It has been a choppy session. Down. 1 , while the nasdaq is up. 2 . The dollar index is strengthening. 97. 55. We had a drop in the 10year yield, we are back at 70 basis points. Lets get some details on what is moving in the market. Scarlet fu is with us. A mixed trade across Asset Classes. Certainly within equities. The backdrop is the next Economic Data we got. The philly fed numbers were interesting, in that they confirm the empire numbers from last week, back in expansion mode. Manufacturing is no longer contracting in the region. All of that is helping to lift the city index to a record high, spate ofg that recent better than expected Economic Data. Oil approaching 40 a barrel. Iraq says it will begin complying with opec production cuts and is working on a program to compensate for cheating in may. It is curious it is not getting ts and to reits utilities. A couple of movers on earnings. Kroger is the second worst performer in the s p 500, beat on the top and bottom line for next quarter but did not promise anything. It did not provide any new guidance for 2020. Carnival off by almost 2 . Much worse than expected on a pershare basis. It is also in talks to sell six ships. Wirecard down 63 . It is the most widely read story on the terminal in the past hour. The company said it delayed its annual report for a fourth time. The german Payment Terms auditors were unable to find 2 billion in cash. Certainly one that we will continue to look at, concerns about its liquidity. Vonnie scarlet, thank you. Initial jobless claims this morning coming in worse than forecast at 1. 50 one million, while continuing claims for Unemployment Benefits decreased but not as much as forecast. 20. 5 million. For more on what the rest of the day will show, we welcome constance hunter, kpmg chief economist. Some improvement in the numbers that we are still talking about 20. 5 million unemployed people. The end of extra benefits is coming at us. What happens to the u. S. Labor market at the end of the summer . Constance this is going to be determined in part by what happens with regard to congress, if they extended emergency unappointed benefits. We were out with some Research Today that said that could be a 1 to 2 drag on gdp if we dont extend the benefits. There is the hope that workers thatcome back to work, these temporary workers will be rehired. Theof this is dictated by path of the virus, where we have seen an uptick. It makes it challenging to separate the signal from the noise in the data. It also makes it difficult to establish improvements we have seen are going to be lasting, given it is the path of the virus that will dictate the ultimate outcome. Next . what happens it is very hard to make a forecast if we dont know whether there will be more fiscal aid, if it will be necessary. On york is opening phase two monday. It is week by week after this. Fiscall we know how much , extra help is necessary . Constance i think we already have a window into that, in some much as we can see what is happening to states budgets. States have lost out because they have not been receiving the normal sales tax they would be receiving, as people have curtailed consumption. States also receive a fair amount of income from tourist taxes, hotel taxes. They receive a lot of income like that in states like florida, louisiana, texas, nevada. Then there is another tax that states receive for oil and gas activities, severance taxes. There are some states like alaska, 51 of their state revenue comes from the combination of tourist and severance taxes. There are a number of states that really need some assistance, or we are going to see 2 million to 3 million more people unemployed as states surtout shed workers in order to meet their balanced budget requirements. This is, i think, the largest impetus that will get congress to act with regard to further stimulus. Of course, politics plays into this, as it always does. We are seeing real, significant crosscurrents as to the motivation for giving additional assistance later this summer. Vonnie why the big move in treasuries today . Constance well, i think that will have to be in part because of the rising number of cases we are seeing in the u. S. Statesin some of the that reopened, florida, texas. If we look at the progress und the u. S. , both states most states are either negative on one or two of these indicators. The first case is cases per million population. Below 30, and very few have below two deaths per million population. Before we get past those thresholds, the virus remains the largest risk, and we dont have a handle on it. That is why you will see periodic down pressure on treasury yields, as a result of fears that the virus is more in control than we would like it to be. Vonnie the dollar strengthening today. Donee Federal Reserve enough, will need to do more before this is all over . Constance i would like to reframe the question, have they done enough given what we have seen so far . I think most would argue that they have done slightly more than enough, given where we are right now. They stand ready to do more, if needed. I think that we have seen in terms of fiscal response is extraordinary. If we compare money supply growth to the Global Financial crisis, we are looking at a situation where the fed is growing a money supply at over 20 yearoveryear. This is almost double what was done during the Global Financial crisis. And more than what was being done by other major Central Banks around the world. During the Global Financial crisis, we saw china really increasing their money supply which helped to stimulate the global economy. We see china barely increasing their money supply. Ae stimulus is really coming lot from what the Federal Reserve is doing, and this will have a global impact. Again, assuming we can get a handle on the virus. For that,ank you constance hunter, of kpmg. Lets get to our first word news with Mark Crumpton. Mark a divided u. S. Supreme court has stopped President Trump from ending the socalled dreamers program. The Obama Era Program shielded 670,000 young undocumented immigrants from deportation and allows them to work. Justices said the administration did not given adequate justification. The deferred action for Childhood Arrivals Program protects people brought into the country illegally as children. On twitter, President Trump called the decision horrible and politically charged. Democratic president ial nominee joe biden is getting ready to unveil his first big set of campaign ad. Mr. Biden is spending 15 million on advertising that prominently features his recent address in philadelphia on racial unrest. The ad campaign will air in six states that President Trump won in 2016. Pennsylvania, wisconsin, north carolina, michigan, and arizona, as well as on fox news in which the president watches regularly. Britain is scrapping plans to launch its own Contact Tracing Smartphone App because of technical problems and will instead work on building one used by technology supplied by apple and google. Governments around the world have been turning to Smartphone Technology to battle new flareups, but technical problems and privacy concerns have slowed the development of virus tracing apps. India says it is trying to ease tensions with china. The country says it is using diplomatic channels to deescalate a military standoff in a remote himalayan border region where at least 20 indian soldiers were killed this week. Deadliestlass was the between the sides in 45 years. Both sides accuse each other of instigating the virus violence. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Has had enormous impact on not only purchase ponders and Health Care Workers but also everyday citizens. New data suggest the pandemic deeply affects how young to view Political Leadership and health care policies. Joining us with some insight into the pandemics lasting effects is professor Barry Eichengreen from the university of callup on your berkeley. California berkeley. 50 have studied up to previous pandemics and you have come away with some answers that you can teach us Going Forward when it comes to policy and politics. Tell us about what you found. Londonbased coauthors and i found that experiencing an epidemic, especially in your impressionable years, the term psychologists refer to as 18 to 25yearolds, reduces the individuals confidence in government, trust in government, political leaders, and trust in scientists as well. Those attacks are very persistent. They last for the better part of the individuals of adult lifetime. Vonnie is there any evidence to suggest it makes the individuals more active, or the types of impact it has on those individuals . Our work does not look at that directly but i know of some other work that looks at the impressionable years and fines that individuals experiencing an epidemic at that stage of life become less politically active. I think that is consistent with the idea that people grow skeptical about government and politics, it their government does a poor job in dealing with the help. That would suggest some complacency coming out of it, but we had never been in a more active period for political activism. ,ou write about this as well about the demonstrations, the impact the pandemic is having on the demonstrations but also vice versa. Explain what you mean by the interlacing of the two . Barry everyone is aware about how holding a rally with 20,000 people in tulsa, oklahoma, in a cause thece can epidemic to worsen. There is a connection between the pandemic and what is going on politically. I think the relationship runs in the other direction as well. The pandemic has fallen heavily on working class people in the United States, is proportionately in terms of its Health Impact and Economic Impact on the africanamerican community. It is not a surprise that black lives matter is getting so much popular attention and support in the midst of a pandemic. Vonnie you write that it is not incidental that the share of the nonelderly u. S. Population lacking Health Insurance is 1. 5 times higher in blacks than among whites. You have a list of ways in which communities are disproportionately affected, particularly the black community, and it is no clintons black lives matter it is no coincidence black lives matter and the protests are happening with the volume that is being heard. Have you studied that in history, is there any lesson we can learn from what the next few years may look like . Barry that is what we really want to know. Theyone is asking whether social changes and political changes, economic changes associated with the pandemic are going to be enduring or not, whether they will persist. I think there is evidence of a persistent impact on the attitudes of young people whose worldview has not yet hardened, whose political affiliation has not yet hardened. As i said, the evidence we have is not always reassuring about the direction of change in so far as past epidemics. Politicallessened involvement, rather than increased, over the long run. Im not entirely reassured. Vonnie another interesting thing you do is look at europe, the differences between europe and the u. S. We are seeing black lives matters demonstrations across europe as well, different histories, but a lot to reckon with. You say there is a major difference, a bigger security blanket when it comes to health care. If that is the case, why are we still seeing europe grappling with its historical problems, as we are seeing in the u. S. . There is not a huge difference between europe and the u. S. And how they have dealt with their histories. Barry europe has dealt with its history partly by building a more expansive welfare state than we have in the united welfareand a public system, rather than the patchwork mainly private system we have in the u. S. When the pandemic hit, and a lot of people were thrown out of work, in europe, they retained their Health Insurance. In the u. S. , that was not often the case. Not all European Countries are alike at this point in time. I dont know whether to refer to the u. K. As a european country or not. Servicenational health has suffered a long series of cuts. People are understandably unhappy about its response to the pandemic. Some European Countries are in a stronger position. But again, the pandemic has laid bare the racial problems and economic problems in the suburbs of paris. There is a lot to come to terms with in europe as well. Vonnie we have more to talk about. Barry eichengreen is the professor at the diversity of california berkeley. I would certainly urge you to Read Everything he has written on these subjects, the protests and the pandemic. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. The reign of the dollar may be coming to an end, according to Stephen Roach that young university. He said in an interview last week the u. S. Economy has some significant macro imbalances. The dollar will fall very sharply. He does say that against a basket of currencies. Lets bring back in Barry Eichengreen to talk about the dollar and currencies. Hasously, Stephen Roach been calling for a weaker dollar for a long time. Im curious what you think the stability of global currencies are right now . The zimbabwe government giving peg to theg to dollar. Is the u. S. Dollar the stalwart that it has always been . Barry in the short run it is. Its dominant position has been reinforced by the steps the fed has taken in the early stage of swaprisis, with renewed lines for mexico, brazil, south korea, singapore, the treasury u. S. Bondity, the market is still the most liquid in the world, so everyone rushes into it in the early stages of a crisis. Looking further down the road, i think there are serious challenges. Im not certain that the dollar will overcome them, heavy u. S. , the tendency for this administration to weaponize the dollar. The one thing that is holding its dominance in place is the absence of more attractive alternatives. Vonnie exactly. Is there a date in the future where you see the yuan as a potential contender in lieu of the dollar . Barry i am betting on the euro instead, if they are truly experiencing a movement, moving slowly but surely in the direction of fiscal federalism. Then i think the euro has potential to rise. The problem with the chinese currency is that people do not entirely trust the Chinese Government. The peoples bank of china is rolling out centralbank digital currency. Will people in other countries use it . Not if they appeared there is a back door to their digital id, and their transactions can be tracked. Those are the kinds of policies more broadly that the Chinese Government pursues. Vonnie thank you so much for all of your thoughts today, Barry Eichengreen, professor at the university of california berkeley. Barry thank you. Vonnie we will be discussing the bank of englands response to the fallout from the pandemic. And we will also speak about President Trumps and the supreme courts decision on daca. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. New York Governor Andrew Cuomo said he is considering a record and people who visit from florida to quarantine for 14 days. Covid19 cases seven climbing in florida and several other u. S. Dates while new york is on the decline. Governor cuomo also said he is signing an executive order that will allow the state to immediately suspend the Liquor License or shut down any bar or restaurant that violates reopening rules. The german chancellor Angela Merkel is urging European Union leaders to show unity in the fight against coronavirus. She is urging the blocks leaders to reach a deal soon to help pull the European Union out of the worst recession as world war ii. Chancellor merkel, who will take over the eu rotating presidency in july, said no country can survive this crisis alone. Former u. S. National security advisor john bolton says donald trump is not fit for office. He is promoting his new tellall book. Lacksd abc the president confidence and is solely focused on his political fortunes. The president called bolton a liar and said he broke the law. The administration has asked a federal judge to stop publication of his book. She was known as the forces sweetheart, the singer who serenaded troops around the globe during world war ii. The relation has died Dame Vera Lynn has died. Prime minister johnson pay tribute saying that she uplifted the country in some of its dark est hours. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Amanda live from toronto, im amanda lang. Vonnie im vonnie quinn in new york. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. The bank of england expands bond buying. By 125e to boost qe billion to counter the coronavirus slump. A trillion dollars for infrastructure. That is how much the Trump Administration is set to be preparing for a proposal. By julylosi once a vote 4. We will speak to Jonathan Spalter about how the money might be used for 5g. Canada fails to secure a Un Security Council spot after waging a for a seat. Prime minister Justin Trudeau facing one of his biggest feats yet on the world stage. Defeats yet on the world stage. Amanda a check on the markets, it is a mixed picture. Tech is doing its part but not enough to offset negativity. All up or down. Energy is one place we are seeing strength in the s p 500. Tech still leading but a mixed bag. Some interesting crosscurrents we are watching, covid19 cases rising in texas and florida, the comments from ray dalio about a lost decade for stocks because of profit margin compression. Real estate is the single biggest decline for the broad market s p 500. In england, we have a move by the bank of england, 100 billion in the asset purchase program. Even as the bank is expanding its purchases, it is sounding a somewhat optimistic note, that the green shoots may be real here. I want to welcome win thin of Brown Brothers harriman. We saw sterling reaction, we saw it on the board. Hadhe one hand, we continued expansion of the balance sheet. Thate other hand, a sense it may be over sooner than people thought. Where do you come done and the bank had to say . Win thank you for having me. I was hoping the bank would go a little bit bigger. We can all agree we are facing unprecedented situations across the world. The fed has led the way, being the most aggressive, opened the door for other banks to be as aggressive. When the announcement came out, it was about expected, sterling rallied as a result. People were looking for a possible dovish surprise. We had some spikes higher, but after the dust settled, the market realized the bank is getting it wrong. Sterling has gone on to make new lows today after the decision. Is it too much of an exaggeration to say there is an unreality of the glass halffull, they will have a trade deal , they think this will be enough to protect the labor market via qe. Does notens if that play out, isnt a disaster scenario or a less good scenario . Shoots outare green there, signs that we should be getting past the worst. But i think chairman powell is much more straightforward here. Is unknownnd breadth and we will err on the side of caution. The bank of england was almost too upbeat. They slowed the pace of asset purchases. Economist evenf dissented in favor of their change. I think the markets are punishing sterling for this disconnect. I agree with you, with brexit, markets are underestimating the chances of a hard brexit. Barely six months away, a very complicated trade deal. Johnson says no extension. I dont know how it gets done. If there is no extension, that is a hard brexit. The bank was a little too rosy given what is the markets did not like that message. Amanda is it even possible to price in the cost of that hard brexit . Theoretically, we know what that will mean. Wto rules will apply come up off, preferential trade treatment will end. Is anyone pricing in the cost of a hard brexit . Win it is so unknown. The bank of england was asked by our limited do a study of the possible outcomes. They did that in 2018, updated late last year. It is a pretty dire scenario. We are talking further contractions of 5 to 10 , sterling depreciating 10 . These are all possible scenarios. A time when come at the u. K. Is hopefully just getting over the coronavirus impact. Of ave this double whammy hard brexit on top of that, it is just a huge weight on the overall economy that is already under structural problems. The bank of england is being too optimistic. The Sterling Exchange rate tells me that the market is being too optimistic. Vonnie just on the dollar, the index itself has been in a range for at least a year, if not more. Does it stay in this range for very long, given the uncertainty out there from the pandemic to the amount of qe underwriting Asset Classes in this market . China we dont know if we are best friends or enemies these days. Win so many moving parts. Fedsd say the aggressiveness in the balance expansion and rate cuts typically weigh on the dollar in the early stages. We saw this in the financial crisis. Earlyhe fed first did qe, adapter, but that translated into a weaker currency. The fed went all in on march 23 with unlimited qe. We have seen some nearterm weakness, but if you go back to longterm ranges, we are about in the middle of the range we have seen since 2017. I know previous guests have called for the longterm secular decline for the dollar but i dont see it. I see more of a cyclical decline. The dollar is in a cyclical decline, but as the u. S. Economy improves, it will be amongst the first to get out of it. That should put a floor under the dollar. For now, it is largely range bound. We have to leave it there. Win thin, global head of currency strategy at Brown Brothers harriman. The trillion dollar bet President Trump is making, considering infrastructure again, as well as 5g. We will speak to Jonathan Spalter, president and ceo of the u. S. Telecom association. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Is Trump Administration preparing a nearly 1 trillion infrastructure proposal as part of its push to spur the economy back to life. Just spoke, saying she is looking forward to working with President Trump on infrastructure. The plan will set aside funds aim to boost five g technology and rural broadband, despite the president canceling events to describe the rollout. For now, we are joined by Jonathan Spalter, president and ceo of the u. S. Telecom association. Many of these companies have taken to upgrading themselves, building out the infrastructure themselves. What could the u. S. Government actually do in order to speed that effort along . Jonathan the bottom line here , we have to deliver broadband to all americans, and that requires a publicprivate partnership. Private companies cannot do it alone. To reach those last 20 million americans, who still dont have broadband, we have to work with government. What government can do is invest, have focused programs to invest, to work with us in delivering broadband, particularly to rural americans. Hearinghat we will be something about that soon. Soon, isiously, the critical component. One of the unfortunate aspects of spending is it can take a long time to get out the door. Of actually hope getting dollars in your hands to actually do the work . Jonathan there is a Great Initiative that we are getting geared up for right now called them rule Digital Opportunity fund, a reverse auction managed , at the end of october, over 16 billion to deliver broadband to unserved American Communities in the rural parts of our country. If we can get through that on time and move forward and get those dollars employed as quickly as possible, we are hoping it will be a matter of weeks, months after that we can begin to actually deliver the more fibert can pull to American Communities, to connect those left behind americans, and get us ready for our 5g future. Vonnie assuming there is an infrastructure bill that goes through, who decides how the money gets divided up, which communities . Obviously, you will have politicians arguing for their states. How do you avoid an unfiar distribution unfair dissolution of the funds . Distribution of the funds . We have census tracts that do not yet have broadband access. The first phase of this rule Digital Opportunity fund will focus on where we know those communities are. Going forward, what we need to have are much more accurate that we at u. S. Telecom and our numbers have helped design. Congress has passed legislation. The fcc is getting ready to deploy those maps. We need our colleagues in congress to appropriate the money. About 28 million to fund those maps, so we can have an efficient mechanism finally to be working with accuracy and efficiency, where those remaining underserved communities are, so we can get broadband not only to where it is currently but also where it is not. Amanda we focus on her role, clear reasons for that, but there are also issues of racial discrimination, socioeconomic discrimination in urban centers. What is your commitment, when there is so much heightened sensitivity, to want to address some of those discrepancies . What can you as an industry due to focus your attention there . Jonathan great and important question, not only timely. Committing to deliver broadband for all americans means it is not just rule america but in our inner cities, suburbs, and in our exurbs. Been through it now and has really stood up tall to deliver not only the promise of keeping those customers that we have had, have been impacted adversely, economically and otherwise by this pandemic, to keep them connected. We stood up early to commit to the pledge that our government asked us to maintain that connectivity. Companies like at t investing 10 million in distance learning. Million so far in programs to address connectivity issues caused by covid. This is across the board. What we need to do is ensure we can deliver programs in the mediumterm, that we keep those americans impacted by the whether theyected, are in rural parts of the country or inner cities, make sure we have the infrastructure to deliver distance learning, distance telemedicine. In the longterm, ensure we can not only address the access issues but also the affordability issues. We want to make sure United States broadband customers can continue to keep the best Broadband Service that exists in the world at the most competitive prices. We are intent on making sure that happens, and so are our companies. Do note, House Democrats unveiling their 1. 5 chilean dollar infrastructure plan, in keeping with what you are hoping to see. We will stay on top of all of that. Jonathan spalter, u. S. Telecom president and ceo, thank you for being with us. Lost its next, canada bid for a place on the Un Security Council, after a long effort by Prime Minister Justin Trudeau to win that. This is bloomberg. Amanda welcome back to bloomberg markets. Im amanda lang in toronto. The Airline Industry faces a long recovery, according to the International Air transport association. The industry could group 100 billion this year and next, far worse than the last recession. Earlier, david westin spoke with the Delta Airlines ceo. We are in the process of a recovery, it is slow, no doubt. The momentum we have is meaningful and is continuing to build. 5 bottomed out in april with of our normal customer load traveling today. That number is closer to 15 . The optimism is we have tripled over the last couple months which is not bad but we have a long ways to go yet. I expect that number to get up to 20 in the coming weeks, adding flying in july and august. 1000 flights a day each month added the next couple of months. Quarter,d of the third we are hopefully back to about 30 of our loads that we are carrying. Disciplined,very taking care of our people and customers on the journey, but the recovery has started. David how much visibility do you have beyond the Third Quarter . If he go beyond the 30 , does it keep rising at a steady pace or is there a plateau . When will you be back to essentially full usage . Ed there has never been more uncertainty with what we are addressing given the pandemic and Economic Impacts, changes in Business Travel patterns will also impact this industry. Is a littleball mercury than normal. After labor day, it will be an important pivot point for us. That is typically when Business Travel source to pick up again. Right now, the vast majority of our Customer Base is leisure. There are some good bargains, not just in the air, but on the ground, as hotels and theme parks and casinos are opening. We need businesses to start opening. Most are largely still closed, corporate businesses. As they begin to open, youll start to see an improved mix of revenue flow. That will be the next stage of the recovery for us. Vonnie that was ed bastian. In what some are considering a personal defeat for Justin Trudeau, canada was not given a seat at the Un Security Council. This is the second time in a decade that it lost out in the vote to ireland and norway. Campaignfouryearlong looking for one of those seats. Our National Security reporter bill faries joins us now. It is not a, massive deal that canada will not have a seat in the 20212022 Security Council, on the other hand, there were positions that it could have brought to the world stage that it now cannot. What does canada considered to be the most important among them . Bill its an interesting situation that canada has at the u. N. , a challenge that trudeau has had. In some ways, he is more popular overseas than perhaps domestically. Things like immigration, in particular, the issue of refugees, that was something where canada brought a distinct toce, particularly compared the United States in the last few years. The thing at the u. N. , canada is perceived as being much closer to the u. S. Position generally, and there is some feeling who follow the internal politics at the u. N. , that perhaps that played against trudeau, despite his Public Campaign for the spot. A lengthy and costly one, which has been the focus of mystically, because domestically, because this is seen as a waste of exercise. I was curious whether this seat at the Security Council is almost an outdated issue, given what has happened with the u. N. , its fractured relationship with the u. S. , whether it does not hold the power and clout it might have for years ago . Bill it is definitely symbolic at this point, but it gives the 10 rotating members inside track, inside knowledge about what the world powers who have the veto power are planning, trying to do. But you are right, absolutely, in the sense of what we have seen particularly in the last year, the Security Council has basically been paralyzed. Lack part of that is the of constructive ties between the u. S. And china. In the past, it was a loggerhead between the u. S. And russia. But the Security Council has not been even able to issue a call for a global ceasefire to con x amid the coronavirus. They have really been out of the game on this. There is a symbolic aspect to it. Then again, every country wants to have a seat at that table, where the major issues in the world are debated. Our thanks to you, bill faries, National Security reporter. From new york and toronto, 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
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