We are just crawling back to flat on the nasdaq. P half a percent. Big moves in treasuries, if you can call it that. Except two basis points on the 10 year. The dollar index relatively unchanged, although other currencies have seen strong swings against the dollar this week. The mexican peso stronger by. 4 . Yen also stronger but are 3 . Lets stick with treasuries and the relatively large moves this week. The industry has more than 12 trillion of assets but record low yields on treasuries are causing a problem for the industry expected to deliver annual returns in the high Single Digits. For more on the subject, we welcome brian chappatta. It seems like maybe once upon a time but right now nobody has an expectation of high Single Digits for their 401 k s or Pension Funds more general. You are not getting it in treasuries. When i was talking about pensions staying away from treasuries, the 30 year bond yield was at 1. 4 . Morning, 1. 24 this which is rare in the fixed income market. Treasuries have been remarkably stable. The fed has said we will keep rates low. There have been all of these ranges, and yesterday, something snapped. That was followed up by a remarkable long bond option, where there was tremendous demand, in some ways unprecedented. Still a lot of demand for long bonds, which is an Interesting Development going into the summer. Vonnie where is the demand come from for these long bonds . We were talking earlier about the sevenyour part of the curve being attractive. Why is that . Theory is it is probably a Foreign Investors, maybe japanese banks, Life Insurance companies. Come down forhave those investors that want to hedge a way the currency risk. If they can get even a marginally positive return on a long treasury bond when it compares to jgbs, they will take it. That seems to be happening now. There is risk off in some ways with the coronavirus popping up in various hotspots once again even after all of these lockdowns. Of aere is the ability japanese life insurer to get a positive yield, they will probably take it. Vonnie we thought we may see some steepening, but we saw it reverse. Our bond Market Investors looking at economic fundamentals, anticipating a slow down for a longer period than equity markets . Brian that is what we have not seen followthrough, there has not been much risk off the weather in highyield or equities. Treasuries have been on their own here. The steepening yield curve ing that weflatten have seen the past couple of days will be interesting to watch for. Runs possible the move has its course, and now we are going from here. Vonnie what are the ripple effects on bonds elsewhere in the world . Brian that is a good question. Bonds, itcorporate seems like there is a tremendously powerful force into Investment Grade Corporate Bond in the u. S. Right now. There is really nothing stopping it, its very impressive, the fund flows. As far as underdeveloped markets, you see no reason why german bond yields will not stay negative for a long time, japanese bonds around zero. Treasuries are on their own, still offering more positive yield generally than others. The long end israeli action will be for the next few months. Vonnie plenty for you to write more problems on. Thank you for your time today, brian chappatta. One company that is tapping the debt markets is carnival. The Cruise Company is boosting capital to weather the storm as the virus brings its business to a halt. Scarlet fu has been diving in to it. Too many puns. You have been looking at this cruise line. Thelet it is our stock of hour. It is moving up quite a bit, and it feels like late may and june when companies are fundamentally challenged doing so well. You are also seeing energy companies, banks rising. We did get an update to carnivals business operations. So far this year, they and norwegian cruise lines are the worst performers in the s p 500, down 70 . In terms of what carnival is saying, it gave some details on everything it has done thus far to conserve cash. It has cut cost, sold chips, committed to selling a couple more. It has delayed deliveries of new ships. 650. So, it expects to burn throughmillion a month the end of the year. Having said that, it will be cruising out of german ports next month, followed by italy. The good news is the bulk of its debt obligation do not come due until 2023 because it negotiated deferrals of principal payments, some of which were due in 2021. In the meantime, it expects a net loss on an adjusted basis or the second half of 2020, and its all about trying to get passengers back. They dont expect to return to prior levels of capacity until 2022 at the earliest. When it comes to bookings in 2021, they are coming in in the low single digit percentages below where they used to be. Potentiale how a second wave of infections affects future bookings. Vonnie it seems there is a little bit of a halo affect with caribbean up as well. I presume the outlook is similar for those . Scarlet they havent given us an update. Vonnie thank you. Lets get to the first word news with Mark Crumpton. Mike President Trump said a phase two duo with china is not under consideration, saying the relationship between washington and beijing has deteriorated too much. The president spoke to reporters aboard air force one en route to florida. When asked about the possibility of a second round of trade agreements, he said i dont think about that, adding the relationship with china has been severely damaged. The president is postponing his rally saturday in New Hampshire because of a Tropical Storm threatening the midatlantic and southern new england even the white house said the event is scheduled to be at an aircraft hangar and would be delayed by a week or two. The event was to mark the president s First Political rally in three weeks. The head of the European Council is trying to win over the socalled frugal four member countries. They are trying to reach an agreement on a coronavirus economic Recovery Plan meant to help nations. The eu is offering some countries financial incentives if a backup plan. Holdouts include the netherlands, denmark, austria, and sweden. Germany is also opposed. Hong kong is taking a step back six weeks after opening the city. New Coronavirus Infections have surfaced in the past week. The government today said schools which are in session, will close, and social distancing restrictions will be reactivated at restaurants and bars. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn. China boosting its estimated foreign soybean imports, citing increasing demand, this after bloomberg learned the country plan to accelerate purchases of American Farm goods to comply with the phase one part of the trade deal. About 4. 65rchased billion of the pledged 36. 5 billion dollars worth of american Agricultural Products under the deal. Anding us to discuss this talk about the plight of farmers is the president of the National Black farmers association, john boyd junior. How are your Association Members doing . About 100,000 members, nearly half are black farmers. A tough time with the coronavirus. Im curious what your numbers are telling you . John our members are struggling. The administration was slow to act to make sure that moneys were in place for farm operating dollars, so that we could plant and harvest in time. There was a short opportunity to get something done there. Many farmers are not sure of their future. There is a doubleedged sword. On time, borrow funds and there is a major issue with the future of our farming, as you spoke about earlier with the tree deal. Trade deal. We have not seen the real rise in cropa prices, the way we would like to see. Soybeans between eight dollars and nine dollars a bushel. Corn and wheat prices are still low. We need to see how that will pan out. Country really hurt our as well as small and midsized farmers around the country. Vonnie about 2 million farms in the country. Beyond the 28 billion that was ,iven as a bailout for farmers what else is necessary for your Association Members . Bailout did not reach a lot of the smaller farmers because they are based on a subsidy payout. The larger the producer, the more relief they get. A lot of our members are smaller producers, the average size for a black farmer is 50 acres. The average age is 60. So we are really in a catch22, and we need some leadership that oflly embraces the plight Small Farmers, black farmers, to make sure that we are included in the american agriculture fabric. Right now we are struggling to do that. , secretary oftion agriculture sonny perdue, i dont believe has done a good job reaching out to Small Farmers, black farmers to work with them. There is a lot of room for improvement right now. That is the current state of black farmers and Small Farmers alike. Vonnie i imagine many farmers need to change their crops in to the increased demand from china for certain crops. Is that an easy thing to happen . Explain how difficult it is for that to happen. John it is very difficult. Farmers basically have two paychecks a year. Fall. Spring and in the farmers are all about planning. Most americans plan within a 30day cycle to pay their mortgages, bills, car insurance, things of that nature. Farmers plan one year out. We need to know what we are doing in advance so that we can have those things in place such as seed, fertilizer. It is all about timing and planting for americas farmers. We need leadership that can put those things in place and lay out what the future of agriculture will look like. Right now, farming is in trouble in this country because we dont have the interest of the Younger Generation stepping up to say i want to take over the family farm. It is because they see farmers like myself and other senior statesman in the agriculture industry struggling to stay alive. If we do not take farmers more seriously in this country, like the issue with the coronavirus, you saw how that played out. Many americans walked into supermarkets, and for the first time, they saw empty shelves. That is the time they knew they needed to form a relationship with farmers. The coin is side of the fortune 500 industry, that we purchase goods and services from every year, such as john deere, has not done a good enough job reaching out to farmers and giving back. Seed producers should be getting back in a way that they should. These are things that we desperately need. We also need leadership. That can help those things happen. This country is crying out for leadership. Vonnie as you say, it all comes at a time when coronavirus is making it difficult to do the traditional things like shared people on labor, hire a shortterm basis. What kind of leadership do you anticipate will materialize, what specifically are you looking to see happen within the next few months before the congressional term ends . John we need leadership that can be a beacon for justice. We need leadership that can be a peaking for racial healing. For anybody wanting the 24 hour news cycle, and you cannot see america crying out for leadership, and the media and the country has given president thep time and time again open avenue to bring america together, and he continues to and drive that crack wider and wider by tweeting videos of white power. That is not the way that you bring the country together. He should be reaching out to leaders in the black community, bring them around the table, with corporate 500 companies, to see how we can Work Together to make america better. That is the kind of leadership we need right now. That is the kind of leadership that america is crying out for. N the protests around the country. Just like 1960s, these protests, you see a lot of white individuals i will come out and just say it. White america beginning to see that America Needs change and racial healing. That have been crying the same tune for a very long time. Vonnie we are going to come back to talk a few more minutes. Way, on your website, there is a call for donations to andt against hunger sovereignty for some of the smallest farmers in america. John boyd junior. We will be back in a moment. This is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn. High profile farm groups against andcountry standing up hoping to stand on racism in agriculture. We welcome back the president of the National Black farmers association, john lloyd junior, to continue the discussion about the difficulties for black farmers. The main concern of the black farmers right now, are they taking on the wider social justice movement, or are they more concerned about putting food on the table . John it is a combination of both. We are very concerned about the state of our country, Race Relations in our country. There are heightened tensions around local communities as all of this is playing out, the issue with george floyd. That really brought Race Relations to the forefront. A verybeen there for long time, people were not talking about it, but now is the time to come together and have those discussions, like we spoke about. Need of farmre in operating loans, Farm Equipment loans, farm ownership loans. Those things have not been made available by the department of agriculture. The top 10 banks have not done enough. Wells fargo and the others have not done enough to come to the aid and the need of Small Farmers, black farmers around this country. The top 10 banks, where they were borrowing a trillion dollars a day or Something Like putting those moneys back into the hands of smallscale farmers and black farmers. Ks caneve and know the ban do better. Ive been working with the occ, Federal Reserve, to see what they can do to loosen those pursestrings to black farmers in the country. Vonnie what are the excuses that these banks are providing . John thank you for asking. They are saying we are not one of the pillars in the regulations, one of the three major pillars, as the report to the occ for credit and things of that nature. We fall under small business. There should be a separate line item for Small Farmers so that banks can get those credits, working with organizations like ours. We are simply not fitting the mold. Since we are talking about this, the right to vote, the Martin Luther king movement, malcolm x. , although civil rights leaders paved the way for the right to vote. But what was left out of there was the right to receive in our room money borrow money. It has not been fair and equitable to smallscale black farmers, is part of the reason why we were losing land and not staying on the farm, because of access to credit. 48 of africanamericans are unbanked. Toof mortgages, only 3 went blacks in this country. Those statistics show there is a lot of room for improvement with the top 10 banks to come to the table and say here are some programs we can put in place to help blacks and other small businesses, smallscale farmers stay on the farm. At thein, it has to come direction of our administration. From President Trump on down to the agriculture secretary, small business. John, we will follow up on those conversations and make sure that we keep in touch with you. Thank you for that, john boyd junior, president and founder of the National Black farmers association. Coming up, will be talking with David Rosenberg on the canadian jobs situation. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Mark im Mark Crumpton with bloomberg first word news. Two. World Health Organization rates are going to china to figure out where and how the coronavirus pandemic began. Scientists believe the virus may was originated in bats and passed on to another and will before being passed on to humans. A freshr focused on food market in the chinese city of wuhan, but the discovery of earlier cases suggest the animal to human jump may have happened elsewhere. President trump has resumed his campaign to get children back in school this fall. He tweeted this morning that Virtual Learning has been terrible compared to being taught in class. The president also again suggested that schools could lose federal funds if they dont real been. Senate Majority Leader Mitch Mcconnell has cast down on his partys plan for a convention in florida. He says holding the convention in jacksonville in august is a challenging situation. He says republicans will wait and see if it is safe to go ahead with it. Florida is one of the hot spots in the United States. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Live in toronto, i am amber kanwar. Vonnie im vonnie quinn in new york. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. Canada as almost a million jobs in june, the Unemployment Rate dropped to 12. 3 as job gains surpass estimates. Wall street facing trouble in its campaign to hire black talent. We will discuss the industrys move to address the lack of black executives. And we take a look at the state of reopening the Fitness Industry with the ceo of orangetheory, dave long. Amanda, what is going on in the markets . Amber lets check in on the action. Breatherq taking a after reaching yet another alltime high yesterday, leading the way in the United States is financial stocks. Lines, this after Carnival Cruise says they are booking next year and it is in line with historical norms, and they have not had to discount prices that much. So a host of cruise liners are trading up. Theres a look at the u. S. Dollar versus the Canadian Dollar. You mentioned earlier the canadian economy turning out nearly one million jobs for the month of march june. We did not see much of a move in the currency. In fact, the Canadian Dollar is a little bit lower right now. Lets get some reaction and analysis to this. We have David Rosenberg of Rosenberg Research and associates. Thank you for being with us. Nearly one million jobs in the month of june, sound like a great number, but can you put that into context in terms of what was lost during the pandemic . In the past two months, 40 ave basically retraced of the carnage that was imposed by the virus, the lockdowns. There is reason to be cheerful over the fact that the headline beat the consensus and that we are climbing out of a deep hole. At the same time, that whole is still extremely deep. Whoever thought, creating a million jobs, have the biggest twomonth snap back in canada on record, and here we sit today and the level of unemployment is the same as what it was in april 2012, more than eight years ago. Things are improving, lets hope it continues, and that the rear openings allow for more growth ahead, but it will take a long time before conditions here are fully healed. Vonnie will conditions fully healed, what part of that number will end up being structural unemployment for a time . David that is sort of the key issue, the problem of the permanence of the job losses. Of course, we know that is the case in the u. S. It is also the case in canada. How the Canadian Dollar did not rally off of that number. Maybe Foreign Investors are going through the fine print. When you talk about the number of people in canada, say, who believe they are permanently employed, that number is one million lower than when the year began. When you look at the number of permanent jobs that have been ,000. We are up to 582 we have not seen a number that big in 26 years. Hink that there will be and not just in canada, this will be in the u. S. And global as well but the structural impairment in the labor market will be with us for a very long time period. David, your former employer, bank of america, putting out a report saying that canada is a very good contender out of the g7 nations for handling the covid19 response the best, in terms of how the virus has been contained, the ,umbers continue to trend down as well as the state of the current economy. Given what you are talking about, that we will see structural issues, are there any policy measures that you think are not being explored that should be explored in order to make that structural number as low as possible . I would counter that, i dont agree with that conclusion one bit. Canada went into this and must much worse shape than anybody else. Slap ourselvesto on the back because the federal debt ratio. But when you add in the provinces, consumers, and businesses, canada has one of the highest debt to gdp ratios going into this thing. There was no productivity growth. I called it the three cs. Condos, crude, and cannabis. When you look at the economy going into this crisis, real per capita gdp growth was stagnant. We didnt go into this thing in good shape, economic standpoint. Absolutely, yes, canada has handled the virus very well, the numbers have improved dramatically. It was really encouraging to see how ontario, quebec accounted for two thirds of the jobs in june. That will probably continue. The way the virus was handled was very good at this stage. A lot of that is at the provincial level, and that has worked. But when youre talking about a situation in canada where the federal government paid out 20 billion of income transfer over and beyond what was needed from the income loss from unemployment, just tells you the extent to which fiscal resources were expended beyond what was needed. But what i will say is, remember, as far as i can see, the only major industrialized country that has been downgraded has been canada. So the federal government has blown a gigantic hole in fiscal policy, over a trillion in debt, a third of that just this year, and the problem in canada will be that this deficit becomes structural in nature, as opposed to cyclical. , as we didte through on the income side, but you cannot pay people to stay out of work indefinitely. I would be a lot more optimistic on the canadian future from a productivity standpoint if the government embarked on an infrastructure package. It doesnt have to be brickandmortar, it could be broader services, internet, wireless, but at some point you want to pay people to work, as opposed to staying out of the labor force. Vonnie there has to be work for them to go back to first. You did forget a c. Canucks. Talk about the central bank governor. The governor could fix this in one fell swoop, just like the Federal Reserve. David oh, please. Canada is not the United States. The Canadian Dollar is not the reserve currency of the world. No, i would say the bank of canada does not have an infinite Balance Sheet like the u. S. Does. The u. S. Dollar is the World Reserve currency. The Federal Reserve can print its ink for free. Canada could face a currency crisis. You cannot run a current account deficits as rating agencies continue to downgrade your readin credit rating. I dont agree with the assessment that the bank of canada it is not superhuman. Fed,the central banks, the can do a lot from a liquidity standpoint, but as we are seeing in the states where we see the default rates going up to a 10 year high, no central bank is equipped to deal with solvency issues. They are equipped to deal with bu liquidity issues. You made the point before and supported my point without knowing it we are having a permanence of job loss here. Then to go through a period of sclerosis, and it is people stay idle, they lose whatever skills they had, incentives, and that is when they leave the labor force. That is when you get these structural problems emanating in the labor market, when you get that disengagement. This is what fdr got right in the new deal. And maybe this is a modern depression for Different Reasons but the point is, the new deal put people to work in public works projects. People did not get paid to not do anything indefinitely. That is something we have to keep in the back of our minds. If the government is going to decide that we are going to pay people more than they were making before to not work, we have to make a decision. We can put these people to work in some capacity. As there are no jobs to go back to, so much the better. If there are jobs to go back to, if Companies Stay alive, it could be parttime work. That is what goes into gdp. If you are going to build a bullish case for canada, when you consider the hole on the fiscalside, which is not expenditure, its an income transfer, we cannot do that indefinitely. People like to get these , even if on a Public Sector payroll, back to contribute into economic activity. Vonnie david, thank you so much. David rosenberg, chief economist and strategist at Rosenberg Research and associates. Officials out to address the lack of black executives. Why isnt it happening sooner . This is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn in new york. Campaign to hire black talent is not going so well. For those that get job offers, there is pay and benefits to consider but also isolation, bias, and racism. For more, we bring in chelsea butler. When you were reporting this, im sure it was difficult, and im sure you also heard many excuses, reasons. Tell me about what you found. A it was interesting, as i spoke to black workers on wall street about some of the things that they think about when they take a job. The experiences were individual, but certain themes came up. A lot of it was about like work. Taking a look at the pages of tes senior teams, the c sui of the places they were interviewing out to see if diversity was part of their dna, but also tapping their own networks to find out about hiring, compensation and culture. To prevent themselves from walking into a situation where they would be in a place that could be depleting or even hostile. Kelsey, what measures are being put in place to make sure this time truly is different, that there is going to be concerted action in solving a problem that we have known about a long time, and that has been given lip service for a long time . Definitely. One of the things that is coming up, certain banks wells fargo most recently are trying to get more diverse candidates in the door. Some of my sources are skeptical because the number of black workers on wall street has not really budged from 8 in over a decade. I think firms really need to look at a topdown in an authentic way to make sure that they are getting people in the door but preventing that him being a revolving door, allowing opportunities for advancement and promotion as well. Can get to say firms a certain percentage but stalls out. Of course, that is a problem in and of itself. If things dont keep growing, the pipeline gets pleaded. There are plenty of candidates out there, plenty of people going through business school, firms, minority owned firms that do cultivate this type of talent. Why is it so difficult for the bigger banks . A really goods question, something that no one has really been able to answer. Those candidates really do exist. I spoke with one who is a cofounder of her own Asset Management firm who said if you are not able to find diverse candidates, you are not looking hard enough. Another person i spoke with at an executive search firm said you cannot just post and pray. You have to go deeper, tap nontraditional channels, make toe there are rules in place ensure that women and minorities are part of the pool of candidates before the final decision is made. So much for you that insight on the work that goes on behind trying to get those numbers up. That is Kelsey Butler with bloomberg news. We are going to take a quick break. When we come back, we will talk about how the Fitness Industry comes back to life amid reopening. We had dave long, the ceo of orangetheory fitness, joining us after the break. This is bloomberg. Amber welcome to Bloomberg Markets. Im amber kanwar in toronto. One of the barometers of how excited consumers will be about stepping back out into the real world amid covid reopening is Fitness Centers and whether or not people will go back to the gym. One company that has been reopening some of its gyms is orangetheory. We have the ceo, dave long joining us. You have more than 1000 facilities around the world. Reopen . Have started to dave thats correct. Near 70 have reopened since the closure. Amber how is that going . Ave we have been really proactive. We have been serving our members every week, understanding how they will feel about coming back, varying by market of course. Orangetheory at home so that they could continue to work out at home. People had 12 million download that. As people are asked to sit and do so as long as they like, but the majority of our members who are returning, they are getting back into their habits. Vonnie obviously, people are desperate to do that. How did you get through this, did you apply for a ppp loan . Did your partner help you out . Dave from a headquarters standpoint, we did partner to get capital. Ly all of our franchisees applied for ppp, and they are getting the money. That is going along way to get them through this, have them be wellfunded to get through this storm. How will you change your Business Model in the medium to longterm . Right now the priority is getting people back in, getting protocols in place so that people feel comfortable. Going forward, do you see changing, a mix of people coming into the gyms, staying at home . Aboutwe have always been being the most safe and effective workout. We have been proactive in having the best cleaning and safety protocols, so that members that want to come back and do so as simply as possible. Longterm, we want to give members more optionality. Their workoutsdo out of the studio and worthy dont have the capacity. Demand, led by our coaches. We have been working on that strategy prior to covid, but we have accelerated that in the past couple of aunts. We are starting to deliver products relate to that. We see that as part of our longterm sustainable strategy. Amber its interesting that you use the word accelerated. One of the things that this virus has exposed is that companies that were heading in any direction, they are getting their faster. Before this pandemic, there was movement, socially workout with people while at home. Now you add in health concerns. Thesume that accelerates number of people choosing to work out at home, doing so through virtual means. Rsondo you, as an inpe facility combat that . What do you see as your key selling proposition . Two wordsy, your last were broken up. Aser basically just asking yorkie selling proposition today now in the age of peloton, health concerns, not wanting to contract a virus when working out in public . Dave it has not really changed. What has set us apart is the sciencebacked programming and the coaches that are helping us achieve success. Studio that is less in and more on our digital platform, we think it is the same value proposition. Thank you for joining , joining us from jackson hole, wyoming at one of his orangetheory outlets. About 600 are open. Our thanks to him again. Stay tuned. Lots more markets coming up. We will be keeping an eye on these market movements from new york and toronto. 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. It is 2 00 in new york, 7 00 in london. This is Bloomberg Markets the close. Caroline is vaccine hopes versus the virus spread. More than 15,000 cases in the u. S. In one day. Gilead offers hope saying remdesivir is responsible for a 62 reduction in death. Markets liking what they are hearing about remdesivir. Withbenchmarks gained banks leading the charge. Tech is the laggard. Up, ae and lighting Record Number of people are trying marijuana amidst the pandemic. Is that translating into Good Business for one of the Largest Cannabis Companies . Our interview with boris jordan this afternoon. All that and more coming up. Romaine lets look at wher
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