Impact on Small Businesses is still unknown. Boris johnson announces a dramatic lifting of lockdown measures imposed in england as the u. K. s chief medical officer warns the virus will persist into 2021. Its just gone 6 00 a. M. In london, 7 00 a. M. In paris. This he question is why is Anthony Fauci talking about a disturbing surge . Are we preoccupied by the two magical words from Steve Mnuchin . We will exit the session at the end of the year, with 10 unemployment potentially. We are hanging our hats on the holy grail of hope, but the reality of real human hotspots in this covid crisis. Nejra yeah, absolutely. When you talk about the real human impact as well, yes, we look at the fact cases are surging in the transmission rate is actually above 1 according to some estimates. The real human impact is on jobs as well. There are really questions over when that support comes away in autumn, what that means for the jobs picture, not just for the u. S. But elsewhere as well. Manus no, you are bang on the money. The other narrative is listen to manny romans interview. He talks about being stunned by tech. Two months ago, it was going to be there. You have the stimulus narrative and the magical words from the rbnz, now looking at a broader range of monetary tools. We are not done on that front. Nejra on that policy front, it was interesting that manny roman saw u. S. Inflation will state for a long time before the fed raises rates. We are not getting a lot of impetus or direction today in terms of asian equities. Perhaps a touch of Risk Appetite, but nothing to write home about. U. S. Futures on the front foot after we saw gains in the u. S. Session yesterday. European futures in the red. Seeing a little bit of divergence in terms of the futures. Third day of dollar weakness which perhaps speak to some sort of cautious risk on coming through cross assets. The 10 year yield not doing a lot. Oil on the back foot after some signals of increasing stockpiles again. Manus lets dig deeper into it. The coronavirus search across is puttingstates the reopening narrative and plans in doubt. New cases have soared in places like texas, arizona, california. They all broke its record, california broke its record for new cases for the fourth time in the past week. Nejra top u. S. Health is puttig the reopening narrative and official Anthony Fauci noted a disturbing surge in new cases and reopening states and says the next couple of weeks will be critical to address this. He told lawmakers that he was cautiously optimistic a vaccine will be ready by the end of the year. Joining us for the hour is Georgina Taylor. Great to have you with us. Thanks for joining today. It is really interesting that we are seeing a reasonable amount of Risk Appetite across markets despite all the warning signs we have just talked about. How pro risk are you across your multiasset portfolio as you weigh out the second half of the year and the risks of a second wave . Georgina good morning. Thank you for having me. I think it is the dilemma we are all facing as investors right now. To look at the immediate in sense of the data coming through. Mathematical,he constructive turning countries back on in terms of manufacturing data, data yesterday that was encouraging. Putting that against the longerterm implications of all of this to say, yes, this is a second wave, potentially what you spoke about coming up. But also but the longterm consequences are of all of this. Portfolios, we want a new strategy to be honest. We can look across all different asset types and get into specific ideas and Investment Opportunities but that top level, very little direction exposure to equities. More to credit because theres a little bit of support their from the policy backdrop. Things like the dollar. We do like the dollar but very specific pairings with emerging markets. Perhaps that backdrop has changed a little bit. And then the appetite you are seeing in markets that perhaps some of the risk is increasing for the u. S. Specifically relative to the rest of the world. Not wanting to run too much directional risk at the moment because the risk around the in demand picture will surge again perhaps later in the year. Manus good morning to you. Lets begin we have a whole hour and we have lots of stra nds to discover. We will hear from manny roman in a moment. The nasdaq composite is up, record high. Manny roman says, from pimco, this is nothing short of its ordinary. I need people to start to define what tech is. Mega tech versus ordinary tech, versus health tech. Where does tech play for you . Georgina tech, for us, really from that top level looking down. It is two things. Firstly, it is playing into where demand has increased to a certain degree agreed a world where we find ourselves. People are starting to be able to justify the valuations attached to these companies, but also start to potentially increase some of their growth expectations that affect overall. But it also affects is this, if we want to term it, the growth of valley debate also linking with the policy backdrop. You do get an extended period of very low Interest Rates. Looking at the cash driven companies. Looking at where you can have some degree of confidence in cash flows that companies are delivering in the future. I think that still, with a number of investors, resonates that the tech sector captures all of those themes. Concernit is a bit of a because i think valuations have run away and i think everything being classed as a strong cash flow, various elements of technology we have to think about. I think investors have to be far more specific. I think from a stock picking perspective, you have to be more selective and continue to have exposure. Nejra on the specificity of your portfolio, with the rebound we have had particularly in equities through april and may from the march low, and as we continue to see lockdowns easing and accelerating around the world through the month of june. What would you say are the most important ideas that you have changed in the portfolio in the month of june of assessing the advent evolution of covid . Georgina i think from a toplevel perspective, we did a little bit before the increasing of exposure slightly to credit over equity. Acknowledging that the risk environment did change a little bit. Holding onto an increasing a little bit on the risk on exposure through the credit markets made some sense to us. I think that top level of equity markets is almost paring equities to say who are the winners and losers within this Global Environment in which we find ourselves. Adding a long position in australian equities, for example. Relative to being cautious in summer like india. We are thinking that relative value across equity markets. Manus we are going to dig into that. I like how you said dividend trades and aussie and volatility in hong kong and inflation in regards to europe. Georgina taylor, Invesco Asset management. I will get you up to speed with your first word news, because the u. K. Will see a dramatic lifting of the lockdown measures in july. The goal is to save the economy. The risk is it causes a second spike in infections. Speaking at a News Conference yesterday, Prime MinisterBoris Johnson was clear, he took full responsibility for that i decision. Officials warned the virus will be in the u. K. Until 2021. The European Union may choose to keep the door shut for americans as officials convene to assess easing control on the blocs external borders. One criteria upper escutcheon is reciprocity. It would mean u. S. Citizens are not allowed in because europeans are still barred from the u. S. 2an is struggling to trillion of virus aid. Funds40 of the budget is for cash handouts that have not reached people, despite being approved in late april. Only 14 have been let out to Small Businesses. For job protection subsidies, it is even worse. That number comes in at 6 . Global news 20 for hours a day on air at quicktake, powered by 2700 journalists and analysts in more than 120 countries. Nejra . Up,a manus, coming treasury secretary Steven Mnuchin is still upbeat about an economic recovery. Why he believes the u. S. Will be out of its recession by yearend. We will find out next, manus. Manus day three of bloomberg invest. Weve got more conversations at hand. Carson block will be speaking out against the german regulator market, blaming it in large part for its rolse in the rise of wirecard which has seen a spectacular fall over the last few days. Over 2 billion went missing. This is bloomberg. The u. S. Had yield curve control during world war ii. Exitafter the war, the from the yield curve control was very difficult, so it kind of ended in tiers. I think that is one of the main concerns of going this direction. I think there are more questions than answers right now. Was st. Louis fed president James Bullard on the possibility of yield curve control by the central bank. U. S. Treasury secretary Steven Mnuchin is finding an optimistic tone on the road to recovery. He believes the u. S. Could be out of recession by yearend. He told bloomberg a new stimulus package could come as early as next month. Has mnuchin the president been clear that we put a lot of money into the economy. We had an unprecedented response on a bipartisan basis in the last cares bill. There is no question that money is having a major impact on the economy. Whether it is the ppe, which impacted 50 million workers, or whether it is the direct on,ments of over 160 milli these are all having an important part of protecting American Workers and american business. I actually just left the Republican Senate lunch and we are beginning to discuss the different aspects of what another bill would look like. We want to take our time because, number one, there is money we still have not put out. Number two, we want to make sure whatever it is we are doing Going Forward is much more targeted to the businesses that are most impacted. Ing, you think it is likely sometime in july, they build my passed both houses . Sec. Mnunchchin that would be e timing. David right now, would you say the legislation is working reasonably well . Would you say the fed is doing as good a job as you would like them to do . They have a Lending Program that has not actually lent money. Can you say whether the president is happier today with the head of the Federal Reserve . Think thein i Federal Reserve has done a phenomenal job. We speak to them almost on a daily basis. These programs are a combination of work of the Federal Reserve and the treasury. I think we have worked very well together. Single one of these programs is up and running. We have a Municipal Bond program. We have a commercial paper program. We have a main program that is now up and running. We have a corporate primary and secondary. We have a program that lent to banks and nonbanks for ppe loans. The fed acted in unprecedented response. Yes, i think you have seen the president is very pleased with what the fed has been doing. David in this quarter, we have slipped into a recession, according to the natural bureau of Economic Research which makes the official determinations. Do you think by the end of this year, we might be out of a recession . Sec. Mnuchin i do, but the traditional economic metrics given really appropriate we shut down the economy. First, let me say they were way too many people that lost their jobs and got laid off. Again, we are not going to be done until we get every single one of those people back to work. So, i am not really focused on the technical issue of it is a recession or its not a recession. Im focused on helping all these Small Businesses and all the workers. Thats what our job i think you saw the recent employment numbers, people thought there would be another 8 Million People unemployed. We put 2. 5 million be able back to work. This is the ppe working. You saw great retail sales. I think you will see the economy had a very bad second quarter. I think you will see a spectacular rebound off the bottom in the third quarter. David you are one of the principal negotiators with Bob Lighthizer on a deal with china. Are you confident the chinese can honor the commitments to buy the products they agreed to from the u. S. . Sec. Mnuchin i have every expectation that they will. They have continued to tell as they will, as recently as last week when secretary pompeo met with one of the senior people that flew in from china. They had a summit. So, i have that expectation that they will lead up live up to their obligation. I think thethat, world wants a lot more transparency on covid. How did it start, how did it spread, how did it spread around the world and it didnt spread within china . We shouldnt confuse these two issues. Yes, we have expectations that they will live up to their trade agreements, but we have expectations they hav in a lot more transparency around the disease. Manus u. S. Treasury secretary Steven Mnuchin talking to david rubenstein. Joining us this morning is Georgina Taylor. I look at your positioning. Selective credit and high yield has been good to you. Listening to the treasury secretary, long the fed, long stimulus. Do you double up on credit here . Georgina i think its a risk. I think that everything they are doing from a policy standpoint is pretty impressive really around the world. I think what it potentially is missing is some of the structure balancing. A number of economies before the crisis even hit. One of those is looking at the strength of Balance Sheets and a lot of debt that has accumulated across the public sector, but the corporate sector as well. While we are quite happy with the credit exposure that we have, we are doing it in quite a selective and specific way in the portfolios. I think we would be reluctant to increase the assets weve had. Secondly, it is a little concern that some of those Balance Sheets stresses do come back to haunt the market at some point and weve got to be very mindful of that. Nejra yeah, interesting. One thing that you say also in your fund summer is that longterm u. S. Interest rates moved higher recently and that worked against your Interest Rate yield compression idea. Do you keep that yield compression idea in place in the u. S. . And do you combine it with an idea of curve steepening as well even though we heard from jim bullard that yield curve control might not work and whats the point of it if rates are going to stay low for such a long time in the market . Georgina i think the yield heme is really looking at the narrowing of the gap between u. S. Interest rates and the rest of the world, more specifically looking at u. S. Versus european rates. That is something that has played out over a multiyear period. There is no real reason why Interest Rates in the u. S. Should be so much higher given some of the stresses in the u. S. As they were in other places around the world. One of those being low inflation for longer and maybe an anchoring of shortterm Interest Rates. Something we hold onto his a theme. Certainly less available within that idea right now given the compression of Interest Rates around the world, but i think given the move in u. S. Interest rates you have had, i think there is still an opportunity to say that gap will still continue to reduce. Georgina taylor from Invesco Asset management stays with us. Coming up, Boris Johnson gives the green light for pubs in england to reopen next week, but scientists warned that the u. K. Must prepare for a second wave. We will discuss next. This is bloomberg. Betterl we have a understanding of the outcome of the 2020 election and we know whats going on, i think we should expect a lot of volatility for the next year. But lets be clear, markets have done quite well with all this uncertainty. Cashheres a huge pile of sitting on the sidelines. That money needs to be put to work. Nejra that was blackrock chairman and Ceo Larry Fink on market volatility. Lets turn to the u. K. And Boris Johnson announced july will see a dramatic lifting of britains lockdown. The uks top scientists were clear about the risks. The chief medical officer warning the public to plan for the long haul on the expectation the pandemic will persist at least until this time next year. Georgina taylor from Invesco Asset management still with us. You take warnings like that, the impacts we have seen other u. K. Economy. Bank of America Merrill lynch sees sterling behaving like an emerging market currency and the deficit will surge as high as 10 of duca economic output next year. That is a fairly bearish output on the pound. How bearish are you on the pound . Georgina we started to get more bearish. It was a very difficult currency to add into a portfolio because it felt as though it was trading on headlines and that is very difficult when you are trying to be a longerterm investor. As we have the negative exposure to sterling very recently, not only do we have the immediate sense of how we feel we can come out of this covid related crisis. Brexit is still looming in the background as well, cannot forget about that. Given the deficit problem, given two big risks now for the u. K. , we certainly are more cautious on sterling as it currency in the portfolio. Manus what does that