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1. 17. Of tech has a lot international exposure. Man,ll hear from catherine Citigroup Global chief economist, and the head of Public Policy research. Is kevin cirilli. Tell us what is in the stimulus bill and when we can expect it to happen . We have new details regarding Senate Majority leader Mitch Mcconnell and that republican proposal we are expecting in the next couple of hours. Unemployment benefits for 70 of workers. That has been a controversial element of this package. Democrats are dug in and say that is not nearly enough to provide Economic Relief for individuals. It will provide another round of 1200 direct payments as well as funneling money to schools for reopening and funding for expanded virus testing. Willdition to that, it allow for Liability Protection oor businesses that are going t incentivize workers to come back provided that they take safety precautions. Democrats are saying that they are dug in on the notion that they want to see much more funding to underserved morenities, muicch additional funding to teachers as well. Joining us now is catherine man. Always a pleasure to talk with you. Weed on your work what do expect from d. C. Government to support growth . This point we have to get beyond just supporting but catalyzing future growth. Have beenms so far life preservers which are extremely important for firms as they deal with this crisis. At some point there needs to be a transition to catalyzing return to private sector activity. That is what will cause the economy to grow. It needs to get workers back to work and businesses back to investing. There is a collapse in business investing. It sets the tone into the future. If you have a continued business collapse and investment, you will never get employment back to where we were precovid. That is what im concerned about. Indicationsgterm implications are profound, but lets talk about the life preservers. 7,we dont deal until august what are the implications . A lot of states will struggle to make it work under that scenario. If it isd question is, a complicated process, adnnd 70 of wages,d how difficult is that and what does it mean for the economy . You pointed out two things. One having to do with the complexity of 70 . We have seen that state and local governments have already had a challenge in delivering on the Unemployment Benefits already put in place. Ofs adds a new layer challenge for systems that have not been working all that well in terms of delivery, often in thes of the 600 extra plus Unemployment Compensation that was already allowed. Thats one set of complexities. The systems have not been up to snuff already. We are adding a layer of complexity on top of that. Concernedally, im about the lack of support for state and local governments. Of fiscalve a lot support at the federal level trying to stave off disaster, local the state and governments are running into huge problems, if theres no way of assisting state and local governments in a comprehensive way, not just schools or health, then the state and local governments will have to be tightening the belt and firing people. The effort that you put forward on the federal level will be offset on the state and local level. You dont even have the traction for the life preservers that you thought you had. At the state and local level pay will have to have more austere policy. That is not fully being addressed in this current bill. Alix as a mother of a fiveyearold girl going into first grade, i really feel that. Is there a magic number that on the state and local level you would feel comfortable for the stabilization of the life preserver . The state and local level has been related to the current budget conditions. It depends what the Unemployment Compensation system has been for them. There is a difference in Health Expenditures that has been undertaken by different states, depending on the severity of the coronavirus crisis. The problem has been to come up with a state and local government formula that adequately accounts for the complexity of how the virus has affected states in a different way. That therer the fact are Politics Associated with the delivery as well. Guy the democrats are talking about extending the program through january. Is that a good idea . Do we need to sidestep politics and think about real lives as they go through the next month . Currente to put the u. S. Fiscal discussions in a b roader context. You have already talked about the early indicators from the Foreign Exchange market and some of the Financial Markets. These markets are not impressed with the current effort in the United States, relative to what is being put forward in other countries. Its not just the tumultuous of some of the negotiations going to the 12th hour, because europe does that whatits because part of is in the European Program is forwardlooking. Privatetalyzing the sector to get back into business. That is crucial. It ought to be a critical ingredient of the program now. It ought to be a critical ingredient of the program past november. Of governmentunt spending that is enough to raise all boats in the economy. You have to get the private sector on track with investment. You have to have that happening. Right now that is not the essential drive in the Fiscal Program in the United States. It haseservers, yes, but with something that will get the private sector investing. Hired again. O be great pointing up a because labor flexibility in the u. S. Is something many point to as being good for the economy. Coming out of the pandemic it is not. Wewe get the second wave and see europe having to shut down the scenario, does change again . Inbe the way we are doing it the recovery effort becomes better . Europe has a better social safety net. They have a situation where more people stay related in their businesses, in their work situation, they stay attached. Better testing and moreng and can lock down surgically than we are currently states. The united we have more information about how to manage it. In the United States, the two waves are conflated. We are still learning about how to handle them. We need to talk about what else we have in focus. The city stays with us. We will talk more about the fed next. This is bloomberg. Guy this is bloomberg markets. Lets talk about this week. The fed and what is happening with gold. Gold is blasting through the 1900 level. Lets talk about what is happening with the price of gold. Alix it is pretty extraordinary. We have gold hitting a new record high. The first time we have seen that since 2011. A piece of this is expectations around the fed. Gold is up 30 this year. Longest winning streak for gold since 2019. A piece of this has to do with the dollar going down. Close to snapping it. Is similar to what we saw in 2011. When you have fed liquidity, it dollar. Eighs on the there is some piece of that of a head at some point. The twoyear breakeven is on the rise. The fact that you have the dollar down and in and inflation rising, that fits. Lets look at an interesting chart. We have the yield curve steepening. Relative to the short end of the curve still down from a march 9 low. We have the 10year and 30year up from that low. The yield curve is steepening with an expectation around growth. Interesting that we have gold going higher. Lots of moving pieces to take into account. Guy thank you very much. Catherine man is still with us. We are still well below the feds target for inflation. The talk seems to be of symmetrical inflation targets. Isyou think the Market Pricing information about right or underpricing it . The inflation story is interesting. Youou are an economist, remember milton friedman. Inflation is always and everywhere phenomena. You look at the balance of Central Banks and credit growth around the world. That is where you get this view that you will have inflation out of the woodwork at some point. On the other hand, you have these microeconomic models. It is all about wages and pricing power. You look at the state of the economy and the labor markets. And tos in a capacity those economic models of inflation do not really tell us the story about inflation. When we compare with those economic model say about the , that isfor inflation will be a gap. Even though we might not have pricing on the upside of the 2 objective, the Financial Markets surprised because they have such a low expectation for price inflation. Do see the twoyear moving up wereatification or they pricing up some, will it be runaway inflation . Definitely not. Alix how low do you think it can go . Think that when we talk about real rates, we have to talk about the nominal tenure, and which inflation rates we will use to deflate by. If youional markets, take the cpi expectations, you can get 100 basis point difference between those two. Theres definitely a lot of leeway in there. We have to look at the 10 year. Low. Ield is inordinately as the equity market goes up, theres more desire to hold hedges against possible negative surprises. You have more attractiveness to buy into the 10 year. That keeps the yield low. There are a number of factors that have to decompose to get into this notion of how low real rates can go. Guy what is next out of the feds toolbox . Box yield curve control in the box . It has been very clear that it is not in the box. There is a lot of guidance language they have been using that is effective in that outcome. Just because youre not going to use the language doesnt mean you are not conscious of the yield curve. Im more concerned about this concern that they need to have Going Forward about how engaged are they going to continue to be in the market . There was a lot of discussion about, if they dont want tantrum outcome again but to what extent does any movement away from reduction in the pace of purchases, we are still purchasing but not as much, how much does the market interpret that as an implied tightening and would yield a taper tantrum anyway. Said something and cost a tantrum. That is what i worry about, the language. Alix it is always a pleasure to talk to you. I love your background, im jealous of it. This is bloomberg. Is time for the Bloomberg Business flash. Google will have employees work from home until at least next july. Affect all 200,000 of the employees. They are the first Major Corporation to come out with an extended timetable. Ondons fastestgrowing funds is enticing new investors. Charging clients the usual 20 of profits only if he earns triple digit returns. Exodus that has plagued the industry for years. Cfo has been named in a federal probe. Is likely to alleged violations of federal securities laws. Its actionssays were appropriate. Alix thanks. This has been happening for a while so that is not necessarily something new but we are in the middle of a pandemic and you would think Something Like this can steer focus away from the fact that. Sales. Sales are plummeting for this company. There is a notice relating to the company. Clear as to whether or not the authorities will proceed with the company. Normally in these situations, what the authorities would look but that hasnt really happened. To see that want kind of shakeup when you are in the middle of a pandemic and you have to manage your way through . Twoyear federal investigation. On that respect, its nothing new. 55 in Second Quarter sales. Thats bad. When you have an investigation hanging over your head, not good. Not good at all. Nike is a company that normally executes really well. Theyre struggling. If nike is having a tough time, everybody else is. That is the lens through which you have to view these things. This is where nike is now and everybody else will be below that line. The company is saying that the executives will maintain their actions where appropriate. They will engage in a dialogue. Whatever that means. Germany considering mandatory tests. We will discuss that next with catherine, the Infectious Disease epidemiologist from houston. About thel talk health trials ready to be tested in nine states. And gope white house are agreeing to Unemployment Insurance transition. We dont really know what this means. This could mean do you make 70 of individuals wages. Do you take that a benefit and reduce it down . There has sure but been agreement of it Unemployment Insurance transition but any kind of tiered system the democrats dont like so i dont know how it moves us closer to the deal. Guy the reason the 600 system worked so well is it was very straightforward. It makes it very hard for the state to administer and hard for people to understand and it reduces the efficacy of that process. This is the gop trying to figure it out and then we get into the hard yards of trying to get the democrats and gop on the same page. Lets talk about what is happening in the world of the coronavirus. Were coming at it from many different angles. There are upticks in europe. That is causing problems in terms of travel. Hong kong is limiting public gatherings to two people. A lot of consternation. Joining us now is dr. Catherine poisi. To start on aant subject that we will spend a lot of time later on. The issue of vaccines. Really looking forward to that conversation. Im trying to understand how quickly this virus process will itsand whether or not actually possible to get to the herd immunity that will provide some degree of protection. Do you think the vaccine programs will get us there . Good morning. Issues whenlot of you develop vaccines. The first is to have one that works and is safe. That is what these phase three trials are looking at. You dont get results right away. They will be looking over two years but hope to have some preliminary results in three months. Does the vaccine work and is it safe . You have to distribute it. We are talking about shortages of glass vials. Well need needles, ppe, all of that stuff. This is a two dose vaccine, so double deverything. The third thing that will affect whether herd immunity is achieved, we can get it to people but will people take it . We are already seeing pushback from antiscience contingents. It remains to be seen. We were hoping a vaccine would be our panacea, but it remains to be seen how quickly that will happen. Alix when we get these headlines like starting phase at 89 u. S. Sites, what do we need to care about . Does the vaccine work . Are people making antibodies and do they not get covid . They will have a Placebo Group bute you get sugar water, know what he will know who gets what. Some people will get that and some will get the vaccine and we will see, do the people who get the vaccine have a lower rate of covid19 than the people who got the placebo. Theyll be looking at side effects. Minorwill be sore arms, things like that but we are looking for more serious conversation complications. A cellulardo not get response, a t cell response, arbery going to find ourselves in a situation where we have to renew this vaccine annually . I get a flu jab every year. It is possible. Because the virus hasnt been long and up around long enough to know how long of unity lasts, we are not sure how good and a human immune response can give. Yournot just because immune response has changed but because the virus has changed. Influenza mutates easily. The coronavirus does not seem to. We will have to see. Alix 89 u. S. Sites. Vaccinatey choose to first . That is something that needs to be looked at. Magically going to build this for 8 billion people in the world. It is probably Health Care Providers and First Responders who will be the first to get the vaccine because they are at highest risk. On that it will depend there are different ideas about who gets it next on that is being worked out. There is also the issue in the United States of people who dont have insurance and will it be free . All of those as well. Guy you think people will be willing to get flu jabs and periodabs within a short of time . A big fear among the doctors ive been talking about is that with flu andp covid in the same cycle and we will presumably have to deal with an injection for both of them. Do you think people will be willing to get both and should we prioritize one over the other . I hope people will. We dont have a Covid Vaccine so people need to get their flu shot stop we do not want to see the flu and covid at the same time. Once the people are going to be willing it depends on the Public Health messaging. For the flu vaccine we have a intranasal vaccine. Alix we have seen hong kong shut down or limited gatherings to just two people and restaurants shutting down. Stillt a second way for the first . How do you look at that . It is a matter of semantics but when you have your cases down very low and they start to go up again that is a traditional second wave. In the United States we havent done that yet. When not surprising that states start to open up that you will see an increase in cases. Way we can stop the spread is through the use of masks, social distancing and and sanitation. People are getting tired of the pandemic and wanted to resume their normal life, there is going to be that possibility and what countries and states have to be ready to do is to go back to the previous phase. Always good to catch up with you. Hour, we will be speaking to the ceo of return a. Dont miss that conversation. The call is underway right now. D. C. Withppening in the next round of stimulus . Asked the gop to meet with her today after unveiling the stimulus, so the horsetrading starts. The question becomes how quickly can they get together. This is bloomberg. Time to check in on bloomberg first word news. The white house said National Security adviser Walter Obrien has tested positive for coronavirus. He is said to have mild symptoms and is now isolating. Senate majority leader mitch the latestnveiled Coronavirus Relief package. The House Speaker nancy pelosi panned the proposal a couple months ago. Thenew forecast says that Unemployment Rate will peak at the end of the year. According to goldman sachs, the jobless rate will hit 9. 5 in the Fourth Quarter before declining. Baseball, the Miami Marlins have canceled their home opener against baltimore because of the coronavirus. Eight players have tested positive in recent days. It is the first game to be canceled due to the virus. It already comes in a shortened season. Day. Berg news 24 hours a this is bloomberg. Thank you. Looking at todays top stories. The Senate Republicans relief package. Senate Majority Leader Mitch Mcconnell is set to unveil details of the plan around or 30 eastern. Global head of Public Policy research joining us. We will get the gop plan later and then into the weeds with the democrats. You think we will get some sort of deal done by the time we get to recess . There is a good chance they will make a lot of progress. Chance there is a good we will get a lot of progress and they might be able to strike a deal by then. It looks like there are a couple of big obstacles. The level of Unemployment Insurance, Liability Protections for businesses that reopen. There are a few sticking points but there is a good chance we get that deal done on time. Earlier the white house and agreed on transitions, what is that mean for you . Trying to avoid making them too generous and trying to balance that with enough incentives to get people to go back to work. That figureyou saw go out there. House democrats have already received released their plan as a starting point. That is them trying to balance lets not make it too generous for folks to stay out of work but have some sort of rehire credits or get back to. Ork credits included guy if the efficacy goes down, we are introducing extra complications into the way we support individual people and individual businesses. Efficacy as aded result . Question. A great there is a little bit of that. Theres going to be a gap in terms of getting individual assistance. Be some level to of decreased impact on the economy. Expect to deal to get done. One of the more important elements we have talked about is aid to state and local governments. There is an enormous budget hole from lack of revenue coming in and additional expenses and if it dont find a way to plug it it could get a lot worse. Alix how far apart are they on state to local aid . The political posturing shows them quite a ways apart. Are in the democratic side generous on that. There is political posturing for us right now given that there is an election in the fall, but i. Hink they will come together the Barclays Research thought they would come together on a 500 billion dollar package. It is a moving target. Will bepect that there some deal in state and local aid. Whether it is more or less remains to be seen. Guy if you listen to the language coming out from the mainstream gop senators, they are getting more and more concerned about what is happening with the amount of debt that the u. S. Is taking on. How problematic is that going to be . Let me add up the ballpark component first. What was once slightly less than 1 trillion turns out to be slightly more. This is nowhere near the house bill that was 3 trillion but you will be around that 1 trillion marker but i think the deficit issue is playing role with this. It is an Election Year and a lot of politicians are getting wary about the amount of debt we are adding. For some folks they will argue that the economy is beginning to come back. We need to let all of those fiscal packages we need to let it work its way through the economy before we move forward. That is an argument put forward by a lot of members of congress. Theyre going to express concern in an Election Year about the deficit and debt. Leery talking over the weekend about the kind of shape we are in. If the people who need the money are hearing that and they know its a political Election Year, they know there is posturing and people are worried about the deficit think they would save their money and not spend it. The transition mechanism will be somewhat hampered by that alone. Various waysll see that this relief will be put out there. The rebate check seem to be very popular. Its just this level of unemployment and that mechanism seems to be a difference of opinion. Ive a feeling that once they release that draft and leadership from the house in the senate come together they will on what wea deal think are the wide gaps and stances and that will narrow as the week comes to an end. Guy will this go past the election . Im wondering what the ratio will be. The democrats are talking about it lasting until january. Does it get us beyond november . That is a great question. Our assumption is that this is probably the last fiscal stimulus package before the election. Clearly it is going past the fall and we see the need for additional fiscal stimulus. You could see phase five coming together but as of now we see this getting us through the election. Guy always great to get your coverage on an important issue thank you. We are going to be talking more about that u. S. Stimulus package and what it will be for the market. We will be doing that a little bit later in the next hour. The ubs chief strategist will join us. Really looking forward to it. This is bloomberg. It is time for the Bloomberg Business flash. The credit freeze is set for a potential windfall. The bank investing all most 100 million in the parent preparing to go public, the credit sees an investment of 150 billion. Soaredwanese chipmaker by the 10 daily limit today. The company adding 35 billion to the market cap. Rivalrge comes after entail warns that it may outsource manufacturing. Carrier discount carrier posted a loss of 215 million when the jets were grounded. Ryanair says they are concerned about a possible second wave of the coronavirus. That is your Bloomberg Business flash. Guy we will talk more about that in the next hour. Latest changes out of the u. K. Were going to see something that i know that you enjoy alstom we will talk sports. I want to make sure that i have got this right. Basically the marlins play the phillies in philadelphia and the yankees are meant to play there tonight which means they would use the same clubhouse and that game has been canceled and the Sports Betting Companies Like draft king are coming under a little bit of pressure. Alix you totally got that and i actually like baseball. In my 20s i went to a lot of baseball games. This is a big deal for two reasons. You think how many are logging onto robinhood to trade stocks. When you take away sports, when people were so looking forward to this on friday this psychologically can very much way on individuals. Guy its one thing to be locked down with sports. Some of it going on over here. Europe is a little backwards when it comes to opening up on sports facilities and that has taken the edge off. The cricket over the last few days has been enjoyable. Every singlenjoy moment. Do you do Sports Betting there . Has been doing Sports Betting for some time our companies are coming over there to try to take over the market. It is a big deal. Anything else of it gives you something to do. The interesting thing has been that some of the Sports Betting that has come into the stock market then drove the rally that everyone was talking about that robinhood rally. The more sports the better. Alix it also explains that if we dont get that 600 unemployment extension that you can see sites like draft kings were robinhood traders coming off because they dont have the extra cash. Thats interesting how as we had to stimulus it might move the needle. Coming up we will speak with the madura ceo. Saying thatd she november is likely the earliest we will see if the madura vaccine will work. It will be testing 89 sites around the u. S. This is bloomberg. Hey, kids welcome to camp tonsafun on xfinity its summer camp, but in your living room. Learn how to draw with a minions expert. How to build an indoor Obstacle Course plus. Whatever shes doing. And me, jade cattapreta. The host of es the soup camp tonsafun. Its like summer camp, but minus the poison ivy. Unless you own poison ivy. In which case, why . Just say summer camp into your xfinity voice remote to join. Simon pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Alix live from new york, imac steel with guy johnson i am alex to im alix steel with guy johnson in london. Gold, dollar, stronger equity markets outperforming in the u. S. Guy a little bit. In europe it is the travel stocks that are being pounded. We heard from ryanair earlier on , but what happened over the weekend was the u. K. Made a snap decision it would quarantine travelers returning from spain. That has knock the stuffing out of the sector. Iag is down hard. Easyjet is down hard and dragging the European Equity market lower. Eurodollar, on nearly 1. 18. The stoxx 600 is little bit of an outperform or, tech is doing relatively well, but the gold story is front and center. Alix really front and center and

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