing, especially in europe, the impact is different from what it used to be. Francine what do you make of when you look at the spread between bund and bdp, is this on the back of what the ecb has done, or on the back of the fact that they have narrowed that spread significantly, is it also on the hope that that 750 billion euro packet from the commission, that it will go to the Member States . Holger first of all, indeed there is huge fiscal support for italy, and many other countries in europe. It will take a while to agree, especially with the frugal four. But with the big countries of the e. U. Behind it, it is somewhat reliable that it will happen. Then there is the European Central bank, which is buying basically the entire net issuing stocks and bonds. While the public that is going up, the public debt outside the Central Banks is actually not going up. That realization in the market on top of that, it is the european actions that reduce the risk that we have an italian politics. Europe is now seeing the ecb and fiscal policy doing something to help italy. Antie. U. , this antigerman, backlash is hopefully fading a bit, and at some point in the future, some Italian Government may want to take the country out of the euro , being used being reduced by european actions. What will we see from the commission to try and get them on the side . Why is everyone so optimistic that they will sign up for this . Holger first of all, the countries in favor of it are the vast majority of the 27 e. U. Members and the vast majority of the gdp. We will probably have the frugal four being assured that the money, especially the grand part of the money, wont come with some strings attached, because the frugal four do have one point. If this is money for the helprterm and not just for one year or two, it will matter more growth will matter more than the money. This emphasis on the need for Economic Reforms will be something to, in the end, get the frugal four to approve it. It will be difficult. In dire straits europe has a difficult way of dealing with this dissent. Thatt is more likely Something Like this will be agreed. It will probably take until late this year for things to be wrapped up. Holger schmieding, thank you so much. Thrilled with this perspective on the new highyield regime. We will have terrific conversations across all of bloomberg surveillance. With so much of it culminating with jon ferros conversation with lawrence kudlow. Coming up, the former governor systemfederal reserve of chicago, randall kroszner. Stay with us. This is bloomberg. Leighann this is bloomberg surveillance. Lets get the Bloomberg Business flash. Rod come suggest the latest iphones will be launched later than usual this year. The chipmaker is a major apple supplier, and it says there is a major product cycle delay at a large north American Mobile phone customer. The broadcom ceo says that means wireless revenue will happen one quarter later than usual. Elon musk is stepping up his rivalry with amazon founder jeff bezos, saying that it is time to break up amazon, that monopolies are wrong. That is the Bloomberg Business flash. Francine . Tom . Francine thank you so much. The markets are on the move, focusing more on some of the positives out there, instead of focusing on the pretty horrific u. S. Jobs figures that we could get later today. So basically stocks are rallying because of the stimulus we saw, certainly in europe, the u. S. Jobs report. Just a reminder, it is expected to show the highest unemployment since the 1930s. Im also looking at oil, looking set for its sixth weekly gain after a tentative agreement to extend cuts on production by opecplus. Officer,hief financial at 11 30 a. M. In new york. Necessary toit was increase size and i can assure you there was unanimous view in the governing council that action had to be taken. In the face of that inflation oflook and given our mandate price stability, action had to be taken francine that was the ecb president speaking on the Central Banks decision to increase stimulus during this unprecedented slump. We talked a little bit about german btps sorry, german etv spreads. We spoke to the commissioner and he said in their forecast, they expect they no deal brexit which would impact the u. K. More than the eu. Your forecast, would europe be worse off than two weeks ago . Relative to the impact of the pandemic, the exit impact on the continent is small Brexit Impact on the continent is small. Impaired, it would be 5. 1 or. 2 percentage points. 2 . , 5 , 5. 5 rebound next year from the recession now . This is a small change, which probably means, for the european changethe incentive to its position to accommodate Boris Johnson is very small. Francine when you look at Central Banks around the world, do we worry about the debt accumulated or do we not worry about deflationary spirals that Christine Lagarde was eluding to alluding to . Have it enterld rates. E the deflationary spiral is unlikely. Policy what the monetary and fiscal policy are jointly preventing. The Monetary Policy is providing a clear safety net for everyone who has to borrow, at least for everyone who has to borrow. Governments are adding so much to demand that this inflationary , people hold back purchases because they believe it will be cheaper one year from now but this effect is unlikely to materialize. Tom its gossip friday, and Everyone Wants to know whats going to happen next. What does the bank do right now . Does he stay quiet or would you look for overt statements from the German Central Bank . All,r first of [inaudible] after what the ecb did yesterday. Thats a good sign. The german fiscal packages good. Package is good. We have to figure out how to respond to the german court. If they could get around to making strong ecb and the public, that would tom are you optimistic that can occur . Youre telling me that when this bank has to have an independent strategy from domestic germany. It can they pull that off . Holger i very much hope they will. Interestingly, when you think of berlin politics, in berlin politics, the ecb and european thats maybe ecb is the standard purchases fine, that has much more than the german constitution court, which is part of the previous circuit in berlin, seen as a development at a time or we need to hold europe together. This is really helpful. In a way, the german court is fairly isolated, and i kind of hope the head of the german and german government, lets find a way to diffuse this conflict without doing any damage to the ecb. Diffuse a conflict without doing the ecb has to do to defend the challenge like they did yesterday. Francine im looking at the trade war escalation from china. The Chinese Government says it will take necessary measures to safeguard the interests from the invested Chinese Companies after we had fresh u. S. Restrictions on 33 companies. Words europe fit in this europe china trade war . Holger we are not part of it and we do not want to be part of it. We have our issues with both sides, and we hate that it does not escalate too much. Economic logic would suggest in the wake of the pandemic and with the u. S. Election, neither side should be interested in doing something that would really hurt the economy, so the only impression is both have an attentiono deflect from the domestic shortcomings, but none of the sides should have an interest in something that hurts badly, because the economic consequences would be even more difficult now than last year when both economies were doing better. Tom this has been wonderful. Holger, thank you so much for joining us. If you just joined us, significant moves in longer maturity yield, up three standard deviations on that foundational two versus tenure spread. In other news, here is london. Good morning, tom. In buffalo, new york, a protester is in a serious condition after being shot to the ground by two Police Officers. The video shows a 75yearold line on the ground with blood pooling around his head. Buffalo police are investigating. The two officers have been suspended without pay. Of containedlant protests in washington dc and play 600 people. According to a document seen by bloomberg news, it includes law enforcement, national guard, and activeduty personnel. The activeduty troops have been kept outside of the city. National guard forces include 1700 troops from nine states. The senate wont take up the next round of economic stimulus for at least a month. The Trump Administration expects to spend up to 1 trillion with the latest proposal. Mitch mcconnell says there are no plans to take up a stimulus bill until after the two week long july holiday. Zillow has passed italy to have the third highest death toll from the coronavirus. Thanountry reported more 1400 deaths yesterday. More than 34,000 brazilians have died from the disease. They account for 40 40 of the daily coronavirus deaths. Global news, 24 hours a day, on air and on quicktake on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im leighann gerrans, this is bloomberg. Francine and tom . Francine thank you. Trade policyu. K. From suggs it suck six from sussex. This is bloomberg. Francine this is bloomberg surveillance. The latest round of trade talks between the u. K. And European Union is set to finish today without a breakthrough. There has been little progress despite a key deadline while the two size remain far apart on things like measures to indicate a field and fishing waters. Joining us now is the director of the u. K. Trade policy at the university of sussex. Professor, thank you for joining us. Our research in both the u. K. And eu want a deal . But theyant to deal, have a definite idea about what they want. In particular, the eu [inaudible] away thet want to give whole philosophy at the eu in order to accommodate. They are getting fed up with the brits i think. The British Government wants any sort of deal, as long as it appears to project a lot of independence. Whenine what will be you look at some of the points, it seems it is so difficult unless both sides are prepared to give a lot of concessions. Whats the likelihood we dont have a deal and dont have an extension . Is quite high now. From thehe extension , its clear they will not ask for an extension. While Boris Johnson did remarkable in october, its not clear what the government is up for an extension. Will we get a deal . Better the odds are bit than half that we will get a deal, but it will not be terribly handsome for a deal. Tom wonderful to have you with us and particularly with your true expertise with the world bank on trade and internationally on interNational Economics. What should Boris Johnson question . What should the Prime Minister they aretish banks, assumed to be british. Hsbc and the Standard Chartered bank are walking away and clearly citing with a new mandate from beijing. How should the United Kingdom respond . I think the United Kingdom, frankly, is going to have to be cautious about what it does. A shock. Going to be covid is a huge shock. Were, it willit era tate the chinese quite a bit. They need something to encourage the plants to stay in hong kong they madese that encouraging noises about making hong kong there base of operations for so long. In the end, to be perfectly honest, if the chinese are smart, it will be quite difficult for a country the size maturityn to offer that they get from china. Tom as we expect, professor, you go to the heart of the matter, which is a country the size of britain. Something postwar. Is there something particularly the way the World Economy is going, you cant help it splitting up into scenes. Out andhas it worked hasnt really quite found a home. I think the truth of the matter policy buttrade other policy has to change. We have to be more like canada and australia [inaudible] and hope we can survive. We have a huge interest in the wto function. Francine alan winters, talk to me about what covid means for brexit. It does seemingly mean it is more difficult to negotiate in person. Does it make it less likely we get an agreement, but we really have a tough economy. What would a no deal under wto agreements mean for an economy already reeling from covid19 . Made inly covid had has made negotiations difficult. [inaudible] they would need coffee or something stronger to ease them along. Covid, we dont know, but it looks like the u. K. Will take a because theyc it are among the slowest to get out of lockdown. Cost 7. 5 exit would gdp. Looking, probably, if we get no deal, it is another 9 . One of the things that bothers entails britains behavior with trade on who we trade with. Its hard work to build out new markets. Thatey are expected to do as a result of surviving covid, they will be much less able and willing to be aggressive in new markets. The idea brexit would take it into a whole different idea of trade, it it is a little less plausible now because the companies there will be hunkering down. Tom professor, thank you so much. Alan winters from the university of sussex on brexit and his expertise on International Trade policy. In the 9 00 hour, there will be two important conversations, of course after the jobs report. For those of you on global wall street and the game theory of the market move we have seen in ian and mohammed el0er rick rieder join Jonathan Ferro. Francine this this is bloomberg surveillance. Lets get the Bloomberg Business flash. It will not confident benefit from the work from home era as as much as investors were expecting. The app is a combination of an office chat room and workflow beating come competing with microsoft. The Justice Department is demanding information from the four biggest meatpackers in the u. S. In an antitrust investigation. Control more than 80 of the beef processing market. Concernnant sparked power. The European Union is weighing in on twitters decision to flag a couple of Donald Trumps tweets. We talked with the european commissioner for transparency. In american territory and the american president , what we are thinking about in europe. I think it was brave and a risky decision, so i just wanted to support twitter on that. Twitter factcheck the president s tweet about voter prod and set another president ial tweet glorified violence. That is a Bloomberg Business flash. Francine thank you so much. The Hong Kong Financial sector says he is ready to defend building to the u. S. Dollar. The banks themselves and their clients see the merit of this legislation. Although people are awaiting will samplet, it the scope of the legislation implementation details. I do not believe the positive isction to this legislation widely held among the business community. What do you think will be the immediate and longterm impact of maybe what we could call a decoupling from hong kong and the United States . I would not say this is a decoupling, but this is an the relationship between the u. S. And hong kong. , welieve, Going Forward will still be enjoying a mutually beneficial relationship. Mentioned about the this serves the best interest of the u. S. In terms of the economic and other interests. I think there are still a lot of common that we can pursue. Without a doubt in your mind, the pegs stand . Of course. Because again, there is the socalled Nuclear Option donald trump could take and prevent hong kong from tapping into the clearing process and selling u. S. Dollars. He is unpredictable. You know. What happens if they take that tactic . I think we should not speculate too much. You must have a contingency though. Of course. We have thought about that as responsible officials. On the other hand, i want to let the public know that when we approach this issue and consider this issue, we do not need to over speculate. We know, in the runup to 1997, it was discussed well it discussed if the dollar could be swapped out to some remedy peg. We know it is not a fully concerta bowl convertible currency. Could you tell me some of those contingencies you are talking about, if the Nuclear Option is deployed . We dont think we need to do the exchange system. We stand firm to defend it, and the country will back us up in the defense of the exchange rates. Tom a really interesting interview there and you will see more over the weekend with paul chan of the Hong Kong Financial ministry with our wonderful stephen engle. Thats an important conversation about the everchanging hong kong. Let me give you a data check as we go through this horrific jobs report in america. Higher yields is the story. The vix comes in well under 25, risk on. Futures show it up 24, dow futures up 307. The yield spaces extraordinary. The 30year bond in the United States, 1. 66 . What a week with the 30 year, with curves steepening. Three0 spread is out standard deviations. Stay with us. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Tom good morning, everyone. This is bloomberg surveillance. This morning, millions are unemployed in america. A jobs report at 8 30 will extraordinary. I will be watching the newest you six reports, which will be extremely difficult. In the markets, it is amazing. Yields are higher. It is no question about that going uptwo 10 spread three standard deviations. In washington amid peaceful protests, the president and extend theice protections of the white. Im tom keene in new york and Francine Lacqua is in new york. The new slope is extraordinary, and i think we need to take