Singapore and malaysia as well. The Peter Navarro episode, if it is any indication how sensitive markets are to the slightest hint of bad news, that tells you the story of volatility in store for markets in the second half of the year. A quick check on the risk radar. Aussie yen coming off a little bit, that tells you where we are in terms of Risk Appetite. We were closing in on 79 a few weeks ago. Brent crude, some upside. Lets get you up to speed with other top stories we are watching. It lawmakers in washington have approved a bill to penalize banks doing business with china over beijings National Security legislation for hong kong. The bipartisan measure in the senate has support in the house of representatives and needs to pass before reaching president trump. It condemns china for breaking obligations under the deal that return hong kong to mainland rule. The coronavirus has hit local trade hard with lockdowns increasing by 12 . The hike of that pandemic in april, new research that 16 . Ents have fallen by the wto says the worst case scenario, a plunge of 30 , will probably be avoided. The wto sees a trade decline of about 13 . The bank of japan governor has issued a new warning about the annomy, saying it is extremely severe situation. He says gdp is likely to see considerable negative growth, and it will take a long time to achieve the banks inflation target of 2 . The governor is focusing on how to maintain stability and provide funds for hardhit businesses. Liverpool has ended a 30 year weight for the english football champion, taking the title when Manchester City lost to chelsea. It is liverpools first championship since 1990. Fans were barred from attending matches amid coronavirus restrictions. This is the first to clinch the title with seven games remaining, and the first two win the crown in june. At social media, liverpool is going nuts. Lets talk about the virus story and how it pertains to the markets. We are wrapping up with a tumultuous first half. Mobile virus cases approaching 10 million. Approachingus cases 10 million. As this crisis evolves, where our opportunities . Asiapacific and broader em space . Overseasguest sees 25 billion. Joining us now is manraj s. Sekhon, cio emerging markets equity, franklin templeton. He is here to talk us through opportunities. Thank you for coming on the program. Basket, 33 at the from the peak. We still have about 10 to go before we can recoup the pick from january. What are the biggest adjustments em investors will need to make further portfolios in the next few months . Manraj good morning, thank you for having me. It has been an interesting recovery in markets the last few months. Going back to the numbers you mentioned, what is most interesting is the fall in the market was right spread, but the by the news been met economy and new Business Models from companies and the internet Media Consumer and so on. In terms of the way forward, i think what we have to be careful about is extrapolating the performance of the new economy for too long. A lot of those companies are interesting and have Business Models that will be sustainable, the valuation of the old economy has fallen to structural levels that as things normalize and recovery becomes more entrenched in china, and in the coming months and quarters in the u. S. , investors will start looking at the old economy stocks more closely. That is where to define a lot of value. David do you think we will get there soon . Outperformsconomy the old economy at the current pace, when will we we will need to revisit and look at the rotation back into cyclicals and oldschool sectors . You would have to have a balanced approach to this. Simply put, the new economy businesses are attractive and have fantastic economics, which is why they generate the kind of cash they are and delivering the valuations not just in emerging markets but around the world. What is interesting about the new economy is while we have gone through this crisis, a lot of these companies which were seen as Growth Companies before trading on high valuation are now seen as defensive companies almosting topline growth regardless of the economic situation. When we see a reversal, you will see phases of the reversal as normalizationund gets better. We are seeing that around the world. Economic activity pickup in started tovel has resume. The u. S. Is seeing cases as thee to rise mortality rate continues to fall, which is reassuring. Places like china and india, the is recovering. Youre on Year Growth Rate is looking healthy. You are already seeing signs of normalization, and as that becomes more clear, that valuation discrepancy or narrow. Tial will that will be progressive over the next six to 12 months. Tom is that dependent on more stimulus where it has been muted so far . Point. That is a good if we were talking about this back in january or february, using china as a bellwether, the expectation was that of all the major economies, china would be the one to put in the most monetary and fiscal stimulus. China stimulus has been unremarkable as a percentage of gdp compared to other countries in east asia. But certainly compared to what is happening in europe and the u. S. , which is good for the longterm, which means the reform agenda is very much intact. They have more bullets. The liquidity picture in asia is not as strong as in the west, but clearly the liquidity from whatary stimulus which is we saw during the Global Financial crisis will find its way to the economies recovering quickest and sharpest. If you look at history, including the Global Financial crisis interestingly, emerging markets have recovered back to the gdp highs quicker than the developed world. A different crisis, but i am optimistic we will see the recovery soon, and liquidity from the west will find its way into the emerging world too. Tom you like what is going on in korea and taiwan in terms of supply chains and the reallocation of those industries and. On the back of semiconductors. To what extent would that be muted if you see additional lockdowns in the u. S. . Will china push that momentum for those economies . Story fore longterm kate tarifcases like korea are r the reasons you mentioned. Amongst the strongest Tech Hardware Companies originate and whether you think about ai or 5g, increased working from home, the demand for data is only going to increase. Are welless models underpinned. In terms of further lockdowns in the u. S. , i do not see further waydowns in the u. S. In the we have seen over the last few months, certainly not widespread lockdowns. It is difficult to put that down over the last few months. It has seen the pain caused the economy. You will see controls but ahead of the election, further lockdowns are highly unlikely. As i said before, ultimately the mortality rate continues to recover or recede, and that bodes well for the future for the u. S. And elsewhere. Tom thank you very much for joining us. That is manraj s. Sekhon, cio emerging markets equity, franklin templeton. , High Mountain border tensions may hit business and trade as india plans stringent measures on chinese goods. We will have the details on that. David speaking of High Mountain, this cover of Bloomberg Businessweek lebron james and maverick carter have an exclusive conversation about u. S. Politics and the protests against racism. That is coming up. This is bloomberg. Tom welcome back. The Federal Reserve says the biggest u. S. Financial institutions are formed well in annual stress tests, but uncertainty over how bad the pandemic will get led regulators to limit what banks can do with dividends and stock buybacks. Editor kathleen is here with the details. What exactly did the fed do and why . Kathleen they brought the uncertainty over covid19 lockdowns of virus cases rising in many parts of the United States into this equation, this annual stress test equation of thessing the health of banks, and are they ready to withstand death, crises. The outcome was, they will limit what they can pay in terms of dividends, not let them do share buybacks for a while. The vice chair of supervision on the board of governors said the fed wants banks to be resilient in the face of this uncertainty. He said they are assessing banks more intensely now. They are requiring measures, making sure they are in place to preserve capital. There is what the fed is requiring, share repurchases, stock buybacks are suspended through the third quarter. Dividend payments, they will be taxed, and it will be a measure to look at how much income you have, and that will determine how much dividend you can pay. That is why a bank like wells fargo that had its profit slump 89 in the first quarter, could have a change. They will have to reassess their capital pal and capital plan. They will do a sensitivity theysis to whatever pandemic is going to do to the earnings, their bottom line. What they found is, loan losses fromig banks ranging from 500 billion to 700 billion, averaging capital ratios would 7. 7 . Ween 9. 5 and they say most firms remain wellcapitalized. , butive to 12 years ago several would approach minimal capital levels. A member of the board of governors dissented, she does not agree or think they should be paying dividends at all. Here is what she said, this is a time for banks to preserve capital so they can be a source of strength. Lightove giving the green that was the problem, banks did not have enough capital, and taxpayers had to bail them out. Another comment, it shows the banks did not make out too badly if one of the members of board of governors is complaining, maybe they are doing better than they should. Funny howis kind of they are trying to assess everybodys capacity, and that is at the fed is doing now. Regulators are also ruling rolling back. What will this do for them . Kathleen it is easing things up, it is removing a requirement for swaps trade among bank affiliates. It is softening from the controversial parts of bank reform that was passed in 2010. This process started last year when regulators eased up on the volcker rule. It they could not do Corporate Bonds trading. They eased up on that. This is the cover funds portion of the volcker rule, they can boost investments in capital funds. They do not have to hold margin when they are trading derivatives with their affiliates. They estimated this could make banks about 40 billion richer over the coming year. Has already been in the works. None of it is a huge surprise. The federal deposit insurance operation, it is still a little politicized. The fdic board passed the rule in a 31 vote. They shouldaid improved supervision. A democratic member opposed the move saying the volcker rule weakened. Warren, if she were on this panel, she would have pounded the table hard on that. If you want to keep liquidity flowing, maybe this will help achieve that. That is what happened today. Hays, coming up, do not forget to get Bloomberg Businessweek. Lebron james and his Business Partner maverick carter. We have that exclusive conversation about how they view u. S. Politics and the protests against racism. This is bloomberg. David welcome back. Lebron james has recruited nba to form anrform activist group called more than a vote. We spokelusively exclusively to lebron and maverick carter about their mission to get people to the polls. Lebron big success looks like educating the people on the ground in the cities. We have had Voter Suppression for so long, people are now understanding how they can vote, where they can vote, if their vote really counts. In the black community, you will is here to go out vote, but what you do not understand is where can i vote, how many people in my voting for, what do these vote stand for . The education side is what we are most proud about. That is success for us, where we get these communities out to vote, and they are educated on who they are voting for, where. Hey can vote they have that power. A lot of people believe they cannot vote because they had previous convictions, or they have been to jail and told they cannot vote. Untrue. In a lot of states we are tackling, to educate and make aware of the people on the ground that have a lot to do with the future of our country. That is success we can have, and we will see what happens in november. Kathleen to speak jason to speak to this moment where we are, given your position to do this, what are the conversations incoming to you, whether it is from Studios Companies . Are your calls getting return more . Is the more interest in what you are doing given that the world does seem to be moving in this moment . Maverick yes, you keep calling it a moment, hopefully it is not just a moment. This is what is needed. Like what this country should be. It is not a moment. It does not feel like a moment to me. I have been black my whole life. And pushing to empower all people and specifically black people my whole life. If you look at what we made long before this time, we made shut andn trouble shut up dribble on showtime. The content we have created has always been about that. For us as a company, people already understood and could feel the essence of what we are doing. It is obviously a bit magnified now. The conversations internally with us are pretty much the same. We are getting some external calls that if you have ideas and want to help, sure. I am getting a lot of calls from people, ceos. A special conversation with lebron james and maverick carter airs saturday, do not miss it. Here is the latest business flash headlines. Another big seen advertiser walking away with a verizon pulling support until the social networks asserts control over posts that spread disinformation. Several Companies Including patagonia have distanced themselves from facebook in instagram to make them take action on misleading content and hate speech. The blame game has begun in germany over the dramatic demise over wirecard, with calls for a comprehensive inquiry and leadership changes. It has filed for insolvency after admitting it cannot locate 2 billion missing from its Balance Sheet. Lets get a check on the market. We had a positive session in the virus infections continuing to rise, hitting records in states like texas. A focus on stimulus and if more will be coming down the pipe in the u. S. The hang seng is down 1. 5 . Stronger in japan and korea. He kospi up 0. 7 futures essentially flat. David heading into the lunch , fairlyer in tokyo uneventful the last couple of days. We should be three weeks from the olympics, but that is a 2021 story. This is bloomberg. 1029 time1029 p. M. In new york. The Federal Reserve is telling u. S. Bank they cannot increase dividends amount amid growing uncertainty over the pandemic. They stressed the lending sector has performed well, but a separate review of the verse effect has uncovered some potential threats. Vice chair printing coral says banks must be prudent and also conserve their capital. The pandemic continues to surge across parts of the usa. Texas is halting the reopening infectionnomy while reports are rising in arizona, florida, and california. Prettydicts modeling byid19 will kill millions october and global cases have passed 9. 5 million with almost 500,000 deaths. Infections continue to surge in the region, especially southeast asia, indonesia topping 50,000. Thats as the government uses restrictions. More than 1100 birth reported thursday, deaths more than 2000. 80 seeing optimism, expected to be clear of covid19 by the end of next month. Now, to india, the country is said to be planning faulty control measures and tariffs on imports from china to maintain their military stand in the hamel areas himalayas. Theyre finalizing tougher rules on products, including pharma goods. It comes with india facing a sharp contraction economic contraction, the first in four decades. Russia has begun voting on constitutional change that led to president putins day in power until 2036. The amendment proposed by the come in were proposed in april but putback because of the virus. Putin has effectively run russia for two decades. It did give him two more sixyear terms. Tom . Tom Southeast Asian leaders are holding a Virtual Summit today and plans for a postvirus recovery will be top of the agenda. China andso discuss americas regional engagement. Lets get some analysis now from the lead researcher for Political Affairs at ncis. Thank you for your time. What is likely to be achieved at this meeting today between leaders . I think to discuss and have hello, can you hear me . Tom please continue. Can you hear me . Yes, we are expecting them to do a followup in response to thed19, especially response fund. [indiscernible] they are partners in this undertaking. Tom to what extent has chinas role in the pandemic, how its managed the pandemic, but also how its become even more assertive in places like the South China Sea . To what extent is that shaping and changing views of the leaders . I think the discussion this time will be over the South China Seas because tensions several notches due to chinas aggressive moves in the South China Sea while they are occupied with the covid19 pandemic. [indiscernible] so, over the past few years, asean has somehow gotten [indiscernible] even in the recent development in the South China Sea, i think the narrative [indiscernible] and t hold anymore [indiscernible] and also there is a convergence among frustrations, especially vietnam, malaysia, indonesia, and fromese behavior the different debates at the united nations. [indiscernible] the tribunal ruling was handed down five years ago to defend in the South China Sea. David just to continue that thought, when it comes to the South China Sea, assuming all members and thats a big if all members aligned in unity against china on this issue, do you think asean actually has a chance to get china to back off on this issue . What you are talking is based on an assumption that is difficult to materialize, given the very divergent interests and strategic outlook among asean lender space. But i do think if all asean members choose to unite and [indiscernible] i think asean does stand a chance to make sure that china whatever aggressive actions in the South China Sea. David i want to move the conversation to supply chains and i imagine asean is a big recipient to companies moving, and covid19, i would imagine, accelerates that existing trend. Do i look at asean as a Cohesive Group when it comes to receiving those, or are they within themselves competing for all those ftis coming out of china . I think there would be both a solutionto among asean Member States [indiscernible] being, i would see more of the competition as a kind of complementarity because of the nature of asean economy, which has been more reliant [indiscernible] however, even with the nature of the regional supply chain and the recent levels of the virus by Member States, i do think that if asean pushes up economical integration within the community towards a Single Production base, they do stand a morer chance of receiving flow of investment in the coming terms. David thank you so much for coming on the program. Coming up here on the show, the border dispute between india and china is now threatening and moving into the economic sphere, with ties at risk, india considering tougher rules on chinese imports. The details are coming up. This is bloomberg. Tom welcome back. Counting down to the end of the session in india, over one hour away. Lets get the details with rick pollard in new delhi ruth david in new delhi. They announced they had agreed to disengage from their border standoff. In terms of the economic tussle, thats only becoming more severe to some extent. Ruth so, thats right. They agreed to disengage from the border earlier in the week, but it looks like they are still locked in a very tense standoff high in the himalayas while foreign ministries have stepped up criticism, accusing the other of violating longstanding agreements. And we have satellite images that appear to so china ash show china images back in the valley. And this is impacting indias trade ties with china and other countries, as well. David ruth, david here. Obviously, its affected trade flows and sentiment. Who knows where this goes . India is considering more rules and tariffs on exports coming from china into the country. What more do we know on that front . Its nowl, india says looking to impose stringent Quality Control measures and higher tariffs on about 370 imports from china, that include chemicals, electronics, and pharmaceutical materials. China is indias biggest source of imports and they trade about 50 billion with new delhi, which their consulate trying to rebalance. This will have some impact on trade between the two countries. Tom what about the impacts on supply chains, ruth . Ruth well, it looks like tensions are disrupting supply chains for u. S. Companies based in india. Haveems custom officials halting clearances of some industrial consignments at major ports and airports, and that is raising big concerns to u. S. Companies based here in india. Much indeed,u very asia government editor. Ok, coming up here on the show, one of the biggest bets on aviation since the pandemic wreck to the industry. Industry. Ked the well discuss bain capitals bold move to by Virgin Airlines to buy Virgin Airlines. Thats coming up next. This is bloomberg. David welcome back to the show. It is all coming together for Virgin Australia. About an hour back, bain capital now sending a deal to acquire the airline after cyrus capital dropping out, saying the administrative deloitte failed to engage. It has been reviewed by the board of australia. Paul allen joins us from sydney to talk us to the details. What do we know . Paul we know that it is going to be based in queensland, at least according to the queensland government, saying the virgin headquarters will be staying there. Bothalso understood that businesses were aiming for a smaller, single branded, domestic shorthaul of flights. Theres an thousand jobs at stake 10,000 jobs at stake and some losses are certain, as we saw at qantas, slashing its workforce is the Airline Industry struggles in this varmint of coronavirus. But it couldve been ash this environment this environment of coronavirus. But it couldve been so much worse. The government refused to step in with the bailout, so this bain deal, the last team standing, this bain deal will save the finisher and well see what virgin looks like going forward. Tom does the deal face any regulatory hurdles or is it smooth sailing from here . Paul in terms of regulatory hurdles, it does appear to be plain sailing. They had review from the board before this happened. The understood clearance from the treasurer. There could be a couple of bumps on the road. Virgin bondholders submitted their own plan to swap debt for new shares, so well have to wait and see what the fate of that plan is. But i guess the biggest challenge is the big picture, which is far from rosie. Weve had another outbreak of coronavirus in the state of victoria between australia and new zealand, and it seems australias going to keep his borders closed to tourism through 2021, so an uncertain future in the industry as a whole. David something to watch moving forward. The story and qantas, as well, to complicate the competition and competitive lionsgate. Paul allen out of sydney. Lets have a look at the new york Stock Exchange. President Stacey Cunningham says u. S. Companies are considering direct listing as an alternative to the deal. She told us how the process is still being finetuned, at least in collaboration with other u. S. Regulators. Have a look. Direct listings are interesting innovation in the Capital Market space. While they arent from everybody, we hear that they are looking for more choices. We have been working with the fec more productively. We have had two companies to date. The ceo of spotify came up with the idea, brought it to us. We rolled out the first one. Furthercompany chose it public listings for their public listings. It allows for Capital Raising. What the listing does is it separates the timing, decouples Capital Raising from going public. You can choose to go public, but not necessarily raise money at the same time. The two have taken that path. Now, what if you want to raise money at the same time but you like the exchange and process of opening that morning to determine how that offering gets priced . Thats the phase were working on right now. We filed the first iteration in december and we worked with them on questions we had. The most recent question answers mechanical question on how that offering will be priced in the morning. How does it get entered into the market, and what measures need to happen that morning to get that live in public . And weve been advancing that ball so we continue to work with issuers and investors on having another alternative to the market. In theu youre middle of this process. But from your perspective, is it really a mechanical issue . Because it sounds like we have to work it through and it might take some time, but is there an issue that you will get through get to sooner or later . With spotify, it took us a year and a half to get through the sec, very constructive feedback and dialogue. Their goal is to protect investors and so they want to make sure theyre working with us to develop a process that achieves cycle. It took us about a year and a half to get that done. We are working on this iteration. Theyre more about how does it come to market . How do investors know what to expect from a price level, a range perspective . And how do we know all the interest gets satisfied . There are more mechanical issues. I do think we will see direct listings have the ability to raise capital at the same time of their listening and ash listing in the not ash in the nottoodistant future. Weve seen stacks. Weve seen over this period of time during covid19, when the markets have been very turbulent, weve seen a tremendous number of acquisition corporations, which are management teams raising money, ip owing without having Business Operations yet, but planning to acquire a business. The fact weve seen so many come to market the past few months is indicative of the fact there are opportunistic businesses out there. Its another way to come public. At the time, the combined entity is a public company. Its one more path to the public we have been working on. If this august work out, how much difference would it make to your Stock Exchange . Do you anticipate more companies will go public . How material would it be for the new york Stock Exchange . I dont think direct listings are the path for every company, but there are some considering it. Were the only ones that have held one. The fact we have human beings overseeing that price discovery process puts us in a unique position to be able to make sure things are flawlessly executed, not just at a time of ipo, but especially when you look at direct listings. Those opening auctions are much larger than the typical opening auction for an ipo. Both spotify and slackware in the top five sized shares ofting in the opening option all opening auctions in history, even though they, as companies, were smaller than some of those companies, really massive traits because so much price trades because so much price discovery is happening. Were uniquely positioned to a compass that. David that was Stacey Cunningham, the president of the new york Stock Exchange. And you can watch more of the interview on wall street week, airing on bloomberg tv, 6 00 a. M. If youre watching saturday. You might have seen this breaking news out of the u. S. And yes, here we are. The u. S. Has now set a daily record, breaking the two month old record set back in april for new daily infections of covid19. Were looking at a number of over 37,000 new cases for thursday. Obviously, hotspots in places like florida, texas, where the governor is now rethinking reopening the economy as california, arizona, 37,000 new daily record in the u. S. The global number right now, as million. King now, 9. 5 the daily global, 950,000 new infections across the world every single day. Tom . Tom and predictions of as many as 180,000 deaths by october in the u. S. , the trump saying there will no be there will be no new lockdowns. Lets get business flash headlines. Nike revenue fell 38 in the Fourth Quarter to 6. 3 billion, missing estimates by more than 1 billion. Bigger than . 51 a share, compared to estimates of just . 10. Nike says it divides no line strategy during lockdowns, but booming e sales werent enough to make up for lost revenue at closed brickandmortar stores. Surging coronavirus cases means apple is preparing to reclose more stores in the u. S. , with at least 14 athletes outlets set to shut the door. 40,000 cases were reported in the u. S. Spikes in north carolina, oklahoma, california, texas, and arizona. Local authorities are reassessing plans to reopen state economies amid pressure to reboot from the white house. And Workplace CommunicationsCompany Slack is joining other companies in letting employees work remotely. The ceo told bloomberg staff wants certainty and so he is not putting a definite date on return to the office. Slack has 16 offices around the world, including london, tokyo, and paris. And the latest figures show u. S. Airlines are still struggling to get back in the air. Passenger numbers on one day this week number just under half a million, 80 from a year earlier, when 2. 5 Million People were flying each day. Still, it is better than the previous week, when passenger numbers were even smaller. U. S. Tariffs operating at about 40 capacity. David . David lets get a brief check that your markets now. 90 minutes into the session in hong kong. China and taiwan are shut. Volumes are higher than usual. Have a look at where singapore is. Weekend,weak dutch weekend, slack higher. We talk about the u. S. Record of new daily cases. This is bloomberg. Haslinda its almost 11 00 a. M. Welcome to bluebook markets asia. Im Haslinda AminBloomberg Markets asia. Im Haslinda Amin. David and im david ingles. Factories get on china for tightening its grip on hong kong. American banks may be hit if they continue to do business with mainland officials. Haslinda global infections approach 10 million, with almost 500,000 people dead. Cases in justnew one day, the highest since late april. David and in the spirit of investing, we look at alternative assets and its volatile environment. Where whiskey is going down particular well. Haslinda [laughter] looking forward to that conversation now. Lets get a check on the markets. It is an update. Risk is on, perhaps as buying dips, the u. S. Having late gains in wall street. Investors betting on prospects for more stimulus against a spike in new virus cases. As we reported, the u. S. Hitting a daily virus record for new 37,000, total u. S. Cases surpassing to put 4 million. 2. 4 million. China remains shut for the holiday, but hong kong remains open the hang seng remains open. We are seeing losses from china and acting the controversial National Security law. The kospi, they are up 910 7 , rising for a third ninth tense of 1 9 10 of 1 , rising for a third consecutive quarter. The asx 200 index up 6 10 of 1 . They resumed trading, slumping 7. 6 after that turnaround plan. Meantime, as we heard earlier, bain will buy Virgin Australia after cyrus withdrew its bid. Asean having its virtual leaders meeting today. A surprise cut by the filipino central bank, a bold 50 basis point reduction, boosting market confidence, not happening today. Up aep up aikins 1 sct tenths of 1 8 10 of 1 . David that sets us up modestly in terms of the india open, up 30 points on futures. The nifty felt 40 . L 40 . E fel hopefully we get there by the end of this year. We will get you more on the markets when the cash market comes up and running. Ok, lets talk about your first word news and get you up to speed with other top stories. Talk about the fed. U. S. Banks cannot increase dividends or resume buybacks in the coming weeks, amid this growing uncertainty over the coronavirus pandemic. The feds latest stress test shows the lending sector performed well, but a separate review of the virus uncovered potential threats. The fed vice chairman said banks must be prudent and also conserve their capital. The resurgent coronavirus produced a number of new cases in the u. S. , in fact topping the daily peak we had in april during the initial outbreak. More than 37,000 new cases were reported in 24 hours after Many Americans let down their guard on social distancing. Texas is halting the reopening of its economy with intensive care wards swamped. Convection reports are infection reports are also rising in arizona, california, also in florida. In southeast asia, virus infections continue to surge, cases in indonesia topping 50,000 as the government uses restrictions there. More than 1100 cases were reported thursday and deaths more than 200. Singapore sees some optimism, with about 80 of markets expected to be clear of covid19 by the end of next month. Now, the broader hits, the trade, the coronavirus has hit twice as hard, lockdowns increasing farms by 12 . Thats at the height of the pandemic in april. New Research Says shipments have fallen 15 , although the wto of aworstcase scenario plunge of more than 30 will be more probably be avoided. They see a trade decline of about 13 . Haslinda the u. S. Senate approved a bipartisan bill that would penalize banks doing business with chinese officials involved in hong kongs new National Security law. Chinas top lawmakers may announce their decision on the lawn next week after a meeting that begins sunday. For more, lets get Tom Mackenzie in beijing. Ask cleaning pressure over the security law, what escalating pressure over the security law, what are the details . Tom if signed by trump, it would compel the u. S. Secretary of state to go to congress once a year to explain whether or not chinese officials were undermining one country, two systems, that which has been in place in the u. K. For china for hong kong. They are concerned and they say this new law what autumn undermine autonomy of the city and thats where they are pushing for this bill. Where it would empower the president to do would be to seize, or at least freeze assets of those officials who are implicated. It would also allow them and the president to ban those officials from entering the u. S. , but crucially also lead to sanctions, potentially on any u. S. Or foreign Financial Institutions that are doing deals or business with those officials. Again, it has to be passed through the house, but its expected to be an easy route, given bipartisan support. Then it will have to be signed off by president trump. And the context is this is a more assertive, more aggressive contracts congress pushing measures. The hong kong human rights bill they signed off on, and more recently last year, this bill aiming sanctions at officials involved with a round of muslims, rent a million muslims interned in camps in that part of the country, as well. David tom, speaking of getting legislation through quickly, when can we expect a security law likely to be enacted . Tom well, it could be a topic that is being debated and talked through by the National Peoples congress and its standing committee, which convenes on sunday for three days. Its not on the official agenda, but it doesnt mean its not going to be one of the priority topics for those officials as they work through this. What that means is they could, in theory, be enacted, and tried into law as early as tuesday. July 1 is the anniversary of the handover of hong kong from britain to china. Its a sensitive week. There is speculation. Were waiting to see what happens. Were going to get more details sunday and monday. It could be as soon as tuesday. The concerns in hong kong are allowed around what could happen with Law Enforcement officials operating in hong kong, carrie lam able to appoint judges as well. The aware of that. In terms ofs be aware of that. In terms of sanctions from the u. S. , china said it would hit back with its own countermeasures though it hasnt said with those would be. The trumpwe know administration sought changes to the original language before the bill could advance. What do we know about that . What are some of the concerns . Tom certainly theres a broad concerned that if you put in place sanctions that were not targeted, that could end up causing damage, particularly to u. S. Financial interests, which of course do a lot of business in hong kong, with hong kong, and with china via hong kong. It seems the Treasury Administration and Department Work closely with the senators. They worked with the Treasury Department in terms of the wording of this bill to ensure its targeted and it gave and gives Financial Institutions u. S. Banks a heads up. It allows them to know who is on the sanctions list so they can prepare in terms of who they do deals with. That has been part of the concern as they shape the language around this bill. David Tom Mackenzie, the for us from beijing. Live for us from beijing. Topng up, talking whiskey, quality spirits are gaining popularity as they hedge around new private equity whiskey fund. Haslinda but before we take a swig of those alternative assets, we look at how traditional ones will fare. They want investors to be careful before jumping into cheap stocks. Thats next. This is bloomberg. David welcome back. Were headed towards 10 million, 9. 5 million in terms of the virus global account, the pandemic continuing to surge across many parts of the u. S. , which is been a big driver. California this is texas youre looking at here. What you have in blue, those are new daily infections, yellow are the number of people going outside and having their meals out there. There might be a correlation here. Our next guest talks about this and perhaps investors needing to be more realistic in their expectations on how quickly this recovery will take place. Need to be patient looking ahead these next few months. Joining us is the chief asian markets strategist, joins us live. Nice to see you. Im guessing were not going to get a repeat. Forget, dont the fantastic Second Quarter was a result of a severe and sharp correction in february and march on the back of coronavirus. Think at perspective, i couple develop its were developments were watching out for, are going to get a second wave in the u. S. Or broader terms . Thats one factor were watching closely. Were also monitoring second Central Banks and governments. We expect them to be aggressive in terms of stimulus, but some of those fiscal policy stimulus start to expire, were watching very closely whether they will be continued or extended. With think they will, but obviously we think they will, but obviously that remains to be seen. David how does that big into earnings . Were looking at elevated valuations headed into that. Not much more visibility compared to last quarter. Whats top of mind for you . Warnings, we2020 were expecting a sharp recession. The uncertainty here is whether that recovery is going to be further pushed back because of this upcoming second wave. If you look at 2020, 2021, most sectors and most markets were expecting not a full recovery in proper earnings, but certainly a decent rebound. I think the risk off where we are now, if we do see a delay, an opening of the job economy, International Travel is still going to be much further down the line. I think investors will have to revisit their 2020 earnings expectations. 2021, whether we could see a more muted recovery, especially in sectors such as travel, retail, energy sector, which were the worst hit sectors when we saw the market corrected back in february and march. Fusion in terms of different sectors continues to be critical because some like health care, like technology, they should be ok. But in some of the more sensitive sectors hit by covid, i think they will be under significant pressure. Haslinda lets pick up on that point. You talk about valuations and extremes. Its hard to find value, but there are really cheap stocks as well. We talk about airlines, for instance, travel. And we know why theyre cheap. If you take a longerterm perspective, is it worth picking up some of the stocks if you have the timeframe . Are i think there interesting opportunities there, but to me, one question we have to ask ourselves is whether were seeing structural shifts facing these sectors. For example, airlines or the travel industries face a structural change as a result of the coronavirus outbreak, not just for the next year or two, but further down the line. The reason why theyre still attractively valued is we dont have a clear answer to these questions for now. So, i think some wellrun companies physically if it can facing significant pressure. I think we can be a bit more patient rather than look for really cheap stocks to get it at this point. It comes back to different sectors. Another thing to keep in mind, many of these companies are burning through cash right now. Even if the world gets better in the next 1218 months, they probably wont have a lot of cash to invest in, unless they issuessue stock raise stocks. So we have to look at Growth Opportunities beyond the pandemic, where lower cash typically means less resources to invest. Tai, has markets priced in politics ahead of the november elections . Have they priced in the possible biden presidency . Tai i think at this point in time, its still a little early because were still four, five months to the elections and a lot can still change. But you look at premium polls, etc. , it does put candidate joe biden in a pretty favorable light. I think another question investors are asking is if joe biden does when the white house, could we get a win the white house, could we get a clean sweep in the senate and house, as well . That could mean a policy shift, especially the deadlock in congress the last couple of years. Haslinda i want to take a look at chinese stocks. They acted like haven place in emerging markets plays in emerging markets. Right now, a defense of play, can this gains persist if Risk Appetite were to go up from here . Tai i think chinas market is one of our favorite markets rayna. You look at the recovery right now. You look at the recovery, its not a sharp vshaped, but certainly more consistent in terms of delivering improvement in economic performance. From that perspective, i do think the Chinese Market does offer an interesting longterm activities. The if we did get improvement in Risk Appetite, think china is but if we did get improvement in Risk Appetite, i think china is care,hnology, health weve seen a significant adoption of how people are getting education, getting medical advice online. These are things we think are very interesting. At the same time, the opening of chinese agree markets to International Investors will attract capital inflow to that part of the world. There are a number of structural factors at play in favor of the Chinese Market. Case, and thats been the for the most part, the last five years. I know you cant talk specific. Tencent has been very much talked about by many investors. Do you think we get to a point, talking about the china market, do we get to a point where it might be a good time talking about rotating out of the popular names and popular trades and injure the sort of less like parts of the equity market less liked parts of the equity market . Tai interesting question. The stocks have been enjoying strong momentum the past few months. I think its important to think about each individual company on its own merit because some of these tech companies, they do casha very large investment feature, and delivered a strong track record in entering new sectors. So from that angle, i dont think of taking out some of the companies. But as i mission earlier, Consumer Trends are changing as i mentioned earlier, Consumer Trends are changing. You look at the auto market, that could be the market of the past and investors could look forward to things like medical and education, where chinese consumers are clearly spending. Be ank that could qualification for taking out the markets. David great stuff as always. Thank you for coming on the program. Right, tai was mentioning momentum. We dont want to get in the way of this next guy if hes coming through the lane. Our exclusive interview with lebron james over the Pandemic Impact on sports and how he feels and how he sees games returning. Thats all coming up. This is bloomberg. Haslinda your walking watching Bloomberg Markets asia. Aftering resumes july 22 halting games to coronavirus. We spoke exquisitely to lebron james exclusively to lebron james about the return of sports. Lebron i believe that sports, in general, has done great things for communities, for households, bringing people together and more portly, like you said earlier, with our commissioner and our league, has always allowed us to spread what we think is important in our lives. Together, a at it lot was going on right now. It gives us another opportunity to continue to talk about what is going on, social injustice, police brutality, black lives matter, and continue to hit home on things that matter a lot, as well. But sports has always been something that galvanized and brought people together and just making people feel very uplifted. I know in my community right now, unfortunately, a beautiful 18yearold girl was just gunned down in akron, ohio last week a week after graduating high school. So, just to get peoples minds not saying forget about certain situations but for a breath of fresh or, to have a sense of fresh air, to have a sense of love for what sports can bring. I know what i do on the Basketball Court can bring a lot of happiness to a lot of household, including my own. So im looking forward to the season getting restarted, getting back in the laker uniform, and continuing to push the envelope, not only on the court, but off the court. Like ive been telling a lot of my colleagues, a lot of my friends, i wont stop until i see change, and i mean real change for us as a community, as a black community, both on and off the floor. My mission stays the same. Bloomberg businessweek special conversation with lebron 7 00 airs this saturday, a. M. If youre watching out of hong kong and singapore. Just to get you some of the latest lines here on this wire card saga and in the philippines, centralbank is committing they will act and help Law Enforcement when it comes to the case, they say based on what we know, is running to bad actors. More details once we get them. That is the latest, a stunning saga. Have a look at where we are, market wise. Were writing into the reopening in tokyo, fairly muted end to the week. Qantas a very big story were tracking on the back of the big news, resuming trade, down 9 on that stock. A couple of big movers to tell you about an hong kong. 4. 87, still double the level of less than two years 487, still less than two years ago. Well leave you with this beautiful shot of victoria harbor and hong kong. Were coming back on the other set of this talk a lot more about these markets. Theres plenty more ahead. This is bloomberg. Haslinda friday, almost 11 30 a. M. In singapore, in the little of the trading day, and the fti 1 , more thanof 22 billion shares have traded so far. The fti has had a rebalancing, that and the optimism on economic reopening contribute to increased activity in the city. Something you want to take note of, with regards to the virus, revoked 130 work assets for breaches of lockdown measures and quarantine orders. The ministers says those individuals have also been permanently banned from working in the lion city, singapore taking stiff action against those who flout restrictions of the lockdown. Now, heres your first word news. Lawmakers in washington have approved a bill that would penalize banks for doing business with china. Beijings security legislation for hong kong. The bipartisan measure in the senate also has support in the house of representatives and needs to pass there before reaching president trump. It condemns china for breaking obligations under the deal that returned hong kong to mainland will. Russia has mainland rule. President iaoted on on mainland change that would put president putin in power through 2036. Putin has effectively run russia for two decades. The change would give him two more sixyear terms. Potential changes have already been approved by parliament. The bank of japan governor has issued a new warning about the economy, saying its extremely severe situation. He says gdp in the Current Quarter is likely to be considerable negative growth, and it wont take a long time to achieve the banks inflation target of 2 . The government is focusing on how to maintain financial civility and provide funds to hardhit business. And liverpool has ended a 30 wait to the champions with a loss at chelsea. Its liverpools first championship since 1990, but fans hard from attending matches restrictions. S the dominance makes it the first ever to clinch the title with seven years seven games remaining in the first to win the crown in june. Yeah, i wish i could continue the good news there. We had this headline earlier on businessweek. So the u. S. Set the Previous Daily record in the u. S. Was 36,188 back in april. Just over 30 minutes ago, we put together the different numbers from the different state health department, and its now exceeded 37,000 in 24 hours. That came on thursday. Thats a new daily record. Heres a look at your hotspots. Its a led by florida, texas, california, and arizona reporting more and more cases. As i would imagine, there might be more cases. As concern grows over the surges in cases, it has resulted in the fed imposing a new list of rules on u. S. Banks. This comes as companies such as apple and nike are starting to show how big a toll the pandemic is taking. Lets bring in su keenan on the phone from new york to talk us through this. Lets talk about apple later on. Start with the banks. What do we know . Su the fed is telling the biggest banks there are a number of things they cannot do, such as boosting dividends. The banks did well in the latest stress test, according to the fed statement, but in a separate review of the coronavirus, the fed said it had key concerns that resulted in requiring the banks to suspend buybacks, put limits on dividend payments, raise capital planes, and be ready for Additional Capital plans, and be ready for additional stress this year. Among the banks that took the stress sets stress test, Morgan Stanley and Goldman Sachs feared the worst and the theoretical downturn. This was expected because both of these companies are more reliant than their peers on Capital Markets. As for the spiked and coronavirus cases in many states, this underscores the feds concern. There are 34,000 new cases around the country, and thats according to the cdc, the centers for Disease Control here. California, texas, arizona just a few, and new york and new jersey, the former hotspots, now putting limits from people from those states to enter new york and new jersey. In other words, they have to be quarantined for two weeks once they arrive. Appleda meanwhile, su, and nike are the latest corporations to find the impact of the pandemic worse than expected. Su absolutely. Apple is shutting 10 of its u. S. Stores again on virus concerns, with 14 of those stores in florida, which again, one of the hardest hit states right now. The company has closed 32 of its recently reopened stores. Grand Central Station in new york city put up signs saying the stores were closed and many customers found out the stores were closed as they arrived at them. In fact, apple is emphasizing it is taking the steps in an abundance of caution. As for nike, lets go into the bloomberg terminal because nikes Gross Margins are at the lowest level this century. The biggest athletic rainmaker brand maker posted a surprise loss after the bell, saying ecommerce sales do not make up for brick and mortar slumps. Revenues declined well below the 7. 3 billion expected. You may recall nike reported a 75 surge in online sales last quarter, but again, that does not make up for these numbers being reported. Its certainly can about faith aboutface from earlier this year. They are really taking a hit here in the result after the bell because many other shares to fall, as well. Skechers, footlocker fell 2 5 after the bell. Back to you. Haslinda bloombergs su keenan in new york. Now, Johns Hopkins university is a surge in virus cases can be tied to a number of factors. Nursing professor jason holly spoke to uber surveillance. Two bloomberg surveillance. Clear the first thing is is there were some nonpharmaceutical interventions that were rolled back quickly. Florida, georgia, arizona, texas. Cases ine seeing is in states that remained closed longer now continued to decline, and places that opened earlier are really seeing these increases, day after day, quite friendly. Of the risksome Mitigation Strategy we should be thinking about now for politicians, but also for individuals . Yeah, i think Everyone Needs to understand there is no risk, other than staying home and staying with your family and avoiding contact with others, whose exposure you do not know. We have to recall that a center medic transmission to three days, that person could be a center medic Trance Mission ptomatic transmission two to three days, could be spreading the virus. Its really critical that politicians understand contact of their staff, understand contact of individuals around them, because they are at great risk given the amount of contact with others. If you have contact with people you dont know, you are. Pacing yourself at greater risk. Francine should people wear masks outside or on the inside at Public Places . Lebron the answer jason the answer to that is it depends. Crowd, at an a protest, absolutely you need to be in a mess. Youre protecting other people. Its not really to protect yourself. Its an ultra mystic act. All truth stick altruistic act. I wear my mask when im outdoors. It ultimately leads to greater protection until the point we community,ine or her if that is hurt immunity, if that is even possible with this virus. What percent of the population do you need to have Heard Community herd immunity . Put out a report on how to correctly do these, but its quite violent. What we know now is the data is really convenient for the investigators trying to obtain that data. What it means is lets put out a facebook ad and have anybody with Internet Access come by a certain date and certain time and obtain an evaluation. What we really need is a much more robust population level estimates. Thats the data that is often missing. Were getting some trickling in of that data, but that is few and far between. But theres estimates range variably depending on the sample and the location. Adjusting the enough, interestingly enough, studies have shown as it changes marketly from each time point. Back to your how many people do we need . Greater than 50 , probably even higher than that to effectively stop transmission. And that was Johns Hopkins nursing professor jason farley, and we should mention that Johns Hopkins, Bloomberg School of Public Health is supported by bloomberg, founder of bloomberg lp. China,alking india, truth remains in high standoff in their malaise the board in the himalayas, the board threatening. Well have the details. Thats all coming up. This is bloomberg. David welcome back. Lets talk about indias border dispute with china. Its now threatening economic ties between the two economic giants, with new delhi considering tougher rules on chinese imports. Lets bring in the new delhi bloomberg chief for more on this. Ive got to ask whats changed since they both agreed to disengage from the standoff earlier this week . How did we somehow get to this point . In the talks earlier this week, there was an agreement to disengage. But what we learned from officials yesterday, that disengagement hasnt worked on grant as yet. Positions the chinese the chinese are maintaining positions on the border. India has increased their presence. Is wellintentioned to be running high at the border. Haslinda this is already affecting trade between the two countries. India seems to be considering more rules, more tariffs. Partlyeah, euna, its partly you know, its reflected on what is going on domestically. Movementa bowl recalling chinese goods. Look at mobile phones and other items of daily use, chinese goods are well entrenched in the indian economy. Its impacting trade. The government is trying to play the trade card, as well, the tipping to impose status. Tariff inooking at terms of more stringent rules as far as quality is concerned. Element being played out along with what we are seeing at the border right now. David do we need to Start Talking about supply chains . Is it too early to Start Talking about start those conversations, extrapolating . Unni i guess it would be still early because right now, im sure at some point of time, the diplomatic level, at the highest leadership level, there would be some thought of a broad agreement to pullback and cool down tensions. These are the two big economies and you cant have this for too long because it will damage both nations, economically. We shouldk ash see we might belong remove at the border, but its time to tickle medic leader will be strong diplomatic leader will be strong. As to guess how soon it will happen, it will be slightly down the road. We might see a border standoff dragging on for a couple of months. The new delhi bureau chief there. It is a risk on day in asia, seeing gains in the indian benchmark, india rising with the rest of the region, all sectors and positive territory, industrials, materials leading the pack higher. The nifty up 8 10 of 1 . Benchmark,p up the nifty 100, 8 10 of 1 . In terms of the rupee, it is one of the worst performers in asia this year. Still to come in the spread of investing, look at alternative assets and a volatile environment with red vines road bike. Domestic worldwide. Dont miss that conversation. This is bloomberg. David lets get the check of the business flash headlines. Macys is cutting thousands of jobs, admitting retail wont recover to previrus levels anytime soon. The upheaval will eliminate 4000 corporate and management positions, with the aim of cutting costs by 306 to Million Dollars this year and 630 annually this year. Macys will be Smaller Companies from now on. The latest figures show u. S. Airlines are struggling to get back in the air. Passenger numbers on monday this week numbered just under half a 80 , 2. 5 million were traveling. U. S. Carriers are currently operating at about 40 capacity. Now, the blame game has begun in germany over the dramatic demise of payments from wirecard, calls for a comprehensive inquiry and leadership inquiries leadership changes. The former sim tech start filed for insolvency after admitting it cannot locate deeply dollars missing from its Balance Sheet locate 2 billion missing from its Balance Sheet. They have questions to answer. They are tightening Corporate Governance after a campaign scandal. Defense secondbiggest utility told shareholders it will separate management, oversight, and execution functions from here on. They are accused of paying local officials contracts in and naming 13 new directors to the Company Sports companys ports. Haslinda time to look at assets at of market instruments. And whiskey could be one of them. Asealth report named whiskey 2019s topperforming luxury investment. Our next guest recently launched a private equity whiskey fund and said this. Is becoming liquid gold. Whiskey is this becoming liquid gold. Speaking of alternative investments, would my money in that whiskey fund have survived, have been saved during that selloff in march . Harry doing . How are you doing . Thanks for having me. There are some uncertainties. People are looking for alternative assets. Now, obviously, this is outside the usual bounds of market activities. Were looking at cask investment, the rare end of the market. Naturally, whiskey goes up year on year. It interacts with the oak. It finds its rarity and really finds its complexity. It wouldve survived. We call that liquid gold because it is a natural safety. It has been doing really well, which is why we are in this market. It is one of the bestperforming assets out there. Haslinda bestperforming. What kind of returns are we looking at . Murray so, rare single malt is targeting 1050 year on year 1015 year on year. You have to look at the amount of people that are involved in this and what they are actually doing in auctions, for example, and how much youre on your some of these auction ash year on year, how much some of these options are doing. We want to be sensible. Were looking at 1520 . Were showing a graphic hear of the different facets of the fund, brian, what have buyin, what have you. I ask this question with no pun intended, what is liquidity like if i want to get out of this . Referencem going to the brokerage side of it. Liquidity is created by more people being interested in the market, especially the asian side of the world coming in, understanding the secondary cask market. Theyre looking to bottle and contain Something Special for themselves. So what were looking to do is utilize the brokerage and be able to exit. Our strategy is quality over quantity, cost oriented. Other whiskey funds may go out and buy 10,000 casks and bottles. We try to excise those, its difficult to get peoples money back quickly and efficiently, hence why we have gone for the rare end of the market. You only have to look at the 1980s and 1990s that these whiskey companies, with great liquidity, they sold a lot of their casks. They could not predict there would be such an uptick in the rare end of the market. That is what we are getting into. That is what we are offering to investors, access they have never had before. David you mentioned 1520 projected return, with a high degree of confidence. What is the risk . What do i nazi what do i nazi . What do i not see . Murray we have adopted an armslength approach, saying we have an independent fund administrator. The interact orders. We take on insurances with the best companies to look after our cost. You mentioned liquidity earlier. Having the brokerage attached, this is what allows us to have liquidity and confidence to trade in return assets as opposed to be stuck with stocks at the end of the term. Haslinda liquid gold. Murray, thank you for sharing your insights with us. Heres a look at the coming week. Chinas Npc Standing Committee meets sunday amid speculation they are putting together the final touches on a National Security law for hong kong. Manufacturing and on many factoring pmi numbers are due tuesday. The next day mark twain three years since hand over to chinese will marks 23 years since hand over to chinese law. Check onay, a health the u. S. Labor market. The june jobs report due. Lots to digest when you look at the week ahead. David yeah, so before we get there, lets go to the we can first. Heres how we look weekend first. Heres how we look. India is hitting highs. Japan 30 minutes out of the lunch break and hong kong heading into its lunch break right now, 6 10 of 1 . Overall, slightly higher this week. Were moving into the second half of this year. There might be pressure to polisher profit off the table and book whats been an extraordinary firsthalf and first quarter. Thats offer for us here at Bloomberg Markets asia daybreak asia. Im looking forward to a stake asian this weekend at home staycation this week and at home. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. Following is a program furnished by Shriners Hospital for children. It is the night before i travel to oklahoma for my filming session. I love seeing my boy caleb. I cant live without it