States come and the jobs report two days away on thursday. To me, all of it is superseded by a global virus update. There is a little bit of good news, but it is overwhelmed by the bad news, and this news out of hong kong, i thought steve engle and anna edwards conversation with lord paren that lord patton was extorted very. Response that we could see from washington will do well worth watching. Lam just carrie finished a speech where she said freedom of the hong kong population it is unclear how china will interpret the new law that has been passed. Coming up in the next hour, our exclusive conversation with barclays executive jes staley. We will talk with him about loans and markets. Lets get to first word news with three. Ritika good morning, tom. The stage has been set for another confrontation between the u. S. And china, chinese lawmakers approving a National Security law for hong kong, punishing acts of terrorism and seclusion with Foreign Forces. The law will shape future of hong kong and has attracted a number of companies. The World Health Organization warns the worst of the coronavirus pandemic is yet to come. The reason, the agency says, lack of Global Solidarity and fighting the disease. Most u. S. Areas are taking steps to scale back reopening. Arizona is closing bars, new jersey is withholding plans for indoor dining. Investigating allegations that russia offered bounties for killing u. S. Soldiers in afghanistan. John ratcliffe made the announcement last night. I the white house says the president was not briefed on the matter the white house says the present was not briefed on the matter, according to the new york times. A newjohnson is promising deal to rebuild the post coronavirus economy. In a major speech today, he will commit to spending on infrastructure and will say that balancing the books must wait until recovery is secure. Johnson says what is needed is a aroundent to put this on the time of crisis. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, ritika gupta. This is bloomberg. Francine . Tom . Tom thanks so much. Equities, bonds, currencies, commodities. Much to talk about this morning, centered around the grind, yields lower. We are not seeing substantial curve flat, and the curve has stayed fairly stable here, even as the twoyear yield has critically come down. Instead of the word grind, maybe i use the word compress, to see the twoyear yield compress. After a tough morning, equities did pretty well off the mark. Other than that, it is pretty quiet out there. We have to watch the news out of hong kong carefully to see how asia equities into wednesday morning. Francine . Francine i wanted to show you renminbi. Partly because of some of the data that we saw. We saw improving purchasing in china thates will lift Global Equity markets. But i guess some investors are questioning or beginning to question the rally, and we are seeing european stocks down 0. 3 . There are couple of things i wanted to show you, copper climbing above 6,000 a ton in london. We have not seen that for quite some time. The markets are pulled in two directions. They are looking at inflation data. They are looking at chinese data. Looking at the World Health Organization, worried that the coronavirus pandemic is still to come which is why they will be pulled in different directions. Joining us to talk about this is Rick Lacaille. As always, thank you so much for joining us. What is the market looking at right now . How difficult is it to be longerterm when there is quite a lot of things going on in the shorter term, almost day in and day out . Very i think it is difficult, and there is the risk of the market coming too long, with 2022 earnings. Getting from here to there is going to inform never getting a lot of bad news. So i think valuations may be a is tought too it when we have been buffeted by the sort of flareups in the pandemic. Also there is a great unknown of how the pandemic will impact emerging companies. Means what, rick, that we have to see if there is a second lockdown, or will you look at stocks or sectors that will fare better no matter what . We are a little underweight equities given concerns about valuation, but the strong support of monetary fiscal policy has put us into high yield. Ourre hedging that with position in gold. We have some hedges against really extreme events, but eventually the valuations keep things away from equities. Lacaille, tom keene in new york. You need to reset equities for the second half of this crazy year. How do you reset equities for this year, getting onto q4, and then into 2021 . Ofk i think toward the end the year they will be 11 news flow about. What were seeing is entering in the quiet phase where we will have flareups and success in bringing down those flareups from time to time. We also have a little more line of sight about how the recovery is going to go. The first part is very rapid. The second half as we get to the end of 2020 will be more moderate. , ihink Consumer Behavior think how corporates respond in terms of caution, and how the fiscal stimulus will affect things i think that will get people were optimistic toward the end of the year. But were worried about the volatility flareups we will see between now and then. That is keeping us cautious. Tom the volatility flareup goes to the society of cash. Remisshing i have been on his talking about what cash should someone have right now. Are you fully invested . Is cash normative, and do you really want to build up a substantial cash cushion waiting for that volatility . Rick institutional levels of cash are quite high. The opportunity cost of holding cash, youre still getting positive Interest Rates in certain parts of the world. I think holding on cash is the expectation there will be better times for purchasing. I dont think it is a longterm position because the needs of most investors are not met by returns for cash. It is an option to sort of purchase, if you think about it that way. Rather than a permanent allocation that is going to solve the longterm investment problem. Francine what is the one thing you worry about in terms of investment longerterm . Is it inflation . Is it Companies Going under . Is it the unemployment numbers not getting back to what we had in december 2019 . Rick i think it is a continued tightening of conditions in terms of globalization. Deglobalization has many malign effects, both political and investment. I think the longterm undermining of private sector profitability through globalization is one of the biggest and slowmoving threats. A little like the climate threat. Returnsterm threat on because it affects the economy. I think there are twin dangers. Inflation not into a present danger. Francine what do you do with gold right now . Rick it is easy to see in the dynamics, you know that things have been extreme from a geopolitical perspective, gold can provide a very nice hedge. At any point in time it is hard to say whether it is cheap or it performs very well in a portfolio setting when other parts in the portfolio are doing badly. Success, the one success has been u. S. Physical u. S. Visible large caps, particularly the select tech giants. When we rebalance here and lets assume everybody wants to be intelligent about that do you lighten up on the successful names to do Something Else, or do you sustain them unchanged and then do Something Else . Which is it . Rick i think the right answer is to retain holdings where you really are confident about longterm growth rates. I think there is a concentration risk in some markets, particularly in the u. S. Where you have capitalization coming from a small number of names. What we would like to see is a broadening l. This kind of acceleration history that we are going through is likely to see a broadening l with the benefits of technology from an investor perspective. Beyond those top names. Provided there are thresholds in that, we have a confidence quotient that measures how likely it is that growth can continue from an earnings perspective. Just heard there from Rick Lacaille is critical. This large question about rebalancing and how to go about it. To editorialize, i am in the camp with Rick Lacaille. We are thrilled that he is with us this morning, and we will continue here at the end of the first half of 2020. That is a good time, always, to catch up with the head of barclays. His plate full not only with things in the united kingdom, but also what barclays should be doing in asia. He has a new bandaging Director Director of a new banking for asia. Please stay with us. This is bloomberg. Good morning. Tom good morning, everyone. Bloomberg surveillance. An eventful day. June 3zero. It will be a different hong kong and a different asia. We will have much more coverage on this Important News event out of hong kong and the reaction from london and washington as well. Jes staley will join us in a bit. The operating officer of barclays. We will get a good update on the barclays future. Right now, Rick Lacaille, thrilled that he could be with us this morning. I want to talk about resetting our sites. It has been without question the oddest six months. It. E is no question about i dont know how to compare it with any other odd six months that we have had since i have been around. We have to reset our sites for the actuarial assumption. Where is that target out there . What is the return we should expect the echo rick i think you have to assume the risk premium is going to be lower on equities for a lot of reasons . Although there will be some really beneficial impacts coming out of this crisis, particularly acceleration of the use of technology, it is going to hold the economy back for a while because of caution, and i think appropriate measures that will be taken to both repair the damage and prepare for the future. The other thing we will exit with is in normas levels of is enormous levels of debt until they reamortize. That does they had that does have the potential to hold back growth a little bit. To hold backing the equity premium. Thats all great. Talkingt of articles about new asset allocation. A splash out of wharton in the where4 hours on 60 40, 80 20 is going to be the new allocation. Where is the tendency of allocating out over bonds, which are priced to perfection . Rick i have heard people say they have restored to lower returns because they are taking more risk. They have fixed liabilities and they dont have the ability to meet that liability, then they will take more risk and that is 60 40. I think the question is, can you withstand the downside, going higher in risk in terms of the interim returns. I think people need to have liquidity buffers, they need to have the solvency buffers to make sure that they can get to that longterm point. 60 40 is really not what prices do anyway. There is a whole panoply of assets and tuning including direct credit and emerging markets, and that will expand very widely. I do think there will be an acceleration history, and some of those things that we invest in that might be governmentsponsored, whether Infrastructure Spending and so on, will provide interesting new opportunities for investors. Francine how much more volatility overall do you think we will see in the markets from here until yearend . Rick i think we will see bursts. We will be driven by the Public Health data. I think what we probably will not be driven by is earnings announcements. They will be interesting and important, but the guide about the future, accepting the context of how the health data is proceeding, i think they are not going to be helpful. Data, i think that will be the primary issue, alongside the election in the u. S. And Political Developments between the u. S. And the rest of the world. What are you expecting the u. S. Elections to change depending on who wins . Is it the tax regime in the u. S. That could change everything in the world, or is it trade skirmishes between the u. S. And china . Rick or are some things that wont change. I think youll still see very loose fiscal policy because of the pandemic but also the preferences. But you are right about tax policy. That could change significantly under a democrat when. I think you will also under a democrat win. I think you will see greater spending more generally from a democratic government. But i think on international relations, the main theme is if the democrats win a different approach. But the relationship between the u. S. And china would still be challenging, i think particularly on issues such as trade. So that issue wont go away for investors very easily. Rick lacaille, thank you so much. Particularly the discussion on rebalancing, i think is improper it as we stagger into july. A couple of program notes. Jes staley coming up from barclays. Really looking forward to that. Together with the Prime Minister of the united kingdom. We may stop by and see what the Prime Minister is speaking of this morning. On thursday, jobs day. Francine, there was the fourth of years ago where we declared separateness across the atlantic ocean, and we celebrate that on friday. So larry kudlow on thursday with jon ferro, looking forward to that. Early in this july come on thursday. Stay with us. This is bloomberg. Good morning. Ritika this is bloomberg surveillance. Huber is seeking to capitalize uber is seeking to capitalize on delivery orders during the coronavirus pandemic. The ridehailing service is in talks to buy post mate. At this same time post mates is exploring going public, according to the wall street journal polk. 2. 6 million. Ayal dutch shell is out with slew of bad numbers, a month before he formally announces results showing estimates post tax impairment charges as high as 22 billion. A huge drop in demand, and the Company Revised its pricing and margin outlooks. Shares of tesla rose above 8,000 again, giving the credit to ceo elon musk. The electric car maker may be able to avoid his secondquarter loss. In an email to employees, musk wrote, breaking even is looking supertight. Please go all out to ensure victory. That is the Bloomberg Business flash. Francine this is what i have in my data check, different than usual. Stocks are slipping in europe, together with u. S. Futures, but what i am looking at is copper. Limbing above 6000 a ton while we had improving purchasing into china, we had optimism that helps lift Global Equity markets. There are still concerns about china trade and hong kong. China trade on the hong kong law. In thee two year yield United States coming in as well, worth watching. An important interview to tell you about, yes, but a book and the notoriety of the book. But far more, john bolton on the uniqueness of america and the path forward for his support of the next president. He says it should be joe biden. Ambassador bolton on president biden. Look for that interview tomorrow. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Tom good morning. Thrilled you are with us. We have lots of good conversations coming up. One with a jennifer and with a gentleman from barclays. Jes staley. Enoughtay cant say about how he is fitting barclays into the u. K. Plan, how they will adapt and adjust the costs continental europe. What i find fascinating is how barclays, and other banks like it, adapt and adjust to the new pacific rim. That will be a force. Francine, it could not be a better day to talk to mr. Staley. Francine a lot of focus is on china as it approves its new Hong Kong Security law. That risks angering the u. S. There are fears we heard from theesters over arrests, erosion of autonomy and basic freedoms. We are trying to figure out what that means and how beijing will interpret that. Kong,oining us from hong karen lee. In hongith bloomberg kong running our china ship. In the middle east for the wall street journal and particularly syria. Go to before this, let us the conversation this morning, this will set up nicely. The is lord patton things they talk about are already illegal under hong kong law. You can go through the crimes ordinance, other pieces of terrorism intot sedition, those things are already made illegal, but they are not made illegal in the way china wants because china wants to be able to define those things in a way which runs counter to most fuse around the world on human rights. Patten. D lee, i could talk to you for three hours about this moment for china. Question, whenmb does the money start walking out of hong kong . When do the businesses at the margins stop investing . Someone like barclays, they say they are going to stop with hong kong investment, when do the Business Elite of hong kong pack up and leave . Karen there is a lot of concern right now for everybody from your ad fridge visage and to International Business about what this law will entail. What its exact parameters are going to be. Will it be retroactive . What will you do or say whether on twitter or that will you get that will get you punished . Terrorism in collusion with Foreign Forces and how will that be interpreted . People are worried about that. From twitter accounts, we see activists stepping down. This goes to the international community, people worried about getting kicked out, worried about what this means if this takes a hit and what this means for the future autonomy of the city. In an environment that is safe from the mainland. What does that mean for protesters . Will they be afraid to protest . Hold athere will briefing on the lot tomorrow where we will get clarity. We also might get details tonight where they conclude the meeting where it was approved. Opposition activists are recalibrating today. They are looking at the timing of this approval. It is just one day before the anniversary of hong kongs hand over to china in 1987. There was a march to market that brought out half a million people. Activists are vowing to march tomorrow. The organization has been denied approval, but it is making a lastminute appeal. We will know the outcome later but they say they are going to merge later anyway. There is a triangulation between beijing, hong kong and taiwan. Washington today, certainly in the next number of days will respond to these actions by beijing. Set up for us this interesting triangulation of beijing, hong kong and taiwan when washington responds. Has said it. S. Would move to strip some of hong kongs trading privileges. That is what distinguishes it from the mainland and how underpinned that reputation that has had as a safe place to do business. About ross announcement the concerns of transfer to tech to commerce moving to regulations that allow special treatment to hong kong over things like exports, that is something we could see more of. We are going to be watching washington to see if they retaliate more, if they follow through on this vow. This is something taiwan is watching closely as well. We are going to be looking to ,ee if the u. S. Follows through especially if relations between china and the u. S. And taiwan is a key component, have worked on that. Thanks for the update. Get straight to the first world news from new york city. Here is pretty good grouped up. Warned Jerome Powell today about the extraordinary uncertainty the coronavirus is posing. Paola set to testify before the House Financial Services committee. Ofwill stress the importance keeping the virus contained. The economy has entered a new phase sooner than expected. President trump is reigniting concerns he is interested in preserving relations with the kremlin, defending rather than defending u. S. Interests. The president has shrugged off allegations that rush offered bounties to kill troops in afghanistan. He has yet to demand an investigation. John ratcliffe promised to look into the report. Democrats unveiled their Climate Change plan, it includes a negative emissions proposal. The goal is to effectively capture more carbon dioxide. It is seen as the opening bid in the political battle over Climate Change this fall. The Internal Revenue service will not extend to the tax filing deadline passed july 15. The agency had previously delayed to the april 15 deadline for three months. Taxpayers can get an automatic 15, butn until october they must pay any money they owe in july. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you. Former United States assistant secretary for health to the u. S. Department of health and human services. We will talk about this pandemic and we will talk about covid19. This is bloomberg. Tom good morning. Bloomberg surveillance. We will have to see on that. Also, jes staley of barclays will stop by for an extended conversation. Out ofe to karen leigh hong kong. Right now, our interview of the day on the pandemic, howard koh is exceptionally qualified to speak across the medicine and political span of our Public Health right now. Shes a distinguished that has a distinguished career out of yale medicine. Good morning. Question, the article i have been looking for, and i see it today, there is very good nonpeerreviewed notes that the virus has mutated. Talk about that. It is normal for viruses to mutate, right . Howard it is. A virus that has humbled us from the beginning. We are entering month six in this pandemic and learning about the science. We have to follow the science of this mutation news carefully. Meantime, we have to emphasize prevention and maximize Public Health. We have a situation where we have made advances in treatment, but do not have a cure or vaccine. We need to double down on prevention especially as we see the trends rising. Tom i am not going to impress you with my knowledge of glycine , you did well, i did it i didnt. There is a medicine, a science. How do we get politicians to start listening to people like his, or dr. Haute fauci . Howard right now, we have 50 states going in 50 different directions. The president declared a National Emergency march 13. A National Emergency deserves a national response. We need more coordination coasttocoast. We have to keep learning from each other. We have to support the states that are going through tremendous burdens, particularly florida, texas and california. The message to the public continues to be everybody can make a contribution. Masks, we know masks not only protect the where were, but protects others. , but protects others. If people follow Public Health guidelines, avoid crowds, Wearing Masks can protect people around them, people they love and make a contribution to getting this chris is behind us. Francine i dont know how much you have been following vaccine trials in china, there is a Vaccine Limited to military use. Is that something we should be looking at . Is that something that could become fruitful . Or countries sharing their, knowledge . An extraordinary time for scientific collaboration. Every scientist will tell you professionals around the world are looking closely at Vaccine Development and other aspects of treatment. 100 vaccine candidates for which research is ongoing around the world. We are expecting up to five to go into phase three trials, the last phase before it gets out into the public. Theres a lot of efforts from the top vaccine scientists around the world to get this done by the end of the year, or early next year. That is a fast timeline. Until that happens, this is where prevention continues to be important. Francine is there any way of reversing what we have had so far . When you look at the trend in the u. S. Versus other countries, the curve has gone up. Is it too late now to significantly get it back down . This is not an easy challenge. Pandemics are very tough. Andeed as much coordination infied approaches to this this country and around the world. We need for on testing for highrisk populations. We need ramping up of contact tracing. We need to get prepared for the fall with respect to ppe and when the fluptions comes. The coordination, communication, a united plan for the United States is key right now. Tom thank you for joining us. Howard koh, we look forward to speaking to him again. Speaking of boston, it is an annual celebration that is different this year. It is not the bops it is not the boston pops. Bloomberg is thrilled to bring you the boston pops. Good morning. Francine this is bloomberg surveillance. Lets get the business flash. Wells fargo breaking with all big wall street banks. It plans to cut dividends after the fed imposed new restrictions on payouts. We wont know how big the cut will be until july 14. Earnings at wells fargo plunged in recent quarters partly due to legal costs caused by multiple scandals. A rare bit of good news for boeing. The plane maker and faa have begun longawaited test flights for the rebound of the 737 max. Forplane has been grounded 15 months following two fatal crashes. Regulators plan to put the max through rigorous examination. The high end art market got a boost. [indiscernible] the seller was a private museum in norway. The buyers name was not disclosed. Thats the business flash. Tom thank you francine Boris Johnson will set out plans for a major boost to Infrastructure Spending. The Prime Minister will say balancing the books can wait until the recovery is secured. In a speech later, he is expected to announce 5,000,000,000 pounds in investments in roads and hospitals. He also wrote a great article looking at a new american hero, Boris Johnson. On the immediacy of what Boris Johnson will announce today, it is unusual to have a tory Prime Minister and chancellor and have so much spending. Clearly trying to change the subject at a time when he sensors theres confusion about how lockdown restrictions will be lifted and general anxiety about what the future is going to bring. He is coming out now and offering, what he does so well it isis i am not sure going to go down as well big time when people are still dealing with this level of uncertainty and trying to figure out whether their jobs will be there when [indiscernible] we know the Prime Minister loves history. We know he idolized Winston Churchill in the past. Receipt trying to channel him now is he trying to channel him now . Franklin delano euros of does the name on everybodys lips. Major speech on Civil Service reform in which he name checks fdr a lot. Why fdr . Rather than be seen as sort of a wartime Prime Minister fighting the war on covid that has not gone well, he would like now to be seen as the healer, the , rescues, provides rejuvenates the economy. That is what many people think of when they think of fdr. The idea of a new deal for something thats appeals a lot about. Details remain to be seen. Fdr is a controversial figure. Historians disagree about whether his measures definitive policies lifted america out of the great depression. Most economic historians would andthe monetary expansion footing america on work footing had much to do with it. Fdrs johnson will take from s ability to connect with and hisnd his energy reputation for big bold moves. The Prime Minister will travel north to the black country, the west midlands. As you say, it is a time of another place in history. Black country folks were the black of the suit of the industrial revolution. Needs thosely people to stay in this majority position. If it is a parliamentary government, if Boris Johnson is in charge, who is opposing this new deal . Why wont it get done . Is noe the simple answer joke and do what Boris Johnson sets out to do. He has a majority. The fact that he is going to make this speech shows how sensitive he is to the hardship being suffered from the country that won him the election. Who will oppose that, we have seen vigorous opposition from not on the general principle of spending, but he will hammer on the thought that a lot of spending has been in the works for some time. Pounds of,000,000,000 new investments in schools is something the labor government proposed and it was michael go decided not to proceed. Fromll get opposition somewhat rejuvenated labour party on the details, and whether people will believe this is truly a new deal or more over previous announcements, we will have to see. Of her the danger johnson, will seem like too betle and that she will also seen as trying to change the subject from covid, which is not over yet. Back in lockdown. All of those things are going to impact how this these policies are received. Would point to senator mcconnell, speaker pelosi, or even the president would kill to be in the position Boris Johnson is in right now. Cleaned get a street across this country right now because of the infrastructure disaster. Does this mean we are going to get a third runway at heathrow . That is all i want to know. Therese he has already waved through hs to commit a massive hs two, a massive infrastructure process which is behind schedule and over budget. Tom [laughter] therese how many bigticket items can he do right now . There will be a big debate on that. Should he be doing smaller scale infrastructure, smaller rail lines in the north rather than a heathrow expansion . It is all in the details, tom. Tom yeah. I would i think reserve judgment after the big speech and wait. Tom ok. This is a breath of fresh air compared to infrastructure in the u. S. Rafael, spectacular. We are going to continue the dialogue over the Prime Minister. We will touch and on his new deal and then we will get the new deal from jes staley. Stay with us, this is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Tom this morning, the fear of slower and sicker for longer. It is a midyear adjustment to have the shape to recovery. It may never come. The bulls predict the vaccine and a better 2021. Boris goes in on a new deal. Morris, in moments scheduled in dudley, in the middle it as the next Mcconnell Pelosi trump deal so much for the afterglow, 95 kids at a bar at Michigan State pick up the virus. In palmings springs, icus are at 95 capacity. Americans, not canadians set to be banned from flying to europe. Good morning everyone. Tom keene in york. Francine lacqua in london. The news