Heated ever, and the last 10 weeks is basically stealing that ground is the most heated rally we have had in quite some time. Caroline brian jacobson, lets get back to him. Wells fargo Asset Management strategist. Are you committed to equities now . What about other assets . Taylor focused on the weakening dollar. Where else are opportunities . U. S. Treasury yields are still through the floor even though we saw a bit of a selloff today. Brian yes, even though we have seen it come up a little bit, the twoyear, at 75 basis points, or 0. 75 on a 10 year treasury, we do like the highyield area. But you need to discriminate within that between the energy names and the nonenergy names. Indexerg has a fantastic on highyield excluding energy, and it is fascinating how that from losses, but not completely. It is mainly the energy names that have been down. But that might be showing signs of coming back to life. We do like highyield. Italy, we have been seeing a bit of a rotation with some european names, some emerging markets, probably on the back of the weakening dollar. For the longer term, we are still we do like emerging markets in europe, but more of the longerterm, taking a few month view. We do think the u. S. Is probably going to prove to be a little more resilient, a little bit more adaptable to the changing environments that we are entering into. There is probably still a major that a lot ofrade businesses need to engage in. Are questions around a new trade war between the u. S. And china. We are still in Campaign Season for the president ial election. Over the six month to 18 month horizon, we are still preferring to keep a little closer to home when it comes to writing this risk rally. You mentioned the potential for trade war, etc. Do you see those as a meaningful tail risk for the markets . Had grumblings with regards to the u. S. China tension. We had a lot of concern about who the next president will be, whether it will be a continuation of the Current Administration or something new. Of course, you have the protests that have engulfed this nation. The market has shrugged that off pretty consistently. Are those events going to have any meaningful Economic Impact that will sway people in a way to abandon their optimism . It is our view is that probably not. That is not to say that peoples fears cannot get the best of euphoria can get the best of investors as well, right . When it comes to what is the likely outcome for the upcoming election, we are probably still going to get gridlock of some form, which means it is kind of the status quo when it comes to issues like, say, tax policy. Maybe things could change on the margin. The regulatory front, if we get a change in the white house. But that is not necessarily a foregone conclusion. I do not think that anything on the political front is necessarily going to really worry investors too much, except for perhaps on the margin, and even the trade war, there is going to be likely a lot of talk, but a big disconnect between what is said and what is done. Investors, i think, recognize from 2018 through 2019 that there can be a lot of words thrown around back and forth, but that does not necessarily mean there is going to be a lot of action. We dont expect more big deals, but we do think the parties are at least committed to the current deal in place, and that should be good enough. Caroline good enough . We always look forward to that headline risk. The wells fargo as it strategist, brian jacobsen. That does it for the closing bell. Up next, we look at the protests continuing in the u. S. Caroline im Caroline Hyde alongside Romaine Bostick and taylor wiggs. This is what you missed. You see markets closing higher. At one point, the nasdaq hitting an alltime record. Money flowing into riskier assets. Defending have protest positions. U. S. Secretary esper breaks with President Trump in terms of their view on where to deploy active troops as protests continue in the u. S. And across the globe. More coming up. And stimulus booster. The ecb is expected to announce yet more money for emergency programs tomorrow. We discuss why this is crucial for markets. That and so much more, coming up. Ellison general keith in minnesota has been speaking about the george floyd case. We understand that has been increased action taken on the Police Officers involved in the killing of george floyd. Romaine, your take on what is being discussed and what happens to be some disagreement at the top when it comes to the administration and the deployment of forces. Romaine that will be interesting. We heard from Amy Klobuchar earlier about the charges being upgraded on that particular officer, and new initial charges being filed on three other officers who were at the scene of the arrest. When you look at the protests and you look at the response by local authorities as well as the federal government, there has been a bit of a tension as to how you address this. Do address it with force . Do you address it in some other way that could potentially be constructive here . But now you have a country that is consumed by this, and it is obviously going to become a big issue Going Forward in the political realm, and whether it bleeds into the economy and the markets is another question. Caroline people asking us whether that is a tale risk they need to bring on board, what we are calling a potential martial law risk. Lets discuss the process further. Protests continue in the u. S. And worldwide after the killing of george floyd by the. Inneapolis police after the president threatened to send the u. S. Military to curb the protesters, secretary esper, the defense secretary, up with the action oppose the action, saying the National Guard is better suited to the job. We are joined by an assistant teacher at Carnegie Mellon university. Take, ons about your what is happening on the street and the emotion and tension that we see. There is partisanship. Will we see policymaking coming off the back of this that helps quell some of the anger and targets some of the issues at stake . Guest as you mentioned, it is a real tinderbox on the ground. There is no question tensions are high, and rightfully so. People are very angry. You have got numerous groups in the mix that are looking to take advantage, to seize this opportunity to promote their own agendas, some seeking like anarchist groups to wreak chaos on the ground. In terms of what actual policy changes we will see, i am hopeful that we will see this translate into something tangible, that we move toward some kind of Police Reform in this country. It is obvious, it has been obvious, that we have reached a breaking point in this country where we cannot continue any longer with this. Romaine when you talk about Police Reform, we have been down this road before. The Previous Administration had proposals out there that never made it to fruition. Other administrations in the past have also tried to do this. It is hard to do this at a federal level, given the autonomy that state and local jurisdictions have with regard to being able to maintain their own police forces. How do you thread the needle to have the heat coming from the federal side, when it is the local jurisdictions that need to address this . Guest that is a great point, that the same time, we managed to do it when we militarize the police. We made it happen then, when we pushed all these weapons and Tactical Gear down to the state and local level. Help providewe resources to mitigate violence . Caroline what do you think at the moment, colin, of the disagreements seemingly brewing at the top between the defense secretary on the route to quell protest, versus what the administration wants to deploy . Colin there is a clear divide right now. I think within the administration and within the country with large, there is divide about what the proper that we is to make sure are able to deescalate, right . That is the key rates key phrase, deescalate, not escalate. Spent sense, and i have my career studying insurgencies and counter insurgencies, the way to deescalate a conflict is not to respond with overwhelming force, but to listen, to seek to assuage grievances. That does not mean that you let anarchists and others parade throughout the city. Those people have to be countered and identified and arrested. That is necessary. But that is a small fraction of the protests we are seeing. The lions share of the people out there are protesting peacefully, and they want change, and we need change in this country. Romaine and that is a good point and is something we should reiterate. Obviously we show a lot of pictures of violence because to certain extent it makes for a better picture, but the majority of the folks out there, as we reported at bloomberg those protests have been peaceful. Collin, you have done a ton of research on terrorism and things that are more foreignbased, meaning the approach the u. S. Can take toward those sort of organizations that are not on our soil can be a little bit different. There are certain tactics we can use. When it is your own citizens on our own soil that you are trying to deal with, how does the government approach that in a way that does not, first of all, infringe on the rights of citizens, at the same time, does not create some of the objects we have seen over the past few weeks of violence being directed in either direction . Colin i would say for starters we do not exactly have a great track record of operating overseas if you look at how we handled iraq and afghanistan. But on those topics, i am going to use a phrase that is a bit hackneyed and somewhat wellworn, and that is winning hearts and minds. Why do we feel the need to go over and win hearts and minds and afghanistan, but not in detroit . Shouldnt we apply the same mentality . And frankly, shouldnt it be easier to operate on our own soil where we do not have liquid or culture barriers to mark we know how to fix the problems here. We need the political will to do it. Caroline the political will, we will see if it finds itself. Colin clark, Senior Research fellow, we thank you very much indeed. Meanwhile, the former u. S. Secretary of defense is weighed in, saying he commends mark esper, who opposed the use of active duty forces against protesters in different cities. Lets listen to an earlier bloomberg interview. I always found, as chief of staff, and then later as cia director and secretary of defense, that when facing a crisis and when facing a series of crises, as we are now, the best approach is to gather the National Security consult together and determine what the best strategy is to deal with each of these crises. And to develop options, obviously, to present to the president. But to try to develop at least a common strategy that everybody can support, and that is in the best interest of the country in terms of dealing with that crisis. I think this is a moment when the president needs to listen to the advice of his most experienced advisors. That is critically important at a time when you are facing this kind of serious threat to the country. You heard from the secretary of defense, but it was public. It was not behind closed doors. Is there any doubt the president has the authority to send in federal troops if he so chooses . There is this insurrection act. Asserthe president could the insurrection act. But again, this country has recognized that the purpose of our military is to be trained to confront foreign adversaries in combat, not to be used for riot control or Law Enforcement. Posssese, taught us clear theact made u. S. Military could not take the place of Law Enforcement. For that reason, i commend secretary of defense esper for taking the position he took, because military leaders almost in unison do not believe that our military ought to be used to fight our own people. It ought to be used to fight foreign enemies. David our federal troops even trained to do this, to pick up on your point . Are they trained to deal with crowd control, things like that . We have sadly in our history seen instances were military were not properly trained and we had tragic results, such as kent state. You know the territory well. Federal troops trained to be effective in this situation . Is this the best tool in the tool kit . Leon i dont believe it is. Military is tor engage in combat with a foreign adversary. That is what they are trained to do. They are not trained on riot control. They are not trained on crowd control. They are not trained on Law Enforcement. In this country, we believe that Law Enforcement ought to be left to the states and local communities, and that if necessary, obviously, the National Guard can support those efforts. They do get some training in that arena. Areu. S. Military forces trained primarily to engage in combat with an adversary, not to fight our own people. David we have a difficult problem i am sure you appreciate. The vast majority of protesters who are peaceful, are exercising their First Amendment rights to petition for redress of grievances that there are clearly some bad actors who are prone to violence or trying to instigate something. Put aside the federal military as a tool. What is the best way for the federal and state governments to sort those two things out, so we maintain law order, protect people and property, but also preserve the rights of those who want to peacefully protest that horrific instants out in minneapolis . Leon i think it would be preferable, rather than the president asserting that somehow he will take control of the situation if others dont i think the president ought to be offering Law Enforcement assistance to states and local communities, so that they can in fact determine whether or not there are criminal elements that are trying to take advantage of these protests. That is a Law Enforcement issue. That is an fbi issue. That is an intelligence issue, frankly. The federal government gets good intelligence on those that are trying to conduct those kinds of criminal activities. So that ought to be shared with state and local Law Enforcement, so that they can play the primary role in trying to maintain order in their communities and in their states. Leon panetta speaking, the former u. S. Secretary of defense, who also led the cia. We will be back in a moment. Romaine a key catalyst for we aremorrow expecting an answer to quite a few questions. What do you think is going to happen . Taylor all eyes are on the ecb meeting. Italy managed to sneak in another bond sale. Some of the demand the ecb is providing. You see 10 year yields down to about 155 basis points or so, really coming in. Use our record demand for the bond sale today. Italy really coming out with a strong sale. I want to widen this out to what this means for italy as we take a look at the ecb tomorrow, because italy has been buoyed by the e. U. s 750 billion euro plan ; pport all the regions regions comeback. They have bought a larger share of italys bonds then the size of the population. The capitald by economics cheap euro economist. The ecb seems to have one decision, and that is to extend and further that stimulus. Is that what you are seeing . Andrew yes, it is. A number of the senior members of the ecb governing board have said very strongly over the last week or so that they intend to extend and expand the program. We are guessing it will be a 500 billion euro increase on top of the 750 billion that has already been announced. They dont actually need to do it immediately because theyve only used about the third of the fund so far, but the markets have been looking ahead and seeing that the Funds Available wont last them until the end of the year, and i think they want to put to bed any concerns that they are not willing to do enough. Caroline clearly they want commitment from the Monetary Policy side. The news on the fiscal side, we had germany coming to an agreement between the cdu and the social democrats for a package. How important is it that the government reaffirm their commitment to spending as well, where they can . Coppers to spend rather than germany. Andrew i think it is essential. Even before the coronavirus crisis, most people felt Monetary Policy had reached the end of the road in terms of its ability to stimulate growth. Now, there is no question they need to run much bigger deficits, and it was only a question of time as to when germany would come up with another package. Remember back at the end of march they did away with their brakereak and the debt and decided to run a deficit of 5 of gdp or so. It is clear for some time it will be higher. It looks like they have reached an agreement of about another 3 of gdp. When you look at the grand ambitions that once existed for the european union, are we getting back to a place where we can be safe to assume that this experiment is going to continue and is going to evolve into something even working crate . Andrew i think we are at a place where we can see over the period of the crisis, this coronavirus crisis, at least through this year and most of next year, there is going to be andgh will behind the ecb fiscal side to make sure there is not a really significant of a blowout in sovereign bond spreads. The longerterm question is still there. To what extent will the politics be supportive of greater european integration in the long term, which means sharing fiscal policy it means fiscal transfers. It means the ecb acting for the euro zone as a whole, rather than trying to hold different governments to account. Are political issues as much as economic issues. I suspect they will come back again over the medium term. It is quite good on the policy side. Economic outlook is so dreadful. Caroline we will see if the euro will continue on its upward trajectory. Our thanks to Andrew Kennington kenningham. Continued installation escalation of tensions between the two largest economies. Trump considering suspending passenger flights from Chinese Airlines. This is really interesting. The jump in administration came out and said effective june 16, they were going to halt chinese carriers given that u. S. Carriers had not been able to reenter the chinese market. After hours, we are seeing some slipping but earlier, you had all of these airlines jumping throughout the trading session. While it ramps up tensions, this could be a boost for the airlines. Given there is less competition from some of these chinese carriers. I want to take a look at a chart here. This comes at a very welcome time. The Airline Index has been hit hard whether pandemic with known traveling. Then, of course, the double enemy. China has prevented u. S. Carriers from restarting service in china. There airlines have been operating here in the u. S. U. S. Airlines have been shut out from china, all of this tension we can discuss further with alan. What does this mean . There islands the airlines were up earlier. Allen thank you. The consensus among my colleagues who covered the sector is that the move in airline shares has relatively mood. Ofre is broader indications their sector rebounding. If anything, that is what is triggering this. Andnumber of china flights the revenue is a relatively for theece of the pie industry at least. The industry in this massive downturn they suffered. Us about the steps that are being taken and how important it is in terms of the implications between the trade tensions we see at play as well. Acrosse this as a shot the bow at the two countries. In the backdrop, you have President Trump blaming china virus. Outbreak of the tensions overased actions in hong kong. In recent days, there are threats over china not buying u. S. Soybeans. Now you throw this into the mix. It is one more straw on the camels back. We are getting some indications that that was starting to get back up into production and even get that certification. When we talk about the broader aircraft industry, all the suppliers that are dependent on boeing, i does a move like this made by the Trump Administration potentially reverberate . Boeing was not mentioned by the department of transportation. It is in the back of everybodys mind. Boeing has a huge order book in china. Hundreds of aircraft on order. If the trade tensions ramp up and it spreads to the aircraft industry and china starts to did she recallr that the 737 max has been grounded for a year. That can have huge implications Going Forward. About whaten we Talk Industries have gotten out of the fiscal bill out of washington, we did not get an Airline Industry willing to set to accept the terms of that. Is the Airline Industry and aircraft industry in a space where it can function without that type of support . That is a significant question Going Forward. Gotenger carriers with amately 50 billion few billion thrown in for some of their subcontractors. Accepted. At has been that is essentially payroll money. The airlines had to give up some. Tock it will eventually pay for the airline employees but only from september 30. The other 25 billion is in loans. It is unclear whether the airlines will take that money or not. Some of them have been quite successful in going into the bond market or raising capital in another way. Then the bigger question is what they will do the rest of the year. The trend and traffic is down right now. They will definitely need some more aid. Lets get you even more breaking news. We have the agreement from the German Coalition on further stimulus. This is to the tune of 130 billion euros. They managed to broker this deal. They will have taxable is for companies, car sale incentives and myth and aid to municipalities. Lets get more from first word news. George floyd mattered, his life had value and we will seek justice. Mr. Ellison announced that will beagainst derek upgraded to seconddegree murder. And three other officers will be charged with aiding and abetting. Chauvin knelt on his neck for more than eight minutes. Job esper is secure in his for now after the pentagon chief publicly opposed the diploma of activeduty protests enforcements to handle the protests. Speaking to reporters, the secretary said that should be a matter of last resort and that the National Guard is better suited to the job. Per hisident viewed as remarks as out of line. When asked about it, the press secretary said should the president lose faith, we will all learn about that in the future. The World Health Organization says it will restart an International Trial using hydroxychloroquine to treat covid19 patients. Questions arose about a study linking the drug to increased death and heart risks. President trump touted hydroxychloroquine, saying he is taking it as a preventative against the coronavirus. Rosenstein is defending his decision to appoint a special counsel to scrutinize ties between the Trump Campaign and russia. He testified before the sender just Senate Judiciary committee today. I was concerned that the public would not have confidence in the investigation and that the acting fbi director was not the right person to lead it. I decided that appointing a special counsel was the best way to complete the investigation appropriately and to promote Public Confidence in its conclusions. Republican allies of President Trump have taken fresh aim at the investigation. News, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton, this is bloomberg. As more state sees lockdown restrictions, experts are warning about a potential second wave of the coronavirus. Francine lacqua spoke a little assistantth an professor of emergency medicine over at john hopkins university. A High Percentage are in effort americans. There has been some writing and some looting. Places where the virus can spread easier. Pepper spray and all that can spread the virus. These are all large gatherings. Thesew that while protests are important, they will be transmission events and we have to be ready for that. Black americans are dying of covid19 at three times the rate of white people. Do we know why . Probably some injustices and systematic biases in our justice system. Covid19 isnow that good at exacerbating already challengessystematic and systematic injustices. A group ofng americans who are already affected negatively affected by the assisting Health Care System andy existing Health Care System and covid19 is exacerbating that. If we get a second wave, when will covid19 hit us . Second waves are hard to predict given that our toolkit is still limited. We still do have some challenges with testing. We are expecting to see a second wave. I think as we talked about before, these protests will eventually speed up the timeline for a second wave. People are going right back to what they did before covid. It is to religion know when we will see a second wave. This was quote unquote, normal. We will see large jumps in cases. If we start to see the numbers creep up again, we may have to reand lament some of the approaches that we have taken previously. A check of the latest business flash headlines right now. Those who have symptoms of the beters will virus will allowed to stay home. Is the latest sign that the u. S. Housing market is held up during the pandemic. Applications for home mortgages were 50 last week. They are up 52 . The biggest seven we jump week jump since 1994. In japan, softbank started a 100 million fund that will exclusively invest in companies owned by people of color. Softbank also says it will adopt an initiative internally to aid people of color. That is your business flash update. We want to continue on what is happening in terms of germany and the money they are bringing to their fiscally. They will temporarily lower value added tax. That would be until the end of 2020. This on top of a 130 billion euro fiscal stimulus package that was agreed by merkels coalition today. We will continue to bring you all of the updated headlines when it comes to further stimulus from germany. For now, lets get over to the smart chart. Abigail this week is all about stocks and gold. Louise, great to have you with us. Especially right now, i think you might agree that there is a possibility that this is a bear market rally. We will leave that conversation a better time. What are you same relative to the markets before we take a look at the charts . I think one thing we have to realize is we have been looking for the possibility of some broader within the market. I think the relative up that we have seen in the industrial suggests that is offering part of it. Lets take a look at the chart longerterm. Notice it has been 2017. Erforming since specifically in this downtrend of relative performance versus the s p. It broke a tenure support level. It really moved into a structural underperformance trend in 2019. At the moment, we are getting a kickback rally. If we look inside we have to recognize that it is very selective names that are actually lifting out of consolidations and moving to new highs for what we would call breakouts with corresponding highs in their individual stock relative performance. A lot of the stocks in this group are not outperforming but there are enough to offer a broadening to the overall stock market. The industrial sector is something that we played with in the mid90s. When we dubbed old tech, new tech. This week, we considered the new high technology, it became the new tech and it has been a growing sector from around 11 20 7 . That is in the same time frame. Industrials went from 40 . That is what we have right now. I think this is an interesting rally. I think one has to be selective in the stocks that you choose. Especially with the industrial sector. It is interesting to look at that massive breakdown relative to the s p 500. The industrial sector is up what he 5 . Up a little more than the s p 500 itself. It will be interesting to see how that plays out. A great hedge for any stock portfolio when the trend is toward gold. Talk about gold with this longerterm chart that you have which appears to have some sort of longterm bottoming pattern in it. It has a nice, sixyear rounding bottom. It has met our break out 1400. 1500, met the target at 1600, 17 hundred. It almost made it to 1800. That takes you back to the 2012 hi. I think having been up 20 from march, we could see a little consolidation here. Especially if some more interest comes into broadening in the stock markets. The pullback could pull back to 1650, a be even 1600. That is where the first uptrend comes into place. Over the longterm, this continues to look like a place that we want to pick up as the price pulls back. Very interesting. It is very interesting in terms of gold. It looks like you could have a little been of consolidation down toward the 1600 level that youre talking about. You can see that over the long term, it would rally to new alltime highs. That was louise, thank you so much for joining us. From new york, this is bloomberg. Romaine welcome back. Breaking news. Activeduty troops were sent to washington dc. Mark esper said he was going to withdraw those trips and he has since withdrawn that decision. Lets get back to what is happening in the economy. Joe weisenthal is year. Here. To get thatcting massive on appointment number on friday. We got a taste of what he could bring and it was not as bad as some people thought. One of the objectively better the adpwe got was Employment Payroll numbers. It is all proprietary data. It was still around this. It showed a loss of 2. 7 million jobs for may. The economist had expected a loss of 9 million. That is a very big gap. The caveat is that adp does not necessarily correlate with the official payroll report as much as we would like. Nonetheless, it might offer some help that people are returning to work quicker. There may be some people who are starting to come back to their previous old job. There is some help there. Women and people of color have been losing their jobs. The next wave of cuts are going to the higher paid workers as well. A lot of it is the people will get their jobs back but there is no saying that it will be too far. It seems very likely that the end of the locked and will mean some millions of people will presumably come off the unemployment rolls and go back place oflow employment. Whether it is restaurant or salons or other areas directly affected by the shelterinplace inquiry meant requirements. There have been management, other suppliers who have taken a hit to their revenue. Madehem, the way they their money is by cutting workers, office workers. Often, higher paid workers, workers who salaries wont be replaced by the unappointed insurance. Onwhen you look at the employment expectations and economic recovery, the gdp expectations, theres or disjointed. To unappointed picture has improve much faster than some people think. It is pretty extraordinary, there is this gap because you see optimistic expectations on 10 unemployment toward the end of the year. Joe weisenthal, always great to get your take. We thank you. Meanwhile come from new york, that is all from us. Bloomberg technology is next up in the united states. We will be right back. Welcome to bloomberg, i am emily chang in san francisco. Global stocks extending a rally now. Eight days in row that investors are holding out hope for a quick economic recovery. Experts are warning of a second wave of job losses as tensions between the u. S. And china continue to escalate. Trump administration suspending passengers to the u. S. By Chinese Airlines in retaliati