Message because it will have an application on markets. Tom not a usual summer friday, folks. The news flow is absolutely extraordinary. We are going to get ourselves around what we are going to be doing with the democrats now moving to the republicans and the president , the usual convention cadence of august in an election year. But that is not the headline item today. The headline item is 13 consecutive hours in our thon. Llance francine will be with us through the morning and through our simulcast as well. I really look forward to it. This news with the slowdown in france and Emmanuel Macron is not a small item, francine. Francine im also looking forward to our tv and radio marathon. Surveillancethon. Francine i dont know if we will have to file for atv divorce after that. Tom we have already done that. I would not know anything about that. Francine which is why we get along, right, tom . Here is ritika gupta. Ritika joe biden slimes president as a National Embarrassment and vowed to what he calls to end what because the darkness. Wouldd his administration bring about immediate change. The days of cozying up to dictators is over. Under President Biden, america will not turn a blind eye to russian bounties on the heads of american soldiers. With foreignput up interference in our most sacred democratic exercises voting. Ritika he said President Trump has failed in his most basic duty to protect americans. President trump warns that hell impose tariffs on u. S. Companys that refused to move jobs back from overseas at a campaign to invent in pennsylvania. He said the comedies that do move jobs back we get tax credits. It is not clear if the white house is actually developing such a policy. House Speaker Nancy Pelosi is getting pressure from moderate democrats running in swing states. They want her to reopen stimulus talks with republicans, the socalled blue dog coalition. The house vote on pressure is growing on hong kong to reopen its economy. There has been sustained decline in the number of coronavirus cases in the city, and businesses are pressing for restrictions on restaurants to be lifted quickly. The report suggests that they may not ease restrictions until the testing blitz next month. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is number. Tom similar color there of the news flow this friday. It is extraordinary. Equities, bonds, currencies, commodities. It is a true turn to the market. We had an up up it is a true churn to the market. We have worded down to a lower yield regime. 30year,. 64 on the 10 year. Digits ono the four bloomberg surveillance. That is the one statistic matters, the 0. 9907 on the tip. It really has not come into lower reyield lower real yield. I also mentioned George Saravelos of Deutsche Bank reaffirms get out of the euro, but he is not calling for weak dollar, he is calling for a churn here at the 1. 18 level. Looking atm european stocks. It was a great data check as always, tom, but it is really important to look at some of the levels that you mentioned. European stocks are fluctuating. We had data that really cast doubts on some of the regions recovery that came out of germany and europe. Im also looking at osher one rising to its highest level in seven months. Then you also have tensions between china and india, so there is a lot to talk about in terms of geopolitics, to be creeping into these markets. Joining us to talk about all of this is the aberdeen standard director. James, thank you for joining us on this friday. What do you do with European Assets right now . James i dont like them. I havent liked them for some severecause there are structural issues, and the ability to mask those structural is something we have seen may be in one year out of the last 10 at least. The environment that we have found ourselves in a few weeks ago is one where the market and braced this narrative that virus,ad had a good and therefore had a strong economic outlook. In the u. S. , quite the opposite happened to me. That did not make a huge amount of cysts amount of sense first and foremost because controlling the virus now seems to be nylon impossible. Nigh on to be impossible. European equities, there seems to be a secular premium attached, or a discount, i should say come attached to them because of the sum because of some of the issues the region faces. I would not favor them being heavily invested in europe at all, when the current is as strong as it is. Francine james, tom and i have been waiting to ask you this question practically all week. I think it was on wednesday when we saw demand rise in germany to an alltime high, and it was also negative. How do you interpret that . James it is a tough one. German auctions are quite strange looking relative to others, the way in which that process is managed, means you quite often get the appearance of failed auctions or uncovered auctions, but that is just the nature of the process. It does not speak a huge amount to the lack of demand out there. If anything, the opposite has been true, where there has been a scarcity of highquality assets. Duration innk general is attractive. The yield that you are receiving in that direction is not attractive, but return expectations across all markets are attractive. Again, the european region, while we have had a couple of months where things have looked a little bit better, i think there is a large body of investors where there are significant concerns about where their mediumterm trajectory is. To the extent that the mediumterm trajectory is not negative, largely that will be the cost of or in conflict with huge amounts of purchases from the ecb. So i think it is just a combination of low expectations, low growth expectations, low inflation expectations, demand for safety in general. Why that happened this week im not so sure, but to me this is generally a mediumterm weakness and uncertainty story. Tom i love the mediumterm. It is such a british thing, folks. Let me cut to the chase. I look at the pandemic in europe and i dont understand it. This week we have merkel and macron describing the issue on the pandemic. How will the pandemic affect european revenue . We have a sense of that in america, but i dont in europe. Do you look at it as a blanket on revenue in europe . Depends which sectors you are looking at. In general, yes, this is a hugely disruptive and disturbing nott on top of what was a particularly healthy Global Economy and a very unhealthy european economy, so the starting point was bad. The starting point was being masked by policy and by debt. Underneath that, things were not healthy and we see a massive supply and demand shock. The demand shock dominated in the shortterm. If you look at germany and the export sector, it has tended to be sensitive to what goes on in china, particularly the traditional sort of china stimulus which is in a big ticket item infrastructure investment. China has kind of issued its schewed its kind of e attempts across the rest of the region, anything which is related to consumer services, anything which is virus sensitive, these things are not good. The only sector really that we are seeing globally and specifically in the u. S. That seems to be benefiting in dramatic site is tech, and europe does not have a huge about of tech stocks there. Tom this is really profound. I brought this up a couple days ago over cocktail conversations, james. It is to me actually profound. If you adjust america for tech, is there an equivalency for Everything Else in america with europe or not . Xtechica outperforming europe . James basically know. If you extra out a handful of companies and look at the trajectory of both equity markets. You see the msci world excluding the u. S. , if you see the u. S. Excluding tech, what you get is a reasonably consistent picture. You somes athey, thank much. Greatly appreciate it. Lots going on around the world today. We will have great coverage on american politics that is affecting the markets, but there is a story that has been developing for 24 hours, and this is in russia. Francine, help me out here. This gentleman is the opposition to mr. Putin. Francine, as you saw in the south of london here two years ago, boys and is in hand for the russians, isnt it . Francine for the moment we dont know. Nothing has been confirmed, but according to the spokesperson mr. Navalny,ny there was an emergency landing. He is in a hospital in that town. Plane to take a him to germany for treatment, but the doctors say he is too unwell. That could have huge repercussions for foreign policy. Miles, in1300, 1400 southwestern siberia. Coming up, nouriel roubini. Stay with us throughout the morning. This is bloomberg. Good morning. ,m bloomberg surveillance from london and new york. Not a usual friday. Grim france news on economic growth, a setback that moved the well. S to an ebb as Kevin Cirilli will join us later. Also, Jeannie Trento will join us. James athey right now with us, everett in standard investments. As we look at the opportunity down there and what to avoid. James athey, what is the number one thing i will not want to do into q3 and q4 . James what a great question, tom. I keep expressing my concern towards the risky assets in general, equities specifically, credit specifically. Obviously that continues to be wrong. I think the biggest thing to avoid would be the classic ageold problem of assuming that the future looks like the past, extrapolating the trends that we have seen since march and believing that they will go on and continue for the mediumterm purely because not a lot changes with respect to growth virus and central banks. I dont think that necessarily is going to be the case in the coming months. I continue to believe that diversification is quite difficult because the influence is driving markets consistently the same, and it is consistently about policy. But i think things like Precious Metals and fx can diversify, so i want to have exposures into risk off type positions in markets such as those. Tom this is the question of the week, and to me it is so important. This is, do you diversify to individual security selection, or do you diversify through says,s, and as mr. Athey do you diversifys across other assets, do you diversify across other assets, tangible and intangible . Greatero through a individual securities . James that is a good question. If you go and break down the drivers of an individual stocks, you will probably see that idiosyncratic drivers are small relative to the beat of the overall market in correlation with the bond sector. It is some information there at you will not find a emotive assets which have primarily drivers relative to their sector or their i certainly think something which, you know, i think is becoming entrenched as an investment psychology is es chewing the concept of value. I know we all think warren buffett, but to me, not understanding what it is that you are paying for today in terms of expected revenue stream , of where the symmetry or asymmetry lies around expected returns, given the price that you pay today, is a bigger input into trying to sort of gauge which sectors may do well or may do badly out of that situation that we face today. Of course we can say that tech should be able to benefit and people will be communicate and more remotely, shop remotely, etc. , but that does not seem justified, and that is where the prevailing environment for investment seems to be to forget about the idea of the value or price or what it exactly is you are paying for, and just the just attached to the fairly high level narratives about how the world is changing. Francine james comer you have been for us with us for about 16 minutes and we have not talked about brexit. We understand it is not going to plan for the moment, or there is the freetrade agreement on the cards, i think we are inspecting some sort of press conference shortly. What do you do with guilt . James im happy not to talk about brexit. I enjoy that there has been a period to give Something Else our attention. Im a bit less short today than i was a few days ago because we have seen a small pop in yields in general, and gilts have participated in that. Think gilts are quite fixed in their own market relative the cash rate, relative to inflation, breaking even at 3. 5 thereabout, and you have the gilts at 20 basis points. Gilts relative to other market, really that there is no brexit story in there for me at the moment. Sterling is where you probably want to express the view on brexit. So i think im somewhat surprised with how well sterling continues to do, notwithstanding that the dollar has done most of the heavy lifting. Certainly has done pretty well. It doesnt look like things have necessarily going to plan with respect to negotiations and our future relationship in the past prior to the virus. That has been catastrophic for sterling, so cautiously, we are a little bit short sterling. Expect in the second half of the year we will be somewhat different. James, briefing reporters in brussels, saying he is disappointed on the talks. What will we see in the u. K. . Mmt . will they call it no, i dont think so. You get into this subtle theoretical distinction really about what is mmt, what is monetization, what happens to be two independent bodies acting at the same time, given the same input and influences coming out with the same results which looks like mmt. I guess whatever the central bank is buying bonds in the way it has done throughout this, that is something a cute akin to qe market asset purchases, not giving directed to the government. The argument will continue to be that this is not mmt, this is not monetary financing, and i dont think that is a library for anybody who is currently in the u. K. Institutes i dont think that is a line that anybody who is currently in the u. K. Institutes wants to cross. It could well be that the outcomes would match what we might expect under mmt policy. You soe james, thank much for joining us today. Names athey, aberdeen standard investment director. Later today james athey, aberdeen standard investment director. , at 3 30 p. M. In new york, christopher aleman. This is bloomberg. Ritika this is bloomberg surveillance. That thed biontech say vaccine is on track for review. They say the vaccine was well tolerated with mild to moderate fever in fewer than 20 of the participants. Markberg has learned that zuckerberg was questioned for over two days this week over antitrust into the social network. Justice Department State attorneys general are looking into facebooks market power and influence. That is the bloomberg is this flash. Tom . Francine . Francine thank you so much. Is briefinger reporters. He says he is disappointed with the outcome but they still have two months to find an agreement. Of course, we were trying to get from both sides, he says again, he took note of the u. K. Decision not to extend a transition. And this was, tom, the biggest question, whether the u. K. At the end of the day come at the 11th hour, decided to extend, or whether they would rather go into a double tao agreement january 1, 2021. Coming up, we speak with professor of International Relations peter trubowitz. This is bloomberg. Experience the ultimate sports hub. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Mr. Biden the current president forcourted american doctors too long. I will be an ally of the light, not the darkness. Our first step will be to take control of the virus that has ruined so many lives. Something this president has not understood from the beginning. Will we be the generation that systemicipes out racism from our National Character . I believe we are up to it. For far too long, it is time that the we can and will do with climate change. Its not only a crisis, it is an enormous opportunity, an opportunity for america to lead the world in clean energy. The days of cozying up to dictators is over. Make no mistake, united we can and will overcome this season of darkness in america. That was the democratic nominee, joe biden, addressing the nation at the d c. Ofning is now is a Professor International relations. Peter, one of the things we are trying to figure out from my newsroom at home this morning is this is basically about President Trump. President trump has done a terrible job, so you need to choose Something Else. Is the messaging too negative . Could it backfire for the democrats . Peter i think that attacking trumps confidence is smart for democrats for two reasons. First, it is Donald Trumps biggest liability going into the election in november. And it is a surefire way to get trumps note, and it did. My guess is he spent more time this past week attacking the democrats then meeting advisors about the pandemic. That might not matter to trumps base, but there is a lot of suburban voters, white collar, educated suburban voters who basically have become tired by and frustrated with trumps shtick. So i think the democrats concentrated on that. They hammered it. Michelle obama started it off on monday night, and i thought biden rounded it out last night. And i think that is probably one of the most effective arguments they can make. Francine peter, what should be the strategy of the democrats if they want to win in november . Is it turning people who voted democrat who voted for President Trump, to vote for the democrat, or is it getting people who have not voted in four years, eight years, 12 years, to go back to the polls and vote . Peter the biggest thing for the democrats is to unify their own base before they try to reach out to those voters that are and there are very few of them at this point that are undecided. I think they did that during this convention. We are going to have to wait and see. This is totally new, an Online Convention and so forth, but they need to rally the troops, and my sense is they energized and inspired the base. So i think that is job number one. I think they are going to have to figure out also whether or not i think they are going to start encouraging their own voters to find a way that a way to actually vote physically, to go to early polling places, to mailbox drop ins, and not to ballots. On mailin i think we will hear more of that in the coming days. Tom tom keene in new york. Thrilled to have you with us today. You had a book out nine years ago, politics and strategy, which is absolutely mustread. In it, you have an extremely important chapter on Herbert Hoover and the others of strategic retrenchment. Thatu just anticipate President Trump will retrench around his comfortable majority . Peter yeah, so that argument was about president s, of course, that retrench internationally, which is frankly what i think donald trump has done. Yes, trumpsk, strategy is to play to his base. They believe that it is he and his team he and his team believe that there are trump 2016. Who did not vote in these are white, bluecollar outrs, who can be brought in the key swing states. That is what hes doing. Thats the strategy. I think it is a highrisk strategy because it is like trying to pull an inside straight to use that phrase, a second time. But he did pull it off one time in 2016. Tom what is so important here is the definition of the 2020 silent majority. How does Vice President biden not do strategic retrenchment, and how does he reach out to that silent majority . Peter i think that we saw some of that last night. You know, i will say that i gave biden beat expectations with that speech to useght, and i think, Donald Trumps words, he looks strong. Focused,cross as energetic, and passionate. But i thought the most effective parts of the speech were when biden spoke from the heart. , when he talked to people this is really talking to Older Americans and people who had lost a loved one to covid. E told them he understood loss he also understood or learned how to overcome loss. It was very moving, and i think for a lot of voters, the kind of voter you are talking about, i think he sharpened the contrast between himself and trump, who has difficulty showing empathy for people. And i think those are the voters that you are talking about. Who thishard to know Online Convention reached, and that will be the same for the Republican Convention next week. But i think along the lines you are talking about, he helped himself. Francine thank you so much, peter trubowitz, lse professor of International Relations. Is, theat where pound ftse 100 has not moved, but we did have some significant headlines from michel barnier, and his counterpart, mr. Frost. They have been trying to negotiate a deal before that deadline at the end of the year. Otherwise the u. K. Will resort to wto trading rules with europe. Is disappointed that talks have not gone to plan. He says an agreement at this stage with the seems unlikely, and mr. Frost, for his side, on the u. K. Side, said time is short for both sides. Tom what is so important here, folks, is the overlay of brexit and i remember jon ferro sitting on the set the morningafter in shock the overlay of the pandemic with brexit is just extraordinary. Francine it is extraordinary, because if you look at debt in the u. K. This is one of the concerns that people were taking a bet on. If you look at what we heard in terms of the u. K. Has the highest debt level it has ever had, so there was a bet on the market that because of that, the u. K. Government would not feel that it could leave the e. U. Without a trade agreement. So there was maybe a feeling out there that because they were already spending so much money on covid19, they could not spend that much more money in mitigating the kind of effect of leading under wto rules. Barnier looking pretty downbeat. Lets get straight to first word news in new york city with ritika gupta. Ritika joe biden accused President Trump of failing in his most basic duty to protect the americans. Last night biden accepted the democratic nomination for president , and he made it clear what a Biden Administration would tackle first. Mr. Biden as president , the first step i would take, we need to get control of the virus that has ruined so many lives. We understand something this president hasnt from the beginning. We will never get our economy back on track, we will never get our kids safely back in school, we will never have our lives back until we deal with this virus. Ritika biden also said the u. S. Doesnt need a tax code that rewards wealth more than it rewards work. He said it is time for the biggest corporations to pay their fair share. Secretary of state mike pompeo has formally demanded that the United Nations reinstate local sanctions against iran. He also slammed european allies who opposed the move. He accused them of the failure to lead and of appeasing the rainy and the iranian regime. President trump said this will be the most fraudulent election in history. He told fox news, they are trying to steal the election. He said mailin voting will lead to widespread cheating, even though there has been no evidence that of that in previous elections. A 5 bannon is free on million bond. He has pleaded not guilty to charges he conspired to commit fraud and launder money while raising funds for a broader war. For a border war. It is said that he defrauded hundreds of thousands of voters. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, im ritika gupta. This is number. Tom thanks so much. Let us not forget our place in history in this fiscal buildup that we have seen, it seems, in each and every country. Skidelsky ofbert new york university. On our fiscal state of affairs. Somehow i think we will speak to Robert Skidelsky of the path forward to economic growth. This is bloomberg. Stay with us. Tom bloomberg surveillance. Good morning, we are having a surveillancethon today. Thrilled to give you many hours of our perspective from, i should say, across the atlantic as well. Right now a joy. Robert skidelsky is controversial. He is a definitive historian. His work on maynard keynes is across generations definitive, but also he is someone who criticizes conservatives and labor with equal fervor. We are thrilled that lord skid l elsky could join us this morning. I dont think that on maynard keynes there was the amount of fiscal debt and deficit that we have now. What can we do now about the magnitude of the debt . Robert well, there was if you think about the debt incurred in the first world war. That was absolutely huge. Think 200 or 250 of gross domestic product. So that was sort of comparable to what we are seeing today. And the way they got out of it was through the growth of the economy eventually. Tois the only way, really, reduce the net burden of debt. The economy has to grow. It has to have policies to make it grow, to help it grow. Tom one of the charms of your work is the work of 10 years. Politicians are worried about two years, four years, six years, may be at the most eight years. How do politicians extend their timeline to get to where they trust that growth will work out these huge debts . Robert i think the first thing is i believe the problem what do we do in the next 12 months. In that sense i am quite shortterm about this. We are going to have a recession, we are going to have a deep recession. It is not some unexpected event coming out of the clear blue sky. Everyone is forecasting it. The doubt is just about the extent to which the economy is going to slide. In the u. K. They think it will they think it will be 13 , 14 , 15 . We are going to have a slide and it is coming, like a blackening cloud. The question is, what our governments proposing to do about it . That is quite apart from the fact that we might get other waves of covid, smaller waves. But what is the policy . Is sort of ambulance work now. They are keeping we are keeping the pay for a lot of people not working and we are paying businesses not to produce. How are we going to get beyond that . What should the u. K. Government do in terms of furloughs . Thear they have rejected asking or the extension of it. And that is different from what germany and france are looking at. Should they extend . The awful problem with economics. Their modelhey take seriously, they will put their bets on a vshaped recovery so graduallydustry reopens, people will get back to their jobs in a reasonable way, and we will have a quick return to normal. But it is not going to happen like that. Other industries have been forced to close down, and the conditions under which they can continue are very restricted, so you have this supply shock and gradually demand will fall. As the furlough has ended. I mean, i think you can say it extend income support for people. But you cannot pay masses of people for not working forever. Im not so worried that about debt, but you run out of wealth, meaning the economy is shrinking, money supply is growing, and then the money is worth less and less. The society gets poorer and poorer. So you have got to actually create work. You have got to do something. Government has to spend for work. It has got to start big public works schemes just as roosevelt did in the 1930s. Robert, thank you so much. Lord skidelsky there. Lord skidelsky stays with us, and we will talk a lot more about some of these fiscal programs. Ating up, Jonathan Golub 7 00 a. M. In new york, 12 00 p. M. In london, and this is bloomberg. Francine this is bloomberg areeillance. Tom, we having a great conversation with lord skidelsky, emeritus professor of political science. Lord skidelsky, we are talking about what governments need to do to help with displaced workers. You called for a jobs guarantee program. What is the merit of this . A lot of people think this would be too difficult. Who can you convince about this being the right thing to do . Robert i think you have got to start with just the idea of public works. Not remedyclassical for depression, it was classical, that compensation, the loss of private sector jobs. Governments provided public works, and you just have to look at all the things that could be. One at a local level as well particularly at a local level. To be convinced that it is not just a matter of sweeping up leaves or filling up holes and digging them up again. Ames had an offthecuff remark. He said if you have people digging up holes and filling them up again, there would be no more unemployment. But that was a joke. Cannot think you of anything more sensible to do. There are lots more sensible things to do. Roosevelt had a work program. Millions and millions of jobs doing good things in the United States in the 1930s. Tom lord skidelsky, i have been thunderstruck about the last the lack of study over the last six month or so about the lack of inflation or deflation. Attlee struggling with the wage of the united kingdom. Are we out of our minds that we are not stating the risk of true wage deflation . Robert of course we should be studying wage deflation. But you have this economic orthodoxy, dont you, that if you have flexible wages, you will maintain full employment. I mean, that is the model. That is accepted by most economists. Tom but this is really important. I dont mean to interrupt, lord skidelsky, but someone who is the operative the opposite of lord skidelsky is john b is it anis assumption . Robert it is a perfectly reasonable assumption. Wages are not like water that sort of instantly adjust to whatever the conditions are. They do stick, and in fact, that depressions, get when you have a shock you do not get wage adjustments. Int you get is an increase unemployment, and then that feeds on itself and the economy runs down. That is what ames said. That is what our experience is. Therefore, it is no good relying on the automatic forces of the market to bring about a very rapid recovery from shock. I read many economists expect a vshaped recovery. And the instrument they rely on is flexible wages and prices. Thethat just seems to be wrong model. It is wrong theoretically. It doesnt happen that way. Francine lord skidelsky, theoretically, what kind of a recovery are you expecting to see . Expecting . T am i sorry, i didnt get francine recovery. What kind of recovery . What i am expecting is a ushaped recovery. Period there will be a where we have very high rates of unemployment, and the economy is smaller. Eventually, in the long run, yeah, there will be a return to normal. But what sort of normal will it be . Will it be the same normal that we had before . Will work habits change . What will happen in the cities . One of the problems is that a Service Economy is very vulnerable to the cessation of business. Economies in the u. K. Have been prevented from working because people have been vented from using services. Tom Robert Skidelsky, we are out of time. The author ofky, three volumes on maynard keynes. It is a friday churn to the market. Weaker, 1. 31 68. It is a surveillancethon. Nouriel roubini with tom keene and francine lacqua. That is next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Ebb tois morning, an friday optimism as france considers a slowing economy. As well, tourism. It returns, and with it, a surge in the pandemic. Merkel and macron meet. They are masked. Can Postal Service salvation be linked with moderate democrats . They insist. And it is decidedly not morning in america. Vice President Biden says president failed to protect us. There is too much anger. In a seasonwe are of darkness. Good morning, everyone. This is bloomberg surveillance , from new york and london as well. Francine lacqua and tom keene. It is a surveillancethon. Acqua to the rescue 5, 6, seven hours of francine lacqua