Structure already. Interesting to see if those that dont, end up following. Fit management style. Embraced the model. Challengeent, the these banks are trying to figure out is whether or not trading revenue, so pivotal now, will sustain. At the moment, it is balancing the leisure. That is the challenge. Does it continue . If it does not tom total fixation in america. Derby, a consortium of people at work. Johnson johnson, their heritage in new jersey. Faceeaconess in boston, read covid19 vaccine trial moving forward, september. Clearly good news along one path of the virus. Very detailed note, published in nature this morning. Futures 28 even with that Johnson Johnson list. City. Word news, new york ritika good morning. Negotiations resumed today on a compromised relief plan, the administration and Congressional Democrats nowhere close to agreement. They are under pressure because millions of americans lose Unemployment Insurance this week. For aeadows is looking stopgap measure that would extend benefits. Jerome powell calls it the most severe economic downturn in our lifetime, after policymakers promised to use tools to support recovery. Interest rate near zero. The bank will plan for the worst and hope for the best. Toll now. Ath infectionse of appears to have leveled off. The German Economy plunged into quarter loss. Wereavirus restrictions cause of the declines. Unemployment remains high. Global news, 24 hours a day, on air and on quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thanks. Focusing on bond space. Move, continue persistent price up, yield lower off the press conference. 1. 20 . R yield, inflation grinds ever lower. Gilt in the u. K. 10 year u. S. , negative. Extraordinary. Lets look at europe. Stocks are lower. Future earnings day for european companies. I listed a couple. Stoxx 600 down. Eurodollar, signs of weakness. I would argue powell yesterday gave the green light to further dollar weakness but ironically that is not what we are seeing this morning. Again, another u. K. Bank, barclays yesterday, painting a bleak picture when it comes to the u. K. Economy. Tom some of those are part of the earnings makeup today. Terrific surveillance for you today. Joinsnow, howard ward with decades of experience encouraged to be in the market. How do you stay in . Howard where else are you going to go . Lowest Interest Rates in history so the fixed income route does not really work unless you are looking for a place to hide temporarily. The only game in town. We can argue what multiples should be. Essentially,ates, it is a big number. 20uld the market be selling times forward expected earnings, 164 next year . Yes. The risk is the high level of earnings uncertainty. 140number could easily be and multiples 20 could be in the teens, then we are talking the market down 20 . Tom can you identify a growth company, largecap, new multiple, 28 or 30 multiple, do you walk through the exercise of saying, ok, i own it, i will be comfortable, i am not looking at twoyear, i am looking at three years or five years . Howard youre familiar with the rule of 72. How long it takes companys earnings to double. Company growing at 10 , double earnings in 7. 2 years. We have a lot of companies in tech land, primarily, where earnings are growing at 20 , 30 . Growing earnings at 30 , you will double earnings in two in halfd cut your pe over that. You can see how Companies Growing rapidly can quickly grow into their multiples. 28 to 30 multiple today, in a world of record low Interest Rates is not what it was when Interest Rates were even 3 , coming out of the Great Recession of 2009. We are not talking 10 year treasury at 60 basis points. I cannot overstate the difference between earnings yield on stocks today, loses 5 , using next years estimates, forward earnings yield, 5 and a 60 basis point 10 year treasury, the difference between earnings and treasury yields, historic. The fed has the fed model, which says, bonds and stocks are at equilibrium when the 10 year treasury equals a forward earnings yield. That means if 10 year treasury was yielding 5 today, stocks would still be valued, to take that to the extreme. When you look at dividend yields on stocks, it is 2 , three times what youre getting from tenure treasury and this is also unprecedented. 2008, a brief time of the dividend yield exceeded stocks, exceeded the bond yields and prior to that it had not happened since 1957. Now the dividend yield is a multiple of the bond yield. Morning. Rd, good with bonds where they are, i can justify any multiple. I can extrapolate to infinity. Isnt that the problem of trying to price this market . A market thatt is will lend itself to speculation. That is what happens when you have zero Interest Rate fed policy in the fed is saying you have to stay there for years, you are asking for a bubble. Youre probably going to get one. There are parts of the market today where you could say, they are bubbleesque. Tom howard ward, we will continue with him. Apple is out with earnings. Mr. Ward has been opinionated on apple to the moon, doing well with ownership. Coming up with jonathan ferro, Michael Wilson has been optimistic on the markets. The right call still on this recovery, still, and of july, look for that at 9 00. Futures, 30. This is bloomberg. Tom bloomberg surveillance guy johnson in london. Francine lacqua reporting on Credit Suisse in zurich. Tom tom keene in new york and howard ward, each of these companies is different. What is the distinction you see in Apple Computer in 2021 . Tom, this has been a phenomenal stock. I never would have expected it to do as well as it has done this year. Cap,trillion market reporting tonight, revenues, 55 so,ion, earnings 2. 10 or earnings this fiscal year up, maybe 5 , 6 , revenues around 2 . Growing your business during a pandemic is a good thing which results in stocks being be rated higher than those companies suffering during the pandemic. Owns the smartphone market. They own it. U. S. Martphone share in with their ecosystem, they have developed incredible brand loyalty with 90 rate of people continuing to own apple iphones when theyre are ready to get anyone. Massive upgrade when the 5g phone comes out in september october, as many as one third of all current iphone owners are planning to upgrade, according to surveys we have seen. Apple will have a nice pop in earnings, next fiscal year, about 20 , so, you have a cyclical kicker with stocks for the next fiscal years in the new product cycle. The real thing happening at apple, what has powered all increase in shares this year is the rerating of that multiple. 25 times next fiscal years earnings, probably appropriate in this market. The rerating is happening because Services Revenue is continuing to grow. Services, today reported, 26 of revenues, up from 17 a couple years ago so you get a higher and higher multiple and a growing earnings space. Tax will thismore company pay if we get a democratic sweep in november . Not just apple, youre looking at substantial increased in Corporate Tax rate to 28 or so, i am not sure what the actual difference would be with the effective tax rate but they would definitely be an increase. That is important. That goes back to the uncertainty regarding next years earnings for the market. It is not just about covid and a vaccine, it is about tax policy and the election. Jobs are essential. Jobs drive profits. Dividends drive from profits. Workers, youand need profits to support jobs. Profits are under pressure this year. They will rebound, second half of the year. We will not get back to the level of earnings expected for this year for three years. Economy issue for this is the unemployment rate. Over 11 now. The peak in the 2009 recession was 10 . Tom thank you so much. Update on that at 8 30 a. M. This morning, without question, the claims number. Mr. Ward. I have been looking forward to this, forget about the tech mumbojumbo. Some talk, others do. Michael wolff is one of the great doers out there. Update on technology and monopoly with michael wolff, next. Futures deteriorate, 29. This is bloomberg. Our services are about connection and our Business Model is advertising. We face intense competition in both. Fears competition at developer and customer sides, which is essentially so competitive i would describe it a street fight for market share in the smartphone business. The few candidates commercial in nature, we see bigger competition, travel, real estate. We do not have a dominant share in any market or any product category where we do business. History shows if we do not innovate, someone will replace every company here today. Tom interesting. Matthew miller, prescient on this hours ago, talking about monopoly or nonmonopolistic characteristics of Companies Including apple. My conversation of the week on technology, michael wolff, you may not know the name, he came out of mckinsey years ago and did a few things. Like with yahoo . He has always been able to develop that Strategic Technology over tactical execution of said strategy. We are thrilled he can join us from activate this morning. Are these companies monopolies Like Standard Oil of years ago . Michael fascinating. Each one of them is not a monopoly. In each case, they dominate their part of their industries. In yesterdays hearings, what was clear and what you have to agree with his they are going to face with is they are going to face competition. Samsung. They will face competition. They are in a great position and have maximum control. Tom the differences, with standard oil, we broke the companies up into like companies. The critics want to break up the divisions of these companies, the parts of these companies. Is that a successful path . Michael there isnt much to separate off from these companies. Thee you could separate off core Amazon Retail business from the Amazon Web Services or in the case of facebook, you could probably easily separate off whatsapp, their messaging service they purchased for 20 billion from the rest of the company and apple, i dont see what you would. In each case, it is unlikely. There is not some easy breakup. This is not like the bell system. If we cannot break them up, we have to find another way of dealing with them, the method is today coming from congressman. What is the biggest threat to businesses now . If we cannot regulate or tax or break them up, are we going to tax them more . Michael the biggest risk is regulation that will hamper their ability to do some things they have done that give them outsized economics try to dodoj will something about apples app store. Right now we have a problem where apple is trying to take more of a share, any transaction that happens through an app, apple believes it should get its 30 . You have to expect that there is going to be regulation or attempts to hold them back. Are these Companies Worth as much, if we get a virus . How much has structurally changed in their favor . Michael it is different for each of them. Amazon, we see ecommerce sales way up. Ecommerce sales they are set to dominate that business. Target,mpanies like walmart have been able, ebay, have been able to capture a share of growth. Apple, expectation is earnings will decline because im sorry revenue will decline because they have not been able to set out a new smartphone. People arefacebook, spending more time on facebook. Each of them has their different covid orallenge from an opportunity. Tom what are they going to do with all that cash . Critics say you are sitting on mounds of cash that could go to social good or shareholder good. Cases, they are waiting around to see what else they can buy. That is a smart strategy. They are going to be up against large Asian Companies that will be able to pretty much pick off anything. We should expect, there will be transforming transactions in the next years depending on administration. There are too many businesses out there that belong together. It has been rumored for so long apple would buy netflix. It is not hard to imagine. Tom we have to leave it. Too short a visit. We will have to do it again soon. This is bloomberg. Guy in london, tom keene in new york. When it comes to the rapidly evolving world of digital currency, Central Banks can no longer afford to be passive bystanders, according to group group of 30, an International Think tank. The g 30 just published a report titled Digital Currencies and stable coins, risks, opportunities, and challenges ahead. Joining us now is ken rogoff, Harvard University professor of economics. Thank you very much indeed for your time today. Ken thank you. Just to clarify, i cochair the group staring the paper but not of the g 30. 30. A member of the g it is a great report on a really interesting and clearly worth spending some time on. How would the policy response differed to the crisis that we face right now if we had Digital Currencies . Ken thats jumping way ahead. Have financial inclusion, which i think we would would help a lot if we did a better job with Digital Currencies. Theres the potential for other things. I dont think this report is about the crisis. It is about the next century, the next 50 years. What is the Payment System going to look like . What is the Financial System going to look like . It is not so much about the crisis response, although it does offer the opportunity for negative rates, if you are asking that. Exactly. The reason i ask is, why do we want to get to this . What is the objective here that would make the way that we respond to financial crises, how we respond to day to day activity better . What is this going to improve if we continue down this trajectory . Ken this is a much broader issue. For example, they knighted states as a very inefficient the United States has a very inefficient with high charges and slow clearing process. How do we make it better . Many countries are concerned that the United States dominates the rails of the global Financial System. We control information, we can enforce sanctions, we can do many things. That is because the dollar is dominant but it is also because of the system by which we cleared transactions. This is rapidly evolving. ,e had facebook and now Libra Bitcoin may be will not be a global currency but libra was a very important wakeup call. The central bake of China Central bank of china has introduced a nascent global currency. The innovations in this space are like we have not seen in two centuries. The first time there is really a challenge to the Standard Central Bank backed model. We feel there is a lot going on faster than maybe many central bankers realize, treasury officials. Would try to raise issues that they might think about we try to raise issues that they might think about. Tom thrilled to have you with us today, particularly you and the professor from chicago and the rest of your team. Frankly, bringing forward the courage of your book, the curse of cash from years ago. This report is almost volume two. Ic see in the pandemic the mint is saying that there is not enough coins out there in the United States. Rogoffse are we to the near Cashless Society . If first of all, this is fairly technical this is a fairly Technical Report aimed at Central Banks. It is not recommending anything, besides the issues that they should look at. There is no question that covid19 has accelerated the move away from cash and legal, tax compliant transactions. That is one of the things that has pushed central bankers along to Start Talking about Digital Currencies. There has also been a lot of innovation. You know, how close are we . Think as know, i Better Things come along, it is going to happen faster. China is movings full speed movings full speed moving full speed trade Cashless Society. Cashless society. They are looking to replace cash. They have a very clever idea where they are not trying to explode the system, they are trying to preserve the central bank system, but instead of getting paper currency, you get digital currency. Of course, that is already going on and china. However far along sweden is in the curve, and the u. S. Is, china is farther. Tom i have got to say that ken ec10. Goes into we have a world war ii deficit. Does the magnitude of this fiscal stimulus concern you . Ken i think we are, in chest terminology, playing chess terminology, playing forced moves. I think we are in a terrible situation. I think the pandemic will get worse before it gets better. I think it is coming back to other parts of the world. That is why you have deep pockets. That is what you use that for. This is a very sensible use of debt. It does not mean that everything that we are doing is sensible. Why are we not Wearing Masks . Why isnt some of the stimulus money invested in giving incentives, support to everyone Wearing Masks . That would obviously save a lot more money than anything they are doing. Know, is this a time to worry about the debt . I would say absolutely not. I think all the literature has it is ad the idea that free lunch. It is nonsense. The costs are huge. Thevor the larger end of different ideas being discussed in washington. I think they are dreaming if they think this is going to be over by the end of 2020. Tom we certainly heard that from chairman paul yesterday as well. Ken rogoff, you have talked about the courage to do an amplitude of greater depth of negative Interest Rates. Will we see negative Interest Rates in the United States of america . If the level of global interest stays the slow. Right now this low. Right now, there is very little that normal Monetary Policy can do. They are essentially executing a form of fiscal policy. They are guaranteeing debt. They are changing the maturity structure of debt. This is not central bank policy. It is necessary. Everything they are doing is great, but eventually when we get out of this, you know, whenever that is, i think we will still have very slow growth, many problems, just like we did after the financial crisis. They will want to do something to stimulate the economy and they will be doing fiscal policy for blast. I full blast. I dont think it will be enough. We will almost surely see it around the world, unless something happens that makes global Interest Rates spike. We dont anticipate that. For better, for worse, it would not be something that we are thinking about. Rogoff of Harvard University on the group of 30, thank you for your time today. Lets figure out what is happening around the world. Here with our bloomberg first word news. The Trump Administration and Congressional Democrats are no closer to a compromise on a virus relief plan. The pressure to act is building. Insurance for millions of americans is running out this week. Mark meadows sees little chance of a stopgap deal. There is an agreement for federal agents to leave portland, oregon. There is a disagreement about n oregons governor says about when. Says the agents the Oregon Governor says the agents will be leaving today. Federal courthouse has been the target of angry protesters. Sup room Supreme Court justice ruth gator Ruth Bader Ginsburg is in a hospital. She has undergone a minimally invasive procedure. She was hospitalized earlier this month to clean out the stent. She recently disclosed she was diagnosed with a fifth bout of cancer. Candidates have been barred from running in the election because they did not comply. The move came hours after Hong Kong Police arrested four student activists for making online comments that allegedly violated that law. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thanks so much. Theerday, we talked about miraculous call, gold to the moon. Now, we followup with jeffrey ry from Goldman SachsJeffrey Currie from Goldman Sachs. Futures deteriorate 32. Tom bloomberg surveillance. Good morning, everyone. Jeffrey currie of Goldman Sachs right now on gold. You have been very successful in this call. Punditsee is every other saying it is simply the real Interest Rate. Am i right that it is more than an Interest Rate analog . What you are referring to, we call that though Mark Investment bell market investment. The wealth effect is tied to the u. S. Dollar. There is strong growth in china and the emerging market, so dollar begins to weaken. Hard,emand got hit really squeezed out by the demand in developed markets. We are seeing signs that it will recover. The biggest one of the three when you look further out is tail risk inflation. When we look at what is going on right now, clearly it is a deflationary type of environment right now. The more debt accumulation we have right now, the higher the probability further down the road. As set managers care about the level of inflation Asset Managers care about the level of inflation. About there change in inflation. Bond portfolios have a really serious problem. I think that is the key point here when you start to think about tail risk inflation. It is not something today, it is further down the road. Tom our guest was fairly eloquent yesterday about saying, you see it everywhere now, the froth in retail on gold is clearly evident. What does it signal to you . In 2011, we peaked out in the cycle. Week, week after was week after week bloombergs top consensus pick. The underlying fundamentals justified it. [indiscernible] guy i think we might have just Goldman Sachsie, global head of commodities research. If you want to read Something Interesting on what is happening, check out notes on the markets live blog on the bloomberg terminal talking about a that makesg a mani it tough to time exactly when the top could be coming through. European markets continue to struggle. There you go, youve got the stoxx 600 down by 1. 5 . We saw Jerome Powell signaling potential for the dollar to slide even further. We have a dollar bid today. We are in a risk off kind of mentality. Airbus flying higher today, trying to manage the cash burden in the second half. A very bleakng picture of what is happening in the u. K. Economy. Coming up, we will talk to jeff miller, halliburton ceo. Addressingtainly be what is happening in terms of the service side of the sector. That is coming up. This is bloomberg. Guy johnson in london, tom keene in new york. This is bloomberg surveillance. We are back with jeff currie joining us on the line. We were talking about gold a few moments ago. Lets carry on that conversation. Do i sell gold if i see positive news on a vaccine . Jeffrey [indiscernible] low real Interest Rates. That is unlikely to change. If you get a vaccine, you are still dealing with the overhang. [indiscernible] the key Downside Risk is, [indiscernible] guy ok. This is not going to work out today, which is a great disappointment because jeff is one of my favorite guests to talk to, particularly at a time when we are seeing gold do so well. Lets talk about what is happening in the markets. We are clearly in the midst of earnings season. Is that justifying valuations that we are seeing . The market has been so focused on technology of late that it will be fascinating to see the reports coming out later from the tech space. Are we going to see the high bar that has been delivered in terms of Market Expectations actually being beaten . We will be talking a lot about what is happening in the pharmaceutical space as well. Fo will be joining us later on at 11 00 a. M. In new york. 4 people claiming to be students have been arrested in hong kong for breaching the National Security law. That is as beijing says the legislation will bring stability to the city, a city they say is caught in turmoil. Stephen engle has delved deeper into these issues. I honestly feel that at the end of the day, at the moment, we are like an airplane with a lot of turbulence. Everybody is holding on waiting to land. In most cases, the plane lands safely. Or waiting for it to crash. Or waiting for it to crash but i honestly feel that this airplane is not going to crash because china needs hong kong, an open hong kong. They just want to keep it safe. They want to make it stronger. Beijing surely does not want a stronger prodemocracy camp. Pandemocrat lawmakers had been accused of using disruptive and filibustering tactics. To the cards, similar ones the u. S. Put out an iraq during the gulf war, have been circulating here. Ofthere will be a lot scaring tactics. Many people are being scared away. They want to defeat you without using any force or even without waging any wa that is the wayr. War. That is the way the chinese played a game. If i say i will never be arrested, were you born yesterday . You lived under communist rule. How dare you say that. Ive never said that, even in 1997. But neither did i predicted that i will be arrested tomorrow, no. We live under chinese rule, so anything, everything can happen. It would not surprise us because that is the way they behave to their own people. But we will stay and fight i dont think i am going to leave, even though i am facing imminent risk of being put in jail. Because, you know, if i become scared, all the other people will all the more become, you know, very scared. Then, the whole community will be stifled. We need to fight until the last minute. Before the National Security law was implemented in hong kong, this was legal. After the law was implemented in hong kong, this film might be illegal. They might arrest you. Freedom of speech is indeed limited. It is mainly the freedom to advocate hong kong independence or the freedom to advocate overthrowing the Chinese Communist party. I must admit that there is some limitation to freedom of speech. Is freedom of the press under threat . No. No . Unless they work in some version or terrorist activities subversion or terrorist activities. Do people have to worry about what they post on social media . I dont think you have this obligation for what criminal offense your staff commits. The point is, if you are not involved with it, you have no intention to carry out succession, subversion, and terrorist acts, what do you have to fear about . Guy that was a taste. One into the full thing bloomberg television. Hong kong on the edge 2 covering the social upheaval we have seen in hong kong over the last few months. It is certainly one that is worth spending time thinking about. Let me run you through some of the price action right now. We are approaching 7 00 a. M. In new york. Things are quite ugly now in terms of the European Equity market session. 3 , the cac a full down circa 2 as well. Looking at the fair value in the United States on my bloomberg, down by 1. 1, 1. 2 on the s p. We will talk to the lilies cfo later on. It is a busy, busy day for earnings. Plenty of great coverage coming up. This is bloomberg. W . W . Uhiono the fed has pretty much done its job. Its gotten rid of dislocations for markets and its gotten barring costs to incredibly low levels, so there really isnt more they can do right now. If the market is ok with the inflation rate running above 2 , so is the fed. If the bond market sells off hard on that news, the fed will be forced to change. Some people feel very comfortable where we are. From a covid perspective, i think it winds up sitting in savings at this point. This is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. Jonathan for our audience worldwide, good morning. This is bloomberg surveillance. Alongside tom keene and lisa abramowicz, im jonathan ferro. Tom keene, the smell of risk aversion on a thursday morning. Equities lower, bonds bid, the dollar stronger. Tom following from what we saw yesterday at the fed meeting,