A whole bunch of other smart people set lower for longer. That is the message this morning. Futures up 19 but to me, the story is the bond market. As you know, those huge negative and persistent real yields. A range of assets and securities, it is interesting to see dollaryen breakdown. Still, equities are firmer on the day, futures up by 6 10 of 1 . We do this going into a battle down in washington, d. C. As long as it is just about size, we will have an agreement. These negotiations are now about thats great, but that means there is a timeline and i dont believe we have the luxury of a timeline because in the state of ,he economy, the unemployment the economic dynamics dont give you a comfortable august. Dont. Incentive to say we not negotiating until you negotiate. Right now, looks like new market is not picking up on it. There are some real nuances, maybe start off gold. Treasury yields down a basis point. Weve broken out of that sticky range for 0. 58 . The lows very much insight now. Comfortably up three quarters of 1 and it is that weaker dollar that people anticipated that is starting to materialize. Negative yields starting to bite. Gold, that is not relegated. A much, muchn stronger price. Weve got a market that is extraordinary and industry. The chief strategist of mystery joined us and what is great about Alicia Levine is academic behind trying to gain and guess the way forward. Thanks so much for joining john and me this morning. Do you buy the marginal share this morning . Yeah, but i think you dont buy it in tech. The message from the last couple of weeks is really interesting. 5 , and thewn over rest of the s p was actually up 5 , suggesting a broadening of the market and moving away from those parabolalike stocks that we have all talked about. I dont mean to interrupt, but this is so important. Do you rebalance by selling tech or do you put new cash to work . I think you have to sell a little tech. I think that the growth stock ant remain a core holding in overall Portfolio Allocation because going forward, growth will not be strong, it will be lower. That tends to outperform. If you look at it on a chart you dont suggest future gains in the near term. A forward common after the has not been matching with the stock prices have done. People just shaving. Not really dumping, but shaving, and that makes sense. You sell the winners and you reallocate. When is the last time you enter someone without meaning to interrupt them . When did that last happen . Nixon was president. Maybe lbj. Its ok, im a new yorker. I know, you can handle it. Im not worried about you at all. The rotation away from tech, lets continue this conversation. Out,talk about rotating asia, china, europe, much more so. Is there an argument to stay u. S. Based . Rest of the, the world is recovering faster than the u. S. Production inhe china, we saw it in the data coming out of china in the last week and we saw it coming out of europe. So the rest of the world is recovering faster. Valuations tend to be higher in the u. S. And i think you definitely have to have an allocation to europe but the softer dollar does argue for a cyclical tier in the u. S. Dollar is helping these Multinational Companies and Multinational Companies are exposed. U. S. ,ve to stay in the but i think asia is great and i think europe looks like a nice trading here. Will continue this conversation. Is the weaker dollar a symptom of the foreign influence or a driver of them . Matt is a really great technical question, thank you. I think it is a symptom and it lets gotom because back to first basis. The path of the recovery is going to track the path of the virus. Is that theve seen has economicirus activity flattening. Its not happening in other regions of the world. Therefore, they are recovering faster. Thursday, the claims data went in the wrong direction for the first time in 16 weeks, so we going to start feeling it here. I think the softer dollar is a reflection of that, not to mention yields are so low, it is that negative yield we were talking about all morning long. I think that the weaker dollar is a symptom. Is Dividend Growth a proxy for yield right now . Yes. Yes. Look, its interesting. Only 62 companies in the s p had actually cut dividends. I would have thought that would be more. Its interesting that they havent and part of that is due to the support from the fed supporting all those Different Levels of bonds here. Creating a situation where to have enough capital to pay dividends. The number of companies that , i find dividends really interesting, i would not have expected that three months ago. Alicia, what you think people actually do with their money . Im fascinated when i talk to you, about what the actual action is of people. What is the action right now . Defensive,on is very and thats why we remain cautiously bullish on this market. Positioning is defensive, the money market bonds,nvestmentgrade and that is really where the incremental trade is coming from. People are nervous to buy into this market. And as long as you still have that going on, it is a contrarian view, so therefore you have support under the market. Let me ask a stupid question. People are still buying stocks, they are just not going into tech in the same way. The last couple weeks was a cautionary sign that valuations do matter, ultimately and we have to take some of the excess out of it. Were seeing buying in equities, it is just the incremental trade still is bonds, gold, and fixed income. In two and i are separate cubicles. I hope to keep it that way. I can see that. Long chart ona amazon with some fancy moving mathematical averages. Come on. Iszon, all it has done fallen back to a very comfortable support. Its not a direction, it is almost like a pause. Dip in can you buy the the tech stock . Im asking. Jon where is the dip on the nasdaq over the last couple of weeks . We are still up near alltime highs. Im just trying to impress alicia with my math and all i see is amazon is backed with support. Alicia right. It is 12 off the high. Again, that is not a bad entry point for any stock after your 10 to 12 off the high. Thats fine. We dont think these stocks are rolling over, we just think some of the excess has to come out of it and charting is a great way to figure interest point. As ive said before, parabolas dont make for great technical charts. Jon always enjoy catching up with you. Are you throwing the shade . Jon i appreciate your tolerance for a certain someone who has a bowtie. For you throwing me some parabolic shade . I love one she is on, we talk. Jon we will hear from amazon, apple, and facebook. Good morning, lets get to the price action this morning. This monday, we are flying out of the gate. Lets get a quick feel for how things are building up this monday, it actually really, really interesting to see the bond yields come lower. Gold starts to break out and the effects market is capturing a weaker dollar once again. We are up a tense of 1 on a single currency. That, a bit of fuel for german business at a high since 2018. Incidentally, eurodollar highest since 2018. This is bloomberg surveillance. Mitch mcconnell today unveiled the latest republican Coronavirus Relief package you the white house plans to cut the weekly 600 unemployment boost to about . 70 70 of prepandemic wages. Health officials around the world are getting a reminder of how tough it is to permanently stamp out the coronavirus. China report of the most cases since midmarch and spain is scrambling to stay ahead of new outbreaks. Have takenhorities over the u. S. Consulate following its closure. That is the latest development in the deterioration of relations between the countries. This week, Jerome Powell is expected to reinforce his message that Interest Rates will stay near zero for a long while. The last time they met in early june, the count of coronavirus cases has stabilized with states like texas, florida, and california having yet to see the surges that have afflicted them since then. Americas Biggest Tech Companies have gone on a buying spree. Haveumber of acquisitions come at the fastest pace since 2015. That is despite steppedup scrutiny under the trump administration. Critics say the tech giants are beefing up their power. Global news 24 hours a day on air and quicktake on twitter. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Workers and americans understand the concept that you shouldnt be paid more to stay home than to work. Thats a fair thing is to replace wages and it just wouldnt be fair to use taxpayer dollars to pay more people to sit home than they would get working and get a job. Steve mnuchin on the fiscal backs of the merging in the United States. Tom, this is the debate. Philosophically, i did it. In the economy where the unemployed vastly exceed the jobs open, it is not an argument you can make right now that this is holding back supply. More broadly we have an economic issue and we have to offset the shock to income somehow, someway. But a percent of income idea is a brilliant idea and works beautifully at 7 income idea. The numbers change, it is clearly fairer. I believe it is operationally not possible. An in the u k, we have done program, 80 of your previous wage for a certain amount of months. In the United States if you want to do this, you have to roll it out across all the different state offices and to do that, weve seen even with a 600 enhance unemployment benefit, weve seen even that processing problems. Can you imagine the processing issues they would have with something more complex like this . Tom balance of power at 12 noon. This is going to be ongoing through the day and at bloomberg Washington Team to give you the flavor that we get on tuesday of this week and then maybe the republicans in some form have agreement. Gold, michael does really, really smart multiple access charts of the story behind a given theory. What is the story behind gold . Im starting to feel insecure about my multiple accuracies and my charts. The key thing for gold is it is just getting exciting now. We are really taking into new markets, and we have to use a little bit of caution on a 50 week basis. It is a little bit overbought. This market is breaking out, it is a new bull market, maybe consolidate. S, does that change your analysis from one million years zero when you are doing it for Alexander Hamilton . Mike couldnt afford to see the play, but i loved the book. It is so much easier to get exposure to gold. 20 or 30 basis points, you dont have to go to the equities. Yes, it is much more easy to get into gold. We are seeing probably a flood of investors. Ferro doesnt know the kruger end if it hit him over the head, but does that mean it is just as easy to get out of gold . Mike it is, but gold has a little more enduring boom market. Free money, every central bank in the gold just world just printing money. There is no competition for gold right now. Theyi can save the record, all got sold a long, long time ago and we dont have them anymore. Im sure that is a story for a lot of people. Tom a question on gold, it is a very british thing. Jon that is my plan to do. In 2011, we saw this story play out. We are seeing a play out again. Why is it different this time . Mike 2011, if you look at the crisis, gold rallied about three times. It is just a continuation, the way i see it. You have to go back to 2011 the last time gold was above the average. This one looks more enduring. When do we have any idea when Central Banks will start hiking again . We dont. And we said repeatedly on this program for a long time, the argument against gold was a lack of yield. Where do you go for yield right now . I just look at that long bond, and i only see a gravitate toward zero. Now, if we just get a little bit more weakness in the dollar, that is for gold. This is probably the one commodity that i unfortunately ignore the most, nat gas. , what are the dynamics of natural gas forward . Mike massive supply despite rapidly decreasing demand. The key thing to remember is rapidly increasing technologies. Creating that supply, most notably in the u. S. , that is a key reason for deflation. , we might spike, but there is just too much supply. Tom is copper affected by the chinau. S. Dynamic . Mike to me, copper is one of the most vulnerable commodities right now. To me, shortterm, a little that supplyconstraint, but overall it is a bear market. Jon how do i know when the gold is it when i start to see those commercials every day . Mike someday will we get near the nadar which is not even on the radar. Jon great to catch up with you, sir. Remember those commercials from 2010, do you think we start recycling those . Out the kids got the pliers and they are trying to get the two out. Jon this is great. He wrote the following on twitter. We all know when tom starts v,lking nonsense with ferrtot he has already given up on the Boston Red Sox season. Have you already given up . Strange to have the third week of april in july. It is absolutely dead on. Is theut of body to know first week of april or whatever, i dont like this. Jon youve got to stick with it. You are just going to have to get used to it. Tom jon when do they start again . Jon i think september. Should we get some price action . We shape up as follows, equity futures with a nice list. We advanced 17 points in the bond market. Treasury yields just down to become lower by a basis point of 10. Foreign exchange getting all the attention over the last week with eurodollar breaking through. I would say take a look at dollarsyen. Sneaking up on you. Tom dont mean to interrupt, wiss explodes, that is a strong euro. Jon coming up, the chief economist for the week ahead for the fed decision coming later this week as well. This is bloomberg surveillance. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Jonathan from new york city, this is bloomberg surveillance. We are live on bloomberg tv and radio. Lisa abramowicz back with us tomorrow. Alongside tom keene im Jonathan Ferro. The cash open just round the corner. Equity futures drifting higher. There is the big fx move. 8 , 1. 1749. Ut you have to go back to 2018. Remember the happy talk of early 2018 about synchronized Global Growth before the trade war kicked off . We are approaching those kind of levels on eurodollar. At Deutsche Bank is out 1. 20 among others. Andee the support on dollar how that will change the resilient dollar quote. Hsbc, ion bloom and wonder what he will publish. Think bloom at hsbc would stick with it. He getting knowledge you can get the restart rotation into currencies like the euro and elsewhere. The debate from hsbc, the argument against a weaker dollar call is it is a broadbased structural shift away from the u. S. Dollar over a long period of time, not just a short move of last month or so. Tom no question. Is euro swissie has gone strong euro, week swissie. That is a segue to a swiss bank, Credit Suisse has a wonderful James Sweeney was brilliant a few years ago, saying the disinflation and deflation bloom of europe of few years ago was off the mark. He joins us with a different view. Our Services Going to cave in and joint goods as disinflationary items . James right now services have joint goods with the collapse and activity driven by the shutdown. Now we are rebounding because there is some activity turning back on. Rebound,ok beyond the the fears should be toward given anflation uncertain path for unemployment and the potential for unemployment deep into 2021. Tom how have you adjusted your gdp for the United States of america . Give us a view out 12 months or even the end of this year . James the rebound is formidable. When you turn the lights off and turn the lights back on it does crazy things to the data. We are seeing an incremental slow down in the u. S. Because of increasing infections in the summer, but we are still forecasting a strong doubledigit increase in q3 gdp. We have to remember is the level activity is going to be well below trend. We have gdp contracting 5 this year. You have a big hole to fill . Tom the trio mcconnell, mnuchin, and meadows. What is the american . Nemployment rate all it now it is over 20 . James that is a fake number because is telling you how many hourly workers are getting zero hours during shutdown. I think the real number is closer to 10 than 5 . In six months, even if there is a vaccine, if the real number is still closer to 10 than 5 , that has real implications for the fed and for growth and for inflation pressure. Jonathan lets talk about inflation pressure. We will be below capacity for an extended period of time. There is a conversation drifting into inflation, away from disinflation. From your perspective, why . Populars actually a conversation among equity investors, not so much among debt investors, but the view is m2 money supply in the u. S. Is up 3 trillion, bank credit is up just under 1 trillion. Treasury debt is up 3 trillion. The fed Balance Sheet is similar. Surely this is inflationary down the road, not so surely, it is possible. It depends on expectations later on. It depends on whether the fed responds to incipient inflationary pressures. A lot of good things have to happen for us to get there. Be onk the focus needs to that european situation i have been not expecting for a long time. The odds that inflation get stuck at a lower level are elevated at the moment and i think the fed will be focusing on that and we will see policy actions over the next six months that confirm that fear. Michael we can talk jonathan we can talk about the policy action in a moment. The relationship between Monetary Policy and inflation, how tight has that relationship in . James poor. Not a good relationship. ,ith Interest Rates so low bonds are not necessarily a bre