Have come on the show saying this was started by the you Recovery Fund, but also inflation is better than expected in europe today, and that growth figure not as bad as it could have been. It is clear that the markets are moving, but i think in general they are buoyed by the Massive Technology earnings that are seeng a lift overall, as we parts of the economy in terms of technology, deliveries, things like that, that are outstanding at the moment. Tom Stephen Engle with us moments ago, and he will join us in the hour, our lead hong kong reporter. This is carrie lam in hong kong, at a not unusual press conference. Stephen engle reports that we could get some announcements out of this rather extraordinary, particularly on the election as well. Are ratherhis that extraordinary, particularly on the election as well. We will get to the data check in a moment with bonds and Foreign Exchange on the move. With first word news, here is ritika gupta. Senate republicans want to go on record saying they tried to restore supplemental jobless benefits for millions of americans. Geordie leader mcconnell is trying to force a debate on the stopgap measure for those 600 a week checks. Payment expire this week. Immigrants want the jobless benefits extended, too, but only as part of our larger relief package. President trump coming under pressure to set a National Strategy for the coronavirus. The white house has largely avoided strict rules that left many of the decisions due to industry or state leaders, and experts say that makes shortages of protective gear at hospitals worse, and it will complicate the distribution of vaccines. The euro area economy plunged into an unprecedented slump in the Second Quarter due to the coronavirus lockdowns, and it may take years to fully recover. France and italy dropped by double digits. In the u. K. , Boris Johnsons government has reimposed lockdown restrictions from millions of people. Norm of part of northern england, peoples guidelinesfollow cost a spark in coronavirus cases. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. This is bloomberg. Francine . Tom . Tom let me frame fx and bonds here as we get to are important guest to start us out in this hour. The twoyear yield in the united states, i dont care what anybody says about yield curve control. 12, go through the week,. 11, four digits right now,. 1093. There is, as they say, gamma there. Francine, it is mirrored in Foreign Exchange. Index, 92. 84, a weaker dollar. Euro is painful. 1. 1856. Even yen, showing 104. 66. Francine we are getting caterpillar earnings as well, but in general european shares are gaining after the stellar earnings from american tech giants, which is lifting sentiment. Im looking at gold climbing to a record, treasuries and european bonds gains. A lot of the focus is what we are seeing in tech stocks. Treasury yields ticking lower. Tom treasury yields may be the ultimate litmus paper here. Right now and update with a gentleman who can give us the dynamics of the Foreign Exchange in the fixed income markets. Kamakshya trivedi. Atsomehow survived calculus oxford a few years ago. I look at the rates of change right now, and i know you guys are looking at level and volatile, a lot of fancy stuff in your bloomberg terminals. All he comes down to is the first and second derivatives. Should there be because here, or pause here, over the rapid move in euro strength . Kamakshya thanks, tom. We are generally of the view that this euro war has further to go. One has to remember that it has a lot of momentum in the last few sessions. As you say, the rates of change have been phenomenal. One has to recall that this is coming after several years of dollar strength. The dollar has been on a multiyear move higher, so what youre seeing here is a very rapid but still not complete unwind of many years of dollar strength. So when i zoom out in a big picture sense, i think the dollar has further to go. Weaker, i think the euro has further to move higher. I am not too concerned about the level here, although i do agree with you that i think the rates of change have been extremely fast, and what has been especially interesting about the recent moves is that they are coming against the backdrop not necessarily of euro area areagth, although euro outperformance is something we subscribe to, but also coming against the backdrop of weaker data in the u. S. It is that interesting dichotomy that is playing out and pushing the euro higher, the dollar weaker in the last few sessions. Into ourill fold this next question. , hong lam, speculation kong to delay legislative election on the virus. She says election delay is to protect the citizens health. That shows the turmoil of the pacific rim. Will that be seen in a flight to quality and stronger japanese yen . Your colleague at rbc capital, adam cole, looks for a 10figure move. Could it breach 100 and move ever stronger . Kamakshya i think the yen is also affected by some of these same forces. The yen, as you said, also has this property that it tends to do better when there is a flight to quality. More volatility, more turmoil, and not just on the political diamond. You are also seeing in this places hong kong, but even tokyo, parts of asia is a resurgence in coronavirus and covid. I think that is something that can propel the yen stronger as well. , primarily move playing out against developed markets or g10 currencies, much less so against emergingmarket currencies. Francine what do you see going on with renminbi from now until the end of the year . Kamakshya that is an interesting one. One of the things we have argued is that for now, the dollar weakness is likely to remain zero centric, in part because it is a reflection of euro area outperformance. For there to be a broader leadership of emergingmarket currencies, i think you need two or three things. I think you need covid to come under more control among some of the other emergingmarket economies. You need more of a benign outlook to a global trade and global trade policy as well. And a key part of that is likely to be what happens to the dollar, the renminbi, as you said. And our concern is that as you go into a highly contested u. S. Election, the noise level on u. S. China relationships are likely to remain high. Keep it is likely to from appreciating further. As you look further out, 12 months, it is possible that the phase one deal still remains intact. You get a more benign outcome on trade, trade policy, and trade relations. And you add to the fact that in china, the economy is recovering quite nicely. Even rates are moving up in china, which is in sharp contrast to everywhere else in the world. More of what you are talking about in the show on u. S. Yield. When you put that together, stronger recovery, higher rates in china come at a more benign trade environment later in the year, that should push renminbi stronger. We should expect some strength on a 12month basis. Being, we think it is likely to remain under some pressure, not appreciate too much as part of the eurodollar weakening. Because tensions on the u. S. China site side remain elevated. Francine thank you so much. Kamakshya trivedi stays with us and we will welcome him back later. There were a number of questions about what that means for the opposition. Hong kong has decided to delay the legislative elections on the virus. We will have plenty more on that shortly. This is bloomberg. Tom good morning, everyone. President trump wants a delay on the election, talking about it because of the virus. Maybe he needs to migrate to hong kong. Carrie lam moments ago, talking about a delay with the upcoming legislative elections. We have on the phone again, Stephen Engle. Was speculation, no fact. What are the ramifications for protest this weekend . Stefan stephen it is unprecedented, and carrie lam is evoking Emergency Powers to delay the Legislative Council elections, which were due to be held on september 6. There was speculation that this was due to the delay, the postponement would be due to the fact that the prodemocracy candidates have a lot of wind in their sales and they could perhaps take many of the seats in the Legislative Council elections. So there is speculation on the prodemocracy camp that this was done to counter that. Ment is, the govern saying that there is a third wave of virus infections, and that is why they are delaying this. It could be up to a year, and that would deliver a severe blow to the prodemocracy camp. Francine will people buy that, that this is purely on Health Reasons . Stephen does it matter whether they buy it or not is the question. This is coming down from the Central Government in beijing. The latest headline says carrie lam says the election delay is supported by the Central Government. You asked me the question an hour ago, is beijing calling the shots. Clearly on these matters, the Central Government in beijing is calling the shots, and they are saying the election is going to be delayed. This follows within the last 24 hours, the disqualification of some 12 prodemocracy candidates, so it is a double whammy for the prodemocracy camp here. Francine i guess in the past people would protest. Are people still protesting, or did the security law change everything . Stephen the security law has changed things. It has been a month since that happened, and there were protests on july 1, the typical anniversary of the hand over 23 years ago. It is a typical day where the antibeijing influenced protesters do go out en masse. However, the police have a new mandate to crack down hard and fast and they did so on july 1. There has been a much smaller protest presence, if any, since then. I think a lot of the activists are trying to figure out what is their next course of action, if they are going to continue to press their agenda. But it is difficult right now. The National Security law is overarching and written fairly vaguely, that can clamp come as we have seen a day and half ago come on some four potential candidates arrested under the National Security law, supporting the termination of hong kong on facebook. Edge 2. G kong on what that means is liberties. Is there a precedent for this in hong kong . Stephen there should be, right . Lawcle 27 on the basic assures Hong Kong Freedom of. Peech, assembly protest however, since 1997 and since the last couple of years, since about 2012, there has been more of a presence of beijing on hong kong affairs. You could say that perhaps there has been more selfcensorship, with perhaps the exception of the billionaire tycoon minnie bogle who runs the apple daily. Mini mogul who runs the apple daily. Tom Stephen Engle, thank you for your reporting. Tonight, hong kong on edge 2, look for it. We are going to continue an extraordinary yields lower. Loader,ng the dollar the Technology Boom evident. We will continue. This is bloomberg. Dan ives coming up in 15 minutes. Tom good morning, everyone. Bloomberg surveillance. Dan ives coming up on technology , without question, our interview of the day. Right now with us, from goldman sachs, Kamakshya Trivedi on Foreign Exchange. I want to talk e. M. On lire. It implodes, it comes down, it toes down, eurotheyre out record weakness as well. How destabilize right now is the erdogan government . Kamakshya i think it is a very difficult situation. I think the unconventional policy mix that is in place, which involves deeply negative real rates and a limited set of reserves, i think is a hard mix for any currency to have to deal with. So i think, you know, it is important to be cautious here. I think that, you know, certainly further moves are possible, especially until we dont see a clear shift in policy to addressing the externalinternal imbalances that have been building up for some time. It is always hard to find the exact catalyst that causes volatility. But the circumstances have been in place for some time now. Tom we had a drinking game, every time i said the world the word idiosyncratic, i had a shot of something. Everything is idiosyncratic until it is not. What is the positioning right now in emfx that would force us to move away from the idiosyncratic to the correlated . Kamakshya i think one of the things you mentioned, turkish very even relative to the big discontinuous moves that you had in 2018, foreign investor positioning with turkish local assets today is significantly reduced. In a way, when you say idiosyncratic or systemic, going from idiosyncratic to systemic come is when you see a correlated selloff among investors. I think it is helpful, that keeps it somewhat idiosyncratic. Especially against the backdrop of the dollar weaker come as we discussed earlier. Seeing broader weakness in some of the major em currencies, positioning in local assets come is pretty large. Take for example things like south africa, mexico, indonesia. Those sorts of things i think will jar people more. I think it is likely to create more correlated moves, simply because you have more investor positioning in the local assets in those countries, especially the underlying bonds. I think the reduced is issue and in turkey after the selloff that you saw the last couple of years is in part helping to keep this somewhat contained. Francine where do you see the biggest value, given what you have just said . Where do you see the biggest value in emerging markets right now . Kamakshya when you look across the em asset complex, i would highlight two places. On a region basis, the most value is in latin america. Looking at fx, parts of equities, places like mexico, brazil, chi lake, columbia highyield i think credit in particular in emerging markets is a very good value proposition. It has lagged, the development em, sou. S. , ig credit, you retrace much less. Ratings changes, but even controlling for those ratings changes, highyield credit in emerging markets is something that has lagged quite significantly, and we think it offers good returns on a 12 month basis. Tom thank you so much, greatly appreciate it. Kamakshya trivedi with us from goldman sachs. Francine, you see it within the Brexit Economy of the United Kingdom. The United Kingdom is falling off the cliff of the atlantic ocean, yet sterling strengthens to 1. 31. Francine and this is something we need to look at in the context of brexit, in the context of possible lockdowns. There is more of an interesting story in fx maybe in august than augusts then other in the past. There are internal tensions between countries, and that will probably play out and currency markets. Tom i want to go back to the yield market. We are going to do technology in a minute. 1. 18 . Bond, i believe in england, the guilds up eight years are in negative yields, speaking about speaking volumes about what chairman powell wants to avoid. You need to recalibrate on technology. Daniel ives, moments ago, raising his price target on apple. We have seen many others today do that. This will be our interview of the day on technology. Daniel ives of wedbush has been absolutely dead on, pushing against the gloom. Apple,es coming up on amazon, facebook, and did not alphabetical google. This is bloomberg. Bloombergs is surveillance. Senate Majority Leader Mitch Mcconnell is moving to force a debate on a stopgap bill on Unemployment Benefits. Americans will no longer get the 600 weekly checks after today. And want are opposed larger stimulus package. Its arizona also set a record for deaths in california reported its and california reported it second deadliest day. The u. S. Government wants to seize book profits from former National Security advisor john bolton without a trial. The administration asked the judge to rule in its favor, violated aton nondisclosure order. Bolton argues he fulfilled his responsibilities. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. Tom we did the view from 10,000 feet on the economy. Now we look at the nuts and bolts, absolute reality and adjustment needed after the miracle witnessed yesterday. Daniel ives has absolutely , andd the tech enthusiasm has been a pin yada. Pinata. The gloom crew has been after him. Your price target gets apple near 2 trillion. Will apple be a 2 trillion company in a number of quarters . Dan by the end of this year, it is a 2 trillion market cap if iphonek into the icap , tom the persistency of all that we saw, the income statement, free cash flow, the foundational thing underneath the news yesterday was a stunning growth of the mac component and the i cut ipad component. No one saw that coming. What does that signal . Dan that shows this work from home, this is another tell showing that the street was not factor in factored in, combined with an iphone deal in china. Is ebit on the spectrum of numbers we have never seen before. Are these companies now i risk of a breakup because they are so powerful and are doing so well . Better than, it is. He tech hearings we see it less as a legislative fix. It is most likely finds rather than a breakup fines rather than a breakup from the investor breakup. From the investor standpoint, it is background noise. Francine what about higher taxation if you have a new administration . Dan that is possible, and a good blue or red, right now senators where this taxation refines, companies are generating more taxes than some countries. That is not the issue. It is more about the Business Model changes. Tom bringing the cash down from the lofty levels of before, if they go down to 80 gazillion, wherever they are now, do they extend debt to buy back shares . Are they pushing an idea of a ginormous acquisition . What is the signal of less ample cash . Dan the one thing from the antitrust, and the target on the m a will slow down because everyone will get a second and third look. Buybacks willore see them buybacks. You will see them take more debt. Right now, the stronger getting stronger and the numbers go higher. And if they can defend 34 do theythe market have the price elasticity against unit growth to do that . What is the persistency against the expanding margin if they have to expand the unit growth . Dan that will be the question on the iphone 12 and in light of what we are seeing, you could defend it, but i think you will see lower price points. Right now it is about demand and defending their moat, especially in china, and that was a , the table apple pounder in terms of what we are seeing from china in the apple story. Francine i was going to ask about apple in china. Will they have serious concerns of selling in china if the trade war escalates . Dan that has been the issue especially over the last year where they are worried they will street of in the beijing and what you are seeing as they are going to the stores and buying them. You will see 20 of iphone sales from china, up three or four bps higher than what anyone thought. Tom i want to give you a 60,000 foot question and flip it over to amazon. You dont cover amazon, i get that, but i am fascinated by francines season on emmas instagram rinsing sees it on instagram francine sees it on instagram, buys it on amazon. This is nots stealing from bricks and mortar. You believe there is an expansion of society from this exercise . Dan everything we are seeing in the strong are getting stronger, as we are seeing, and that is something where does become an issue obviously, as we see from the antitrust perspective. One thing we are seeing is a doubleedged sword and we are seeing investors and regulators focus. Tom you raised your price target to 465. Up likehave to break standard oil just to take apple, how close are some of the parts for your new price target . Dan the new bull case, 550. If i further break that down, i believe the Services Business is 700 billion toly 800 billion. If you look at the Core Hardware business, that could be worth 1. 5 trillion. I think this is a 2 trillion stock by the end of the year. Francine what could derail that . Is there anything you worry about . Continuesupply chain to see major issues, iphone 12 pushed out further, even past holiday season, and that looks like a very negligible chance. Tom why do we need a new toy . Let me speak for my children, they all just got new toys. And does the gravy train where Everyone Needs a new iphone 13, 14, and 15 . Dan 350 million of 950 million iphones have not up rated in three and a half years. That is the super cycle going into 5g, and if you look in the u. S. And china, 96 buy a new iphone that already have one, and that continues to be why that is the golden brand that cook and cupertino belt. Tom fascinating conversation, this will be out on bloomberg digital hopefully in its entirety sometime today. Fantastic for mr. Ives, who has been dead on. Churning, bute is low yield space. This is an important conversation. T dataed at the juh f today. Ft data today. In conversation with stephen elder, the mayor of austin. Good morning. This is bloomberg. Tom bloomberg surveillance, it is a sleepy friday in july. No, its not. Not even close. The news flow is extraordinary, starting with low yields and fx with the dollar at dollar weaker. Dan ives is looking at apple is a 2 trillion company. Knows it is somewhere in the facility of a 20 trillion u. S. Economy until it wasnt. He was with oxford economics. The u. S. Gdp report, four point something nominal gdp and then we go to 3 and now we plunge down to an unimaginable nominal gdp. How much do we clawback . Greg i think we may clawback some of that loss, but if you look at the pattern of quarterly gdp, the Second Quarter print was largely irrelevant because most of the Second Quarter we have been rebounding from h ross we reached in early april. If you are looking at early data, you are seeing a recovery in the economy. Of lossesovering half in terms of output, but the second half will be more difficult. Tom Alan Greenspan scheduled to join mr. Daco on this lunch. Thist the lengths of unemployment. What does that 12 month trailing gdp look like, 4 , . 07 . 7 . Gregory we will see a lingering shortfall of economic output. We have seen sectors fall. Sectors that are not nervous oriented have been restarted fast but have been aided. Bywill not get as much aid congress and it is taking some time, so we will see declines in overall income and that will constrain consumer spending. I would not expect the economy to get back to the size of recovid levels before 2021, and the labor market will take longer. Francine when do you see the employment market get back to in 2019. Hat we saw gregory it will take a couple of weeks at least. We have an environment where we have regained about 7 million jobs but we are still 15 million jobs in the whole hole and up to 2 million jobs, people claiming claiming Unemployment Benefits on a weekly benefit. We will see more permanent layoffs, permanent business closures, and the scars will be deep that will take time to be erased. Francine what does this all mean for dollar . Gregory it is interesting, because there is a lot of talk of the dollar losing its status and we will go into a oneway bet on a weaker dollar. I would caution against that view. There are cyclical elements wishing the dollar lower. The Health Situation in the u. S. Deteriorated worse than some advancing economies and emergingmarket and at the same time, you have seen the Recovery Fund past by the European Union which is quite novel in neutralizing european debt, and we are waiting on congress for some fiscal package. There may be a timing impact on the impetus of recovery. Francine thank you so much, gregory daco. Up next, Andrew Pekosz. We track covid19. This is bloomberg. Bloomberghis is surveillance. As we track the virus, bloomberg has developed a unique partnership with a on covid19 and h day each day we bring you information. Joining us is Andrew Pekosz. Thank you so much for joining us. When you look at some of the positives we heard over the last couple of days, how close are we to a vaccine that will last and work . Andrew we have a number of studies entering what is called phase three Clinical Trials, and that is important because those are trials that increase the number of people getting the vaccine, so now we will be talking about thousands or tens of thousands in these trials as opposed to 50 or 100. The other thing these trials will do is look at efficacy. They will follow people and see if they are getting infected compared to a control group of people who are not getting the vaccine. We are going to start to see data on antibody responses as well as real protection from infection. That is of course the critical bar that we need. It is important to note that there are probably four or five vaccines entering these trials, so we have a lot of candidates coming through, which increases the likelihood of finding the ones that are working the best and are the safest. Francine is this a case of National Pride . Is there a worry that safety wont be at the forefront of all regulators to make sure that something is out quick and you become number one, the person and country becomes number one with the vaccine . Andrew i can tell you from discussions with people running the trials as well as investigators that are part of the regulatory process that safety is an absolute high priority. We do not want to bring a vaccine on the market that has problems with respect to too many side effects. That is important, because some of the vaccines coming through are using unique platforms. We have not had widespread use of previously. That is why phase three Clinical Trials will be incredibly important, because we will be seeing responses to new vaccine platforms and see how well they work in producing protection from covid19. Francine could this be the shortest amount of time in which a vaccine was produced and distributed . Andrew absolutely, in modern times, at least. Along with that will be a relatively high level of data about safety, and that is critical. Things are moving forward well. There has been organization at the sense of trying to combine steps of the studies and move things ahead. Vaccine manufacturers are making doses of these vaccines going into trial, not because there is a guarantee we will use them, but because if they show efficacy and safety we will have a large amount in the freezers that can be used to start immunization trials. There has been good coordination in making sure we are planning multiple steps ahead and not just focusing on the immediate steps. Francine the numbers in the u. S. Were really bad for a couple of weeks. Do most states have a better handle on the situation . Our infections and deaths going down . Andrew it is a mixed result. What you are seeing in the states that had high numbers of cases the past weeks or two, you are seeing death and mortality the increase compared to cases we saw a week or two ago. In other states, we are starting to see a small surge in cases that does not reach the level of places like florida, california, or texas, but now is the time for them to act and finetune their Public Health interventions so they can have a better chance of flattening the curve, and not waiting for the cases to get to such high levels. Francine we are almost in august which means september is around the corner. What do we know about kids catching and transmitting the virus . Andrew an incredibly important question. What we are pretty firm on in terms of the data, children dont seem to suffer a severe illness at the rate we see in other age groups, which is a positive. They seem to be infected at a similar rate as other groups, so they are seeing the virus as much as other groups are. Aboute are not 100 sure is how well they transmit the virus, and when it comes to opening schools, this is a critical and incredibly important thing that has to be addressed. Some studies suggest they can spread the virus, probably not as efficiently as adults do. Any level of spread can be very important and be critical in terms of moving the virus into populations that are susceptible to infection. You need to understand the transmission part better, and understand that schools are linked to transmissions going on in the local population as well. Francine thank you so much for joining us, Andrew Pekosz of johns hopkins. Be sure to check out the bloomberg every day, and our exclusive conversation with johns hopkins. Gaining,equities are thanks to the good feeling when it comes to technology stocks. Stellar earnings from american next,ts is lifting bloomberg surveillance simulcast. This is bloomberg. What where getting now is evidence that the recovery is leveling off, so yes, we went up in jobless claims not much. I dont think we will fall off again. I dont think it is a w shape trajectory. Moving as negative, it will be the fed, not the market. This is bloomberg surveillance. Jonathan good morning. This is bloomberg alongsidece, live tom keene and lisa abramowicz. Will sayet it once, we it twice, the stock market is not the economy. Tom well said. Grim is an overlay, the gdp numbers against the absolute tech logical miracle that was witnessed yesterday afternoon