That is highly unusual. There is an effort to do the facetime, but lets not kid ourselves, they are far, far apart. I cant convey that for everyone in america, the clock is ticking for july 28. Francine rent needs to be paid and fees. Lets get to the bluebird first word news in new york city with ritika gupta. The bloomberg first word news in new york city with ritika gupta. Ritika Senate Majority leader Mitch Mcconnell unveiled the republican proposal, House Speaker nancy pelosi called it pathetic are capped she says she will try to fight , and she says she will try to fight. The hardest hit u. S. States after Health Officials posed unpopular members like closing bars and requiring masks. Texas had its lowest total in two weeks. Now states wonder whether they can keep infection rates down until a vaccine arrives. China is buying american imports, but not enough to hit returns of the two nation trade deal, according to bloomberg calculations based on chinese come sims Chinese Customs Agency data. Farm products have stepped up the last two months. European central bank has asked that the bank hold off on dividends or share buybacks at least until january. Lenders wanted to return to business as usual. The ecb asked banks to show moderation when it comes to handing out bonuses. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Francine . Tom . Francine thank tom thank you so much. Equities, bonds, currencies, commodities. Futures up three, dow futures up. The vix, 25. 04. Yields compressed yesterday, and with a better action through the day, we saw a nice yield pickup. The 10 year yield 0. 1 6 0. 61 . Up yesterday from the 0. 57. Francine the interesting thing, and we have been talking about it quite a lot, is gold. The rally seems to be fitting somewhat. 1932. It is lvmh is dropping after the french luxury conglomerate earnings missed analysts expectations. That is a good way to look at the details, struggling even if they have an online presence. Joining us now is david riley, Asset Management chief investment strategist. When you look at the market and what they are being driven by, how much of the focus is on the stimulus in the u. S. , the size and the scope, and who it will go to . David i think in the near term the stimulus package, the market is expected to come out of washington is absolutely vital. I do think that one of the key lessons that we learn in the aftermath of the Global Financial crisis and the euro zone sovereign debt crisis is that policymakers introduce austerity too soon. They introduce the stimulus too soon, and there was much reliance on central banks. I hope certainly that policymakers come around and bit and realize that fiscal has to do more of the heavy lifting in terms of reporting the recovery. Some of the data is starting to weaken in the u. S. Because of the upsurge in cases, even though that may now start to be approaching a plateau. So if we dont get a deal, the u. S. Economy faces a fiscal cliff, a fiscal headwind, just as the momentum around the recovery is starting to weaken. I think the stakes are very high indeed. I think the market is expecting that we will get a deal, but as you have been highlighting, there is a lot of negotiation to be done and time is fast running out. Francine does it make a difference if it is 1 trillion or if it is much more, like one or two in terms of the size of the package . David i think it does make a difference, and i think bigger is better. We can worry about deficits today when the economy is on the Sustainable Growth path. A dealink that if we get which is roundabout expect tatians, 1 trillion is , 1dabout expectations trillion, to 1. 5 trillion if we get a bigger deal than that, then i think that will be supportive because it will reinforce the commitment to sustaining the recovery. But it feels quite asymmetric. If it is not a deal or it gets delayed and it is on the smaller side, with implementation preferences delayed through september, then i think that will be a significant certain. I think that will spill over into financial assets. Tom david, it is the oddest summer in our lifetime. I dont know, folks. This is where i really wonder if i can keep track of the calendar, track of the cadence of the months as we stagger into august. David, do you feel like we need a reset into labor day, into the early autumn months, or are you study as you go within your ideas and within your Asset Allocation . Ivid i certainly feel that could personally do with a reset. In terms of portfolio littlection, taking a bit of risk down, i do think that, you know, with the stimulus that we are currently expected to come out of washington, not really expecting too much from the fed over the next two days, that it is hard for me to sort of see what is going to be the positive catalyst for a sort of meaningful move higher in sensitive risk assets, so i think it actually makes sense to be a little bit closer to home as we go through the summer and as we then approach labor day. There is going to be a big deal around when we go into the Northern Hemisphere winter as to what is going to happen in terms of the virus. It is clear that not only the u. S. , but europe is struggling to contain the virus. David, the idea of the illusion of may is that there was a bridge somewhere being 2020 tot there over somewhere. Where is that bridge heading right now . David i think that the definition or the end points of that bridge is going further into the distance. Balancehad a strong after the lockdowns, and we got a good sense this week was gdp. That is how extraordinarily deep those economic downturns and essions and the downturns the damage from the recessions and downturns has been. Declining real yields, rising gold prices. We still have the kind of make a cap growth stocks, which are outperforming value and cyclicals, and i think what that is telling us is that the market is kind of coming around to the notion that, actually, this is not going to be it is actually going to be a long haul, and that longhaul to get to the other side of that bridge come as you described, tom, will be pacing late into 2022, 20 23, i think. Francine how much of a long haul . 2023 if you look at cases in europe, and it doesnt matter whether it is a second wave or first wave are we going to be in a start and stop situation more than say we more than we were expecting, in terms of a recover . David the reality is that we are going to have to live with this virus for a long period of time. Even hopefully a vaccine is developed, and we are getting that, over then next six to nine months, it is still going to take a long period of time before the vaccine is rolled out and we have genuine herd immunity. The restrictions on activity, social distancing, the sector and labor market dislocation that is coming from this virus is going to be that it is going to take a long time to heal. Even if we do have positive progress, as i honestly hope we do, in terms of vaccine development. It is going to be a long haul. We are going to have to live with this and adjust. Tom and the important thing is out to 2022, 2023. David riley he is a in manufacturing process. Will take over and jaguar, the chief officer. Stay with us. This is bloomberg. Good morning. Tom good morning, everyone. Bloomberg surveillance. Kevin cirilli will be joining us later on the stimulus. London, tomqua in keene in new york. That is front and center, but one thing i field to mention in the data check is some of the em currencies. Turkey with its own set of issues, including real tension between turkey and greece. Turkey weakens out, printing 6. 90, nowhere near record weakness, but nevertheless edging up toward a new weaker trend on turkish lira. That is a nice set up with david riley of bluebay Asset Management on em. Em is a mystery. It is like a wait and see to see it unravel. Will em unravel with this global slowdown in world trade . David i dont think it will unravel. I dont think we are going to face a systemic emergingmarket crisis, but clearly, you know, a lot of Different Countries are facing a whole set of different challenges, and you mentioned geopoliticalhe risk associated with turkey. But it is also a policy arrangement which is driving very rapid credit growth with a large account deficit declining foreignexchange research. That leaves turkey vulnerable, but i think there is value in european corporate credit. One thing which does support the emergingmarket asset class is valuations are a bit more attractive than developed markets. Nobody is in there. It is not a situation where they sort of overstretch positioning on the investor site. On the investor side. Techtarget there are risks within emerging markets. Technically there are risks within emerging markets. Tom give me a name. Is there a pacific rim . Where is the country where francine can get started on the autumn . The sectors and regions id like is, for example, china real estate and property developers. I said before we are not going to get a vshaped global recovery, but the one country that is getting closer to a vshaped has been china. I quite like china. , real estatessets in particular. Value in someis of the higherrated investment rate emerging markets, and they continue to trade at a discount to their develop market counterparts. Some of those are in asia, but some of them are actually in the gulf as well. This may be a surprise, but i actually think is the and i actually think brazil, there is a lot of Bad Development news going on there, but there are tactical opportunities and looking markets in the brazilian realities well. Francine i know in the past you were quite bullish on some of the european bonds. I know this was 10 days ago, but does the European Recovery Fund change on them . Is now the time to be invested in europe . Do see that the European Recovery Fund was a big deal. A lot of commentators have tried to downplay the significance that it was a oneoff, but i think the precedent has been set. We have a countercyclical fiscal policy and e. U. Wide shared policy response to the crisis, which is in stark contrast to what happened in the aftermath of the Global Financial crisis and the euro zone crisis. I think 80 reduces risks of the european breakup of the euro breakup, and he will be meaningfully and amount of fiscal stimulus for the likes of spain and italy. I think it is too early to take that tradeoff. We will see further convergence in euros on Government Bond yields. I feel like the eurozone i still actually do like euro assets and your credit more generally. Francine what part of the credit market do you like . David i still think there is room for pressure on italian bond yields. We are currently at something to 1. 50. Tied in meaningfully toward the prepandemic spread levels. I still also think there is value in European Investment grade credit in particular. And i very much like european their, wherenated you will get a 5 or 6 yield. We had an announcement today about dividend payments. I think there are question marks about that longerterm for banks, and in the near term i think actually if anything it is a positive for Credit Investors like myself. European equity shares in banks . I know it is away from what you do, david, but we find interview to interview a real fascination about the European Banks. David they proved to be a value trap because with time to look about European Bank equity, you start thinking there is real value here, and even as a credit investor, i cannot be in different to what happens to the equity valuations of European Banks. Sickle asset, still a very difficult time. The earnings outlook, we still think we are going to see in the u. S. Increasing provisions for nonperforming loans as a result of the scarring from the pandemic and the recession, so it is hard to get, i think, bullish at these valuations. But a lot of bad news is already in the price for the whole capital structure of European Banks from equity down to the subordinated bank debt that i am invested in. Bluebayid riley with Asset Management. Over on the equities side, we will continue to look at the stock market. , equityging director strategist at citigroup. We will do that in the 8 00 hour. Those tech earnings are coming along in a few days. The fed meeting wednesday. This is bloomberg. Good morning. Ritika this is bloomberg surveillance. In outlook for a bigger than in nissan. Unch it plans to skip dividends after losses. The pandemic has forced nissan to speed up cost cuts. Have begun aontech late stage trial for their Coronavirus Vaccine they are hoping to submit for Regulatory Approval as soon as october. That would be one of the most ambitious timeline so far. Runners like moderna announced it started its own final stage trial. One of americas oldest and makers has filed for bankruptcy for the second time in two years. Remington outdoor now plans to sell the twocenturyold company. Remington was overwhelmed by debt. That is the Bloomberg Business flash. Tom thank you so much. Data one of the quietest i have seen futures negative two, they were green, red, green, red, green, red. Other than that, it is a struggle. Turkish lira at 6. 90 is a weaker lire this morning. Renting . Francine european francine . Francine gold stabilizing below 2000. I wanted to show you lvmh, because there is not that much on the markets and they did drop after the Luxury Company put out earnings that missed analyst expectations. This is despite having a pretty good online presence, so it is interesting to see what happens to luxury retailers. Coming up on balance of powers, max baucus, former u. S. Ambassador to china. They will talk about u. S. China, security law, and trade. York,s 12 00 p. M. In new five a clock p. M. In london, and this is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. 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. Tom this it francine this is bloomberg surveillance. Openweeks fed meeting may a path for further advances. Joining us to talk about the price for gold is georgette bowl. Georgette boele thank you for joining us on the phone. What are the fundamental driving gold Prices Higher . Georgette the thing with gold prices at the moment, you have a combination of factors which are all positive. For example, the Monetary Policy fun, the central bank easing asetary policy aggressively, well with qe, very low rates. Nominal rateshave with inflation, and that is an environment in which gold prices do very well. In addition, you have fiscal policy. You have a lot of countries stimulating their economies, resulting in quite a lot of fiscal deficits, 5 of fiscal deficit, and there investors that are worried about that. Looseningation of Monetary Policy and high deficits on the fiscal side is what investors are worried about. In combination, i will say the negative yields in the euro zone as well as negative to the u. S. , yeah, i am very positive. Francine what would it take for gold to see a correction . What would be the catalyst for that . I thinki think if if they are satisfied with the moves they have seen, on the future level it could be that ok, we have reached 2000, lets take some profit. I think that is increasingly likely, i would say, because at some point in time you will not find a lot of new buyers because decisions are very high. Those who havee, already bought gold may say lets take some profit. Crucial we have already reached the level of 2000. Tom tell us about the positioning of gold. He has been a moonshot from just under 1700 per ounce. Does gold behave like a normal stock in terms of positioning and how people buy and sell and how the bid and the ask move . Oldgette i would say that is increasingly behaving like a financial asset, such as stocks. If i look at positioning, you it by a metrically like gold etfs. Time, there are also investors buying inside of overall, i would say positions are quite extreme. That also means that they have changed their minds or our with the move they are seeing or with the move they are saying, it can be quite a big drawback. Tom i went back and forth with dennis gartman, folks, who has gold andish on euro. He is cautious because everyone is on board the trade. How do you feel about the idea that it seems every 3 00 a. M. At out there is to buy gold . Isnt that top of the market when we see those kind of ads . Georgette usually it would make me cautious, as it has been going up for quite a while and people get more optimistic. And the last part of the rally was mainly dollar weakness. But i would yeah, going so far, i would get cautious. I think it goes too fast. More it isming difficult to say if it is dovish or not, but for me it goes too fast. Francine georgette, thank you so much. Georgette boele there. Precious metals strategist. In europe because the markets are regular the, we dont have those gold ads, but im looking forward to seeing them so you can send them over. Tom we are really starting to see a lot of them. You see it every cycle, every time gold goes up, buy this, buy these coins, buy jewelry, etc. Francine lets get to first word news with ritika gupta. Ritika it is likely to be a combative hearing when attorney general william barr testifies today before the democraticcontrolled house judiciary committee. In a prepared statement, he says the president has not tried to interfere in Justice Department business. He also argues that the president was a victim of wrongdoing by the Obama Administration and by antitrump forces in the fbi. Mitch mcconnell has to do more than battle democrats over his new Coronavirus Relief proposal. A number of fellow republicans are also proposed also opposed to the trillion dollar measure. It since hundred dollar checks to most americans. Sendspelosi calls that it 1200 checks to most americans. Then she pelosi calls it pathetic and says she will try to find common ground. Biden stock has been for been from trading stock according to an email obtained by bluebird news, bloomberg news. New york state Health Officials will investigate hampton Charity Concert opened by Goldman Sachs ceo devon solomon. He performed as a dj. Governor andrew cuomo says he was appalled by he called egregious social distancing violations seen in video of the events. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. This is bloomberg. Francine . Tom . Tom thanks so much. Coming up on the pandemic, may be she will have something to say about that event out on long island. The Lieutenant Governor of the empire state. Kathy hogle will join us in the 7 00 hour. She has been really, really wonderful through this entire pandemic about the pulse and the fabric of upstate new york. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. The covid19 shock is underscoring the role private markers that private markets can play in portfolios. Amongst the key investment that jim sees emerging is the size of the policy response so far, the changes to the economy, and sustainability. Jim barry joins us now. Thank you so much for joining us. We are doing an analysis with our colleagues, also following what you do very closely. Have you struggled with any fundraising, for alternative things . What is the appetite for them right now . Jim i would say in general private markets in particular have accumulated capital at a phenomenal rate over the last five years, and really there are some logistical difficulties with respect to the last few months. There is nothing from our client suggesting that that allocation is going to diminish in any way. And in particular the low yield environment has been a big driver and we are looking at that sustaining into the medium and potentially longterm. No end of the accumulation of capital. Pandemic how has the changed investors . Or the market . Are you seeing bargains in the market right now . Jim as investors we were all waiting for a turn. I would have said to you last year if we spoke that we were seeing very much late stage Market Dynamics in terms of pricing come in terms of deals. And no one expected the pandemic on the scale that we have had, but it was always an expectation. Has been arisis great advantage for private market. I would say briefly, i dont see this as the equivalent of the gse for a number of reasons. One is the scale of the physical response and the tsunami of liquidity has kind of modify the scale of some of the opportunity in the short term. I would say secondly, because of the scale of capital that is available and investors being less gun shy than they were in 2009 and 2010, there is more competition for assets. And i fundamentally believe this will not be a rising tide that lifts all boats. I think we are seeing massive structure shifts in the economy that will be permanently on the crisis with more dispersion of outcome. Tom back to your days at bain, i am going to say youre one of atguys in the world infrastructure. Give me the update on Renewable Energy and infrastructure and the future of big oil, whether state or private owned, and fossil fuels. You guys are almost antiexxon. Where is exxon going to be in 10 years . Science reality is the says we have to fundamentally thesform energy and carbonized. That is great for renewables and the carbonized. At the same time, that does not happen overnight, that will happen over the next two or three decades. But the big challenge for the oil majors come apart from how do they go into a d carbonized to write is ok for me a check today and look out 10 years, but how do they sell that how do i sell that in 10 years if i dont have cash flow that i have confidence in . Ons is why the Impact Capital is going to be more immediate and dramatic. Tom what are the rates of return on Infrastructure Projects . Are you talking a single digit world, or are you talking more like private equity returns . Jim i would say infrastructure done properly does not have the same risk. We are seeing returns move in on the level based into the mid to single high digits in a classically developed market be a highly contracted asset. We may see a little improvement at that through this crisis, but frankly we have still been selling assets at precovid prices over the last few months. High quality assets. I would say it is not going to see generally we are not going to see this dramatic jump in returns, but i think we will see more flow. Him of that liquidity pressure will drive at will drive flow of assets, but you will not expect a dramatic boon in the returns. Francine how difficult is it to do Due Diligence, given that you are not traveling and you are not on the ground as much . Jim it is very funny, i put my hand up the other day to do some Due Diligence that was needed, and i travel that much. More seriously, it is a challenge. ,learly we are using Technology Video tours of sites, particularly when it comes to real assets drawn. One of the bigger challenges his management teams if you are in private equity. You need to look people in the eye. It is definitely putting a crimp in the style. Much more leaning on existing relationships which mitigate some of those issues, but i would say rather than stopping it, it is slowing down the pace. Much moneyre too chasing too few projects . I look at carlisle and i said they have to fix terminal one at jfk as fast as they can because it is an international disgrace. You guys building things is it too much money chasing too few ideas . Jim i think it is a challenge generally in private markets. Have Something Like two point 5 trillionin debt 2. 5 we have Something Like 2. 5 trillion in dry markets. Think, look, it really emphasized the needs for distancing in underwriting, and also pacing now. We may see assets that is great froma price perspective six months ago, but fundamentally the world has changed in a way, is that price appropriate for the risk . That is the challenge. Barry, thank you for joining us today. We greatly appreciate it. Coming up, this is a timely conversation. David westin with mr. Summers, a little bit to talk about, including the efficacy of stimulus. Somehow i think that will come up with the former secretary of the treasury. Look for that in the 12 00 hour. This is bloomberg. Good morning. Red, green, red, green green, red red. It is that kind of market. Ritika this is bloomberg surveillance. Lets get the Bloomberg Business as theyshakeup at intel have ousted the chief executive officer. The disastrous announcement not more than 40 billion off market value, and it led analysts to question the future of its manufacturing organization. In malaysia, a court has found former Prime Minister guilty in the first trial links to the Corruption Scandal over the state wealth fund full of the charges involve 10 millions of dollars deposit in his account. The verdict came days after Goldman Sachs agreed on a 3. 9 billion settlement on its role. In return, criminal charges were dropped. Stepping up against Online Companies that it accuses it has asked speculators to dilute a law that social media giants such as facebook and twitter say is crucial to them. It protects Online Companies from legal liability for users posts. That is your Bloomberg Business flash. Tom thanks so much. A quiet tape this morning, futures backandforth, red and green. Matthew winkler, the editorinchief emeritus for bloomberg, would want me to say the turkish lira is weakening, not going up. Matt winkler, no stronger you have written a beautiful piece on esg, and the real question through your very factdriven article, is esg the real thing, and does it have a permanence to it . What have you found out . Matt thank you, tom, great to be with you. The answer to your question is most definitely, esg israel. And just getting stronger. Really by the day. What we are talking about in this column specifically is probably the most important part of esg, which is carbon and energy. Here is where you see the cost of alternative energy becoming much more efficient and cheaper, simultaneously, to the extent that investors are recognizing this and accelerating the trend. You see this in multiple ways, but some prominent examples are apple deciding by 2030 it is going to be 100 Carbon Neutral, nike has already committed itself were through really 100 other companies to doing the same thing by 2025. But the most emphatic demonstration of this is in the market, in the stock market. The companies that are committed to alternative energy are dramatically outperforming the market, beating the market consistently. Tom what is important here, folks, is the use of the bloomberg terminal to bring in all the data that is available. Does that data show the Traditional Energy wants to take part in esg . Matt no, it doesnt. Not yet at least. Because if you look at the giants, they are still committed to the past. And their performance reflects that. Whereas the esg companies are going to have really spectacular returns so far this year, you look at exxonmobile, you look at conoco come everywhere you look, there is a decline in the next year,ng forward with paltry profits by comparison, or returns by comparison to the esg crowd. You can see this also, by the way, in the broader market. For example, if you look at the Exchange Traded funds that are committed to esg in this case, clean energy they are dramatically outperforming, dramatically since the covid19 crisis, the Traditional Energy fun. Divergence is accelerated, and we dont see any sign that that is going to change. In fact, this is really a longterm trend. If you go back five years and look at the fiveyear return of esg versus Traditional Energy, it is a much better return. If you look at it over two years, it is the same thing. Not,is something that is if you will, momentary. It is actually a longer term trend. Even al gore, speaking at a bloomberg conference earlier this month, said as much. Said that alternative energy is cheaper and going to be much more profitable. Francine i understand, you mentioned at the end of the peace the difference in market value, still being large but narrowing. A company like apple that says they are Carbon Neutral is there a common f edition for companies around the world so that if they say if there is there a common definition for companies around the world that it,that they can add to that if investors do more, that investors make sure where they invest in . What is really encouraging about this trend is that this is where the profits are. Is reallyhat encouraging about this trend is that this is where the profits are. Cap it is can say they are doing the planet, companies can say they are doing the right thing by the planet, but companies are doing the right thing by their shoulders. Embraceanies that alternative energy as opposed to fossil fuel will be rewarded, so the smart money and the Smartest Companies are converging in the same place, which is a place where carbon becomes less and less of the energy source. Tom matt winkler, we have to leave it there. Matthew winkler, our editorinchief emeritus, with an article on esg. You can look at it on the terminal as well. We will try to get it out on twitter through the morning. Much more to talk about through the morning. Us. A kirr will join that is where we are focused right now, with all the back and forth, with all the fiscal stimulus discussion, and of course the earnings coming on as well, and a quiet into summer markets, and the day to day noise of this pandemic. A good time to catch up with beata kirr of bernstein. Futures at 10. Dell futures at 79. The fixed backup. 76 points. 25. 50 on the vix. Continued dollar weakness over the last three days. Also a two cent spread, coming back from where it was yesterday. A little bit steeper. This is bloomberg. Good morning. Tom this morning, they clearly do not have shared values. The distance between republicans and democrats is far greater than a 2 trillion divide. Speaking of distance, it is 294 feet to walk from a Trump International hotel to the fbi headquarters. Talk this morning on the multichilean dollars socialist manifesto. Multitrillion dollar socialist manifesto. Mark as well, he continues in the state to state. It continues in the dugout of the florida marlins. This is bloomberg surveillance. Francine lacqua with us. I have such respect for premier football. Opean by bus chops all the time, but you guys did that so much i bust chops all the time, but you did that so much better than sports in america, just incredible