110 per share the last time i looked. For green on the screen mainland equities. They continue to climb higher. The futures in the u. S. Are flat. We can move it on now. In terms of the dollar, there is some weakness. Trade data out earlier. A bit of a squeeze on the aussie. Concerns about the virus as well in victoria. In terms of the euro, that has been on the tail end. We can move it onto some of the commodities were looking at. This thing in terms of inventories. They have been declining but still concerns about the virus and demands there. Gold is currently at 17. 68. There is the spread that we see. Were are looking at really back termsupport, on pause in of additional stimulus to the economy. Yvonne i was hoping for some type of liquidity or something to reverse that trade. Look at what we are seeing here. The Prime Minister of australia has considered this worse. This is falling in line with what we have seen from other Global Leaders like Boris Johnson who now says nearly 3 million hong kong residents could be on that path to citizenship in the u. K. Well, easing some of the rules when it comes to those that want to seek refuge in the u. S. Lets continue that story. Lawmakers in d. C. Have unanimously passed a bill. Bill is similar to a measure approved by the senate in response to beijings mood last week. China began enforcing the new security law with several arrests being made. The legislation goes on beyond what many investors and even probeijing politicians expected. This includes subversion of state power and collusion with foreign forces. It appears to cover even nonviolent tactics employed by protesters. Lets bring in a specialist in chinese. They focus on the legal institutions. Joined by the professor of law at George Washington university. Thank you for staying up late. I know you have been going through this. We are all trying to understand the implications of it. What are the most significant changes that will result from this legislation . Changemost significant of mainlandt chinese influence in hong kong. People can look all they want at what the wording of the law says. Ifthe end, what matters is there is an institution out there that care what the word say, if it will make what they say matter. In hong kong, up until now we had independent judiciaries. We still care about what words say. It makes sense to wonder about what the words say now. This wholeing National Security law offensive under the law. It will be investigated and then prosecuted and then finally in which theystem pr team has very significant influence over appointments. There was even a National Security office. This is the mainland chinese body that operates in hong kong. They will take jurisdiction over any case. They will have the first one taken to the mainland, tried in mainland courts under chinese criminal procedure law. They can do all that if they want. Changes of the business operating in hong kong should be making now to ensure they are compliant with the law. That is the problem. It is very hard to know what is compliant and what is not. Point, we at some will understand where the new lines are being drawn. One cannot tell where the lines are being drawn by looking at the law. Early on, the law says the provisions of the International Commission on civil rights, it is under the joint declaration, part of hong kong pasta messick law. This National Security law says peoples rights under that low would be respected. But as we have seen already on the very first day of operations, the police are advocateg that if you hong kong independence which is pure free speech, it is protected. Police are saying that if you show these slogans, you will be arrested and punished under National Security law. What really hard to say people should be doing, the desire is to scare the something out of people. Extremelyem be cautious. We dont know how far the hong kong authorities will go. Yvonne you mentioned this law. We talked about how this extends to actions committed by anyone, whether you are in hong kong, whether you are a hong kong resident or not, this pertains to foreign nationals. This brings up the question of extra territorial jurisdiction. They may not know zack it what it means. What would that entail . Exactly what that means. What would that entail . Criminalizes activity undertaken by foreigners outside of macau. This andnd examples of the laws of other countries. I think you could probably commit a crime if you conspire in europe to price fix for experts exports. In principle, it is not necessarily unknown. About the hong kong law is that it goes beyond even what the mainland criminal love provides. Under the mainland chinese criminal law, if you a foreigner outside of china, you cant be liable under chinese criminal law unless the punishment is over three years. If youre in canada, writing an , that would beg a crime in china. It is not a crime if you do it in canada. That is now a crime under hong kong law. It does not have that limitation. Anybody really, a professor in a class, a student in the class has some be writing an oped. I could not be prosecuted for that in hong kong. Yvonne legal experts are saying that most countries, when it comes to extradition clauses, they do have exceptions for political offenses. Could any request made from china and hong kong be rejected . I think so. I dont know a lot about extradition law. That is certainly my understanding. The law and extradition treaties do have section four clinical offenses. Therefore, the defendants could argue that it is a political offense, of course, they would not be extradited. Itt it comes down to is wants to do what china says or are they in a country that has the capacity to stand up to a chinese request . It does not really matter what the words say. We have seen examples of countries in central asia that clearlyradited what are political offenses. They probably had an exception. Another component of this all the jumped upper many was the inclusion of this article 60. That makes officials from the immuned or operating from hong kong well. Would they be allowed to do whatever they want without the threat of judicial or legal oversight . What are the applications of that article . Donald that is a very interesting article. That is very troubling. It has all the invocations you suggest. As a practical matter, it is itard to imagine really hard in china to bring the police to book for abuses. What is really interesting about this is the police are members of this National Security office. They are not subject to hong kong law. Completely immune. The interesting thing is that they are not subject to prc law. It generally does not apply in hong kong. Dontws against murder apply in hong kong. The laws against murder in hong kong still apply to these people when they are in hong kong. ,t is hard to see how any law murder, arson, rape, it seems that none of these laws would apply to them in hong kong. That is pretty remarkable. Laste that leads to my question. In what area does hong kong still maintain its autonomy . Under this law. Donald that is the issue. If someone wants to advocate for hong kong having more autonomy in some areas, other than National Security, that could become very dangerous for that person. Hong kong will have exactly as autonomy as the p. R. C. Authority. I think that is why this is the end of one country to systems. Two systems. Y, i think that is probably correct. Yvonne thank you for that while we all try to digest this language. Lets get to the first word news. We have Karina Mitchell in new york. Karina we will start off in the u. S. Where President Trump has seemed to change his opinion on the federal reserve. He said he is satisfied with policy. He says now he is very happy with the performance. He was not impressed initially but now the president said powell has stepped up to the plate over the last six months. President trump says face masks are now good. He mandated this, even as infections continue to rise. He said he is all for but is not convinced they should be law. He has not won a mask himself in public despite Health Officials urging him to do so at events. Global infections have now topped 10. 5 million with more than 500,000 deaths. Rising Coronavirus Infections in u. S. Have forced Indoor Dining was set to resume on monday but city Officials Say restaurants will not have to continue will have to continue using sidewalk space for now. Global news, 24 hours a day on , powered byuicktake more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is blumberg. Tom coming up, we will look at electric transport with one of the producers of biggest producers of batterypowered scooters. Have the Market Outlook coming up. That is why we will ask our guest why market waters are underestimating the global shaped rebound. This is bloomberg. Yvonne asian stocks, were seeing some decent gains on the second day of the Third Quarter. Some positive vaccine developments. The u. S. Manufacturing data is tempering. With discuss all of that the md of global macro strategy. Always good to have you, sue. Youre saying that it is time to ofs out these alphabet soups what kind of recovers we can expect. Kind of scenarios are you mapping out . Sue great to be here. U, all of these different shapes. This is the larger point, that we wont actually recover a lot of the lost output for sabia decade if you go to the cbo forecasts. The way we have been looking at global macro is this multiphased framework. Phase one being the rapid rebound. Exports in august where base effects and mechanically, that is what happens when you shutdown an economy and then reopen. Plus, we have had immense apport from the monetary third monetary and fiscal authorities. We could be entering phase ii, the still that phase. He improvements will stall out our expectation is that the focus will shift from improving towards moreanges depressed levels of activity. It could be precrisis levels. Yvonne when it comes to the market indications, does that mean i need to start reducing my risk now in the Third Quarter . Thisarket has been eyeing trade and wondering if it can continue. Could the fed deploy some yield curve control later on this year . Verywe have gone from undervalued over the last few ths and shifting back to from that perspective, a more neutral stance between equities and cash would be prudent. Phaseare embarking on to two where investors might be disappointed by the extent of the recovery. There is a risk that we are going into a bit of a monetary and fiscal cliff. Chuck and all is no longer there. We are rapidly going to diminishing and marginal returns. Puttingbit more of a stance from here, that would be reasonable. Tom please carry on. Sue as we go into the second half of this year, a number of sequences are catching arrive. We need to monitor them closely. This ongoing decoupling between the u. S. And china which could move into the realm of financial decoupling. A potential second wave of covid. The u. S. Has not really moved out of its first wave. There could be election risks in the u. S. Investors search for yield in this environment, particularly in the credit space, are they compelled to look at higher risk in this environment . Is that where you want to be finding opportunities . That fiveyear forecast when we look in the horizon, we dont expect any major Central Banks to be raising Interest Rates at all until at least 25 2025. I will usher in the reach for yield narrative, that will push investors further up that spectrum. It will require them to supplant traditional government bonds alternative and riskier asset classes. We have to leave it there but we will get you back on hopefully in the next few weeks or months. We are running out of time. Plenty more coming up. We have a lot more great interviews, stay with this is bloomberg. After 18 months collapsing under 30 billion of wildfire liability, california utility, pg e has emerged from bankruptcy. It has completed restructuring and exited chapter 11. Critics say the company has yet to fully address the operational issues it faces, even after overhauling the board and planning to accept more oversight for his agent and faulty equipment. Lemonade is set to raise about 320 million in an initial public offering. Was 11 million shares at 29 per piece, giving it a market value of 1. 6 billion. Softbank led a funding round in lemonade best year which valued the company at more than 2 billion. Achievedafter john fame and fortune, he is the latest bigname money manager to quit the business. Converting his firm into a family office. The company has peak assets of 38 billion in 2011. They will now concentrate on his own fortune of around 4. 5 billion. Tesla has officially replaced toyota as the rose most valuable carmaker, underscoring investor enthusiasm for battery check over combustion engines. The stock has more than doubled this year, climbing again on wednesday to give tesla a market cap of 207 billion dollars, six billion more than toyota. Below itss remain far traditional rival. To tell younterview about, Bridgewater Associates cochairman and cocio, he will be joining francine for a virtual conversation on the economic recovery and opportunities post covid19. Hong kong 9 00 p. M. Time. This is bloomberg. It is 10 29 a. M. In hong kong and shanghai. Here are the first word headlines. Lawmakers in washington unanimously passed a bill imposing sanctions on banks that do business with chinese officials involved in the crackdown in hong kong. The house bill is similar to a measure approved by the senate in response to beijings move. Nancy pelosi says chinas actions against signaled the death of one country, to systems that has been in place since 1997. Hong kong is waking up to a new reality with hundreds arrested wednesday during protests against the National Security law. Police say 10 of those detained are accused of breaching the new legislation, which can carry a life sentence. The u. S. Is pledging a strong response what it calls a draconian law. To 3. K. May allow up million hong kong residents the right to move to britain. We make clear that if china continued down this path we would introduce a new route for those with British National overseas status to enter the u. K. , granting them limitedly to remain with the ability to live and work in the u. K. And thereafter, to apply for citizenship. That is what we will do. Vladimir putin has won a resounding victory in his bid to stay in power, despite isolated protests against changes to the constitution. Preliminary results show putin winning 74 backing to remain in the kremlin. His Approval Ratings remain near historic lows. 65 as theput at president seeks to stay in control until at least 2036. The corruption trial of the former malaysian Prime Minister has been halted to let him campaign in an upcoming local election. 15ceedings will resume july with a further delay permitted if he has to attend parliament. The trial involves billions of missing dollars at state fund 1mdb and 680 million that landed in his personal bank account. Lets give you a check of the markets. As we look at a risk on mood generally across the region, following the close on wall street, you can see the hsi up after the holiday, brushing off concerns about security measures and threats from the Trump Administration around trying to curtail the behavior of china, up more than one point 6 . Tencent performing strongly, reaching 510 per share earlier. Ups upin japan is 0. 7 and the nifty futures up 0. 8 . The futures in the u. S. Turned around, up more than zero point 1 . The stronger ism data towards the end of play yesterday, and the payrolls we are looking ahead to as well as job claims later today. In terms of the currencies, the dollar index is flat essentially. It has been weakening over the last few days. Gold and silver, down 0. 4 and in terms of oil, that is flat at 42 per barrel. There is a concern about the lack of demand given the virus infection rates in the u. S. 10 year yield is at 0. 68. Former u. S. National security advisor john bolton says President Trumps response to the allegation that russia offered bounties for killing american troops makes the u. S. Vulnerable, whether it is true or not. Bolton declined to say whether he personally briefed the president on the matter before he left the administration. What i said to the Associated Press on the question was asked was, no comment. That is the same thing i will say today. We are embroiled in litigation over whether i complied with the requirements of the prepublication review process, which i think i did. I didnt write the book with any intention of putting classified information in it. I dont think trump wants to suppress the book because he is worried about foreign governments reading it. He doesnt want the American People to read it. With respect to russia and what they are up to, and afghanistan and a range of places around the world, this current controversy, i could have written about in the book if i didnt face these other difficulties. Susan rice, the second obama National Security advisor, writes today in the New York Times that if she had information like that being reported in the papers, whether it was totally verified or not, she would have gone into the oval office to tell president obama. Without getting into what i knew or didnt know, i want to say i agree with susan rice. I think that is of the National Security advisor should do. Notmore point, there are two categories of intelligence, verified or not verified. Intelligence invariably is placed along a spectrum, and the Intelligence Community understands this. They say they have high confidence, some medium confidence, some low confidence. People have to judge different agencies that disagree. There is not a block of granite that you carry around to show to the president that is called verified intelligence. There is a range. You deal with uncertainty, that is part of the job. Essay andsusan rice the essay by leon panetta, i found them extraordinary in their heat. How would you recommend President Trump extricate himself from this now, and particularly how he addresses the military at the pentagon . I cant offer advice on how to get out of a mess he has created. By my count, in the last for five days, he told three different stories on whether he was briefed, whether he was told it was fake, whether it is fake news by the New York Times, a. Ange of things his advisers are contradicting themselves, as well. How do i view that in terms of the Trump Presidency . It is another day at the office, that is the way it works. Every day is a new day, every story is a new story. What you said yesterday doesnt dictate what you say today. What it tells the russians he is, we are in disarray and right ripe for this type of provocation, in many places around the world. On this particular intelligence, is there any reason why intelligence like this would be put in the president s Daily Briefing and not be followed up in person directly with the president himself . I dont want to specific story and its intelligence implications for the reasons i said a minute ago. I will say, which i say in the book, donald trump doesnt consume intelligence the way you expect a president to do. Everybody is entitled to gather information in their own personal style. Ronald reagan has his style, George H W Bush had his. Im not saying there is one that is right or wrong. I think the presentation of intelligence to the president has to take that style into account. ,hat i am talking about is not does a president read lengthy briefing papers . Does he get it through movies and that sort of thing . The question for donald trump is whether he gets it at all. I think he is uninterested in learning. I think facts that are inconvenient for him often dont stick, despite repeated tellings. Can he say that he was never briefed on it, or he thinks it is fake, and get away with it . We will see. Maybe he will. Bolton. That was john the ceo of anask electric scooter maker how he is writing out the pandemic. Investors sent the stock up close to 100 this year. This is bloomberg. Yvonne a potential deal in the philippines, converge ict, the company that provides fiberoptic internet, is said to aim for an ipo as soon as this year. That is according to sources. They are said to be picking banks for the ipo that could value at around 700 million. Bpi, bdo,et to pick unit bank for the planned ipo. They are looking at Morgan Stanley and ubs for the listing. The aim is for an ipo as soon this year. Moving on, more cities are trying to boost environmentally friendly Public Transit systems. Chinas new technology thinks it may have an answer. Our correspondent is standing by with more. Im here with the ceo of niu technologies, and electric scooter maker based in china. Thank you for joining us. In the First Quarter of this year, sales were down by about one third yearoveryear. What has the impact of the pandemic been on your business at home and abroad, and how is it starting to recover . Yan thanks for having me here. Basically, we are in the mobility industry. Covid19 has impacted our business in q1. We maintained healthfully margins with 23 growth. We are starting to recover in q2 as our revenue is expected to grow by double digits yearoveryear is reported. We are seeing a very Strong Demand rebound in china in q2 and our china sales have been expected to return to healthy growth in the second quarter. There will be stores open for business at the beginning of april. On top of that, sales in china have experienced a phenomenal Live Streaming sales in china. Productsed two new with Live Streaming, and attracted more than 7 million 50,000 preorders of scooters and services during the campaign. Globally, we are in 42 countries. Representnal sales 15 of total revenue in 2019. The International Market is recovering slower than china, and most of the market resumed operations in may. We are excited about the acceleration of the transition from Public Transportation to individual mobility transportation within cities. This is happening in the u. S. And europe. We will continue to commit in the global market. During the pandemic, we were Opening Stores in antwerp. With more store openings across europe and the next few weeks. Lastly, we support 19 sharing operators between many countries. Our operatorss, are seeing a strong growth in ridership. Operator in the u. S. Has surging demand. My friends in new york city are using our new scooter on a daily basis now. Youra how do you see industry overall being impacted by the pandemic . You mentioned you were seeing growing demand internationally and at home as a result of people looking for a more affordable personal mobility option. Will that be a big tailwind for the industry . Yan i think so. I think the urban Mobility Market is a necessity. People need to go to work and commute and go grocery shopping. Is looking very bright. We see three trends in this industry. One trend is the shift from cars or Public Transportation to individual moped scooters, like andbicycles ebicycles, ownership or sharing model. Because individual devices are more time efficient and more Energy Efficient and space efficient. , andhift has accelerated this happened before the pandemic but it has accelerated because of covid19 safety concerns. We also observed a shift in this energyy in terms of technology from petrol to electric, or from a china perspective, from acid battery electric to this new kind of battery. This is more environmentally friendly. The third trend is the trend, from an unconnected device to a smart, connected solution. Our scooter is not just a scooter. It is a scooter with a brain. You actually get a network of data and a better product and user experience. Accuracy, andves enables personalized operation for users. This is the tip of the iceberg. Overall, i think the urban Mobility Market is huge. Selina your expansion into the u. S. Came admitted amid the trade war. How has that impacted your business . Are you passing costs along to consumers . Yan that is a great question. The tariff increase in the u. S. Has created some impact for us. Last year, sales in the u. S. Market were small compared to our global market. We do have High Expectations of the u. S. Market. We are seeing a huge demand from the sharing model. We are seeing a huge demand from individual ownership model. At this point, we are exploring options in terms of Global Manufacturing to enable us to enter the u. S. With reduced tariffs. Selina what locations are you looking at for that . Yan obviously, we are looking at southeast asia, as well as mexico and the potential u. S. , as well. Now, there is increasing bipartisan pushback in the u. S. Towards china. The senate recently passed a bill that could require Chinese Companies to delist if they dont meet certain disclosure requirements. What is your assessment of the situation, and are you preparing for a potential worstcase scenario . Yan i think that is a great question. The bill in the senate is a draft under review, but we are watching closely for any updates. Recently, we saw other Chinese Companies get listed in the u. S. From our perspective, our staff has performed very well in the past few months. In my personal view, i believe a company with a strong competitive advantage in a promising market with a high Growth Business performance, i think that company will always be welcomed by the u. S. Capital market. Selina thank you so much. Technologies. Niu , great thank you conversations. Love that, scooters with a brain. With more than 10 million cases, covid19 vaccine makers are in focus. This is bloomberg. Tom welcome back. The race to come up with a vaccine for coronavirus has pharmaceutical giants kicking into high gear. One relatively unknown Chinese Biotech Firm is jumping ahead of the pack. Lets find out more about this companys progress with rachel. Why does this company stand out . The chineseg companies that have candidates in the final stage of human trials, this company has received a lot of attention simply because they have highlevel backing. This company doesnt make any profit, it is relatively small compared to the major drugmakers that are trying to get a vaccine, but they have a tiein with the Chinese Military and are backed by a Major General in china who is interested in their technology. The on that, the company was beyond that, the company was founded by chinese scientists who worked in canada and through those connections, they have managed to tie up with the canadian government and have an agreement to manufacture and do final stage trials in canada. Their ability to link that east and west is something making people focus on the company as having a great chance of success. Yvonne im wondering, how does this compare what they have right now compared to what all the other drugmakers have . Pfizer, astrazeneca also have these virus shots. How do they compare . Onhel people are focused the handful of drugmakers who finalaccines nearing the stage of human trials. There are several, in the west end in china, with in the west and in canada, that are entering the final stage around that time, over the next three months into the fall. Who will get their first . We are not sure whether there can be a vaccine and whether the vaccine will be accessible to the general public, but this company got attention because it was one of the first and only major drugmakers to publish a full Scientific Study of its initial trials that showed there was no harm on human chip human subjects. It got a lot of attention and legitimized them as a serious candidate in the race. Yvonne rachel, thank you. Lets do a check on the latest business flash headlines. Rival all butcks completed an internal scandal probe saying a fabricated transactions began as early as april last year. The former ceo and coo were among a number of employees who used third parties to invent 300 Million Dollars in fake sales. They have been dismissed. The company will meet to consider the future of the chairman. Ecommerce of an startup stepped down and reduced his personal stake in the company by roughly 14 billion. He still holds roughly a third of the company, and 80 of the Voting Rights and will stay on as chairman to oversee longterm corporate strategy. The newsteps up as chief executive. Citigroup is pausing plans to return staff to the office after the coronavirus as several u. S. States report a surge in cases. Sources say the bank is holding moves to resume normal operations in 13 its almost 11 00 a. M. In singapore and hong kong. Im haslinda amin. Im Rishaad Salamat it. Hong kong coming to terms with a new reality. Protesters detained under a new security law. Washington, pledging a strong response. The u. K. Will offer citizenship. Global virus infections continue to rise with record numbers reported daily in the united states. Beijing seems to have its resurgence under control, but victoria reports yet more cases. Bank of china, slowing the pace of easing amid signs of recovery that is disappointing investors, worried about tightening liquidity and rising bond yields. Markets, asian markets edging higher. Modest gains after a mixed session in the u. S. Overnight. Vaccine optimism and betterthanexpected data offsetting surging virus cases. The Msci Asia Pacific up by more than 1 , building on gains up for a third day pillar a third day. Real estate, leading the pack higher. S p futures pointing to a higher open, the s p rising for a third day. Nasdaq was at a record. All eyes on the u. S. Jobs report due later thursday. The csi 300 inching up, continues to gain. This despite concerns about the u. S. Response to china and the Hong Kong Security law. Chinese stocks broke through the 3000 level, suggesting we could see more upside. The hang seng, back trading today, up by one point 6 , brushing up all sectors on the index in the territory. The other indices in asia, the benchmark in australia, up by 1. 4 , rising for a third day as virusuntry probes hotspots. Investors are buying blind ons on fundamentals. Pcomp up by 1 . All sectors in the green, pretty good, considering how the asian benchmarks are doing. Lets have a look at other news, the u. S. House of representatives unanimously passing sanctions a sanctions bill meant to hit chinas crackdown in hong kong. Mike pompeo, saying chinas move to exert control over the city may have eviscerated the rule of law. Free hong kong was one of the worlds most stable, prosperous and dynamic cities. Now, it is just another communist run city where people are subject to the party elite whims. The hong kong legislation passed as the Trump Administration prepares to roll out sanctions on beijing over human rights abuses. What do we know more specifically about the sanctions bill itself . I think everyone is waiting to see what is going to happen with this bill. There is a lot of different legislative efforts, obviously the u. S. Targeting chinese officials, everything from bands on particular officials to those targeted to hong kong specifically that are about dual use technology that example, golf for clubs and missiles. Hong kong gets treated differently for those things than it does for others. There is a broad range of things that may be coming down the pipeline, but it is important to remember that everything is on the table right now. U. S. China relations are at one of the lowest points we have seen since i have been in hong the, and the rhetoric and followthrough to sort of, the restrictions on either side is speeding up quite a lot. Have also heard about possible sanctions on china about abuses. How close is the trumps to rolling out those sanctions . The Trump Administration to rolling out those sanctions . Iain i think we are seeing a moment where things are really speeding up. The administration is following through on certain things. On one hand, some of the democrats in the u. S. Are saying , you are being weak on russia and china, so he quickly follows through, especially after the bolton book came out and had some revelations about his relations with chinese president xi jinping. He followed quickly with the chin zhang, criticizing those policies that china has done. I think it is something we will see keep coming out, from rhetoric to actual policy action. Our asian government reporter. The first word news from new york. Australia is investigating alleged Security Breaches in hotels in melbourne used the quarantine people, including claims guards were intimate with guests. Officials want to know if breaches contributed to a resurgence of virus in victoria. Most states and territories use police to regulate quarantine. The victoria victoria contracted private security. They have seen two weeks of double digit infections. New Zealands Health minister has resigned over a string of lockdown breaches during the peak of the coronavirus crisis. He went for a bike ride in the early days of one of the worlds strictest lockdowns and three days later, took a 20 kilometer drive to walk along the beach. The Prime Minister called him, quote, a distraction. The corruption trial of the former malaysian Prime Minister has been halted to let him campaign in an upcoming local election. Proceedings in the 1mdb case will resume july 15 with further delay permitted if he has to attend parliament. The trial involves billions of missing dollars in state funds and 680 million that landed in his personal bank account. Global news 24 hours per day, onair and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Still to come, we have analysis of what is going on marketwise. We get reaction on u. S. Stimulus from a nobel laureate. Us. Nker joining reaction to the Hong Kong Security law from the u. S. There is a lot coming up. This is bloomberg. Haslinda investors are worried about tightening liquidity and rising bond yields. Lets bring in our chief asia economics correspondent. Why is the pboc pursuing this strategy . Markets and the backstory is that sovereign bond yields, 10year sovereign bond yields are the highest in five months and the Central Banks seem to be relaxed. There has been expectation for another liquidity injection to the markets there come of the pboc seems to be taking its time in doing that. It all backs up a narrative around how the pboc is being restrained and disciplined with its policy approach during the crisis. They are not willing to unleash , andolicies some expected we know policymakers in china are worried about that. The question remains, as pmi improves, how long can the pboc maintain this kind of disciplined approach . We know the virus hasnt gone away. It is a question of, how much can china recovery recover . Question,his begs the everybody looks for any type of intel. What is the fed telling us about that . Enda the take away from the fed essentially is that we dont seem to be in a hurry to commit what is called yield curve control. This was a strategy that came out of japan a few years ago. It is a tool that keeps a lid on bond yields and tells the market Interest Rates arent going up and keeping costs cheap. Australia used that as well. The fed doesnt seem to be in a hurry to experiment with it. They are saying they will come back with more guidance on where they think Interest Rates will go and where there Asset Purchase Program will go. The big take away from jerome powell, he told lawmakers that even though the economy is , it is uncertain and it depends on containing the virus. Said that policy options remain on the table and we will have to see which one they choose. They will have to roll out some support in the months ahead. Rishaad thanks. That was enda curran. Paul krugman has been talking to bloomberg about the recovery from coronavirus. His concern about a second wave, and the lessons we have learned from the crisis. Paul we are in big trouble. About a month and a half ago, i was laying out the bad scenario. It was fairly clear we were going to have a couple good months of recovery, because there was lots of pentup demand for stuff people werent allowed to do. That scenario the bad scenario was that we would have a spike in covid19 cases that would lead us to have to stall and backtrack, and that is happening. So we are going to get a jobs report thursday, tomorrow, which is going to be, its going to look good but it is going to be in the rearview mirror. It is going to it is clear that the highfrequency data and everything we are seeing says we hit a wall because of the spike in cases in the sunbelt. Lets stipulate for a second that in order to get a durable recovery, we need to get the virus under control or at some point hopefully, an effective therapy or vaccine. From a policy standpoint, we know in congress they are going to revisit this question at some point in early july. What would you say are the key priorities from an Economic Policy standpoint . Paul i have been of the view that this is not like the aftermath of the financial crisis will when you had a wounded economy, an economy that had gotten in over its skis before the crisis so it took years to get out of it. You needed a lot of stimulus along the way. I dont think that is happening. To say i dontve think the economy as of february was fundamentally unbalanced. If the virus were under control, i think we could i think there is a lot of reason to believe we could have a fast recovery and wouldnt need all that much in the way of policy. The problem is, that appears to be a number of months off. Where we are now is, we are back in the situation we were in in march and april, with an economy that is in a coma because of the virus. The goal of policy is to make that situation tolerable, to avoid having the depression spread any further than it has to make a partially lockeddown economy livable, which means we need to continue a lot of the programs we put in place in march. The big concern is, a lot of that stuff will expire in a few weeks. Are you surprised, arguably, by the effectiveness of the programs . We see Household Incomes actually up between april and may relative to their market levels, despite the extraordinary collapse and unemployment. You cant look too much at the stock market, but looks like demand is reasonably boy and for t for consumer companies, not something you would expect. Have you been surprised by the effectiveness . Paul yes. I was surprised by what they passed. The cares act was highly imperfect, but by u. S. Standards, the standards of how we dealt with previous downturns, it was actually good. In particular, the Unemployment Benefits were a huge lifeline. So many, perhaps most of the unemployed and up with ended up with more income, which in turn contained the spill over. We shut down part of the economy and one of the great concerns was that shutting that down would, by depleting peoples incomes, lead to a secondary round of unemployment in the rest of the economy, but we provided so much aid that that didnt happen. Haslinda paul krugman there. Up next, market analysis. We will discuss growth and value in japan, and how markets appear supported supportive of hong kongs controversial new law. This is bloomberg. Rishaad you are back with Bloomberg Markets asia. Stock seeing markets modest gains. Hong kong markets, driving things up as they return to trade. They are looking past concerns of chinas new security. Lets bring in jim mccafferty. Good of you to join us. Lets start off with what your investment philosophy is telling you right now about what is happening. Seems like the good news is kind of absorbed and priced in, and the bad news ignored entirely. Guess the bad news is being ignored, but we need to look at the quantum of money that has been pushed into the economy. We have been doing research on this, looking at how this time around is different from the financial crisis in 2008. Based on our calculations, we see the amount of money that has been pumped into the system is four times what it was in 2008. It would be silly to try to beat the quantum of money going into the markets. You were saying approaching longterm investing by Pension Funds in particular has been recalibrated over the last few years. Has that recalibration also accelerated with what has been going on in the last few months . Jim yes. I think this is something we are seeing happen right now and a lot of Pension Funds globally. Back in 2008, we had a similar event in terms of the equity markets being shaken up by the Global Financial crisis. Many Pension Funds reacted by going into lower risk assets. The issue we have now is that lower risk assets are yielding absolutely zero returns at a time when you have on jevity increasing, longevity increasing. That is why i think investors who are looking for low risk assets will increasingly look to equity markets to satisfy that part of the portfolio, in particular we have been, asian equities are attractive from that point of view. A lot of the companies in european markets and u. S. Markets have more leveraged balance sheets. They have had to issue equity and cut back on dividends at a time when companies in asia, because they are run conservatively, have the ability to increase dividends. Rishaad particularly japanese once. You have a long list of companies that may have Significant Growth looking ahead. Tell us about the process and how you pick those stocks. Jim what we have identified in japan is that companies have been conservatively run for many years. They have had this stakeholder management policy were companies dont just look after shareholders, they look after employees and suppliers. They have conservative balance sheets. Over the last few years, you have had a number of activist investors starting to engage with management teams in Japanese Companies to encourage these companies to pay out their earnings as dividends. That is increasingly happening. We have looked at, rather than dividend yield at the basic valuation metric to identify whether a company has a different pet decent payout, we look at Dividend Growth. With Japanese Companies we identified Many Companies that are growing the dividends more than 20 every year. Looking at the valuation on todays dividend yields, instead, you could look at it in two or three years and identify these companies have strong growth potential. The issue we have had is many Global Equity income funds that held onto u. K. Or u. S. Stocks, which are cutting dividends, with Japanese Companies, they are comfortable growing dividends despite the fact that the economy is not in good shape. We have good examples of that. Some of the telcos, they are increasing dividends at a time where the economy is struggling. That gives us a sense that these companies are reacting to shareholder engagement. Haslinda you talk about it being a Dividend Growth story and japan being a good market. You look at exposure to Dividend Growth in japan, it is small. Why is that . What would reverse that position . Jim what we have done in terms of the stocks we identified, we wanted to get a basket of stocks to reflect the geographic weight of the region. When you take the biggest single marketing asiapacific, it is japan. The next is china, then taiwan and korea. Relative to that geographic base, we have a decent representation coming from japan. We havease of korea, Big Companies like samsung, we have Dividend Growth over the last five years averaging an annual rate of 25 increase. That is a significant number. We are seeing that in japanese stocks, as well. In terms of where we have chosen to put the basket, we have tried to go for big liquid companies. What we identified is Global Investors generally, they are looking for large market capitalizations. That is something we dont find in japan the same extent as markets like the u. S. There are concerns about a bubble economy in japan. How might that play out . How much of a risk is that . See anth japan, we element of great caution in the Way Companies are run. If we look at some of the pharmaceutical names in japan, you find the yield is relatively modest. These names are trading at about 2 dividend yield. The dividend coverage is 9. 4 times. If you look at the Global Equity , theirhealth care names dividend coverage is one. 5 times. The japanese names are very cautious. Their ability to grow dividends, especially at a difficult time for the markets, is much better, and if i look at the average Dividend Growth, it is 7. 5 over the last 10 years, whereas for the global popular favorites, it is 4. 4 . Caution is something that will benefit these companies in the future. If you look at equities overall, if you look at the best evidence Dividend Growth, it has happened in japan. East. Da time to look time to look at the Dividend Growth story. Jim mccafferty, thank you for your insights. The latest headlines now, softbankbacked insurer lemonade is set to raise millions of dollars in an initial public offering, having raised its share price amid investor interest. It will shall 11 sell 11 million shares, giving it a market value of 1. 6 billion. Led a funding round that valued the company then at more than 2 billion. A company replaced toyota tesla replaced toyota as the most valuable carmaker. The internal combustion engines have powered autos for more than 100 years. The stock more than doubled to give tesla a market cap of 207 billion, 6 billion or than toyota. Teslas shares remain far below its traditional rivals. Reports from germany say payments ape payments platform wirecard made suspicious payments to three companies in asia in 2018. There is a report from an auditor that says wirecard extended loan facilities even though interest on the original deal hadnt been paid. To the markets, what is going on in china . As we had to lunch break, shrugging off these moves by congress to put sanctions on Chinese Companies, and we are not quite sure, chinese entities at least. At the same time, investment communities are ignoring these signs that the central bank seems to be slowing down the pace of monetary easing. It is all perhaps good news and that is what investors are contemplating, signs of an economic recovery. That is Chinese Markets as we head into their lunch break. 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. Almosta the lion city, 11 30 a. M. In singapore, in the middle of the trading day. The sei up about 0. 3 , rising as election campaigns get underway. A heated debate on tv last night. This morning, to my second a company saying its Financial Report will be delayed until september. Saysfacebook post, the ceo they manage a portfolio of 313 billion singapore dollars. They have stakes in singapore airlines. Financial report, delayed until september. Lets get first word news. The u. S. Start in President Trump says masks are good, but repeats they shouldnt be mandated as infections continue to rise. He told fox he is all for masks, but isnt convinced it should be law. He has mocked joe biden for wearing one and hasnt won a mask in public despite Health Officials urging him to do so. Global infections have topped 10. 5 million with more than 500,000 dead. Turning to russia, president Vladimir Putin has won a resounding victory in his bid to stay in power despite isolated protests against changes to the constitution. Preliminary results show prudent winning 74 backing to remain in the kremlin, although his Approval Ratings from remain at historic lows. He seeks to stay and to control in control until 2036. Narendra modi quit his account on a social media platform after new delhi banned 59 apps developed in china. A Spokesman Says it sends a message to beijing about their himalayan border dispute. And also, Rising Economic concerns. Modi has 115 post on the platform, including two photos of him and xi jinping. Spacex successfully launched a u. S. Military gps satellite after a twomonth delay amid the coronavirus upheaval. The new falcon 9 booster fired the payload into orbit before landing on a seaborne platform. The launch was originally set for april, but the space force held back because of the virus. The satellite joins an array of many gps craft in orbit. Global news 24 hours per day, onair and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Rishaad lets get to the markets. The hang seng drives up equity prices in this part of the world, up 1. 5 . Not long to go before lunch in hong kong. Japan has come back off lunch, and there we have it, 0. 5 higher. Looking at the prospects of what we can get out of the chinese or the Indian Trading day, which is about 13 minutes away or thereabouts, the nifty indicating positivity. , but there is more data to come. Pmis and services in the composite with manufacturing for june showing huge improvement and a rebound. The number in may was 30. 8. We have a reading and the session yesterday of 47. 2. A big jump. 50 is the figure you have to get above to achieve expansion. That is our subject coming up. It certainly is. Data suggests the activity has picked up as containment message measures are scaled back lets bring in our guest. The contraction and growth, our economy and economist, radh ika, good to have you with us. We spoke to the chief advisor of the Modi Government and he says he expects a v shape recovery. Are you making those assumptions . What can you read into the latest pmi figure . Pandemicthe [indiscernible] daily count continues to the government is finding a balance between spurring growth while fighting the pandemic. Certainly, a twoway street but also, the growth prospects, we think the second quarter, when the shutdown was at its extreme or most intense, will be the weakest point, the weakest part of the year for the economy. The projection in the second quarter, thereafter we do think a decline is at a smaller extent. Unlock 2. 0 is underway, it started easing restrictions. It is not happening uniformly across the country. Resuming at a slower pace in some places but they agricultural belt is coming back at a faster pace. Taking that as an indicator of where the pmi is, that is encouraging. We would like to look at services, because that has been affected to a bigger extent than the rest of the country. Haslinda ad told those all those, adds to challenges, simmering indiachina tensions. How might that play out in the economy . Could that way on its recovery . This has built over into the economic ties. Is asymmetricip with china, which is indias for import source electrical equipment. China has big participation in their technology space, particularly startups. The relationship is frosty but i dont expect a blanket ban on imports. I think there will be gradual tightening. Importss small ticket are concerned, i think manufacturers will be asked to look for local substitutes and suppliers. Policy, overall, the arestic industry, they encouraging onshore activities. The development of the situation is slower so we will wait and watch. To touch on the operation of the r. B. I. Most people think it is a oneoff and there is a need for the r. B. I. To be even more outright in its participation in the bond market. What is your take . Bankka what the central announced was a good step. I think it was, it was communication that it will be ongoing so everybody is running with the assumption it will be a oneoff. In the second half of the fiscal year, the September Quarter onward, after september, where the central bank would play a bigger role. By then, there will be a better. Dea on the theme of issuance the governor the government came up with a richard a record high issuance. To get stock of [indiscernible] we think they will step into the bond markets, but probably not in a hurry. Meanwhile, the focus has been more on ensuring the quality. If they see the bonds under pressure, it will come in and [indiscernible] or thisidity operation that was just announced. They are keeping tabs and i think they are participating but it is not in a fullblown measure, so i think they will do that in the second half of the year. If you were to look at various actors usually present in the hold lessarket, they than 3 outstanding. Banks as well as the central bank we think will play a leading role in terms of , and followe supply up with assurances and mutual funds. With banks and the r. B. I. At the forefront. It is not time now. The markets are more stable. Rishaad is the Central Government doing enough, the State Government wing enough . They have doing enough . They have been criticized for not wing enough. Doing enough. Each of the states are recovering at a different pace. There are many, each state has its own set of Containment Zones where it needs to see infection going down. Some have extended the lockdown until the end of july. It is not uniform but it is prudent for the State Governments to make their own call and operate under localized circumstances. In so far as everybodys ability, this year will be difficult from the fiscal perspective because Slower Growth means lower revenues, tax as well as nontax. The spending is bound to increase. This will be visible in the deficit numbers and debt levels. This growth is naturally nominal growth as well as zero gdp will decline. Nonetheless, i think puts the pandemic, a localized approach has been the case for the past couple months. Rishaad thank you so much for joining us. Lets tell you about what we have on the way. The opening for mumbai, looking at that, we are four minutes away from that. A discovery on the nifty, getting some of that and the free market up 0. 6 , the nifty up 63 points. That is the futures contracts, up by 0. 5 . Atia is chipping away chinas tech influence. The details are on the way. This is bloomberg. Haslinda breaking news japan, tokyo finding over 100 new cases of coronavirus. More of japan opens up its cities. Tokyo, finding more than 100 new cases of coronavirus, according to the nhk. 100 new cases. Right. We will get back to the spat between beijing and delhi. Relations within the two are deteriorating. The Indian Government, planning to discourage Telecom Players from using huawei and other companies. How will they implement this . For thoseit mean indian telecommunication players . The Indian Government is talking to private telcos and stateowned telcos and they are asking not to use telecom in q 10 from china. They are trying to say there is a new contract, please dont engage in an agreement with Chinese Companies, including huawei. What happened to the existing contract that is a point of contention . What we are hearing is, they are reviewing the existing contracts, as well. Especially when it comes to the state owned companies, they will be asked, or forced not to enter into any kind of future contracts with Chinese Companies as of now. They will be revealing the existing contracts with reviewing the existing contracts with Chinese Companies. Saslinda what will be huawei fate in participating with five g trials . It is in it is in limbo. 5g, it does around the corner. After a lot of deliberation and hadussion, huawei permission to participate in trials, but with the tensions at the border and the Indian Government taking actions against Chinese Companies, it is now in a dicey position. What is industry saying about banning chinese products . Industry is divided. One section is saying it is not possible to ban or go for a blanket ban for chinese products, even if it is absurd telecom gear or retail products. Or telecom gear or retail products. Is used to buying chinese products. Notsection is saying it is possible for a blanket ban, but other sections are saying this is the right time to boost indias make in India Program and india should limit chinese product. Industries are waiting and watching to see whats next. Our Bloomberg Telecom reporter, thank you. Lets take a look at where Indian Markets are, given asian markets are edging higher despite modest gains after a mixed session in the u. S. Overnight. Optimism over the vaccine. Lets take a look at where markets are in india. While continuing to rise, the theex up zero point 8 , nifty up, there is doubt that indias june rally may last into july. Some analysts say there are concerns about the outlook for earnings and the pandemic is pushing earnings by at least a year. Tensions with china, Indias Economic ties with china run deep. Gains for the indian market, the index up 0. 8 . 20 more to come. Plenty more to come. This is bloomberg. Haslinda as hong kong grapples with the implications of its new security law, we heard from the u. S. Undersecretary for Economic Growth on the reaction from the business community. A disastrous decision. This is, to eviscerate hong kongs freedoms and imposing draconian National Security measures, you know, if you look at this legislation that has been enacted, it has taken away all three all freedoms, including freedom of press. They are bringing in their forces. The reaction is really disastrous, and i think a lot of companies are really worried, because i think it is under clause number 33 that they actually can take nonresidents and as you know, they can take they can take them back to china where there is no rule of law. Greatk it has been such a , it has been a success for china with the twoparty system, and no it is a one party system. Happened, byhas breaking this british declaration, they only got 23 years instead of 50. It gets back to this issue with the Chinese Communist party of trust. Are agreements, the wto, the who, the united nations. That highlighted on top of the pandemic is, how can you trust them for anything . I want to come to something that happened earlier today. Secretary pompeo and secretary mnuchin issued some supply chain Business Advisory as it relates supplyweaker uighur chains and camps. That Business Advisory goes to anybody who is partnering, investing, buying goods, through the forced labor camps. These are some of the most serious acts of human rights abuse since world war ii. The whole purpose of this is to groups tority renounce their religion and embrace ccp ideology. In silicon valley, we say Corporate Responsibility is social responsibility. Today, that means refusing to participate in Human Rights Violations and deals. I think transparency is a key to making a difference. It is a fundamental business principle that transparency is visibility, and visibility leads to accountability. It is a magical concept. , withk by shining a light the business as well as coupled with the 33 chinese firms now on the enemy list with sanctions, many of them are the ones that are doing business in this province. It is incumbent for boards of , fortors to conduct financial institutions, it is their duty to establish Governance Principles investing in companies that violate human rights. More than that, it is a moral duty. Duty for these companies. Pension funds, university fundsents, emerging index , mutual funds, insurance companies, venture capitalist companies, at a minimum, should disclose what Chinese Companies they are investing in. Business, we hope, will do the right thing. That is it is going on when it comes to the uighur concentration camps. With 5g, secretary pompeo said the u. S. Has turned the tide as it relates to huawei working with allies. What did he mean and how has the u. S. Been able to do that . The tide has turned towards trusted 5g vendors and against huawei. That is the citizens of the world waking up to the dangers of the ccp surveillance state, on top of the pandemic. Hong kong, the skirmish at the indian border, and in february, huawei announced they closed 91 5g deals. The best we can see, it is down to less than a couple dozen. I think they are evaporating. Undersecretary secretary of state for economic we apologizekrach. For the audio interference. The latest business flash headlines, nearly 18 months after collapsing under 30 billion of wildfire liability, the california utility pg e emerged from bankruptcy. It says it completed restructuring and exited chapter 11. Critics say the company has yet to fully address the operational issues it faces even after overhauling the board and pledging to accept more official oversight for its aging and faulty equipment. A decade after john paulson achieved fame, he is the latest bigname money manager to quit the hedge fund business. He bet against the Housing Market in the runup to the last financial crisis and he is converting his firm into a family office. The company had to gasket assets of 30 billion in 2011. Chinas starbucks rival completed an internal scandal probe saying it fabricated transactions as early as april of last year. Coo werer ceo and among the employees who used third parties to invent some 300 million of fake sales. They have been dismissed and the board will meet thursday to consider the future of the chairman. Today,a coming up later Bridgewater Associatess cochair has a virtual conversation on the economic recovery and opportunity post covid19. Plenty more ahead. Keep it here. 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. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. The following is a paid presentation brought to you by rare collectibles tv. The California Gold rush is considered to be one of the most impactful events to affect americas young economy during its first 100 years and it has certainly had a longlasting impression in numismatic history as well. But people of california needed a way to standardize the value of the new gold so they set up a sayers offices