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Dollar. Shocks are shoveling and there is a haven did, signaling some uncertainty as we wait for some sort of a fiscal stimulus package around the pandemic out of d. C. Taylor what are we seeing in sector level in the first two weeks of august . Abigail it the cyclical field. Yesterday it felt Like Technology was gaining, but so far in august, the top sectors for the month of august are cyclical sectors, such as industrials, energy. Consumer discretionary is in , but the there reopening sectors are taking gain and also giving the idea support, the dow transport up until yesterday had been up 11 days in a row, the longest since 2010. That is the one index gaining come up 1. 3 . Investors hoping there will be a promise of a reopening ahead. That is what some sectors in the stock market are telling us. Taylor that is bloombergs Abigail Doolittle. We are going to go to the chief washington correspondent, Kevin Cirilli. He is standing right at the white house with the landmark deal with israel and the uae. Kevin we are joined by jared kushner, lismore my the architects behind the q ae you ae he is one of the architects behind the uaeisrael deal. Jared ofwas an honor to be a part such a breakthrough. It is the First Agreement we have seen in the past 26 years. The last one was between israel and jordan in 1994. President trumps leadership outlined the vision for what he wants in the region between 2017 and today. The hard work of the last three and a half years brought this. I think this will change the paradigm. Everyone knew what the problems were but nobody was able to find a solution. In andnt trump came reestablished alliances with israel and uae and egypt and serious, taking a very nononsense approach. President trump was able to make a breakthrough that nobody has been able to make for. Kevin the phones have been ringing off the hook. Have you spoke since this was announced in do you think other arab states could follow suit . Jared dido the great things we one of the great things we did yesterday was keep it a secret. People were surprised that a deal of this historic magnitude was able to take place. We have had discussions on going for the past years. People are positive. Was a are seeing this historic step forward. A lot of people realize that by taking the steps making it secure and economically prospect, it will help people in the long run. Kevin have they agreed to purchase new military weapons from the United States, like drones . Can you give us anything about the purchases they will make . Jared we have had the partnership with israel for a long time. There is always ongoing discussions about how we can increase forces. Iran is the there is right now, who have been causinging and instability. Security has never been more important and we have been in discussions with allies to make progress to make sure the region can be safe. Kevin the last time we spoke was after the peace proposal from the administration during one of the administration. It is said that there would not be annexation in the western bank for the time being. Shouldis unravel netanyahu pursue annexation . Understandsnyahu what is important to the israeli people. He understands what is critical to security and his economy. Right now he believes it is much more important to strengthen the relationship with United Arab Emirates and other countries and create the cross colonies in of the cross colonization of the country. With ai was speaking Previous Administration official here at the white house, and he noted there has been some optimism with how the palestinians and israelis were working together with covid19. Not all the way, but some areas, especially with the economic and medical situation in israel and palestine. It has forced them to look at cybersecurity. However, the palestinians really denounced the deal. At what point did you have to put additional pressure on palestine to broker them . Jared we dont want to pressure the Palestinian People. A lot has changed over the 25 years. People want better lives for their children. They want to live in peace and security. That is the natural evolution. People are tired of war in the middle east. President trump came in and recognized the reality on the ground and try to sort it out. We laid out a good vision for what can happen. We got israel to agree to a palestinian state and we get the palestinians to agree to a border. We had a conference in bahrain where the National Community came together to endorse the plan. They doubled their gdp and created a Million Dollars and helped to have a better quality of life. I think the recipe the israeli and Palestinian People are closer together than where the palestinian leadership is. The hope is that the leadership will see her is more to gain further people and legacy by resolving these conflicts instead of putting out the same tired. Kevin from a geopolitical sense, democrats have been campaigning sing they would rejoin the iran Deal Campaign saying they would rejoin the iran deal. The Coalition Building is a contract to the Foreign Policy of this administration. How important did the role of iran play in these negotiations . Jared i think that americans are smart. One of the reasons people elected donald is because americans are tired of their politicians making stupid deals. The iran deal was one of the most stupid deals that were ever made and made them on a path to have nuclear weapons. They used the money to fund terrorism. The day they signed the agreement, they were in the street chanting death to america and death to israel. It was a terrible deal. America has made terrible trade deals. President trump has changed that. The American People want to see their troops come home. President trump has reduced the troops. President trump, the democrat said would create wars, and that has not happened. He has accomplished things the other administrations have not been able to. You have to separate the media and the political jostling to what he does. Brings a common sense approach and he brings results. That is what the American People want. Theining the iran deal on previous terms would be catastrophic for the entire region. The vision for what iran wants to see is not consistent with amercos Vision Americas vision. Up will this end right i know that was the vision. Kevin think you very much for your time. Talking about the historic uae deal. Taylor bloombergs Kevin Cirilli. He will be running back to the studio so he can join me later in the hour. Stay with us. We will be speaking mike of novogratz of galaxy investment partners. This is balance of power. Taylor this is balance of power on Bloomberg Television and radio. Im taylor riggs. Last Mike Novogratz last time we spoke to Mike Novogratz , he was saying he expected biden in the white house. Welcome the to founder and ceo of galaxy investment Mike Novogratz. Take it away. Thank you for joining us. The announcement of, let Harris Kamala harris was big. Do you think she would be tough on wall street . Mike i think she will be fair on wall street. The democrats will be tougher on wall street in terms of the tax plan. You are going to raise corporate taxes in personal income taxes and most importantly for the stock market the Capital Gains tax. As much as it is going to be great for the country, it will not be great for the market. Taxation, thethe Vice President ial pick doesnt do much in the way of financial policy. People will be watching closely for the financial pick. What are your expectation of the moves they will use. . Mike the bite and camp are quite centrist. They are more conservative than the trump camp. They are fiscal conservatives, in that they know you cant keep spending forever without having some offset. I think you will see tax hikes on the wealthy to fund some programs. The countries skew has been as white as it has been forever. You have guys like jeff bezos with 180 billion in the american average american not doing so well. The democrats feel it is time for change. It is a question of how it is done. If it is done transparently and fairly. Regimes, it feels like many havent been fair. Sonali our markets ready for that, factoring in higher taxes in general . Mike i dont think so. We are in a the quidditydriven frenzy. Tesla stocks liquiditydriven frenzy. Tesla stocks up. It makes sense in this environment because everything is trading like bitcoin in 2017. Bubbles normally and with policy response. It could be action on raising taxes that could end this trough we have. Andon is an Amazing Company it is doing well during this pandemic. I think we are in bubble territory and the election might be what ends up at least topping it for a while. Sonali you mentioned a few volatile stocks, tesla, bitcoin. Appropriate in these volatile times . Mike i think they crossed the rubicon last year for being something that people think is here you have institutions joining. You have banks looking into how to get involved. It is a downhill race, as opposed to an uphill race. For my five years in crypto, i was pushing the ball uphill and now it feels like it is going downhill. Bitcoin has been hard to buy. Goal is over 10 trillion. Go. Oin has a long way to sonali where do you think gold should end up by the end of the year . Mike those are hard predictions. We have taken out the old high. Could it be 2500 to 3000, it could be. It is hard to figure out where they end. I dont think anything changes between now and yearend in side and thefiscal fed just printing more and more money. I think they are going to go more dovish at this next meeting. Sonali iven that we how much of your wealth is tied up in the crystal crypto industry . Mike more of it than was at the beginning of the year. I tell people to put 1 to 2 of their money into bitcoin if they are starting. It seems like the right amount. I have a lot more of it, 25 in galaxy and bitcoin. Dont think that is necessarily the prudent thing to do. Sonali other cryptocurrencies you like sides bitcoin . Mike the theory him is the a etherium is booming all of a sudden. We are all in a venture stage in everything but bitcoin. There is a lot of excitement in the space. There are a tremendous amount of town to people. The capital spends most of its time through the blockchain and building on that. Bitcoin is almost a finished system. Given that you have been talking about this bubble territory, as are entered anything you are watching short that is interesting . Mike i tried short, and it is very dangerous place to be short. Privatebig stake in a chicken industry, and i look at a growth stock but it is at 90 times earnings for a Chicken Company that makes no sense. We bought a Similar Company for similar earnings, 1 8 of the price. In somepublic markets stocks are we overvalued. Sonali what are you thinking about the general theme of people working moving to the suburbs. We are in new york and it is said in the Real Estate Market that we will see a collapse what do you think . Mike new york city will all be new york city. Once you see the all clear sign from covid, you will see young people been back. Right now, we dont have the all clear sign. In the suburbss and School Districts being made. It is going to take longer than i thought. It may take six months to a year after we got the all clear sign where people will say, not, why god, why did idad move to the suburbs . Sonali are people going to say want to live and work . Mike a lot of my friends have moved to florida and made the decision it will save enough on taxes and it is worth giving up new york or another city. New york taxes are as certainly as high as they can go. We are seeing that outflow of Human Capital because of tax. Governments budget have been decimated. No one has woken up to the fact that next year we will have to get a bailout from the government or services will go down. The marketont think has woken up to that either. Mike novogratz , galaxy investment partners. Taylor we will have coverage of the Democratic National convention. This is balance of power on Bloomberg Television and radio. Taylor this is balance of power on Bloomberg Television and radio. Retail sales making their way all the way back in july, albeit climbing into a deep covid19 hole here here is Abigail Doolittle with the look at that come back. Abigail macys is having a great day. There appeared to be a few reasons. One is retail sales, but we also had a knife out of. Calledne that is being wind in the sales. Lossput up a much lower than expected. I think folks are hoping things are turning around perhaps for some of the retailers and department stores. Sales, overretail 2. 1 . 2 versus you can see the value is higher than prepandemic levels, so that is positive. Doing the best in july, gastronics, appliances, and , and then clothing. There are some right spots and we are seeing it in the stocks. We all not all retailers we know all retailers are not created equal. Abigail and the bloomberg terminal, we have amazon up in a huge way on the year and that is boosting the overall retail index, up to 70 . But to your point, we might have a great day for macys on the the store isear, up 50 . Higher to the pandemic or around the pandemic, falling about 80 . The brick and mortar part of retail still struggling. Taylor thank you, Abigail Doolittle. Up next, read on the u. S. Treasury market and more. With Byron Scott Minerd Guggenheim Partners ceo. Taylor this is balance of power on Bloomberg Television and radio. Im taylor riggs. Lets get over to first word news. Mark stocks on another round of Fiscal Relief are stuck on 1 trillion of aid to state and local governments. Democrats offered to cut the third,l demand by one but are insisting on government aid. The white house has offered no more than 150 billion for that. Negotiation is at a standstill heading into two weeks in which democrats and republicans will hold national conventions. Secretary of state mike pompeo back to the arms embargo on iran. Extending vote on sanctions which are due to expire in october. Speaking in vienna, secretary pompeo said it makes no sense to admit the state sponsored terrorism to get weapons. Relatives of those who died in the explosion in beirut are demanding answers. Theyre asking the Un Security Council for an international investigation. Many want the investigation of. Ut of the hands there are doubts over whether the panel could be impartial. Tycoon jimmy lai accused evidence, they said i was guilty. I should be presumed innocent. One thing i can say from the we havet they made is the support of independent of hong kong. The new says it has law has curtailed the democracy movement. Global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in. Im markountries crumpton. This is bloomberg. Taylor u. S. Treasury market headed for the worst week in the months after it attempted to send 30year bonds and received a less than enthusiastic response from buyers. Scarlet fu has a special guest. Scarlet i am joined by the cio of the guggenheim global which oversees 260 billion in assets. It is always a pleasure to speak with you. Start with treasury. Got a selloff that pushed the 10 year yield to an eight week high. This felt like a significant shift. In late july, you said the markets could drive the rates below zero, even without the Federal Reserve setting is zero rate policy. What about the recent rise in are the drivers for negative rates still there . Is, theirst thing seasonality for bonds turning negative, traditionally the bottom is the second week of august. The selloff arrived on schedule. I am not surprised. But having said that, we have good support on bonds and in terms of the 10year note and getting rates above 1 . I dont think that is very likely. As far as the negative rates are concerned, bloomberg ran a fantastic interview with lacey hunt. He points to the same things i do, which is that there is a lot of deflationary pressure. Which are been reliable for the last 35 years, a sickly indicate that we should expect 35 years, basically indicate that we would expect to see the 10year note go to negative 50 basis points. Range is between 2 and negative 1 . We have never missed hitting the target numbers in the model. We have never failed to overshoot to the lower end. Bondsl remain bullish on longerterm. They dont represent good value and give poor returns. In the economy look like they will ultimately turn back to negative, with her in the fall because we dont have stimulus packages whether in the fall because we dont have stimulus packages and it will take a long time to get everybody back to work. In the shortterm, we are seeing increases in prices, both on consumer and wholesale level. Do you see signs that fears of deflation are giving way to a more sustained price . Scott absolutely. The bounceback in prices caught some people off guard. It is not to be unexpected, because you have prices plunged as much as they did, like oil and petroleum products, it is not unusual to see a bounceback once the economy reaches some level of stability, which it appears we have. That inflation is now back in the front of mind for most investors. Resolution the around inflation will be one of the big determinants of water we end of where we end with bonds. Scarlet we are seeing a lot of supplies absorbed by the u. S. Treasury market. Is that messing with the market signaling function . Adjustthe market has to for the increased supply and find rates where we can actually clear the stuff. The other side is that the supply function is also being heavily affected by the Federal Reserve and the fed has made it clear to us that they do not want to see longterm rates rise. I would expect in the policy statements coming in september that we will see some commitment to keeping rates lower. So i think the weakness in bonds from here would be a buy opportunity. Clou we the improved data have seen, how much does the stock market versus the bond market depend on benefits getting extended . Scott it is interesting to watch what is going on. I realized the other day that when you look at things like credit spreads, historically those are driven by the economy. But the market has turned everything on its head and says now that the fed is controlling it must equate to economic activity. The credit spread volume on corporate debt dont mean much to main street and the stimulus is what really matters. A lack of progress in the stimulus, which i dont think we will get anything until september at the earliest, which wont bemulus checks coming until october and maybe even the Unemployment Benefits wont be solidified, that we are leaving ourselves exposed to an air pocket. I wouldnt be surprised to see the august Economic Data and the september data to be very disappointing. Scarlet speaking of stimulus, i know one thing you believe should be taking up taken up. S a payroll President Trump has been pushing for this since before covid, and it makes it politically untenable for some in congress did what is your view on the administration and congress should proceed with a payroll tax . Scott the real test sits in the senate, because the senate is the place we get actually get this kind of discussion rationalized. My view on the payroll tax holiday is it would be stimulative for the economy and would probably add 2 million jobs to the economy. I am in favor of a period of payroll tax holiday which is voluntary on the part of participants, which in exchange for getting a holiday on the payment of payroll tax, they agree to extend that retirement age. When you look at the numbers on this based on the proposal i shared with bloomberg and others, this would free up 15 trillion to 20 trillion, which could see a large portion used to provide additional stimulus, extended Unemployment Benefits, stimulus a largeand even Infrastructure Program, like 3 trillion. A 3 trillion Infrastructure Program would not only help get the economy going again, but since state and local governments basically spend most of the infrastructure money, it would help shore up the state and local finances without having the administration to have to compromise on their top position in terms of helping state and local governments. Scarlett so what you are proposing could be a winwin. You speak regularly with those officials. From the Federal Reserve interview, and they try to remain neutral, what would be the main objection to a payroll tax cut . Scott apparel tax cuts the payroll tax cut im talking about, they would see us fiscally responsible. As you know, there are a number of people out there, whether it is conservatives in congress are people at the Federal Reserve, who are concerned about the sustainability of deficits in the long run. Longtermeduce our one deficits and would help we wouldtings reduce our longterm deficits and would help secure ratings. Get youri want to thoughts on the framework politicians are using for the growing economy. The pandemic has caused a new normal. To what extent do you see evidence policymakers and congress are relying on Old Solutions rather than creating new normal in addressing how to tackle some of these challenges. Mistakese of the major in the financial crisis was that washington didnt use it as an opportunity to deal with the true Structural Reforms. The famous line, dont let a good crisis go to waste, there is opportunity that congress can implement big Structural Reforms that could really change america and improve Living Standards and get rid of income inequality or it and it reduce ensure expansion. A congress is focused on getting reelected. There is a phenomenal opportunity sitting in front of congress and the president to really make permanent, lasting changes to the United States economy like Ronald Reagan did, if we could get together and compromise and do what is in the best interest of the public versus how to get votes. Make whenard case to it is a couple months away from the elections. Thank you so much. He is the chief investigating officer chief executive officer of guggenheim. Taylor that is bloomberg scarlet fu. Up, with the u. S. And china set to review the terms of the trade deal, we will stuff the two biggest economies with republican senator Marsha Blackburn of tennessee. This is balance of power on Bloomberg Television and radio. Taylor this is balance of power on Bloomberg Television and radio. Im taylor riggs. Kevin im Kevin Cirilli in washington dc it was interesting to see derek Kushner Jared kushner respond to democrats who say there should be more coalition in terms of the Foreign Policy, contracted contrasted with the white house response. I spoke earlier this morning with a democrat from delaware, and i asked him specifically about the Foreign Policy administration that the Biden Administration would carry out and about the uaeisrael deal. Overall, i think it is thetive to begin easing isolation of israel from the region. This is just the third arab country to recognize and begin normalization with israel. What was announced was just an agreement in principle. There are a lot of details, but the most important part was the suspension of Prime Minister netanyahus Movement Toward unilateral annexation of land in the west bank. To do so would have finally shut down any possibility of a solution. I strongly support a twostate solution and oppose annexation closed that would have the possibility for a palestinian state. I pushing the ambassadors hard work on this. And that was they continue to support the palestinian cause. This was an important agreement between the United States, israel under Prime Minister netanyahu, and the uae. It will contribute to reductions in the region and i hope it will be followed by other aired states. Kevin how would a Biden Administration handle this particular issue . I get that this is a big question. How would he look to rally allies between the u. S. And israel . To rally allies. Wayof the challenges to the President Trump has conducted Foreign Policy, is he as used the tools of terrorists to essentially beat up some of our closest friends and allies and has distanced us from countries like canada, germany, sweden, france, the u. K. , pan, and south korea. Japan, and south korea. It has caused economic tensions and political tensions. In the middle east, we have a range of partners and allies who i think could be brought together, but a resolution of the israelipalestinian issue is contributor to stabilization in the region. Uae, really, the view iran as the Biggest Issue in the region, the tension between sunni and shieh, the radical regime in tehran and what they are doing in the region is a more pressing Security Threat than concerns about the unresolved israelipalestinian tensions. That development has been going on for a decade and i expect a Biden Administration would continue to work with israel and regional partners to try to achieve further stabilization and improve security through resolution of some of the longstanding conflicts. Kevin that was from my conversation earlier with s. Nator coon the headlines crossing bloomberg terminal, writers reporting the u. S. And china have planned trade deal review is delayed. That is according to reuters. Continuee talks set to between the two Worlds Largest economies, i bring in senator , who has beenrn increasingly critical of china. There, thatt right review on the u. S. China trade phase one deal is now delayed according to reuters, ahead of these talks. There has been an escalation in tensions between the u. S. And china, no doubt. Sen. Blackburn definitely, there has been. I think it points specifically to the issue that china felt for decades they could take advantage of us. They did a good job of taking our jobs. It is like with the and mosttical industry of the plants were built in the 1940s, and in the 1970s, and set up modernizing these plants, what do they do . That torted to shift china in the 1970s and 1980s, because it was cheaper. Where did we find ourselves with covid . That we were not making the active pharmaceutical ingredients we needed, that all of our antibiotics were made in china. That is why theyre is such a push to repatriate our pharmaceutical manufacturing. On thez has joined me bill in the senate. They thought they could do it, because we had let them take advantage of us, whether it was our masuda goals or semiconductor chips, or whether it was pharmaceuticals, semiconductor chips, taking advantage of our farmers. China, young, no, need to come into a proper standing with the other nations of the world. It is not what china wants. China wants to overtake the other nations of the world. Kevin when i talked to economists and traders, they are not really blinking on the notion that the United States chat. And we there have been some reports that Silicon Valley has urged the white house to reconsider. When i spoke to senators like yourself, they say big tech is here to stay. What is your message to wall street traders who may not specifically grasp the reality that this is a nonpartisan issue in washington, d. C. . Sen. Blackburn it is a nonpartisan issue and i have been leading the Technology Task force. Every country in china is partially owned by the government, which is the Chinese Communist party. They are trying to build a global spy network. Huawei is the foundation for that. You see them pushing this through their debt diplomacy. You also see, through the utilization of applications and software, that they are infiltrating that down to the individual level. It is not just enough to spy on the government or companies, they are building a virtual view tictoc or weat use chat. This is why you have seen us say if you are a member of the u. S. Military, employed by the u. S. Government, you cannot put that on your phone. Taylor do you need to see separated fromat Parent Companies . Is that the end goal . Sen. Blackburn we know that facebook is looking at the purchase of tictoc. What you would have to do is make certain china is not cloning that data and holding that data, and that americans are going to be protected, there privacy there privacy is going to be protected their privacy is going to be tempted and that it be a housed entity going to be protected in that it be a housed entity. Taylor where are we on compromise . The democrats have said we want 3 trillion as a blank check. We will tell you later how we are going to spend it. I will tell you, every employer we have talked to said we need to get people back to work. Every educator and parent i have talked to has said we have to get children back to school. We wish our colleagues across the aisle would come to the table and work with us. We feel like there is agreement on schools, agreement on another round of ppp for some of these companies, like Live Entertainment venues, restaurants, and the motorcoach industry that have absolutely not been able to open. These components, we should take a vote on those and finalize those. Me thatconceivable to they are so dug in to their number that they will not come to the table and say, lets pass the things where there is agreement and continue to work. Taylor thank you sen. Marsha blackburn, republican of tennessee. Kevin, great to have you back as my cohost avenue you have been running around. Come monday, what do we want to see out of the convention . Kevin is going to be interesting to see the optics and how joe biden tries to navigate through the progressive and the more moderate winds of the party. We can run all over these things. Taylor stay with us, balance of power continues on bloomberg radio. This is bloomberg. From new york city and for our viewers worldwide, bloomberg real yield starts now. Fiscal talks on capitol hill collapsing and record supply flying into turbulence. Theill be airing from president of the United States. This, as talks between the United States and china have been delayed. We wait to hear from the president and he takes the podium. We begin with a big issue, indigestion in the treasury market. Debtere has been a lot of issue. Issuance by the treasury, we had to trillion dollars of corporate credit. We are seeing indigestion. You will see the central bank expand

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