With neding to do that davis, chief u. S. Strategist. Panic, correlation started to break down. Are you looking at correlations as you start to look at u. S. Equity . About 20of all, i am years past my prime on hot dog eating contests. So i believe that to you guys. Wehink it is a general trend have seen over the past few months. Markets trying to get back to normal. While we can criticize the fed for maybe overreaching and buying fixed income, in reality, they stymied a panic in the market. We need to watch a host of things for the markets to return to normal. We need to watch volatility, Interest Rates, gold. If we can see these things continue to heal, then the investors are on the sidelines. That the investors on the sidelines will feel more. Omfortable getting back in areas thatclical have so far not been able to mount sustainable rallies. Caroline so you anticipate a rotation, that the beaten up stocks will start to lead the charge again . There is the typical rotation that you get at the beginning of an expansion. This gets back to the covid numbers. If it looks like the economy can in fact pull out of a recession, we would expect the cyclical value areas to do well. They are still the most oversold parts of the market. Coiled spring, oversold areas. And the macroenvironment, to their benefit, really a question of when is it something that happens early in the quarter, something that has to wait until we get definitive news on a vaccine before they rally . If you look at historical cycles, that could be an area you need to do your homework on now, get ready for potential area to outperform the indices . Romaine as we get into the next earnings season and the one after that, hopefully we do get positive results out of these companies, at least better than what the expectations are. Does that create another catalyst for the markets to go higher or simply can simply confirm the valuations we have now . Ed historically, you get more marketon early in a bull because earnings trough after the end of a recession. Valuations high, that is a risk because if earnings dont come through, you could see a bigger downdraft. We dont want to get overly concerned about the expanding p e ratios. If you do get the Earnings Growth coming through, you will get it from cyclical areas. Welor then why are overweight value instead of growth in the second half . Ed those are the areas that should benefit from the outlook. The industrials, financials, materials. I would say this. Tothe growth areas continue outperform and our technical models slip back, we will make the call and go back. We have been favoring growth for the last basically 10 years. We dont want to get too caught. P in what could happen wethe technicals confirm, should go back over to growth. Caroline always great to get you on, especially on a day like and keeping us going wonderful to have some time with you. That does it for the closing bell. Whatd you miss . Is next. The barbecue tracker. More hot dog conversations. Analystood and beverage joins us with more. This is bloomberg. Caroline from bloombergs World Headquarters in new york, i am caroline hyde. Romaine this is whatd you miss . Caroline we managed to keep into the green for this shortened week. Equities up across the board. The s p 500 closing 14 points higher. U. S. Jobs made greater progress than expected, but high layoffs and virus spikes may contain enthusiasm. And we speak with everett saintsaens loans for underserved minority owned businesses and what a better model looks like. Romaine earlier today, the job stayed out for the month of june. The headline number may not be painting an accurate picture of the economy. President trump says the numbers proof our economy is roaring back. Pres. Trump the u. S. Economy added almost 5 million jobs in the month of june. It a spectacular number and it helps the overall situation enormously. On a standalone basis, this is a strong report. A reasonable expectation given what is happening on the ground with the progression of the virus. These numbers are really stimulus driven. This data really underscores how rapid things change in a covidtainted economy, even though we did get a very important upside surprise. It is way too early to declare victory. Romaine joining us, the Washington Center for equitable growth president and ceo. Listening to those comments, you could ache pretty good case that the employment report today was positive, you could also make a case that the employment report was negative. If you are stuck at the bottom of the barrel and you get up just a little bit, it is better than being at the bottom. But this certainly is not a great labor market. We continue to have an Unemployment Rate that is higher than at any point since the great depression. This is the third month we have had these record highs. So, it is good that more people are not losing their jobs. But one of the really ugly things from his months data is that there are more people who are actually on permanent job loss. When we started seeing the unemployment numbers rise after the coronavirus hit, and a lot of those people set, a, i am just on temporary layoffs. Now we are seeing that shift, people saying, i permanently lost my job. Is this data to me indicates one thing, which is then we need to continue to provide support to all of the workers who have been affected by the coronavirus, whose jobs have been destroyed. Maybe they will come back, maybe they wont. But we know that it will be much harder for them to come back if we do not provide aid in the here and now. Of the numbers, when you dig police dig beneath the surface, is the fact that it depends on which at the city for how much you are still hurting. Which ethnicity for how much you are still hurting. Africanamericans are still like 15 in terms of workers out of work, more than the 11 across the board. How much are you concerned about the Racial Disparities we continue to see in the numbers . Heather the saying goes, when wall street gets a cold, harlem gets pneumonia. Black workers have an Unemployment Rate much higher than whites. At the same time, we know that many black workers have been employed in jobs that have been essential, which is led to come in no small part, the higher death rate. They are getting it both in terms of being in jobs where they have not been protected from the virus but also these incredibly high on numbers. Taylor what is the prescription to solve this issue . Heather in the shortterm, we need to make sure that those who are not at work today get the support they need. We need to continue to provide Unemployment Benefits and acknowledge that because of the coronavirus and rising caseloads around the country, many people cant go back to work. Governors and mayors are closing down businesses again. We need to make sure those numbers are close to 100 of someones lost income so they can still pay their bills, mortgage, rent. Put food on the table. Second, we need to make sure that communities are able to provide services and do all the things they need to do to fight the coronavirus. Because of this recession, tax revenues are down. State and local governments are laying off people rate when they need them most. We need to make sure we provide aid to the states so they do what is most critical for the economy, to do everything we can to contain the virus. Romaine right now, we dont have a clear idea of one congress will pass something and what it will look like. If we do not get that, if we do what do you think will be the outcome . Even if we dont get back to precovid19 levels . This point,in, at we have higher unemployment than any time since the great depression. This is the worst labor market right now in our lifetime. If we allow this to continue, it is very difficult to see how you can continue on the upswing. You have all of these Small Businesses struggling to stay afloat, many of which are starting to fold because they cannot make it. They need to know that people still have income. You can go to your local Small Business if you are also laid off and dont have income. If we dont act and continue to extend that aid, we are looking at a deeper, much more protracted recession than is necessary. We can already see what we are doing here, actively creating an Economic Situation that is much more troubling. That is going hurt our economic competitiveness for years to come. Wonderful to have some time with you today. Thank you. Investigation into the coffee chain. Theboard had been seeking chairmans removal. Lockheed says the chairman will remain as it stands. That will be one that they have to identify. They said the resolution, a proposed removal of their chairman has not been approved by a vote of two thirds of the rest of the directors present. Remain ahe will director. A highflying company, they took thetarbucks, they fired ceo, formerly the coo as well. We continue to investigate. Coming up, the u. S. Senate approving a new sanctions bill in response to agings new Hong Kong Security law. This is bloomberg. Caroline lets get you a quick check of the latest business flash headlines. Ruled that juan g be recognized as the venezuelan president , which means he gets the bullion in the vault. The highend grocery chain fresh market, a Success Story during the pandemic. Retailers and restaurants. Just 12 yearoveryear. Consumers are demanding healthy and organic food at home tesla is still on a roll. The electric car maker handed over 90,000 vehicles. That beat projections. 160 for the year. That is your business flash update. Tolor i want to transition china and hong kong. We know that the new security law passed by china has rocked hong kong. China has asserted broad new powers to rein in those who criticize its role. The reducing or dropping influence on china. Hong kong used to make up 25 of chinas gdp. Influence waning as other mainland cities have continued to grow and influence. Hong kongs share of gdp down just 2. 5 . For more, i want to bring in robin rooks, the chief economist of the institute of international finance. I wonder if this almost seems like a natural step where hong kongs influence has been waning, so china is less concerned about the International Backlash over this new security law. First of all, great to be with you. Thank you for having me on. Precautionschanging changing proportions in the hong kong economy relative to the rest of china is less about hong kong. Chinas economy has grown massively. It rivals the United States in terms of size on the global stage. It is really more a phenomenon about how chinas economy has diversified from originally a manufacturing hub to now much more broadbased services and a global player. Romaine talk to me about some of the capital flows and current accounts. Where does it stand right now with regards to the health and prosperity of the economy . It is a good question. As you will recall, when we had tariffs back and forth between china and the United States, they were apposite there were episodes where the rmb depreciated. It is reasonable for your currency to weaken when tariffs are imposed. The underlying picture now, china has a large growing currentaccount surplus. Reserves are still extremely high. The valuation risk is quite low. Caroline interestingly, the threat of tariffs is very much back on the agenda. We have had as a jeff various laws going through the senate and house. The position of perhaps some sanctions against the treatment of uighurs. We also know that we had larry kudlow earlier today saying they are not happy with china and that there will be an impact on exports. Is the terrorist threat back on the agenda more than before . I think both parties here have a lot to lose and it is a tricky game. For china, devaluing in response is verytariffs dangerous because devaluation carries the risk of capital outflows taking back up again. We had gargantuan capital outflows in 20152016. For the United States, the confrontation can be quite tricky. 500 reacts comedy s p very violently when that relationship goes down the tubes. I think the United States also, especially going into an election, has to tread carefully. The shape of the rebound at the moment, especially if you believe their numbers, they put a lot of the covid19 cases in the rearview mirror. There is a whole debate about swoosh, what have you. China comes closest globally to being sort of a v. To give you an idea comedy contraction in gdp in the First Quarter was close to 11 the rest of the world is really struggling to get this thing under control in comparison. Struggling with the covid crisis, when you compare what is happening here the u. S. , what does this mean for a lot of those em nations where they are still relatively depended on the direction of the dollar, the direction of the yuan. Thatrst of all, let me say emerging markets earlier this year were incredibly sensitive to covid19 in the United States. We had the panic in march about icus in new york getting overrun , emerging markets got hit really badly. If we have a big resurgence of cases in the United States, a big second wave, i would be very worried about emerging markets. Picturehat, i think the in emerging markets is better. There are still idiosyncratic weak cases. Argentina looks vulnerable. Turkey looks vulnerable. We are certainly not out of the woods. Caroline we will keep a close eye on how that all impacts the u. S. Market. Chief economist for the institute of international finance. Romaine quit breaking news on texas, the governor says he is going to impose a mandatory face mask requirement. Obviously, this has been a big political football in some areas of the country including down in texas. We have seen not only a spike in covid19 cases, but in the hospitals and some of those areas basically bursting at the seams right now. Caroline d santos is out speaking, the governor, talking about how socializing is possible, it matters how you do it. Notably, after we see texas impose face masks, d santos is saying it is much better at the beach than indoors in a c. In ac. I assume what he is meeting is you are better than indoor diamon indoor dining, going out for fresh air. Taylor global case is now passing 10. 7 million. Deaths, about 517,000. Certainly a different fourth of july weekend relative to years past. Romaine we will be back in a moment. Spillane,ve bryan bank of america senior food and beverage analyst. Amaine a little bit more of lighter note here. The fourth of july weekend in the u. S. Observed on friday. On saturday. A lot ofple take people take to the beaches, parks. But, this year, they might not. Bank of america food and beverage analyst joining us now with the bbq tracker. How many of us would be out drilling and doing these things we would normally do on a fourth of july weekend . Bryan thank you for having me. The survey we published this morning, and we have done this now throughout the summer 57 of period, is about respondents are planning to attend or host some sort of barbecue event this weekend. A typical year would be about 68 . Still below what would be normal. But still a healthy number of respondents are planning on either attending or hosting a barbecue. Caroline what i loved reading about your note was that there is an association called the barbecue and patio association. I am intrigued about the potential backslide in certain states. How are you seeing a consumer react to how texas, california, having to impose regulations, seeing now that you have to wear a mask. How numbers in your most recent public would pull back even lower . Was justis survey completed a few days ago. If you look at it by region where the cases are strongest in terms of affirmative, new england and the midatlantic, new england, 65 said they tend to go to a barbecue. It is lowest in the south atlantic, think about like florida. It does suggest to us that maybe you are starting to see more trepidation in places where the virus is spiking. One other aspect that came out of this, of the 43 of respondents who said they were not going to attend a barbecue also saidnd, over 70 they dont intend on going to barbecues over the course of the rest of the summer. That is a higher percentage than our survey suggested when we did a similar survey at fathers day. Though itely seems as is beginning to creep into consumer consciousness even more the last couple of days. Insightdo you have any into the rise of fake meat over traditional meat . I am focused on increasing food transparency given the rising animal to human firewall transmission. Any insight over how respondents are now doing fake meat . Bryan in survey, about 30 of respondents said they would be adding about adding some sort of plantbased meat onto their menu. The survey work that we have done separately on plantbased t suggests that with the that what has emerged is consumers really looking at it from an Animal Health and welfare lands. That is especially true with younger respondents, those in their teens and 20s. I think, given all of the headlines we have had about Meat Processing plants this year and the virus that has spread in those plans, it does suggest that could actually gain some momentum. Romaine lets not forget, this is of course a day for hotdocs. This great report out even brings up the nathans hot dogs eating championship. They will be out there on coney island, stuffing their face with hotdogs. There wont be a crowd this year. Obviously, this is a big promotional opportunity for the folks at nathans. There are a lot of companies that stand to benefit from the fourth of july trends and broader summer trends. Bryan if you think about hotdogs, craftheintz has done Something Interesting with oscar meyer where they are encouraging people to have front yard barbecues. Everyone is outside but having a barbecue still. The beer companies, it is a big beer holiday. Pressedare seeing really are hard seltzers. Beer . E hard seltzer over Caroline White cloth. I had my first watt a month or so ago. Talk to us about which companies have got themselves in the right place at the right time, managed to as best they can whether this covert crisis, make sure their supply chains remain functioning, and are able to win out from some of the demand in the backyard . Bryan we think it really sets up well for constellation brands. Their beer business is tracking well above the category. Beer and werate in think they are in good position to take share of the holidays. We also think kraft heinz and conagra, hotdogs and condiments. We think there is room for them to take share and have a good holiday period as well. Caroline great to have you with us. Thank you so much. Senior food and beverage analyst. Withtodays first word mark crumpton. Mark i think we all got the invitation to romaines for the fourth of july. Thanks, buddy. A job report shows a rebound in losses from the coronavirus pandemic during a News Conference from the white house this morning, he also predicted a resurgence before the election. Pres. Trump the economy is coming back extremely strong. We have some areas where we are putting out the flames or the fires. That is working out well. Mark the president s comments came as spiking coronavirus cases are causing some states to slow or reverse plans to reopen their economies. The senate has approved legislation that would increase sanctions on chinese officials cracking down on dissent in hong kong. The bill now moves to Donald Trumps desk. A National Security law and the territory, critics say, is aimed at squashing protests against the government and could lead to in some cases life imprisonment. And e. U. Ween the u. K. Over their future relationship broke up today a day earlier than planned. The two sides say they are still far apart. The two sides resumed facetoface meetings this week for the first time in three months in an effort to work out a trade deal before britains final split with the block at the end of the year. British socialite ghislaine fbiell was arrested by the on charges that she helped procure underage sex partners for billionaire jeffrey epstein. The indictment said she lived for years with epstein and was his frequent travel companion around the world and facilitated his crimes by helping epstein abuse girlsom, and as young as 14. They said she participated in the alleged abuse. Epstein killed himself in prison last summer while awaiting trial on charges. Maxwell was arrested in new itpshire where the fbi said had been keeping tabs on her. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am a mark crumpton. This is bloomberg. The economy and markets are driven by the Central Banks. The coordination with the central government. What i mean by that is the purchases right now of Financial Assets by the Federal Reserve board the purchases by the Federal Reserve of government securities are the drivers of that market. The production of the money, if you look at money and who is in the market. The Federal Reserve, for example, will set an Interest Rate for different types of creditors based on if economic objectives. Thehe old days, lets say 2008 financial crisis, we needed to protect banks because they work systemically important, then money market funds, commercial paper, and the like. Now, the whole economy is systemically important. If they did not go out and make to companies, those just above Investment Grade and fell into Investment Grade, we would far lose large parts of our economy. We are in a position now where they are market makers. Take the markets out and Central Banks out, and you have a different story, including the value of money. In europe, the central bank will lend to banks at a 1 . So, that means you dont have interest payments. In fact, you have interest credits. The central bank will take that debt off, they will own it, and they have a clinical agenda, not an economic agenda, where they will determine how they will be paid back or when they want to be paid back based on what the economy is doing. In that case, like in europe and similar situations in the United States and japan to various degrees, they will make loans that will have interest credits, and you may not have to pay principal back. It depends on what the conditions are at the time. Those are markets which are driven by Central Banks, not only their actions, but their desire to be an owner of the assets, and their priorities about that ownership when they buy and when they sell are not the same as the classic freemarket allocations. Marketsult, the capital are not free markets allocating resources in the traditional ways. One of the questions investors are wrestling with is how far Central Banks are willing to go in their effort to reflate Financial Assets to begin with, and they hope to transfer something through to the real economy that would result in growth and jobs. How far are Central Banks willing to go with this power they have discovered they have had . Central banks are willing to go, and need to go, as far as it takes in order to keep the system afloat. Because we are in these late stages where we have a lot of debt, you are going to see Central Bank Balance sheets explode. They have to because the choice is the sinking ship. Romaine bridgewater ceo and founder, ray dalio. Lets talk about what is happening in the economy. Of course, the resurgence of coronavirus threatening the rebound. The house of representatives did approve an extension to that Paycheck Protection Program for Small Businesses got Small Businesses, but it only goes until next month. 130 billion Still Available in that pot. Our next guest was tapped by goldman to deploy a portion of those funds. President and ceo of a Fintech Company that specializes in lending to Small Businesses run by women, people of color, and veterans. Take you for being here. I want to start off with the last of the the lapse of the program in june where you still had 130 billion in that pot. Do you know why we did not see more Small Businesses take advantage of that program and deplete those funds . Thank you for the opportunity to be here. When we first looked at it, we wanted to Pay Attention to was the data. 3 of its funds to Small Business owners. If you also look at the attention that was paid to round one and round two, there was going to be a rush on those funds. You had to have all your paperwork together, and you had to have a Lending Institution in place. Those things took a while for the Small Business owner to learn or try to i think muddle through. By sbae 19 changes made and the multiple changes made by congress did not really help the Small Business owner to understand. If you already sold proprietor in many of our black and brown businesses, their rule came out last. It took a while for the Community Development organizations of the missionbased institutions to get a line so they can help those Small Business owners. Of ppp. Nsion milliont roughly 4. 5 businesses are still eligible for the program. If they would at some additional things, forgiving loans under 150,000, we think for sure there will be a lot more spark than latterday industries to help those Small Business owners. Caroline changes that in the future will help more particularly underserved businesses that may be need certain amounts written off. In addition to the forgiveness program, one thing to consider here is that every 1. 25. Hat a minimum of that was 1. 25 ilya dollars. That was given to the states to use at their discretion. There are plenty of states out there using their money. The state of pennsylvania which 190oughly 2. 6 million is going toward Small Businesses. We have partnered to help deploy that capital in the form of grants. One of the answers to your question, we can provide unique solutions these Small Businesses in the form of grant dollars, which will help them pay back bills, restart, reengage. Taylor a lot of the frustration around ppp was that it was a loan, not a grant. The ppp Program Never made up for that big lost revenue. What are some of your customers saying about what they really need to survive when it comes to the grants, if that even happens . Everett that is why i bring up the forgiveness as well as the state programs. This is a 12 punch we need to have. I think what has been learned and what we can look at with this pennsylvania program, it is a blueprint that other states can follow. It is a gigantic opportunity to help replenish the funds in these Small Business owners. I think making the loan forgivable in terms of ppp also provides another sense of equity. Another thing that is equally important, all of the loans through september 27, if a Small Business owner takes out that loan, six months of those loan payments are paid by sba. Romaine one thing that the program and really this all pandemic exposed was i guess the lack of presence of community banks, at least in certain areas of the country. I know we have some of these other solutions that were there to plug the gap, but im wondering, what do you see as the longerterm solution for these businesses that may be our too small to go to a chase, goldman, other big bangs. What will their options be Going Forward to not only start businesses, but grow them and get through other rough patches down the road . Everett i think the key is play ayers in the larger role. It takes what is good about fintech with what is good about banking, which is low cost of , low cost of management. Goldman sachs were looking for those lenders who had a deep commitment to underserved minority Business Owners. I think it will have to be a collaboration of some of the larger Capital Providers with some of the smaller Capital Providers. Then i think policy also plays a role. Regulatory credits for banks. There is already regulatory credit, so i am talking about double regulatory credits. I think one of the other things we can do, we can look at programs like the main street loan program. We are about to repeat the same process with ppp. But we have done in the past as we have said, lets decrease the loan amount and therefore more Business Owners will,. The problem, Operational Efficiency and deployment. Deployment, one is who is deploying the capital. If you look at someone like lendistry that has a focus to help underserved communities, that is important. We have to put the capital in the hands of those who have a vested interest in seeing those communities do well. On the others, we have got to have policy and structure that allows the capital to flow. Caroline i wish we had more time. Great advice. Nudges potentially to the fed and the government. From new york, this is bloomberg. Romaine time to check in with joe weisenthal, was going to take off his mask for a few minutes and give us his thoughts on the unemployment report we got today. A lot of people were trying to spin it as a relatively positive thing. It looked relatively positive. A lot of folks focused on the temporary job losses. But there were other areas that maybe were not as encouraging. Joe i want to have the positive spin. The headline was indeed better than expected. Two months in a row that the total amount of job creation in the month was better than expected. But i am having a hard time getting too excited about it. The large part is because job loss is characterized as permanent, jumped nearly 600,000. These are not just sort of furloughs. Bls expects asks if people expect to get their job back in the next six months. If they say no, they are characterized as permanent. We only had one month worse than this in the past 20 years, during the great financial crisis, in early 2009. Taken during a period of june in which there was some relative optimism on virus suppression. Middle of june, it looked like new york, new jersey, connecticut had all gotten their numbers down. Everywhere else was fairly low. We know that the rest of the month, it got worse on the virus front. It makes me extremely anxious about the state of the labor market Going Forward. Romaine of course we will get a few more reports here over the next few months that maybe will shed a little bit of light. Joe, have a great weekend. Be safe, take care of yourself. Reminder to our viewers, respond to our weekly podcast. He will find all the best content each friday to enjoy over the weekend. It will have a lot of caroline, hopefully less of me. Caroline all about romaine. Taylor Bloomberg Technology is next in the u. S. Romaine this is bloomberg. I got an oriole here. Eh. Common bird. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Iredefined the wordng thschool this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Emily welcome to number technology. Bloomberg technology. U. S. Sox paring gains after a jobs report. Most are not new jobs, just replacing all jobs that were lost the on employment rate falling for the second straight month, but there are rising concerns that researching cases of covid19