People dead. Apple is reClosing Stores and pepsi is shutting a food plant in beijing. The reserve bank of australia shifting its yield curve policy into Cruise Control, saying it is functioning better now than when the qe program began. Shery u. S. Futures under pressure. We are seeing it down. 6 . This after u. S. Stocks dropped the most in more than a week. Stocks are feeding on the record levels fading on the record levels of coronavirus in florida. Industrials and energy leading. The weekeek ended in the green for u. S. Stocks. China will accelerate purchases of u. S. Farm products. It was a slightly in the green sixth session of gains. Oil is under pressure heading towards the 39 a barrel, after it at one point surpassed four dollars a barrel. 40 a barrel. Theres optimism we could see global fuel demand and we had more reassurance from the opecplus groupon output cuts last week. Group on output cuts last week. Haidi china has confirmed its new National Security law will override hong kongs independence. That is shedding light on a move that has stoked tensions with the u. S. And threatened the citys status as a top financial center. Yvonne man joins us now. Some of the language that has been released, the takeaway is what critics have said, the worst views. This is language that was released from shenhua news agency over the weekend. It seems like this is beijings response, a direct challenge to hong kongs autonomy. The Central Government will have jurisdiction over a extremely small number of National Security cases over what they call specific circumstances and china will establish a new bureau to analyze the security situation, collect intelligence and lawfully handle National Security cases. They will form a committee to protect National Security which will report directly to beijing. This detail has been interesting. The chief executive will oversee this committee and appoint judges to handle criminal cases brought under this law. Ultimately the committee will report to the Central Government and beijing will have the final say. The chief executive appoint judges, it raises question about the separation of powers. This response has been a direct challenge to the autonomy of hong kong and the imposition of this National Security law shows beijing will circumvent what legal system hong kong has. If they dont comply with beijings wishes whether it is legislative, the courts and the chief executive. Shery a huge blow to the prodemocracy camp. What are they saying . Yvonne the reaction was swift. We heard from Fernando Jones saying no doubt this will turn hong kong into a mainland city. He first sees an exodus of Young Professionals leaving the city. For activists, they say we have seen similar legislation in the mainland to prosecute chinese journalists and when it comes to human rights activists as well. They are fearing the worst, that we will Face Criminal Charges for everything we do, they say. We heard from joshua wong over the weekend. He did say the law erodes the common law jurisdictions as local courts are not allowed to interpret the law once disputes arise. He said being a prime target, i will be subject to secret trials, televised confessions and tortures, he said in a string of tweets, therefore i call on the world to call on china to withdraw. We have not heard a lot from the foreign nations judges. We did not see big gatherings. Perhaps a lot of questions about the path forward for the prodemocracy camp which remains unclear. Haidi like you said, this is part of what we know. What are the details that need to be ironed out . Still a lot ofs questions. This is a snippet of the draft. We have not seen much more than what the news agency has released. The big question is if this is retrospective, the activists who took part last year, will they be punished . And what are the maximum penalties for the four crimes they highlighted . Terrorism, collusion, which was added last week, and which cases will beijing have jurisdiction over . They keep saying it is a small number, but that leaves a lot of unanswered questions, and will the public be consulted . We are not sure if there will be public input. Given the urgency of the npc to deliberate on this bill, perhaps there is a sense they will be voting this legislation soon. There is talk they will be foring later on next week further deliberations. That is a rare move and there are speculations they could pass legislation before july 1 which is the anniversary of the handover here in hong kong. Shery you can get more on the security bill and other stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers, go to dayb on your terminals. You can customize your settings so you only get news on industries and assets you care about. We will be speaking to research. Ello Brandon Thomas noon and up next, President Trumps first rally since the coronavirus swept the u. S. , smaller than expected crowd. We will have more from d. C. This is bloomberg. This is bloomberg. Announcer reporter the International Monetary fund will downgrade its view of the World Economy two weeks after predicting the deepest recession in 100 years. They warn it could be more pessimistic than aprils statement when they saw global contraction of at least 3 . The only bright spot is that some countries may have passed of the coronavirus. Cases continue to rise around the world with total infections with 465,000llion people dead. Cases in several u. S. States jumped. When first warning about a forest fire of cases on the horizon. Spain has been hard hit by the pandemic that is lifting restrictions on visitors from the e. U. , the Schengen Area and the u. K. The America First policy. Beijing had stood back from the arms treaty which regulates crossborder sales and conventional weapons but now it has decided to sign on following President Trumps decision to withdraw. More than 100 patients have signed on. North korea is upstate upping the stakes in retaliation for messages sent over the border by southern critics. Despite denouncing such actions, pyongyang says it has printed millions of leaflets telling its side of the story. The north has destroyed and interkorean Liaison Office an interkorean Liaison Office last week. I am karina mitchell. This is bloomberg. President trumps First Campaign rally drew far fewer supporters than his team had promised, failing to shake off the turmoil overshadowing his reelection bid. You are warriors we had some bad people outside. We had some very bad people outside doing bad things. I stand before you today to declare the silent majority is stronger than ever before. Shery ros krasny is on the line. That rally was not the big campaign reset president was hoping for. Ros it really was not. The crowd was smaller than campaign that trumps promised an overflow crowd and tens of thousands waiting out the. They canceled a second speech trump was going to give to the overflow crowd. There was no attempt by the president to offer conciliation, to reflect on things happening in the country in the last three months, the coronavirus epidemic, racial protests. More of his usual grievances about the media and democrats. He stood for almost two hours, kind of rambling. Campaignggesting his is worried and may be troubled, looking for answers. Troubled and looking for answers. Haidi we are seeing a risk aversion feel to the start of the trading week as investors are looking at the virus resurgence in parts of the u. S. Like california and florida seeing new cases climb. Rosalind that is right. Looking around the south and the southwest, the sun belt, florida, oklahoma, a lot of red states are seeing the resurgence in coronavirus cases. In some cases it is like a second wave. Apple on friday announcing it was Closing Stores in some states, but it is something that has people concerned. One top coronavirus researcher on sunday called this a forest fire. It does not really seem like there is quite the pressure on the Health Care System we saw in new york and new jersey but it is a concern and it seems like the white house has moved on. They dont really seem that interested in the virus. The task force has been sidelined. There is no National Strategy to speak of. Shery and on the rising u. S. China tensions, attorney general william barr had Something Interesting to say about pushing back against china, that it was u. N. Businesses were part of the problem. What did he mean . Ros he went all in on President Trumps America First strategy. He talked about how companies are putting profits ahead of national interest. He returned to comments he made earlier in the year about turning away from huawei and u. S. , european buyers had embraced technology from nokia and ericsson. Not what you would expect to hear from a top Law Enforcement officer but that is where he went. And it really speaks to how deeply the u. S. China rivalry is dominating the Trump Administration, i think. Shery President Trump pushed back against china, especially on the human rights front when he signed the uighur muslim bill. Axios is reporting President Trump held off on the sanctions in order to get a china trade deal. This seems to be in line with what we have been hearing from john bolton, excerpts from his book, that it had to do with what President Trump could accomplish on the trade deal or his reelection bid when it came to dealing with china. Trump has always been called a transactional president s. He wants to know what is in it for the country or in it for me, President Trump. It does seem like he tried to use leverage over time to possibly get action on the trade deal and to focus on things like farmers who voted for me. We will hear more from john bolton in the next few days. He has a big interview that runs tonight and he will be doing the media blitz the next couple of weeks. Even if even if you dont have a book on hand, you can hear about it in the next few days to come. Uncertainty,ing wells fargo betting on emerging markets, particularly those in asia. Giving us their reasons why. This is bloomberg. Shery investors are heading into the week with an added note rising numbersof of coronavirus cases including record amounts in california and florida. Joining us is kirk hartman. Great to have you with us. We continue to see the volatility in the markets. This gtv chart showing how many ups and downs that we have had when it comes to the weekly stock moves. In this environment where we dont know where we are heading and we are subject to headlines from coronavirus cases, how do you play defense . You have to look for the Mega Technology stocks which are viewed as defensive plays. They have long cash flows, certain cash flows and there is a 0 interest rate. They are being discounted at a low level. A lot of the more what traditionally would be the value stocks, while they are catching up, more serious and speculative because they are viewed as a function of the economy. The other place i am looking is emerging markets. Interest rates and the prospects of a sluggish u. S. Economy through the summer, you wonder if the dollar will weaken and it would be good for the emerging markets. Shery emergingmarket fear is very broad. Where are you looking at especially when it comes to benefiting from a weaker dollar . Lot, korea anda taiwan. What is interesting is china has gotten the message that they can no longer rely on the u. S. For parts. A lot of this is because the terrorists and the trade wars. Asia is where there will be more diversification. I am not recommending these stocks one way or the other but i look at the Technology Like the taiwan semi conductors, samsung, those kind of manufacturers and Tech Companies which are going to replace a lot of the suppliers in the u. S. I think it is an interesting area to look at. Shery does a slowdown haidi does a slowdown in china and that part of the world worry you . You are right. End,es china, so goes the to the extent if china were to have a large second wave or a slowdown, that would be concerning. It looks like china is rebounding. You have talked about first in, first out. China is coming out of the corona wave whereas other countries like the u. S. And others are still dealing with it. China were to if slow down, it will slow down that scenario. We have talked a lot about the rotation from birth to value, the leg up in the most recent part of this rally. How much of that continues Going Forward . If you look at the s p which is weighted towards growth stocks, where does the next catalyst or section of the market come from . It is interesting. The s p 400 and the russell 2000, they are catching up to the larger cap. The gap was pretty wide for a while. The s p was down. Now the s p is down three or four and the midcaps and small caps are down 12 or 13. They are catching up. Aremidcaps and a small more representative of the u. S. Economy. The answer on the midcaps and the small caps is the general improve, or are we going to continue to have the earnings come primarily from the mega caps . Shery are stocks still compelling . What do you feel about on and opportunity in the fixed income space . What is the future of fixed income at a low rate environment . I think you need to stay to the spread sectors meaning Investment Grade corporates, crossover. Given this rate environment, you will be lucky to get your coupon. If rates were to rise, the direction would be negative. You have to look to the spread sectors. I think they offer value. That is the conundrum here. Stocks in many ways look cheap, but we have had a great run up off of the loans. Lows. It is hard to argue that stocks longerterm dont have value. Wells fargohartman, president and cio. Dont miss our coverage of the bloomberg invest global summit starting in new york. We will bring you the biggest names of economics and investing. Some of those names speaking. Lets get you a quick check of the business flash headlines. Apple is closing outlets in the u. S. As covid19 cases spike across the country. This will include 11 stores in florida, arizona and the carolinas. In recent days they had opened many stores but now they are being extra cautious as they monitor the evolution of infections. Staff will continue to be paid and there is no timeline for a full reopening. Daimler is preparing to cut more jobs. Local media saying 10,000 jobs will go by 2025 with the outsourcing of i. T. And r d services. Byy promised 10,000 losses 2020. 300,000 staffmost at the end of last year. Plex a coach china is closing a food plant in beijing after confirmation of a virus case last week. People were put in quarantine saturday even though they had all tested negative. Pepsico said none of the beverage plants in china have reported covid19 cases so far. Beijings battle to contain the coronavirus and relations with the u. S. The details and the latest just ahead. This is bloomberg. This is bloomberg. You are watching daybreak australia. Will override the system, stoking tensions with protesters in the city and with the u. S. And other western nations. The Central Government will only have jurisdiction over an extremely small number of cases under what it calls specific circumstances. China will open a new Security Office in hong kong supervised by beijing. President trumps first postlockdown Campaign Rally failed to mobilize his base. News outlets say over 6000 people turned up on saturday, filling less than one third of the center and far fewer than trump trades had said applied for tickets. The campaign blames medical protesters for blocking entrances, but reporters say the 100 or so demonstrators outside had little impact. Singapore is positioning itself for the post virus world with a massive investment in innovation. The government will set aside more than a 14 billion u. S. Dollars to support research and what it calls high impact areas such as health and biomedical services. The investment is part of a fiveyear r d plan. Italy is preparing to seek a wider budget gap as the government draws up a reform plan e. U. To lobby for e. U. Assistance plan to lobby for e. U. Assistance. Giuseppe conte will focus on Infrastructure Projects and may cut the vat. Cutays a wider budget may be needed. China is suspending culture and imports from tyson foods plant in arkansas where hundreds of employees tested positive for covid19. Thats cross to selina wang for more on this. We do not know for sure yet that food can actually transmit the virus so why is china halting these important . China, so far, the Customs Authority says it will be seizing all products from this plant in arkansas where tyson is based. 13 oft have arrived its more than 3000 700 workers tested positive for covid at its facility in northwest arkansas. 95 of those who tested positive worrisome to medic. This move is now a potential from around the world. Many of these plants have had to deal with disruptions as a result of the virus. Hundreds of workers have become sick. Dozens have died. There has been an uptick of infections in brazil and germany. If china continues to suspend shipments based on covid cases being reported, it can undermine agricultural purchases as part of the trade one phase deal with the u. S. Which was already under pressure before this move from china. This mentioned earlier, decision is a complete 180 from just a few days ago when chinese officials said that food was unlikely to be responsible for causing the latest outbreaks in beijing. Chinas customs officials, just a few days ago, said it is taking the advice of International Organizations and said there is a low likelihood of food transmitting the virus and no restrictions will be imposed. A few days later, we are seeing china put on these restrictions from that tyson foods plant. Texaco has shot a beijing food plant after a case was confirmed. What are the details . Selina the Pepsico China plant said it has conducted nucleic acids tests on all of its employees and quarantined 480 people and that even though they all tested negative for the virus, they are taking those precautions. This is against a backdrop of beijing really pulling out all of the stops to try and stop the resurgence of the virus, which has surpassed 200 infections. Beijing has more than doubled its coronavirus testing capabilities to one billion people a day and authorities said 2. 3 Million People have been tested for covid in just the past week. This is as beijing sets up more than 200 sampling sites across the city. Haidi selina wang in beijing with the very latest. South koreas 157 billion dollars Sovereign Wealth Fund may add to its Equity Holdings if theres another coronavirus shock in global markets. I spoke with the chairman and ceo about where he sees opportunity in the markets post pandemic. Thee believe that given high equity valuation, we think there might be some limit for the market rally. It will prepare another market dislocation for the pandemic. These are more crucial at this stage. In the long run, we strongly believe the market is fully for the time being. We might have to take away nancy position. What do you think the next downturn or the next uptick in this market will be driven by . Obviously, most Market Participants expect that may be the second wave we can prevent we can fully overcome the second wave of coronavirus. Then we might prevent Second Market for the full run. Due to the Central Bank Governments strong policy be frank we can to with you, we have no idea when is the right time to do the market rally. We are very happy about that. Have you made major changes to your investing strategy or your portfolios since the start of the pandemic . Heenam it is overweight equities compared to the fixed income. That is our strategy. If there is a second wave, we obviously reconsider our asset allocation. If there is another market share, it may be further developing the location towards equities. Othere you might see potential and the equity markets. That was heenam choi. You can catch that full interview at 2 10 in hong kong and 4 10 in sydney as part of the bloomberg invest global event, and the threeday event kicks off later monday. We will bring you the biggest names across finance, economics, and investing, including charles li, and ross mcewan. To theslowly returns office while victoria extends a state of emergency after an uptick in new virus cases. The latest for australia, next. This is bloomberg. Haidi we are less than 90 minutes away to the market open this monday morning in sydney. This is what we are seeing when it comes to the aussie dollar getting wiped out in early trade alongside the kiwi as investors continue to weigh up the risk of increasing coronavirus cases, not just in the u. S. , but we are continuing to see the uptick in major places like florida as well as california, but also in australia. The port of victoria under new restrictions. U. S. Centso 68 level. The reserve bank of australia in the meantime has shifted told curve policy into Cruise Control. That is the same length of time as string of purchases. Lets get more from bloombergs paul allen, who is back here in sydney. Paul it is. The whole situation seems to be working well for the rba. They are in Cruise Control when it comes to those purchases. Three year yields exactly where. 25 want it to be at percent so the market bond function is functioning pretty well. There are a few odd distortions. The yields on the one year and twoyear at the moment are higher than the three year but the reserve bank of australia said in its june Meeting Minutes that this is something worth keeping a close eye on. It would get involved in the secondary market to ensure short term yields are consistent with that target for the three year yield as well so the rba keeping in i. B. Eye on this. It is another thing entirely to get out of these policies again so questions naturally turn to when does it begin to end . Seesevans says he tightening in 2022. That would mean the three year target might be lifted from. 25 to. 4 . For the. 25 shery how about the government tightening or turning off the taps of fiscal stimulus . We know life in australia seems to be gradually returning to normal. Paul it does seem to be getting back to normal very slowly. The government is going to update the nation on july 23 with an economic and fiscal outlook update. According to the treasury, theres been more than 250 billion worth of total economic support from the government. The rba says when the time comes to turn off the tap, there needs to be gradual tapering. In terms of restrictions, things are getting back to normal, particularly in sydney. Only been five new cases over the weekend. All of those were already in quarantine. Now, restrictions are getting eased. There will be 50 people in bars and restaurants and casinos. Most businesses with the exception of nightclubs will be allowed to open on july 1, but you heard haidi mention before the state of victoria, things are rather different down there. 19 new cases over the weekend and that is the fifth day in a row that victoria has seen double digit increases, 120 one active cases. It does not seem like a lot but these things can get out of control very quickly. The state of emergency and victoria has been extended. If you are living in victoria, you have only allowed five people and 20 people maximum left together in any one space. There is evidence that there is potentially a second wave gathering there. Shery paul allen in sydney. Still to come, we will be speaking with Brendan Thomas noon about australia being the target of cyberattacks. He says this may be a part of a Widespread Campaign conducted by china. This is bloomberg. Haidi on friday, Scott Morrison confirmed a search in surge in cyberattacks. Amid a weekend of accusations, china denied it is behind the attacks, calling such suggestions tasteless. Lets get some insights. Great to have you. Saw the Prime Minister being diplomatic as to who is behind these attacks. What you have a pretty good idea of who the main corporate might be. Corporate might be. Brendan thanks for having me. The main culprit might be. Thanks for having me. It is a sophisticated attack, not just in terms of the techniques the actor is using, but i think in its broad application and persistence. And so, that only means there is a certain amount of actors in the world who have that capability. So you have to pare the capability with the motivation, and you end up, you know, the list of tour three, and obviously, the top of the list is china. Its also important in putting it in its geopolitical context, because obviously, this announcement, and the number of australia china and are having increasing tensions and using the governments own language, china has been trying to actively coerce australia across economic, diplomatic a campaign ofh disinformation as well, so i think that it does not take too much to put together that the likely culprit is china. You make of the interesting counter accusations from china that they say the attack, you know, looking for people responsible, should be looking at the australian think tank, spi, and china says, its links with the u. S. . Brendan brendan if they are is funded by it the Australian Government through the department of defense. That is its primary aspect of funding. It has been conducting Excellent Research over the last couple of years, looking and using open source techniques to look at ofcentration camps, the sort links between chinas commercial sector, military sector, involvement in universities in australia and elsewhere, and also detailing kind of the use of just recently twitter accounts, using brought accounts on twitter to push narratives about australia and the United States in terms of covid. I think that that is pretty clear that china certain aspects of the communist party have been shining a light on some of the issues. I think that that is probably re the kind of context funded majority by the Australian Government. From we have seen efforts the Trump Administration to push back on china when it comes to not only cybersecurity but also chinese Tech Companies doing business in the world. If we continue to see this divergence in the tech world, how will australia be affected . Brendan i got a recent report out last week looking at this issue and appoint the kind of lens more at the United States and the changes that the u. S. Theress has put forth over last three years reforming really all aspects of the u. S. Relationship and Technology Relationship with china. The thing is that australia obviously is a close ally of the is ad states but also global science and Technology Player and is closely integrated with the u. S. Technology world both from the scientific aspect of what happens in universities, but also the commercial aspect and things that are occurring in silicon valley. That asto understand the Technology Relationship between china and the United States really diverges and changes, how that leads australia in the way australia is modeled that science and technology are quite horrible. In some ways, as that relationship changes, that decision will sort of already be made for us just because we are so integrated with America Technology world, so i look specifically at things like export controls and theres a lot of reforms in the United States right now really expanding and changing the Way Technology the rules around technology exported in the United States. That would have a direct and unintended consequence for australia. I dont think the United States is targeting australia in these kind of things, but australia will be impacted as things start to diverge. Shery that is the case in australia. I wonder how it would affect markets. We have interesting comments coming from william barr in the u. S. That u. S. Businesses are at fault and in part to play part of the problem given that they are looking at their bottom line and continue to do business with chinese tech firms. It all falls down to what is cheaper. I do wonder, in this emerging market economy, will we choose chinese tech over the u. S. And we will see a bifurcated technological world in the future. Is definitely a danger. There was a recent rule change that the United States made that allowed u. S. Tech companies to interact with huawei. Why is because they found that this rule did not allow them to interact with in standardsetting agencies and these are very technical. They played an Important Role in getting together and setting what the standards will be for technology. While they build the tech and u. S. Firms built attack, they are able to talk to each other with the same technical standards. This will prevented u. S. Companies from even interacting with huawei. They amended that rule because they realized that the United States, its better to be competing and involved in those discussions than not. Of bodiesthe types where a lot of these rules will be set that will set the kind of groundwork for how technologies have adopted it over the last five to 10 years. It is incredibly important. They are starting to realize that it needs to compete more with huawei in these sort of sectors. Haidi appreciate your time as always. Brendan thomasnoone joining us out of sydney. Germany and france are pushing for a deal on the proposed 750 billion euro program to be wrapped up next month to help european economies rebound from the covid19 knocked down. The Imf European Department rector, paul thompson, spoke in an exclusive interview with bloomberg. I think it is important that all leaders recognize we need a forceful response at the european level. The details are still under discussion but there needs to be a forceful response. Going into the summit, that was what was helpful. I agree it would be important to get a final deal before the summer break. Angela merkel and Christine Lagarde are having some fairly harsh words to their colleagues. Both warning that if there is no agreement, and it was not expected today, but if there is no agreement before the summer, the european economy will face dire consequences. Would you agree with that assessment of the situation and how dire . That theo agree proposed Recovery Fund is an important additional element which has so far been a very forceful european policy response. We have had a significant response at the National Level and with some early response at the european level to the support from the commission for labor markets. This additional very large fund would complement the very strong measures we have seen so far and the ecb going outside the fiscal this is indeed critically important. Facing aill significant downturn. You will see us revising downwards. It is too early to see by how much. This european economy is taking a very severe hit and i would agree that we will need to continue with very forceful policy stimulus. Is it enough . Is this package as well as the individual stimulus package, is thats going to be enough is not going to be enough . Is that going to be enough . Poul the uncertainty is huge. There are some significant downside risks. We are all aware of them. Ofecond hit and the risk some spillovers we have not seen so far, thankfully, into the financial sector, these things happen, more will be needed. Mr. Thompsen, if there is to be money distributed, that toey needs to be tied reform, not just consumption. Lets think about that for a moment. Beenmerican response has very much to maintain and drive consumption. It is a critical part of what is happening in terms of the recovery in the United States. Is it a mistake at this point for the chancellor and others to suggest that actually there should be Strings Attached to this money or should the the money be dished out to try and keep consumption going, to try and keep the velocity in the economy that has been sadly lacking . That we have to recognize the European Union the euro area is not a Political Union in the sense that you have it in the u. S. One will need to force a compromise between sovereign member states. Needs to be reached. I am not going to go into one or the other side of that, but the situation is different in europe compared to the u. S. Politically. Thats one of the things you are seeing. Next coming up in the hour, we will discuss the week ahead. This is bloomberg. Haidi a very good morning. I am haidi stroudwatts in sydney. We are counting down to asias major market opens. Shery i am shery ahn in new york. Welcome to daybreak asia. Chinas security law will override prodemocracy campaigners say they are preparing for jail. Global coronavirus cases approach 9 million with 400 625 thousand people dead