French Economic Data. Francine if you look at the numbers, tom, it really missed estimates. It was interesting yesterday when Angela Merkel met with emmanuel macron, that they seemed to have a united front and said that they would do whatever they can to keep the economy open. It doesnt mean that they will not put in more measures, but if you look at the numbers of infected rising in germany and france, it is a lot of a problem with these leaders. Will they go back to a lockdown . They seem to suggest with more targeted measures, they do not want to go back to a lockdown, and it was interesting, they especially talked about borders, that if they can they do not want to close borders. Tom may be the border between florida and new york would be one of the selected borders of debate. On friday, an extraordinary friday. The first word news in new york city, here is ritika gupta. Ritika joe biden slams President Trump as a National Embarrassment and vowed to end what he calls the darkness. Biden accepted the democratic nomination for president last night, and he said in his administration there would be immediate change. Mr. Biden the days of cozying up to dictators is over. President biden, america will not turn a blind eye to russian bounties on the heads of american soldiers. Nor will i put up with foreign interference in our most sacred democratic exercise, voting. Ritika biden also said President Trump has failed in his most basic duty to protect americans. President trump warns of u. S. Tariffs on American Companies backrefused to move jobs from overseas. The president said the companies that do move jobs back we get tax credits. Its not clear if the white house is 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 on Postal Service funding as an opportunity to revise negotiations. Pressure is growing on hong kong to reopen its economy. There has been a sustained decline in the number of coronavirus cases in the city, and businesses are pressing for restrictions on restaurants to be lifted quickly. Reports suggest hong kong may not ease any restrictions until a mass 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 uber. Francine . Tom . This is bloomberg francine . Tom . Tom 30 year bond, the tips that everybody is following. The real yield,. 99 percent. Francine . Francine european stocks are actually fluctuating. If you look at, you know, full faith and Technology Lead rally, chanced by poor Economic Data from the region that you mentioned, france pmi is significant, falling estimates. It also germany was disappointing. So im looking at the euro go down a touch, and if you look at the offshore fund, rising to the strong this level in seven months against the dollar, chinas economic market rebound from the pandemic was one of the fastest in the world. So keep an eye on china and what they will know next. Tom we could go many ways in a three hour conversation with kevin cirilli. Unfortunately, we only have minutes here. What i want to do with our chief washington correspondent is drive forward the conversation. At first, last night, Vice President biden. Mr. Biden as president , the first step i will take, we need to get control of the virus that has ruined so many lives. Because i 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. Tom Vice President biden last night with a decidedly dark speech, making the headlines. Kevin, i dont want to do a postmortem. I want to look forward and get ready for the next republican week. First of all, can you have a convention on federal property . Kevin they have to. I think that the speech he is going to give next week is going to be very different than the speech joe biden gave last night, and i also would argue that in the lead up to it, the republicans had the advantage to look at what when well, what didnt work with the democrats, and they will have to kind of go through that. But they will focus on heartland voters, they will have some speakers that are representing the heartland, im told, and they are also going to feature predominantly this issue of law order. Not just in terms of the protests that have rocked to the country over the past couple of months, it also on the supreme court. I think next week a key theme based on the conversations i have had with folks on the reelection campaign, is going to be the supreme court. And that Brett Kavanaugh vote, which i think you are going to hear a lot more about next week. Tom thundering, to see the darkness last night, the idea that the president failed, which president obama said a few days ago. This President Trump go back to morning in america . Kevin i think that behind the scenes there are two policy points that i would make on that. First and foremost, i think you are going to hear a lot about the economy because they feel that that is an issue they can take head on in the biden campaign. Secondly, i think you are also going to hear a little more brevity, so to speak, because i think that that is the thread that you just mentioned, that republicans were very curious about, typically they would have anticipated a much more uplifting tone, but, you know, i think the pandemic does these challenging times. Is it to how difficult actually measure the impact of these conventions . It must be easier because it is online. Do we think it is swaying voters less voters than in the past . Kevin if you look at the ratings, francine, they really have been trending downward in terms of the number of people that are actually watching. It is 20 Percentage Points down throughout. Typically, if there is anything like 26 million plus people that tune into the convention, like back in the obama campaign, it was 35 million plus per night for the convention. So this has been hovering between 18 million and 22 million viewers. We dont have the data yet on last night. But on the digital side, it has about 10 in 2016 been million digital streams of people tuning in. Now it is Something Like 28 million to 30 million streams online. Before in previous cycles, they had to play for the front pages of the newspapers. Now they are playing for this thing. They are playing for the viral moment on your cell phone in order to see what is going to go viral and outlast on the social media feed. Tom the whole distribution question and the permanence of it next time around is an interesting source of study. Kevin cirilli, thank you so much for your coverage this week. Somehow i think we will hear from him again on this friday. This place to mr. Trump and to the heartland. The John Deere Company the gloom isnt there, and they really come out with a reset of a lift across all of their third quarter. Hes headlines are coming out right now with operating margins of 14. 6 , what i just want to state that it is a reset for john deere, with a little more enthusiasm to it. That is the kind of thing mr. Trump is playing on, as we just heard from kevin cirilli. Coming up next, im thrilled to bring in Nouriel Roubini. Francine and i will talk to Nouriel Roubini about the moment we are in, and the fiscal weight upon our budget. This is bloomberg. Stay with us. It is a surveillancethon. Francine lacqua, for like 18 hours in a row. Donate this is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Saw 45op from what we did ago. Now 1. 3160. 1. 32, we are having a wonderful conversation. Robert skidelsky with us moments ago, and someone from a different wing of the economic game, Nouriel Roubini joins us now from new york university, the school of business, and of course of great acclaim looking at crises. Wonderful to have you back with us. You wrote in february or january of the white swans that are out there stealing that phrase from swans twore the white years from now . Nouriel well, there are some mediumterm challenges, in a world where public and private debt are rising and they will become even bigger in response to the crisis. We have the risk of a Global Pandemic becoming a rich coming ae the recurrence. The situation with china is getting worse, geopolitical risks are rising. His Political Uncertainty about the u. S. Election, about the shape of the recovery. Stocks are in a freefall. You a u,oming a the u could become a w. Forwardant to look given the assumptions and certitude that institutions have right now. Great model that we have is there is a bridge out there and we should invest or act according to that bridge. Do you believe in the bridge, and can it get us to 2022 . Nouriel i worry, because before the crisis there was a massive leveraging of the corporate butor in the United States in many other parts of the world, including emerging markets, in giving the and given the covid shot, most emerging markets had to deleverage. That means spend less, save more, but how you spend less, your main costs, they are labor costs. But labor costs, labor income, the deleveraging is much more sluggish labor income. If and when they are going to be start to theyre going to start to be hired again, full range jobs with benefits will be more. Parttime workers, hourly workers, contractors, freelancers, there is a huge amount of uncertainty and risk aversion. There is also piling debt. You can also have deleveraging by the housing sector, spending less, save more, and do less residential investment. That deleveraging of the private sector implies, at best, a sluggish ushaped recovery. And of course we are not doing the right thing by controlling dividers, and we dont have the vaccine. Then you could become even a w. If you look at the markets, they are going up. You have basically you are saying that we are going through 10 years of misery. The market keeps on going up because of Central Banks. So, you know, who is right . Does the economy catch up with the market, or does the market catch up with the economy . Nouriel well, as you pointed out, we had a zero policy rate that is negative, we have longer Interest Rates in the u. S. , at 60 basis points in parts of the world. The euro is not negative. Central banks are even buying highyield and highgrade bonds, creditdont get much in or fixed income. And therefore people are going into stocks, but not because there is a very strong recovery of earnings. Companies back within the 500 they are doing well, the rest of them are not doing well. So it is all driven by further multiple expansion rather than a real recovery. What is good by the way for wall street is bad for main street because wall street represents, what, big fronts, big tech, and big banks. What is main street . Households, and small to mediumsized enterprises. Retailers and others will go out of these, market share of big business arising, and that is making it even bigger than the market shares. As i said, if the firms are going to survive and thrive and achieve their urns targets by slashing labor costs, your labor costs, consumption, and eventually the slump of consumption is going to weaken earnings and profit down the line. The stock market does not reflect the male economy. Main street is struck does not reflect the real economy. Main street is struggling. Francine we are also focusing a lot more on health, a lot more on climate change. Governments are doing that across the world. Does it mean that the pandemic is actually ending our obsession with Economic Growth to focus on other things . Nouriel well, it might in the short run, but now there is some there areence that diseases, transmission from animal to human that are occurring much more frequently. Were hiv, sars, mers, swine fluke, ebola, now covid night flue fluke, ebola, swine , now covid19 now these diseases are closer to livestock and closer to human. So if we dont address the destruction of the ecosystem, the Global Situation will become more frequent and more severe. This pandemic alone has done more economic destruction than other economic then any other economic crisis and last 100 years. Tom lets come back. I want to come back with Nouriel Roubini and talk about the philosophy of helping people during this pandemic. He is at new york university. Later today, this is timely about the actual assumption that is out there given this crisis. Christopher ailman will join us. Im sure they have tons of apple, tons of amazon and all the rest of them. But what about the assumptions forward . That is this afternoon. Christopher ailman. Stay with us. With Nouriel Roubini, Francine Lacqua and tom keene. This is bloomberg. Futures flat. Tom good morning, everyone. Bloomberg surveillance. London, lacqua in ne tom keene in new york. Rate conversations to get you started on that back to school, back to work september feeling. You can always do that with Nouriel Roubini of new york university. Of course, we have known him for years, and his prescient view has been wonderful, particularly his old worldview, what he brings from his heritage. And of course from his education in italy, over to america, has been absolutely Nouriel Roubini, i want you to take an old world study of how america is struggling to do income replacement. It is understood in germany, it is understood in the continent. It is understood in the united kingdom. America is struggling so hard with aid, with stimulus, and with the idea simply of replacing income. Why is that . Nouriel well, historically people are criticizing the european labor markets for being more rigid and not as flexible as the u. S. But during this crisis, the european system has worked much better because instead of firing people, the system where workers aty on the job suggests least 60 to 70 of their income, depending on the country, and the rest of it is resharing between the firm and the government. That is why that employment rate barely went up in germany or even in italy, while in the u. S. We have had doubledigit Unemployment Rate and actually even worse, considering underemployment and so on. I think that actually a system where there is more social coalition implies that you do not have the collapse of employment, the collapse of labor income, and that is why the recovery of the europe of europe and the euro zone right now may be better than the United States. Of course, there is a dual labor market. There are people who are informal workers who do not get the same kind of benefits, and there is a risk of course that covid is going to hit europe with another wave, and there will be another wave of unemployment. Thereigid labor markets, is resharing i think actually they are doing a major crisis like this, the european system of greater social cohesion gives you better economic outcomes than the one of the United States. In this wild west capitalism. Francine does that mean that mmt will be here, and again, what does that mean for assets . Nouriel well, we are already effectively in mmt or in a drop of money because we have massive budget deficits on the order of 10 in europe, and in the u. S. The in the u. S. It will be closer to 20 . And we have Central Banks that are effectively doing unlimited qe. Formally in the case of japan, informally given in the eurozone and other parts of europe. So what is the difference between mmt and large monetized budget deficits . Are buying the bonds in the primary market, which is mmt, and in the other case it is qe, you buy it secondary a week later. Mmt is supposed to be permanent. One is supposed to be temporary, qe is supposed to be temporary, but this qe is becoming permanent. Francine we are out of tom we are out of time. Nouriel roubini, we look forward to seeing you again. Stay with us. Jon golub on the markets. Stay with us. This is bloomberg. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music the current president has forked america in darkness too long. Too much anger, too much fear, too much division. Here and now, i give you my word if you entrust me with the presidency, i will draw on the best of us, not the worst. I will be an ally of the light, not the darkness. Thes time for us, for we, people, to come together. United, we can and will overcome this season of darkness in america. Tom the Vice President last extraordinary euro politics, it is a different convention for the democrats and no doubt from the republicans. Whatana joins us now did republicans learn from this Democratic Convention experiment . One thing that the president has already been vocal about that he learned business much better done live than it is pretaped. We saw some of the pretaped blunders, and i think the insident is masterful producing television, as we have seen over and over, so he will want to make as much of this possible live, and get surprises, like the democrats had with fireworks. Script . S he stay on ons President Trump stay script on law and order, etc. , or does he go against what the Vice President said and does the president take from reagan, a morning in america . Jeanne this is what i am so curious about. Vice President Biden last night really tight, on script, nobody interrupting him, booing, cheering. The president , he likes to play to a crowd, likes to go off script. ,ikes to do ad hoc moments impromptu things. I think we will see a little bit of both from the president , so but we know the theme is honoring the Great American story. They have these nights of land of promise, heroes, opportunity, greatness, and they would like to end with the land of greatness theme and the president getting renominated. Tom from where you sit, and certainly these are early days moving to the first tuesday of november, which of these teens can get out the vote best . Jeanne it is so fascinating. I think the democrats were like a laser beam, focused on getting the vote out, and obviously saying donald trump should not be reelected. I am amazed by that sort of ofady bunch moment when all his competitors were talking about supporting joe biden. Ive never seen the Democratic Party so unified in getting out the vote. But this is a battle of getting out the vote in the battleground states, essentially, those six states to eight states that will decide the selection. And that republicans proved they could do that in 2016. Numbers wise as bad as things are number wise for the campaign on the republican side, they are good at that, and we saw the democrats trying to hit them on where they do need to hit the economy because President Trump does when does president want does he really want this to struggle and go away . Jeanne i think he wants a bill. I think the democrats do not have much of an incentive, politically obviously, to get that done, because we have seen the president come out hours after that august 7 meeting where he said that i will do what i can unilaterally, because this is not going anywhere. I do think he wants the bill. I do not think they will get there because you have to combat with the democrats in the house, and so far, we have not seen a willingness on two sides to come together. Tom jeannie dana come jeanne zaino, thank you. Broken,oming out, widely anticipated. Right now on a friday, we widely dissipate first word news. Biden Vice President accused President Trump of failing to protect americans. He made it clear what a Biden Administration would tackle first. As president , the first step i will take with you to get control of the virus that has ruined so many lives. Because understand something that this president has not from the beginning we will never get our economy back on track. We will never get our kids safely back in schools, we will never have our lives back, until we deal with this virus. Ritika biden also said the u. S. Does not need a tax code itat rewards wealth more than rewards work. Secretary of state mike pompeo has formally demanded the United Nations reinstate global sentience against iran global sanctions against iran. Willdent trump says this be the most fraudulent election in history. The president told fox news theyre trying to steal the election. Leadid mailin voting will to widespread cheating, even though there has been evidence of that in previous elections. Steve bannon is free on a 5 million bond. He pleaded not guilty to charges he conspired to launder money while raising funds for a border wall. Global news 24 hours a day on air and bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Tom lots on economics, lots on politics today. What about the markets . Coming up, Chris Grisanti on what you need to do this weekend to think about your portfolio, to structure your portfolio, and to make the drama changes in september that are needed. Futures, negative three. Christopher grisanti, you need to buy more apple and amazon im kidding. This is bloomberg. Tom bloomberg surveillance. Francine lacqua and tom keene. Jon ferro, Lisa Abramowicz off. I will be on radio with paul sweeney. But in interesting friday, not a boring friday, on wall street. Right now, we need to regroup. We do that with Chris Grisanti, who has been absolutely stunning value. Ing how do you find how do you value . Grossi is they are asset like and, most importantly right now, their margins are terribly impacted by covid. You have the classic faang stocks but you also have stocks like domino pizza or even lockheed martin. These are companies that are making it through to the other and end. But i think there run is coming not to an end but there are even better places to be. Tom where are those . Capital now,cap but get more specific. Marginnow we need more protectors. Lets look at terrific companies that are affected by covid. Classic example would be disney. Disney is a terrific company, except that half of their revenue comes from the in parks and cruise ships. Parks and cruise ships. So if you see a world much more normal, at least the way it used to be, two years or three years down the road, you think disney will really capitalize on that. We tried to go to where the puck will be. We are talking medical companies that rely on elective surgeries, on real estate related Companies Like otis elevators. We think that is the next leg of the market. Tom that is the gretzky school of investment. [laughter] francine is that on the assumption that we get a vaccine . When do we get back to something that looks more like our old lives . Two years or three years or will we have permanent changes to the way we live . Chris i think the answer is yes to both those questions. We are a little more pessimistic on the vaccine than the market consensus. It is tough to do a vaccine. Producingd step 300 million batches of it. The vaccine right now has to be 300 degrees celsius right now. That is a huge logistic. We think the world is permanently changed, not necessarily in bad ways but in ways that favor these margin protectors, the online delivery folks, Digital Payment folks. So we just greatly accelerated the change to the new place we were headed towards in the first place. Francine by two years, three years . And what do you do with the Big Tech Companies . Does amazon become so big that, at some point, they want to break it up . Chris yes, of course, that is the real risk. I am old enough to remember and having owned microsoft in the 1990s when the government did file the antitrust case there. That caused headline hiccups, but at the end of the day, they kept on powering through. The real reason was if you do break up these things, there is value and the parts. At the end of the day, what will you do . Sat amazon on the threat of a breakup and buy something not performing nearly as well . It is a risk but i do not think you get off the train. Tom you have been brilliant on apple. Likedoes the path look the 3 trillion . Of thethe path is more it isaw the ruler, and doing what it has done before, emphasize service. Apple is, at the end of the day, still a company that relies on hardware. The iphones produce more than half of the revenue for the company. I would say love apple, terrific company, great management, but, at the end of the day, it still, it is a hardware company, so be a little careful visavis more asset light places like a facebook or google, which have a higher margin business. Tom the question i always ask you, use of cash. Do you factor in evident growth to sustaining this . And, friendly, helping Jerome Powells stability frankly, helping Jerome Powell stability . Chris i think so. The next six months are critical. The euphoria of the stimulus will start to fade. 4 trillion another or 5 trillion over the next six months. We are slightly pessimistic. They will be choppy waters. If i were joe biden, he may just repeat what happened to barack obama, who took office six weeks inore the market bottomed the financial crisis. Eye on things an over the next six months. Francine what are the things you want to know for the next six months . Volatility in markets, where extra stimulus goes to, or just who wins the u. S. Election . Because that changes portfolio management. Chris sure. Mediacracy gete wound up about who will win, and there are other things that will move markets more for the long term. There is no doubt that covid news will move the markets even more than the election. If you get a fantastic vaccine that will clear the hurdles, that will be great news, no matter who wins. Expect, youas we get setbacks in that area, or if unemployment remains stubbornly high, that will move the market more. Francine how quickly can we get a vaccine even if we have a formula, we need to distribute it. Chris right. That is as optimism little unfounded, especially with the market upside. Wasif a vaccine discovered tomorrow, would we all line up to get a shot . I do not think so. I think we would wait to see the efficacy. This will be an evolution, not a revolution to a new place. We are really keeping our eye on a trend that takes a while. Francine thank you so much for joining us today. Chris grisanti, mai chief deputy strategist. Coming up we were just talking with chris about vaccines dr. Andrew pekosz. We continue to track covid19. This is bloomberg. Ritika this is bloomberg surveillance. Im ritika gupta. Directors at General Electric have extended the ceos contract by two years. Board also revised his compensation plan. That would make it easier for culp to take home as much as 230 million at the end of his contract. Uber and lyft got a reprieve in california. A state Appeals Court ruled that the companies can keep operating as normal while they challenge in order to comply to a state law. Amazon is facing growing pressure to make money from its alexa voice activated assistant. Bloomberg learned that the company halted some hiring in the alexa division. Amazon is also considering selling ads on the alexa service. That is your Bloomberg Business flash. Francine thank you. As we continue to track the virus, bloomberg vallow a unique ship with the leading authorities on covid19. Johns hopkins has been at the forefront of the international response. Every day, we bring you insights from experts. Joining us as anja because, Johns HopkinsBloomberg School of Public Health professor and virology professor. Is andrew pekosz, Johns HopkinsBloomberg School of Public Health professor and verlander professor. Dr. Pekosz it is important to set expectations for vaccines. Often times, vaccines that work in children were infant from adults, and they are both different from ones that work on the elderly. Veryow the disease is different in these three populations be of the vaccine rolled out may not be tested for all of those populations. So when we get vaccines, there will be safety data, efficacy data, but it may not be across all those populations. The vaccines that are rolled out may only work for certain groups, and we may have to wait longer for vaccines that work in other groups. But what do you want to know about the virus . We still do not know what role t cells play in protecting from the virus. Do not know why some and up on a ventilator and some do not have an immune response. What are the three things we need to understand before we can say we have a handle on this pandemic . Dr. Pekosz number one, protective immunity. We know that, if you get infected, you will generate lots of different types of immune responses. There are even several studies that show some of your responses to common cold coronaviruses react to covid19. We know there are a lot of immune responses to virus infection. We also know that your immune system remembers an infection, as a second exposure to the same virus will start a fast immune response. But what we do not know there is which of those immune responses will protect you from reinfection. What we do not want is a situation where your immune responses lessen disease but maintain transmission, because in that scenario, we can still have the virus circulating in the population and really not protect people from infection. The second thing is understanding these mild cases and what it is about your response to infection that can cause you to come often times, have a mild disease but sometimes have a progress to a severe disease. Francine and it is difficult, as a parent, the to decide whether to send your child back to school kid we get a lot of people writing in, asking what they should do. What are the questions you ask the school . Again, depends on district, on safety measures. Youe or four questions that have to call your principal and say are you putting this in place . Dr. Pekosz it is such an important question. I am actually dealing from that from both ends. As an instructor, we are trying to set up learning for our students coming in, but i am also the father of two children who have gone on to graduate school and undergraduate in the past couple of weeks in places where they will have some attempt for in person classes. It starts with community, making sure the virus is controlled in the community and that you are not seeing large amounts of spread. If you see large amounts of spread in the community, that will spill over into the school you are attending. Second, you need to have Good Measures in place to minimize the risk of transmission. Low density in classrooms if you are going to have in person classrooms masks, good general hygiene, understanding things like the places where people get together most frequently, cafeterias, breaks, those kind of things. All those things need to be put in place to make sure you do not have largescale transmission in these settings. And you need testing, because you need to be able to monitor these situations, because they will be higher risk than you would like. So lots of things need to be put in place for these to be rolled out efficiently, and we see in the u. S. A couple of examples where things rolled out well and we have immediately had to back up and get away from in person learning. Andrew pekosz, as always, thank you for your really valuable insight at Johns Hopkins. Make sure to check out vrus. Stocks are now rising, fluctuating all morning, but now focusing on a possible breakthrough in this virus vaccine. Coming up, more bloomberg surveillance, but this time simulcast on radio and tv. This is bloomberg. Youre seeing a lot of divergence within the market in terms of valuation. Theres a disconnect between Public Markets and what is happening on the ground. The worst that data looks, hopefully the more there is for fiscal stimulus. The pace probably slows down now that weve had this rebound. Weve got demand being stimulated, and that should lead to higher prices. This is bloomberg surveillance with tom keene, jonathan ferro, and Lisa Abramowicz. Tom good morning. It is a simulcast on bloomberg radio, on bloomberg television. Off. Off, abramowitz joining us on the simulcast through the morning, Francine Lacqua in london. , andcided to do this endurance test here. We