July. It is the last week in july and we are running out of Unemployment Benefits and the rent is due august 1. There is a lot going on. Francine we will spend a lot of time on that. Lets get to first word news gupta. Itika group unveileditch mcconnell the new relief package, listing unemployment to 70 of prepandemic wages. Makes to pelosi panned that proposal. Health officials around the world are getting a reminder of how tough it is to permanently stamp out coronavirus. They are grappling with second waves of the pandemic. China reported the most cases since midmarch, and spain is scrambling to stay ahead of new outbreaks. Posed a new imposing new quarantine on travelers from there. Will stay near zero for a longer while. Policymakers open the twoday meeting tomorrow. The last day they met was in early june. Florida and california have yet to see the surges have that if that that have afflicted them since then. China eagle authorities following the closure, the latest development in the deterioration of relations between the two countries. The u. S. Lowered its flag over the consulate, two days after force the closing of its consulate in houston. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, im ritika gupta. This is bloomberg. Tom thanks so much. Equities, bonds, currencies, commodities. Dollar weaker, gold stronger. I will let francine talk about that. Wonder on the screen is the the one number not on the screen is inflation adjustment. Through,it has burst 0. 92. I never thought we would get there, but that is where we are with the yield structure that is lower. The 10 year yield,. 57. Yields are lower this morning, francine. Francine yields are lower, tom. Im also looking at gold piercing through this record, the dollar sinking, european stocks are a little bit under pressure, only down to 0. 2 . And i think is really interesting story. Sinceiggest increase april. We have not talked about bitcoin. We will have to talk about that in the next few hours. Bitcoin climbing back above 10,000. This is in part due to a second wave, or the first wave of coronavirus that has not gone away. It is also due in part to u. S. China tensions that simmer. To simila earlier today the u. S. Has says it has closed its consulate in chengdu. Bloomberg now is our chief asia economics correspondent. Ray dalio said that we do not know how far the u. S. Will go and that this could be extreme the dangers for the dollar. Talk to us about how each side, how much there is appetite to escalate this. Good morning, francine. I think there is a feeling along everyone watching this that there is no floor in u. S. China relations at the moment. We had the flag come down in the isngdu mission, and that weakening relations between the powers. The fear now is that ray dalio has spoken for the dollar, and there is probably more technology restrictions. I think ultimately Big Companies are getting caught up in the mix one way or another. Even if they dont want to. It is all adding up to backing up that one from hank paulson a couple of years ago when he warned of tensions between the u. S. And china. A lot of people i spoke to are making the same point. Francine what is the one thing you are watching out for in the next couple of days and weeks . If it does ratchet up, will it be quickly, or will there be some kind of retaliation from the chinese come september . Enda even to those who are skeptical, to begin with, we have some veteran china watchers making the point that with the amount of rhetoric we heard especially from the secretary of state, it doesnt qualify as a declaration of effectively cold war, so i think people are effectively expecting anything to happen over the months leading up to the u. S. Election on the u. S. Side as further measures will be coming. To your point as well that china has made it clear that they will retaliate in kind, they have already promised for some sanctions on Lockheed Martin for planned dealings with taiwan, and they are targeting u. S. Auto companies as well. Measures coming from the chinese side or the u. S. Side, we can inspect retail retaliation from china as well. Tom have we seen anybody in hong kong change their behavior . Have we seen any american or european financial or Industrial Companies change their behavior in hong kong . Enda i think there has been a change of sentiment for sure. We had a survey recently from the American Chamber which made it clear that their members are quite concerned about developments here in hong kong, and of course we know that some of the big tank here some of the big banks here made their money in hsbc and standard chartered, they were forced to laws inthe new security hong kong. There has been a dampening sentiment on business here, and at the same time, china is doubling down on hong kong as a financial marketplace. We are seeing some Big Chinese Companies listing on the exchange here with stronger flows of money from the mainland. While sentiment has shifted, the position of hong kong as a position of capital has not changed. Tom that is really one that is really where i wanted to go. Are you seeing and influence chinese into hong kong where rents or vacancies have the the not moved . Enda that is a difficult one with the travel restrictions in china. Some passes for Business People moving back and forth. More broadly, real estate is holding up a hong kong despite everything, despite a deep recession from the year we just had, the year of political unrest, uncertainty, and of course the coronavirus. Sideonsumption and retail of the hong kong story is not holding up, and that is very much due to the disappearance of mainland tourism. Francine enda, overall, it seems that president xi is not shy from fighting with countries like the u. K. And the u. S. What does that mean economically for how willing he is to support the economy in the meantime . Asa it is being described like you mentioned, it is not just u. S. And china, it is chinas on clashing with other pretrading partners, like australia and of course the u. K. Despite all of that, president tois preaching a message Foreign Companies and to multinationals that China Remains open for business, and it will do more to allow foreign competition. China was standing on the correct side of history there is a view that china sort of needs Foreign Companies, foreign knowhow or foreign capital, because the economy of course is something in a fairly stable but fragile recovery from the coronavirus. It has held off massive stimulus this year, but there is still the view that the government has to keep supporting the economy because it has a long way to go. The jobs market is quite fragile. We have seen another flareup of is a concern that for the authorities, too. China economy story is one of steady rebound but still a long way to go before a full recovery. Enda curran, thank you so much. Greatly appreciate it. Chief asia, our economics correspondent. We have much more coming up. James bevan will be with us. He will be here to talk about the equity markets this morning. We need to talk about them. Futures up 12. This is bloomberg. Good morning. Tom bloomberg surveillance. Ter dolla dollar weaker. 1. 20 99, moving sharply here in the last number of minutes. Watching. Careful the tenure inflationadjusted yield in tips statistic is now down through 2012 lows. 092. Here is another bombshell, joseph ellman, tim and kelsey at kelsey advisory group, where they put an outperform on amazon, from 2800 up to 3600. All you need to know it is up, up, up and outperform. We always outperform with james bevan, who is certain he does not own enough amazon. Extrapolationan forward of the successful bluechip platforms. Is that a dangerous game, or is it common sense . James it is massively dangerous. Make businesses can shareholders a lot of money over the longer term. My question whether the share prices are simply running too far ahead. The war of money that has come from the Federal Reserve and more recently the u. S. Government is clearly propelling stop isis to levels that i begin to anticipate becoming very from reality. Tom i want you to understand that james bevan has the best remote audio of anyone we have talked to since the beginning of the pandemic. Whatever you are doing at your studio there, it is meant. Mint. Is when we look at equity markets, are they delinked from gold and the equity markets . James as you identify earlier in the program, we are now looking at record low negative real yields from u. S. That seems almost oxymoronic, but there we are. They have been driven by extreme rebuying by the Federal Reserve, and gold has been a beneficiary. I think we anticipate there is some interesting technical factors kind the recent strengths of the gold price. Normally as you would be aware, futurespeople trade out intake cash delivery. Now i would observe there are surprisingly large numbers of people taking physical old, and there are far more futures contract in circulation than the availability of physical gold. So people who have to deliver on futures contracts have to go into the market. I think that there is therefore values perhaps at 40 billion, and that will keep the gold price going for some time. Francine james, will you be buying at these levels . Tom i dont buy gold james i dont buy gold or those currencies. I like the values based on calculating the future value of the cash flows i will receive as an investor. Very much as if i was with a private company, with a little block of gold sitting on my desk, i can put a price on it longterm. I would say that the gold price will come down as real confidence in the Global Economy returns and bond yields begin to rise once again. Francine if the economy is going to be much more sketchy than we thought it would because of a resurgence in cases in covid19, what do you buy then . James i certainly think there is still room to buy all that he and secular Growth Opportunities in equity space. I worry about the s p 500 index because 2010 times forward earnings, there is no room for error. However, if one is able to buy companies at reasonable valuations, so the second tier tell secondtier tech names, there is room. Simply living off the Free Cash Flow yields and therefore by extension the return returned from the Companies Invested in, i think that is very attractive. Tom to me the big that is what does the private money do . There are trillions of dollars sitting around doing nothing, trying to find a place to go. They start throwing in the towel and rationalizing a higher multiple to acquire . James i think that we are in a real risk of being in that bubble territory, tom. I think that would sow the seeds of its own destruction. It moves sideways as earnings catch up with the optimism baked into the earnings numbers. There,the numbers out the streak is looking at her 120 5000 in 2021. To 164 and the high 180s for 2022. That is very much a vshaped recovery in numbers. I think those numbers are woefully optimistic. I have 120 this year, 150 next year, and in a push i can get to 105 for 2022. The markets are expensive and this does not take into account the risk that we get, a serious risk between the u. S. And china as it emerges on the economic platform in the space, and also as the next biden president , i suspect that he would can you own the american banks and the european banks, with the shocking values that they are . James i think you can make a very good case of buying j. P. Morgan, to name but one, because as the worlds most successful bank, it is due to profitability for shareholders and i think that can be just justified. I did not think there was a make money for shelters. I think we are seeing genuine sides that the european economy can be turned around. More,e germany spending we have talked about crosscountry consolidation, which broadly means that each individual country, instead of them justifying what theyre doing, they can look at it as a block. The european banks will be the big beneficiaries, and not only in the euro system. Ubs is looking about as cheap as it has ever looked on fundamentals. It has a reasonable outlook. Francine thank you so much, james bevan. He stays with us. Coming up in the next hour, liam fox, former trade secretary. Andill talk about the rally we will talk about brexit. This is bloomberg. Ritika this is bloomberg surveillance. Lets get the Bloomberg Business flash. An alltime high, passing the previous record of 1921 dollars set in 2011 for gold. Has passed theld record in 2009. A u. S. Ipo of the Software Unit it requires a u. S. Company less than two years ago, the company a people keep a majority interest in politics. In four bloomberg learned there investors almost 100 million in its parent of china ant financial during its last round. Lamp funding one estimate says it could be valued at more than 200 billion. That is the bloomberg flesh. Francine thank you so much. This is what im looking at in the markets. Time and i spend a good amount of time talking about gold. Gold is significant because we can see if you look at stocks, it is pretty much missed, but now it is flatlining and the dollar is sinking. Don let me run through it now. Futures up 14 tom let me run through it. Futures up 14. The twoyour stunning under. 392. Nt you have seen that in the inflationadjusted 10 year tips in 0. 92. That is beneath the 2012 nadir. There is some Real Movement in lower yields this morning. On dollar index, you go to the through 1. 06, the euro was 1. 17, giving a little bit of that back. That means euroyen is indicating stronger yen, weaker euro. That was flipped about an hour ago. For than anything, folks, euroswissie is has really not done much. One thing surprising to me, we have not seen stronger swiss franc, without question. Today, pat foy of the mta in new york. What people are doing, how they are getting out or not getting out, across the great cities of the world. From london, and from patrick york, this is bloomberg. Good morning. You say the customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept. 5g, everybody is talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. We just have to make more corners in this building. Chad . Your wireless, your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch to Xfinity Mobile and save up to four hundred dollars a year on your wireless bill. Plus, get two hundred dollars off when you buy an eligible phone. But what if you could stdo better than that . K. 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. Francine this is bloomberg surveillance. We are having a conversation on gold with james bevan. James, what is in the bubble right now . James i would say very largely, all assets are driven by the actions of both Central Banks and governments. Central banks have poured money into markets and driven down bond yields, and that has necessarily driven of the evaluation of every asset that is available. I think that is what one has to think about, that when there is ultimately a correction, what assets will stand the test . I think the assets that return, and a link to the resale price index around the world, we should also link to the progress of the real economy in cyclical turns looking to be the best place. I say links to inflation, because i think we will have more deflation this year and likely next year. By 2022, i anticipate inflation will be back on the rise again. Rampant inflation, or just a bit of inflation . James i think inflation look at back to central bank targets of two percentage points. Of course relative to prior cycles it is modest, but against bond yields it is extraordinarily extravagant. That makes me very concerned about people who are buying bonds at current levels because the real rate of return that they will achieve on a 10year piece of european paper or a u. S. Paper or japanese paper is likely to be very miserable. Tom i look at the constraints that could be out there, whatever the call, lets say weak dollar. One of them to me is eurodollar. Do you have in your head with the understanding of largecap europe where strong euro becomes a constraint . I can figure it out. James i think that the strength of the euro is multidimensional, so not just eurodollar. European recovery has in the past and very much driven by domesticrough consumption. I would say the euro against the r b is important cross rate. We know that german motor cars purchased into china. We know that china is becoming more pricesensitive. Tom explained the link between china. We are completely focused on chinau. S. Explain the link of european prosperity with the multidimensional challenges of china. James lets unpack where some of the real challenges to china occur. I would say china interestingly has been very depended on inflows of foreign capital to keep its party going. I would suspect that quite a lot of people do not really appreciate the largesse of the Federal Reserve actually ended up supporting the reexpansion of china after the covid19 crisis. Money from the United States flowed into japans banks, and china and off singapore and australia, but also interestingly to the french banks, and the french banks lent onto china. Foreign capital has been very important. We have heard the stories about the risks, the standoff between china and the u. S. Evolved into a capital rather than simply a trade war. If that were to be so, everybody would lose. I would say that chinas demand for both import and its capacity to export would be much diminished. Interestingly, chinas recovery on my data is very much to do with exporting, and exporting of course has been disinflationary or deflationary for the product size of balance sheets. Europeans therefore have benefited from benefit from importing