Level north of 50. New orders are very positive, 31. 8 was last time around. Significant beat with prices paid better than expected and unemployment picking up as well. Unemployment, this is what we are seeing in europe as well. Headlight numbers are good, but the unemployment numbers are quite weak and remain so it is a cause for concern. Yes, its an improvement but a while things pick up around the world what you are not seeing is full employment and a lot of companies are beginning to lay off people. You are seeing that in the data here. Alix and the question of who recovers less, that will be the next question. Breaking down the numbers even more, Michael Mckee joins us now. We had the headline numbers, but to guess a little deeper. Mike there is work to do out there. Diffusion indexes compare one month with another. This is the difference between june and may and at this point it looks like we saw a rebound andune from the dismal may april numbers. As this continues its going to be hard to know at this point. Looking at inventories, they didnt change that much. Doesnt look like the are toessarily out of products sell, suggesting a big rebound in production going ahead, with new export orders remaining below the 50 level. Not a lot of business, but significantly more than there was last month, thats what you take away from this. We will have to see how employment figures in to the estimates of whats going to happen tomorrow with the manufacturing portion of the payroll records. Guy absolutely, and in some ways regional surveys had alluded to the fact we were seeing a bounceback in the manufacturing sector, but employment is a critical factor and is likely to remain so for the rest of this year. What happens with those numbers i think will determine government policy in a meaningful way. Mike, as ever, thank you for breaking down the numbers for us. Lets get a reaction to the data that we are seeing around the world. Goldman sachs asset management, with the postcio of Liquidity Solutions joining us now to give us his take on this. What are you seeing in terms of data . What is it telling you about the direction of travel . Thanks so much for having me. The first thing you have to remember about this data is what you have in highlighting. This is diffusion data. We know that things are Getting Better as people come out of quarantine. And you know, frankly, any of the nearterm data is going to be noisy, including the Employment Data that we see tomorrow. I think you just have to look past all of this. The data that is going to be the most important is as Companies Start reporting, look at how much cash they have burned. If a company is under challenge from covid and they have been burning a lot of cash, thats a real problem that they will have to address and thats going to move markets. Good point. Such a i thought youre going to see jobs numbers, so its interesting that you said job cash burn. That previous month being revised up by 6 million jobs . When you have these kinds of revisions, how does that make any sense . It tells you how difficult forecasting is at a time when there is so much change. We will look back at this and the covid shock will have opened up the great acceleration. So, when things are moving this quickly, trying to look at nearterm numbers to make Investment Decisions is a bad idea. You need to look forward and be asking yourself whats going to and 12 months from now invest for the long term. Guy talking about another problematic factor here, since the data was corelated we have seen a different term when it comes to whats happening with the virus. The virus lives moves at one rate and the data happens at another increasingly in the rearview mirror. How problematic is that again in terms of the way that we think about these numbers . I think that you highlight a really important point, which is that we are seeing very rapid change. We knew that this was going to be a very bumpy road to recovery. Everything we have seen so far, thenumber of times we used term unprecedented or unbelievable when it comes to the things we have experienced over the last six months has been absolutely astounding. I think that when it comes to thinking about the changes in the path of the virus, the most important thing to remember here is that it is not actually the virus that is causing the economic mayhem. It is the policy response to contain the virus. So, its important that as the system learns how to deal with and protect people from the using ideally we wont be the blunt force instruments that we had to two or three months ago. You see that playing out in states like texas and florida, where they are being more nuanced in the approaches that they are taking and what we have learned on the medical side alone has been helpful in terms of treating patients and reducing the risk that comes from the virus. Said im glad that you policy response. It feels to me that the take that is coming is who did it right. We saw the negative numbers from germany, we dealt with that in the u. S. , but it feels like the consensus that is emerging is that europe did it better. That they outperformed on the others. How do you think about that . Sure. I feel that the u. S. Will have had many individual responses in terms of the policy approach that has been taken. Those lessons will come after we have gone through the majority of the crisis. People are questioning whether the right actions were taken early on. If you start to bring it back to kind of financial markets, interestingly the policy approach used across the central hass and the fiscal side been reasonably coordinated. Out there hasbank been really focused on easing the liquidity shock coupled with the growth shock that has been covid. That has been a lesson from prior crises when maybe Central Banks were too timid out of the gate in directing the shot at the economy. Up the policyht response. From the federal reserve, are you expecting any hits on yield control . Is this a policy direction the fed wants to go in . Are we there in terms of pricing it or are there implications in terms of the yield term and other assets that are not already factored in . Question. Great its premature to have the fed coming out with a policy statement around Interest Rates. Yield curve control is a good way to articulate to go Forward Strategy as tension lee different from what they are doing exactly today. Settling into a steady buying and they are extending their Balance Sheet at a healthy pace, the Balance Sheet alluding by 3. 2 trillion, providing a lot of liquidity for consumers, companies, and countries to be able to solve this liquidity gap that covid has created. Going forward if they feel that volatility and Interest Rates are not reflecting a likely path , they will start to articulate something that looks more like volume relative to price curve control. But at this stage the market is pricing in very much that the fed is going to be on hold and they will stay on hold until they see the whites of the eyes of inflation and that is going to be several years from now. Alix inadvertent yield control seems to be anchoring the frontend. Do we go to zero here . Is there a yield . Is that going to happen . Yeah, look, we are essentially there. The real question now is whether the fed has an appetite to go below zero and at this stage unlike other global Central Banks they have the flexibility sizerchase assets in a that makes going below zero very unappealing. Resortrtainly a last they dont have to contemplate at this stage. Two things that could end up leading them down that path, you know, obviously greater severity or a follow along shock unrelated to growth that could lead them to consider lower Interest Rates or negative Interest Rates. The importantly, if, if federal government doesnt continue to run deficit spending at a pace that allows the fed to expand its Balance Sheet at the pace that it would like to, they will have to consider negative Interest Rates. But we are so far away from that this stage, its not even worth a discussion. All right, great, really great to cap to catch up with you. Great to chat. Coming up, the virus story is next. Shares up after an early German Biotech Company shows promise and powell says it all depends on the path of the virus. We will break that down next. This is bloomberg. The numbers speak for themselves. Im very concerned. If you look at the curve of the new cases, we have really got to do something about that and we need to do it quickly. The short answer to your question is that clearly we are not in control right now. That was dr. Anthony fauci yesterday testifying to members of congress. Now we are getting the latest headlines on the virus here in new york with bill de blasio saying that new york state will be double delaying indoor dining. New jersey did something similar. Should also point out that the for is backing off on plans returns after the surge of the virus but we did get reports that early trials of a vaccine that pfizer is developing is showing promise. Sam, and what does the promise mean for this vaccine . Looking at the paper that has come out, they have basically responses in the participants that were vaccinated. And took a bunch of people they vaccinated them. The individuals showed an immune response. Thats it. Promising but very, very early. Guy dealing with the details here, how strong of an antibody response to these vaccines have to produce to be deemed successful . Whether wondering, sam, an antibody response is enough or whether or not we need a stronger antibody response or the right antibody response. Where there doesnt need to be that detail. Can you help me . I wish i could. I dont think anyone can prove it until they have a field trial with thousands of people, looking at those who got infected versus those who didnt get the vaccine. In this case what you can do is compare the number of antibodies with what you have seen in the blood of patients who have recovered. Case of this particular study, one of the few human studies, it shows that it can be 1, 2, 3 or higher in terms of antibodies. But that still doesnt mean that this is protection. And it also doesnt mean that its a longlasting protection. But it certainly a good first step. Alix there you go. I think you raise over the good point. Just because we get a headline that says it shows promise, that doesnt mean its a foolproof perfect vaccine. I wonder, the more the headline crosses optimism, does that take out the structural changes that we as people need to implement to move past the virus . Sure. If we get a vaccine that protects us, even if it is one that doesnt necessarily clear our infections but makes us less then of coursee, we can just move on and get on with our lives. That is what we are all waiting for. Guy ok. Sam, do you think that that is what is realistically possible . I listened to the testimony from dr. Fauci, to what the british Prime Minister said. The expectation seemed to be that we wont have an effective vaccine until much later on in the winter at the earliest. And then im wondering as well whether these first round vaccines are going to do what you just said, allow us to get on with our normal lives. Is that where we are heading . What kind of timeline are we looking at and when we get the vaccines, will they allow us to return to our normal lives . A very good question. We have the u. K. Parliamentary select committee and Vaccine Task Force run by an amazing lady called kate gingham , who is a managing director. They were being quizzed by various folks on the government side on that exact same thing. If answer seemed to be that the other vaccines that they are developing, like the one at imperial college, similar to one that pfizer is developing, similar to the one that modernity is developing, similar if the oxfordme, university and astrazeneca vaccines, where they were on the podium discussing, they seemed to be more optimistic about hitting something available by the end of the year. A lot of that depends on what regulators want from these people. If we look at the guidelines from yesterday, they seemed to be pretty onerous. Work doneave to before the end of the year. Guy and then we tied a line between what you just said and what mayor de blasio said about restaurants and we wonder whats going to happen this winter. Sam, thank you for joining us on the line. Lets switch to one of our other main stories, the new reality in hong kong. Beenpeople have already arrested for violating the new National Security from chinese lawmakers lesson 24 hours ago. We will talk about the escalating tension, next. This is bloomberg. Guy Boris Johnson spoke to the house a little earlier on talking about the u. K. Response to whats happening and we are getting mike pompeo, the u. S. Secretary of state, speaking live now as well. Kong asdescribed hong just another communist run city now, saying that the u. S. Will end Hong Kong Special status. Joining us now, Jodi Schneider to give us her thoughts on what is happening here. Jody, that seems like a significant development. Ending special status for hong ofg brings with it all kinds implications, including for the hong kong dollar. Walk us through the significance of what we are hearing from the u. S. Secretary of state. That is a significant element. He had already determined that hong kong was no longer autonomous, up to and including ending special status, but ending the special status would end a lot of trade preferences and really discourage u. S. Companies from being in hong kong and it would impact all kinds of things. Has made a lot of threats about what it would do with hong kong. It is obviously at odds with china on a number of issues. Undoing the special status would be highly significant. We only have about 30 seconds, but if im a Company Operating in hong kong, a u. S. Company, what am i supposed to do . There are a lot of questions. It just took effect. While we knew it was coming, we didnt know the details. Now we are finding that out and the first arrests have been made under it of people who were protesting today, calling for independence. That seems to be an obvious redline. The question is, for companies, how much is this going to threaten their ability to do business here, what will change, how quickly will it change . This is something that all companies doing business here are really starting to look at. Other things remain that make it a difficult place to do business where they look the other way with these other freedoms. Alix we have to leave it there. Thanks a lot, bloombergs Jodi Schneider. This is bloomberg. From london, im guy johnson parting alix steel in new york. Waiting for the crude inventory report. Alix we are waiting for that across. Headline, paulson will convert its hedge fund to a Family Office bearing 80 of assets but totallyowned, closing to outsiders. John paulson will convert officially into a Family Office. Oil inventories dropping. Inventories 27. 1 Million Barrels, slightly less than estimated. Cushing inventories drew. Gasoline inventories increased by 1. 2 million as economies opened up, and then, pulled back. We are seeing that in the gasoline inventory. Refiners picked up as well. They are making more product. If they dont have the drivers, it will be difficult to draw down on those inventories. For more on oil after its best quarter in decades, we are joined by jess. Just to start off on the oil picture. Where are we in supply and demand as we start the Third Quarter after oil had that big rebound in the second . Deficit, in a slight an indication of the rally and prices on the tightness and the time stretch. From a trading perspective, we would argue on the high side. We are sticking with our 35 a barrel on a nearterm basis. We are bullish further out into next year, however, commodities cannot price in expectations. If the prices go to high, it will disrupt the rebalancing process. In terms of looking at the overall balance, we will look at demand. Since the covid crisis began, we are down to 10 Million Barrels a day. As you pointed out, the gasoline market are looking good and strong in terms of recovery, however, with the second wave hitting texas and florida, gasoline demand in those two states are down week over week. That is concerning. Turning to the supplyside on opec, it is slightly more bullish than expected. Libya has yet to recover as many have expected. On shale them of the question really is, are we going to see a rebound in production . On the High Frequency data, that would suggest that is the case, but be reserve judgment on that. Companies say they will bring that back online. That will be the key to drive the market lower. Jeff, you are basically saying we are in the United States, five bucks ahead of fundamentals. Is that what you are telling me here . The price is indicating a yield target of around 35 . And what needs to happen to narrow that spread to get us back in line with fundamentals . Jeff i think one of the factors that has driven the market fundamentals is the weakness in the dollar in the sector location towards cyclicals. This is my fifth cycle in commodities, and the one thing i have consistently underestimated over and over is that rotation, when you have strong emergingmarket demand growth and Global Growth as you can out of one of these crises of the weakness of the dollar puts a lot of pressure on commodities. You see it in metals. Metals have real strong fundamental supporting them. Oil, on the flipside, is being pushed up. The one caveat that is keeping the market at much stronger levels, i would argue is going on in the macro bases and the weakness in the dollar has helped support commodities. Alix im glad you brought that up. I wanted to talk about copper. Yesterday, when we see a selloff, coppers not participating in that. Grind higher. We a